Supreme Court Decision Removes Barrier to Importing US Patented Drug Products at Lower Cost

In its May 30, 2017 decision Impression Products, Inc. v Lexmark International Inc., the Supreme Court ruled that patent law cannot be used to prevent the resale of products back into the United States. The Court case specifically concerned printer toner cartridges, but it is an important ruling in the context of the domestic policy debate concerning prescription drug pricing.

The case addressed whether Lexmark could use patent law to prevent a ‘generic’ U.S. toner refill company from purchasing used Lexmark cartridges, refilling them, and reselling them. The Court took on the question of whether U.S. patent law differentiates between patent holder rights for products sold by the manufacturer to purchasers in the U.S. and to purchasers outside the U.S. The Court determined that patent holder rights are not differentiated by the location of the purchaser.

Importation of prescription drugs as an antidote to the high prices in the U.S. is popular with the public and many policymakers. The biopharma industry remains steadfast against the idea for two obvious reasons: the U.S. is typically the largest commercial market in the world for biopharmaceutical products, and, unlike other industrialized countries, lacks price regulation in a market that has all the hallmarks of a monopoly or oligopoly. Until this latest Supreme Court ruling, one question (among many) about the viability of drug importation was the ability of manufacturers to sue the U.S. purchasers of drugs originally sold ex-U.S.

The ruling does not change the fact that the Food and Drug Administration (FDA), the agency responsible for the safety and efficacy of drugs used by U.S. consumers, is committed in its opposition to any organized importation program. While the FDA allows importation for personal use, it has never used its authority to permit wholesale importation.

The FDA chooses to exercise enforcement discretion to not prosecute individuals who fill their prescriptions ex-U.S. so long as the drugs are for personal use and the amount does not exceed a personal-use threshold of 90 days. Federal law does permit the Secretary of Health and Human Services, of which the FDA is part, to approve a system of importation provided certain conditions and requirements are met concerning safety and cost savings. No proposal to permit importation has yet met those criteria and standards.

However, the National Academy for State Health Policy (NASHP) just released a proposal for state-level, state-administered importation that we believe will meet federal muster. The proposal was developed with, and approved by, a geographically, politically, and professionally diverse group of state officials working over the course of months to sort through issues and approaches that would best serve both the public interest and the public health. The result is a model act that is a program plan for how a safe and effective program of importation might work. We look forward to engaging more states and the federal government to see how such a program might be able to move forward.