Fourth Circuit Skeptical of ‘Gray Market’ Drug Import Vendors

The US Court of Appeals for the Fourth Circuit seemed likely to side with Gilead Sciences Inc. as it seeks to uphold a lower court’s decision pausing foreign importation of the company’s drugs in employer-sponsored health plans.

Gilead sued a series of drug supply chain vendors in December 2024, alleging the companies were infringing patents under the Lanham Act by importing cheaper international versions of its medications, including HIV drug Biktarvy.

The drugmaker was alerted to the import strategy after a patient received a Turkish version of Biktarvy through his employer’s insurance administrator Meritain Health Inc. Meritain worked with a “carve-out” pharmacy benefit manager, ProAct Inc., as well as drug savings vendor Rx Valet LLC and its dedicated mail-order pharmacy, Advanced Pharmacy LLC, to source the medication.

“Prescription referral service” Aqua Enterprise Inc., doing business as Affordable Rx Meds, then sent the prescription to Istanbul-based pharmacy Fetih Eczanesi, which dispensed the drug.

The “Meritain-to-ProAct-to-Rx Valet-to-Advanced Pharmacy-to-Affordable Rx stream of commerce” highlights the so-called gray market, where products are legally acquired abroad and imported without a company’s knowledge. It also underscores the legal complexity of attempting to import cheaper prescription drugs, which a number of states have so far unsuccessfully attempted to do under encouragement from President Donald Trump.

The US District Court for the District of Maryland partially granted Gilead a temporary restraining order against the companies and Rx Valet CEO Gregory Santulli in June 2025, saying a domestic record is “essential to patient safety.”

Fourth Circuit judges G. Steven Agee, Pamela A. Harris, and Barbara Milano Keenan on Wednesday seemed skeptical of the appellees’ arguments that Gilead didn’t offer enough evidence that the imported medication with a Turkish label is confusing to consumers, pointing to the district court’s conclusion that the US version was materially different from the Turkish version.

“I read our cases as saying that, by itself, establishes a likelihood of consumer confusion,” Harris said.

“They need to establish that a reasonable consumer is likely to be confused,” countered Michael Beltran, counsel for Advanced Pharmacy, Affordable Rx Meds, Rx Valet, and Santulli. Beltran added that patients receive English inserts with foreign medications.

The judges likewise scrutinized Meritain’s and ProAct’s argument that they were unaware of specific patent infringements. Silverman Thompson Slutkin White partner Todd Hesel, representing ProAct, pointed to Meritain’s policy of not importing drugs on its own and the safety concerns it communicated to clients as evidence that it opposed the practice.

But the judges indicated that internal emails and marketing campaigns advertising Meritain’s work with international sourcing vendors undercut that argument.

“Saying and doing aren’t exactly the same thing,” Agee said.

Gilead is represented by Kramon & Graham P.A., Zuckerman Spaeder LLP, and Patterson Belknap Webb & Tyler LLP.

Meritain is represented by Foley & Lardner LLP. ProAct is represented by Silverman Thompson Slutkin White. Rx Valet, Advanced Pharmacy, Aqua Enterprise, and Santulli are represented by Beltran, Anastasia Wagner, and Nelson Mullins Riley & Scarborough LLP.

The case is Gilead Sciences, Inc. v. Meritain Health, Inc., 4th Cir., No. 25-1828, oral arguments held 5/6/26.