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Abstract

The role of intellectual property in the pharmaceutical industry has been controversial for decades. On one hand, evidence suggests that patents and monopolies on drug sales for limited periods are necessary to fund costly R&D required to produce life-saving therapies. On the other, there is concern that patent rights have gone too far in favour of innovation, limiting access to lower-income populations who cannot afford exorbitant drug prices. This tension plays out at a grander scale in the international context, as drug prices can vary drastically between countries, as has happened in the COVID-19 pandemic. In 2017, the United States Supreme Court held in Lexmark that a patentee’s rights are exhausted after international sale. This decision has immense implications for the U.S. pharmaceutical industry and the affordability of medicines worldwide. Legislators such as Senator Bernie Sanders have proposed bills in light of the decision to lower American drug prices by permitting importation from countries like Canada. Though FDA and other regulatory barriers may still be present, American innovator companies can no longer sue reimports on the grounds of patent infringement. However, while the results may be favourable to U.S. consumers, international impacts remain to be seen. Some suggest that prices in countries like India could increase to reduce opportunities for arbitrage. In this article, we suggest methods for branded pharmaceutical companies to address issues arising from Lexmark while simultaneously providing affordable access—from voluntary licensing to avoid the risk of compulsory licenses and creative forms of contracting. Finally, we conclude regarding India’s newfound consumer protection laws to note that American pharmaceutical players may not simply be able to lower product standards to prevent parallel importation back to the US

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