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**DEPARTMENT OF HEALTH & HUMAN SERVICES** Public Health Service

Food and Drug Administration

Rockville MD 20857

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######## Statement of

**John M. Taylor, III**

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######## Associate Commissioner for Regulatory Affairs

**Food and Drug Administration**

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######## Before the Committee on Commerce, Science and Transportation

**United States Senate**

**Hearing on Drug Importation**

######## November 20, 2003

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######### **Release Only Upon Delivery** 

**INTRODUCTION**

Mr. Chairman and Members of the Committee, I am John M. Taylor,
Associate Commissioner for Regulatory Affairs at the U.S. Food and Drug
Administration (FDA or the Agency).

I appreciate the opportunity to testify regarding the importation of
prescription drugs into the United States. Let me begin by saying that
the overall quality of drug products that consumers purchase from U.S.
pharmacies remains high. The American public can be confident that these
medications are safe and effective. FDA cannot, however, offer the same
assurance to the public about the safety and quality of drugs purchased
from foreign sources that are outside the regulatory system.

My testimony will focus on FDA's efforts to assess and respond to the
public health threats posed by the importation of unapproved,
adulterated and misbranded drugs, as well as counterfeit drugs from
foreign and domestic sources that pose a threat to the health and safety
of U.S. consumers. I will also discuss the law governing drug imports,
and the enforcement strategies used to prevent potentially unsafe drugs
from reaching the American consumer.

# SUMMARY

The Food and Drug Administration (FDA) shares with Congress its great
concern for senior citizens and other patients who have difficulty
paying for prescription drugs. That is why the Administration has been
working so closely with Congress to enact landmark legislation to
provide millions of America's seniors with coverage for prescription
drugs under Medicare. As part of that legislation, the Administration
supports provisions that build on FDA action earlier this year to expand
access to more affordable generic drugs. FDA has also taken a number of
other significant steps to provide greater access to affordable
prescription medications without compromising safety, including
unprecedented steps to lower drug costs by helping to speed the
development and approval of low-cost generic drugs after legitimate
patents have expired on branded drugs. This includes the biggest
expansion in history of our generic drug program, and a series of
regulatory changes to make it easier for generic manufacturers to
compete.

The Agency has also taken steps to help improve the development process
to help lower the high cost of developing new drugs. And the Agency has
taken steps to improve the process by which drugs are manufactured. FDA
is also working to prevent adverse events through new rules that would
require bar coding for drugs and better ways to track adverse events
automatically - with the goal of preventing billions of dollars in
unnecessary health care costs each year. In addition, FDA is striving to
promote electronic prescribing, to improve quality and reduce
prescription costs as well. And the Agency is taking additional steps to
provide better information to health care professionals and patients
alike, including new and better electronic product labels and
Internet-based information, about the risks and benefits of medication
choices available to treat a particular health problem.

However, FDA continues to have serious public health concerns regarding
legislation that would allow the importation of drugs from outside the
current safety system established by Congress under the Federal Food
Drug and Cosmetic Act. When it comes to buying drugs internationally,
outside our existing regulatory protections, FDA has consistently
concluded that the Agency is unable to endorse a "buyer beware"
approach.

All imported drugs are required to meet the same standards as domestic
drugs, and thus must not be unapproved, misbranded, or adulterated.
Drugs imported by individuals that are unapproved, misbranded, or
adulterated, are prohibited by law. This includes drugs that are foreign
versions of FDA-approved medications, and drugs that are dispensed
without a prescription, because there is no assurance of their safety
and effectiveness. FDA is doing its best to stop the increasing flow of
violative drugs into this country but the task is daunting. Each day
thousands of packages containing prescription drugs are imported
illegally into the United States. Our Office of Regulatory Affairs has
inspectors who work in the field who perform investigational work
pertaining to imported prescription drugs, a job that is not limited to
inspections at ports of entry. But while the volume of imported drugs
has increased enormously, FDA has not received additional resources or
authorities to address these shipments, in contrast to the case for food
security at the border.

Under the FD&C Act, a drug is subject to refusal of admission into the
United States if it appears that it: 1) has been manufactured, processed
or packed under unsanitary conditions, 2) is forbidden or restricted for
sale in the country in which it was produced or from which it was
exported, or 3) is adulterated, misbranded or in violation of section
505 of the FD&C Act, which relates to new drugs. To determine whether a
product is in compliance, FDA may collect an analytical or documentary
sample from the shipment for evaluation, and the shipment is held until
the results of the examination are known. In some instances, a product
may be detained as soon as it is offered for entry into the U.S. This
procedure \-- detaining a product without physical examination \-- is
based on past history and/or other information indicating the product
may violate the FD&C Act. At mail facilities, Bureau of Customs and
Border Patrol (BCBP) officials identify parcels that should be brought
to FDA\'s attention. BCBP places these packages in a secure location
that they maintain for FDA and other agencies. As with all imports, if
it appears that the product may be subject to refusal, FDA will issue a
notice to detain the product and provide the owner or consignee an
opportunity to respond.

Due to the huge volume of drug parcels entering the U.S. through the
international mail and courier services, the requirements for notice and
hearing, and our limited resources, it is difficult for FDA to detain
and refuse mail imports for personal use. In addition, considerable
storage space is needed to hold the large number of detained parcels
while a notice, opportunity to respond, and Agency decision are pending.

The recent rise Internet purchasing of drugs has significantly
compounded this problem. During a recent drug importation survey at
several mail facilities in the United States, FDA found that the vast
majority of parcels (88%) contained unapproved drugs that could pose
significant safety problems. These packages included drugs that have
been withdrawn from the U.S. market for safety reasons; animal drugs
sold illegally for human use; drugs improperly packaged in sandwich bags
or tissue paper; drugs without English labeling or proper instructions
for use; and drugs requiring precise dosing and monitoring by a
physician.

The Agency has responded to the challenge of importation by employing a
risk-based enforcement strategy to target our existing enforcement
resources effectively in the face of multiple priorities, including
homeland security, food safety and counterfeit drugs. As an example, the
Agency utilizes Import Alerts to identify particular shipments that may
pose significant potential risk to public health, e.g., drugs that
require careful risk management and products from shippers known to
present significant safety problems. However, this system is already
overwhelmed by the number of incoming mail packages that must be
evaluated and this state of affairs presents a significant ongoing
challenge for the Agency.

Sixty-five years ago, Congress responded to widespread fears of unsafe
and ineffective domestic drugs by directing FDA to create a system for
assuring that Americans have a drug supply they can trust. Fifteen years
ago, Congress responded to serious safety problems created by imported
drugs that were not tightly regulated by passing the Prescription Drug
Marketing Act. Congress limited access to these foreign drugs because of
safety concerns it identified with the importation of significant
volumes of adulterated and counterfeit drugs.

Unfortunately, the drug supply is under unprecedented attack from a
variety of increasingly sophisticated threats. This is evident in the
recent significant increase in efforts to introduce counterfeit drugs
into the U.S. market. FDA has seen its number of counterfeit drug
investigations increase four-fold since the late 1990s. Although
counterfeiting was once a rare event, we are increasingly seeing large
supplies of counterfeit versions of finished drugs being manufactured
and distributed by well-funded and elaborately organized networks. At
the same time, inadequately regulated foreign Internet sites have also
become portals for unsafe and illegal drugs. Evidence strongly suggests
that the volume of these foreign drug importations is increasing
steadily and presents a substantial challenge for the Agency to
adequately assess and process these parcels, resulting in an increased
workload for Agency field personnel at ports-of-entry, mail facilities,
and international courier hubs.

FDA remains concerned about the public health implications of personally
imported prescription drugs and the introduction of counterfeit drugs
into the stream of commerce. In our experience, many drugs obtained from
foreign sources that either purport to be or appear to be the same as
U.S.-approved prescription drugs are, in fact, of unknown quality. FDA
cannot assure the American public that drugs imported from foreign
countries are the same as products approved by FDA. The Agency has long
taken the position that consumers are exposed to a number of potential
risks when they purchase drugs from foreign sources or from sources that
are not operated by pharmacies properly licensed under state pharmacy
laws. These outlets may dispense expired, subpotent, contaminated or
counterfeit product, the wrong or a contraindicated product, an
incorrect dose, or medication unaccompanied by adequate directions for
use. The labeling of the drug may not be in English and therefore
important information regarding dosage and side effects may not be
available to the consumer. The drugs may not have been packaged and
stored under appropriate conditions to prevent against degradation, and
there is no assurance that these products were manufactured under
current good manufacturing practice standards. When consumers take such
medications, they face risks of dangerous drug interactions and/or of
suffering adverse events, some of which can be life threatening.

Patients potentially are at greater risk because there is no certainty
about what they are getting when they purchase some of these drugs.
Although some purchasers of drugs from foreign sources may receive
genuine product, others may unknowingly buy counterfeit copies that
contain only inert ingredients, legitimate drugs that are outdated and
have been diverted to unscrupulous resellers, or dangerous sub-potent or
super-potent products that were improperly manufactured. Furthermore, in
the case of foreign-based sources, if a consumer has an adverse drug
reaction or any other problem, the consumer may have little or no
recourse either because the physical location of the manufacturer or
because the operator of the pharmacy often is not known or the seller is
beyond the consumer's reach. FDA has only limited ability to take action
against these foreign operators.

