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UNIVERSITY PARK, PA (October 20, 2004)—George W. Bush and John Kerry, along with many other politicians, have said they’re for the importation of less-expensive pharmaceuticals from Canada, but according to research authored by Daniel R. Cahoy of Penn State’s Smeal College of Business, legal barriers may prevent government-run plans from ever working without industry cooperation.

“Patent Fences and Constitutional Fence Posts: Property Barriers to Pharmaceutical Importation,” which is forthcoming in the Fordham Intellectual Property, Media & Entertainment Law Journal , addresses the liability issues facing government entities that choose to import U.S.-manufactured pharmaceuticals to circumvent high prices.

States such as Minnesota, Illinois, and Wisconsin have recently unveiled drug importation proposals, and municipal governments in cities such as Boston and Los Angeles have also explored similar plans. Additionally, at least six drug importation bills were introduced during the latest congressional term.

U.S. law gives patent owners the right to exclude importation of patented drugs without their authority. Although state governments are immune to patent lawsuits in federal court (city and county governments are not), Cahoy points out that patent holders have other legal options through their constitutional rights as personal property owners.

“There is no reason that this basic protection of property rights should not extend to intangible property like patents when a trespass or infringement is proven,” writes Cahoy, an assistant professor of business law. “Although compensation for takings may not match all of the relief a patent owner may receive under the Patent Act, the liability could be significant enough to throw a wrench into the state importation schemes.”

Cahoy adds that drug importation supported by the federal government is also problematic despite the recent surge in congressional bills. “When established property rights are limited or eliminated by Congress, there are constitutional hurdles that must be addressed for such changes in the law to stand,” he writes. “It appears that the benefits of legal change would either be offset by the costs, or delayed for an intolerable amount of time.”

About the Author

Cahoy’s research interests include investigating the theoretical and practical application of intellectual property rights in the areas of e-commerce, pharmaceuticals and biotechnology. Cahoy is licensed to practice before the United States Patent and Trademark Office and has been admitted to the New York State Bar and several federal courts including the United States Court of Appeals for the Federal Circuit. He formerly practiced at the law firm of Fitzpatrick, Cella, Harper & Scinto, where he specialized in complex patent litigation.