Patents and Prescription Drug Importation (CRS Report for Congress)
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| Release Date |
May 2, 2016 |
| Report Number |
R44511 |
| Report Type |
Report |
| Source Agency |
Congressional Research Service |
Summary:
Prescription drugs often cost far more in the United States than in other countries. Some consumers have attempted to import medications from abroad in order to realize cost savings. The practice of importing prescription drugs outside the distribution channels established by the brand-name drug company is commonly termed "parallel importation" or "re-importation." Parallel imports are authentic products that are legitimately distributed abroad and then sold to consumers in the United States, without the permission of the authorized U.S. dealer.
Numerous bills have been introduced in the 114th Congress that would ease the ability of individuals to import lower-cost prescription drugs from foreign jurisdictions. None of these bills have been enacted. Each bill would allow individuals to import drugs from foreign jurisdictions, although the bills differ on the jurisdictions from which imports are permissible. Some bills are restricted to Canada; some to a set of specifically named jurisdictions; while others potentially apply to any foreign country.
None of these bills address intellectual property issues that may arise through parallel importation. However, many prescription drugs are subject to patent rights in the United States. In its 2016 decision in Lexmark International v. Impression Products, Inc., the U.S. Court of Appeals for the Federal Circuit confirmed that the owner of a U.S. patent may prevent imports of patented goods, even in circumstances where the patent holder itself sold those goods outside the United States. The Lexmark opinion squarely declined to extend the "exhaustion" doctrineâunder which patent rights in a product are spent upon the patent owner's first sale of the patented productâto sales that occurred in foreign countries. The court's ruling will in some cases allow brand-name pharmaceutical firms to block the unauthorized parallel importation of prescription drugs through use of their patent rights.
In addition to any patent rights they possess, brand-name drug companies may place label licenses on their medications. A label license may be drafted in order to restrict use of a drug to the jurisdiction in which it was sold. As a result, in addition to a charge of patent infringement, an unauthorized parallel importer may potentially face liability for breach of contract.
Introduction of an "international exhaustion" rule restricted to pharmaceuticals does not appear to be restricted by the provisions of the so-called TRIPS Agreement, which is the component of the World Trade Organization (WTO) agreements concerning intellectual property. Another possible legislative response is the immunization of specific individuals, such as pharmacies or importers, from patent infringement liability. Alternatively, no legislative action need be taken if the current possibility of an infringement action against unauthorized importers of patented pharmaceuticals is deemed satisfactory.