In recent weeks, several governors and mayors around the country have
proposed to create systems whereby their employees and/or constituents
could be directed to Canadian pharmacies for purchasing Canadian drugs.
FDA has spoken with a number of such officials about our legal and
safety concerns, and many have declined to proceed and, at this time, no
state has put in place such an approach. In general, it is premature for
FDA to predict any potential enforcement actions against cities and
states. However, it is foreseeable that some jurisdictions may decide to
implement such a program, despite the Agency's concerns. FDA has not
threatened legal action against specific jurisdictions, but has signaled
its safety concern about these proposals and about their potential
illegality. FDA laid out these views in a letter to the Attorney General
of the State of California in the summer. Under current law, it is
fairly clear that states or cities would be encouraging the importation
of unapproved (and thus illegal) prescription drugs if they created such
programs.

At a time when FDA faces more challenges than ever in keeping America's
supply of prescription drugs safe and secure, legislation to liberalize
drug importation could cause additional drug safety concerns. The volume
of importation that could result from enactment of these bills could
easily overwhelm our already heavily burdened regulatory system. In
general, these bills fail to provide FDA with adequate authority or
resources to establish and regulate the distribution system for incoming
foreign drugs - manufactured, distributed, labeled, and handled outside
of our regulatory system - or even to ensure their safety. Some of these
proposals would take away our existing authorities, which are already
being stretched. They would create unprecedented prohibitions on FDA's
ability to inspect and test drugs, and FDA's authority to block the
distribution of drugs we think are unsafe. The proposals offer no added
resources to handle the flow of imported drugs into the United States; a
flow that would likely become far larger than it is today. Perhaps most
importantly, in addition to allowing in some drugs that might be safe,
these bills create wide and poorly regulated channels through which
counterfeit drugs, criminally diverted controlled narcotics, and
otherwise unsafe drugs could enter our drug supply. By choosing
affordability over safety rather than taking new steps to address both,
such legislation is a dangerous solution to the twin challenges of
safety and affordability.

Today, FDA drug approvals are manufacturer-specific, product-specific,
and include many requirements relating to the product, such as
manufacturing location, formulation, source and specifications of active
ingredients, processing methods, manufacturing controls,
container/closure system, and appearance. Under section 801 of the FD&C
Act, only manufacturers may import drugs into the U.S. The drugs must be
produced in FDA inspected facilities. These facilities and the drugs
produced in them are currently covered by the U.S. regulatory system,
and it is legal to import these drugs. But legislation allowing
pharmacies or consumers to import drugs directly from foreign sources
would bypass the protections provided by FDA's drug approval process and
by state regulation of firms that dispense drugs within their
jurisdictions.

Some drug importation legislation would limit imports to only those
drugs that are FDA-approved and made in FDA-inspected facilities, simply
because the legislation states that it is limited to drugs that comply
with sections 501 (adulteration), 502 (misbranding) and 505 (marketing
approval) of the FD&C Act. However, this approach fails to provide
resources, authorities, or the procedural framework necessary for FDA to
assure such compliance. As a practical consequence, the Agency would be
forced in many instances to rely on visual examinations of incoming drug
packages to determine whether a drug is FDA-approved and in compliance
with the FD&C Act. A visual inspection, however, is not nearly
sufficient to verify whether these drugs are FDA-approved, manufactured
in FDA-inspected facilities or in compliance with the adulteration and
misbranding provisions of the FD&C Act. This is no substitute for the
existing FDA regulatory process, which tracks prescription from the
acquisition of active and inactive ingredients to on-site inspection of
manufacturing and distribution facilities, with documentation of
appropriate product testing and handling.

Even if a manufacturer has FDA approval for a drug, a version produced
for foreign markets usually does not meet all of the requirements of the
FDA approval, and is thus considered to be unapproved. Even if a drug
bound for a foreign market is produced in the same plant as a similar
drug approved for the U.S. market, FDA is not ability to track that drug
in foreign commerce before it enters the U.S. Consequently, it is
difficult for the Agency to determine that a drug appearing at a U.S.
border is in fact the one produced in the FDA-inspected plant, pursuant
to FDA approval. Taken together, these practical problems create an
unworkable system that may appear to provide consumers with safety
protections, but in fact is hollowed by the inadequacy of resources and
authorities needed for effective implementation to protect the US drug
supply.

FDA firmly believes that we can and should do a much better job of
making safe and innovative drugs more affordable in the United States,
but to succeed we need to find safe and affordable solutions that, when
implemented, do not put consumers at risk. We appreciate and support the
commitment to making drugs more affordable for seniors and other
consumers and are working hard to achieve this goal. However, the Agency
continues to believe that we must focus on solutions that do not put at
risk safety in an effort to achieve increased affordability.

# REDUCING DRUG COSTS

The Administration believes that Americans should have access to safe,
effective and affordable prescription drugs. The Administration is
currently engaged in a number of actions to reduce the costs of
prescription medications. These initiatives will result in more
affordable prescription drugs and will reduce the incentive to look to
foreign sources for cheaper medications.

#  

On June 18, 2003, FDA published its final rule to lower prescription
drug costs for millions of Americans by improving access to generic
drugs. These changes are expected to save Americans over \$35 billion in
drug costs over the next 10 years. FDA's final rule provides the generic
industry with enhanced predictability and certainty, while avoiding
unnecessary and lengthy litigation, preserving intellectual property
protections and protecting the process of developing new breakthrough
drugs.

Specifically, the proposed rule would allow only one 30-month stay for
each generic drug application, clarify that certain patents cannot be
listed, and improve the declaration that innovators must make about
patents they submit to FDA for listing in the Agency's Orange Book
publication that lists all drug products approved under section 505 of
the FD&C Act.

The President's 2004 budget proposes an unprecedented increase of \$13
million in spending for FDA's generic drug program. This will be the
largest infusion of resources into the generic drug program in history,
increasing the program's size by about one-third. The proposed increase
in FDA's generic drug budget will allow FDA to hire 40 experts to review
generic drug applications more quickly and initiate targeted research to
expand the range of generic drugs available to consumers. The
improvements in the efficiency of review procedures are expected to save
consumers billions more by generally reducing the time for approving new
generic drugs.

The Agency has also taken steps to help improve the development process
to help lower the high cost of developing new drugs. And the Agency has
taken steps to improve the process by which drugs are manufactured. FDA
is also working to prevent adverse events through new rules that would
require bar coding for drugs and better ways to track adverse events
automatically - with the goal of preventing billions of dollars in
unnecessary health care costs each year. In addition, FDA is striving to
promote electronic prescribing, to improve quality and reduce
prescription costs as well. And the Agency is taking additional steps to
provide better information to health care professionals and patients
alike, including new and better electronic product labels and
Internet-based information, about the risks and benefits of medication
choices available to treat a particular health problem.

FDA is also taking steps to reduce the cost and regulatory uncertainties
of developing and manufacturing drugs, especially generic drug
alternatives. FDA initiatives in the Commissioner's Strategic Action
Plan address important factors affecting the cost of new drug
development and the cost of drug manufacturing.

New drug development presents uncertainties that increase the business
risk and costs to the innovator. Higher costs can create barriers to
competition for new drugs and new innovators\-- those companies that
don't have access to the capital available to more established drug
companies. Although some scientific and technical uncertainties are
inherent and unavoidable in drug innovation, others can be reduced or
eliminated. Such reductions will help speed patient access to new drugs
and reduce the cost of drug development. FDA has begun major initiatives
to reduce some of those sources of uncertainty.

FDA is continuing to improve the methods by which advice is provided to
sponsors regarding what we believe are the best approaches to develop
new therapies. These ongoing efforts are designed to provide sponsors
with the best possible information, and thus increase the efficiency of
the development process. FDA has identified several priority disease
areas and new technologies that the Agency believes are good candidates
for new work to clarify regulatory pathways and clinical endpoints. The
targeted disease areas include cancer, diabetes and obesity. The
targeted technologies include cell and gene therapy, pharmacogenomics
and novel drug delivery systems.

Another important step the Federal government can take to respond to the
need for affordable drugs is beyond FDA's reach. It requires legislation
that the President and Congress on a bipartisan basis are close to
achieving. The Administration believes that it is time for Congress to
pass Medicare legislation that will make safe and effective drugs more
affordable for seniors. The legislation would provide immediate
discounts through Medicare-endorsed prescription drug cards. Beginning
in 2006, Medicare beneficiaries would have access to a drug benefit,
through which they would be able to take advantage of lower prices
negotiated by private health plans.

The Medicare legislation also contains two other provisions designed to
lower prescription drug costs: generic drug reform and legislation
approved by the House or Representatives that would open our borders to
non-FDA approved drugs. One holds great promise, the other raises
serious safety concerns.

