Prescription Drug Importation and Internet Sales: A Legal Overview

^Pr^ep^ar^{ed f}^o^r^M^e^m^b^ers^an^d^Com^mⁱ^t^t^ees^of^C^ong^r^e^ss

High prescription drug prices have increased consumer interest in purchasing less costly
medications abroad. Policymakers opposed to allowing prescription drugs to be imported from
foreign countries argue that the Food and Drug Administration (FDA) cannot guarantee the safety
or effectiveness of such drugs. Importation proponents, who claim that importation would result
in significantly lower prices for U.S. consumers, say that safety concerns are overblown and
would recede if additional precautions were implemented. The importation debate continues.
In response to concerns about prescription drug imports, lawmakers have introduced multiple ^th
bills in this and previous Congresses. Bills introduced in the 110 Congress include H.R. 194,
H.R. 380, H.R. 1218, H.R. 2638, H.R. 2900, H.R. 3161, H.R. 3580, S. 242, S. 251, S. 554, and S.
1082. In recent years, appropriations bills have contained restrictions on the use of funds by
Customs and Border Protection (CBP) to prevent certain individuals from importing Canadian
prescription drugs; however, such provisions appear to have limited effect.
The following federal and state agencies are involved in regulating aspects of prescription drug
importation: FDA, CBP, the Drug Enforcement Agency (DEA), state boards of pharmacy, and
state medical boards. This report, originally written by Jody Feder, Legislative Attorney, CRS,
focuses on legal aspects of prescription drug importation, including antitrust law, international
trade law, and patent law issues. However, policy issues are also addressed because they are
closely linked. For a more complete analysis of policy issues, see CRS Report RL32511,
Importing Prescription Drugs: Objectives, Options, and Outlook, by Susan Thaul. For more
information regarding Internet pharmacies, see CRS Report RS21711, Legal Issues Related to
Prescription Drug Sales on the Internet, by Vanessa K. Burrows.

I. Introduction..................................................................................................................................1
II. Prescription Drug Importation: Legal Regulation......................................................................3
Importation of U.S.-Manufactured Prescription Drugs.............................................................4
Importation of Foreign Versions of Prescription Drugs............................................................6
Canadian Prescription Drug Importation After the FY2007 Homeland Security
Appropriations Bill................................................................................................................8
The House FY2008 Agriculture Appropriations Bill..............................................................10
The FY2008 Homeland Security Appropriations Bill/ 2009 Consolidated
Appropriations Act................................................................................................................11
Penalties Under the FDCA and Other Federal Laws...............................................................12
The FDA’s Personal Importation Procedures..........................................................................13
State and Local Importation of Prescription Drugs: Violation of Federal Law?....................16
Businesses That Facilitate Importation of Prescription Drugs................................................20
Antitrust Laws.........................................................................................................................22
Federal Antitrust Law.......................................................................................................23
State Antitrust Law...........................................................................................................27
International Trade Law..........................................................................................................29
General Agreement on Tariffs and Trade..........................................................................29
WTO Agreement on Technical Barriers to Trade..............................................................31
General Agreement on Trade in Services..........................................................................33
Patent Law...............................................................................................................................34
III. Conclusion...............................................................................................................................35
Author Contact Information..........................................................................................................36

his report explores the legal issues raised by prescription drug importation. Although this
report is intended to focus on legal analysis, policy issues are also addressed because they
are closely linked. For a more complete analysis of policy issues, see CRS Report T

RL32511, Importing Prescription Drugs: Objectives, Options, and Outlook, by Susan Thaul.
Issues associated with the risks posed by some online pharmacies and prescription drug sales over
the Internet will no longer be addressed in this report, but are rather addressed in CRS Report
RS21711, Legal Issues Related to Prescription Drug Sales on the Internet, by Vanessa K.
Burrows.

High prescription drug prices have increased consumer interest in purchasing less costly ¹
medications abroad by means of either commercial or personal (consumer) imports. Meanwhile,
congressional legislators have been exploring a variety of legislative solutions to the problems ^th
posed by rising drug costs. During the 108 Congress, the Medicare prescription drug benefits
bill, H.R. 1, modified a provision of existing law that authorizes the FDA to allow the importation
of prescription drugs if the Secretary of HHS certifies that implementing such a program is safe
and reduces costs, a determination that no Secretary has made in the years since a similar ²
certification requirement was established in 2000.
Congress has used the appropriations process to insert provisions prohibiting the use of funds to
restrict prescription drug importation. Most recently, P.L. 110-329, the Consolidated Security,
Disaster Assistance, and Continuing Appropriations Act, 2009, prohibited the U.S. Customs and
Border Protection (CBP) from using funds to prevent individuals from transporting on their
person a 90-day supply of Canadian prescription drugs that comply with the Federal Food, Drug, ³
and Cosmetic Act (FDCA). However, few, if any, prescription drugs from Canada will comply
with the requirements of the FDCA because such drugs are likely to be unapproved, mislabeled,
or improperly dispensed. As a result, the provisions in these appropriations bills and the final
Medicare bill appear to have limited effect and ultimately did not change the law with respect to
the prohibition against importing prescription drugs from Canada and other foreign countries.
The debate about drug importation continues. On the one hand, some policymakers remain
opposed to allowing prescription drugs to be imported from foreign countries. Worried about the
risk to consumers, these critics argue that, with its current resources and authority, the FDA

¹^A^s^t^udy^b^y^the^A^A^R^P^note^d^tha^t^pr^ic^e^s^r^o^s^e^6.^{2 pe}^r^c^eⁿ^tⁱⁿ²⁰⁰⁶^f^o^r¹⁹³^br^a^nd-^na^m^e^pr^e^s^c^r^iption^dr^ug^s^c^o^m^m^onl^y
^pre^s^c^r^ibe^d^f^o^{r ol}^de^{r in}^divⁱ^d^u^a^l^s.^AA^RP^Pub^lic^Polic^y^Institute^,^Tr^e^ndsⁱⁿ^M^aⁿ^u^fac^t^ur^e^r^Pr^ic^e^s^{of B}^r^and-^N^a^m^e
^Pr^e^s^c^r^{iption D}^r^u^g^s^U^s^e^d^by^O^l^de^r^Am^e^r^ic^ans^—2⁰⁰^{6 Ye}^ar^-^E^nd^U^p^date^{, htt}^p^://a^sse^ts.a^a^r^p.org^/^rg^c^eⁿ^t^e^r/he^a^lth/
^dd1⁵⁴^_d^r^u^g^p^rⁱ^c^e^s^.p^df^{. P}^r^ic^e^s^of^{75 c}^o^m^m^only^pr^e^s^c^r^ibe^d^g^e^ne^rⁱ^c^dr^ug^s^de^c^r^e^a^s^e^d^{2 pe}^r^c^eⁿ^{t i}ⁿ²⁰⁰⁶^.^A^A^R^P^Pub^lic
^Polic^y^Institute^,^Tr^e^ndsⁱⁿ^M^a^nuf^ac^tur^e^r^Lis^t^Pr^ic^e^s^of^G^e^ne^rⁱ^c^Pr^e^s^c^r^{iption D}^r^u^g^s^U^s^e^d^by^O^l^de^r^Am^e^r^ic^ans^—2⁰⁰⁶
^Ye^ar^-^Eⁿ^d^U^p^date^{, htt}^p^://a^sse^ts.a^a^r^p.org^/^rg^c^eⁿ^te^r/^he^a^lth/^d^d¹⁵³^_^d^ru^g^p^ri^c^e^s^.pdf^{. How}^e^ve^{r, othe}^{rs n}^o^te^tha^t^pa^rtic^ula^r
^dr^ug^s^m^a^y^{not ne}^c^e^s^s^a^rⁱ^l^y^c^o^s^t^m^o^r^e^thaⁿ^be^f^o^r^e^{, a}^s^c^linic^ia^ns^m^a^y^ha^v^e^s^ubs^tit^ute^d^m^o^r^e^e^x^pe^ns^iv^e^dr^ug^s^,^th^oug^h
^t^h^{ese d}^r^u^g^{s are n}^o^tⁿ^ecessari^l^y^mo^{re eff}^ectⁱ^v^e.^S^p^en^dⁱⁿ^g^on^p^r^escri^p^tⁱ^oⁿ^d^r^u^g^{s m}^a^y^h^a^{ve i}ⁿ^creased^b^ecau^{se cl}ⁱⁿⁱ^cⁱ^aⁿ^s
^a^r^e^w^r^iting^m^o^re^pre^s^c^r^{iptions a}^s^w^e^ll.
²^Me^dic^a^r^e^Mo^de^rⁿ^iz^a^tio^{n A}^c^{t (}^MMA⁾^,^P^.^L^.¹^08-¹⁷³^[^h^e^r^eⁱ^na^f^t^e^r^Me^dic^a^r^e^A^c^t]^{. T}^h^e^or^ig^ina^l^c^e^r^tif^ic^a^tion^pr^ov^is^ioⁿ
^w^a^s^c^ontaⁱ^ne^{d i}ⁿ^t^h^e^Me^dicⁱ^ne^Eq^uity^a^{nd D}^r^ug^Sa^f^e^t^y⁽^M^ED^S)^A^c^t.^P^.^L^.¹^06-³⁸^{7. T}^h^e^ne^w^Me^dic^a^r^e^A^c^{t a}^l^s^o
^r^e^quir^e^{d H}^H^S^{to c}^oⁿ^duc^{t a}^s^t^udy^a^{nd is}^s^u^e^a^r^e^p^o^r^t^on^im^por^ting^pr^e^s^c^r^iption^dr^ug^s^,^w^h^ic^{h is}^a^v^a^ila^b^l^e^a^t
^http:^//www^.hhs.g^ov^/im^portta^skf^o^rc^e^/^Re^port12²⁰^.^p^d^f^.
³^P^.^L.¹¹⁰^-³²^9,^{§ 53}⁵^,¹¹⁰^th^C^o^ng^{. (}²⁰⁰⁸⁾^;^{see a}^l^so^P.L^.¹^09-²⁹^5,^§⁵³⁵^{. T}^h^e^pr^ov^is^ion^e^x^c^l^ude^s^na^r^c^otic^s^,^bi^ol^og^ic^s^,
^inte^rⁿ^e^t^s^a^le^s^,^aⁿ^{d im}^por^ta^tio^ns^of^C^a^na^diaⁿ^pr^e^s^c^r^iptioⁿ^dr^ug^s^by^m^a^{il or}^de^r^.

cannot guarantee the safety or effectiveness of such drugs,⁴ which they contend are more
susceptible to being mishandled, mislabeled, unapproved, or counterfeited than drugs sold ⁵
domestically. Legislators and others have also expressed concerns about the safety of imports in
general and the ability of the FDA to inspect increasing amounts of imported products entering ⁶
the United States. In addition, drug manufacturers and other opponents argue that allowing the
importation of prescription drugs would stifle investment in the research and development of new ⁷
drugs. On the other hand, importation proponents, who claim that importation would result in an
increased supply of prescription drugs that could result in significantly lower prices for U.S.
consumers, say that safety concerns are overblown and would recede if additional precautions
were implemented. Arguing that drug manufacturers are concerned only about their profits,
proponents of importation contend that U.S. consumers should not subsidize the cost of research ⁸
and development and that consumers in other countries should share the burden.
Linked to the issue of prescription drug importation is a debate about drug costs.⁹ While some
comparisons of U.S. and Canadian drug prices conclude that U.S. prices are higher than their
Canadian counterparts, other studies do not find such discrepancies. In part, studies may vary
depending on which drugs are selected for comparison and whether or not U.S. generic drugs, ¹⁰
which tend to be cheaper than Canadian brand-name and generic drugs, are considered.
In addition, there is an unresolved debate about whether allowing drug imports would affect drug
prices. Supporters argue that drug prices would drop due to competition if imports were allowed,
while opponents argue that increased demand for imported drugs and moves by manufacturers to
limit supplies of cheaper drugs would cause prices to rise both in the U.S. and abroad and would ¹¹
increase the risk of counterfeit drugs being introduced into the system. According to a study by
the Congressional Budget Office (CBO), “the reduction in drug spending from importation would
be small,” in part because of new costs associated with ensuring the safety of imported drugs and
because of the likelihood that manufacturers would alter drug formulations or reduce foreign ¹²
supplies. Furthermore, there are questions about how much it would cost to implement a safe

⁴^T^h^{e Can}^a^dⁱ^an^go^vern^m^eⁿ^t^h^a^{s al}^so^st^at^ed^t^h^atⁱ^t^cann^o^t^gu^aran^t^{ee t}^h^{e saf}^e^t^y^o^f^d^r^u^g^{s exp}^o^r^t^e^d^t^o^t^h^e^U.^S^.^f^r^o^m
^C^a^na^da^{. Ma}^r^c^K^a^uf^m^a^n,^C^ana^di^aⁿ^D^r^ug^Posⁱ^tⁱ^oⁿ^Mⁱ^sⁱ^nte^r^pr^e^t^e^d^{, W}^AS^H^.^P^OS^T^{, Ma}^y^{26, 2}⁰⁰³^{, a}^t^A^11.
⁵^Se^e^D^ona^l^d^G^.^Mc^N^e^{il, J}^r^.,^Iⁿ^t^h^e^W^o^r^l^{d o}^f^Life^-^Savⁱ^{ng D}^r^u^g^s^,^{a G}^r^ow^ing^Ep^ide^m^ic^of^D^e^adly^F^a^k^e^s^,^N.^Y.^T^IM^ES^,
^Fe^br^ua^r^y^{20, 2}⁰⁰⁷^.
⁶^Se^e^David^Hess,^Rising^Ti^de^of^L^e^gitimate^Dru^g^Imp^o^{rts T}^h^re^ateⁿ^{s FDA’s Abil}^ity^to^Ens^u^re^Safe^t^y^,^C^ong^r^e^s^s^D^a^il^y
^A^M^{, J}^une^5,²⁰⁰⁷⁽ⁿ^oting^t^h^a^t^w^h^ile^“^t^heⁿ^u^m^b^e^r^of^dr^ug^ins^p^e^c^t^or^s^ha^s^rⁱ^s^e^{n by}¹⁰^pe^r^c^eⁿ^{t, t}^h^e^v^o^lu^m^e^ofⁱ^m^por^ts^ha^s
^m^o^re^thaⁿ^triple^d”^).
⁷^Ma^r^c^K^a^uf^m^a^n,^{FDA’s Auth}^ority^Te^ste^d^Ov^e^r^{Drug Imp}^o^rts^{, W}^AS^H^.^P^OS^T^{, N}^o^v^e^m^b^e^r^{9, 2}⁰⁰³^{, a}^t^A^11.
⁸^Id^.
⁹^For^a^dis^c^us^sⁱ^oⁿ^of^the^de^ba^te^a^b^out^dr^ug^c^o^s^t^s^a^nd^pr^ic^e^s^{, s}^e^e^C^R^S^R^e^por^t^R^L³²⁵¹¹^,^Imp^o^rtin^{g Pr}^e^s^c^r^{iption Dru}^g^s:
^Obje^c^tiv^e^s^{, Optio}^{ns, a}ⁿ^d^Outl^ook^,^by^Sus^a^{n T}^h^a^u^{l; C}^R^S^R^e^por^t^R^L³³⁷⁸²^,^Fe^de^r^a^{l D}^r^ug^Pr^ic^e^N^e^got^iatio^n:
^I^m^plic^ati^ons^f^o^r^M^e^dic^a^r^e^P^a^r^t^D^{, by}^Jⁱ^m^H^a^{hn; C}^R^S^R^e^p^o^r^t^R^L³³⁷⁸¹^,^P^harmac^e^u^tⁱ^c^a^{l C}^o^{sts: An}^In^te^rnatio^na^l
^C^o^m^par^is^on^{of G}^o^v^e^r^nm^eⁿ^{t Po}^lic^ie^s^{, by}^G^r^e^t^c^h^eⁿ^A^.^J^a^c^obs^on;^C^R^{S R}^e^por^t^R^L³³⁸⁰²^,^P^h^a^r^ma^ceu^tⁱ^ca^l^Co^st^{s: A}
^C^o^m^par^is^on^{of D}^e^p^a^r^t^m^e^nt^{of Ve}^t^e^r^ans^Aff^a^ir^s⁽^VA)^{, M}^e^dic^a^id^{, a}ⁿ^d^M^e^dic^a^r^e^Polic^ie^s^,^b^y^G^r^et^ch^en^A^.^Jaco^b^s^oⁿ^,
^Sida^th^Vⁱ^r^a^ng^a^P^a^na^ng^a^l^a^,^a^{nd J}^e^aⁿ^H^e^a^r^ne^.^S^{ee a}^l^s^o^C^o^ng^r^e^s^sⁱ^ona^{l B}^udg^e^t^O^f^fⁱ^ce^{, P}^r^e^s^c^r^ipti^on^D^r^u^g^P^r^icⁱⁿ^g^{in t}^h^e
^P^r^iv^a^t^e^Se^c^t^or^,^J^a^nua^r^y²⁰⁰^7,^http^://w^w^w^.c^bo.g^o^v^/^f^t^pdoc^s^/^77x^x^/^do^c⁷⁷¹^5/^01-⁰³^-^P^r^e^s^c^rⁱ^pti^onD^r^u^g^.^p^d^f^.
¹⁰^H^H^S^T^a^s^k^For^c^e^{on D}^r^ug^I^m^por^t^a^tion,^H^e^a^{lth a}ⁿ^{d H}^u^m^a^{n Se}^r^v^ic^es^,^Re^por^t^on^Pr^e^s^c^r^iptio^{n D}^r^u^g^I^m^por^tatⁱ^oⁿ^,
^De^c^e^m^b^e^r^2004,^a^t⁶⁵^h^ttp:^//www.hhs.g^ov^/ⁱ^m^portta^skf^o^rc^e^/^Re^port¹²²⁰^.p^df^.
¹¹^G^a^rdⁱⁿ^{er Harris,}^The^Natⁱ^oⁿ^{: Pre}^s^c^r^iptions^Fille^d;^{If Ame}^r^ic^{ans W}^ant^{to P}^a^y^Le^{ss for}^Drugs,^The^y^W^ill^,^N.^Y.^T^IM^ES^,
^N^o^v^e^m^b^e^r^16,²⁰^03,^§^{4, a}^t^4.
¹²^C^ong^r^e^s^sⁱ^ona^{l B}^udg^e^t^O^f^fⁱ^ce^,^W^o^u^l^d^P^r^escri^p^tⁱ^oⁿ^Drug^I^m^po^rt^at^ioⁿ^R^e^d^u^{ce U.}^S.^Drug^Sp^en^di^ng^?^,^Ec^onom^ic^a^nd
^B^udg^e^t^I^s^s^u^e^B^r^ie^f^,^A^p^r^{il 29,}²⁰⁰⁴^{. T}^h^e^H^H^S^T^a^s^k^For^c^e^{on D}^r^ug^I^m^por^ta^{tion f}^o^u^nd^tha^t^“^t^ota^l^s^a^vⁱ^ng^s^{to c}^o^ns^um^e^r^s
⁽^c^onti^nue^d.^..)

drug importation program. The FDA has estimated that such a program would cost at least $100
million but that the figure could rise as high as several hundred million dollars, especially if there ¹³
was an increase in the volume of imported drugs.
In response to concerns about prescription drug imports, a number of congressional legislators
have introduced bills that would make changes to existing law in these areas. Bills introduced in ^th
the 110 Congress include H.R. 194, H.R. 380, H.R. 1218, H.R. 2638, H.R. 2900, H.R. 3161,
H.R. 3580, S. 242, S. 251, S. 554, and S. 1082.
Current regulation of prescription drug importation consists of a patchwork of federal and state ¹⁴
laws in an array of areas. At the federal level, the FDA regulates prescription drugs under the
FDCA, which governs, among other things, the safety and efficacy of prescription medications, ¹⁵
including the approval, manufacturing, and distribution of such drugs. It is the FDCA that
prohibits the importation—sometimes referred to as “reimportation”—of certain prescription
drugs by anyone other than the manufacturer and that requires that prescription drugs may be ¹⁶
dispensed only with a valid prescription. After a change in enforcement policy by CBP, the FDA
assumed the primary responsibility for determining whether foreign drug imports may legally ¹⁷
enter the country. In addition, the Drug Enforcement Agency (DEA) administers the Controlled
Substances Act, which is a federal statute that establishes criminal and civil sanctions for the
unlawful possession, manufacturing, or distribution of certain addictive or dangerous substances, ¹⁸
including certain prescription drugs that share these properties, such as narcotics and opiates. At
the state level, state boards of pharmacy regulate pharmacy practice, and state medical boards
oversee the practice of medicine. Thus, some of the laws that govern pharmacies and doctors vary
from state to state.
Finally, although foreign laws are beyond the scope of this report, it is important to note that such
laws may also affect the importation of drugs from those countries.

At the federal level, the FDA regulates prescription drugs under the Federal Food, Drug, and
Cosmetic Act (FDCA), which governs, among other things, the safety and efficacy of prescription

^(...c^on^tin^ue^d)
^f^r^o^m^le^g^a^liz^e^d^im^porta^tion^un^de^r^a^c^o^m^m^e^rc^ia^{l s}^y^ste^m^w^{ould be}^a^s^m^a^{ll pe}^rc^eⁿ^ta^g^e^re^la^tive^{to tota}^l^drug^speⁿ^ding^t^h^e
^U^.^{S. (}^a^b^out^one^to^tw^{o pe}^r^c^eⁿ^t.”^H^H^S^T^a^sk^For^c^e^{on D}^r^ug^I^m^por^ta^tion,^s^upr^aⁿ^o^te¹¹^{, a}^t⁶⁵^.
¹³^Iⁿ^sⁱ^de^W^a^s^h^ing^t^oⁿ^Publ^is^he^r^s^,^$^{58 M}^illi^on^{for C}^aⁿ^adi^an^Rx^Imp^o^r^tatio^{n B}^a^se^{d o}ⁿ^O^u^td^ate^d^Estimate^{, FD}^A^W^EEK^,
^Ma^r^c^{h 19}^{, 2}⁰⁰⁴^.
¹⁴^For^othe^r^inf^o^r^m^a^{tion o}ⁿ^pr^e^s^c^r^ip^tion^dr^ug^im^porta^tion^aⁿ^d^Inte^rne^t^sa^le^s,^see^C^R^S^R^e^por^{t R}^L³²⁵¹^1,^I^m^por^tin^g
^Pre^s^c^r^{iption Dru}^g^{s: Obje}^c^tiv^e^s^,^Optio^{ns, a}ⁿ^d^Outl^ook^,^by^Sus^a^{n T}^h^a^u^{l; C}^R^{S R}^e^por^{t R}^L³²²⁷¹^,^P.L^.¹⁰⁸^-¹^73,^by^Sus^aⁿ
^T^h^a^u^{l a}^{nd D}^oⁿⁿ^a^U^.^Vog^{t; a}ⁿ^{d G}^A^O^R^e^por^{t G}^A^O^-^01-^69,^Iⁿ^te^rⁿ^e^t^Phar^m^a^cⁱ^e^s^:^A^ddi^ng^Dⁱ^s^c^los^u^r^e^Re^quir^e^m^e^nts
^W^ould^Aid^St^ate^aⁿ^d^Fe^de^r^a^{l O}^v^e^r^sⁱ^ght^.
¹⁵^{21 U}^.^S.C^.^§³⁰^{1 e}^t^s^e^q.
¹⁶^{21 U}^.^S.C^.^§³⁵³⁽^b)^.
¹⁷^Se^e^se^c^{tion e}ⁿ^title^d^“^C^aⁿ^a^d^iaⁿ^Pr^e^s^c^r^{iption Dr}^ug^Im^porta^tioⁿ^A^f^t^e^r^the^FY2⁰⁰⁷^H^o^m^e^la^{nd Se}^c^u^rity^A^ppropria^ti^ons
^Bill,”^infr^a^a^t^{p. 10.}
¹⁸^Id^{. a}^t^§⁸⁰^{1 e}^t^s^e^q.^For^m^o^r^e^inf^o^r^m^a^{tion o}ⁿ^t^h^e^C^o^ntr^o^lle^d^Su^bs^ta^nc^e^s^A^c^{t, s}^e^e^C^R^S^R^e^por^t^97-¹⁴¹^,^D^r^ug
^Sm^ug^gli^ng,^D^r^ug^D^e^alin^g^an^{d D}^r^{ug A}^bus^e^:^B^a^c^k^g^r^o^un^{d a}ⁿ^d^O^v^e^r^vie^w^{of t}^h^e^S^anc^ti^ons^U^nde^r^the^Fe^de^r^a^{l C}^o^ntr^o^lle^d
^Subs^t^anc^e^s^Ac^t^an^{d Re}^l^a^te^d^Stat^u^t^e^s^,^b^y^Ch^arl^e^{s Do}^y^l^e.

medications, including the approval, manufacturing, and distribution of such drugs.¹⁹ Although
many states also have their own laws that regulate drug safety, the FDA maintains primary
responsibility for the premarket approval of prescription drugs, while the DEA and CBP have
somewhat more limited regulatory authority over such drugs.
The FDCA contains several provisions that apply to prescription drug imports. First, the statute
contains an outright prohibition that forbids anyone other than the manufacturer from importing
prescription drugs. This prohibition affects drugs originally made in the United States. Second,
the FDCA contains a number of other provisions relating to drug approvals and labeling that
make it nearly impossible for prescription drugs made for foreign markets to comply with the
extensive statutory requirements, in part because the FDA considers any drugs not made on an
FDA-inspected production line to be unapproved and therefore illegal. These provisions generally
affect foreign versions of drugs that are approved for domestic sale.
Importation of both U.S.-manufactured prescription drugs and unapproved foreign versions of
U.S.-approved prescription drugs are discussed in this next section. That section also discusses
the change in CBP policy with regard to the seizure of mail order prescription drugs, the penalties
under the FDCA, the FDA’s personal importation procedures, state plans to import prescription
drugs, and businesses that facilitate the importation of prescription drugs. In addition, this section
contains a discussion of other legal areas that may affect prescription drug importation, including
antitrust law, trade law, and patent law.
Currently, the FDCA prohibits anyone other than the manufacturer²⁰ of a prescription drug from ²¹
importing that drug into the United States. Thus, it is technically a violation of the statute for

¹⁹^{21 U}^.^S.C^.^§³⁰^{1 e}^t^s^e^q.
²⁰^Id^.^at^§³⁸¹⁽^d⁾⁽¹^).^T^h^{e S}^ecret^ary^,^h^o^w^ever,ⁱ^s^au^t^h^o^rⁱ^zed^t^o^al^l^o^w^t^h^{e i}^m^p^o^r^t^a^tⁱ^o^{n o}^f^an^y^d^r^u^g^{s t}^h^at^a^r^{e req}^uⁱ^red^f^o^r
^e^m^erg^eⁿ^c^y^m^e^dⁱ^cal^car^e.^Id^.^a^t^§³⁸¹⁽^d⁾⁽²⁾^.
²¹^T^h^e^FD^C^A^doe^s^not^de^fⁱ^ne^“^U^nite^{d Sta}^t^e^s^,”^e^x^c^e^p^{t f}^o^r^{in o}ⁿ^e^s^e^c^{tion, w}^h^ic^{h m}^a^y^pr^e^s^eⁿ^{t uni}^que^is^s^u^e^s^f^o^r^U^.^S.
^te^r^r^itorⁱ^a^l^pos^s^e^s^sⁱ^ons^{. H}^o^w^e^v^e^r^,^t^h^e^FD^C^A^de^fⁱ^ne^s^“^s^ta^te”^a^{nd “}^t^e^r^r^itor^y^.”^{21 U}^.^S.C^.^§³²¹⁽^a⁾^{. T}^h^e^F^D^C^A^defⁱ^ne^s
^“st^a^t^{e” as an}^y^U.^S^.^st^at^{e o}^r^t^e^rri^t^o^ry^,^t^h^{e Di}^st^ri^ct^o^f^Co^l^u^m^bⁱ^a^,^an^d^P^u^ert^o^Rⁱ^co^.²¹^U^.^S^.^C.^§³²¹⁽^a)(1).^T^h^{e F}^D^CA
^d^e^fⁱⁿ^e^{s “t}^erri^t^o^{ry” as an}^y^t^e^rri^t^o^{ry o}^r^p^o^ssessi^oⁿ^o^f^t^h^{e Un}ⁱ^t^e^d^S^t^at^e^s^,ⁱⁿ^cl^udⁱⁿ^{g D.}^C^.^an^{d excl}^u^dⁱⁿ^g^P^u^ert^o^Ri^{co an}^{d t}^h^e
^C^a^na^{l Zone}^.²¹^U^.^S^.^C^.^{§ 3}²¹⁽^a⁾⁽²⁾^.^T^h^e^pr^incⁱ^pa^{l ins}^u^la^r^p^o^s^s^e^s^sⁱ^oⁿ^s^a^r^e^:^U^.^S.^Vir^gⁱⁿ^I^s^la^nds^,^G^u^am^{, A}^m^e^r^icaⁿ^Sa^m^o^a^,
^W^a^k^e^I^s^la^{nd, Mi}^dw^ay^I^s^la^nds^{, a}^{nd J}^o^hns^t^{on A}^t^oll.^T^h^e^N^o^r^t^he^rⁿ^Ma^rⁱ^aⁿ^a^I^s^la^nds^a^r^e^a^l^s^o^“^g^eⁿ^e^r^a^lly^c^ove^r^e^{d by}^the
^[^F^D^C^A^]^.”^D^EPA^R^TM^EN^{T O}^F^T^H^E^I^N^TER^IO^R^,^O^FFIC^E^O^F^T^H^E^S^OL^I^C^I^T^OR^,^T^HE^A^P^P^L^I^C^A^T^I^{ON O}^F^F^ED^ER^A^L^L^AW^S^I^N^A^ME^R^I^CA^N
^S^AM^O^A^,^G^UA^M^,^T^HE^N^ORT^H^E^R^N^M^AR^I^A^N^A^I^SL^A^N^D^S^,^T^HE^U.^S^.^V^I^R^GI^N^I^S^L^ANDS^,^V^OL^.^2—^U^.^S.^C^ODE^T^ITL^E^S^17-³⁹^{, p.}
⁶²⁴^{, 6}²⁶⁽¹⁹⁹³⁾^{. T}^h^e^s^e^ins^u^la^r^p^o^s^s^e^s^sⁱ^ons^a^r^e^outsⁱ^de^U^.^{S. c}^u^s^t^om^s^te^r^r^itor^y^{. 19 C}^.^F.R^.^§^7.2^.^A^s^m^e^ntio^ne^{d a}^b^ov^e^,
^w^{ith lim}^ite^{d e}^x^ce^ption,^aⁿ^y^one^ot^he^r^thaⁿ^the^m^a^nuf^a^c^t^ur^e^r^{is proh}ⁱ^b^ite^{d f}^r^om^im^porting^into^the^Uⁿⁱ^t^e^d^Sta^t^e^s
^pr^e^s^c^r^iptio^{n d}^r^ug^s^tha^t^a^r^e^m^a^nuf^a^c^t^ur^e^d^{in a}^s^t^a^t^e^aⁿ^{d e}^x^por^te^d.²¹^U^.^S.C^.^§³⁸¹⁽^d)⁽¹⁾^.^I^f^the^de^fⁱⁿⁱ^tion^of^“^U^nite^d
^S^t^at^{es” i}ⁿ²¹^U.^S^.^C.^§³⁸¹⁽^d⁾⁽¹⁾ⁱⁿ^cl^u^d^e^{s i}ⁿ^su^l^a^r^p^o^ssessi^oⁿ^s^,^t^h^eⁿⁱ^t^ap^p^{ears t}^h^at^ph^arm^a^ci^{es i}ⁿ^t^h^{ese i}ⁿ^su^l^a^r
^pos^s^e^s^sⁱ^ons^a^r^e^a^l^s^o^pr^o^h^ib^ite^{d f}^r^omⁱ^m^por^ting^U^.^S.-^m^a^d^e^pr^e^s^c^r^ip^tion^dr^ug^s^.^Se^c^tion³⁸¹⁽^d)⁽¹⁾^mⁱ^g^h^{t be}^pa^r^a^phr^a^s^e^d
^a^s^f^o^llow^s^{: ... no}^drug^s^u^bje^c^t^t^o^s^e^c^{tion 5}⁰³⁽^b)^[^e^s^s^e^ntia^lly^a^pre^s^c^r^iptioⁿ^drug^]^.^{.. w}^h^ic^{h is}^m^a^nuf^a^c^t^ure^dⁱⁿ^a^Sta^t^e
^[ⁱ^nc^lu^dingⁱⁿ^s^u^la^r^pos^s^e^s^sⁱ^ons^]^aⁿ^{d e}^x^por^te^d^[^t^o^aⁿⁱⁿ^s^u^la^r^pos^s^e^s^sⁱ^on,^due^to^its^s^t^a^t^us^a^s^o^u^tsⁱ^d^e^the^c^u^s^t^om^s^te^r^r^itor^y
^of^the^U^.^S.,^or^a^f^o^r^e^ig^{n c}^o^untr^y^]^m^a^y^beⁱ^m^por^te^{d i}ⁿ^to^the^Uⁿ^ite^d^Sta^t^e^s^[ⁱ^nc^lu^dingⁱⁿ^s^u^la^r^pos^s^e^s^sⁱ^ons^]^unle^s^s^the^dr^ug
^is^im^por^te^{d by}^the^m^a^nuf^ac^tur^e^r^of^the^dr^ug^{. F}^o^r^e^x^a^m^ple^,^unde^r^t^hⁱ^s^inte^r^p^r^e^ta^ti^on,^a^dr^ug^m^a^de^{in I}^o^w^a^a^{nd e}^x^por^te^d
^{to t}^h^e^U^.^S.^Vir^gⁱⁿ^I^s^laⁿ^d^s^c^oul^d^oⁿ^ly^be^im^por^te^{d int}^o^A^m^e^r^ic^aⁿ^Sam^o^a^or^aⁿ^y^s^t^a^t^e^by^the^dr^ug^’^s^m^a^nuf^a^c^t^ur^e^r^{. I}^t
^a^ppe^a^r^s^tha^t^w^h^e^t^he^r^p^h^a^r^m^a^cⁱ^e^s^{in ins}^u^la^r^p^o^s^s^e^s^sⁱ^ons^a^r^e^pr^ohi^bit^e^{d f}^r^omⁱ^m^por^ting^pr^e^s^c^r^ipti^on^dr^ug^s^de^pe^nds^oⁿ
^w^h^e^t^he^{r the}^de^fⁱ^nitio^{n of}^“^U^nite^d^Sta^t^e^s^”^{in 2}¹^U.S^.^C.^{§ 3}⁸¹⁽^d)(1)ⁱⁿ^c^l^ude^{s i}ⁿ^sula^r^posse^ssions.^T^h^e^De^pa^rtm^e^{nt of}
^Heal^t^h^an^d^H^u^m^aⁿ^S^e^rvi^{ces h}^a^{s a}^r^gu^ed^t^h^at^“Unⁱ^t^e^d^S^t^at^{es” i}ⁿ^cl^u^d^{es t}^e^rri^t^o^ri^es.^D^EP^A^R^TM^EN^{T O}^F^T^H^E^I^NT^E^R^I^O^R^,^O^FFIC^E
^OF^T^H^E^S^OL^I^C^I^T^O^R^,^T^HE^A^P^P^L^I^C^A^T^I^{ON OF}^F^ED^ER^A^L^L^AW^S^I^N^A^M^E^RI^CA^N^S^AM^O^A^,^G^UA^M^,^T^HE^N^OR^T^H^E^R^N^M^AR^I^A^N^A
^I^SL^A^N^D^S^,^T^HE^U.^S^.^V^I^R^GI^N^I^S^L^A^NDS^,^V^OL^.^2—^U^.^S.^C^ODE^T^IT^LE^S^17-^39,^p.⁶²^{8 (}¹⁹⁹³⁾^{. How}^e^v^e^{r, if}^th^e^de^fⁱ^nition^of
⁽^c^onti^nue^d.^..)

