Daniel J. Hemel, Assistant Professor of Law at the University of Chicago, and Lisa Larrimore Ouellette, Assistant Professor of Law at Stanford University, published recently, before the decision was announced, a deep analysis of the consequences of possible decisions on the international drug market in the Columbia Law Review.
Essentially, the expected effect is that:
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the decision opens the door to gray market import of patented medical drugs from low-priced markets back into the US or other high-priced markets;
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it is likely to bring price changes into tiered priced markets;
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consumers in low-priced tiers will see prices go up; some may be priced out of the drug entirely;
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consumers in high-priced markets will see prices go down.
What patent lawyers think consequences will be with pharmaceuticals
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Professor Frederick Abbott, of LSU Law School, believes that we will see some limited parallel imports into the US that will exert some downward pressure on drug prices. He considers that such imports are already authorized by the SCOTUS decision if “if such medicines are produced in FDA-inspected and approved facilities abroad, the medicines have been approved for sale in the United States and chain of custody records are satisfactory.” Other circumstances may require further legislative action by Congress. Professor Abbott considers it possible that the FDA may, in the future, regulate such parallel imports.
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Professor Lisa Ouelette, of Stanford Law School, believes that the SCOTUS decision makes it impossible for drug manufacturers to rely on patent protection to stop such reimports, but mentions that some consider that existing FDA regulations would still not allow for such direct reimports, for instance because of foreign labeling.
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Case Collard, of Dorsey & Whytney, believes that drug manufacturers will attempt to enforce the contracts they have with their distributors. Since drug companies deal with limited numbers of distributors, going after them is easier [than Lexmark going after many more retail customers]
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Isaac Ashkenazi, of Paul Hastings, suggests that new distribution contracts may include clauses that require specific steps from the distributor to ensure clients will not export drugs back [into the US or other higher-tiered-pricing markets]
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Nick Williamson, of Bryant Cave, believes that drug manufacturers may take over distribution where the danger of re-export is too high
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Kevin Nelson, of Schiff Hardin, expects existing FDA regulations to be a significant barrier to import into the US. He explains that different versions of a drug [from overseas] may be treated differently by the FDA and require new approval.
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Biotechnology Innovation Organization (BIO), an industry trade group, had filed a friend-of-the-court brief favoring Lexmark, and its deputy general counsel, Hans Sauer, warns that some low-priced countries may see their access to critical drugs jeopardized by re-export into high-price markets.
The discussion thread for this post is here.
This article will continue to be updated throughout the day, as news develop.
Last update: 6/1/2017 at 1:10 AM PST