[Gregg-Schumer Generic Drug Provisions]{.underline}

The Medicare legislation contains a bipartisan proposal sponsored by
Senators Gregg and Schumer that would complement FDA rulemaking by
providing greater access to more affordable generic drugs. The Senate
bill would codify elements of FDA's June 18, 2003, final rule and add a
provision limiting 180-day exclusivity to accelerate generic competition
in the marketplace. These changes will enable consumers to save billions
of dollars each year by making it easier for generic drug manufacturers
to get safe and effective products on the market. The increased
availability of lower-cost generic drugs will benefit all Americans,
especially seniors.

[Foreign Drug Imports]{.underline}

Efforts in Congress to enact legislation to restructure the current drug
import standard are inconsistent with the realities of drug safety. As
any of our dedicated field investigators will attest, and as pharmacy
regulators and major health professional organizations have warned, just
because legislation declares drugs safe doesn't make them so.

At a time when FDA faces more challenges than ever in keeping America's
supply of prescription drugs safe and secure, legislation to liberalize
drug importation could cause additional drug safety concerns. The volume
of importation that could result from enactment of these bills could
easily overwhelm our already heavily burdened regulatory system. In
general, these bills fail to provide FDA with adequate authority or
resources to establish and regulate the distribution system for incoming
foreign drugs - manufactured, distributed, labeled, and handled outside
of our regulatory system - or even to ensure their safety. Some of these
proposals would take away our existing authorities, which are already
being stretched. They would create unprecedented prohibitions on FDA's
ability to inspect and test drugs, and FDA's authority to block the
distribution of drugs we think are unsafe. The proposals offer no added
resources to handle the flow of imported drugs into the United States; a
flow that would likely become far larger than it is today. Perhaps most
importantly, in addition to allowing in some drugs that might be safe,
these bills create wide and poorly regulated channels through which
counterfeit drugs, criminally diverted controlled narcotics, and
otherwise unsafe drugs could enter our drug supply. By choosing
affordability over safety rather than taking new steps to address both,
such legislation is a dangerous solution to the twin challenges of
safety and affordability.

Today, FDA drug approvals are manufacturer-specific, product-specific,
and include many requirements relating to the product, such as
manufacturing location, formulation, source and specifications of active
ingredients, processing methods, manufacturing controls,
container/closure system, and appearance. Under section 801 of the FD&C
Act, only manufacturers may import drugs into the U.S. The drugs must be
produced in FDA inspected facilities. These facilities and the drugs
produced in them are currently covered by the U.S. regulatory system,
and it is legal to import these drugs. But legislation allowing
pharmacies or consumers to import drugs directly from foreign sources
would bypass the protections provided by FDA's drug approval process and
by state regulation of firms that dispense drugs within their
jurisdictions.

Some drug importation legislation would limit imports to only those
drugs that are FDA-approved and made in FDA-inspected facilities, simply
because the legislation states that it is limited to drugs that comply
with sections 501 (adulteration), 502 (misbranding) and 505 (marketing
approval) of the FD&C Act. However, this approach fails to provide
resources, authorities, or the procedural framework necessary for FDA to
assure such compliance. As a practical consequence, the Agency would be
forced in many instances to rely on visual examinations of incoming drug
packages to determine whether a drug is FDA-approved and in compliance
with the FD&C Act. A visual inspection, however, is not nearly
sufficient to verify whether these drugs are FDA-approved, manufactured
in FDA-inspected facilities or in compliance with the adulteration and
misbranding provisions of the FD&C Act. This is no substitute for the
existing FDA regulatory process, which tracks prescription from the
acquisition of active and inactive ingredients to on-site inspection of
manufacturing and distribution facilities, with documentation of
appropriate product testing and handling.

It is difficult for the Agency to reconcile the movement to allow
consumers to purchase drugs from foreign sources with widespread
understanding that the world has changed, that we now face more security
concerns than ever, and that our vigilance over imports entering this
country must reflect this reality. Just last year, Congress enacted
legislation giving FDA an additional new authority to help protect
imported food from deliberate or accidental contamination. As a result
of this legislation, FDA has substantially boosted its food safety and
security activities at the border, adding hundreds of new inspectors and
support staff. For example, for the first time, FDA must be notified of
essentially all commercial food shipments before they arrive. This will
allow FDA to target our efforts to the riskiest products, before they
enter the country. So thanks to Congress, we have new abilities to help
us prevent the entry of foods that may be unsafe.

Yet in the area of drugs, some in Congress want to move in the opposite
direction. The evidence in my testimony today strongly suggests that it
simply is not safe to throw open our borders and declare broad new
classes of drugs to be "legal." Despite well-intentioned efforts to
design safeguards for this proposed drug import regime, many unsafe
drugs will enter if Congress establishes a new, wide "legal" avenue for
imports.

This approach would encourage the individuals who are currently trying
hard to exploit weaknesses in our drug security system to make the most
of any new paths that are opened into America's drug supply. The
problems we are witnessing now will only multiply if current safeguards
are weakened. The evidence that this will occur becomes stronger each
day.

For example, an 81-year-old U.S. consumer recently purchased Neurontin,
an FDA-approved anti-seizure medication after watching a TV commercial
that claimed consumers could save up to 70 percent on prescriptions by
calling a 1-800 number. A brochure that was subsequently sent to the
consumer after he called the toll free number led him to believe that
any drugs he ordered would be FDA-approved, brand name drugs from
Canada. The consumer subsequently purchased the Neurontin, along with
two other pharmaceuticals. However, the Neurontin the consumer actually
received was made in India and unapproved for any use in the United
States. This is just one of many examples where consumers thought that
they were getting FDA-approved products from Canada, only to find out
that their products were coming from countries in Asia and Africa.

International pharmaceutical peddlers are taking advantage of regulatory
gaps to move millions of prescription drugs, including controlled
substances, into the United States from Mexico, Canada, and elsewhere.
Rogue medical merchants who have dubious or no medical background are
selling potentially dangerous drugs to people who never see the
prescribing doctor in person or undergo necessary tests. At best, these
drugs are of unclear origins and safety. At worst, they are poorly
manufactured, improperly repackaged, stored, and labeled, or out-and-out
fakes. Weakening import restrictions will only compound these problems.

The resources and authorities to assure drug safety that are available
to FDA and our state partners must be commensurate with the scope and
volume of the drug products that may legally be imported. It is
important to remember why Congress made many drug imports illegal in the
first place: FDA did not have the resources or authorities to assure
their safety. Moreover, in recent years we have seen many more drugs
that require "risk management" programs and regular monitoring to be
sure they are used safely and effectively. We have also approved
biologic and injectable drugs that have especially complex manufacturing
and storage requirements. In both cases, the public health safeguards
that FDA has imposed are being undermined by the illegal importation of
these products. In addition, regulating controlled substances at our
borders is an enduring challenge. These factors strongly argue for
maintaining, not loosening, the current standards.

[Promising Anti-Counterfeiting Technology]{.underline}

Over time, it may be possible to assure drug safety through a
multilayered strategy of modern anti-counterfeiting technologies.
Promising developments such as "track and trace" technologies that
cannot be faked like a paper drug pedigree, and verification
technologies built not only into tamper-resistant drug packaging but
also into the drugs themselves will make our job of verifying the
legitimacy of drug products much easier. FDA is working to speed the
availability of these anti-counterfeiting technologies, but they are
months or years away.

In the meantime, FDA needs all of the authorities it has now to assure
the safety and effectiveness of legal prescription drugs. This includes
the ability to require or conduct tests of product authenticity and
potency, the ability to identify and, when necessary, inspect firms
involved in the distribution of pharmaceuticals, and the authority to
issue regulations and take decisive action to block the distribution of
potentially unsafe drugs. Now is not the time to weaken these
authorities, or to allow products into this country that circumvent
these important public health protections.

# DRUG IMPORTS: HEALTH AND SAFETY CONCERNS

Sixty-five years ago, Congress responded to widespread fears of unsafe
and ineffective drugs by directing FDA to create a system for assuring
that Americans have a drug supply they can trust. FDA responded to this
challenge by establishing a system that has become the gold standard
that others strive to emulate. The FD&C Act prohibits the importation of
unapproved, misbranded, or adulterated drugs into the U.S. Drugs
imported by individuals generally fall into one of these prohibited
categories. This includes foreign versions of U.S.-approved medications.

More recently, in 1988, Congress enacted the Prescription Drug Marketing
Act (PDMA) to establish additional safeguards to prevent substandard,
ineffective, or counterfeit drugs from entering the U.S. Under PDMA, it
is illegal for anyone other than the drug's original manufacturer to
re-import a prescription drug into the U.S. that was manufactured in the
U.S.

At least two high-profile cases prompted the passage of PDMA. In one
instance, over

2 million unapproved and potentially unsafe and ineffective Ovulen-21
"birth control" tablets from Panama were distributed throughout the U.S.
They were falsely imported as "American goods returned." In another
case, a counterfeit version of Ceclor, a widely used antibiotic at the
time, found its way into the U.S. drug distribution from a foreign
source. Over the years, our professional staff has employed PDMA and
other pre-existing authorities to build a drug safety infrastructure to
ensure that Americans enjoy the highest-quality drug supply in the
world.

