Introducción

The Task Force pointed out that reversing reimportation’s illegality and providing a safe mechanism of operation do not address other legal issues that will arise. Although these legal issues can be resolved through appropriate legislation, they increase the complexity of reimportation, and the resulting litigation

374Christopher Rowland, A Turning Tide, Boston Globe, Jan. 5, 2005, at D1.

375See John Chase, Canada May Cut Off Drugs Via Mail, Net, Chicago Tribune, Jan. 6, 2005, at C1.

376Greider, supra note 50, at 147.

377Id. at 150. Harrison believes that drug companies have not won domestically because “a more cost-conscious federal government has become directly involved in the delivery of health care,” the demographics of the aging population, and the rise of generics. One key turning point came in the 1960s, when Senator Estes Kefauver held Hearings on Administrative Prices.

However, the thalidomide scandal shifted these hearings from their original focus on economics toward drug safety, resulting in stringent FDA review that required the industry to reorganize and ensured that larger, higher-funded firms would survive more readily. Moreover, the step up in FDA safety requirements created “a more pronounced split between imitators and innovators.”

Harrison, supra note 214, at 3–4, 50–51.

378Morton M. Kondracke, Drug Industry Must Change Its Ways To Improve Its Image, Roll Call, Dec. 6, 2004.

could increase reimportation’s costs.

Allowing relabeling of foreign products could violate trade name or trade dress intellectual property rights, making the scheme vulnerable to a takings challenge.³⁷⁹ Furthermore, the Tariff Act of 1930 makes it

“generally unlawful to import into the U.S. any merchandise of foreign manufacture if the merchandise or any part, such as the label, package, or wrapper, bears a trademark owned by a U.S. company ... unless the written consent of the trademark owner is produced.”³⁸⁰ Although there is arguably little monetary value to the label itself, Congress would either have to create an exception to the intellectual property law or change the FDCA’s label requirements. The latter approach would almost certainly be easier to stomach for Congress because it feels less like government seizure of company’s property. One possibility would be to modify the identity requirement to allow a label that contains the drug’s scientific but not brand name. Of course, opponents of this provision would point out that this modification of the U.S. labeling requirement could lead to patient confusion and improper fulfillment of the label’s purposes. Furthermore, according to Gamut Trading Co. v. U.S. Int’l Trade Comm’n, if the differences between the foreign and domestic product are “material,” then the manufacturer may be able to exclude foreign drugs with identical trademarks but different compositions.³⁸¹ Congress might have to legislate around this issue along with the modified labeling requirement, and the pending bills in fact do so. An imported drug’s label satisfies FDCA requirements if it has a copy of the labeling approved “‘without regard to whether the copy bears any trademark involved.”’³⁸²

Other causes of action could include patent or copyright infringement suits against importers and distributors.

379See Task Force Report, supra note 32, at 31.

380Id. at 94.

381200 F.3d 775, 778–79 (Fed. Cir. 1999).

382Pharmaceutical Market Access and Drug Safety Act, S. 334, 109th Cong. § 4 (2005) (amending FDCA § 804(g)(3)).

U.S. patent law currently does not create exhaustion upon foreign first sale; Congress would have to create an exception for reimportation, perhaps by instituting a rule of international exhaustion, as Japan does.³⁸³ Furthermore, patent law does not prohibit manufacturers from adding provisions to contracts preventing resale to the U.S., and drug companies would almost certainly turn to this strategy.³⁸⁴ This modification to patent law would not necessarily violate TRIPS, although it could be slightly embarrassing given the U.S.’s role in pushing such universal protection for IP rights on the rest of the world. Several proposed reimportation bills do take the step of introducing a limited form of exhaustion for imported drugs.³⁸⁵ Furthermore, copyright protections might govern the label, but these causes of action are unlikely to be significant.³⁸⁶

Non-intellectual property causes of action also may arise, perhaps leading to defensive measures whose costs would then pass down to the patient.³⁸⁷ Tort claims against the drug companies currently include problems with the distribution chain (such as mislabeling, misbranding, adulteration, or improper dosing), defective packaging design, failure to warn, and strict liability for a manufacturing defect.³⁸⁸ If reimportation were instituted, litigation risks might increase for all actors in the distribution chain. Drug manufacturers may be jointly and severally liable with parts of the distribution claim outside U.S. jurisdiction, unfairly leaving them on the hook.³⁸⁹ Exporters and importers may be liable for improper storage and transportation, although

383See Ako S. Williams, International Exhaustion of Patent Rights Doctrine, 7 Detroit J. of Int’l L. & Prac. 327 (1998) (discussing the Supreme Court of Japan’s decision in Jap-Auto Products v. BBS Kraftfahrzeug Technik, Case No. Heisei 7(wo) 1988, Hanrei Jiho (Sup. Ct., July 1, 1997)).

384See, e.g., Task Force Report, supra note 32, at 96.

385For instance, S. 334 § 4(d) says it is not “‘an act of infringement to use, offer to sell, or sell within the United States or to import into the United States any patent invention under Section 804. . . that was first sold abroad by or under authority of the owner or licensee of such patent.”’ Pharmaceutical Market Access and Drug Safety Act, S. 334, 109th Cong. § 4(d) (2005) (adding 35 U.S.C. § 271(h)). S. 16 mirrors this language, as does S. 109. See, e.g., Pharmaceutical Markets Access Act, S. 109, 109th Cong. § 8 (2005).

386See Task Force Report, supra note 32, at 94. The Task Force warns that the first sale doctrine might not apply because MMA required drug companies to allow relabeling for free. A modified labeling requirement would avoid this constitutional question.

387See id. at 99.

388See id. at 101–102.

389See id. at 103.

they may defend themselves by showing that the defect existed when it left the manufacturer’s hands.³⁹⁰ Depending on the jurisdiction, pharmacists may be held liable for failure to warn if they do not inform the patient that their drugs are imported.³⁹¹ Because the U.S. defendants may be forced to pay plaintiffs despite the fault of foreign defendants, liability may increase. On the other hand, joint and several liability is not universal, which could alleviate the burden on companies but also provide incomplete compensation for victims.³⁹² Plaintiffs wrongly injured also may find it more difficult to win, and the case could be moved to a foreign country or require costly foreign discovery.³⁹³

Manufacturers and other members of the distribution chain may adjust by choosing carefully whom they deal with and taking other quality-control measures; this might increase price, but it also would make reimportation safer, which is one of the purposes of tort liability. Congress could intervene with legislation to limit joint and several liability on domestic companies when foreign companies are unavailable, or it could make submission to American jurisdiction a condition of certification as a drug importer/exporter.

Alternatively, Congress could create a fund to compensate patients injured because a drug is reimported, using part of the fees collected from registered importers and exporters as well as federal savings from reimportation.

In the end, if reimportation goes through, these concerns all possess legislative solutions as long as politicians have the will. As discussed above, Congress could also look at other countries and decide that certain countries’ approval and labeling systems satisfy U.S. requirements. By doing so, the focus for maintaining

390See id. at 102–103.

391See id. at 103.

392See id. at 106.

393See id. at 105–106.

safety would then shift to guaranteeing the integrity of the chain from foreign manufacturer to foreign pharmacy to the U.S. distribution system. In the end, the complexity required to develop a workaround for reimportation will cut even further into the cost savings, and policymakers interested in easing the burden of drug prices on Americans will have to consider the costs of navigating this legal thicket.