individual consumers or online pharmacies to import a prescription drug back into the country,
even though the drug was, prior to export, originally manufactured in any U.S. state or territory,
the District of Columbia, or Puerto Rico and even if the drug otherwise complies with the ²²
FDCA. Although critics of this law argue that there is no rational justification for forbidding the
importation of a drug that is theoretically identical to its counterpart sold in the United States, the
FDA contends that the agency can no longer guarantee the safety of a prescription drug once it
has left the country and the agency’s regulatory control. According to the agency, the FDA
“cannot provide adequate assurance to the American public that the drug products delivered to
consumers in the United States from foreign countries are the same products approved by the ²³
FDA.”
In response to concerns about the rising costs of prescription drugs, however, Congress adopted
importation amendments to the FDCA in 2000. Under the Medicine Equity and Drug Safety ²⁴
(MEDS) Act, the FDA was authorized to allow pharmacists and wholesalers to import ²⁵
prescription drugs from Canada if certain safety precautions were followed. The act, however,
stipulated that the importation provision would not become effective until and unless the
Secretary of HHS determined that the implementation of the provision would “pose no additional
risk to the public’s health and safety; and [would] result in a significant reduction in the cost of ²⁶
covered products to the American consumer.” Citing safety concerns, both the current and
former Secretaries declined to implement this provision.
In the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (Medicare ²⁷
Act), Congress revisited the issue of prescription drug importation. Like the MEDS Act it

^(...c^on^tin^ue^d)
^“^U^nite^{d Sta}^t^e^s^”ⁱⁿ²¹^U^.^S.C^.^§³⁸¹⁽^d⁾⁽¹⁾^di^d^not^inc^l^udeⁱⁿ^s^u^la^r^po^s^s^e^s^sⁱ^ons^{, the}ⁿ^{it a}^p^pe^a^r^s^tha^tⁱⁿ^s^u^la^r^p^o^s^s^e^s^sⁱ^ons
^m^a^y^{not be}^pr^oh^ibite^{d f}^r^omⁱ^m^por^ting^U^.^S.-^m^a^d^e^pr^e^s^c^r^iptioⁿ^dr^ug^s^.^T^h^e^s^t^a^t^ute^c^oul^d^poteⁿ^tia^lly^be^r^e^a^d^a^s^f^o^llow^s^:
^‛^...^no^drug^s^u^bje^c^t^to^s^e^c^tion⁵⁰³⁽^{b) ..}^{. w}^h^ic^{h is}^m^a^nuf^a^c^t^ure^d^{in a}^Sta^t^e^[^w^hic^hⁱⁿ^c^l^u^d^e^s^theⁱⁿ^s^u^la^r^pos^s^e^s^sⁱ^ons^]^aⁿ^d
^e^x^por^te^d^[^t^{o a}ⁿⁱⁿ^s^u^la^r^pos^s^e^s^sⁱ^on^{, due}^to^its^s^t^a^t^us^a^s^o^u^tsⁱ^d^e^U^.^{S. c}^u^s^t^om^s^te^r^r^itor^y^{, or}^a^f^o^r^e^ig^{n c}^o^uⁿ^tr^y^]^m^a^y^be
^im^por^te^{d int}^o^t^h^e^Uⁿ^ite^d^Sta^t^e^s^[^e^x^c^luding^ins^u^la^r^p^o^s^s^e^s^sⁱ^ons^]^unl^e^s^s^the^dr^ug^is^im^por^te^d^by^the^m^a^nuf^a^c^t^ur^e^r^of^the
^dr^ug^.^{21 U}^.^S.C^.^§³⁸¹⁽^d)⁽¹⁾^.^’^Uⁿ^de^r^this^inte^r^p^r^e^ta^ti^on^{, f}^o^r^e^x^am^ple^,^a^dr^ug^m^a^de^{in I}^lli^nois^a^{nd e}^x^p^o^r^t^e^d^t^o^S^out^h
^A^f^rⁱ^ca^or^G^u^am^c^ould^be^im^por^te^{d in}^{to t}^h^e^U^.^S^.^Vir^g^{in I}^s^laⁿ^d^s^by^aⁿⁱⁿ^divⁱ^dua^l^ot^he^r^thaⁿ^a^m^a^nuf^ac^tur^e^r^.^H^o^w^e^v^e^r^,
^the^FDCA^c^ontaⁱ^ns^othe^r^prov^isio^{ns re}^la^ting^to^dr^ug^a^ppr^ov^a^l^{s a}^nd^la^be^lin^g^.^A^c^c^o^rding^{to W}^illia^m^{K. Hub}^b^a^r^d,^theⁿ
^the^FD^A^’^s^A^s^s^o^cⁱ^a^t^e^C^o^m^m^is^sⁱ^one^r^f^o^r^Polic^y^a^nd^P^l^aⁿⁿⁱ^ng^{, a}^v^e^r^s^ion^of^aⁿ^FD^A^-^a^ppr^ov^e^d^dr^ug^tha^t^is^pr^o^duc^e^d^f^o^r^a
^f^o^r^e^igⁿ^m^a^r^k^e^t^“^u^s^u^a^lly^doe^s^not^m^e^e^t^a^{ll of}^the^r^e^quir^e^m^e^nts^of^U^.^{S. a}^p^p^r^ov^a^l^{, a}ⁿ^{d th}^us^it^is^c^o^ns^ide^r^e^d^to^be
^una^p^p^rov^e^d.”^L^e^tte^{r f}^r^om^W^illiam^K^.^H^ubba^{rd, A}^s^s^o^cⁱ^a^t^e^Com^mⁱ^s^sⁱ^one^{r f}^o^r^P^o^lⁱ^c^y^a^{nd Pla}ⁿⁿⁱ^ng^{, F}^ood^aⁿ^d^D^r^ug
^A^d^mⁱ^nistra^{tion, t}^o^R^obe^rt^{P. L}^o^m^b^a^r^di,^Esq.,^T^h^e^Kullm^aⁿ^Firm^{1 (Fe}^b^rua^r^y^{12, 2}⁰⁰³^),^htt^p^://w^ww^.^f^da^.g^ov^/ora^/im^port/
^k^u^llm^aⁿ^.pdf^[^h^e^r^eⁱ^na^f^t^e^r^L^o^m^b^a^r^{di L}^e^tte^r^]^{. I}ⁿ^or^de^r^t^o^be^pr^ope^r^l^y^la^be^le^{d, a}^pr^e^s^c^r^iptⁱ^oⁿ^dr^ug^m^u^s^t^be^la^be^le^{d i}ⁿ
^acco^rd^an^{ce w}ⁱ^t^h^t^h^{e F}^D^A^’^{s ext}^eⁿ^sⁱ^v^{e st}^at^u^t^o^r^y^req^uⁱ^re^m^eⁿ^t^s.^Se^e^infra^t^h^e^se^c^tion^eⁿ^title^{d “}^I^m^porta^tion^of^Fore^igⁿ
^Ve^r^s^io^ns^of^P^r^e^s^c^r^iptio^{n D}^r^ug^s^.^”
²²^U^nde^r^t^h^e^FD^A^’^s^pe^r^s^ona^{l im}^por^ta^tion^pr^oc^e^d^ur^e^s^{, h}^o^w^e^v^e^r^,^the^FD^A^c^u^r^r^e^ntl^y^a^llow^s^bor^de^r^s^t^a^f^f^t^o^e^x^e^r^cⁱ^s^e
^dis^c^r^e^tionⁱⁿ^im^plem^eⁿ^ting^the^pr^ohi^biti^{on a}^g^aⁱ^ns^{t i}^ndivⁱ^dua^ls^w^ho^im^por^{t a}^lim^ite^{d s}^upply^of^pr^e^s^c^r^iptioⁿ^dr^ug^s^f^o^r
^pe^r^s^ona^{l us}^e^.^Se^eⁱⁿ^fraⁿ^o^t^es⁸⁵^-⁹⁵^an^{d acco}^m^p^an^yⁱⁿ^g^t^e^xt^.^T^h^{e C}^B^P^p^r^evi^o^u^s^l^y^en^f^o^rcedⁱ^m^p^o^r^t^a^tⁱ^oⁿ^l^a^w^sⁱⁿ^t^h^{e same}
^gen^e^ral^m^aⁿⁿ^e^{r as t}^h^{e F}^D^A^’^{s p}^e^rs^oⁿ^a^lⁱ^m^p^o^r^t^a^tⁱ^oⁿ^p^r^o^cedu^r^es,^t^h^{en i}ⁿ^creased^en^f^o^rce^m^en^t^f^o^{r an}^al^mo^st^el^even^-m^oⁿ^t^h
^pe^rⁱ^od^.^S^{ee i}ⁿ^f^r^aⁿ^o^t^e^{s 4}⁷^-⁶⁴^an^d^acco^m^p^an^yⁱⁿ^g^t^e^xt^.^Ho^w^e^ver,^d^u^{e t}^o^{a recen}^t^ch^an^{ge i}ⁿ^en^f^o^rce^m^eⁿ^t^po^lⁱ^c^y^a^f^t^e^{r t}^h^e
^pa^ssa^g^e^of^a^prov^isionⁱⁿ^the^FY²⁰⁰⁷^De^pa^rtm^e^{nt of}^Ho^m^e^la^{nd Se}^c^u^rity^a^ppropria^ti^ons^a^c^t^,^the^CB^{P w}^{ill now}^“^f^oc^us
^{on i}ⁿ^te^r^c^e^p^ti^ng^only^c^oun^te^r^f^e^{it m}^e^dicⁱ^ne^s^,^na^r^c^otic^s^,^aⁿ^{d il}^le^g^a^{l dr}^ug^s^.^”^C^h^rⁱ^s^t^o^phe^r^L^e^e^,^U^.^S.^t^o^St^{op Se}^izⁱⁿ^g
^Pr^e^s^c^r^{iption D}^r^u^g^s^I^m^p^o^r^t^e^d^f^o^r^Pe^r^s^{onal U}^s^e^{, W}^AS^H^.^P^OS^T^{, O}^c^tobe^r^5,²⁰⁰⁶^{, A}^16.
²³^Lo^m^b^a^r^dⁱ^Le^t^t^e^r^,^s^upr^aⁿ^o^te²²^,^a^t^1.
²⁴^P^.^L^.¹⁰^6-³⁸⁷^.
²⁵^{21 U}^.^S.C^.^§³⁸^4.
²⁶^Id^.^a^t^{§ 38}⁴⁽^l)^.
²⁷^M^e^dⁱ^{care A}^c^t^,^s^upr^a^no^t^e^3.

superseded, the Medicare legislation directs the FDA to allow pharmacists and wholesalers to ²⁸
import prescription drugs if certain safety precautions are followed. Unlike the MEDS Act,
which covered prescription drugs from a specified group of foreign countries, the Medicare Act ²⁹
allows imports from Canada only. In addition, the Medicare Act, unlike the MEDS Act, also
authorizes the FDA to allow, by regulatory waiver, individuals to import prescription drugs for ³⁰
personal use under certain circumstances. Despite these new importation provisions, the
Medicare Act, like the MEDS Act, stipulates that the importation provisions will not become
effective until and unless the Secretary certifies that the implementation of the provision would
“pose no additional risk to the public’s health and safety; and [would] result in a significant ³¹
reduction in the cost of covered products to the American consumer.” As noted above, the
Secretary of HHS has thus far declined to provide such certification. Absent such certification, the
ban on the importation of prescription drugs remains in effect.
Even if the FDCA did not contain an explicit prohibition against drug importation, the FDA
maintains that consumer imports of prescription drugs from foreign countries would almost ³²
certainly violate other provisions of the act. For example, such drugs are likely to be ³³³⁴³⁵
unapproved, mislabeled, or improperly dispensed. According to the FDA:
^T^h^e^r^e^a^s^oⁿ^t^h^a^t^Ca^na^dⁱ^aⁿ^o^r^o^t^he^r^fo^r^eⁱ^gⁿ^ve^r^sⁱ^o^{ns o}^f^U^.^S.^-a^p^p^r^o^v^e^d^d^r^{ugs a}^r^e^ge^ne^r^a^l^l^y
^c^o^nsi^d^e^r^e^d^una^p^p^r^o^v^e^dⁱⁿ^t^h^e^U^.^S.ⁱ^s^t^h^a^t^F^D^A^approv^al^s^are^m^a^nuf^act^u^r^er-^s^peci^fⁱ^c,^produ^ct^-
^s^p^ecifⁱ^{c, a}ⁿ^{d in}^cl^u^d^e^m^a^ny^requ^ire^m^eⁿ^ts^relati^ng^{to th}^{e produ}^{ct, s}^u^c^h^as^m^a^nu^f^act^u^rⁱ^ng
^location^,^f^o^r^m^u^l^at^ion^,^s^o^u^r^{ce a}ⁿ^{d s}^p^ecifications^of^ac^tiv^e^ingredien^t^s^,^proces^sⁱⁿ^g^m^e^t^h^ods^,
^m^a^nuf^act^u^r^ing^controls^{, con}^t^aiⁿ^e^r/clos^u^r^e^s^y^s^t^e^m^{, an}^{d appearan}^{ce... . Moreov}^{er, ev}^enⁱ^f^t^h^e
^m^a^nuf^act^u^r^{er h}^a^s^F^D^A^approv^al^f^o^{r a dru}^g^,^t^h^{e v}^e^rsⁱ^oⁿ^produ^{ced f}^o^r^f^o^r^eⁱ^gⁿ^m^a^rk^e^t^s^u^s^u^a^l^l^y
^d^o^e^{s n}^o^t^m^{eet a}^{ll o}^f^t^h^{e r}^e^q^u^ir^e^m^en^{ts o}^f^th^e^{U.S. ap}^p^r^o^v^{al, an}^d^th^u^s^{it is co}ⁿ^s^id^er^ed^to^b^e
^uⁿ^a^pprov^{ed. V}ⁱ^rt^u^a^l^l^y^a^l^l^s^hⁱ^p^m^eⁿ^t^s^of^pres^cri^p^tⁱ^oⁿ^dru^g^sⁱ^m^port^e^{d f}^r^om^{a C}^aⁿ^a^di^an
^p^h^ar^m^a^c^y^wⁱ^{ll r}^uⁿ^a^f^o^u^l^o^f^th^e^A^c^t,^alt^h^o^u^g^h^it^is^{a t}^h^eo^retical^p^o^ssib^ilit^y^t^h^at^an^o^ccasioⁿ^a^l
^sh^ip^m^eⁿ^t^wⁱ^{ll n}^o^{t d}^o^so^.^P^u^{t d}ⁱ^f^f^er^en^tl^y^,ⁱⁿ^o^r^d^e^r^to^en^su^r^e^co^m^p^liaⁿ^ce^wⁱ^t^h^th^e^A^c^t^w^h^en
^t^h^e^y^{are i}ⁿ^v^o^l^v^{ed i}ⁿ^shⁱ^ppi^ng^pres^cri^p^tⁱ^oⁿ^dru^g^s^t^o^consum^e^r^sⁱⁿ^t^h^{e U}^.^S^{., bus}ⁱⁿ^e^s^s^e^s^an^d
ⁱⁿ^dⁱ^vi^d^u^a^l^s^mu^st^eⁿ^sur^e^,^a^m^oⁿ^g^o^t^he^r^t^hⁱⁿ^g^s^,^t^h^at^t^h^e^y^onl^y^s^e^l^l^F^D^A^-^approv^{ed dru}^g^s^t^h^at^are³⁶
^m^a^{de ou}^ts^{ide of}^t^h^{e U.S. an}^{d t}^h^{at co}^m^p^l^y^wⁱ^t^h^th^{e F}^D^A^approv^{al in}^{all res}^p^ect^s^.
The difficulty in determining whether a drug is FDA-approved is demonstrated by the agency’s
response to a letter from Representative Edward Markey. On October 11, 2006, he asked the

²⁸^T^h^e^Me^dic^a^r^e^A^c^{t a}^l^s^o^r^e^quir^e^{d t}^h^e^Se^c^r^e^t^a^r^y^{to c}^oⁿ^duc^{t a}^s^t^udy^{on the}^im^por^ta^tion^of^dr^ug^s^.^T^h^is^s^t^udy^{, w}^h^ic^{h w}^a^s
^r^e^le^a^s^e^d^{in D}^e^c^e^m^b^e^r²⁰⁰^{4, c}^o^nc^l^ude^d^tha^t^le^g^a^liz^ing^dr^ug^im^porta^{tion w}^oul^d^be^lik^e^l^y^{to re}^{sult in}ⁱⁿ^c^r^e^a^s^e^d^risk^to
^c^ons^um^e^r^s^a^{nd w}^ould^not^sⁱ^gⁿ^if^ic^aⁿ^tly^r^e^duc^e^r^e^ta^{il dr}^ug^pr^ic^e^s^{. H}^H^{S T}^a^s^k^For^c^e^{on D}^r^ug^I^m^por^ta^ti^on,^s^upr^a^no^t^e¹¹^.
²⁹^M^e^dⁱ^{care A}^c^t^,^s^upr^a^no^t^e^3.
³⁰^Id^.^T^h^{is le}^gⁱ^sla^tio^{n, w}^h^ic^{h is sim}^ila^{r to t}^h^e^FDA^’^{s pe}^rsona^{l im}^por^ta^tion^pr^oc^e^dur^e^s^{, is}^dis^c^us^s^e^{d i}ⁿ^m^o^r^e^de^ta^{il i}ⁿ^a
^s^e^pa^r^a^te^s^e^c^{tion be}^low^.
³¹^Id^.
³²^Lo^m^b^a^r^dⁱ^Le^t^t^e^r^,^s^upr^aⁿ^o^te²²^,^a^t^2.
³³^{21 U}^.^S.C^.^§³⁵^5.
³⁴^Id^.^a^t^§§³^52,³⁵³⁽^b)⁽²⁾^.
³⁵^Id^.^a^t^{§ 35}³⁽^b)⁽¹⁾^.
³⁶^Lo^m^b^a^r^dⁱ^Le^t^t^e^r^,^s^upr^aⁿ^o^te²²^,^a^t^3.

agency how a consumer would know if a product is FDA-approved or unapproved.³⁷ The agency
responded with a recommendation that consumers
^acces^s^t^h^e^FD^A^s^{ite to}^s^earc^h^f^o^{r th}^e^acti^v^{e i}ⁿ^g^r^edieⁿ^t^{or n}^a^m^e^o^f^drug^{. T}^h^{e n}^a^m^e^s^of
^approv^{ed com}^p^an^ies^f^o^{r a dru}^g^w^{ill be lis}^{ted... .}^If^th^e^m^a^nuf^act^u^r^{er of}^{a con}^s^um^{er drug}^is
ⁿ^o^t^lⁱ^s^t^e^{d, t}^h^{e dr}^u^g^m^a^y^be^un^a^pprov^{ed or t}^h^ere^m^a^y^{be dat}^a^e^rrors^.^T^h^{e dru}^g^m^a^y^al^s^o^{be an}
^approv^{ed dru}^g^,^bu^t^di^s^t^ri^bu^t^e^{d u}ⁿ^d^{er t}^h^eⁿ^a^m^e^{of an}^ot^h^e^{r com}^p^aⁿ^y^.^C^ons^um^ers^{are al}^s^o³⁸
^advⁱ^s^e^{d to ch}^eck^wⁱ^th^t^h^{e drug}^m^a^nuf^act^u^r^er.
In addition to complying with the requirements regarding FDA approvals, imported drugs must
also meet FDA requirements regarding labeling and dispensing. For example, mislabeling a drug
is a violation of the FDCA, as is the act of introducing or receiving a mislabeled drug in interstate ³⁹
commerce. In order to be properly labeled, prescription drugs must be labeled in accordance ⁴⁰
with the FDA’s extensive labeling requirements. Furthermore, the FDCA requires that ⁴¹
prescription drugs may be dispensed only with a valid prescription. Therefore, it is a violation of
the act to import prescription drugs without a legitimate U.S. prescription.
According to the FDA, an inspection of prescription drug shipments by CBP found that 1,728 of

1,982 drug shipments from foreign countries violated the FDCA because they contained ⁴²

“unapproved drugs” that could pose safety problems. Although the reason for the violation
varied depending on the shipment, the FDA and CBP found shipments of drugs that, among other
things, had never been approved by the FDA, were inadequately labeled (e.g., lacked instructions
or were labeled in a foreign language), had been withdrawn from the U.S. market due to safety
concerns, could cause dangerous interactions, required monitoring by a doctor, or were controlled ⁴³
substances. For example, in February 2007, the FDA alerted consumers that Americans who had
ordered the prescription drugs Ambien, Xanax, Lexapro, and Ativan online instead received a
product with haloperidol, the active ingredient in an anti-psychotic drug used to treat ⁴⁴
schizophrenia. A separate FDA investigation found that approximately 43 percent of the
imported drugs that the agency intercepted from four countries—India, Israel, Costa Rica, and
Vanuatu—were shipped to fill orders that consumers believed they were placing with Canadian
pharmacies. Of the products believed to be Canadian, FDA reported that only 15 percent actually

³⁷
^Iⁿ^sⁱ^de^W^a^s^h^ing^t^on^Publis^he^r^s^,^M^a^{rkey Eyes Bill o}ⁿ^S^t^roⁿ^g^e^{r U}ⁿ^a^p^p^ro^ved^Dru^g^{s En}^fo^rcemen^t^{, FD}^A^W^EEK^{, J}^a^nua^r^y^5,
²⁰⁰^7.
³⁸^Id^.
³⁹²¹^U^.^S.C.^§^§³³¹^{(a)-(c), 3}⁵³⁽^b⁾⁽²^).
⁴⁰^S^{ee e.}^g^.^,²¹^C^.^F^.^R^.^§2^01.¹⁰⁰⁽^c⁾⁽²⁾^.
⁴¹^{21 U}^.^S.C^.^§³⁵³⁽^b)⁽¹⁾^.
⁴²^P^r^e^s^s^R^e^le^a^s^e^,^{Food a}^{nd D}^r^ug^A^d^mⁱ^nis^t^r^a^{tion, R}^ecen^t^FDA^/^{U.S. Cu}^sto^m^{s I}^m^p^o^r^{t Blitz Ex}^am^{s Co}ⁿ^tin^u^e^t^o^Rev^eal
^Pote^ntia^l^l^y^D^a^nge^r^ous^I^lle^g^a^lly^I^m^por^te^{d D}^r^ug^Shi^p^m^e^nts⁽^J^a^nua^r^y^{27, 20}⁰⁴⁾^,^ht^tp:/^/w^w^w^.^f^da^.g^ov^/^bbs^/^t^opic^s^/^N^EW^S/
²⁰⁰^4/^N^E^W⁰¹⁰¹^1.^htm^l^.
⁴³^Id^.
⁴⁴^P^r^e^s^s^R^e^le^a^s^e^,^{Food a}^{nd D}^r^ug^A^d^mⁱ^nis^t^r^a^tion,^FD^A^A^l^e^r^ts^C^ons^u^m^e^r^s^{to U}ⁿ^s^a^f^e^{, Mis}^r^e^p^r^e^s^e^nte^d^D^r^ug^s^Pur^c^ha^s^e^d
^O^v^e^r^the^Iⁿ^te^rⁿ^e^t⁽^F^e^b^r^u^a^r^y^{16, 2}⁰⁰⁷⁾^,^http:^//w^w^w^.f^da^.g^ov^/^bbs^/^t^op^ic^s^/^N^E^W^S^/2007^/^N^EW⁰¹⁵⁶⁴^.htm^l;^{see a}^l^so^P^r^ess
^Re^le^a^s^e^,^{Food a}^{nd D}^r^ug^A^d^mⁱ^nis^t^ra^tion,^FD^A^W^a^rns^Cons^um^e^r^s^A^bou^{t Co}^un^te^rf^e^{it D}^r^ug^s^f^r^om^Multiple^In^te^rne^t
^Se^lle^rs^(Ma^y^{1, 200}^7),^htt^p^://w^w^w^.^f^da^.g^ov^/^bbs^/^t^opic^s^/^N^EW^S/200^7/^N^E^W⁰¹⁶²³^.htm^{l (c}^a^u^tio^ning^c^o^ns^um^e^r^s^a^bout
^w^e^bs^ite^s^dis^t^rⁱ^butiⁿ^g^c^o^uⁿ^te^r^f^e^{it dr}^ug^s^,^inc^l^u^dⁱⁿ^g^c^oun^te^r^f^e^{it Xe}^nic^a^{l, a}^dr^ug^“^u^s^e^d^to^he^lp^o^b^e^s^e^indi^vⁱ^dua^ls^w^{ho m}^e^e^t
^c^e^r^ta^{in w}^eⁱ^g^{ht a}^nd^he^ig^{ht re}^q^u^ire^m^eⁿ^{ts lose}^w^e^ig^{ht a}^{nd m}^a^inta^{in we}^ig^{ht loss”}^).

originated in Canada, while the remaining 85 percent were manufactured in 27 different ⁴⁵
countries.
Until recently, the Department of Homeland Security, via the U.S. Customs and Border Protection
agency (CBP), was responsible for examining imported prescription drugs at the nation’s
international mail centers and borders and for detaining and destroying any FDA-regulated ⁴⁶
prescription drugs that did not meet statutory or regulatory requirements. Prior to November 17,
2005, CBP officials tolerated prescription drug mail orders from Canada of up to 90 days worth
of medication, “generally interpreting U.S. laws against the importation of drugs as applying to ⁴⁷
wholesalers and distributors.” However, the CBP began strictly enforcing importation laws on
November 17, 2005, two days after the beginning of open enrollment for the Medicare
prescription drug program. This policy change lead consumer groups and Canadian pharmacies to
complain that CBP’s policy was intended to encourage seniors to enroll in the Medicare plan and
decrease competition for often costly prescription drugs. CBP officials denied this charge, noting
that the new enforcement policy was designed “to protect consumers from potentially dangerous ⁴⁸
drugs manufactured abroad.” For the next eleven months, CBP agents confiscated mail
packages with foreign prescription drugs and often destroyed the drugs, then mailed letters about ⁴⁹
the violation to consumers attempting to import the drugs. An estimated 37,000 to 40,000 ⁵⁰
packages were detained by CBP during this period.
In past years, the House Committee on Appropriations had added provisions to appropriations
bills that would have prohibited the FDA from using monies to prevent drug importation from
foreign countries. Such provisions were always removed during conferences between the House
and the Senate. Representative Emerson added a similar provision to the FY2007 Homeland
Security appropriations bill prohibiting CBP from using funds to prevent importation of “FDA-⁵¹
approved” drugs. Opponents labeled the provision “an inappropriate way to address the issue of
drug affordability” and expressed concerns that the United States would be more exposed to ⁵²
harmful counterfeit drugs or that terrorists would take advantage of the provision. Additionally,
some Canadian pharmacist associations and other importation opponents worried that their