Unfortunately, the drug supply that we work so hard to safeguard is
under unprecedented attack from a variety of increasingly sophisticated
threats. Today everything from product packaging to labeling and product
containers can be readily purchased created or counterfeited and
counterfeiters and diverters take advantage of this opportunity.
Moreover, the skill and ingenuity demonstrated by counterfeiters and
diverters have improved significantly. As a result, more than ever
before, well-organized criminals have the ability to exploit our
regulatory system and profit at the expense of public health.

A large and growing volume of parcels containing foreign prescription
drugs ordered by individuals from foreign sources is entering American
commerce through U.S. Postal Service international mail facilities.
Evidence strongly suggests that the volume of foreign drug imports is
increasing steadily. The volume presents a substantial challenge for the
Agency to adequately assess and process these parcels, resulting in an
increased workload for Agency field personnel at ports-of-entry, mail
facilities, and international courier hubs.

FDA remains concerned about the public health implications of foreign
prescription drugs imported by consumers and counterfeit drugs
introduced into the stream of commerce. In our experience, many drugs
obtained from foreign sources that either purport to be or appear to be
the same as U.S.-approved prescription drugs are, in fact, of unknown
quality. FDA cannot assure the American public that drugs imported from
foreign countries are the same as products approved by FDA.

FDA has long taken the position that consumers are exposed to a number
of potential risks when they purchase drugs from foreign sources or from
sources that are not operated by pharmacies properly licensed under
state pharmacy laws. These outlets may dispense expired, subpotent,
contaminated or counterfeit product, the wrong or a contraindicated
product, an incorrect dose, or medication unaccompanied by adequate
directions for use. The labeling of the drug may not be in English and
therefore important information regarding dosage and side effects may
not be available to the consumer. The drugs may not have been packaged
and stored under appropriate conditions to prevent degradation, and
there is no assurance that these products were manufactured under
current good manufacturing practice (cGMP) standards. When consumers
take such medications, they face risks of dangerous drug interactions
and/or of suffering adverse events, some of which can be life
threatening. These risks could include potential side effects from
inappropriately prescribed medications or side effects due to drug
contamination.

Patients also potentially are at greater risk because there is no
certainty about what they are getting when they purchase some of these
drugs. Although some purchasers of drugs from foreign sources may
receive genuine product, others may unknowingly buy counterfeit copies
that contain only inert ingredients, legitimate drugs that are expired
and have been diverted to unscrupulous resellers, or dangerous
sub-potent or super-potent products that were improperly manufactured.
Moreover, consumers who are desperately seeking a cure for a serious
medical problem may be more willing to accept a product of unknown
origin.

Furthermore, in the case of foreign-based sources, if a consumer has an
adverse drug reaction or any other problem, the consumer may have little
or no recourse either because the physical location of the manufacturer
or the operator of the pharmacy is unknown the seller is beyond the
consumer's reach. In addition, as a condition of doing business, many of
these foreign operators require the U.S. consumer to sign a document
releasing the operator from all potential liability. FDA has only
limited ability to take action against these foreign operators since
they operate outside if the United States.

Due to the huge volume of drug parcels entering the U.S. through the
international mail and courier services and the requirements under
current law for notice and hearing if we detain an import, it is
difficult for FDA to detain and refuse mail imports for personal use.
The advent of the Internet and the proliferation of "storefront
pharmacies" has significantly compounded this problem. As a consequence,
tens of thousands of parcels that FDA is unable to review given the
Agency's multiple competing enforcement priorities are released by the
BCBP even though the products contained in these parcels may violate the
FD&C Act and may pose a health risk to consumers. We acknowledge that
this is not an optimal public health outcome and are working on
strategies to better utilize our available resources to minimize
potential public health risks.

The Agency has responded to this challenge by employing a risk-based
enforcement strategy to deploy our existing enforcement resources in the
face of multiple priorities, including homeland security, food safety
and counterfeit drugs. As an example, the Agency utilizes Import Alerts
to identify particular shipments that may pose significant potential
risk to public health. In the case of the increased volume of certain
unapproved drugs arriving at mail facilities throughout the country, the
Agency has issued Import Alerts to instruct field personnel to work with
BCBP to detain all such shipments from specific manufacturers,
distributors and countries of origin.

# [FDA Response To Illegal Imports]{.underline}

FDA is working on a number of fronts to address the influx of unapproved
and counterfeit prescription drugs coming into the U.S. from foreign
sources. These efforts include: 1) educating the public about the
potential safety issues presented by the purchase of drugs from foreign
countries, 2) working with professional groups to disseminate FDA's
message on the potential dangers of Internet drug sales, 3) partnering
with state governments and other Federal agencies to develop more
effective enforcement strategies, and 4) enforcement activity directed
at the most significant concerns. Recent high-profile regulatory actions
send a strong message that FDA is actively working to take strong steps
to protect the public from conduct that threatens the U.S. drug supply.

# [Public Outreach and Education]{.underline}

Public outreach is an important tool that the Agency uses to inform
consumers about potentially dangerous or ineffective drugs. FDA is
expanding its public outreach to further educate consumers about
potentially dangerous practices associated with some Internet drug
sales. We also are conducting outreach to explain the nature of
compliance and enforcement actions we already have taken. This effort
includes FDA Talk Papers, articles in FDA Consumer magazine, and
information on FDA's website to help educate consumers about safely
purchasing drugs online. FDA's website also provides consumers with an
opportunity to submit information to the Agency about sites that may
violate the FD&C Act.

FDA has also created public education brochures and posters entitled,
"Things you should know about purchasing medications outside the United
States" to alert consumers to the health risks of buying medications
outside the U.S. Cross-border travelers at certain land border stations
are provided with information regarding the potential risks of imported
drugs and another brochure entitled, "Looks Can be Deceiving," which
describes the dangers of purchasing drugs directly at cross-border
pharmacies. This information is also available on FDA's website.

In October 2000, FDA's Center for Drug Evaluation and Research (CDER)
launched an education campaign on the subject of buying prescription
medicines online entitled, "Shop Smart." This effort is part of FDA's
"Buying Rx Drugs Online" education program. The centerpiece of this
multi-media campaign is FDA's website:
*http://www.fda.gov/oc/buyonline/default.htm* that has information for
consumers, including tips and warnings, how to spot health fraud,
frequently asked questions and how to report suspect pharmacy sites. The
website is one of the most frequently visited web pages on FDA's
website.

Another central piece of our campaign is a brochure entitled, "Buying
Prescription Medicines Online: A Consumer Safety Guide," a brochure
produced by the CybeRx-Smart Safety Coalition, a partnership of Internet
companies, trade associations, health and consumer organizations and
other government agencies. The brochure is available in hard copy from
FDA, the Federal Consumer Information Center and the National Council
for Patient Information and Education (member of CybeRx-Smart). It also
is posted on FDA's website. The number of consumer inquiries FDA
receives has grown steadily with the circulation of the brochure. In
addition, a 30-second radio public service announcement was produced and
distributed to stations throughout the U.S. The release has been
broadcast on 233 radio stations in 46 different states with an audience
of almost 6 million. Two print public service announcements (one for
medical devices and one for prescription medicines) were produced and
sent to over 100 national magazines.

The January/February 2001 issue of the FDA Consumer magazine included an
article entitled, "Buying Drugs Online: It's Convenient and Private, But
Beware of 'Rogue Sites.'" The article is available online and thousands
of reprints have been distributed at conferences and exhibits around the
country.

# [Recall of Asthma Drug Sold in Canada]{.underline}

On November 14, 2003, FDA issued a precautionary press release to alert
the public to the recent recall of GlaxoSmithKline "Diskus" medicines
sold in Canada to treat asthma and chronic obstructive pulmonary disease
(COPD). In cases such as these, our ability to warn U.S. consumers about
defective products may be compromised when patients purchase drugs from
outlets in foreign countries.

Asthma, COPD and related diseases can be serious and life threatening.
The three asthma products -- Ventolin Diskus, Flovent Diskus, and
Serevent Diskus \-- were recalled in Canada on November 12, 2003,
because the products' drug delivery system may not function properly and
may deliver too little of the drug, or none at all.

FDA emphasized that FDA-approved Diskus products (Advair and Serevent)
sold in the U.S. through legitimate marketing channels are not subject
to this recall. But because some Americans are buying prescription drugs
from Canada and elsewhere through on-line or storefront operations, U.S.
patients may be using these potentially substandard and ineffective
products.

FDA urges any patients who bought these Diskus products from a foreign
source to review the recall information on the manufacturer's website
and check the lot numbers of Diskus products they have purchased. FDA
advised U.S. patients with questions or concerns about these products to
call their physician, pharmacist, or other knowledgeable care provider.

