The cost of drug development continues to rise and may be prohibitive in cases of unmet clinical need, particularly for rare diseases. Artificial intelligence-based methods are promising in their potential to discover new treatment options. The task of drug repurposing hypothesis generation is well-posed as a link prediction problem in a knowledge graph (KG) of interacting of drugs, proteins, genes and disease phenotypes. KGs derived from biomedical literature are semantically rich and up-to-date representations of scientific knowledge. Inference methods on scientific KGs can be confounded by unspecified contexts and contradictions. Extracting context enables incorporation of relevant pharmacokinetic and pharmacodynamic detail, such as tissue specificity of interactions. Contradictions in biomedical KGs may arise when contexts are omitted or due to contradicting research claims. In this review, we describe challenges to creating literature-scale representations of pharmacological knowledge and survey current approaches toward incorporating context and resolving contradictions.