⁴⁵^P^r^e^s^s^R^e^le^a^s^e^,^{Food a}^{nd D}^r^ug^A^d^mⁱ^nis^t^r^a^tion,^FD^A^O^p^e^r^a^{tion R}^e^v^e^a^l^s^Maⁿ^y^D^r^ug^s^P^r^om^ote^d^a^s^“^C^aⁿ^a^d^ia^n”
^P^r^o^d^u^c^t^s^Real^l^y^Ori^gⁱⁿ^at^{e F}^r^o^m^Ot^h^e^{r Co}^un^t^rⁱ^e^{s (Decem}^b^e^{r 1}⁶^,²⁰⁰⁵^),^h^t^t^p^:^/^/^www^.^f^d^a^.^g^o^v^/^b^b^s^/^t^o^pⁱ^c^s/^NE^W^S^/²⁰⁰⁵^/
^N^E^W⁰¹²⁷^7.h^t^m^l^.
⁴⁶^L^ee,^s^upr^a^no^t^e²³^.
⁴⁷^Id^.^{; L}ⁱ^s^a^Gⁱ^rⁱ^on,^U^.^{S. t}^o^A^llow^C^ana^di^{an D}^r^{ug I}^m^por^ts^{, L}^.^A^.^T^IM^E^S^{, O}^c^tobe^r^4,²⁰⁰⁶^.
⁴⁸^Lⁱ^s^a^Gⁱ^rⁱ^on,^Se^iz^e^d^D^r^ugs^Be^ing^Re^le^as^e^d^{, L}^.^A^.^T^IM^E^S^{, Ma}^r^c^{h 1,}²⁰⁰⁶^{, a}^t^C¹^{; S}^u^s^a^{n H}^e^a^v^ey^,^{FDA Role}^Re^store^d
^O^v^e^r^M^a^il-^O^r^de^r^D^r^{ug I}^m^por^ts^{, W}^AS^H^.^P^OS^T^{, O}^c^tobe^r^4,²⁰⁰⁶^{; G}ⁱ^rⁱ^on,^s^upr^a^note^48.
⁴⁹^Heave^y^,^s^upr^a^note^49.
⁵⁰^Iⁿ^sⁱ^de^W^a^s^h^ing^t^oⁿ^Publ^is^he^r^s^,^S^eⁿ^a^t^o^{rs’ E}^f^f^o^rt^t^o^F^o^{rce R}^eⁱ^m^po^rt^atⁱ^o^{n F}^l^oo^{r Deb}^a^t^e^B^l^o^cked^{, F}^D^A^W^EEK^{, A}^u^g^u^s^t
⁴^,²⁰⁰⁶^;^Lee,^s^upr^a^no^t^e²³^.
⁵¹^Iⁿ^sⁱ^de^W^a^s^h^ing^t^oⁿ^Publ^is^he^r^s^,^H^o^me^lan^d^Se^c^u^rity^Ap^{props B}^ill^Al^{lows Drug}^Re^import^a^ti^on^{, F}^D^A^W^EEK^{, J}^une^2,
²⁰⁰^6.
⁵²^E^x^ecu^tⁱ^v^{e O}^f^fⁱ^{ce o}^f^t^h^{e P}^r^esi^d^ent^,^OM^B,^State^m^eⁿ^t^of^Admⁱ^nis^t^r^a^ti^{on P}^o^lic^y^:^H^.^R.54⁴¹^—D^e^par^tm^eⁿ^{t of H}^o^m^e^lan^d
^Se^c^u^rity^Ap^propri^a^ti^{ons Bill, FY 200}⁷^,^Ma^y^{25, 2}⁰⁰⁶^{, a}^t^{3; I}ⁿ^sⁱ^de^W^a^s^h^ing^t^on^Publis^he^r^s^,^{FDA t}^o^R^e^sume^Rx^Drug
^I^m^por^{t O}^v^e^r^sⁱ^ght^as^C^u^s^t^om^s^B^a^c^k^s^O^f^f^{, FD}^A^W^EE^K^{, O}^c^tobe^r^{6, 2}⁰^{06; I}ⁿ^sⁱ^de^W^a^s^h^ing^t^oⁿ^Pub^lis^he^r^s^,^R^eⁱ^m^po^rt^a^t^ioⁿ
^Deb^a^t^{e R}^a^g^e^{s on}^wi^t^h^Lⁱ^t^t^l^e^Mo^vemen^tⁱⁿ^C^o^ng^ress^{, FD}^A^W^EE^K^{, J}^u^ly^{28 20}^06.

country would encounter shortages as a result of the provision.⁵³ Supporters noted that the
provision was “aimed at forcing FDA to assess prescriptions from foreign countries for safety ⁵⁴
instead of simply blocking all reimported drugs.”
The Senate Committee on Appropriations subsequently stripped the Homeland Security
appropriations bill of the importation provision, but Senators Vitter and Nelson introduced the
CBP funding prohibition for certain seizures of Canadian drug imports in an amendment that ⁵⁵
passed 68-32. As passed on September 25, 2006, Section 535 reads as follows:
^Noⁿ^e^o^f^t^h^e^f^uⁿ^d^s^m^a^d^e^av^a^ilab^l^{e in}^t^h^is^A^c^t^f^o^r^Uⁿ^ited^States^C^u^sto^m^{s a}ⁿ^d^B^o^r^d^er
^Prot^ectⁱ^oⁿ^m^a^y^be^u^s^{ed t}^o^prev^en^t^aⁿⁱⁿ^di^vⁱ^du^a^lⁿ^o^tⁱⁿ^t^h^{e bus}ⁱⁿ^es^s^o^fⁱ^m^portⁱⁿ^g^a
^pres^cri^p^tⁱ^oⁿ^dru^g⁽^wⁱ^t^hⁱⁿ^t^h^e^m^eaniⁿ^g^o^f^s^ectⁱ^oⁿ^801(g⁾^{of t}^h^e^F^e^deral^F^{ood, D}^r^u^g^,^aⁿ^d
^C^o^s^m^etic^A^c^{t) f}^r^o^mⁱ^m^porti^ng^{a pres}^cription^dru^g^f^r^o^m^C^aⁿ^a^{da th}^{at co}^m^p^lⁱ^es^wⁱ^t^h^t^h^e
^F^e^deral^F^{ood, D}^r^u^g^,^an^{d C}^o^sm^etⁱ^c^A^c^t^:^Provⁱ^d^{ed, T}^h^at^t^hⁱ^s^s^ectⁱ^oⁿ^s^h^al^l^appl^y^on^l^y^t^o
ⁱⁿ^di^vⁱ^d^u^al^s^t^r^aⁿ^s^portⁱⁿ^g^on^t^h^eⁱ^{r pers}^on^{a pers}^on^al^-^u^s^e^qu^aⁿ^tⁱ^t^y^of^t^h^{e pres}^cri^p^tⁱ^oⁿ^drug^{, n}^o^t
^{to ex}^{ceed a 90-}^day^s^u^ppl^y^:^P^r^ov^{ided f}^u^rt^h^e^r,^T^h^{at th}^{e pres}^cr^iption^dru^g^m^a^yⁿ^o^{t be—(1) a}
^con^t^rol^l^e^{d s}^u^bs^t^aⁿ^{ce, as}^defⁱⁿ^e^{d i}ⁿ^s^ectⁱ^oⁿ^{102 of}^t^h^{e C}^ont^rol^l^e^{d S}^u^bs^t^aⁿ^c^e^s^A^c^t^{(21 U}^.^S^.^C^.
^802);^o^r^{(2) a bi}^ol^ogⁱ^cal^produ^ct^{, as}^defⁱⁿ^e^{d i}ⁿ^s^ectⁱ^oⁿ^{351 of}^t^h^{e Pu}^blⁱ^c^H^eal^t^h^S^e^rvⁱ^ce^A^c^t⁵⁶
^{(42 U}^.^S^.^C^.²⁶^2).
The provision excludes narcotics, biologics, Internet sales, and importations of Canadian ⁵⁷
prescription drugs by mail order. Most importantly, the bill appears to allow individuals to
transport a 90-day supply of prescription drugs from Canada across the border by foot or vehicle.
However, the provision ultimately appears to have limited effect because it states that individuals
may personally import Canadian prescription drugs that comply with the FDCA. By definition,
most prescription drugs from Canada do not comply with the FDCA. As the previous section
explained, drugs that comply with the FDCA must be approved by the FDA, be dispensed with a
valid prescription by a U.S. doctor, and meet, among other possible requirements, mandates that
are manufacturer and product specific, manufacturing controls and processing methods, extensive ⁵⁸
labeling requirements, and source and active ingredient specifications. While it is possible that a
prescription drug could meet FDA requirements and therefore obtain FDA approval, in almost all
cases, imported prescription drugs will not comply with the FDCA. Thus, the provision does not
change the current illegal status of most drugs imported from Canada, and it appears that CBP
may still legally use funds to detain Canadian drug imports that do not comply with the FDCA.
Despite the limited effect of the importation provision, CBP announced a change in its
enforcement policy, effective October 9, 2006. CBP agents now “focus on intercepting only ⁵⁹
counterfeit medicines, narcotics, and illegal drugs.” As a result, the FDA assumed the primary
responsibility for determining whether Canadian and other international drug imports may legally

⁵³^Iⁿ^sⁱ^de^W^a^s^h^ing^t^oⁿ^Publ^is^he^r^s^,^L^a^w^m^ak^e^r^s^’^Sol^uti^{on t}^o^Hⁱ^gh-^C^o^s^t^D^r^ugs^M^a^k^e^s^W^a^v^e^s^{in C}^a^na^da^{, FD}^A^W^EEK^,
^O^c^tobe^r²⁷^,²⁰^06.
⁵⁴^Iⁿ^sⁱ^de^W^a^s^h^ing^t^oⁿ^Publ^is^he^r^s^,^F^o^llowⁱ^ng^H^o^us^e^Le^ad^{, Se}ⁿ^a^te^V^o^t^e^s^{to All}^o^w^D^r^u^g^Re^im^p^o^r^t^ati^oⁿ^{, FD}^A^W^EEK^{, J}^u^ly
^{14, 20}⁰⁶^.
⁵⁵^Id^.
⁵⁶^P^.^L^.¹⁰^9-²⁹⁵^.
⁵⁷^Iⁿ^sⁱ^de^W^a^s^h^ing^t^oⁿ^Publ^is^he^r^s^,^C^onfe^r^e^e^s^Strⁱ^k^e^D^e^{al t}^o^All^o^w^Pe^r^s^onal^Rx^I^m^p^o^r^t^ati^oⁿ^{, FD}^A^W^EEK^{, Se}^ptem^be^r^29,
²⁰⁰^6.
⁵⁸^L^o^m^b^a^r^{di le}^tte^r,^s^upr^a^no^te²²^.^See²¹^C.^F^.^R.^§³¹^4.⁵⁰^;ⁿ^o^t^{es 35}^-39^,⁴²^-⁴⁴^and^acco^m^p^an^yⁱⁿ^g^t^e^xt^.
⁵⁹^L^ee,^s^upr^a^no^t^e²³^.

enter the United States. In most cases, prescription drugs are illegal to import into the United ⁶⁰
States. The FDA has the authority to seize “[a]ny article of food, drug, or cosmetic that is ⁶¹
adulterated or misbranded when introduced into or while in interstate commerce . . . .”
However, the FDA’s ability to “thoroughly inspect and handle confiscated imports” is questioned ⁶²
by some, given the agency’s shortage of resources and staff.
In December 2006, Senators Grassley and Baucus attempted to alter the Homeland Security
importation provision. Their modification would have only allowed importation from Canada of
prescription drugs “with at least two generic competitors” and would have excluded certain drugs
and biologics from the those that the Homeland Security appropriations bill intended to allow ⁶³
individuals to personally carry across the Canadian border in a 90-day supply.
Members of Congress have also attempted to use the agriculture appropriations bill to attach ⁶⁴
language to FDA funding that would allow prescription drug importation in various forms. The
House FY2008 agriculture appropriations bill, H.R. 3161, included a provision that purported to
expand the types of persons who may import prescription drugs. An amendment to strike the
provision failed by a vote of 146-283. The Senate bill, S. 1859, did not contain a similar
provision. As passed by the House on August 2, 2007, § 726 of H.R. 3161 read as follows:
^N^oⁿ^e^of^t^h^{e fu}ⁿ^d^s^appropri^a^t^e^{d or}^ot^h^e^r^wⁱ^s^e^m^a^{de av}^ai^l^a^bl^{e by}^t^hⁱ^s^A^c^t^f^o^{r t}^h^{e F}^{ood an}^d
^D^r^u^g^A^d^mⁱⁿⁱ^s^t^ratⁱ^on^m^a^y^be^u^s^ed^un^{der s}^ectⁱ^oⁿ^{801 of}^t^h^{e F}^e^deral^F^{ood, D}^r^u^g^,^aⁿ^d
^Co^s^m^etic^A^c^{t to}^p^r^ev^en^{t a}ⁿⁱⁿ^dⁱ^vⁱ^d^u^alⁿ^o^{t in}^t^h^{e b}^u^sⁱⁿ^e^{ss o}^fⁱ^m^p^o^r^tin^g^{a p}^r^escr^ip^tioⁿ^d^r^u^g
^wⁱ^t^hⁱⁿ^t^h^e^m^e^aⁿⁱⁿ^g^of^s^ectⁱ^oⁿ^801(g⁾^of^s^u^ch^A^c^t^,^w^h^ol^es^al^ers^,^{or ph}^arm^aci^s^t^s^f^r^o^m
ⁱ^m^portⁱⁿ^g^{a pres}^cri^p^tⁱ^oⁿ^dru^g^w^hⁱ^c^h^co^m^p^lⁱ^e^s^wⁱ^t^h^s^ectⁱ^ons^501,^502,^an^{d 505}^.
The provision would have prohibited the FDA from using appropriated funds to prevent
wholesalers, individuals not in the business of importing prescription drugs, and pharmacists from
importing prescription drugs that—among other FDCA conditions—obtain FDA approval;
comply with good manufacturing practices; meet strength, quality, and purity requirements; do
not contain other mixtures or substitutions for other substances; are labeled in accordance with
FDCA requirements; and were manufactured in establishments registered with the Secretary of
HHS. It appears unlikely that any prescription drug manufactured for a foreign market would ⁶⁵
have met these and other requirements of FDCA §§ 501, 502, and 505. In a statement of
administration policy, the White House remarked: “While the provision theoretically limits

⁶⁰^Id^.;^U^.^S.^Ste^p^s^Bac^k^oⁿ^D^r^u^g^C^o^nfis^c^a^ti^ons^{, N}^.^Y^.^T^IM^ES^{, O}^c^tobe^r^{4, 2}⁰⁰⁶^.
⁶¹^{21 U}^.^S.C^.^§³³⁴⁽^a⁾⁽¹⁾^.
⁶²^Heave^y^,^s^upr^a^note^51;^L^e^e^,^s^upr^a^no^t^e²³^.
⁶³^Iⁿ^sⁱ^de^W^a^s^h^ing^t^oⁿ^Publ^is^he^r^s^,^G^r^as^s^l^e^y^,^Bauc^us^Tr^ie^{d B}^aⁿⁿⁱⁿ^{g D}^r^{ug I}^m^p^o^r^t^s^W^h^eⁿ^G^e^ne^rⁱ^c^s^Av^ai^l^able^{, FD}^A^W^EE^K^,
^D^e^c^e^m^b^e^r^{8, 20}^06.^T^h^e^pr^ov^is^ioⁿ^w^{ould ha}^v^e^e^x^c^l^ude^{d “}^t^he^r^a^pe^uti^c^D^N^A^pla^s^mⁱ^{d pr}^oduc^ts^,^the^r^a^p^e^u^tic^s^y^nthe^tic
^pe^pti^d^e^pr^o^duc^ts^,^m^onoc^lo^na^{l a}ⁿ^ti^body^pr^o^duc^ts^us^e^dⁱⁿ^vⁱ^v^o^{, t}^h^e^r^a^p^e^u^tic^r^e^c^o^m^b^inaⁿ^{t D}^N^A^-^d^e^r^iv^e^d^pr^o^duc^ts^,^inf^u^s^e^d
^drug^{s, in}^je^c^t^e^d^dr^ug^{s, dr}^ug^{s inha}^l^e^{d dur}^ing^surg^e^r^y^,^drug^{s w}^{ith a}^t^le^a^s^{t tw}^{o g}^e^ne^ric^c^o^m^p^e^{titors, a}ⁿ^d^ste^r^ile^op^htha^lm^ic
^d^r^u^g^{s i}ⁿ^t^eⁿ^d^e^{d f}^o^{r u}^s^{e on}^t^h^{e ski}ⁿ^o^rⁱⁿ^t^h^{e eye.}^”^Id^.
⁶⁴^A^lthoug^{h t}^h^e^FD^A^w^a^s^tr^aⁿ^s^f^e^r^r^e^{d f}^r^om^the^U^S^D^A^{in 194}^0,^FD^A^appr^opr^ia^ti^ons^r^e^m^a^{in pa}^r^t^of^the^a^g^rⁱ^c^u^ltur^e
^a^ppro^p^ria^tio^ns^b^ills^{. Ric}^h^a^r^{d M}^.^Coope^r,^Iⁿ^tr^od^uc^tio^{n t}^o^F^o^o^d^aⁿ^d^D^r^{ug L}^a^w^an^{d Re}^g^u^la^tioⁿⁱⁿ^{1 F}^U^N^D^A^M^EN^T^A^{LS O}^F
^L^AW^AN^D^R^EG^U^L^A^T^IO^N⁵^(Ro^b^e^rt^P^.^Brad^y^et^al^.^ed^.¹⁹⁹⁷^).
⁶⁵^Se^e^s^upr^a^se^c^tion^eⁿ^title^{d “}^I^m^porta^tion^of^Fore^ig^{n V}^e^rsio^ns^of^P^r^e^s^c^r^iptioⁿ^Drug^s.”

importation to only FDA-approved prescription drugs, it would be impossible for FDA to verify ⁶⁶
at the border that they are not counterfeit.”
The provision would not have “legalized” importation for wholesalers, pharmacists, or other
individuals not in the business of importing prescription drugs. Under FDCA § 801(d)(1), only ⁶⁷
manufacturers are allowed to import prescription drugs into the United States. Thus, while H.R.
3161 would not have provided funding to the FDA to prevent those such as wholesalers or
pharmacists from importing prescription drugs that comply with parts of the FDCA, the bill’s
provision would not have legalized importation by those persons. Failure to comply with the ⁶⁸
FDCA may have exposed such individuals to criminal and civil liability. Additionally, drug
manufacturers may not have allowed individuals not in the business of importing prescription
drugs, wholesalers, or pharmacists to import such drugs into the United States. As a result, it
appears that the provision would have had limited effect.
The FY2008 agriculture appropriations bill was included in P.L. 110-161, the Consolidated
Appropriations Act, 2008. However, the provision in H.R. 3161 was not included. Rather, § 558
of the act included the same language as the FY2007 homeland security appropriations bill.
Please see above for a discussion of that provision.

Senators Vitter and Stabenow cosponsored an amendment to the FY2008 Homeland Security
Appropriations bill that appeared to expand upon the prescription drug importation amendment
passed the previous fiscal year:
^Noⁿ^e^o^f^t^h^{e f}^uⁿ^d^s^m^a^d^e^av^aila^b^l^{e in}^th^is^A^c^t^f^o^r^{U.S. C}^u^sto^m^{s an}^d^B^o^r^d^er^P^r^o^t^ectioⁿ^o^r^an^y
^ag^en^c^y^{or of}^fⁱ^ce^wⁱ^t^hⁱⁿ^t^h^{e Departm}^eⁿ^t^of^Ho^m^e^lan^d^Secu^rⁱ^t^y^m^a^y^{be u}^s^{ed to prev}^en^{t an}
ⁱⁿ^di^vⁱ^d^u^al^f^r^o^mⁱ^m^portⁱⁿ^g^{a pr}^es^cri^p^tⁱ^oⁿ^drug^f^r^o^m^C^aⁿ^a^{da i}^f^—⁽^{1) s}^u^{ch i}ⁿ^di^vⁱ^du^a^lⁱ^sⁿ^o^tⁱⁿ
^t^h^{e bu}^sⁱⁿ^e^ss^ofⁱ^m^portⁱⁿ^g^{a pres}^cri^p^tⁱ^oⁿ^dru^g⁽^wⁱ^t^hⁱⁿ^t^h^e^m^e^anⁱⁿ^g^of^s^ectⁱ^oⁿ^801(g⁾^of^t^h^e
^F^e^deral^F^ood,^D^r^u^g^,^an^{d C}^o^sm^etⁱ^c^A^c^t^{(21 U}^.^S^.^C^.³⁸^1(g⁾^));^an^{d (}²^{) s}^u^ch^dru^g^—⁽^A⁾
^com^p^lⁱ^e^s^wⁱ^t^h^s^ectⁱ^oⁿ^s^{501, 502, an}^{d 505 of}^t^h^e^F^e^deral^F^{ood, D}^r^u^g^,^aⁿ^d^C^o^sm^etⁱ^c^A^c^t⁽²¹
^U^.^S^.^C^.^{351, 352, an}^{d 355);}^{and (B) i}^sⁿ^o^t^—⁽ⁱ^{) a co}ⁿ^t^rol^l^e^{d su}^bs^t^aⁿ^{ce, as def}ⁱⁿ^e^{d i}ⁿ^s^ectⁱ^oⁿ
¹⁰²^of^t^h^{e C}^oⁿ^t^rol^l^e^{d S}^u^bst^aⁿ^c^es^A^c^t^{(21 U}^.^S^.^C^.^802);^or⁽ⁱⁱ⁾^a^bi^ol^ogⁱ^c^a^l^p^r^o^d^u^c^t^,^a^s^d^e^fⁱⁿ^e^d⁷⁰
ⁱⁿ^s^ectⁱ^oⁿ^{351 of}^t^h^{e Pu}^blⁱ^c^H^eal^t^h^S^e^r^vⁱ^ce^A^c^t^{(42 U}^.^S^.^C^.^262).

⁶⁶^E^x^ecu^tⁱ^v^{e O}^f^fⁱ^{ce o}^f^t^h^{e P}^r^esi^d^ent,^Of^fⁱ^{ce o}^f^M^aⁿ^a^g^e^m^eⁿ^t^an^d^B^udget^,^S^t^at^emen^t^o^f^A^d^mⁱⁿⁱ^st^r^a^tⁱ^oⁿ^P^o^lⁱ^c^y^:^H.^R^.
³¹⁶^1—^A^g^rⁱ^c^u^ltur^e^{, R}^u^r^a^{l D}^e^v^e^lo^pm^eⁿ^{t, Foo}^d^aⁿ^{d D}^r^ug^A^d^mⁱ^nis^t^r^a^tion,^a^{nd R}^e^la^te^d^A^g^eⁿ^cⁱ^e^s^A^ppr^opr^ia^ti^ons^A^c^t,
²⁰⁰^{8 (J}^uly^{31, 2}⁰⁰⁷^),^htt^p^://w^w^w^.^w^hite^hous^e^.^g^o^v^/^om^b/le^gⁱ^s^l^a^tiv^e^/^s^a^p/11^0-1^/^hr31^61s^a^p^-^h^.p^df^.
⁶⁷^A^s^st^at^ed^p^r^evi^o^u^s^l^y^,^t^h^{e S}^ecret^a^r^y^o^f^HHS^m^a^y^au^t^h^o^rⁱ^{ze a d}^r^u^g^{’s i}^m^p^o^r^t^a^tⁱ^o^{n f}^o^{r emergen}^c^y^medⁱ^cal^care.²¹
^U^.^S.C^.^§³⁸¹⁽^d)⁽²⁾^.
⁶⁸^“Eⁿ^f^o^r^ce^m^eⁿ^t^o^f^t^h^{e F}^D^CAⁱ^sⁿ^o^t^lⁱ^mⁱ^t^e^d^t^o^F^D^A^.^S^eⁱ^z^u^r^e,ⁱⁿ^j^uⁿ^c^tⁱ^oⁿ^,^an^{d m}ⁱ^sd^e^m^ean^o^r^o^r^f^e^l^oⁿ^y^p^r^o^ceedⁱⁿ^{gs m}^a^y
^b^eⁱⁿ^stit^u^t^ed^b^y^th^{e Un}^ited^States^A^tto^rn^e^yⁱⁿ^th^e^dⁱ^{strict i}ⁿ^w^h^ich^t^h^{e case is b}^r^o^u^g^h^t^{. I}ⁿ^ad^d^itioⁿ^,^th^{e DHHS In}^sp^ecto^r
^G^e^ne^r^a^{l ha}^{s be}^eⁿ^gⁱ^v^e^{n the}^re^sp^oⁿ^sibili^ty^f^o^{r inv}^e^stig^a^tin^g^f^e^lon^y^vⁱ^ola^tions^of^the^FDCA^{, e}^x^c^e^p^{t f}^o^{r m}^a^tte^{rs ‘tha}^t
^s^houl^{d r}^e^m^a^{in a}^f^unc^tion^of^the^F^ood^aⁿ^d^D^r^ug^A^d^mⁱ^nis^t^r^a^tion.’^”^I^.^Sc^ott^B^a^s^s^,^Enf^o^r^c^e^m^eⁿ^{t Pow}^e^r^s^{of t}^h^e^Fo^od^an^d
^D^r^{ug A}^d^mⁱ^nis^t^r^a^tioⁿⁱⁿ^{1 F}^UNDAM^E^N^T^A^L^S^O^F^L^AW^AN^D^R^EG^U^L^A^T^I^O^N^{57 (}^R^obe^r^t^{P. B}^r^a^d^y^e^t^a^l^{. e}^d^.¹⁹⁹⁷⁾^.
⁶⁹^H.^R.²⁶³⁸^b^e^gan^{as t}^h^{e F}^Y²⁰⁰⁸^Ho^m^e^l^aⁿ^d^S^ecu^ri^t^y^A^p^p^r^o^p^rⁱ^a^tⁱ^on^{s b}ⁱ^l^l^an^{d t}^h^at^bⁱ^l^l^w^a^{s u}^s^ed^{as t}^h^{e veh}ⁱ^cl^{e f}^o^{r t}^h^e
^C^ons^ol^ida^t^e^d^A^c^t.
⁷⁰^H^.^R^.²⁶³⁸^{, § 54}^{2, 11}⁰^th^Cong^{. (2}⁰⁰⁷^{). T}^h^e^Vitte^{r a}^m^e^ndm^eⁿ^{t w}^a^s^opp^os^e^d^by^the^c^o^m^m^itte^e^,^a^{nd Se}^na^{tors Coc}^h^raⁿ
^an^d^By^rd^co^sp^on^so^red^{a secon}^d^{degree a}^m^en^d^m^en^t^t^h^at^w^o^u^l^{d h}^a^{ve p}^l^aced^t^h^{e sam}^e^p^r^o^vⁱ^sⁱ^oⁿ^f^r^o^m^t^h^{e F}^Y²⁰⁰⁷
⁽^c^onti^nue^d.^..)

The provision excluded narcotics and biologics. By preventing CBP from using funds to prevent
certain individuals from importing Canadian prescription drugs, the amendment would have
appeared to allow an unlimited supply of importations—by mail order, Internet sales, or physical
transportation across the border—of Canadian prescription drugs that comply with parts of the
FDCA. However, like the provision in the previous fiscal year’s bill, the amendment ultimately
would likely have had limited effect because it stated that the imported Canadian prescription
drugs must comply with three sections of the FDCA that address adulteration, misbranding, and
new drug applications. These three FDA provisions require, among other things, that drugs obtain
FDA approval; comply with good manufacturing practices; meet strength, quality, and purity
requirements; do not contain other mixtures or substitutions of other substances; are labeled in
accordance with FDCA requirements; and were manufactured in establishments registered with
the Secretary of HHS. It appears unlikely that prescription drugs manufactured for the Canadian ⁷¹
market would meet these and other requirements of FDCA §§ 501, 502, and 505. While it is
possible that a prescription drug could meet FDA requirements and therefore obtain FDA
approval, in almost all cases, imported prescription drugs will not comply with the FDCA. Thus,
the provision would not have changed the current illegal status of most drugs imported from
Canada, and it appears that CBP would still have been able to use appropriated funds to detain
Canadian drug imports that did not comply with the selected sections of the FDCA mentioned in
the amendment.
As passed on September 30, 2008, § 535 of P.L. 110-329, the Consolidated Security, Disaster
Assistance, and Continuing Appropriations Act, 2009, did not include the amended provision. The
Consolidated Act contained the same text as the FY2007 Homeland Security Appropriations bill.
Please see above for a discussion of that provision. The Department of Homeland Security had
proposed deleting the section from the FY2007 appropriations bill in its Performance Budget
Overview for FY2008, “because prohibiting CBP from exercising its authority to assist the FDA
in enforcing current laws designed to protect the health and safety of American consumers is not ⁷²
the best way to address drug affordability.”
If a business or consumer violates the FDCA by importing unapproved or misbranded
prescription drugs, there are a number of criminal and civil penalties that may apply. As set forth
in the act, penalties vary depending on the offense. Violations of the act’s general prohibitions are ⁷³
a misdemeanor offense punishable by up to a year in prison or a fine of up to $1,000, or both. A
violation of a general FDCA prohibition that occurs after a prior conviction for violating the act
or that is committed with the intent to defraud or mislead is a felony offense punishable by up to ⁷⁴
three years of imprisonment or up to a $10,000 fine, or both. Penalties for violations of the

^(...c^on^tin^ue^d)
^H^o^m^e^la^{nd Se}^c^u^r^ity^A^ppr^opr^ia^ti^oⁿ^s^bil^lⁱⁿ^to^the^FY²⁰⁰⁸^bill^{. A}^f^te^r^a^pe^rⁱ^o^d^of^de^ba^te^{, a}^de^a^l^w^a^s^a^p^pa^r^e^ntly^s^t^r^u^c^k^{; the}
^s^e^c^{ond de}^g^r^e^e^a^m^e^ndm^eⁿ^{t w}^a^s^w^ithdra^w^{n, a}ⁿ^{d Se}^na^t^o^r^V^itte^r,^by^una^nim^ous^c^ons^eⁿ^t^,^m^odifⁱ^e^d^the^t^e^x^t^of^his
^am^e^ndm^eⁿ^{t, w}^h^ic^{h pa}^s^s^e^d.^Se^e¹^{53 C}^ong^{. R}^e^c^.^S¹⁰^,0⁶⁷^{, 1}⁰^,⁰⁷⁰^-⁷^{2, S}¹⁰^,0^76-⁷⁷⁽^d^a^ily^e^d^{. 2}⁰⁰⁷⁾^.
⁷¹^Se^e^s^upr^a^se^c^tion^eⁿ^title^{d “}^I^m^porta^tion^of^Fore^ig^{n V}^e^rsio^ns^of^P^r^e^s^c^r^iptioⁿ^Drug^s.”
⁷²^D^e^pa^r^t^m^e^{nt of}^H^o^m^e^la^{nd Se}^c^u^rⁱ^t^y^{, P}^e^r^f^or^m^a^nc^e^B^udg^e^t^O^v^e^r^vⁱ^ew^{, Fis}^c^a^l^Y^e^a^r²⁰^{08 C}^ong^r^e^s^sⁱ^ona^l^B^udg^e^t
^J^u^s^tif^ic^a^{tion, a}^t⁸²^,^htt^p^://w^w^w^.dhs^.g^ov^/x^libra^ry^/^a^s^s^e^ts^/^b^u^d^g^e^t_pb^o_f^y^2008.p^d^f^.
⁷³^{21 U}^.^S.C.^§³³^3(a^)(1).^{In a}^dditⁱ^oⁿ^{, m}ⁱ^sde^m^e^a^{nor v}ⁱ^ola^tio^ns^of^the^a^c^t^a^r^e^stric^t^lia^bility^off^e^nse^s^{. Unite}^{d Sta}^t^e^s^v^.
^D^o^tte^r^w^eⁱ^c^h^{, 320}^U^.^S.²⁷^7,²⁸^{4 (}¹⁹⁴³⁾^.
⁷⁴^{21 U}^.^S.C^.^§³³³⁽^a⁾⁽²⁾^.

FDCA’s importation provisions are stricter. If a business or consumer knowingly imports a drug
in violation of these provisions, then the violation is a felony offense punishable by up to 10 years ⁷⁵
in prison or up to $250,000 in fines, or both.
Despite these designated penalties, individuals and corporations that violate the act may face
monetary fines far greater than those specified in the FDCA because those sanctions are
superceded by general fines set forth in the Sentencing Reform Act of 1984, which applies across
the board to all federal crimes. That statute raised the limit on the maximum penalties that apply
to federal crimes. As a result, misdemeanor violations of the FDCA are actually punishable by a
fine of up to $100,000 for individuals and up to $200,000 for organizations, and felony violations ⁷⁶
of the act are punishable by up to $250,000 for individuals and up to $500,000 for corporations.
In addition, federal courts are authorized to issue injunctions in order to enjoin violations of the ⁷⁷⁷⁸
act, and any drug that is adulterated or misbranded is subject to seizure under the act.
It is important to note that “[t]hose who aid and abet a criminal violation of the act, or conspire to ⁷⁹
violate the act, can also be found criminally liable.” Federal criminal law generally makes it a
separate crime to aid or abet any criminal offense against the United States or to conspire to ⁸⁰
commit a criminal offense against the United States, so illegal importers could potentially be
charged with these offenses as well as other general federal crimes, such as mail or wire fraud or
making false statements. In addition, the FDCA explicitly forbids certain acts, as well as the ⁸¹
causing of such prohibited acts. Thus, businesses that facilitate the importation of unapproved
prescription drugs or U.S.-manufactured prescription drugs may be liable if they are deemed to be
“causing” violations of the act. In addition to penalties under the FDCA and other federal criminal
statutes, individuals or businesses that illegally import prescription drugs that are also controlled
substances may be subject to penalties under the Controlled Substances Act.
Despite the range of penalties that FDA has available to punish those who import prescription
drugs in violation of the act, the agency has clarified that its “highest enforcement priority would ⁸²
not be actions against consumers.” Indeed, the FDA exercises its enforcement discretion
leniently in this regard by allowing consumers to import certain otherwise illegal prescription
drugs under certain circumstances. These enforcement procedures, known as the FDA’s personal
importation procedures, are described in detail below.
Because importing unapproved prescription drugs is a violation of the FDCA, the FDA is ⁸³
responsible for determining whether pharmaceuticals should be admitted into the United States.