#### Partnering With Professional Organizations

FDA continues to meet with organizations representing state regulatory
and law enforcement bodies, consumers, health care practitioners and
industry to address our concerns. The purpose of these meetings is to
discuss and coordinate efforts to respond to issues relating to online
drug sales, including who should regulate and how they should regulate,
whether and what policy changes should be considered, and when to
develop partnering arrangements. The organizations we regularly meet
with include:

-   The National Association of Boards of Pharmacy

-   The Federation of State Medical Boards

-   The National Association of Attorneys General

-   The American Medical Association

-   The American Pharmacists Association

-   The National Consumers League

-   AARP (formerly the American Association of Retired Persons)

-   The American Society of Health-Systems Pharmacists

-   The National Association of Chain Drug Stores

-   The National Community Pharmacists Association

-   The Pharmaceutical Research and Manufacturers Association

-   Pharmaceutical Security Institute

-   Healthcare Distribution Management Association

In addition, we have Memoranda of Understanding (MOUs) with the National
Association of Boards of Pharmacy (NABP) and the Federation of State
Medical Boards (FSMB) that enhance our collaborative working
relationship. State pharmacy boards have primary responsibility for the
licensing of pharmacies and regulating the dispensing of drugs.

FDA has been working with the states to address concerns regarding
importation of foreign prescription drugs. In February 2003, FDA hosted
a nationwide call with 38 state boards of pharmacy, other state
regulatory agencies and consumer groups to discuss current Internet drug
sale practices and the growth of storefront pharmacies. While some state
laws are stronger than others, FDA has actively engaged with a number of
states in jointly pursuing Internet sites that are engaged in illegal
prescription drug sales. In some cases, the states have acted
unilaterally. FDA is continuing to expand its cooperative activities
with states in order to address effectively the many challenges in this
area of electronic commerce. FDA also is continuing to work closely with
our partners in the states in support of their efforts to curtail
illegal and potentially dangerous operations, especially when they
involve misleading claims about drug safety.

[State-Federal Enforcement: Rx Depot]{.underline}

On March 21, 2003, FDA issued a "warning letter" to a storefront
operation known as

Rx Depot. We commenced this action in conjunction with the Arkansas
State Board of Pharmacy. Rx Depot generally obtained drugs from Canada
for U.S. consumers, exposing the public to the significant potential
risks associated with imported prescription medications. Rx Depot and
similar companies have often incorrectly stated to consumers that FDA
condones their activities and even that their prescription medications
are "FDA approved." This could lead consumers to the mistaken conclusion
that the prescription drugs sold by the companies have the same
assurance of safety as drugs actually regulated by FDA.

While Rx Depot responded to FDA's "warning letter," the response was
inadequate. Therefore the U.S. Department of Justice and FDA filed an
injunction on September 11, 2003, to stop Rx Depot Inc. from importing
prescription drugs from Canada in violation of U.S. law. The Agency
brought the suit because the storefront chain posed a risk to public
health by importing unapproved prescription drugs and drugs that may
only be imported by the U.S. manufacturer. These drugs posed a public
health risk because they do not have the same assurance of safety and
efficacy as drugs regulated by FDA

On November 6, 2003, U.S. District Judge Claire Eagen granted the
government's motion for a preliminary injunction and ordered Rx Depot to
stop importing drugs and stop advertising and promoting any service that
causes or facilitates drug imports.

Judge Eagen also ruled that the firm had ten days to send a letter to
its customers informing them that the company's business violated the
law and that the safety and efficacy of drug products obtained through
the firm could not be assured.

FDA, and the District Court Judge, concluded that operations such as Rx
Depot expose the public to significant potential risks associated with
unregulated imported prescription medicines. FDA's decision to bring
this action and the court's subsequent ruling sends a clear signal that
FDA is committed to protecting the public health and challenging those
who put profit before safety. This case also demonstrates FDA's
commitment to protect the American public from illegal drugs that may be
unsafe, ineffective, or substandard.

# 

As of November 10, 2003, twenty-two states have taken, or are prepared
to take, regulatory actions against storefront pharmacies that
facilitate illegal imports of prescription drugs from Canada. .

[Federal Enforcement Actions]{.underline}

Although the Rx Depot case is a recent prominent action, we have also
taken action in other similar cases, discussed in more detail below.

# 

## [CanaRx]{.underline}

On September 16, 2003, FDA issued a "warning letter" to CanaRx notifying
the firm of our concerns about supplying prescription drugs from
unregulated sources and making unwarranted claims about these products.
Specifically, FDA's "warning letter" stated that CanaRx runs an Internet
website and mail operation that illegally causes the shipment of
prescription drugs from a Canadian pharmacy into the U.S., thereby
subjecting Americans to risky imported drug products. This potential
risk is compounded by the fact that CanaRx makes misleading assurances
to consumers about the safety of its drugs.

An FDA investigation of this firm showed that CanaRx operates a drug
purchasing arrangement that channels drugs through companies that are
not licensed pharmacies and does not consistently use shipping practices
necessary to ensure its drugs are safe and effective. For example, FDA
has evidence demonstrating that CanaRx shipped insulin, a product that
should be stored under refrigerated conditions, in a manner that did not
satisfy the storage conditions specified in FDA approved labeling. This
failure could genuinely compromise the safety and effectiveness of the
insulin. CanaRx's response to the Agency's "warning letter" was
inadequate. Therefore, on November 6, 2003, FDA sent a second letter
reiterating our concerns about the potential safety of the product, and
the firm's business practices, which could expose the firm's customers
to unnecessary risk.

## [Alliance Wholesale Distributors]{.underline}

On September 15, 2003, FDA announced the seizure of all drug products
labeled in a foreign language and/or labeled as repacked by Phil and
Kathy's, Inc., dba Alliance Wholesale Distributor and/or Local Repack,
Inc. ("Local Repack") of Richton Park, Ill.

FDA acted to prevent these drug products from entering the U.S. drug
distribution system because there is no assurance that they are safe or
effective. Many of the products received and repackaged at Local Repack
are of unknown origin, and their storage and handling is unverifiable.
Local Repack has repeatedly failed to comply with cGMP requirements. In
addition, many drugs at Local Repack's facility are misbranded. These
drugs may also pose a serious or even life-threatening risk to patients
who use them.

FDA inspections conducted after an August 1999 "warning letter" to Local
Repack revealed significant and continuing violations. A series of
inspections and other recent evidence revealed numerous deficiencies
including the failure to properly handle customer complaints,
discrepancies surrounding the signatures of quality control employees,
records indicating the review and approval of repackaging operations
before the operations were completed, incomplete or missing repackaging
records, duplicate and inconsistent repackaging records for the same
batch, and unreliable receiving and distribution records for drugs.

This September seizure follows the July 9, 2003, seizure of more than
4,500 bottles of prescription drugs that were being repackaged by Local
Repack stemming from an investigation of counterfeit Lipitor. Many of
the products seized in July were marked with expiration dates to permit
them to be sold after similar U.S.-approved drugs would have expired.
For example, Portuguese-labeled product that Local Repack labeled as
Lipitor had expiration dates well beyond the two-year limit that is
based on stability studies performed under the new drug application
(NDA) approved in the U.S. for Lipitor. Furthermore, none of these
products were shipped to Local Repack in authentic, original
manufacturer's packaging with appropriate labeling. This case
demonstrates the Agency's continued commitments to protect consumers
from potentially dangerous drugs and the litigation is ongoing.

# 

# [FDA/Customs' Import Blitz Exams]{.underline}

This past summer, FDA and BCBP conducted a series of blitz examinations
on mail shipments of foreign drugs destined for U.S. consumers. This
joint operation was carried out to help FDA and BCBP target, identify,
and stop counterfeit and potentially unsafe drugs from entering the U.S.
from foreign countries via mail and common carriers. It was also
designed to help FDA and BCBP assess the extent of this problem posed by
imported drugs.

These "blitz" exams were conducted in the Miami and New York (JFK) mail
facilities from July 29-31, 2003, and the San Francisco, and Carson,
California, mail facilities from August 5-7, 2003, and one of the goals
was to obtain a representative picture of drug products entering the
United States. In each location, the agencies examined packages shipped
by international mail through U.S. Postal Service facilities over a
3-day time span.

Approximately 100 parcels per day, per facility, were selected based
upon their country of origin and historical experience. In some cases,
packages contained multiple drug products.

Although many drugs obtained from these foreign sources purport, and may
even appear to be, the same as FDA-approved medications, these
examinations showed that many foreign drug products are of unknown
quality or origin; have not been approved in the U.S., and may pose
potentially serious safety concerns. For example, potentially hazardous
products encountered during the blitz exams included:

-   Unapproved drugs such as Roaccutane, an unapproved version of
    Accutane.

-   The unapproved drug Taro-warfarin, an unapproved version of Warfarin
    used to prevent blood clotting. This drug requires careful blood
    monitoring during administration.

-   Drugs such as Dilantin, Synthroid and Glucophage that require
    individual titration and very careful dosing in order to avoid
    serious and potentially life-threatening side effects.

-   Drugs with missing dosage information and whose labeling was not in
    English.

-   Inappropriately packaged drugs that were shipped loose in baggies,
    tissue paper or envelopes.

