Opinion ID: 687717
Heading Depth: 2
Heading Rank: 2

Heading: The Austin Decision

Text: 35 The seminal case construing the term drugs under the TSUS is Austin Chemical Co. v. United States, 11 CIT 130, 659 F.Supp. 229, aff'd, 6 Fed.Cir. (T) 42, 835 F.2d 1423 (1987). The imported merchandise in Austin, consisting of D(-) mandelic acid, was classified by Customs under Item 404.46, TSUS. 14 Plaintiff contended that the merchandise was properly classifiable as a drug under Item 411.91, TSUS. 15 After importation the D(-) mandelic acid was sold to Eli Lilly and Company for use in the synthesis of Cefamandole Nafate, a cephalosporin antibiotic which also contains the four-membered beta-lactam ring. D(-) mandelic acid is a chemical intermediate which, after synthesis, imparts the mandelic acid moiety to Cefamandole Nafate. Unlike the ADC-6 moiety present in Imipenem, the mandelic acid moiety does not form the beta-lactam ring present in Cefamandole Nafate; rather, the mandelic acid moiety appears as a functional side-chain on the four-membered beta-lactam ring. The mandelic acid moiety protects the beta-lactam ring from hydrolysis of the amide bond by beta-lactameses produced by the target bacteria. Absent the mandelic acid moiety, Cefamandole Nafate would be susceptible to cleavage by beta-lactameses, resulting in the effective loss of its antibacterial properties. 36 Concededly, the mandelic acid could not be used alone as a curative. The trial court distinguished, however, between substances that are therapeutic and those that possess therapeutic properties. Because the imported D(-) mandelic acid imparted desirable properties to Cefamandole Nafate which enhanced the effectiveness of the antibiotic, the subject merchandise was found to possess therapeutic properties. 16 The trial court further relied upon dictionary definitions of the terms ingredient and constituent to conclude that Congress intended to recognize that before the chemical reaction [producing Cefamandole Nafate] occurs, the component substances of the compound are properly deemed ingredients. Austin, 11 CIT at 135, 659 F.Supp. at 233. Consequently, the court deemed D(-) mandelic acid to be an ingredient possessing therapeutic properties which was properly classifiable as a drug under the TSUS. 17 On appeal, the Court of Appeals for the Federal Circuit affirmed the trial court's decision. In doing so, the court held that the trial court did not err when it determined that  'therapeutic' properties include the imparting of 'properties to the other substances which are necessary to produce an effective antibiotic.'  Austin, 6 Fed.Cir. (T) at 45, 835 F.2d at 1426.