⁷⁵^Id^.^a^t^§§³³³⁽^b)(1),³⁸¹⁽^d)(1)^.^T^h^e^a^c^t^prov^ide^s^e^x^c^e^p^tions^t^o^t^h^e^p^e^na^ltie^s^{in c}^e^r^ta^{in c}^a^s^e^s^of^g^{ood f}^a^ith.^Id^.^at^§
³³³^(c).
⁷⁶^{18 U}^.^S.C^.^§^§³⁵⁵⁹^,³⁵⁷¹^.
⁷⁷^{21 U}^.^S.C^.^§³³^2.
⁷⁸^Id^.^a^t^{§ 33}^4.
⁷⁹^Lo^m^b^a^r^dⁱ^Le^t^t^e^r^,^s^upr^aⁿ^o^te²²^,^a^t^1.
⁸⁰¹⁸^U^.^S^.^C^.^§§^2,³⁷^1.
⁸¹^{21 U}^.^S.C^.^§³³^1.
⁸²^Lo^m^b^a^r^dⁱ^Le^t^t^e^r^,^s^upr^aⁿ^o^te²²^,^a^t^4.
⁸³^C^B^P^{, Me}^dⁱ^c^a^tion^/^D^r^ug^s^,^ht^tp:/^/w^w^w^.c^bp.g^o^v^/^x^p^/c^g^o^v^/^tr^a^v^e^l^/^c^le^a^r^ing^_^g^oods^/^r^e^s^tr^ic^te^d/^m^e^dic^a^tion_d^r^u^g^s^.xm^l^.
^A^c^c^o^rding^to^the^FDA^,^CB^P^ha^{s t}^h^eⁱⁿ^it^ia^{l re}^spoⁿ^sibi^lity^f^o^{r e}^x^a^mⁱⁿ^ing^im^porte^{d g}^o^{ods a}^t^the^na^tioⁿ^’^{s bor}^de^rs.
⁽^c^onti^nue^d.^..)

To determine whether to allow or refuse entry to imported drugs, the FDA developed its personal
importation procedures. Under the procedures, the FDA exercises its enforcement discretion to
permit consumers to import otherwise illegal prescription drugs for purposes of personal use.
Recognizing that the agency’s limited enforcement resources are best directed at commercial
shipments of imported drugs rather than personal imports, the FDA may, at its discretion, refrain
from taking legal action against illegally imported drugs under the following circumstances:
^a)^th^{e in}^ten^d^ed^u^s^{e i}^s^uⁿ^a^p^p^r^o^v^ed^an^d^f^o^r^{a ser}ⁱ^o^u^{s co}ⁿ^d^itioⁿ^f^o^r^w^h^ic^h^ef^f^ecti^v^{e tr}^eat^m^eⁿ^t
^m^a^yⁿ^o^t^{be av}^ai^l^a^bl^{e do}^m^e^s^tⁱ^c^al^l^y^ei^t^h^{er t}^h^rough^co^m^m^e^rci^a^l^{or cl}ⁱⁿⁱ^cal^m^e^aⁿ^s^;
^b⁾^th^er^{e is n}^o^kⁿ^o^wⁿ^co^m^m^e^r^cⁱ^a^lizatioⁿ^o^r^p^r^o^m^o^tioⁿ^to^p^e^r^s^oⁿ^s^r^e^sⁱ^dⁱⁿ^gⁱⁿ^t^h^e^U^.^S^.^b^y^t^h^o^s^e
ⁱⁿ^v^o^l^v^{ed in}^t^h^{e dis}^t^ribution^of^th^{e produ}^{ct at is}^s^u^e;
^{c) th}^{e produ}^{ct is}^con^s^{idered not to rep}^r^es^en^{t an}^uⁿ^r^ea^s^oⁿ^a^bl^{e ris}^k^{; an}^d
^d⁾^th^{e in}^dⁱ^vⁱ^d^u^{al see}^kⁱⁿ^g^toⁱ^m^p^o^r^{t th}^{e p}^r^o^d^u^{ct af}^fⁱ^r^m^{s i}ⁿ^w^rⁱ^tin^g^th^at^{it is}^f^o^r^th^{e p}^a^tien^t^’^s
^o^wⁿ^u^s^{e (g}^eⁿ^erall^yⁿ^o^t^m^o^{re than}^th^ree^m^oⁿ^t^h^s^u^ppl^y⁾^an^{d prov}^ides^th^eⁿ^a^m^e^aⁿ^{d addr}^e^s^s^o^f
^t^h^{e doct}^o^{r l}ⁱ^cens^e^{d i}ⁿ^t^h^e^U^.^S^.^res^pon^sⁱ^bl^e^f^o^{r h}ⁱ^s^{or h}^e^r^t^r^eat^m^e^nt^wⁱ^t^h^t^h^{e produ}^ct^{, or}
^prov^ides^ev^iden^{ce t}^h^{at th}^{e produ}^{ct is}^f^o^{r t}^h^{e con}^tⁱⁿ^u^a^tⁱ^on^of^{a treat}^m^eⁿ^t^be^g^uⁿⁱⁿ^{a f}^o^reign⁸⁴
^c^o^unt^r^y^.
Ultimately, the personal importation procedures detail the FDA’s enforcement priorities for
imported drugs, but are not intended to grant a license to consumers to import unapproved ⁸⁵
prescription drugs into the United States. Indeed, the FDA emphasizes that even if all of the
factors above are met, “the drugs remain illegal and FDA may decide that such drugs should be ⁸⁶
refused entry or seized.” Furthermore, these procedures do not apply to commercial shipments
of unapproved prescription drugs, nor are they intended to permit the importation of foreign
versions of drugs that are already approved in the United States. Thus, it appears that personal
importations of cheaper versions of prescription drugs that are already available in the U.S. do not ⁸⁷
conform to the FDA’s personal importation procedures. Nevertheless, U.S. consumers continue
to import drugs from abroad, and one Canadian group claims that Canadian pharmacies supply ⁸⁸
two million people in the U.S., or roughly one percent of the U.S. market for prescription drugs.

^(...c^on^tin^ue^d)
^A^c^c^o^rding^l^y^,^CBP^{is s}^u^p^pose^d^to^notif^y^the^FDAⁱ^f^{it ha}^s^de^te^c^t^e^d^a^m^a^{il or}^ba^g^g^a^g^e^s^h^ipm^e^{nt of}^“^aⁿ^FD^A^-^r^e^g^u^la^te^d
^artⁱ^c^l^eⁱⁿ^t^eⁿ^d^e^d^f^o^{r co}^mm^erci^al^dⁱ^st^ri^b^u^tⁱ^o^n,^an^artⁱ^c^l^e^t^h^at^F^D^A^h^a^{s sp}^eci^fⁱ^cal^l^y^req^u^e^st^ed^b^e^d^e^t^aⁱⁿ^e^d^,^{or an}^F^D^A^-
^re^g^u^la^te^{d a}^r^tic^le^tha^t^a^p^pe^a^r^{s to re}^pre^s^eⁿ^{t a}^h^e^a^lth^f^r^a^{ud or a}ⁿ^uⁿ^kⁿ^o^wⁿ^ris^k^{to he}^a^lth^.”^O^FFIC^E^O^F^R^E^G^U^L^AT^ORY
^A^FFA^I^R^S^,^F^{OOD A}^ND^D^RUG^A^D^M^I^N^IS^TR^A^T^IO^N^,^C^o^v^e^r^age^{of Pe}^r^s^o^nal^I^m^por^tatⁱ^oⁿ^s^{, R}^E^G^U^L^A^T^ORY^P^ROC^E^DURE^S^M^A^NUA^L^,
^http:^//w^w^w^.f^da^.g^ov^/^o^r^a^/c^om^plia^nc^e^_^r^e^f^/^r^p^m^_ne^w²^/^c^h9pe^r^s^.^h^tm^{l. I}ⁿ^lig^ht^of^the^C^B^P^’^s^polic^y^c^h^aⁿ^g^e^{in O}^c^to^be^r²⁰⁰⁶^,
^{it is u}ⁿ^c^l^e^a^r^w^h^e^t^he^{r the}^CB^P^{is c}^onti^nui^ng^to^a^l^e^r^{t the}^FDA^if^{it de}^te^c^t^{s shipm}^e^{nts of}^the^a^bov^e^-^m^eⁿ^tione^{d ite}^m^s^.
⁸⁴^Id^.^;^{see al}^so^O^FF^IC^{E O}^F^R^E^G^U^L^AT^ORY^A^FFA^IR^S^,^F^{OOD A}^ND^D^RUG^A^D^M^IN^IS^TR^A^T^IO^N^,^Importatio^{n o}^f^P^r^e^s^c^r^iption
^M^e^dicⁱ^ne^s^/^D^r^ugs^{, h}^ttp:^//www^.^f^da^.g^ov^/ora^/im^port/tra^v^e^l^e^r^_a^le^rt.ht^m^{; O}^FFIC^E^O^F^R^E^G^U^L^AT^ORY^A^FFA^I^R^S^,^F^{OOD A}^ND^D^RUG
^A^DM^I^N^I^S^T^R^AT^I^O^N^,^Iⁿ^for^m^at^io^{n o}ⁿ^I^m^por^t^a^tioⁿ^{of D}^r^u^g^s^(A^{pril 3,}¹⁹⁹⁸^),^http:^//www^.f^da^.g^ov^/^o^ra^/im^p^o^rt/^p^ipiⁿ^f^o^.htm^.
⁸⁵^O^FFIC^E^O^F^R^E^G^U^L^AT^ORY^A^FFA^IR^S^,^F^{OOD A}^ND^D^RUG^A^DM^I^N^I^S^T^R^AT^I^O^N^,^C^o^v^e^r^age^o^f^Pe^r^s^oⁿ^a^{l I}^m^por^t^a^tio^ns^,
^R^E^G^U^L^AT^ORY^P^ROCE^DURES^M^AN^U^A^L^{, http:/}^/w^w^w^.^f^da^.g^ov^/^o^r^a^/^c^om^p^lia^nc^e^_^r^e^f^/^r^p^m^_ne^w²^/c^h9pe^r^s^.ht^m^l.
⁸⁶^O^FFIC^E^O^F^R^E^G^U^L^AT^ORY^A^FFA^IR^S^,^F^{OOD A}^ND^D^RUG^A^DM^I^N^I^S^T^R^AT^I^O^N^,^I^m^por^t^a^tio^{n of}^Pr^e^s^c^r^ipti^{on M}^e^dicⁱ^ne^s^/^D^r^ugs^,
^http:^//www^.f^da^.g^ov^/^o^ra^/im^port/tra^v^e^l^e^r^_a^le^rt.htm^.
⁸⁷^O^FFIC^E^O^F^R^E^G^U^L^AT^ORY^A^FFA^IR^S^,^F^{OOD A}^ND^D^RUG^A^DM^I^N^I^S^T^R^AT^I^O^N^,^Iⁿ^for^m^atio^{n on}^I^m^por^t^a^ti^{on o}^f^D^r^ugs⁽^A^pr^il^3,
¹⁹⁹^8),^htt^p^://w^ww^.^f^da^.g^ov^/^o^ra^/ⁱ^m^port/^pipⁱ^nf^o.h^t^m^.
⁸⁸^Iⁿ^sⁱ^de^W^a^s^h^ing^t^oⁿ^Publ^is^he^r^s^,^C^ana^di^an^Ph^ar^m^a^cⁱ^s^t^to^D^r^ug^Fir^m^s^:^Sup^por^t^Lim^ite^d^Rx^I^m^p^o^r^t^s^,^FD^A^W^EEK^{, Ma}^y
⁷^,²⁰⁰⁴^.

Meanwhile, in the Medicare Prescription Drug, Improvement, and Modernization Act of 2003,
Congress authorized the FDA to allow individuals to import prescription drugs for personal use
under certain circumstances, provided that the Secretary has certified that importation is safe and ⁸⁹
cost-effective. Specifically, the act, subject to certification, requires the Secretary of HHS to
allow individuals to import prescription drugs from Canada if the drug:
^{a) i}^sⁱ^m^port^e^{d f}^r^om^{a l}ⁱ^c^eⁿ^s^e^d^ph^ar^m^a^c^y^f^o^{r pers}^on^al^u^s^{e b}^y^anⁱⁿ^di^vⁱ^du^al^,ⁿ^o^t^f^o^{r res}^a^l^e^{, i}ⁿ
^qu^an^tit^ies^t^h^{at do n}^o^{t ex}^{ceed a 90-}^day^s^u^ppl^y^;
^{b) is}^accom^p^{anied by}^{a cop}^y^o^f^{a v}^a^{lid pres}^cription^;
^{c) is}ⁱ^m^{ported f}^r^o^m^C^aⁿ^a^{da, f}^r^om^a^s^e^{ller reg}ⁱ^s^t^ered^wⁱ^t^h^t^h^e^Secretary^;
^{d) is}^{a pres}^cription^dru^g^appro^v^e^{d b}^y^th^{e Secretar}^y^...
^{e) is}ⁱⁿ^th^{e f}^o^r^m^of^{a f}ⁱⁿ^a^l^fⁱⁿⁱ^s^h^{ed dos}^ag^{e th}^a^t^w^a^s^m^aⁿ^u^f^act^u^r^{ed in}^{[a reg}ⁱ^s^t^ered]
^es^tablis^hm^eⁿ^{t ...}
^f⁾^{is i}^m^p^o^r^ted^uⁿ^d^{er su}^c^h^o^t^h^e^{r co}ⁿ^d^itioⁿ^s^{as th}^{e Secretar}^y^d^e^termⁱⁿ^e^s^to^b^eⁿ^ecessar^y^to⁹⁰
^en^su^{re pu}^blⁱ^c^s^a^f^e^t^y^.
Although the new individual importation provisions in the Medicare Act appear similar to the
FDA’s personal importation procedures, the legislation differs significantly because it contains the
certification requirement. The current Secretary of HHS, however, has declined to provide such
certification in the past, and it is unclear what direction the agency will take in the future. Thus,
the new individual importation provisions do not appear to represent a codification of the FDA’s
personal importation procedures.
Although the FDA exercises its enforcement discretion to permit personal importation, such
importation remains illegal. However, an elderly couple from Chicago challenged the FDCA’s
prohibition on personal importation. In Andrews v. United States Department of Health and ⁹¹
Human Services, the court rejected the plaintiffs’ claim that the statutory prohibition on personal
drug importation violated their substantive due process rights under the Fifth Amendment of the
Constitution. The standard of review that courts use when reviewing substantive due process
claims depends on whether or not the statute in question affects a fundamental right. If a statute
affects a fundamental right, then strict judicial scrutiny is required; if the statute does not affect a
fundamental right, then a court applies rational basis review. In the Andrews case, the court
determined that there is no fundamental right “to purchase drugs from a preferred source at a ⁹²
preferred price.” As a result, the court, applying the rational basis test, upheld the ban on
personal importation because it is rationally related to a legitimate governmental interest in ⁹³
ensuring the safety of prescription medications.

⁸⁹^M^e^dⁱ^{care A}^c^t^,^s^upr^aⁿ^o^te³^,^a^t^§¹¹²^1.
⁹⁰^Id^.
⁹¹²⁰^{05 U}^.^{S. D}ⁱ^s^t^{. L}^E^X^I^S⁵⁷¹⁰^(D^.^D^{.C. 2}⁰⁰⁵^).
⁹²^Id^{. a}^t^*⁷^.
⁹³^Id^{. a}^t^*⁸^-9.

Just as individual consumers have sought to buy cheaper prescription drugs from foreign sources,
several state and local governments have in place or have considered plans to import or facilitate
the importation of prescription drugs in order to save themselves or their residents money on
medicines. Contending that carefully structured state programs will provide a sufficient degree of
safety, states and cities continue to argue that they have a duty to explore innovative methods for
providing more affordable prescription drugs to their residents, even at the risk of violating
federal law. Currently, several states and the District of Columbia have online prescription drug
importation programs, and several localities, including Boston, Massachusetts, are importing ⁹⁴
prescription drugs from Canada. Interest in importing Canadian prescription drugs may be
beginning to wane due to factors including the Medicare Part D prescription drug program, a
temporary increase in seizures by the CBP, declining currency-exchange rates, and a greater use ⁹⁵
of generic drugs. For example, the first city to import Canadian prescription drugs, Springfield,
Massachusetts, reported no problems with its Canadian prescription drug importation program;
however, it later switched to a state health benefits program that does not import Canadian ⁹⁶
prescription drugs.
Each state and local importation plan varies somewhat in the details. Illinois, for example, has
implemented a drug importation program known as I-SaveRx. Under the program, the state has
established a website that offers information regarding pharmacies in Canada, Ireland, and the
United Kingdom that the state has inspected and determined to be reliable sources for prescription
drugs. The state, however, does not import drugs directly, but rather provides users with
information on available drugs, prices, and order forms. Currently, Kansas, Missouri, Vermont, ⁹⁷
and Wisconsin also participate in I-SaveRx. In addition, Rhode Island legislators passed a law ⁹⁸
that allows the state to license Canadian pharmacies. Many other states and localities have ⁹⁹
considered and/or implemented importation plans of their own.

⁹⁴^City^of^{Boston, A}^f^f^o^rda^b^le^Pre^s^c^r^iptio^{n Dr}^ug^{s, htt}^p^://w^ww^.c^it^y^o^f^b^oston^.^g^o^v^/^pu^blic^he^a^l^t^h^/^p^re^sc^ripti^on.a^s^p^.^T^h^e^sta^t^e^s
^a^r^e^:^Illinoⁱ^{s, Ka}^nsa^s^{, Mi}^nne^sota^,^Missouri^,^V^e^rm^{ont, a}ⁿ^d^Wⁱ^sc^onsin.^S^ee,^e.^g^.^,^G^e^t^A^c^c^e^{ss to L}^o^w^-^C^o^st^P^r^e^s^c^r^ipti^on
^Drug^{s, http}^://hc^.^rrc^.^d^c^.^g^o^v^/^hc^/c^wp/^v^ie^w^,^a^,^3,q,4⁵⁶⁰⁹⁵^.a^sp;^A^b^o^u^t^Minne^so^ta^Rx^Conⁿ^e^c^t^{, htt}^p^://w^ww^.sta^te^.^m^n.us/porta^l/
^mⁿ^/^j^s^p^/^c^onteⁿ^t.^do?ⁱ^d⁼^-⁵³⁶⁸⁸⁵¹⁴^5&^a^g^eⁿ^cy⁼^R^x^.^N^e^w^H^a^m^p^s^h^ir^e^pr^e^v^ious^ly^a^d^v^e^r^tise^d^s^u^c^h^a^pr^og^r^a^m^;^how^e^v^e^r^{, af}^te^r
^{a d}ⁱ^f^f^eren^t^go^vern^o^r^w^a^{s el}^e^c^t^e^dⁱⁿ²⁰⁰⁵^,^t^h^{e p}^r^o^g^ram^w^a^{s n}^o^l^oⁿ^g^{er ad}^vertⁱ^s^ed^oⁿ^t^h^{e st}^at^{e’s m}^aⁱⁿ^web^sⁱ^t^e^.^A^sso^ci^at^ed
^P^r^ess,^F^u^tur^e^Uⁿ^c^l^e^a^r^for^St^ate^’^s^C^ana^di^{an W}^e^b^Link^s^{, J}^aⁿ^u^a^r^y^{2, 200}^5.
⁹⁵^Id^.^;^Ke^lle^y^M^.^Bu^tle^r,^L^o^c^a^{l Rx}^I^m^por^{t Pr}^ogr^am^s^Fⁱⁿ^d^Fe^w^e^r^Tak^e^r^s^{, Em}^plo^y^e^e^B^e^nef^{it N}^e^w^s^{, J}^aⁿ^u^a^r^y^{1, 200}^{7. I}ⁿ
^the^f^a^{ll of}²⁰⁰^{6, se}^v^e^ra^{l re}^ta^{il pha}^rm^a^cⁱ^e^s^sa^{id the}^y^w^{ould s}^e^{ll c}^e^r^ta^{in pr}^e^s^c^r^iptⁱ^oⁿ^dr^ug^s^f^o^r^a^s^low^a^s^$4.^Id^.
⁹⁶^C^h^rⁱ^s^t^o^phe^r^R^o^w^l^a^nd,^M^a^s^s^.^C^ity^Ends^D^r^ug^Plaⁿ^t^hat^D^e^fie^{d U}^.^S^.^{, Bos}^t^oⁿ^G^l^obe^{, A}^u^g^u^s^t²⁶^,²⁰⁰⁶^.
⁹⁷^Se^e^htt^p^://w^ww^.i-s^a^v^e^r^x^.^ne^{t/ f}^o^{r m}^o^re^inf^o^r^m^a^{tion on}^dr^ug^im^porta^tion^prog^ra^m^s^f^o^{r Illin}^{ois, W}ⁱ^sc^{onsin, Ka}^nsa^s^,
^Ve^r^m^{ont, a}ⁿ^{d Mis}^s^o^ur^i.
⁹⁸^R^.^I^.^G^e^{n. L}^a^w^s^{§ 5-}¹⁹^.1-¹¹^.^Iⁿ^sⁱ^de^W^a^s^h^ing^t^on^Pu^blis^he^r^s^,^R^h^o^d^e^I^s^lan^d^is^Fⁱ^r^s^t^St^ate^t^o^Pas^s^C^aⁿ^adi^{an D}^r^ug
^I^m^por^{t L}^a^w^,^FD^A^W^EE^K^{, J}^u^l^y^{9, 200}^{4. T}^h^e^FD^A^ha^s^w^a^rⁿ^e^d^R^h^o^d^e^I^s^la^{nd t}^h^a^t^the^le^gⁱ^s^l^a^tio^{n m}^a^y^be^pr^e^e^m^pte^d^by
^f^e^de^ra^{l la}^w^.^L^e^tte^r^f^r^om^W^illia^m^{K. Hub}^b^a^r^{d, A}^ssocⁱ^a^t^e^Com^m^issi^one^{r f}^o^r^Polic^y^a^nd^P^l^aⁿⁿⁱ^ng^{, F}^o^o^d^aⁿ^d^Drug
^A^d^mⁱ^nistra^{tion, t}^o^G^o^v^e^{rnor Do}ⁿ^a^{ld L}^.^Ca^rc^ie^{ri (July}^{1, 20}^04),^ht^t^p^://w^ww^.^f^da^.g^ov^/^o^c^/^opa^c^o^m^/^hott^opic^s^/ⁱ^m^portdrug^s^/
^c^a^r^cⁱ^e^r^i.pdf^{. For}^a^dⁱ^s^c^us^sⁱ^on^of^t^h^e^pr^e^e^m^ption^doc^trⁱⁿ^e^,^se^e^infraⁿ^o^t^{es 11}⁹^-²⁰^an^{d acco}^m^p^an^yⁱⁿ^g^t^e^xt^.
⁹⁹^{For e}^x^a^m^ple^,^Ca^lif^ornia^,^Ka^nsa^s^{, Illin}^{ois, I}^o^w^a^{, Minne}^so^ta^,^Misso^{uri, Ne}^w^Ha^m^p^shire^,^{North Da}^k^o^t^a^,^Rho^d^e^Isla^nd^,
^Ve^r^m^{ont, a}ⁿ^{d W}ⁱ^s^c^ons^{in a}^r^e^a^m^ong^the^s^t^a^t^e^s^tha^t^ha^v^e^c^ons^ide^r^e^d^a^nd/^or^im^ple^m^eⁿ^te^{d im}^por^ta^tioⁿ^pr^og^r^a^m^s^{. For}
^c^u^rre^{nt i}ⁿ^f^o^rm^a^{tion o}ⁿ^sta^t^e^a^c^tiv^itie^{s w}^{ith re}^g^a^{rd to pre}^s^c^r^ipti^on^dr^ug^im^porta^tion^,^se^e^Na^tiona^{l C}^onf^e^r^eⁿ^c^e^of^Sta^t^e
^L^e^gislato^r^s,²⁰^{07 Pr}^e^s^c^r^iption^D^r^{ug Sta}^t^e^Le^gis^l^atioⁿ⁽^A^ug^us^{t 1}^,²⁰⁰⁷⁾^,^http:^//w^w^w^.nc^s^l.or^g^/^pr^og^r^a^m^s^/he^a^lth/
^d^r^u^g^bⁱ^l^l⁰⁷^.^h^t^m^.^A^cco^rdⁱⁿ^{g t}^o^t^h^e^Natⁱ^oⁿ^a^l^Con^f^eren^{ce o}^f^S^t^at^{e L}^e^gⁱ^sl^at^o^r^s,¹³^st^at^{es co}ⁿ^sⁱ^d^ered^t^h^{e i}^ssu^{e o}^f
^pr^e^s^c^r^iptio^{n d}^r^ug^im^por^ta^tioⁿ^durⁱⁿ^g²⁰^06,^w^h^ile^only^{7 s}^t^a^t^e^s^c^onsⁱ^d^e^r^e^d^the^is^s^u^e^d^u^rⁱ^ng^t^h^e^fⁱ^r^s^{t s}^e^v^e^{n m}^onths^of
⁽^c^onti^nue^d.^..)

In addition, several states, including Vermont, have petitioned the FDA in hope that the agency
would, as it has done with regard to personal drug importation, exercise its enforcement ¹⁰⁰
discretion and allow states to establish prescription drug importation pilot plans. The Medicare
Act authorized the FDA to provide waivers for individual importation, and some lawmakers have
argued that the individual importation waiver authority extends to state importation plans because
such plans are intended to provide prescription drugs to individual state residents. The FDA,
however, responded that the waiver provisions in the Medicare Act become effective only upon ¹⁰¹
certification by the Secretary that drug importation is safe and reduces costs. If the Secretary
would grant a waiver or if federal law would otherwise allow such a program, Maine would ¹⁰²
provide access to foreign prescription drugs.
Ultimately, Vermont, whose petition for a pilot program was rejected by the FDA, sued the
agency, claiming that the FDA’s failure to implement regulations that authorize waivers and
subsequent denial of Vermont’s petition violated the Administrative Procedure Act (APA). The
Vermont lawsuit also claimed that the importation provisions in the Medicare Act constitute an ¹⁰³
unconstitutional delegation of legislative authority to the Secretary of HHS. Vermont’s claims, ¹⁰⁴
however, were rejected by a federal district court. In the case, Vermont v. Leavitt, the court held
that the FDA did not act arbitrarily and capriciously in violation of the APA because Vermont’s
petition asked the agency to approve a program that was illegal. The court based its ruling, in
part, on its determination that, as the FDA had argued, the FDCA provision authorizing waivers
for personal importation becomes effective only upon certification by the Secretary that drug ¹⁰⁵
importation is safe and reduces costs. Likewise, the court rejected Vermont’s claim that the
certification provision constitutes an unconstitutional delegation of legislative authority, holding
that the provision “provides clear guidance to the Secretary of HHS by directing the Secretary to ¹⁰⁶¹⁰⁷
consider safety and cost-effectiveness.” Vermont did not appeal the decision.
Montgomery County in Maryland petitioned the FDA for a waiver to allow its residents and
employees to import prescription drugs from Canada. The FDA rejected the petition, citing the ¹⁰⁸
Leavitt case. In response, Montgomery County filed a lawsuit alleging that the FDA’s denial of

^(...c^on^tin^ue^d)
²⁰⁰^7.^Id^.^;^Natⁱ^oⁿ^a^l^Con^f^eren^{ce o}^f^S^t^at^{e L}^e^gi^sl^at^o^r^s,²⁰⁰^{6 Pr}^e^s^c^r^iptⁱ^{on D}^r^ug^Sta^t^e^Le^gis^l^ati^oⁿ⁽^M^a^r^c^h²⁶^,²⁰⁰⁷⁾^,
^http:^//www^.nc^s^l.org^/^prog^ra^m^s^/^h^e^a^lth/^d^rug^b^ill^06.^htm
¹⁰⁰^Iⁿ^sⁱ^de^W^a^s^h^ing^t^oⁿ^Publ^is^he^r^s^,^V^e^r^m^{ont W}^ants^FD^{A t}^o^All^o^w^D^r^u^g^Re^im^p^o^r^t^ati^oⁿ^for^St^ate^Em^pl^oy^e^e^s^,^FD^A^W^EEK^,
^Dece^m^b^{er 1}⁹^,²⁰⁰³^;^{see a}^l^so^Iⁿ^sⁱ^de^W^a^s^h^ing^t^on^Pu^blis^he^r^s^,^Se^{n. D}^o^r^g^aⁿ^P^u^s^h^e^s^for^D^r^{ug I}^m^por^t^Pil^o^{t Pr}^o^g^r^a^mⁱⁿ
^No^rth^D^a^ko^ta^{, FD}^A^W^EEK^,^A^p^r^{il 2, 2}⁰⁰⁴^{; L}^e^tte^r^f^r^om^L^e^s^t^e^r^{M. C}^r^a^w^f^o^r^d^{, A}^c^ting^C^o^m^m^is^sⁱ^one^r^of^Foo^d^aⁿ^{d D}^r^ug^s^,
^Foo^d^aⁿ^{d D}^r^ug^A^d^mⁱ^nis^t^r^a^tion,^to^G^o^v^e^r^nor^R^{od R}^.^B^l^a^g^oj^e^v^ic^{h, St}^a^t^e^of^I^llinois⁽^J^une^3,²⁰⁰⁴⁾^,^htt^p^://w^w^w^.^f^da^.g^ov^/
^oc^/opa^c^o^m^/^hott^o^pⁱ^c^s^/im^por^tdr^u^g^s^/G^ov^B^63.pdf^.
¹⁰¹^Ke^lly^Fie^l^d,^Battle^Bre^wⁱ^ng^Be^twe^eⁿ^Administr^a^ti^on,^Lo^c^a^{l Offic}ⁱ^a^{ls Ov}^e^r^{Drug Import}^a^ti^{on Issue}^{, C}^Q^T^OD^A^Y^,
^Dece^m^b^{er 1}⁹^,²⁰⁰³^.
¹⁰²²²^Me^{. Re}^v^.^Sta^t^.^§²⁵^4-C.^Sim^ila^rl^y^,^the^W^a^shing^t^{on le}^gⁱ^sla^t^ureⁱⁿ^c^o^rp^ora^t^e^dⁱⁿ^to^{its sta}^t^e^la^w^s^the^a^b^ility^{to a}^s^k^f^o^r
^w^aⁱ^v^e^r^s^f^r^o^m^the^FD^A^tha^t^w^ould^a^llow^the^m^{to lic}^eⁿ^s^e^C^a^na^diaⁿ^,^Uⁿ^ite^{d K}ⁱ^ng^dom^{, I}^rⁱ^s^h^{, a}ⁿ^d^othe^r^non^dom^e^s^tic
^pr^e^s^c^r^iptio^{n d}^r^ug^w^hole^s^a^l^e^r^s^.^Wa^s^h^{. R}^e^v^.^C^ode^{§ 1}⁸^.^64.⁴⁹^0.
¹⁰³^V^e^rm^{ont v}^.^T^hom^ps^{on (D}^.^V^t^{. f}^ile^{d A}^u^g^u^s^t^19,²⁰⁰⁴^{). I}ⁿ^J^a^nua^ry²⁰⁰⁵^{, Mik}^e^L^e^a^v^{itt s}^u^cceed^ed^T^o^mmy^T^h^o^m^p^s^oⁿ
^a^s^Se^c^r^e^t^a^r^y^o^f^the^De^pa^rtm^e^{nt of He}^a^{lth a}ⁿ^d^Hum^a^{n Se}^rv^ic^e^s^{, re}^su^ltingⁱⁿ^a^dif^f^e^re^{nt c}^a^s^e^na^m^e^.
¹⁰⁴⁴⁰^{5 F}^.^S^u^p^p^.^2d⁴⁶^{6 (}^D^.^Vt^{. 2}⁰⁰⁵⁾^.
¹⁰⁵^Id^{. a}^t⁴⁷^3-⁷⁵^.
¹⁰⁶^Id^{. a}^t⁴⁷^6.
¹⁰⁷^Ti^m^C^r^aⁱ^g,^D^unc^an^Sue^s^FD^{A O}^v^e^r^C^anad^ia^{n D}^r^ugs^{, W}^AS^H^.^P^OS^T^{, Fe}^br^ua^r^y^{23, 2}⁰⁰⁶^{, a}^t^B⁰⁵^.
¹⁰⁸^L^e^tte^r^f^r^om^Ra^nda^{ll W}^.^L^u^tte^{r, Ph.D., A}^c^ting^A^ssocⁱ^a^t^e^Co^m^m^issi^one^{r f}^o^r^Polic^y^a^nd^P^l^aⁿⁿⁱ^ng^{, F}^o^o^d^aⁿ^d^Drug
⁽^c^onti^nue^d.^..)