-   Drugs that had been withdrawn from the U.S. market for safety
    reasons such as Buscapina, which appears to be the drug Dipyrone.
    This drug was removed from the market in 1977 because of several
    reports of cases of agranulocytosis, some of which were fatal.

-   Animal drugs not approved for human use such as Clenbuterol, a drug
    approved for the treatment of airway disease in horses but which is
    also known as a substance of abuse in the "body building" community
    and is banned by the International Olympic Committee. 

-   Drugs that have the potential for clinically significant
    interactions with other drugs a consumer may be taking.

-   Drugs such as Lipitor and Pravachol that require initial screening
    and/or periodic monitoring to assure safety.

-   Controlled substances that are sedating, associated with respiratory
    depression, or have abuse potential for abuse.

> These drugs arrived from many countries. For example, 15.8 percent
> (161) entered the U.S. from Canada; 14.3 percent (146) from India;
> 13.8 percent (141) from Thailand, and 8.0 percent (82) from the
> Philippines. The remaining entries came from other countries. Overall,
> of the 1,153 imported drug products examined, the overwhelming
> majority, 1,019 (88 percent), contained unapproved drugs.

The blitz results will assist the Agency in its efforts to:

-   Employ its resources more strategically to focus on the foreign
    sources of illegal, unsafe imported drugs.

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-   Identify shipping patterns so that it can target future shipments
    and sources of such drugs.

-   Seek out partnerships with other federal and state agencies to
    combat this problem. To continue to refine its efforts at
    identifying and stopping potentially unsafe, imported drugs, FDA
    will continue to conduct additional blitzes.

# IMPORT ENTRY STUDIES

In addition to the import blitz exams described above, FDA conducted an
informal study to screen and examine mail-entry drug samples from
foreign countries, including Canada, during a six-week period in early
summer, 2003. FDA's Buffalo and Detroit FDA import offices conducted the
import entry studies. The study confirmed FDA's belief that an
increasing number of U.S. citizens are choosing to fill their
prescriptions through mail-order purchases from pharmacies located in
Canada. During the course of this study, FDA reviewed 154 entries from
Canada representing 350 drug items. In terms of safety concerns, this
study affirmed what FDA has learned to expect from imported
pharmaceuticals. For example, it was not possible to verify where, or
under what conditions, the drugs were manufactured for any of the
pharmaceutical products that were offered for import. For those drugs
that were apparently ordered from websites, the need for a valid
prescription was not always specified, and if the sites identified a
prescription requirement, it did not disqualify prescriptions coming
from other countries. Moreover, some websites specifically solicited
U.S. business by stating that their drug products' quality and
manufacturing requirements were "equivalent" to those in the U.S.

The following examples of imported drugs, although not specifically
restricted to Canada, further illustrate the types of products and
situations FDA has encountered since it started examining this issue.
For example:

-   Apo-Metformin, a drug used as a daily treatment for diabetic
    patients to prevent high glucose levels, arrived with no pharmacy
    label, no warnings of potential serious and life threatening side
    effects, no specific directions for use or instructions for proper
    storage, and no contact information (such as phone number) in the
    event that the patient needed a pharmacy or physician in the case of
    an emergency.

-   Apo-Gabapentin, a drug used as a daily treatment for seizures. 1,200
    tablets were mailed to the patient, a dangerously large volume.
    While the quantity could last for years for a typical patient, the
    product began expiring within one month of receipt.

-   Lipitor, a drug used to treat elevated cholesterol, was shipped to a
    U.S. consumer. The product was manufactured in Germany for export to
    Ireland, but had been exported to Thailand and forwarded to the
    consumer.

The results of the July-August blitz and our import entry study concern
FDA because the products we encountered move through many channels of
commerce in many countries, and fall well outside established safety
controls. Consequently, these products are especially vulnerable to
abuses such as counterfeiting, diversion and degradation. These
conditions represent safety threats to the American consumers who
purchase them.

# SUMMARY OF FEDERAL Enforcement ACTIVITY 

FDA's Office of Regulatory Affairs (ORA), including the Office of
Criminal Investigations (OCI), works with state and Federal
investigative agencies and prosecutors to uncover violations of the FD&C
Act and other laws with respect to unapproved, misbranded, illegally
imported, or otherwise unsafe or substandard drug products. This
includes violations associated with drugs sold over the Internet.

Recent criminal and civil cases involving drugs sold over the Internet
provide insight into the seriousness of the risks these products pose to
the public health. With respect to Internet drug sales, FDA to date has
initiated the following actions:

-   372 Internet-related drug criminal investigations;

-   142 Internet-related drug prosecutions resulting to date, in 106
    convictions;

-   90 open Internet-related drug investigations;

-   Nearly 200 cyber "warning letters" sent to domestic and foreign
    online sellers;

-   9 preliminary injunctions;

-   19 product seizures;

-   16 product recalls and the voluntary destruction of 19 illegal
    products; and

-   1 Contempt Action.

# [Controlled Substances Cases]{.underline}

As a part of its larger efforts to address the illegal sale of
pharmaceuticals, the Agency has committed substantial resources to
controlled substances cases, including controlled substances sold over
the Internet. The Drug Enforcement Administration (DEA) is the lead
Federal Agency responsible for regulating controlled substances and
enforcing the Controlled Substances Act (CSA). FDA has also worked with
the FBI on criminal investigations involving the illegal sale, use, and
diversion of controlled substances, including illegal sales over the
Internet. FDA's Office of Criminal Investigations (OCI), however, is
responsible for managing and conducting the Agency's criminal
investigations. OCI conducts these investigations with support from
other Agency components. In some cases, illegal activity may involve
both imported and domestic controlled and non-controlled prescription
drugs, and thereby violate the FD&C Act and the CSA. Even though FDA
does not initiate investigations where the sole violation is thought to
be a CSA offense, OCI works closely with DEA on criminal investigations
involving the illegal sale, use, and diversion of controlled substances,
including illegal sales over the Internet. This close working
relationship with DEA, as well as with local law enforcement agencies,
has led to the successful prosecution of many criminal cases involving
controlled substances. These cases show the extent to which criminal
investigations involving controlled substances can quickly encumber the
resources and finances of local and Federal law enforcement agencies in
their attempts to combat the growing problem these drugs present.

FDA has investigated drug diversion schemes and hundreds of illicit
Internet sites by reassigning its criminal investigative staff from
other priority efforts. Our goal is to reduce the illegal promotion,
sale, and distribution of unlawful prescription drugs via the Internet
and other channels and this can include controlled substances. These
efforts have protected consumers from unsafe, ineffective, and
fraudulent products that present a danger to the public health. Here are
some of our most recent cases involving controlled substances:

-   In August 2003, a doctor pled guilty and was sentenced to 30 months'
    imprisonment for conspiring to dispense Schedule III and IV
    controlled substances. The conspiracy transpired via a web-based
    pharmacy with an Internet address of www.thepillbox.com and a
    physician referral service with the Internet address of

> *www. physicianreferral2000.com*. From 1999 through early June 2001,
> customers in the U.S. and abroad who accessed Pill Box's website would
> be referred to the physician referral website to obtain prescriptions
> prior to placing their orders. The doctor would prescribe drugs such
> as hydrocodone and diazepam (Valium) to customers without establishing
> a patient history or performing a mental/physical exam, and despite
> the fact that he had no means to monitor the medications' response.
> Moreover, whenever a prescription was issued, the doctor and Pill Box
> would subsequently split a "fee" for the service. Over the course of
> the conspiracy, the doctor illegally prescribed, and Pill Box
> dispensed, over 4, 214,945 dosage units of hydrocodone and 537,080
> dosage units of diazepam. This enterprise grossed more than \$7.7
> million from Internet sales of these two drugs alone. This case was
> the product of an 18-month investigation by the DEA, FDA, IRS and the
> U.S. Attorney's Office.

-   In August, 2003, an individual pled guilty to charges relating to
    various counts of conspiracy, distribution, and importation of
    controlled substances as a result of a case initiated by OCI in July
    2000 after the individual was identified as the principal for
    Vinci-online and CFF Pharma Consult. The website domain used by the
    defendant, Vinci-online.com, was found to be registered to CFF
    Pharma Consult at an address in Germany. Vinci-online.com offered
    golf training services and investments, along with pharmaceutical
    drug products including controlled prescription drugs, antibiotics,
    anti-allergenics, weight loss medications, steroids, and hormones
    for sale via its website. Agents made several undercover purchases
    of prescription drugs from the website without providing
    prescriptions. Following the e-mail purchase request, an invoice was
    generated instructing the purchaser to send a money order or
    cashier's check to Vinci American Ltd. in Las Vegas, NV. The
    products received as a result of these on-line purchases were sent
    from Germany and contained German labeling.

# DRUG Counterfeiting CASES

FDA takes very seriously any allegations or information regarding the
counterfeiting or adulteration of drug products. As the drug
manufacturing and distribution system has become more global in nature,
the challenge of protecting against counterfeit, adulterated or
substandard drugs has become more difficult. The Agency is concerned
about a spate of drug counterfeiting and tampering cases that have
occurred in recent months, and is aggressively pursuing these types of
enforcement cases.

