Gilead has been fighting a quiet war against a practice called alternative funding programs, or AFPs. These programs buy prescription drugs from international markets and hand them to U.S. patients. The pitch is simple: the same drug costs less abroad, so why not import it?
The problem, according to the FDA, is that it is illegal. And Gilead decided to test that in court.
In December 2024, the drugmaker sued Rx Valet, an AFP, along with several companies connected to it. Gilead also named Meritain Health, a health plan manager owned by CVS Health's Aetna, and a pharmacy benefits manager called Pro-Act.
The lawsuit centered on Gilead's HIV medication Biktarvy. The case got personal fast. A patient in Maryland received Biktarvy by mail from Turkey, and the label instructions were in Turkish.
That is not a mix-up. It is the whole point of the AFP model. The drugs come from foreign supply chains where quality and labeling follow different rules.
This week, the U.S. Court of Appeals agreed with Gilead. The court kept a preliminary injunction in place against Rx Valet and the other defendants. The judges ruled that the version of Biktarvy sold in Turkey and the one sold in the United States are different in "material, not theoretical" ways.
Same chemical formula. Different safety and quality control systems.
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The AFP industry has been growing fast. A CNBC investigation last year found these programs had expanded across the country by importing medications from abroad. For patients and employers, the appeal is obvious: cheaper drugs.
But the court's decision makes the legal ground much shakier. If companies cannot legally import drugs without facing lawsuits from big pharma, the whole business model gets harder to defend.
Aetna's spokesperson Phil Blando said Meritain has a policy against supporting non-FDA-approved medications from outside the U.S. and does not contract with companies that facilitate that. But he added that Meritain was still named in the lawsuit and is fighting the allegations.
Shabbir Imber Safdar, who heads the Partnership for Safe Medicines, was blunt: "You cannot import untraceable medicine with foreign-language labels, hand it to American patients, and call it equivalent to an FDA-approved medicine."
Gilead, for its part, said the ruling protects patients by keeping drugs that have not gone through FDA oversight out of the U.S. supply chain. Rx Valet did not respond to a request for comment.
This case is not just about one drug. It is a test of whether pharmaceutical companies can enforce their U.S. prices by blocking imports. If Gilead wins this fight, other drugmakers may follow.
The ruling does not kill the AFP industry instantly. But it adds a big legal risk. Any company that tries to import a branded drug now faces the possibility of a costly lawsuit and an injunction that stops the practice cold.
For investors, the takeaway is about how far drug companies can go to protect their revenue. Gilead's HIV drugs bring in billions of dollars a year. A court ruling that says importing those drugs is illegal shores up that revenue stream. It also signals to other pharma companies that the same legal strategy could work for their own medicines.
But there is a flip side. Drug prices in the U.S. remain among the highest in the world. If legal challenges shut down cheaper imports, patients and employers will keep feeling the squeeze.
That pressure does not disappear. It just changes where it shows up.
The bottom line: the court made a clear statement about safety and regulation. For the companies betting on imported drugs, the math just got harder. For pharmaceutical shareholders, it is a reminder that the legal system can be a powerful tool to protect pricing power.