its petition was arbitrary and capricious and violated the APA.¹⁰⁹ Specifically, the County argued
that the FDA’s action was arbitrary because the agency has tacitly allowed numerous other states
and localities to import prescription drugs in violation of the FDCA but nonetheless refuses to
assist jurisdictions that attempt to import drugs legally under a waiver program. Furthermore, the
County contended that the FDA’s failure to act with respect to illegal importation programs
indicates that the agency does not believe that importation poses a safety risk, despite the ¹¹⁰
agency’s statements to the contrary. The federal district court granted the FDA’s motion to
dismiss the case. The court held that the FDA complied with the FDCA and the Medicare Act
when it denied the County’s waiver request and found the FDA’s denial did not violate the APA ¹¹¹
because it was not arbitrary or capricious. In response to the County’s argument that the FDA
failed to act with respect to importation programs, the court held that “the FDA’s failure to
enforce the FDCA in some situations does not constitute de facto certification by the Secretary”
of HHS, because the statute gives the Secretary discretion to issue such certification that ¹¹²
Canadian prescription drug importation programs are safe and cost-effective. The court could
not review the Secretary’s failure to certify importation programs, nor could the court grant the ¹¹³
County any relief, because certification is discretionary.
Despite the efforts of such state and local governments, the FDA continues to maintain that
importing unapproved prescription drugs is unsafe and illegal. Indeed, FDA representatives have
met with and sought to convince state officials to change their minds about importing drugs in
apparent violation of federal law. At the same time, the agency has notified certain states of its ¹¹⁴
legal position regarding drug imports. For example, according to the FDA’s response to an
inquiry from California officials, “if an entity or person within the State of California (including
any state, county, or city program, any public pension, or any Indian Reservation) were to import
prescription drugs into the State of California from Canada [or any other foreign country], it ¹¹⁵
would violate FDCA in virtually every instance.”
The FDA provides several legal arguments for reaching its conclusion that state and local drug
importation is a violation of the FDCA. First, the statute prohibits anyone other than the
manufacturer from importing drugs that were originally manufactured in the United States.
Second, even if an FDA-approved drug is manufactured outside the U.S., the imported version of
the drug will likely violate statutory requirements regarding drug approvals, labeling, and ¹¹⁶
dispensing. These first two arguments are identical to the arguments that FDA has made when

^(...c^on^tin^ue^d)
^A^d^mⁱ^nis^t^r^a^{tion, t}^o^D^oug^la^s^{M. D}^unc^aⁿ^{, C}^o^uⁿ^ty^Ex^e^c^u^tiv^e^,^Of^fⁱ^c^e^of^the^C^o^uⁿ^ty^Ex^e^c^u^tiv^e⁽^N^ov^embe^r^8,²⁰⁰⁵⁾^,
^http:^//w^w^w^.f^da^.g^ov^/^o^c^/^opa^c^o^m^/^hotto^pic^s^/ⁱ^m^por^tdr^u^g^s^/duⁿ^c^aⁿ¹¹⁰⁸^05.^htm^l^.
¹⁰⁹^Mo^ntg^o^m^e^r^y^County^v^.^L^e^av^{itt, 445}^F.^Su^pp^{. 2}^d⁵⁰^{5 (D}^{. M}^d^.²⁰⁰⁶^).
¹¹⁰^P^r^e^s^s^R^e^le^a^s^e^,^Montg^o^m^e^r^y^C^ounty^,^Ma^r^y^la^{nd, D}^unc^aⁿ^Sue^s^B^u^s^h^A^d^mⁱ^nis^t^r^a^{tion O}^v^e^r^C^a^na^diaⁿ^D^r^ug^I^m^por^t
^(Fe^b^rua^r^y^{23, 2}⁰⁰⁶^),^htt^p^://w^w^w^.^m^ontg^o^m^e^r^y^c^ounty^m^d.^g^o^v^/^a^pps^/N^ew^s^/^pre^s^s^/^Dⁱ^s^p^la^y^I^nf^o.cfm^?^Item^ID⁼^1755.
¹¹¹^Moⁿ^t^go^{mery C}^o^un^t^y^,⁴⁴^{5 F.}^Su^p^p^{. 2}^d^a^t⁵⁰^8-¹⁰^.
¹¹²^Id^.^a^t⁵¹^2.
¹¹³^Id^.^a^t⁵¹^3-¹⁴^.
¹¹⁴^In^d^eed^,^t^h^e^F^D^A^h^a^{s i}^ssu^ed^{a seri}^{es o}^f^warnⁱⁿ^{g l}^e^t^t^e^{rs t}^o^st^at^{es t}^h^a^t^h^a^{ve co}ⁿ^sⁱ^d^ered^o^r^t^h^at^h^a^{ve i}^m^p^l^em^en^t^e^d
^pre^s^c^r^iptio^{n d}^r^ug^im^porta^tioⁿ^plaⁿ^{s. T}^h^e^s^e^le^tte^{rs a}^r^e^poste^d^{on t}^h^e^FDA^’^s^w^e^bsite^a^t^http://w^ww^.^f^da^.g^ov^/
^im^por^te^ddr^ug^s^/^.
¹¹⁵^L^e^tte^r^f^r^om^W^illiam^K^.^H^ubba^rd,^A^s^s^o^cⁱ^a^t^e^Co^m^m^is^sⁱ^one^{r f}^o^r^P^o^li^cy^a^nd^P^l^aⁿ^ning^{, F}^o^o^d^aⁿ^{d D}^r^ug^A^d^mⁱ^nis^t^ra^tion,
^{to G}^r^e^g^or^y^G^{onot, D}^e^p^u^ty^A^ttorn^ey^G^e^ne^ra^{l, Sta}^t^e^of^Ca^lif^ornia^{2 (}^A^ug^us^{t 25,}²⁰^03),^htt^p^://w^w^w^.^f^da.g^ov^/opa^c^o^m^/
^g^onot.^h^tm^{l [}^h^e^r^eⁱ^na^f^t^e^r^C^a^lif^or^nia^L^e^tte^r^]^.
¹¹⁶^Id^.^at³^.

explaining why the agency views business and consumer imports of prescription drugs to be ¹¹⁷
statutory violations. Therefore, the FDA considers virtually any imports of prescription drugs,
as well as virtually any act that causes such imports, to be illegal, regardless of whether such
imports are conducted by businesses, consumers, or governmental entities.
In addition, the FDA contends that any effort by states to enact legislation authorizing ¹¹⁸
prescription drug imports would be preempted by federal law. Although the FDA sets forth
several legal arguments for its position, preemption of a state act’s importation provisions does
not appear to have been tested in court, and there are several instances in which other prescription ¹¹⁹
drug provisions in the FDCA have been held not to preempt state law. Finally, the agency has
warned some states that they could be subject to lawsuits for injuries to consumers who relied on
the state’s endorsement when purchasing prescription drugs from Canada. For example, in a letter
to Minnesota state officials, the FDA warned of “the potential tort liability that a state could be
subject to if a citizen purchases an unapproved, illegal drug on your advice, and suffers an injury ¹²⁰
as a result.”
Despite the FDA’s position regarding state and local imports of prescription drugs, it appears that
the agency is currently refraining from taking legal action against state and local governments
that have established drug importation programs. Indeed, in a warning letter to Minnesota, which
established a website that provides information about accessing less costly prescription drugs
from Canada, the agency notably refrained from asserting that the state’s program violated the ¹²¹
FDCA and did not describe any potential enforcement action that the FDA might take.
Likewise, the FDA has indicated that it is unlikely to sue the state of Illinois, which has

¹¹⁷^S^ee^s^upr^a^no^t^e^{s 2}¹^-4^{6 an}^{d acco}^m^p^an^yⁱⁿ^g^t^e^xt^.
¹¹⁸^Ca^lif^ornia^L^e^tte^r,^s^upr^a^note¹¹⁷^,^a^t^5-^{7. I}ⁿ^a^w^a^rⁿ^ing^le^tte^r^{to R}^h^o^d^e^I^s^la^nd,^the^FD^A^e^l^a^bor^a^t^e^d^on^its^pr^e^e^m^ption
^a^r^g^u^m^e^{nt in g}^r^e^a^t^e^r^de^ta^{il. L}^e^tte^{r f}^r^o^m^W^illiam^K^.^H^ubba^{rd, A}^s^s^o^cⁱ^a^t^e^Com^m^is^sⁱ^one^{r f}^o^{r P}^o^lⁱ^c^y^a^nd^P^l^aⁿⁿⁱ^ng^{, F}^o^o^d
^a^{nd D}^r^ug^A^d^mⁱ^nis^t^r^a^tion,^to^P^a^trⁱ^c^k^C^.^Ly^nc^{h, A}^ttorⁿ^ey^G^e^ne^r^a^{l of}^R^h^o^d^e^I^s^la^nd⁽^J^a^nua^r^y^28,²⁰⁰⁵⁾^,
^http:^//w^w^w^.f^da^.g^ov^/^o^c^/^opa^c^o^m^/^hotto^pic^s^/ⁱ^m^por^tdr^u^g^s^/ly^nc^h0128⁰⁵^.htm^{l. T}^h^e^pr^e^e^m^ption^doc^trⁱⁿ^e^de^rⁱ^v^e^s^f^r^o^m^the
^S^u^p^r^em^ac^y^Cl^au^{se o}^f^t^h^{e Co}ⁿ^s^tⁱ^t^u^tⁱ^oⁿ^,^w^hⁱ^c^h^est^a^b^lⁱ^s^h^e^{s t}^h^at^t^h^{e l}^a^{ws o}^f^t^h^{e Un}ⁱ^t^e^d^S^t^at^{es “sh}^a^l^l^b^e^t^h^{e sup}^r^em^{e l}^a^w^o^f
^t^h^{e l}^aⁿ^d^;^and^t^h^e^j^u^d^g^{es i}ⁿ^ever^y^s^t^at^{e sh}^al^l^b^e^b^o^uⁿ^d^t^h^ereb^y^,^an^y^t^hⁱⁿ^{g i}ⁿ^t^h^{e C}^oⁿ^s^tⁱ^t^u^tⁱ^oⁿ^o^r^l^a^w^s^o^f^an^y^S^t^at^{e t}^o^t^h^e
^c^ontr^a^r^y^notw^iths^t^a^ndi^ng^.”^U^.^S.^C^ONS^T^{. a}^r^{t. VI}^{, c}^l^.^{2. I}ⁿ^a^p^plyⁱ^ng^this^c^ons^tit^uti^ona^{l m}^a^nda^te^{, c}^our^ts^ha^v^e^r^e^c^o^gⁿ^iz^e^d
^bot^{h e}^x^pre^{ss a}^{nd im}^plie^{d f}^o^rm^{s of}^pre^e^m^p^{tion, w}^h^ic^{h a}^r^e^“^c^o^m^p^e^lle^{d w}^h^e^t^he^{r Cong}^re^{ss’ c}^o^m^m^a^{nd i}^s^e^x^plic^itly^sta^t^e^d
^{in t}^h^e^sta^t^ute^’^{s la}^ng^ua^g^e^{, or}^im^plic^itly^c^ontaⁱ^ne^{d in}^its^struc^t^ure^aⁿ^d^pur^pose^.^”^G^a^de^v^.^Na^tiona^{l S}^o^li^d^W^a^ste^s
^Ma^na^g^e^m^e^{nt A}^s^s^o^cⁱ^a^tion,⁵⁰^{5 U}^.^{S. 8}⁸^,⁹⁷⁽¹⁹⁹²⁾⁽^q^uot^ing^J^o^ne^s^v^.^R^a^th^P^a^c^k^ing^C^o^.,⁴^{30 U}^.^S.⁵¹^9,⁵²⁵⁽¹⁹⁷⁷⁾⁾^.
¹¹⁹^M^aⁿ^y^o^f^t^h^{ese cas}^es,^h^o^w^ev^er,^d^eal^wⁱ^t^h^p^r^escri^p^tⁱ^o^{n d}^r^u^g^l^a^b^e^lⁱ^ng,ⁿ^o^tⁱ^m^p^o^r^t^a^tⁱ^o^n,^and^st^at^{e co}^m^m^oⁿ^l^a^w^cl^ai^m^s^,
^{not s}^t^a^t^e^s^t^a^t^utor^y^la^w^.^D^a^vⁱ^{d R}^.^G^eⁱ^g^e^r^a^{nd Ma}^r^k^D^.^R^o^s^e^n,^R^a^ti^o^naliziⁿ^g^Pro^duc^{t L}ⁱ^a^b^ility^f^o^{r Pre}^s^c^r^iption^Drugs:
^I^m^plie^{d Pr}^e^e^m^pti^on,^Fe^de^r^a^{l C}^o^m^m^{on L}^a^w^,^an^{d O}^t^he^r^P^a^ths^{to U}ⁿ^ifor^m^P^har^m^a^c^e^u^tic^al^Sa^fe^ty^St^a^ndar^ds^{, 45}^D^E^P^AU^L
^L.^R^EV^{. 395,}⁴^{08 (}¹⁹⁹⁶⁾^{. I}^t^is^a^l^s^o^im^por^ta^{nt t}^oⁿ^o^te^t^h^a^t^the^FD^C^A^e^x^pr^e^s^s^l^y^pr^e^e^m^p^ts^s^t^a^t^e^law^w^{ith r}^e^g^a^r^d^{to ov}^e^r^-
^the^-^c^o^uⁿ^te^r^dr^ug^s^a^{nd m}^e^dic^a^l^de^vⁱ^c^e^s^{but n}^o^{t w}^{ith r}^e^g^a^r^d^to^pre^s^c^r^iptioⁿ^drug^{s. A}^s^a^re^{sult, it}^{is m}^o^re^dif^fⁱ^c^u^{lt to}
^pr^e^d^ic^{t t}^h^e^o^u^tc^om^e^of^a^pr^e^e^m^p^{tion c}^h^a^lle^ng^e^{to s}^t^a^t^e^la^w^s^{on pr}^e^s^c^r^iptio^{n dr}^ug^s^.^A^de^ta^ile^{d e}^x^am^ina^tion^of^the
^pr^e^e^m^{ption is}^s^u^e^,^how^e^v^e^r^{, is}^bey^ond^the^s^c^o^p^e^of^this^r^e^por^t^.
¹²⁰^L^e^tte^r^f^r^om^W^illiam^K^.^H^ubba^rd,^A^s^s^o^cⁱ^a^t^e^Co^m^m^is^sⁱ^one^{r f}^o^r^P^o^li^cy^a^nd^P^l^aⁿ^ning^{, F}^o^o^d^aⁿ^{d D}^r^ug^A^d^mⁱ^nis^t^ra^tion
^{to t}^h^e^H^oⁿ^o^r^a^ble^Tⁱ^m^P^a^w^l^eⁿ^t^y^{, G}^o^v^e^r^nor^of^Minne^s^o^ta^{3 (}^F^e^b^r^u^a^r^y^{23, 20}⁰⁴⁾^{, ht}^tp:/^/w^w^w^.^f^da^.g^ov^/^o^c^/^opa^c^o^m^/
^hott^opic^s^/ⁱ^m^portdrug^s^/^p^a^w^le^nt^y⁰²²³⁰⁴^.htm^{l. In}^the^Mⁱⁿⁿ^e^s^ota^w^a^rⁿ^ing^le^tte^{r, t}^h^e^FDA^e^x^plic^itly^note^d^tha^t
^Minne^s^o^ta^’^s^ow^{n ins}^p^e^c^tⁱ^on^of^s^o^m^e^of^the^r^e^c^o^m^m^e^nde^{d C}^a^na^diaⁿ^p^h^a^r^m^a^cⁱ^e^s^ha^{d r}^e^v^e^a^l^e^d^poteⁿ^tⁱ^a^l^s^a^f^e^t^y
^vⁱ^ola^tions^.^Id^.^a^t^1-^3.
¹²¹^Id^{. O}ⁿ^e^p^o^ssible^e^x^plaⁿ^a^tⁱ^{on f}^o^{r t}^h^e^FDA^’^{s sile}^nc^e^w^{ith re}^spe^c^t^{to t}^h^e^le^g^a^lity^o^f^Minne^sota^{’s a}^c^tio^ns^c^oul^{d be}^t^h^a^t
ⁱ^tⁱ^s^un^cl^{ear w}^h^et^h^e^{r t}^h^{e st}^at^{e i}^s^“cau^siⁿ^g^{” t}^h^{e p}^r^ohⁱ^bⁱ^t^e^dⁱ^m^p^o^r^t^a^tⁱ^oⁿ^actⁱ^vⁱ^t^yⁱⁿ^vi^o^l^atⁱ^oⁿ^o^f^t^h^{e st}^at^u^t^e,ⁱⁿ^p^a^rt^b^ecau^se
^the^s^t^a^t^e^ne^ithe^r^im^por^ts^dr^ug^s^f^r^o^m^C^a^na^da^nor^a^llow^s^c^ons^um^e^r^s^{to or}^de^r^dir^e^c^tly^thr^o^ug^{h its}^w^e^bs^ite^{. O}ⁿ^the^ot^he^r
^ha^nd,^the^Minⁿ^e^s^ota^w^e^bs^ite^doe^s^pr^ov^ide^or^de^r^f^o^r^m^s^,^pr^ic^ing^inf^o^r^m^a^{tion, a}ⁿ^{d i}ⁿ^s^t^r^u^c^tⁱ^ons^on^h^o^w^{to s}^u^bm^{it a}ⁿ^or^de^r
^{to t}^h^e^re^c^o^m^m^e^nde^{d p}^h^a^r^m^a^cⁱ^es^{, a}^{nd s}^u^c^h^a^c^tions^m^a^y^be^e^noug^{h t}^o^e^s^ta^blis^h^tha^t^Minⁿ^e^s^ota^is^f^a^c^ilita^ting^ille^g^a^l
^im^porta^tion.^Se^e^htt^p^://w^ww^.sta^te^.m^n.us/porta^l/^mⁿ^/js^p/hom^e^.^do?^a^g^eⁿ^c^y⁼^R^x^{to v}ⁱ^e^w^Minne^sota^{’s w}^e^bsite^.

implemented a plan to import drugs from Canada and certain European countries, despite the
agency’s earlier pronouncement that it would refrain from suing states and localities as long as ¹²²
those entities imported drugs from Canada and not from other countries. One possibility is that
the agency is “simply waiting for a state to actually buy foreign drugs for their residents, which ¹²³
would constitute direct commercial importation, before taking legal action.” Although several
localities are importing drugs directly, “the FDA has not gone after these cities because they are ¹²⁴
too small.” Previously, the FDA had indicated that it had not yet sued states or localities
because “the agency wants to first win its case against Rx Depot, giving FDA bargaining power ¹²⁵
for the more difficult task of taking formal action against states and local governments.”
However, in the Rx Depot case, which involved a private company that helped individual
consumers import prescription drugs, the FDA successfully concluded its lawsuit when Rx Depot
agreed to enter into a consent decree that permanently enjoins the company from the importation ¹²⁶
of unapproved prescription drugs. The Rx Depot case is discussed in detail in the following
section.
Although the FDA has refrained thus far from taking legal action against both states and
individual consumers who import prescription drugs in violation of the FDCA, the agency has
pursued legal action against businesses that facilitate the importation of such drugs. Unlike
pharmacies, which receive orders from consumers and dispense drugs directly, some businesses
facilitate drug sales without dispensing drugs directly. Rather, these companies, many of which
are online, act as middlemen between consumers, who provide medical and payment information,
and foreign (typically Canadian) pharmacies, which then ship drugs directly to consumers. The
FDA has pursued legal action against at least one such business. That case is discussed in detail in
this section, while separate but related issues involving online pharmacies are discussed in CRS
Report RS21711, Legal Issues Related to Prescription Drug Sales on the Internet.
In United States v. Rx Depot,¹²⁷ the Department of Justice (DOJ), acting on behalf of the FDA,
filed suit against Rx Depot, a storefront operation that helped U.S. consumers obtain prescription ¹²⁸
drugs from Canada. In the suit, DOJ contended that Rx Depot was violating two provisions of

¹²²^Iⁿ^sⁱ^de^W^a^s^h^ing^t^oⁿ^Publ^is^he^r^s^,^F^D^{A Sig}ⁿ^a^l^{s Re}^luc^t^anc^e^to^S^u^e^Illi^{nois f}^o^{r Imp}^o^rtin^{g Dru}^g^s,^FD^A^W^EEK^{, A}^u^g^u^s^t^20,
²⁰⁰^4.
¹²³^Iⁿ^sⁱ^de^W^a^s^h^ing^t^oⁿ^Publ^is^he^r^s^,^C^M^{S C}^oul^{d Re}^f^u^s^e^M^e^dic^a^id^Ap^pr^ov^als^f^o^r^Rx^-^I^m^por^tⁱⁿ^g^St^ate^s^,^FD^A^W^EEK^,
^Dece^m^b^{er 1}⁰^,²⁰⁰⁵^.^E^v^enⁱ^f^{a st}^at^{e were t}^oⁱ^m^p^o^r^t^d^r^u^g^{s d}ⁱ^rect^l^y^,^h^o^w^ev^er,^t^h^{e Cen}^t^{ers f}^o^{r M}^e^dⁱ^{care an}^d^M^e^dⁱ^cai^d
^Se^rv^ic^e^s^{(CMS) m}^a^y^be^be^tte^{r po}^sitione^d^to^ha^{lt s}^u^c^h^st^a^t^e^a^c^tiv^itie^{s tha}ⁿ^t^h^e^FDA^w^{ould be}^{, si}^nc^e^th^e^FDA^w^ould
^ha^v^e^{to e}ⁿ^g^a^g^e^{in pote}ⁿ^tia^lly^le^ng^thy^litig^a^{tion ov}^e^r^the^issue^,^w^h^ile^{CMS c}^o^uld^de^ny^a^pprov^a^l^f^o^{r a}ⁿ^y^st^a^t^e^Me^dic^aⁱ^d
^plaⁿ^t^h^a^t^c^o^ntaⁱ^ne^d^a^dr^ug^im^por^ta^tion^pr^og^r^a^m^,^the^r^e^b^y^e^lⁱ^m^ina^ting^w^h^a^t^w^{ould o}^t^he^r^w^is^e^be^a^sⁱ^gⁿ^if^ic^aⁿ^{t s}^our^c^e^of
^s^t^a^t^e^f^unding^f^o^{r im}^porta^tio^{n a}^c^tⁱ^v^itie^s^.
¹²⁴^Id^.
¹²⁵^Iⁿ^sⁱ^de^W^a^s^h^ing^t^oⁿ^Publ^is^he^r^s^,^F^D^{A To Re}^s^o^lv^e^Rx^D^e^pot^Su^{it Be}^f^o^r^e^Takⁱⁿ^g^on^St^ate^s^,^FD^A^W^EEK^{, O}^c^tobe^r^31,
²⁰⁰^3.
¹²⁶^P^r^e^s^s^R^e^le^a^s^e^,^{Food a}^{nd D}^r^ug^A^d^mⁱ^nis^t^r^a^{tion, R}^x^D^e^p^o^{t A}^g^r^e^e^sⁱⁿ^C^o^ns^eⁿ^{t D}^e^c^r^e^e^{to C}^e^a^s^e^I^m^por^ting^Uⁿ^a^p^pr^ov^e^d
^D^r^ug^s^f^r^o^m^C^a^na^da⁽^A^ug^us^{t 20, 2}⁰⁰⁴⁾^,^http:^//w^w^w^.f^da^.g^ov^/^bbs^/^t^op^ic^s^/^ne^w^s^/²⁰⁰^4/^N^E^W⁰¹¹⁰^5.h^t^m^l^.
¹²⁷²⁹^{0 F}^.^S^u^p^p^.^2d¹²³⁸⁽^D^{. O}^k^la^{. 2}⁰⁰³⁾⁽^o^r^d^e^r^g^r^aⁿ^ting^pr^e^lim^ina^r^y^inju^nc^tioⁿ⁾^.
¹²⁸^{DOJ initia}^te^d^{this la}^w^s^{uit a}^f^te^{r Rx}^De^{pot f}^a^ile^{d to re}^sp^on^d^t^o^the^a^g^eⁿ^c^y^’s^w^a^rning^le^tte^{r a}^{nd c}^ontⁱⁿ^ue^{d t}^o^f^a^c^ilita^te
^the^im^por^ta^tio^{n of}^pr^e^s^c^r^ipti^on^dr^ug^s^a^{nd t}^h^e^im^por^ta^tio^{n of}^uⁿ^a^ppr^ov^e^d^dr^ug^s^.^Se^e^L^e^tte^{r f}^r^o^m^Da^vⁱ^{d J. Hor}^o^w^itz^,
^Es^{q., D}ⁱ^r^e^c^t^or^{, O}^f^fⁱ^ce^of^C^o^m^p^lia^nc^e^,^C^e^nte^r^f^o^r^D^r^ug^Ev^a^l^ua^tio^{n a}^{nd R}^e^s^e^a^r^c^h^{, F}^o^o^d^aⁿ^{d D}^r^ug^A^d^mⁱ^nis^t^r^a^{tion, t}^o
^H^a^rr^y^Le^e^J^one^s^,^Store^Ma^na^g^e^r,^Rx^D^e^{pot, Inc}^.^{, (Ma}^r^c^h²¹^{, 2}⁰⁰³⁾^,^htt^p^://w^w^w^.^f^da^.g^ov^/^f^oi/w^a^r^ning_le^tte^rs^/a^rc^hiv^e^/
⁽^c^onti^nue^d.^..)

the FDCA, namely the provision prohibiting importation and the provision prohibiting the ¹²⁹
introduction into interstate commerce of any drug that violates the act’s approval requirements.
Although Rx Depot was not directly importing drugs, the company admitted that it was “engaged
in the business of causing the shipment of U.S.-manufactured and unapproved, foreign-¹³⁰
manufactured prescription drugs from Canadian pharmacies to U.S. citizens.”
Rx Depot countered that the FDA was not actually concerned about the safety of imported drugs
because the agency had never tested the drugs it bought from Rx Depot as part of a sting ¹³¹
operation against the company. Similar complaints have been voiced by other businesses that
facilitate the importation of prescription drugs. Critics of FDA’s importation stance also argue that
it “fails to protect the public health because it allows individuals to import drugs, while ¹³²
prohibiting ‘commercial’ operations that are in the best position to develop safeguards,” and ¹³³
allege that the FDA’s importation procedures may violate international trade agreements.
Ultimately, critics argue that the FDA’s procedures protect the profits of drug manufacturers at the ¹³⁴
expense of consumer pocketbooks.
Despite these arguments, the district court held against Rx Depot during a preliminary ruling in
the case. Concluding that “Rx Depot’s importation of prescription drugs clearly violates the law,”
the district court issued a preliminary injunction enjoining Rx Depot from facilitating the ¹³⁵
importation of prescription drugs. While the court’s order was not actually a final order on the
merits of the case, it did indicate that DOJ had a substantial likelihood of prevailing in the
lawsuit. Indeed, the court appeared particularly concerned with the safety of imported drugs:
^[U^]n^approv^{ed p}^r^es^cri^p^tⁱ^oⁿ^dr^u^g^s^an^{d dru}^g^sⁱ^m^port^e^{d f}^r^om^f^o^rei^gⁿ^couⁿ^t^ri^e^s^b^y^s^o^m^e^on^e
^oth^e^{r th}^aⁿ^th^e^U.S.-m^aⁿ^uf^act^{urer do n}^o^{t h}^a^v^e^th^e^s^a^m^e^a^s^s^u^r^aⁿ^{ce of}^s^a^f^e^t^y^an^{d e}^f^fⁱ^cac^y^a^s
^dru^g^s^regu^l^a^t^e^{d b}^y^t^h^{e F}^{ood an}^{d Dru}^g^A^d^mⁱⁿⁱ^s^t^ratⁱ^oⁿ^.^{... Bec}^a^u^s^{e t}^h^{e drug}^s^{are n}^o^t^s^u^bj^ect
^{to FD}^A^ov^ersⁱ^gh^{t a}ⁿ^{d are n}^o^t^con^tinu^ous^l^y^uⁿ^d^{er t}^h^{e cus}^t^o^d^y^of^{a U.}^S.^m^a^nuf^actu^r^{er or}
^au^t^h^ori^{zed di}^s^t^ri^but^{or, t}^h^ei^{r qu}^alⁱ^t^yⁱ^s^l^e^s^s^predi^c^t^a^bl^{e t}^h^{an dru}^g^s^obt^aiⁿ^e^{d i}ⁿ^t^h^{e U}ⁿⁱ^t^e^d
^States^{. For in}^s^t^aⁿ^{ce, th}^{e drug}^s^m^a^y^{be con}^t^a^mⁱⁿ^{ated, cou}ⁿ^t^er^{feit, or con}^t^ain^{erratic am}^oun^t^s
^of^th^{e acti}^v^{e i}ⁿ^g^r^edieⁿ^t^{or dif}^f^eren^{t ex}^cipieⁿ^ts^.^A^l^s^o^{, th}^{e drug}^s^m^a^y^h^a^v^e^been^h^e^{ld un}^der¹³⁶
^uⁿ^cert^aⁱⁿ^s^t^ora^g^{e con}^dⁱ^tⁱ^ons^{, an}^{d t}^h^eref^{ore be ou}^t^d^at^{ed or s}^u^bpot^en^t^.