FDA's OCI has opened 85 counterfeit drug cases since October 1996.
Investigations have so far netted 44 arrests and 29 convictions. Fines
and/or restitution have been imposed in excess of \$250,000.

Over this timeframe, however, FDA has witnessed a gradual, but
troubling, increase in the incidence of finished dosage form counterfeit
activity. Much of this activity has targeted high volume, high cost
drugs where counterfeiters attempt to obtain the highest return possible
in a short time period. Many of these drugs are used for treating cancer
and AIDS patients. However, Viagra and Lipitor have also been
counterfeited. The public perception of a more dramatic increase in
counterfeit drug activity stems from the fact that the latest several
counterfeits have appeared in the wholesale market and received wider
distribution than has been the case historically.

**[FDA Counterfeit Drug Initiative]{.underline}**

In July 2003, Commissioner McClellan announced a major new initiative to
more protect American consumers from drugs that have been counterfeited.
The initiative includes creating an internal task force to explore
modern technologies and other measures to make it more difficult for
counterfeit drugs to be distributed with -- or deliberately substituted
for -- safe and effective drugs.

The task force submitted its initial findings in an interim report
presented to the Commissioner in October 2003, and will issue a final
report in early 2004, after opportunities to hear from the public. In
addition, FDA plans to coordinate more closely with other Federal
agencies and state and local governments that share the responsibilities
with FDA for ensuring the safety of the U.S. drug supply and
distribution system as well as with members of Congress who have worked
closely with FDA in the past on these important public health issues.

Counterfeit prescription drugs are not only illegal but also are also
inherently unsafe. Many counterfeit drugs are visually indistinguishable
from the authentic versions, and thus pose a potentially serious health
threat to Americans.

Although FDA believes domestic counterfeiting is not widespread, the
Agency has recently seen an increase in counterfeiting activities as
well as a more sophisticated ability to introduce finished dosage
counterfeits into the otherwise legitimate drug distribution channels.
FDA has likewise seen its counterfeit drug investigations increase to
over 20 per year since 2000, after averaging only about 5 per year
through the late 1990's.

At the same time, worldwide counterfeiting of drugs is believed to be
more commonplace. The World Health Organization has estimated that
perhaps seven or eight percent of drugs worldwide are counterfeit, and
reports from some countries suggest that as much as one-half of those
countries' drugs are counterfeit.

FDA's initiative is designed to better identify the risks and threats
from counterfeit drugs, to coordinate public and private efforts to
fight drug counterfeiting and distribution, and to develop new tools to
aid in identifying, deterring and combating counterfeiting.
Specifically, the FDA task force will:

-   Develop a strategic action plan to decrease the risk of counterfeit
    drugs entering the U.S. marketplace and to protect consumers from
    potentially harmful effects of using these products.

-   Continue to strengthen FDA's collaborative relationships with other
    Federal agencies, including the Bureau of Immigration and Customs
    Enforcement (BICE), BCBP, and the U.S. Secret Service in the
    Department of Homeland Security and entities within the Department
    of Justice, as well as with health professionals, industry,
    consumer, and other stakeholders to gather information regarding the
    best practices for dealing with drug counterfeiting.

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-   Identify mechanisms for strengthening the nation's protections
    against counterfeiting, including such possibilities as developing
    state model practice acts, best practices for those who sell and
    distribute prescription drugs, and better education for patients,
    pharmacies, and others about how to identify counterfeit drugs and
    alert others to their existence.

-   Assess the extent to which new technologies, e.g.,
    counterfeit-resistant packaging, product identifiers such as
    chemical taggants, and implanted radio-frequency chips in packaging
    can help assure the authenticity of drugs. Although some of this
    technology is not currently mature enough to adequately protect the
    drug supply, it may have great promise as an added counter-measure
    against counterfeit pharmaceutical products.

FDA believes the increase and shift in this illicit activity has
occurred for a number of reasons. These include:

-   Better counterfeiting technology, including improved technology to
    make labeling, packaging and products that appear real.

-   Better organized, more effective criminal groups attracted by
    financial opportunities.

-   The use of the Internet as a sales tool by unlicensed pharmacies
    and/or foreign websites.

-   Opportunities for introducing foreign-made counterfeit and
    unapproved drugs into large and rapidly growing import flows.

-   Weak spots in the domestic wholesale drug distribution chain,
    including some wholesalers who acquire most of their inventory from
    secondary sources, do not maintain effective due diligence efforts
    on these sources and ignore warning signs indicative of illegal or
    unethical behavior.

The details of what we have cataloged so far in this initiative were
released in an interim report dated October 2, 2003.

### Reporting of Information on Counterfeit Drugs by Manufacturers

In another move to respond to the increase in counterfeit drug cases and
to strengthen the Agency's and industry's collaboration in those
situations where counterfeit drugs are suspected, on April 22, 2003, the
Pharmaceutical Research and Manufacturers of America (PhRMA), which
represents the country's major research-based pharmaceutical and
biotechnology companies, announced the adoption of a voluntary program
to report suspected instances of drug counterfeiting to FDA. The
information provided by PhRMA members under this program will assist FDA
in carrying out its responsibilities to protect the safety and integrity
of the nation's drug supply. It will enhance the Agency's ability to
detect quickly and remove counterfeit drugs from the marketplace.

Under this program, PhRMA member companies have agreed to notify FDA's
OCI within five working days of determining that there is a reasonable
basis to believe that a product has been counterfeited. The program also
applies to counterfeits discovered in foreign countries if there is
clear evidence that the counterfeits are intended for distribution in
the U.S. Drug manufacturers already conduct their own investigations of
suspected distribution of counterfeit drugs. This formal collaborative
agreement will strengthen FDA's ability to assure the safety and
effectiveness of drugs used by U.S.

The reporting program went into effect on May 1, 2003 and has already
led to some useful tips. The two most recent cases of counterfeit
prescription drugs in which FDA has played a significant role are those
involving the drugs Procrit and Lipitor.

#### Procrit

##### On May 21, 2003, the U.S. Attorney's Office for the Southern District of Florida filed charges against Eddy Gorrin, William Chavez and Duviel Gonzalez for unlawful sale and wholesale distribution of counterfeit versions of Amgen, Inc.'s, prescription drug Procrit, a medication indicated mainly to help cancer, anemia and HIV patients increase their red blood cell count. 

##### Between January and February 2003, Gorrin intentionally engaged in the sale of counterfeit versions of Procrit. During that same time period, Chavez and Gonzalez also were engaged in unlawful wholesale distribution of counterfeit Procrit without a state license. The undercover operation and tests conducted by FDA's Forensic Chemistry Center revealed that the vials being distributed by all three men labelled as "Procrit" did not contain any active ingredient for Procrit, but instead, contained only bacteria-tainted water. In early June 2003 all three defendants plead guilty to criminal charges in the Southern District of Florida. Gorrin was sentenced to a 3-year, 1-month Federal prison term; Chavez was sentenced to 3 months in prison, and Gonzalez was sentenced to 

##### 6 months house arrest for their respective roles in this counterfeit operation. 

##### 

[Lipitor Investigation]{.underline}

On May 23, 2003, FDA issued an alert on a counterfeit version of Pfizer,
Inc.'s, prescription drug, Lipitor. The alert warned health care
providers and others that three lots of counterfeit Lipitor represent a
potentially significant risk to consumers. One in five people have high
cholesterol that may lead to cardiovascular disease, such as heart
disease and stroke. According to the American Heart Association (AHA),
every 33 seconds, someone in the U.S. dies from cardiovascular disease.
(Source: AHA 2002 Heart and Stroke Statistical Update) Lipitor is the
number one prescribed cholesterol-lowering medication, and is currently
used by more than 18 million people. Lipitor is proven to lower total
cholesterol and decrease the risk of developing cardiovascular disease.
FDA investigators have aggressively pursued a variety of leads all along
the supply and distribution chain in an effort to identify the source of
this counterfeit activity and to facilitate the recall of any
counterfeit products.

In conjunction with the manufacturer of this product, FDA also issued
several press releases warning consumers and pharmacists about the
counterfeit Lipitor and providing guidance to identify of any suspect
product. For example, FDA published a list of lot numbers to identify
the counterfeit product. We also urged health care providers and
patients alike to check the packaging very carefully before using this
product. Patients who had the product (labeled as "Repackaged by
MED-PRO, Inc.") with the specified lot numbers were told not to consume
it, and to return the product to their pharmacies. Because of the
breadth of the distribution of counterfeit products, FDA issued several
warnings.

FDA's advice to health care providers and consumers remained the same as
when the Agency issued its original [alert on counterfeit
Lipitor](http://www.fda.gov/bbs/topics/ANSWERS/2003/ANS01224.html). They
should check the packaging very carefully before using Lipitor. Patients
who have any of the product with any of the lot numbers we identified
should not take it, and they should return the product to their
pharmacies.