^(...c^on^tin^ue^d)
^g³⁸⁸⁸^d.^pdf^{. T}^h^e^FD^A^ha^s^s^e^{nt s}ⁱ^m^ila^r^w^a^rning^le^tte^rs^{to othe}^r^busⁱⁿ^e^s^s^e^s^tha^t^f^a^c^ilita^te^the^im^porta^tion^of^pre^s^c^r^iptioⁿ
^dr^ug^s^.^S^ee,^e.^g^.^{, L}^e^tte^r^f^r^om^D^a^vⁱ^{d J}^.^H^o^r^o^w^itz^{, Es}^q.,^Dⁱ^r^e^c^t^or^{, O}^f^fⁱ^c^e^of^C^o^m^p^lia^nc^e^,^C^e^nte^r^f^o^r^D^r^ug^Ev^a^l^ua^tion^aⁿ^d
^Research^,^F^o^o^d^an^{d Dru}^g^A^d^mⁱⁿⁱ^st^ratⁱ^oⁿ^,^t^o^G^.^Aⁿ^t^h^on^y^Ho^ward^,^P^r^esi^d^eⁿ^t^,^Caⁿ^a^{Rx S}^e^rvi^ces,^In^c.^,^(S^ep^t^e^m^b^{er 1}⁶^,
²⁰⁰^3),^htt^p^://w^ww^.^f^da^.g^ov^/^c^de^r/w^a^rn/²⁰^03/^RHow^a^r^d.pdf^.
¹²⁹^Uⁿ^ite^d^Sta^t^e^s^v^.^R^x^D^e^pot,²⁹^{0 F}^.^Su^pp^{. 2}^d¹²^{38 (}^D^.^O^k^la^{. 20}⁰³⁾⁽^o^r^d^e^r^g^r^aⁿ^ti^ng^pr^e^lim^ina^r^y^injunc^tⁱ^on)^;^{see a}^l^so
^{21 U}^.^S.C^.^§§³³¹⁽^d)^,³³¹⁽^t)^{, a}^nd³⁵⁵^.
¹³⁰^Rx^D^e^pot^{, 29}⁰^F^.^Su^pp^.²^d^at¹²⁴¹^.
¹³¹^Iⁿ^sⁱ^de^W^a^s^h^ing^t^oⁿ^Publ^is^he^r^s^,^R^x^D^e^pot:^FD^A^Alle^ge^d^S^a^fe^ty^C^oⁿ^c^e^r^ns^W^{ith Re}^im^por^t^a^ti^{on Ar}^e^B^o^gus^{, FD}^A
^W^EEK^{, N}^o^v^e^m^b^e^r^{7, 200}^3.
¹³²^Id^.^.
¹³³^Iⁿ^sⁱ^de^W^a^s^h^ing^t^oⁿ^Publ^is^he^r^s^,^C^ana^Rx^S^a^y^s^{FDA’s Re}^imp^o^rtati^oⁿ^P^o^lⁱ^{cy V}ⁱ^o^l^at^{es T}^r^a^d^e^A^g^reemen^t^s^{, FD}^A^W^EE^K^,
^No^ve^m^b^er⁷^,²⁰⁰³^.
¹³⁴^Ma^r^c^K^a^uf^m^a^n,^{FDA’s Auth}^ority^Te^ste^d^Ov^e^r^{Drug Imp}^o^rts^{, W}^AS^H^.^P^OS^T^{, N}^o^v^e^m^b^e^r^{9, 2}⁰⁰³^{, a}^t^A^11.
¹³⁵^Rx^D^e^pot^{, 29}⁰^F^.^Su^pp^.²^d^at¹²⁴⁷^.
¹³⁶^Id^.^a^t¹²^41-⁴²^.

With regard to Rx Depot, the court specifically noted that drugs ordered through the company
were often dispensed in quantities greater than prescribed and did not contain the required
package inserts. Although the court acknowledged that the cost of prescription drugs in the U.S. is
high and that there are no known cases of an individual who has suffered harm from drugs
imported through Rx Depot, the court nevertheless concluded that the FDA has legitimate safety
concerns and that Congress is in the best position to resolve the tension between prescription drug ¹³⁷
safety and cost.
Shortly after the court issued the preliminary injunction, Rx Depot agreed to enter into a consent
decree with the FDA. Under the terms of the consent decree, Rx Depot “admitted liability for
causing the importation of unapproved new drugs and U.S.-manufactured drugs in violation of ¹³⁸
the act and agreed to permanently cease such activities.” In the wake of the consent decree, the ¹³⁹
legal battle continued, as the U.S. requested disgorgement of Rx Depot’s profits. The federal
court of appeals found that disgorgement was an appropriate remedy under the FDCA because
disgorgement “furthers the purposes of the FDCA by deterring future violations of the Act which ¹⁴⁰
may put the public health and safety at risk.” Many companies like Rx Depot remain in ¹⁴¹
business, and a number of states and localities have contemplated or implemented their own
importation programs. In response, several drug manufacturers have begun limiting sales of their
drugs to Canadian pharmacies in an effort to prevent the drugs from being resold in the U.S. at
cheaper prices. These actions have raised questions about whether such behavior violates federal
antitrust laws, a topic that is discussed in the following section.

As noted above, several major prescription drug manufacturers have responded to the rise in the
number of businesses and consumers that are importing cheaper drugs into the U.S. by reducing
the supply of such drugs to distributors and pharmacies in Canada, where most of the imported ¹⁴³
drugs originate. Although some manufacturers argue that restrictions on sales are designed to
prevent drug shortages in Canada, such moves may instead be intended to limit Canadian
distributors and pharmacies to selling prescription drugs to Canadian consumers only, rather than
selling excess supplies of prescription drugs to U.S. consumers at cheaper prices than such
consumers would pay for similar drugs in the United States. As a result, several members of
Congress have questioned whether these drug manufacturers are violating federal antitrust ¹⁴⁴^th¹⁴⁵
laws. Several bills introduced in the 109 Congress would have prohibited such sales tactics,

¹³⁷^Id^.^a^t¹²^41-⁴²^{, 1}²⁴⁵^.
¹³⁸^P^r^e^s^s^R^e^le^a^s^e^,^{Food a}^{nd D}^r^ug^A^d^mⁱ^nis^t^r^a^{tion, R}^x^D^e^p^o^{t A}^g^r^e^e^sⁱⁿ^C^o^ns^eⁿ^{t D}^e^c^r^e^e^{to C}^e^a^s^e^I^m^por^ting^Uⁿ^a^p^pr^ov^e^d
^D^r^ug^s^f^r^o^m^C^a^na^da⁽^A^ug^us^{t 20, 2}⁰⁰⁴⁾^,^http:^//w^w^w^.f^da^.g^ov^/^bbs^/^t^op^ic^s^/^ne^w^s^/²⁰⁰^4/^N^E^W⁰¹¹⁰^5.h^t^m^l^.
¹³⁹^Uⁿ^ite^d^Sta^t^e^s^v^.^R^x^D^e^pot,⁴³^{8 F}^.^3d¹⁰⁵²^{, 1}⁰⁵³⁽²⁰⁰⁶⁾^,^c^e^r^{t. de}^nie^d¹²⁷^{S. Ct}^{. 8}⁰⁽²⁰^06).
¹⁴⁰^Id^.^a^t¹⁰⁵⁸^{, 1}⁰⁶¹^.
¹⁴¹^F^o^{r exam}^p^l^e,ⁱⁿ^{a case agai}ⁿ^s^t^{a b}^u^sⁱⁿ^{ess si}^mⁱ^l^a^{r t}^o^{Rx Dep}^o^t^,^t^h^e^F^D^A^w^oⁿ^{a p}^e^rm^an^en^tⁱⁿ^j^uⁿ^c^tⁱ^{on t}^h^at^en^j^oⁱⁿ^{s a}
^c^o^m^p^aⁿ^y^k^now^{n a}^s^C^a^na^da^C^a^r^e^f^r^o^mⁱ^m^por^ting^uⁿ^a^p^pr^ov^e^d^pr^e^s^c^r^iptioⁿ^dr^ug^s^.^P^r^e^s^s^R^e^le^a^s^e^,^Fo^o^d^aⁿ^d^D^r^ug
^A^d^mⁱ^nis^t^r^a^{tion, C}^our^t^H^a^lts^I^lle^g^a^{l I}^m^por^ta^tion^of^P^r^e^s^c^r^iptⁱ^oⁿ^D^r^ug^s⁽^D^e^c^e^m^b^e^r^{27, 2}⁰⁰⁴⁾^,^http^://^w^w^w^.^f^da^.g^ov^/^bbs^/
^topic^s^/^A^N^S^W^E^R^S^/200^4/^A^N^S01337.^htm^l^.
¹⁴²^T^h^{is se}^c^{tion w}^a^s^w^r^itte^{n by}^Ja^nic^e^{E. Ru}^bin^,^L^e^gⁱ^sla^tiv^e^A^ttorne^y^{in the}^A^m^e^rⁱ^c^aⁿ^L^a^w^Di^vⁱ^{sion of}^CRS.
¹⁴³^F^o^l^l^o^wⁱⁿ^{g t}^h^{e exa}^m^p^l^{e set}^b^y^G^l^axo^S^mⁱ^t^h^Klⁱⁿ^e,^P^fⁱ^{zer In}^c.^,^t^h^{e w}^o^rl^d^’^s^bⁱ^ggest^d^r^u^g^m^aⁿ^u^f^a^c^t^u^rer,^al^so^an^no^un^ced
^tha^t^the^c^o^m^p^aⁿ^y^wa^{s li}^m^iting^sa^le^{s of}^pre^s^c^r^iption^dr^ug^{s to Ca}^na^dⁱ^aⁿ^pha^rm^a^cⁱ^e^s^tha^t^re^{sold suc}^h^dr^ug^{s to U.S}^.
^c^ons^um^e^r^s^.^C^e^cⁱ^C^onno^lly^,^Pfize^r^{Cuts S}^u^p^p^lie^{s t}^o^Ca^na^di^{an Dru}^g^s^tore^s^{, W}^AS^H^.^P^OS^T^{, Fe}^br^ua^r^y^19,²⁰^04,^a^t^A^10.
¹⁴⁴^Iⁿ^sⁱ^de^W^a^s^h^ing^t^oⁿ^Publ^is^he^r^s^,^L^a^wma^{kers S}^{eek DOJ A}ⁿ^tⁱ^-^T^r^u^s^t^P^r^o^b^e^o^f^Fⁱ^{rms L}ⁱ^mi^tⁱⁿ^g^Sa^l^e^{s t}^o^C^aⁿ^a^d^a^{, FD}^A
⁽^c^onti^nue^d.^..)

and similar legislation was introduced in the 110^th Congress.¹⁴⁶ Furthermore, a federal district
court issued what appears to be the first ruling regarding antitrust allegations against several drug ¹⁴⁷
manufacturers and the decision was affirmed on appeal. In addition, at least one state has
launched an investigation into whether the drug manufacturer GlaxoSmithKline (GSK) has ¹⁴⁸
violated state antitrust laws. This section discusses the potential federal and state antitrust
issues raised by the decision of certain drug manufacturers to limit the supply of drugs to
Canadian distributors and pharmacies.
Federal antitrust law is concerned with the competitiveness of markets (competition), and not
with the competitors—unless they have suffered an injury as a result of an actionable wrong
under the antitrust laws. Similarly, the achievement or implementation of specific programs or
goals is not a concern of the federal antitrust laws. It is not a given, therefore, that existing federal
antitrust laws could be successfully employed to challenge pharmaceutical manufacturers whose
actions appear either to reduce the U.S. supply of imported prescription drugs or to make it more
difficult for Americans to purchase prescription drugs from other countries, including Canada.
First, neither current antitrust statutes nor doctrine make unlawful the market-oriented activities ¹⁴⁹
of individual entities, unless, under certain circumstances, the entity is a monopolist. Section 1 ¹⁵⁰
of the Sherman Act makes illegal “[e]very contract, combination ... or conspiracy, in restraint
of trade or commerce ... .” That provision, by its terms, may only be violated by multiple parties
engaged in concerted, or joint action. Thus, it would not currently be applicable to, for example, a
drug manufacturer who, on his own, and not in agreement with another drug manufacturer or ¹⁵¹
other person, refuses to supply, or reduces supplies to, a Canadian or other non-U.S. pharmacy.
^T^h^{e Sh}^er^m^aⁿ^A^c^{t [15 U.S.C}^.^{§§ 1-}^{7] c}^oⁿ^t^ain^s^a^‘^b^as^{ic dis}^tⁱⁿ^ction^bet^w^eeⁿ^con^{certed an}^d
ⁱⁿ^d^e^p^eⁿ^d^en^{t actio}ⁿ^.^’^T^h^{e cond}^uct^of^{a s}ⁱ^ngl^{e f}ⁱ^r^mⁱ^s^gover^ned^{by § 2}^[of^t^h^{e Sher}^m^an^Act^,¹⁵
^U^.^S.C^.^{§ 2}^]^al^one^andⁱ^s^unl^a^w^f^u^l^onl^{y w}^h^{en i}^t^t^h^r^e^at^ens^ac^t^ual^m^ono^polⁱ^z^atⁱ^oⁿ^{. I}^tⁱ^s^no^t
^en^oug^h^t^h^{at a s}ⁱ^ng^le^fⁱ^r^m^ap^pears^{to ‘}^r^es^train^trade’^uⁿ^r^e^a^s^oⁿ^a^bl^y^,^f^o^{r ev}^eⁿ^{a v}ⁱ^g^o^rous
^com^p^eti^t^or^m^a^y^lea^v^{e t}^h^{at i}^m^pres^sⁱ^on^{.... Secti}^{on 1 of}^t^h^e^Sher^m^aⁿ^{Act [15 U.S.C}^.^{§ 1], i}ⁿ
^con^t^ras^t^{, reach}^e^s^un^reas^oⁿ^able^res^t^rain^ts^of^trad^{e e}^f^f^{ected b}^y^a^‘^c^on^{tract, co}^m^bⁱⁿ^atioⁿ^{. .}^{. or}

^(...c^on^tin^ue^d)
^W^EEK^{, N}^o^v^e^m^b^e^r^{7, 200}^3.
¹⁴⁵^S^ee,^e.^g^.^,^H^.^R^.³²^{8; S. 33}^4.
¹⁴⁶^S^ee,^e.^g^.^,^H^.^R^.³⁸^{0; S. 24}^2.
¹⁴⁷^{In Re}^{: Ca}^na^dⁱ^aⁿ^Im^{port A}ⁿ^titr^ust^L^itig^{., 38}^{5 F.}^Su^pp^{. 2}^d⁹³^{0 (D.}^Minn^{. 2}⁰⁰⁵^),^aff’^d^,⁴⁷⁰^F.^3d⁷⁸⁵⁽⁸^th^Cⁱ^r^.²⁰⁰⁶⁾^.
¹⁴⁸^Iⁿ^sⁱ^de^W^a^s^h^ing^t^oⁿ^Publ^is^he^r^s^,^J^u^dge^W^aⁿ^t^s^M^o^r^e^Iⁿ^f^o^Be^for^e^D^e^cⁱ^din^g^M^o^ti^on^{to C}^o^m^p^e^l^A^g^aⁱ^ns^{t G}^S^K^{, FD}^A
^W^EEK^{, N}^o^v^e^m^b^e^r^{21, 20}⁰³^.
¹⁴⁹
^For^a^m^o^r^e^de^ta^ile^{d d}ⁱ^s^c^us^sⁱ^on^of^this^is^s^u^e^,^s^e^e^C^R^S^R^e^p^o^r^t^R^L³³⁷^08,^The^Dⁱ^s^tⁱⁿ^c^tio^{n Be}^tw^e^eⁿ^M^oⁿ^opo^ly^a^nd
^M^ono^poliz^atio^{n i}ⁿ^Aⁿ^titr^{ust L}^a^w^,^an^d^{CRS Re}^p^o^r^t^RS2⁰²⁴¹^,^M^oⁿ^o^poly^an^{d M}^oⁿ^o^p^o^liz^a^tio^{n -}^Fu^nda^m^e^{ntal B}^u^t
^Se^par^ate^Co^nc^e^p^{ts in}^U.S.^An^titru^s^{t Law}^,^by^J^a^nic^e^{E. R}^ubi^{n, a}^{nd C}^ong^r^e^s^sⁱ^ona^{l D}ⁱ^s^t^rⁱ^but^io^{n Me}^m^o^r^a^ndum^,^D^u^ty^of^a
^M^ono^polis^t^{to D}^e^a^l^,^by^J^a^nic^e^{E. R}^ubi^n.
¹⁵⁰^{15 U}^.^S.C^.^§^§^1-^7.
¹⁵¹^S^ee^infra^the^se^c^tio^{n of}^th^{is re}^por^{t on}^“^S^ta^te^Aⁿ^{titrust L}^a^w^”^re^g^a^rdiⁿ^g^the^e^x^iste^nc^e^a^t^the^sta^t^e^le^v^e^{l of}^som^e
^unila^te^ra^{l re}^stra^int^of^tra^d^e^pr^ov^isions.

^con^s^pi^rac^y^’^bet^w^eeⁿ^s^e^par^a^t^e^en^titie^{s. I}^t^d^o^e^{s n}^o^{t r}^e^a^c^h^coⁿ^d^u^c^{t t}^h^{at is}^‘^w^h^o^l^l^y¹⁵²
^uⁿⁱ^later^a^l.’^”
Moreover, the Court long ago noted in United States v. Colgate that
^th^{e [Sh}^e^r^m^an^{] act does}ⁿ^o^{t res}^t^{rict th}^{e lon}^g^rec^ogn^{ized rig}^h^t^of^{[a] trade}^r^o^r^m^a^nuf^act^u^r^er
^e^nga^ge^dⁱⁿ^aⁿ^eⁿ^tⁱ^r^e^l^{y p}^rⁱ^v^a^t^e^b^u^si^ne^ss,^fr^e^e^l^{y t}^o^e^x^e^r^cⁱ^se^hi^s^o^w^{n i}ⁿ^d^e^p^e^nd^eⁿ^t^dⁱ^sc^r^e^tⁱ^o^{n a}^s
^{to parties}^w^ith^w^h^o^m^h^e^wⁱ^l^l^{deal; an}^{d, of}^cou^r^s^e^{, h}^e^ma^y^ann^oun^{ce i}ⁿ^adv^aⁿ^{ce t}^h^e¹⁵³
^cir^c^u^m^staⁿ^{ces u}ⁿ^d^er^w^h^ic^h^h^e^w^ill^r^e^f^u^se^to^sell.
The U.S. Court of Appeals for the Federal Circuit added that the fundamental Colgate precept of
seller choice set out above is not altered by the applicability of either the patent or copyright law
to the item(s) in question, unless it is judicially determined that the patent or copyright in question ¹⁵⁴
was fraudulently procured.
Second, whether certain joint activity is unlawful and therefore violates the antitrust statutes is
not always susceptible of proof. Although the Supreme Court has indicated several times that a
formal contract may not be necessary to establish the collective action required by section 1, an ¹⁵⁵
antitrust violation may be found if the unlawful agreement can be inferred from the totality of ¹⁵⁶
surrounding circumstances.
In 1984, in Monsanto Co. v. Spray-Rite Service Corp., the Court said:
^T^h^{e correct s}^t^an^{dard is}^th^{at there}^m^u^s^t^{be ev}^ideⁿ^{ce th}^at^ten^d^s^{to ex}^cl^u^d^{e th}^{e pos}^sⁱ^bilⁱ^t^y^o^f
ⁱⁿ^d^e^p^eⁿ^d^en^{t actio}ⁿ^b^y^t^h^{e [}^p^ar^ties]^{. T}^h^{at is, th}^{ere m}^u^s^t^{be dir}^{ect or circu}^m^s^t^{antial ev}^ideⁿ^ce
^th^{at reas}^on^abl^y^teⁿ^d^s^{to prov}^{e th}^{at t}^h^{e [p}^arties^]^h^a^{d a con}^s^cio^u^s^co^m^mⁱ^t^m^eⁿ^{t to a co}^m^m^on¹⁵⁷
^s^c^h^e^m^e^desⁱ^gⁿ^e^{d t}^o^achⁱ^e^v^e^aⁿ^un^l^a^w^f^ul^obj^ectⁱ^v^e.
“Conscious parallelism” is the term often given to uniform or synchronous business behavior, ¹⁵⁸
which, while prima face evidence of concerted behavior, is not proof of unlawful agreement. In

¹⁵²^C^o^p^p^e^r^w^e^{ld C}^o^r^p^{. v}^.^I^nde^pe^ndeⁿ^c^e^T^ube^C^o^r^p^.,⁴^{67 U}^.^S.⁷⁵^2,⁷⁶⁷^-^{68 (}¹⁹⁸⁴⁾⁽^r^u^li^ng^tha^t^a^pa^r^e^{nt c}^o^r^por^a^tⁱ^{on w}^a^s
^not^le^g^a^ll^y^c^a^p^a^b^le^of^c^onspiring^w^{ith its ow}^{n w}^holly^ow^ne^{d subsidia}^ry^{, a}^{nd so c}^o^uld^no^{t be}^g^u^ilty^of^c^onspira^c^y⁾
^(c^ita^{tions a}ⁿ^{d f}^oot^note^om^itte^{d) (}^e^m^pha^{sis a}^dde^d).
¹⁵³^Uⁿ^ite^d^Sta^t^e^s^v^.^C^o^lg^a^t^e^&^C^o^.,²⁵⁰^U^.^S.³^00,³^{07 (}¹⁹¹⁹⁾^.
¹⁵⁴^{In re}^I^nde^peⁿ^d^eⁿ^t^Se^rv^ic^e^Org^a^niz^a^{tions A}ⁿ^titrust^L^itig^a^tio^n,²⁰^{3 F}^.^3d¹³²²^{, 1}³²⁶⁽^F^e^d^{. Cir}^.²⁰⁰⁰^).
¹⁵⁵^T^h^{ere are a s}^m^al^lⁿ^u^m^b^e^{r o}^f^actⁱ^oⁿ^s^(e.^g^.^,^p^rⁱ^{ce f}ⁱ^xiⁿ^g^,^market^al^l^o^catⁱ^oⁿ^,^b^o^y^co^t^t^s^o^r^con^cert^e^d^ref^u^sal^s^t^o^d^eal^{) t}^h^at
^t^h^{e co}^u^r^t^s^h^a^{ve d}^e^si^gn^at^ed^as^p^e^{r se}^vⁱ^ola^tions^of^s^e^c^{tion 1;}^ot^he^r^a^c^tions^a^r^e^aⁿ^a^l^y^z^e^d^pur^s^u^aⁿ^t^to^th^e^R^u^le^of^R^e^a^s^on
^(a^ntic^om^pe^titiv^e^c^onse^que^nc^e^s^we^ig^he^{d a}^g^aⁱ^{nst a}ⁿ^y^proc^om^pe^titive^re^{sult), a}ⁿ^{d o}ⁿ^ly^those^f^oun^{d t}^o^unre^a^s^ona^b^l^y
^r^e^s^t^r^a^{in tr}^a^d^e^a^r^e^c^onsⁱ^d^e^r^e^d^uⁿ^la^w^f^{ul v}ⁱ^ola^tions^of^s^e^c^{tion 1.}
¹⁵⁶^“^N^{o f}^o^rm^a^l^a^g^re^e^m^eⁿ^{t is ne}^c^e^ssa^ry^{to c}^onstitute^aⁿ^uⁿ^la^wf^{ul c}^onspⁱ^ra^c^y^{.... T}^h^e^e^sse^ntia^{l c}^o^m^b^ina^tio^{n or}^c^ons^pira^c^y
^{in v}ⁱ^ola^tⁱ^on^of^the^S^h^e^r^m^aⁿ^A^c^t^m^a^y^be^f^{ound in}^a^c^our^s^e^of^de^a^ling^s^or^ot^he^r^cⁱ^r^c^um^s^t^aⁿ^c^e^s^a^s^w^e^l^l^a^s^{in a}ⁿ^y^e^x^c^h^aⁿ^g^e
^of^w^o^r^d^s^.^[^A^c^ons^pir^a^c^y^{, or}^un^la^w^f^{ul a}^g^r^eem^eⁿ^t^m^a^y^be^f^ound^w^h^e^r^e^]^the^c^ons^pi^r^a^tor^s^ha^{d a}^uⁿ^ity^of^pur^pos^e^or^a
^co^mm^oⁿ^d^e^sigⁿ^an^d^uⁿ^d^e^rstan^dⁱⁿ^g^,^o^r^{a m}^eetin^g^o^f^mⁱⁿ^d^sⁱⁿ^an^uⁿ^l^a^wf^u^l^arran^g^e^m^en^t....^{” Am}^erican^T^o^b^acco^Co^{. v}^.
^Unite^{d S}^t^a^t^e^s^{, 32}^{8 U.}^S.⁷⁸^1,⁸⁰^9-^{10 (}¹⁹⁴⁶⁾^(c^ita^tio^{n om}^itte^d).
¹⁵⁷⁴⁶^{5 U}^.^S^.⁷⁵²^,⁷⁶⁸⁽¹⁹⁸⁴⁾⁽^r^e^f^u^sⁱ^ng^{to f}ⁱ^nd^tha^t^c^onc^e^r^te^{d a}^c^tio^{n m}^a^y^be^inf^e^r^r^e^{d f}^r^o^m^the^f^a^c^t^tha^t^a^s^e^lle^r
^t^e^rmⁱⁿ^at^ed^{a d}^eal^{er a}^f^t^e^{r t}^h^{e sel}^l^e^{r h}^a^d^recei^ved^co^m^p^l^aⁱⁿ^t^s^f^r^o^m^{a c}^o^m^p^etⁱⁿ^{g d}^eal^{er a}^bout^the^te^r^m^ina^t^e^d^de^a^l^e^r^’^s
^pric^ing^p^o^lic^ie^s).
¹⁵⁸^“^T^a^c^{it c}^o^llusⁱ^on,^s^o^m^e^ti^m^e^s^ca^{lled ol}^ig^op^olis^tic^pr^ic^e^c^oor^dina^ti^on^or^c^ons^cⁱ^ous^pa^r^a^lle^lis^m^,^de^s^c^rⁱ^be^s^the^pr^oc^e^s^s^,
^not^{in i}^t^s^e^lf^unla^w^f^u^{l, by}^w^h^ic^{h f}ⁱ^rm^s^{in a}^c^onc^eⁿ^tra^t^e^d^m^a^rke^t^mⁱ^{ght i}ⁿ^e^f^fe^c^t^s^h^a^r^e^m^onop^oly^pow^{er, s}^e^tting^theⁱ^r
^pric^e^s^a^t^a^prof^it-m^a^xⁱ^mⁱ^zⁱ^ng^{, sup}^r^a^c^o^m^p^e^titiv^e^le^v^e^{l b}^y^re^c^o^gⁿ^iz^ing^theⁱ^{r sha}^r^e^d^e^c^oⁿ^o^mⁱ^c^inte^re^{sts a}^{nd t}^h^eⁱ^r
ⁱⁿ^t^e^rd^ep^end^eⁿ^{ce w}ⁱ^t^h^resp^ect^t^o^pri^{ce an}^d^ou^t^p^u^t^d^eci^si^oⁿ^s^.^.^.^.^Fⁱ^rm^{s t}^h^at^{seek t}^o^reco^up^p^r^e^d^at^o^r^y^l^o^{sses t}^h^ro^u^g^h^t^h^e
^c^ons^cⁱ^ous^pa^r^a^lle^lis^m^of^olig^opol^y^m^u^s^t^r^e^l^y^{on unc}^e^r^ta^{in a}ⁿ^{d a}^m^big^uous^sⁱ^gⁿ^a^l^s^t^o^a^c^h^ie^v^e^c^onc^e^r^t^e^{d a}^c^tion.^T^h^e
⁽^c^onti^nue^d.^..)

an early case, for example, the Court held that the circumstances surrounding imposition by eight
motions picture distributors of nearly identical restraints concerning the licensing of first-run
“feature” films were sufficient to create a valid inference that the distributors had acted in
concert, in violation of section 1 of the Sherman Act.
^Itⁱ^s^el^e^m^eⁿ^t^a^r^y^t^h^at^an^un^l^a^w^f^u^l^cons^pi^rac^y^m^a^y^{be a}ⁿ^{d of}^t^eⁿⁱ^s^f^o^r^m^ed^wⁱ^t^h^ou^t
^sⁱ^mu^l^t^aⁿ^e^o^u^s^a^c^tⁱ^oⁿ^o^r^a^g^r^e^e^m^eⁿ^t^oⁿ^t^h^e^p^a^r^t^o^f^th^e^coⁿ^s^pⁱ^rat^o^rs.^A^ccep^tan^ce^b^y^co^m^p^etito^r^s^,
^wⁱ^t^h^o^u^{t p}^r^ev^io^u^s^ag^r^e^e^m^en^{t, o}^f^anⁱⁿ^vⁱ^tatioⁿ^{to participate in}^{a plan}^{, t}^h^{e n}^ece^s^s^a^r^y
^con^s^equ^eⁿ^{ce of}^w^h^ic^h^,ⁱ^f^{carried ou}^{t, is}^res^t^r^aⁱⁿ^{t o}^fⁱⁿ^ter^s^ta^{te co}^m^m^er^{ce, i}^s^s^u^f^fⁱ^cⁱ^en^t^to¹⁵⁹
^estab^lis^h^an^uⁿ^l^a^w^f^u^{l co}ⁿ^s^pⁱ^r^a^c^y^uⁿ^d^e^r^th^{e S}^h^er^m^aⁿ^A^c^t.
In Theatre Enterprises v. Paramount Film Distributing Corp., the Court continued to state that
parallel behavior by itself is not necessarily proof of a conspiracy:
^T^h^{e cr}^u^c^{ial q}^u^e^s^tioⁿⁱ^s^w^h^et^h^e^r^r^e^sp^oⁿ^d^eⁿ^t^s^’^coⁿ^d^u^c^t^to^w^a^r^d^p^e^titioⁿ^e^r^ste^m^m^e^d^f^r^o^m
ⁱⁿ^depen^d^en^t^deci^sⁱ^oⁿ^{or f}^r^om^aⁿ^ag^ree^m^en^t^,^t^aci^t^{or ex}^pres^s^.^{To be s}^u^r^e^,^b^u^sⁱⁿ^e^s^s^b^e^h^a^vⁱ^o^rⁱ^s
^admⁱ^s^s^ible^circ^um^s^t^aⁿ^tial^ev^id^en^{ce f}^r^o^m^w^h^ich^t^h^{e f}^{act f}ⁱⁿ^d^e^r^m^a^y^fⁱⁿ^d^a^g^ree^m^eⁿ^t.^B^u^t^t^hⁱ^s
^Co^ur^t^ha^s^ne^ve^r^he^l^d^t^h^a^t^p^r^o^o^f^o^f^p^a^r^a^l^l^e^l^b^u^sⁱ^ne^ss^b^e^ha^vi^o^r^c^o^nc^l^u^si^ve^l^y^e^s^t^a^b^lⁱ^s^he^s
^ag^ree^m^eⁿ^{t or, ph}^ras^e^{d diff}^er^en^tl^y^,^th^at^s^u^ch^be^h^a^vⁱ^{or it}^s^e^lf^cons^tit^u^t^es^a^Sh^er^m^aⁿ^A^c^t
^o^ffe^nse^.^Ci^r^c^u^m^st^aⁿ^tⁱ^a^l^e^vⁱ^d^eⁿ^c^e^o^f^c^o^nscⁱ^o^u^sl^{y p}^a^r^a^l^l^e^l^b^e^ha^vi^o^r^ma^y^ha^ve^m^a^d^e^he^a^v^y
ⁱⁿ^r^o^ad^{s in}^to^th^{e tr}^ad^itioⁿ^a^{l j}^u^dⁱ^{cial attitu}^d^e^to^w^a^r^d^coⁿ^s^pⁱ^r^a^c^y^{; b}^u^{t “}^c^oⁿ^s^cio^u^s^p^a^r^a^llelis^m^”¹⁶⁰
^h^a^sⁿ^o^t^y^e^{t r}^ead^coⁿ^s^pⁱ^r^a^c^y^o^u^t^o^f^th^{e S}^h^er^m^aⁿ^A^c^{t e}ⁿ^tir^el^y^.
Although the Supreme Court has stated, and lower court decisions have continued to illustrate,
that an unlawful agreement or conspiracy in restraint of trade may be proved by consciously
parallel behavior that is accompanied by any of several “plus” factors—“the additional facts or
factors required to be proved as a prerequisite to finding that parallel action amounts to a ¹⁶¹
conspiracy”—there has not been much agreement or standardization concerning exactly which ¹⁶²
“plus” factors are to be given what, if any, evidentiary weight. The “plus” factors courts have ¹⁶³
considered favorably include artificial standardization of products and raising prices in time of ¹⁶⁴
surplus. Less persuasive is evidence that indicates merely that the parties had an opportunity to

^(...c^on^tin^ue^d)
^si^gn^al^{s are su}^b^j^ect^t^o^mⁱ^siⁿ^t^erp^r^et^atⁱ^oⁿ^and^{are a bl}^un^t^andⁱ^m^p^r^eci^{se mean}^{s o}^f^en^su^riⁿ^g^sm^o^o^t^h^co^operatⁱ^oⁿ^,^esp^eci^al^l^y
ⁱⁿ^t^h^{e co}ⁿ^t^ex^{t o}^f^ch^an^gⁱⁿ^g^o^r^uⁿ^p^r^eced^en^ted^m^a^r^k^{et circu}^m^stan^ces.^T^h^{is an}^tico^m^p^e^titiv^e^mⁱⁿ^u^e^{t is mo}^{st d}ⁱ^f^fⁱ^cu^{lt to}
^c^o^m^pos^e^a^{nd to}^pe^rf^orm^{... .”}^Bro^o^k^e^G^r^{oup, L}^t^{d. v}^.^Br^ow^{n &}^W^illia^m^s^{on T}^ob^acco^Co^r^p^.^,⁵⁰⁹^U.^S^.²⁰⁹^,²²^7,²²⁸
⁽¹⁹^{93) (c}^ita^ti^ons^om^itte^d).
¹⁵⁹^Inte^rsta^te^Circ^uit,^Inc^.^v^.^Uⁿ^ite^d^Sta^t^e^s^{, 30}^{6 U.S}^.²⁰⁸^,²²⁷⁽¹⁹³⁹⁾^(c^ita^tions^om^itte^d).
¹⁶⁰³⁴^{6 U.S}^.⁵³⁷^,⁵^40-⁴⁴⁽¹⁹⁵^{4) (c}^it^a^tions^om^itte^d).
¹⁶¹^S^ee,^e.^g^.^{, In}^re^Ba^by^Food^Aⁿ^{titrust L}^itig^a^tion,¹⁶^{6 F}^.³^d¹¹²^,¹²²^{(3d Cir}^.¹⁹⁹⁹^{) (c}^iti^ng^A^r^e^e^d^a^,^A^NT^I^T^R^U^S^T^L^AW^§
¹⁴³³⁽^e⁾⁾^.
¹⁶²^F^o^{r exam}^p^l^e,^t^h^e^Ba^by^Fo^od^co^u^r^t^,^id^{. a}^t¹²²^,^q^u^o^t^e^d^B^a^la^k^l^a^w^v^.^L^o^v^e^{ll, 822}^F.^Su^pp.⁸⁹^2,⁹⁰^{3 (}^N^.^D^.N^.Y^{. 19}⁹³⁾
^a^{nd c}^ite^{d T}^o^dor^ov^v^.^D^C^H^H^e^a^lthc^a^r^e^A^u^thor^ity^{, 92}^{1 F.}^2d¹⁴³⁸^,¹⁴⁵⁶^note³⁰⁽¹¹^th^Cⁱ^r^.¹⁹⁹¹⁾^{: “}^[^T^]^he^m^e^r^e^pr^e^s^eⁿ^c^e^of
^one^or^m^o^re^of^the^s^e^{‘plus f}^a^c^t^{ors’ doe}^s^not^ne^c^e^ssa^ril^y^m^a^nda^te^the^c^onc^lusioⁿ^t^h^a^t^t^h^e^r^e^w^a^{s a}ⁿ^ille^g^a^{l c}^onspira^c^y
^be^tw^e^eⁿ^the^pa^rtie^{s, f}^o^{r the}^c^o^urt^m^a^y^{still c}^onc^lude^,^ba^se^d^up^{on t}^h^e^e^v^ideⁿ^c^e^be^f^o^re^{it, tha}^t^t^h^e^de^f^e^nda^{nts a}^c^t^e^d
^inde^pe^nde^nt^ly^of^one^a^nothe^r,^aⁿ^d^notⁱⁿ^vⁱ^ola^tioⁿ^of^aⁿ^titrus^t^la^w^s^”^;^“^I^f^aⁿ^inf^e^re^nc^e^of^{... a}ⁿ^a^g^re^e^m^eⁿ^{t m}^a^y^be^dra^wⁿ
^f^r^o^m^hig^h^ly^am^big^uous^e^v^ideⁿ^c^e^,^the^r^e^is^a^c^onsⁱ^d^e^r^a^b^le^da^ng^e^r^tha^t^the^doc^trⁱⁿ^e^s^eⁿ^uⁿ^cⁱ^a^t^e^dⁱⁿ^[^C^oⁿ^tineⁿ^ta^{l T}^.^{V., I}ⁿ^c^.
^v.^GTE^]^Sy^lv^aⁿ^ia^{[, Inc}^.^{, 4}³³^U.S.³⁶⁽¹⁹⁷^7),^no^n-pric^e^re^stra^ints^e^v^a^l^ua^te^{d u}^nde^{r t}^h^e^aⁿ^titr^{ust r}^u^le^of^re^a^s^{on] a}^nd
^Co^lg^a^t^e^[^sup^r^a^note¹⁵^{5, f}^r^e^e^dom^of^se^lle^{r to de}^a^l^w^{ith w}^hom^he^wishe^s^]^w^{ill be}^se^rio^u^sly^e^r^ode^d.”^Monsaⁿ^t^o^C^o^{. v}^.
^S^p^r^a^y^-^Rⁱ^t^e^S^e^r^vⁱ^c^{e C}^o^r^p^.^,⁴⁶⁵^U.S^.⁷⁵^2,⁷⁶^{3 (}¹⁹⁸⁴⁾^.
¹⁶³^C^-^O^-^Tw^{o Fir}^e^Equⁱ^p.^C^o^.^v^.^Uⁿ^it^e^d^Sta^t^e^s^{, 1}⁹⁷^F.^2d⁴⁸^{9 (}⁹^th^{Cir. 1}⁹⁵²^),^cert^.^d^eⁿⁱ^ed^{, 34}⁴^U^.^{S. 89}²⁽¹⁹⁵²⁾^.
¹⁶⁴^Ameri^can^T^o^b^acco^Co^.^v.^Unⁱ^t^e^{d S}^t^at^es,³²⁸^U.^S^.⁷⁸¹⁽¹⁹⁴⁶⁾^.

collude.¹⁶⁵ That the parties communicated with one another is, at best, ambiguous evidence of ¹⁶⁶
conspiracy. The bottom line appears to be whether the parties acted in their own self-interest:
where there is no direct evidence of a conspiracy, behavior as consistent with a desire to maintain
profitability or to remain in business at all as with any participation in injurious or unlawful ¹⁶⁷
conduct does not constitute sufficient indirect evidence of an alleged conspiracy; similarly,
where a defendant would have little or no motive to enter a conspiracy, his actions will be ¹⁶⁸
considered unilateral and independent.
Based upon these cases and assuming that there is no evidence that the drug manufacturers in
question conspired or colluded when reducing drug supplies to Canadian distributors and
pharmacies, it would appear difficult to sustain a charge that the drug companies that limit sales
to Canada have violated the Sherman Act. Indeed, there may be lawful reasons for their actions.
For example, the manufacturers may be capable of supplying only the United States market and
to a lesser extent foreign markets because of limited production capacity. They may also need to
recoup research and development costs by obtaining a profit margin through sales primarily in the
United States. However, if one were able to show that the drug companies did in fact conspire or
collude or that they engaged in parallel behavior accompanied by other factors, a case might be
made for a Sherman Act violation.
In the first federal court case on the question, In Re: Canadian Import Antitrust Litigation, a
group of consumers and organizations from Minnesota who purchased prescription drugs in the ¹⁶⁹
U.S. from American drug companies challenged the defendant drug companies. The plaintiffs
claimed that the defendants violated federal antitrust laws “by engaging in a course of conduct
designed to suppress the importation of prescription drugs purchased from Canadian pharmacies ¹⁷⁰
for personal use in the United States.” The district court held that prescription drugs imported
from Canada are misbranded and that “the transport of drugs for personal use into the United ¹⁷¹
States constitutes an ‘introduction into interstate commerce.’ “ The introduction of misbranded ¹⁷²
drugs into interstate commerce violates the FDCA. Noting that the plaintiffs lacked standing

¹⁶⁵^S^ee,^e.^g^.^,^G^r^eat^{er Ro}^ck^f^o^rd^Eⁿ^er^g^y^&^T^ech^.^Co^rp^.^v.^S^h^el^l^Oi^l^Co^.^,⁹⁹⁸^F^.^2d³⁹¹⁽⁷^th^Cⁱ^r^.¹⁹⁹³⁾^;^C^a^r^p^e^t^G^r^oup
^Iⁿ^te^rⁿ^a^tio^na^{l v}^.^O^r^ie^nta^l^R^u^g^I^m^por^te^r^s^A^s^s^’^{n, 256}^F.^Su^pp.²^d²⁴⁹⁽^D^.N^.J^{. 2}⁰⁰³⁾^.^B^o^th^c^a^s^e^s^s^t^a^{nd f}^o^r^the^pr^o^posⁱ^tioⁿ
^t^h^at^m^e^re^me^m^b^ershⁱ^pⁱⁿ^a^t^r^ad^{e a}^sso^ci^atⁱ^oⁿ^,^even^wⁱ^t^h^t^h^{e kn}^o^w^l^e^d^g^{e t}^h^at^t^h^{e asso}^ci^atⁱ^oⁿⁱ^s^en^gagi^{ng i}ⁿ^un^l^a^wf^u^l
^a^c^tiv^it^y^,^{is insuf}^fⁱ^cⁱ^eⁿ^{t to prov}^e^th^a^t^a^pa^rty^pa^rtic^ipa^t^e^d^{in s}^u^c^h^a^c^tⁱ^v^it^y^.
¹⁶⁶^S^ee,^e.^g^.^,^M^ons^ant^{o, s}^upr^aⁿ^o^te¹^{64, a}^t⁷^64:^“^P^e^r^m^itting^aⁿ^a^g^re^e^m^eⁿ^{t to}^beⁱⁿ^f^e^rre^{d m}^e^re^l^y^f^r^o^m^the^e^x^iste^nc^e^of
^c^o^m^p^la^ints^{... c}^o^uld^de^te^r^{or pe}^na^liz^e^pe^rf^ec^tl^y^le^g^iti^m^a^te^c^onduc^t.”^S^{ee a}^l^so^Iⁿ^re^Ba^by^Foo^d^Aⁿ^titrus^{t L}^itig^a^tion,
^s^upr^a^no^te¹⁶^{3; I}ⁿ^te^r^v^e^s^{t, I}ⁿ^c^.^v^.^B^l^oom^be^r^g^{, L}^.^P^.,³⁴^{0 F}^.³^d¹⁴⁴⁽³^{d C}ⁱ^r^.²⁰⁰³⁾^.^B^u^t^{see e.}^g^.^T^o^y^s^“R^{” Us v.}^F^e^d^e^ral^th
^T^r^a^d^e^C^o^m^m^is^sⁱ^{on, 2}²¹^F.3^d⁹²⁸^,⁹³^4-^{35 (}⁷^Ci^r.²⁰⁰⁰^):^“W^h^eⁿ^ci^rcu^m^st^an^tⁱ^a^l^evi^d^en^{ce i}^s^u^s^ed^,^t^h^e^r^{e m}^u^st^b^e^so^me
^e^v^ideⁿ^c^e^tha^t^‘te^nds^{to e}^x^c^l^ude^th^e^possi^bi^lity^{’ tha}^t^the^a^lle^g^e^{d c}^ons^pira^{tors a}^c^t^e^dⁱ^nde^pe^ndeⁿ^tly^{.... T}^h^e^te^{st sta}^t^e^s^only
^tha^t^the^r^e^m^u^s^t^be^s^o^m^e^e^v^ideⁿ^c^e^w^h^ic^{h, if}^be^lie^v^e^{d, w}^{ould s}^u^pp^or^t^a^fⁱ^nding^of^c^onc^e^r^te^d^be^ha^vⁱ^or^{. I}ⁿ^the^c^onte^x^{t of}
^aⁿ^a^ppe^a^l^f^r^om^the^C^o^m^m^is^sⁱ^{on, the}^que^s^tⁱ^oⁿ^is^w^h^e^t^he^r^s^ubs^taⁿ^tia^l^e^v^ideⁿ^c^e^supp^{orts its}^c^onc^lusi^on^tha^t^{it is}^m^o^re
^lik^e^l^y^thaⁿⁿ^o^{t t}^h^a^t^the^m^a^nuf^a^c^t^ure^r^{s a}^c^t^e^d^c^o^llusiv^e^ly^.”^(c^ita^{tions om}^itte^d).
¹⁶⁷^In^terv^est,^s^upr^aⁿ^o^te¹^68;^T^w^o^m^bly^v^.^Be^ll^A^tla^ntic^Corp^.,³¹^{3 F.}^Sup^p^.^2d¹^{74 (}^S^.D^.N^.Y^.²⁰^03).
¹⁶⁸^Ma^ts^us^hita^Ele^c^t^rⁱ^c^Iⁿ^d^u^s^t^rⁱ^e^s^C^o^{. v}^.^Ze^nit^h^R^a^di^{o C}^o^r^p^.^,⁴⁷⁵^U^.^S.⁵⁷⁴⁽¹⁹⁸⁶⁾^;^T^o^d^o^r^o^v^,^s^upr^aⁿ^o^te¹⁶⁴^{; Ha}^{ll v}^.
^Uⁿ^ite^{d A}ⁱ^r^Lⁱ^ne^s^,²⁹^{6 F}^.^S^u^p^p^.^2d⁶⁵^2,⁶⁰^{0 (}^E^.D^.N^.C^.²⁰⁰³⁾⁽^q^u^o^ti^ng^M^a^ts^us^hit^a^,⁴⁷^{5 U}^.^S^.^a^t⁵⁸^{8: “}^[^C^]^on^duc^{t a}^s
^c^onsiste^{nt w}^ith^pe^rm^issible^c^o^m^p^e^tition^a^s^w^{ith ille}^g^a^{l c}^ons^pira^c^y^doe^{s n}^o^{t, sta}^ndi^ng^a^l^one^,^sup^por^t^aⁿ^inf^e^re^nc^e^of
^aⁿ^{titrust c}^onspⁱ^ra^c^y^{. ... a}^plaⁱⁿ^tif^f^se^e^k^ing^da^m^a^g^e^s^f^o^{r a}^vⁱ^ola^tion^o^f^{§ 1}^[^o^f^the^S^h^e^r^m^a^{n Ac}^t]^m^u^{st p}^r^e^s^eⁿ^{t e}^v^ideⁿ^c^e
^‘^t^ha^{t te}ⁿ^d^s^to^e^x^c^l^ude^the^pos^sⁱ^bil^ity^’^tha^t^the^a^lle^g^e^{d c}^ons^pir^a^t^o^r^s^a^c^te^{d inde}^pe^nde^ntly^.”⁾
¹⁶⁹^{In Re}^{: Ca}^na^dⁱ^aⁿ^Im^{port A}ⁿ^titr^ust^L^itig^{., 38}^{5 F.}^Su^pp^{. 2}^d⁹³^{0 (D.}^Minn^{. 2}⁰⁰⁵⁾^aff’^d^,⁴⁷^{0 F.}^3d⁷^{85 (}⁸^th^Cⁱ^r^.²⁰⁰⁶⁾^.
¹⁷⁰^Id^{. a}^t⁹³^2.
¹⁷¹^Id^.^a^t⁹³^4.
¹⁷²²¹^U^.^S^.^C^.^§3³¹⁽^a⁾^.

“to challenge Defendants’ allegedly anti-competitive behavior because the importation of these
drugs is unlawful and, therefore, not the type of activity which federal antitrust laws were ¹⁷³
designed to protect,” the district court dismissed the case. The district court also dismissed the
state and common law claims, which were ancillary to the federal antitrust claim, after deciding ¹⁷⁴
not to exercise supplemental jurisdiction over them.
On appeal, the United States Court of Appeals for the Eighth Circuit affirmed the district court
judgment, finding that the importation of prescription drugs from Canada is illegal and that the
plaintiffs did not have standing under antitrust laws to maintain the suit. Even if importation were
legal, according to the court, the antitrust injury that the plaintiffs encountered—“an absence of
competition from Canadian sources in the domestic prescription drug market”—was not a result
of the defendants’ behavior and was not an injury that the antitrust laws were designed to prevent.
Rather, the injury to the plaintiffs was “caused by the federal statutory and regulatory scheme ¹⁷⁵
adopted by the United States government.” Although this decision is not binding on courts in
other jurisdictions, it provides an initial glimpse of how the antitrust issue may play out in the
courts.
Despite the apparent lack of violation of federal antitrust law, drug manufacturers that limit sales
of prescription drugs to Canadian distributors and pharmacies may still violate state antitrust
laws. Because antitrust laws vary from state to state, this section does not provide an exhaustive
analysis of state antitrust laws, but rather describes the legal dispute between GlaxoSmithKline
(GSK) and the state of Minnesota as an example of potential liability under state antitrust statutes.
Even if drug manufacturers that limit sales of prescription drugs to certain Canadian distributors
and pharmacies are found not to have violated federal antitrust laws, they may still be in violation
of state antitrust law. Antitrust laws exist in all fifty states and the District of Columbia, but their ¹⁷⁶
scope and enforcement differ from state to state. Most state antitrust laws mirror the federal ¹⁷⁷
statutes or are interpreted to reflect case law interpreting these federal statutes, although there ¹⁷⁸
are a small number of states in which a restraint of trade violation includes a unilateral act. This
section describes the recent legal dispute between the state of Minnesota and GlaxoSmithKline
(GSK) over state antitrust law and its effect on prescription drug importation.

¹⁷³
³⁸⁵^F.^Su^pp^{. 2}^d^a^t⁹³^2.
¹⁷⁴^Id^.^a^t⁹³^4.
¹⁷⁵^{In Re}^{: Ca}^na^dⁱ^aⁿ^Im^{port A}ⁿ^titr^ust^L^itig^{., 47}^{0 F.}^3d⁷^85,⁷^{91 (}⁸^th^Cⁱ^r^.²⁰⁰⁶⁾^.
¹⁷⁶^Se^e^ge^ne^r^a^lly^Se^c^tion^of^Aⁿ^titrus^{t L}^a^w^,^Am^e^r^ic^aⁿ^Ba^{r A}^ssocⁱ^a^{tion, S}^TA^TE^A^NT^I^T^R^U^S^T^E^NF^O^R^CE^M^E^NT^H^AN^D^B^O^O^K^,
²⁰⁰^3.
¹⁷⁷^Id^.^;^see,^e.^g^.^,^Minⁿ^e^s^ota^T^w^ins^Pa^r^t^ne^r^s^{hip v}^.^Sta^t^e^e^x^r^e^{l. H}^a^tc^{h, 5}^{92 N}^.^W^.²^d⁸⁴^7,⁸⁵^{1 (}^Mⁱ^nn.^C^t^{. A}^pp.¹⁹⁹⁹⁾^,^cert^.
^de^n.^H^a^tc^{h v}^.^Minⁿ^e^s^ota^T^w^ins^Pa^r^t^ne^r^s^hip^,⁵^{28 U.}^S.¹⁰^{13 (}¹⁹⁹⁹⁾^:^“^M^inne^so^ta^{’s a}ⁿ^titr^{ust la}^w^s^a^r^e^ge^ne^ra^ll^y
^inte^rpre^te^{d c}^onsiste^nt^ly^w^{ith f}^e^de^ra^{l c}^{ourts’ c}^o^nstruc^ti^on^of^f^e^de^ra^l^aⁿ^titrust^la^w^s^”^(c^iting^Sta^t^e^by^Hu^m^phre^y^v^.^A^l^pine
^Aⁱ^r^P^r^o^duc^ts^{, I}ⁿ^c^.,⁴⁹^{0 N}^.^W^.^2d⁸^88,⁸⁹^{4 (}^Mⁱⁿ^{n. C}^t^{. A}^pp.1⁹⁹²⁾^,^aff^’^d^,⁵⁰^{0 N}^.^W^.^2d⁷^{88 (}^Mⁱⁿ^n.^S.C^t^.¹⁹⁹³⁾⁾^.
¹⁷⁸^E.g^{., §}²^03(A⁾^of^the^Ok^lah^o^ma^Antitrust^Re^{form Ac}^t^(O^KL^A^.^S^TA^T^{. tit. 7}⁹^,^§§²⁰¹^et^seq.^{) m}^a^k^e^{s ille}^g^a^{l a}^{nd “}^a^g^aⁱ^nst
^p^u^b^lⁱ^c^po^lⁱ^c^y^”ⁿ^o^t^on^l^y^agr^e^e^m^en^t^s^,^coⁿ^t^ract^s,^o^r^co^m^bⁱⁿ^atⁱ^oⁿ^sⁱⁿ^r^e^st^raiⁿ^t^o^f^t^r^ad^e,^bu^t^al^{so “act}^{s” i}ⁿ^rest^raiⁿ^t^o^f^t^r^ad^e.

In 2003, the Minnesota Attorney General (AG), who is investigating whether GSK violated ¹⁷⁹
Minnesota antitrust laws, filed a court motion seeking to compel GSK to release information
located in Canada and the United Kingdom about the company’s decision to stop selling drugs to
Canadian pharmacies that then sell the drugs to U.S. consumers. According to the AG, GSK
conspired to limit drug sales to Canada, and “GSK’s refusal to supply prescription drugs to ¹⁸⁰
Canadian pharmacies that sell drugs to Minnesota buyers violates state laws.” In reply, GSK
argued that “importing drugs from Canada is illegal and a drug company can take steps to stop ¹⁸¹
illegal sales of its products;” and also that federal law preempts Minnesota’s antitrust laws.
Ultimately, the district court of Hennepin County, Minnesota, ordered GSK to produce the ¹⁸²
records and information sought by the AG. The court ruled that even if GSK’s position that “the
importation of non-approved drugs from Canada is illegal under the FDCA, and there cannot be a ¹⁸³
conspiracy in violation of the antitrust laws to restrain trade in illegal goods” were correct,
which the court questioned, “[e]nforcement of federal law is the responsibility of the FDA, not of
GSK,” especially since “the FDA has never even reviewed GSK’s boycott,” much less ¹⁸⁴
specifically approved it. The district court judge obliquely addressed the preemption argument,
finding sufficient authority for the Minnesota AG’s investigation and the document request in
pursuit of that investigation under the Minnesota statute that mandates that the Attorney General ¹⁸⁵
“investigate violations of the business and trade laws of this state.... ”
Based on information revealed in the GSK documents that were turned over, the Minnesota AG ¹⁸⁶
filed a lawsuit against GSK in 2004, alleging that the company had violated state antitrust laws.
GSK and the Minnesota AG are mired in fighting over the public release of over 40 documents
turned over by GSK. The Minnesota Supreme Court recently remanded the case regarding public
disclosure of the documents to the district court with a framework to apply to determine whether
to issue a protective order for each document in order to protect a person’s association rights or to ¹⁸⁷
publicly disclose the document’s information. Minnesota’s case against GSK may have been
harmed by a federal court decision in In re: Canadian Import Antitrust Litigation, which
determined that drug manufacturers had not violated federal antitrust law by attempting to halt the ¹⁸⁸
importation of prescription drugs.

¹⁷⁹^Minⁿ^{. S}^t^a^t^.^§§³²^5D^.4⁹^et^seq^.
¹⁸⁰^Iⁿ^sⁱ^de^W^a^s^h^ing^t^oⁿ^Publ^is^he^r^s^,^J^u^dge^W^aⁿ^t^s^M^o^r^e^Iⁿ^f^o^Be^for^e^D^e^cⁱ^din^g^M^o^ti^on^{to C}^o^m^p^e^l^A^g^aⁱ^ns^{t G}^S^K^{, FD}^A
^W^EEK^{, N}^o^v^e^m^b^e^r^{21, 20}⁰³^.
¹⁸¹^Id^.
¹⁸²^Iⁿ^t^h^e^Ma^tte^r^of^G^l^a^x^oS^m^ithK^lin^e^plc^,^N^o^.^MC^03-¹⁵⁹⁹^{2, s}^lⁱ^p^op.⁽^D^{. Min}ⁿ^.,^Ma^y^{7, 20}⁰⁴⁾^.
¹⁸³^Id^.^a^t¹¹^.
¹⁸⁴^Id^.
¹⁸⁵^Id^.^a^t^{6 (}^c^iti^ng^Mi^nn.^Sta^t^.^§^8.3¹⁽²⁰⁰²⁾⁾^.
¹⁸⁶^Iⁿ^sⁱ^de^W^a^s^h^ing^t^oⁿ^Publ^is^he^r^s^,^Mⁱ^nne^sot^a^Trie^{s t}^o^P^ubl^ic^ize^GSK^Doc^u^me^{nts to}^Bo^lste^{r Antitr}^{ust S}^u^it^{, FD}^A^W^EE^K^,
^Dece^m^b^{er 1}⁷^,²⁰⁰⁴^.
¹⁸⁷^Iⁿ^t^h^e^Ma^tte^r^of^G^l^a^x^oS^m^ithK^lin^e^plc^,⁷³²^N^.^W^.^2d²^57,²^62,²^69,²⁷^{3 (}²⁰⁰⁷⁾^.^T^h^e^c^our^{t s}^t^a^t^e^d^the^f^r^am^ew^or^k^a^s
^f^o^llow^s^{: First, the}^c^o^{urt sh}^ou^ld^de^te^rm^ine^w^h^e^t^he^{r a}^pa^rty^as^s^e^r^ting^the^ne^e^d^f^o^r^a^pr^ote^c^tiv^e^or^de^r^ha^s^s^u^f^f^ic^ie^ntl^y
^e^s^ta^blishe^{d a}^p^o^te^nt^ia^{l c}^h^ill^ing^e^f^fe^c^t^{on its a}^ssocⁱ^a^tⁱ^{on r}ⁱ^g^h^t.^Se^c^oⁿ^d^{, if}^the^pa^r^t^y^m^e^e^t^s^this^bur^de^n,^t^h^e^c^our^t^s^h^o^u^l^d
^b^a^l^aⁿ^{ce t}^h^{e p}^a^rt^y^’^{s asso}^ci^atⁱ^oⁿ^ri^gh^t^agaiⁿ^s^t^t^h^{e st}^at^{e’s i}ⁿ^t^e^restⁱⁿ^re^l^easiⁿ^{g t}^h^{e i}ⁿ^f^o^rm^atⁱ^oⁿ^t^o^t^h^e^p^ublⁱ^c^.^T^h^{e st}^at^{e m}^u^st
^de^m^onstra^t^e^a^c^o^m^p^e^lling^g^o^v^e^rn^m^e^nta^l^inte^re^{st in}^or^de^{r to}^re^le^a^s^e^doc^um^eⁿ^{ts prote}^c^t^e^d^by^the^First^Am^e^ndm^eⁿ^{t rig}^h^t
^{to a}^ssocⁱ^a^tio^n.^Id^.^a^t²⁶^9-⁷⁰^.
¹⁸⁸^S^ee^s^upr^a^no^t^e^{s 1}⁷¹^-⁷⁷^and^accom^p^an^yⁱⁿ^g^t^e^xt^.

As with antitrust law, international trade obligations may also impact the feasibility of
prescription drug importation. On the one hand, permitting some importation of prescription
drugs may be seen as removing an existing barrier to trade or trade liberalizing; on the other hand,
the United States’ international trade obligations may present obstacles to prescription drug
importation. Furthermore, legislative and/or regulatory proposals regarding importation may be
inconsistent with provisions of various international trade agreements including, but not limited
to, the General Agreement on Tariffs and Trade 1994 (GATT 1994), the Agreement on Technical
Barriers to Trade (TBT) and the General Agreement on Trade in Services (GATS), all of which
are a part of the World Trade Organization (WTO) Agreement to which the United States is a ¹⁹⁰
signatory member. At the same time, however, these agreements contain exceptions that may
be used to justify some of the potential inconsistencies that may arise.
Under the GATT 1994, Articles III:4, I:1 and XI:1 contain provisions that may affect prescription
drug imports. Generally, Article III governs the application of domestic regulatory measures
requiring that “laws, regulations and requirements affecting the internal sale, offering for sale,
purchase, transportation, distribution or use of products ... should not be applied to domestic
products so as to afford protection to domestic production.” Article III:4 specifically obligates
Member countries, with respect to all such domestic measures, to provide national treatment to
imported products from other WTO Member countries. Simply put, national treatment requires
that Member countries not discriminate against imported goods relative to like domestic products.
In addition to the national treatment obligation, internal regulatory measures are also required to
comply with Article I:1, the most-favored-nation (MFN) clause. MFN requires that “any
advantage, favor, privilege or immunity granted by any contracting party to any product
originating in or destined for any other country shall be accorded immediately and
unconditionally to the like product originating in or destined for the territories of all other
contracting parties.” The inclusion of Article III measures within the Article I:1 MFN obligation
was intended to extend the obligation to them “regardless of whether national treatment is ¹⁹¹
provided with respect to these matters.”
To the extent that any legislative or regulatory proposal contains requirements affecting the
internal sale, offering for sale, purchase, transportation, distribution, or use of prescription drugs
in the United States, it could be viewed as falling within the purview of Article III. The provisions
of Article III have been interpreted broadly, with the use of the word “affecting” having been
interpreted as implying that the drafters of the Article intended it to apply to “not only the laws

¹⁸⁹^T^h^is^s^e^c^{tion w}^a^s^w^r^itte^{n by}^T^{odd B. T}^a^te^l^m^aⁿ^{, L}^e^gⁱ^s^l^a^tiv^e^A^ttorne^y^{in the}^A^m^e^r^ic^aⁿ^L^a^w^Dⁱ^vⁱ^sⁱ^on^of^CRS.
¹⁹⁰^It^sh^ou^l^d^b^eⁿ^o^t^e^d^t^h^at^m^aⁿ^y^o^f^t^h^{e same i}^ssu^{es rai}^s^edⁱⁿ^t^h^{e W}^T^{O co}ⁿ^t^ext^m^a^y^al^so^ari^s^e^wⁱ^t^h^resp^ect^t^o^t^h^{e No}^rt^h
^Ameri^can^F^r^{ee T}^r^ad^{e Agree}^m^en^t^(NA^F^T^A^),^t^o^w^hⁱ^c^h^t^h^{e Un}ⁱ^t^ed^S^t^at^es,^Can^a^d^a^,^an^d^M^e^xi^co^{are si}^gn^at^o^rⁱ^e^s.^W^hⁱ^l^eⁱ^t
^ap^p^{ears t}^h^at^un^d^e^{r NA}^F^T^A^si^mⁱ^l^a^{r d}^e^f^eⁿ^s^{es are p}^o^t^en^tⁱ^a^l^l^y^av^ai^l^a^b^l^e,^t^h^{e rat}ⁱ^oⁿ^a^l^e^{s an}^d^aⁿ^al^y^sⁱ^s^ma^{y b}^e^quⁱ^t^e^di^f^f^eren^t^.
^F^u^rt^h^e^rm^o^r^e,ⁱ^ssu^{es h}^a^{ve b}^een^rai^s^ed^wⁱ^t^h^resp^ect^t^o^ot^h^e^{r F}^r^{ee T}^r^ad^{e A}^g^re^e^m^en^t^s^(F^T^A^{) t}^o^w^hⁱ^c^h^t^h^{e Un}ⁱ^t^e^d^S^t^at^{es i}^s
^{a p}^a^rt^y^;^h^o^w^e^v^er,^siⁿ^{ce each}^agr^e^e^m^en^t^coⁿ^t^aiⁿ^s^dⁱ^f^f^e^r^eⁿ^t^p^r^o^vⁱ^sⁱ^oⁿ^s^,^t^h^ey^s^houl^d^be^aⁿ^a^l^y^z^e^d^inde^p^e^nde^ntly^a^{nd a}^r^e
^be^y^{ond the}^s^c^o^p^e^of^this^r^e^p^o^r^t^.
¹⁹¹^W^o^r^l^{d T}^r^a^d^e^O^r^g^a^niz^a^tion,^Aⁿ^a^l^y^tic^{al I}ⁿ^de^x^:^G^u^ide^t^o^G^A^{TT L}^a^w^an^{d Pr}^ac^tⁱ^c^e^{30 (}⁶^th^ed^.¹⁹⁹⁵⁾⁽^q^u^o^tⁱⁿ^{g t}^h^e
^pr^o^pos^a^l^of^f^e^r^e^{d by}^the^Uⁿ^ite^{d St}^a^t^e^s^dur^ing^t^h^e^Se^c^oⁿ^d^Se^s^sⁱ^oⁿ^of^the^P^r^e^p^a^r^a^t^or^y^C^o^m^m^itte^e^of^{the U}ⁿ^ite^{d N}^a^ti^ons
^C^onf^e^r^eⁿ^c^e^{on T}^r^a^d^e^{in Em}^ploy^m^e^{nt, G}^e^ne^va^{, A}^p^r^il-^O^c^tobe^r¹⁹⁴⁷⁾^.

and regulations which directly govern[] the conditions of sale or purchase, but also in any law or
regulations which might adversely modify the conditions of competition between the domestic ¹⁹²
and imported products in the international market.” Given this broad interpretation, it appears ¹⁹³
that any proposals containing provisions affecting the labeling of imported drugs, or requiring
that prescription drugs produced in foreign countries for importation be destined only for the
United States may be interpreted by the WTO as inconsistent with our national treatment and
MFN obligations.
In addition to potential conflicts with Articles III:4 and I:1, GATT Article XI:1 prohibits a
Member country from instituting or maintaining quantitative prohibitions or restrictions “on the ¹⁹⁴
importation of any product of the territory of any other contracting party.” The language of
Article XI has been interpreted to be comprehensive, applying to “all measures instituted or
maintained by a contracting party prohibiting or restricting the importation, exportation ... of the ¹⁹⁵
products other than measures that take the form of taxes duties and charges.” Measures may ¹⁹⁶
fall within the scope of Article XI:1 if they “prevent the importation of goods as such,” or ¹⁹⁷
“affect the right of importation as such.” Furthermore, Article XI:1 requires that any
quantitative restrictions that are imposed be instituted on a non-discriminatory basis, in other
words, that all exports of like products to and imports of like products of, third countries be
similarly restricted or prohibited. Therefore, to the extent that any legislative or regulatory
proposal appears to prohibit, or authorize prohibitions, on the importation of prescription drugs
under specific circumstances, there is a possibility that the proposals may constitute or result in a
measure affecting importation “as such,” and thus, may be challenged under Article XI:1.
Article XX contains the general exceptions to the GATT. These general exceptions permit
Members to impose otherwise GATT-inconsistent measures to fulfill certain enumerated public
policy objectives, provided that the measures are not “applied in a manner which would constitute
a means of arbitrary or unjustifiable discrimination between countries where the same conditions ¹⁹⁸
prevail or a disguised restriction on international trade.” Specifically relevant to legislation
involving prescription drugs is Article XX(b), which exempts measures “necessary to protect ¹⁹⁹
human, animal or plant life and health.”

¹⁹²^P^aⁿ^e^l^R^e^po^r^t^on^I^t^ali^{an D}ⁱ^s^c^rⁱ^mⁱ^nati^oⁿ^Ag^ains^t^I^m^por^te^{d A}^g^rⁱ^c^u^lt^ur^{al M}^a^c^h^ine^r^y^{, G}^A^TT^{, B}^a^sⁱ^c^Iⁿ^str^u^m^e^nts^a^nd
^S^e^l^ect^ed^Do^cu^m^eⁿ^t^{s (BIS}^D),⁷^th^Sup^p^.⁶⁰^{, 6}⁴^¶¹²⁽¹⁹⁵^9).
¹⁹³^{It sho}^u^l^d^be^note^d^t^h^a^tⁿ^o^{t a}^ll^la^b^e^ling^prov^isio^{ns w}^oul^d^beⁱⁿ^c^o^ns^is^te^{nt w}^{ith G}^A^T^T^ob^lig^a^{tions. A}^r^tic^le^IX^of^the
^G^A^T^T¹⁹⁹⁴^pe^r^m^its^c^ontr^a^c^ting^pa^r^tie^s^{to r}^e^q^u^ir^e^m^a^r^k^s^of^or^ig^{in, a}^{nd t}^h^e^W^T^O^A^g^r^e^em^eⁿ^{t on}^R^u^l^e^s^of^O^r^igⁱⁿ
^c^ontaⁱ^ns^a^d^diti^ona^l^o^b^lig^a^tions^.^Oⁿ^ly^{to the}^e^x^te^{nt t}^h^a^t^a^la^be^li^ng^re^quire^m^e^{nt g}^o^e^s^be^y^{ond w}^h^a^t^is^pe^rm^itte^{d in e}^ithe^r
^o^f^th^{ese p}^r^o^v^isioⁿ^s^co^u^l^dⁱ^t^b^e^coⁿ^s^id^eredⁱⁿ^coⁿ^s^isten^t^w^ith^A^r^{ticle III:4}^.
¹⁹⁴^A^r^tic^le^X^I^{:1 sta}^t^e^s^tha^t^“^no^pro^hⁱ^b^itio^ns^{or re}^stric^tio^ns^ot^he^{r t}^h^aⁿ^d^u^tie^{s, ta}^x^e^{s or ot}^he^{r c}^h^a^r^g^e^{s, w}^h^e^t^he^{r m}^a^de
^e^f^f^e^c^tiv^e^thr^oug^{h q}^u^o^t^a^s^{, im}^por^{t o}^r^e^x^por^{t lic}^eⁿ^s^e^s^or^ot^he^{r m}^e^a^s^ure^s^{, sha}^{ll be}^instit^ute^d^{or m}^a^inta^ine^d^by^aⁿ^y
^c^ontr^a^c^ting^pa^r^t^y^{on t}^h^e^im^por^ta^ti^on^of^aⁿ^y^pr^oduc^t^of^the^te^r^r^itor^y^of^aⁿ^y^othe^r^c^o^ntr^a^c^ting^pa^r^t^y^or^{on t}^h^e^e^x^por^ta^ti^on
^or^s^a^le^f^o^r^e^x^por^{t of}^aⁿ^y^pr^od^uc^t^de^s^tine^d^f^o^r^t^h^e^te^r^r^itor^y^of^aⁿ^y^othe^r^c^ontr^a^c^tⁱⁿ^g^pa^r^t^y^.^”
¹⁹⁵^Paⁿ^e^l^R^e^p^o^r^t^J^a^pa^n—Tr^adeⁱⁿ^Se^mⁱ^-^C^ond^uc^tor^s^{, G}^A^TT^{, BISD}^{, 3}⁵^th^Supp.¹^16,¹^53,^¶¹⁰⁴⁽¹⁹⁸⁸⁾^.
¹⁹⁶^P^aⁿ^e^l^R^e^po^r^t^on^C^aⁿ^a^d^a^—A^dmin^istratioⁿ^{of F}^o^re^ign^Inv^e^s^tmeⁿ^{t R}^e^vⁱ^e^w^Ac^t^{, G}^A^T^T^,^BISD^{, 30}^th^S^upp^.¹⁴^0,¹⁶²^-⁶³^,
^¶^5.^{14 (}¹⁹⁸⁵⁾^.
¹⁹⁷^P^aⁿ^e^l^R^e^po^r^t^on^Uⁿ^tⁱ^e^d^S^t^at^es—^M^ea^su^{res A}^f^f^ectⁱⁿ^g^A^l^c^o^ho^lⁱ^c^an^{d Ma}^l^t^B^evera^g^e^s^{, G}^A^TT^{, BISD}^{, 3}⁹^th^Sup^p^.²⁰^6,
²⁹²^{, ¶}^5.6³⁽¹⁹⁹³⁾^.
¹⁹⁸^G^A^T^T^A^r^{t. X}^X^{, c}^h^a^p^e^a^u^.
¹⁹⁹^Id^.^{at A}^r^t.^XX^(b^).

To determine whether a measure is eligible for the Article XX(b) exception a three-part test, as
established by the WTO Appellate Body (AB) must be applied. First, the policy must fall within
the range of policies designed to protect life or health. Second, the country invoking the exception
must show that any GATT/WTO inconsistent measures are “necessary” to fulfill the policy
objective. Third, the measures must be applied in conformity with the introductory clause, or ²⁰⁰
“chapeau,” of Article XX. Finally, should the United States invoke Article XX(b) in defense of
the import restrictions, the United States would bear the burden of demonstrating that the ²⁰¹
measures satisfy all three parts of the test.
In addition to Article XX(b), another possibly relevant GATT exception is Article XX(d), which
may be invoked where an allegedly GATT-inconsistent measure can be shown to be “necessary to
secure compliance with laws or regulations that are not inconsistent with the provisions of the
Agreement, including those related to customs enforcement, ... the protection of patents, trade
marks and copyrights, and the prevention of deceptive practices.”
According to its preamble, the WTO Agreement on Technical Barriers to Trade (TBT Agreement)
expands upon the GATT Article III obligations with respect to internal regulations and is intended ²⁰²
to promote the general aims of the GATT. The TBT Agreement applies to all products,
including industrial and agricultural products, but does not apply to measures covered by the
WTO Agreement on Sanitary and Phytosanitary Measures, nor to government purchasing ²⁰³
specifications for production or consumption of governmental bodies.
The three categories of measures covered by the TBT Agreement are: (1) technical regulations;
(2) standards; and (3) conformity assessment procedures. Of particular relevance to prescription
drug importation are technical regulations and conformity assessment procedures.
A “technical regulation” is defined as a “[d]ocument which lays down product characteristics or
their related processing and production methods, including their administrative provisions, with ²⁰⁴
which compliance is mandatory.” A technical regulation may also include or deal exclusively
with terminology, symbols, packaging, marking or labeling requirements as they apply to a ²⁰⁵
product, process or production method.” To qualify as a “technical regulation,” a measure must
fulfill three criteria, derived from the above-cited definition:
^Fⁱ^rst^{, t}^h^{e docum}^eⁿ^t^m^u^s^t^appl^y^t^o^aⁿⁱ^d^en^tⁱ^fⁱ^abl^e^produ^ct^{or g}^r^ou^{p of}^pro^d^u^c^t^s^{. T}^h^e
ⁱ^d^en^tⁱ^fⁱ^abl^e^produ^ct^{or g}^r^o^u^p^of^produ^ct^sⁿ^eedⁿ^o^t^,^h^o^w^e^v^e^r^,^{be ex}^pres^s^l^y^id^en^tifiedⁱⁿ^th^e

²⁰⁰^Se^e^A^ppe^lla^te^R^e^por^t^on^Uⁿ^ite^d^State^s^—^S^ta^nd^ar^ds^f^o^r^Re^for^m^ulat^e^d^an^{d C}^onv^eⁿ^ti^on^{al G}^a^s^o^li^ne^{, W}^T^/DS2/A^B/R
⁽^A^pr^{il 29,}¹⁹⁹⁶⁾^{, p}^.²⁵^[^h^e^r^eⁱ^na^f^t^er^c^ite^{d a}^s^U.S.^{- Gas}^o^line⁽^{AB Re}^p^o^rt)^]^.^T^h^{e ch}^ap^eau^st^at^{es t}^h^at^m^e^a^s^u^r^{es are n}^o^t
^pr^o^h^ibite^{d s}^o^lo^ng^a^s^the^y^a^r^e^{not “}^a^pplie^{d i}ⁿ^a^m^a^nne^r^w^h^ic^{h w}^{ould c}^ons^t^itute^a^m^e^aⁿ^s^of^a^r^bitr^a^r^y^or^uⁿ^jus^t^if^ia^ble
^dis^c^rⁱ^mⁱ^na^{tion be}^tw^e^eⁿ^c^o^uⁿ^tr^ie^s^w^h^e^r^e^the^s^a^m^e^c^onditi^ons^pr^e^v^a^{il or}^a^dis^g^uis^e^{d r}^e^s^t^rⁱ^c^tioⁿ^on^inte^rⁿ^a^tio^na^{l tr}^a^d^e^.^”
^G^A^T^T¹⁹⁹⁴^{, A}^r^{t. X}^X^.
²⁰¹^Se^e^ge^ne^r^a^lly^W^o^rl^d^T^r^ad^{e Orga}ⁿⁱ^zatⁱ^o^n,^W^T^O^An^aly^tic^a^l^Iⁿ^de^x^;^G^u^ide^t^o^W^T^O^L^a^w^a^nd^Pr^ac^tic^e³⁴¹^-⁴²⁽¹^st^e^d^.
²⁰⁰³⁾^[^h^e^r^eⁱ^na^f^t^e^r^c^ite^{d a}^s^W^T^O^Analy^tic^a^l^Iⁿ^de^x^].
²⁰²^T^B^T^Agree^m^en^t^,^P^r^eam^b^l^e.
²⁰³^Se^e^A^ppe^lla^te^B^ody^R^e^por^{t o}ⁿ^E^u^rope^{an C}^o^mmun^itie^s—M^e^asure^s^Affe^c^ting^Asbe^{stos an}^d^As^be^{stos Cont}^aini^ng
^Pr^oduc^ts^,^W^T^/D^S135/A^B^/R⁽^M^a^r^c^h¹²^{, 2}⁰⁰¹⁾^¶⁸⁰^[^h^e^r^eⁱ^na^f^t^e^r^EC—Asbe^s^{tos (}^{AB Re}^p^o^rt)^].
²⁰⁴^T^B^T^A^g^r^e^em^eⁿ^{t, A}^nne^x^{1, ¶}^1.
²⁰⁵^Id^.^a^t^A^nne^x^I^,^¶^3.

^docum^ent^.^Second^{, th}^{e documen}^t^m^u^s^t^la^y^do^wⁿ^oⁿ^{e or}^m^o^re^ch^aracteris^tⁱ^cs^o^f^t^h^{e produ}^ct.
^T^h^es^{e produ}^{ct ch}^aracteris^tics^m^a^y^{be i}ⁿ^triⁿ^sⁱ^{c, or th}^e^y^m^a^y^{be related to th}^{e pro}^d^u^c^{t. T}^h^ey
^m^a^y^b^e^p^r^escr^ib^ed^o^r^im^p^o^s^edⁱⁿ^eit^h^er^{a p}^o^s^itiv^{e o}^rⁿ^e^g^a^ti^v^e^f^o^r^m^.^Th^ird^{, co}^m^p^liaⁿ^ce^wⁱ^t^h²⁰⁶
^th^{e produ}^{ct ch}^aracteris^tic^m^u^s^t^{be m}^aⁿ^d^ator^y^.
The TBT Agreement’s primary obligations require that the central governments of WTO ²⁰⁷
Members provide national treatment with respect to technical regulations. In addition, WTO
Members must also “ensure that technical regulations are not prepared, adopted or applied with a ²⁰⁸
view to or with the effect of creating unnecessary obstacles to international trade.” This means
that “technical regulations shall be no more trade-restrictive than necessary to fulfil a legitimate
objective, taking account of the risks non-fulfillment would create. Such legitimate objectives
[include] ... the prevention of deceptive practices; [and] protection of human health or safety ... .”
Moreover, Members are obligated not to maintain technical regulations “if the circumstances or
objectives giving rise to their adoption no longer exist or if the changed circumstances or ²⁰⁹
objectives can be addressed in a less trade-restrictive manner.”
A conformity assessment procedure is “[a]ny procedure used, directly or indirectly, to determine ²¹⁰
that relevant requirements in technical regulations or standards are fulfilled.” Such procedures
may include, among other things, “procedures for sampling, testing and inspection; evaluation,
verification and assurance of conformity; registration, accreditation and approval as well as their
combinations.”
Obligations concerning conformity assessment procedures are primarily contained in Article 5 of
the TBT Agreement, which requires WTO Members to ensure that a number of specific
requirements are met “where a positive assurance of conformity with technical regulations is ²¹¹
required.” These include a requirement that the procedures be prepared, adopted and applied in ²¹²
accordance with the principles of national treatment. The TBT Agreement further provides that
“access entails suppliers’ right to an assessment of conformity under the rules of the ²¹³
procedure.” In addition, conformity assessment procedures may not be “prepared, adopted or
applied with a view to or with the effect of creating unnecessary obstacles to international ²¹⁴
trade,” meaning, among other things, that “conformity assessment procedures shall not be more
strict or be applied more strictly than is necessary to give the importing Member adequate

²⁰⁶^A^ppe^lla^te^B^ody^R^e^por^{t o}ⁿ^E^u^r^o^p^e^{an C}^o^m^m^unitⁱ^e^s^—Tr^ade^D^e^s^c^rⁱ^ptioⁿ^{of S}^a^r^dⁱⁿ^e^s^{, W}^T^/D^S231/A^B^/R⁽^S^e^p^te^m^b^e^r
^{26, 20}⁰²⁾^,^¶¹⁷^6.
²⁰⁷^Se^e^T^B^T^A^g^re^em^eⁿ^{t, A}^r^{t. 2.1 (re}^quiri^ng^Me^m^b^e^r^c^ountrie^s^t^o^“^eⁿ^s^u^re^tha^t^...^pro^duc^ts^im^porte^d^f^r^om^the^te^rritory^of
^an^y^M^e^m^b^{er sh}^al^l^b^e^acco^rd^ed^t^r^e^a^t^m^en^tⁿ^o^l^e^{ss f}^a^vo^u^r^ab^l^e^t^h^aⁿ^t^h^at^acco^rd^ed^t^o^lⁱ^k^{e p}^r^od^u^c^t^s^o^fⁿ^a^tⁱ^oⁿ^a^l^o^rⁱ^gⁱⁿ^aⁿ^d^t^o
^lik^e^prod^uc^{ts orig}ⁱⁿ^a^tingⁱⁿ^aⁿ^y^othe^{r c}^o^uⁿ^try^.^”⁾^.
²⁰⁸^Id^.^a^t^A^r^{t. 2}^.^2.
²⁰⁹
^Id^.^a^t^A^r^{t. 2.}^3.
²¹⁰^Id^.^a^t^A^nne^x^1,^¶³^.
²¹¹^Id^.^a^t^A^r^{t. 5}^.^1.
²¹²^Id^.^at^A^r^t^.^5.¹^.¹^(st^a^tⁱⁿ^g^t^h^at^sup^p^lⁱ^e^{rs are t}^o^b^e^gran^t^e^{d access t}^o^“lⁱ^k^{e p}^r^o^d^u^c^t^s^o^rⁱ^gⁱⁿ^atⁱⁿ^{g i}ⁿ^t^h^{e t}^e^r^rⁱ^t^o^ri^{es o}^f^o^t^h^e^r
^Me^m^b^e^r^s^unde^r^c^oⁿ^d^iti^ons^no^le^s^s^f^a^v^our^a^b^le^thaⁿ^th^os^e^acco^rd^ed^t^o^sup^p^lⁱ^e^rs^o^f^lⁱ^k^{e p}^r^o^d^u^c^t^s^o^fⁿ^a^tⁱ^oⁿ^a^l^o^rⁱ^gⁱⁿ^o^r
^orig^ina^tingⁱⁿ^aⁿ^y^othe^{r c}^o^untry^{, i}ⁿ^a^c^o^m^p^a^r^a^b^le^situa^tio^n”^).
²¹³^Id^.
²¹⁴^Id^.^a^t^A^r^{t. 5}^.^1.^2.

confidence that products conform with the applicable technical regulations ... , taking account of ²¹⁵
the risks non-conformity would create.”
Application of the TBT Agreement will depend on the details of any prescription drug
importation program that might be enacted. The AB has speculated that a measure consisting
“only of a prohibition on ... [a product] ... might not constitute a ‘technical regulation,’” thereby ²¹⁶
placing it outside the scope of the TBT Agreement. On the other hand, a measure that has both ²¹⁷
“prohibitive and permissive elements” may potentially be covered by the Agreement. If a
legislative or regulatory proposal were to be considered solely in light of provisions that would
allow importation of drugs from a limited set of approved countries, the proposal could
potentially be viewed as constituting solely a prohibition (albeit implied) on importing
prescription drugs from countries other than those named or designated as such. One might thus
be able to argue, based on the above-quoted AB statement, that there are no issues under the TBT
Agreement. On the other hand, were any such proposal to be viewed more broadly—that is, as
having both prohibitive and permissive elements—TBT obligations may come into play.
While the TBT Agreement does not contain a separate Article with general exceptions, there is
language within the Agreement that appears to provide for something similar to an Article XX(b)
exception. Specifically, the Preamble to the TBT Agreement states that “no country should be
prevented from taking measures necessary ... for the protection of human, animal or plant life or ²¹⁸
health ... .” Given that there has been no WTO panel or AB ruling to date with respect to this
language, it remains unclear as to what, if any, weight or interpretation this language would be
given, especially considering it appears only in the Preamble and is not within the body of the
agreement.
The General Agreement on Trade in Services (GATS)²¹⁹ applies to “measures by Members ²²⁰
affecting trade in services.” The Agreement defines trade in services as the supply of a service
through four modes, two of which would appear to be most relevant to the issue of prescription
drug importation: cross-border supply, or supply “from the territory of one Member into the
territory of any other Member” (Mode 1) and consumption abroad, or supply “in the territory of ²²¹
one Member to the service consumer of any other Member” (Mode 2).
For purposes of the GATS, the phrase “measures by Members affecting trade in services” has
been interpreted broadly, encompassing “any measure of a Member to the extent it affects the

²¹⁵^Id^.
²¹⁶^EC—Asbe^s^{tos (}^{AB Re}^p^o^rt)^,^s^upr^a^no^t^e²⁰^5,^at^¶⁷¹^.
²¹⁷^Id^.^a^t^¶⁶⁴^.
²¹⁸^T^B^T^Agree^m^en^t^,^P^r^eam^b^l^e.
²¹⁹^G^e^ne^r^a^l^A^g^r^e^em^eⁿ^{t on T}^r^a^d^eⁱⁿ^Se^r^v^ic^e^s⁽^G^A^T^S)^{, e}ⁿ^te^r^e^{d int}^o^f^o^r^c^e^J^a^nua^r^y^{1, 1}⁹⁹⁵^{, H}^.^D^o^c^.¹⁰^3-³^{16, v}^.^{1, a}^t¹⁵^86-
¹⁶⁵^{3, a}^{nd v}^.^{2, a}^t³⁷⁴⁸^ht^tp:/^/w^w^w^.^w^to.or^g^/Eng^lis^h/^doc^s^_^e^/^le^g^a^l_e/26-^g^a^ts^.p^df^.
²²⁰^GAT^S^,^A^r^t.^I:1^.
²²¹^G^A^T^{S, A}^r^{t. I}^:^{2. T}^h^e^othe^r^tw^{o m}^ode^s^of^s^e^r^v^ic^e^s^upply^—^c^o^m^m^e^r^cia^l^pr^e^s^eⁿ^c^e^of^one^Me^m^b^e^r^{in t}^h^e^te^r^r^itor^y^of
^aⁿ^y^othe^r^Me^m^b^e^r^{, a}^{nd pr}^e^s^eⁿ^c^e^of^na^tur^a^{l pe}^r^s^oⁿ^s^,^or^s^u^pply^“^b^y^a^s^e^r^v^ic^e^s^upplie^r^of^one^Me^m^b^e^r^{, thr}^oug^h^pr^e^s^eⁿ^c^e
^of^na^tur^a^{l pe}^r^s^oⁿ^s^of^a^Me^m^b^e^r^{, in the}^te^r^r^itor^y^of^aⁿ^y^othe^r^Me^m^b^e^r^—^w^{ould no}^{t s}^e^e^m^{to be}^dir^e^c^tly^a^t^is^s^u^e^he^r^e^.

supply of a service regardless of whether such measure directly governs the supply of a service or ²²²
whether it regulates other matters but nevertheless affects trade in services.”
A basic obligation of the GATS is the unconditional most-favored-nation (MFN) obligation set
forth at Article II:1. The obligation applies to “any” GATS-covered measure, though Members are
allowed to exempt specific national measures pursuant to Article II:1 and the Annex on Article II
Exemptions and may accord preferential treatment to countries that are members of regional trade
agreements (see GATS, Arts. V and V bis). The other fundamental GATS obligations are the
market access and national treatment obligations made with respect to a Member’s specific ²²³
scheduled sectoral commitments. These are set forth, with any limitations, in the Member’s
Schedule of Specific Commitments by mode of service supply. As with the TBT Agreement,
application of the GATS will depend on the details of any specific prescription drug importation
that might be enacted. For example, in the event that a legislative or regulatory proposal affects
the wholesale distribution of prescription drugs, the measure may be subject to a WTO challenge
as inconsistent with our specific GATS commitments.
GATS obligations are also subject to various general exceptions at Article XIV, including one for
measures “necessary to protect human, animal, or plant life or health.” General exceptions are
subject to a requirement that such measures “are not applied in a manner which would constitute
a means of arbitrary or unjustifiable discrimination between countries where like conditions
prevail, or a disguised restriction on trade in services.” While there does not appear to be any
WTO jurisprudence on this exception to date, it would seem that the same or similar test as the
GATT Article XX(b) exception would also be applicable with respect to the GATS Article XIV. It
should be noted, however, that the GATS contains the phrase “like conditions” as opposed to the
phrase “same conditions” found in the GATT. In the absence of any WTO jurisprudence, it
remains unclear whether this change in language would have any effect on the application of the ²²⁴
exception.
In addition to raising questions about antitrust law and trade law, the issue of prescription drug
imports has also prompted inquiries regarding whether or not a drug importation program would ²²⁵
violate patent rights. In particular, a federal court case, Jazz Photo Corp. v. ITC, has raised the
prospect that a drug manufacturer could, under certain circumstances, sue a drug importer for
patent infringement and block U.S. imports of drugs the company sells abroad. Under patent law,
the first sale of a patented product in a given market extinguishes, or “exhausts,” the patent

²²²^P^aⁿ^e^l^R^e^po^r^t^on^E^C^—^R^egⁱ^m^{e fo}^{r t}^h^{e I}^m^po^rt^a^tⁱ^o^n,^Sa^l^e^aⁿ^d^Di^st^ri^bu^tⁱ^oⁿ^o^f^Ba^na^na^s,^W^T^/D^S27/R^/^U^S^A⁽^M^ay^22,
¹⁹⁹⁷⁾^¶^7.²⁸^5.^Se^e^ge^ne^r^a^lly^W^T^O^Analy^tic^{al I}^nde^x^,^s^u^pr^a^no^te²⁰^{3, a}^t¹⁰^89-^91.
²²³
^GAT^S,^A^r^{ts. XV}^I,^XV^{II. A}^r^tic^le^XX^{I of}^the^G^A^T^S^a^llow^s^a^WT^{O Me}^m^b^e^r^{to m}^odify^or^w^ithdra^w^aⁿ^y^of^{its sc}^he^dule^d
^co^mmⁱ^t^men^t^s,^oⁿ^{ce t}^h^{ree years h}^a^{ve el}^ap^sed^f^r^o^m^t^h^{e d}^a^t^e^t^h^{e co}^m^mⁱ^t^m^en^t^en^t^e^redⁱⁿ^t^o^f^o^rce,^sub^j^e^c^t^t^o^cert^aⁱⁿ
^c^ondi^tio^ns^{, i}ⁿ^c^l^u^d^ing^p^o^s^sⁱ^ble^c^o^m^p^eⁿ^s^a^{tion to}^Me^m^b^e^r^s^af^f^e^c^t^e^d^by^the^c^h^aⁿ^g^e^.
²²⁴^Sh^oul^{d t}^h^e^Unite^d^Sta^t^e^s^ta^k^e^aⁿ^y^le^gⁱ^sla^tive^{or re}^g^u^la^to^ry^a^c^tion^w^{ith re}^spe^c^t^{to the}^im^porta^ti^on^of^pre^s^c^r^iptioⁿ
^drug^{s, a}ⁿ^y^c^h^a^lle^ng^e^s^tha^t^a^r^e^bro^u^g^h^{t o}ⁿⁱⁿ^te^rna^tⁱ^ona^{l t}^r^a^d^e^g^r^ouⁿ^d^{s w}^{ill be}^re^quire^{d t}^o^be^a^d^ju^dic^a^t^e^d^un^de^{r t}^h^e
^p^r^o^ced^u^r^{es set}^f^o^rt^{h i}ⁿ^t^h^{e sp}^eci^fⁱ^{c agree}^m^en^t^.^F^o^{r exam}^p^l^e,ⁱ^f^{a ch}^al^l^eⁿ^g^{e i}^s^b^r^o^u^ght^pu^rsu^a^nt^t^o^a^W^T^O^A^g^re^e^m^en^t^,
^th^{at ch}^allen^g^{e w}^{ill b}^e^req^u^ired^t^o^b^e^h^eard^acco^rdⁱⁿ^g^to^th^e^p^r^o^ced^u^r^{es co}ⁿ^t^ain^e^dⁱⁿ^th^{e W}^T^{O Disp}^u^t^{e Settlem}^eⁿ^t
^U^nde^r^s^ta^ndi^ng^.^S^ee^C^R^S^R^e^por^t^R^S²⁰⁰⁸^8,^Dis^pute^Se^ttle^me^{nt i}ⁿ^t^h^e^W^o^{rld Tr}^ade^Org^aⁿⁱ^zati^on:^An^Ov^e^r^vⁱ^e^w^{, b}^y
^Je^a^nne^{J. G}^rⁱ^m^m^e^tt;^se^{e a}^l^so^W^T^O^w^e^bs^ite^http://w^w^w^.^w^to.org^/e^ng^lis^h/tra^t^op^_e^/^d^is^pu^_e^/^d^is^pu_e^.^h^t^m^.
²²⁵²⁶⁴^F.^3d¹⁰⁹⁴⁽^F^e^d^.^Cⁱ^r^.²⁰⁰¹⁾^.

holder’s rights in the product. Prior to the Jazz Photo decision, some legal commentators believed
that this exhaustion doctrine extended internationally, meaning that the sale of a patented product
abroad would exhaust the patent rights in the U.S. and elsewhere, thereby allowing the purchaser
of the product to use, sell, or otherwise do as he pleases with the product without regard to the
patent holder, unless the purchaser is contractually restricted from importing into the U.S.
In Jazz Photo, however, the court, which addressed the exhaustion doctrine question only briefly,
stated: “United States patent rights are not exhausted by products of foreign provenance. To
invoke the protection of the first sale doctrine, the authorized first sale must have occurred under ²²⁶
the United States patent.” Under this ruling, because the U.S. patent is not exhausted by the
foreign sale, the patent holder retains its patent rights. Thus, a drug manufacturer could exercise
these rights to block imports of its patented drug products into the U.S. It is important to note,
however, that some legal commentators have questioned the validity of the ruling in the Jazz ^th^th
Photo case, and bills proposed in the 109 and 110 Congresses would have overturned the ruling ²²⁷
with respect to patent exhaustion for pharmaceutical imports. For further information on the
subject, see CRS Report RL32400, Patents and Drug Importation, by John R. Thomas.

The debate about importing prescription drugs continues. Although the FDA maintains that it
cannot guarantee the safety or effectiveness of imported drugs, many U.S. consumers, in search
of affordable prices, continue to purchase and import such drugs. As a result, legislators and
interest groups have suggested a variety of changes to current law, including encouraging the
development of more generic drugs; negotiating lower drug prices through bulk purchase
programs; increasing prescription drug insurance coverage; lowering co-pays; allowing drug
imports but restricting ports of entry; establishing state pilot programs; allowing only certain
drugs to be imported; educating consumers about the dangers of imported drugs; allowing drug
imports from approved Canadian pharmacies only; regulating credit card companies, search
engines, and shipping companies that enable rogue online pharmacy sites to do business;
increasing the number of inspections of foreign drug manufacturers; and utilizing anti-²²⁸
counterfeiting technologies, such as radio frequency identification technology (RFID), for
shipments of prescription drugs.

²²⁶^Id^{. a}^t¹¹⁰⁵
²²⁷^Se^e^{S. 33}^{4, 10}⁹^th^C^ong^{. (}²⁰⁰⁵⁾^;^S^.¹⁰⁸²^{, 1}¹⁰^th^C^o^ng^{. (}²⁰⁰⁷⁾^{. T}^h^e^F^e^de^r^a^{l C}ⁱ^r^c^{uit ha}^s^s^ubs^e^q^ue^ntly^uphe^ld^its^Ja^zz
^Phot^o^r^u^lⁱⁿ^{g i}ⁿ^F^u^jⁱ^P^h^o^t^{o F}ⁱ^l^m^Co^.^v.^{Jazz P}^h^ot^o^C^o^rp.^,³⁹⁴^F^.³^d¹³⁶⁸^(F^ed.^Ci^r.²⁰⁰⁵⁾^.
²²⁸^Iⁿ^sⁱ^de^W^a^s^h^ing^t^oⁿ^Publ^is^he^r^s^,^Se^nate^Bi^{ll Re}^q^u^ir^e^s^D^r^ug^Tr^ac^kⁱⁿ^g^Sy^s^t^e^m^s^that^Dⁱ^s^c^our^a^g^e^RFI^D^{, F}^D^A^W^EEK^,
^Ma^y^{25, 20}^07.

^Van^e^s^s^{a K. B}^u^rro^w^s
^L^e^gⁱ^s^l^at^iv^{e A}^t^torn^e^y
^v^b^u^rro^w^s^@^c^rs^.l^oc.g^ov^{, 7-}⁰⁸³¹