As part of the FDA's ongoing efforts to investigate and respond to
unscrupulous counterfeiting activities, FDA's OCI is investigating this
case of counterfeit Lipitor in carrying out its public health mission.
The investigation is ongoing but it appears that some of the counterfeit
product originated from overseas.

[Other Counterfeit Cases]{.underline}

Other counterfeit prescription drug cases in which FDA has had a central
role include:

-   [Serostim (somatropin (rDNA origin)) for injection]{.underline} \--
    In late 2000 and early 2001, FDA became aware of consumer complaints
    about adverse effects, and a recall was initiated at the distributor
    level for Serostim, a growth hormone often used to treat AIDS
    wasting. After further investigation by the manufacturer, Serono,
    Inc., and FDA, Serono issued press releases regarding the apparent
    counterfeiting of two lots of the product. In May 2002, Serono
    became aware that counterfeit Serostim displaying a fake lot number
    again had been distributed. Laboratory analysis by FDA showed that
    the product contained no active ingredient, and that the product did
    not originate from Serono.

-   [Neupogen (filgrastim) for injection]{.underline} \-- In the spring
    of 2001, based on observations by a distributor about the appearance
    of Neupogen, a colony stimulating factor used mostly in cancer
    patients, the manufacturer, Amgen Inc., analyzed a suspect lot and
    determined that the vials contained only saline solution. Amgen
    issued Dear Health Care Professional letters nationwide informing
    patients, physicians, pharmacies and wholesalers about the
    counterfeiting of Neupogen. The counterfeit product was labeled with
    fake lot numbers and/or wrong expiration dates.

-   [Epogen (epoetin alfa) for injection]{.underline} \-- In May 2002,
    FDA, state regulators and the manufacturer, Amgen Inc., became aware
    that a potential counterfeit of Epogen was in commerce. Epogen is
    used to stimulate red blood cell production in cancer and AIDS
    patients. Amgen analysis indicated that certain vials of a
    counterfeit product labeled as Epogen contained active ingredient
    approximately 20 times lower than expected. Further investigation
    revealed that a major wholesale distributor was holding
    approximately 1,600 cartons of counterfeit product. Later that
    month, Amgen warned health care professionals that two additional
    counterfeit lots of Epogen had been discovered.

# [Combivir (lamivudine plus zidovudine) tablets]{.underline} \-- In the spring of 2002, the manufacturer, GlaxoSmithKline (GSK) received four complaints that bottles containing 60 tablets of Combivir had been replaced with Ziagen tablets. In addition, the firm determined that counterfeit Combivir labels had been placed on authentic bottles of Ziagen tablets, a different GSK product with a label containing a black box warning about the dangers of possible fatal hypersensitive reactions to Ziagen. A black box warning placed at the beginning of an FDA-approved label is the strongest warning to prescribing physicians, health care professionals and consumers, that severe adverse reactions have been experienced from use of the product. Both Combivir and Ziagen can be used as part of a combination regimen to treat HIV infection. The concern in this case was that if an individual were to take the wrong tablet and is sensitive to Ziagen, a potentially life-threatening hypersensitivity reaction could occur. In May 2002 distributors were advised to initiate a recall to their customers. 

-   [Zyprexa (olanzapine) tablets]{.underline} \-- In the winter and
    spring of 2002, bottles of Zyprexa, an Eli Lilly and Company
    product, indicated for the treatment of schizophrenia and acute
    bipolar mania, had been emptied and replaced with white tablets
    labeled as aspirin. The tampering situations occurred in two
    strengths and in three different lots. In May 2002 Lilly issued a
    press release and Dear Health Care Professional letter concerning
    the tampering situation.

**FDA IMPORT ENFORCEMENT EFFORTS**

FDA has conducted numerous investigations and enforcement activities of
imported products. The Agency has taken action when it believes imported
products, including prescription drugs, pose a significant public health
risk. FDA takes regulatory action in the import arena, which covers a
wide range of products including foods, drugs, medical devices, human
and animal drugs and biological products. If a situation appears to
involve criminal activity, FDA's ORA has the option of referring the
information to the Agency's OCI.

FDA has a number of enforcement tools that can be used to regulate
imported products. These include: 1) "warning letters," 2) recalls, 3)
seizures, 4) injunctions, or 5) prosecution. FDA may issue a "warning
letter" in a number of scenarios including when: 1) a party fails to
hold its entry intact before FDA releases it, 2) a party consistently
imports in violation of the FD&C Act, or 3) an importer presents
misleading information, or 4) FDA informs an importer that the Agency
has requested that BCBP deny immediate delivery privileges.

FDA also may ask a firm to voluntarily recall an imported product if FDA
deems it a potential health hazard or if there is some evidence of
distribution of detained or refused merchandise. FDA may opt to seize a
product if it: 1) represents a health hazard and has been or is likely
to be distributed following detention or refusal, 2) has been previously
refused, or 3) has been identified fraudulently in documents submitted
to FDA.

Injunction may become the action of choice when FDA sees a pattern of
violations with some recognizable danger of reoccurrence. This is a
judicial action that may result in quicker corrective action than a
prosecution, and, if successful, it legally enjoins the defendants from
continuing to violate the law. Prosecution may be used when conventional
import enforcement approaches are determined inadequate to correct
violations or the violation is sufficiently egregious to warrant
punishment. Prosecution may be warranted when there is: 1) continued
illegal distribution after receipt of a notification of detention, 2)
submission of false or misleading entry documents,

3\) repeated entry of previously refused products, or 4) evidence of
fraud.

None of the potential actions described above are mutually exclusive. In
some cases, FDA may take complementary steps that involve a combination
of these actions in order to protect the public health from drugs that
violate the FD&C Act. Evidence of this type of mix of regulatory actions
can be seen in FDA's ongoing work on counterfeit Lipitor.

Many imported prescription drugs that are arriving at mail facilities
are ordered over the Internet. FDA has increased its capability to
monitor the Internet and identify sites that potentially violate the
FD&C Act, through the use of various search tools and by upgrading its
data handling capabilities. In some cases the Agency will conduct
exercises to better understand the products that are coming in through
specific ports-of-entry. As discussed above, the Agency is conducting
import exercises to help the Agency to better understand the type and
extent of unlawful conduct on the Internet and to more accurately assess
whether its enforcement efforts have had an impact on illegal behavior.
However, due to the ever increasing volume of imported drugs and
multiple competing enforcement priorities, the Agency is working on
focusing its resources more efficiently.

**[Improvements to FDA's Import Compliance Program]{.underline}**

FDA is re-evaluating, refining, and improving the programs and
procedures that it is using to ensure the availability of safe and
effective drugs to U.S. consumers. As part of our efforts to improve the
programs and procedures that are used to ensure the availability of safe
and effective drugs to U.S. consumers, FDA is considering several
concepts that will improve the Agency's ability to target resources
applied to regulation of imported drug products. As with all of FDA's
activities, priorities are established based on benefit/risk to public
health. In terms of prioritizing the Agency's domestic and import
compliance workload, products that present a direct health hazard to the
user are FDA's highest priority. Such products include those that have a
reasonable potential for causing direct serious adverse effects, or
where there is documentation of injury or death. Examples of such
products include counterfeit Procrit and counterfeit Serostim. Products
that are not themselves hazardous can still present an indirect health
hazard in that the consumer may delay or forgo proven medical treatment
and the use of approved therapies. These are also a top priority for the
Agency. Examples include unapproved products that are promoted for the
treatment of cancer, Alzheimer's disease, arthritis, heart disease, high
cholesterol and high blood pressure.

# [ORA Enforcement Successes]{.underline} 

##### [AstraZeneca]{.underline}

On June 20, 2003, officials from FDA's OCI joined with representatives
of the U.S. Attorney's Office for the District of Delaware, the
Department of Health and Human Services (DHHS), and the Defense Criminal
Investigative Service (DCIS) to announce that AstraZeneca
Pharmaceuticals LP had pleaded guilty to a large-scale health care
crime. The firm agreed to pay \$355 million to resolve the associated
criminal charges and civil liabilities. The massive conspiracy involved
illegitimate pricing and marketing of Zoladex, an AstraZeneca drug for
the treatment of prostate cancer. The various schemes used by the firm
caused multimillion-dollar losses to Federally and state-funded
insurance programs and individual patients.

FDA's OCI began investigating AstraZeneca's pricing and marketing
practices after a private individual filed a civil False Claims Act
suit. The broadly-based investigation, which also involved the Office of
the Inspector General for the DHHS, the DCIS and the Federal Bureau of
Investigation, discovered that AstraZeneca employees were using several
illegal methods to stimulate the demand for Zoladex by enabling
prescribers to reap illicit profits.

The agreement included the following provisions:

AstraZeneca pleaded guilty to criminal conspiracy to violate the
Prescription Drug Marketing Act by causing Medicare, Medicaid and other
Federal providers to be overcharged for Zoladex that had been provided
as free samples to urologists. As part of the plea agreement, the
company agreed to pay a \$63,872,156 criminal fine.

-   AstraZeneca also agreed to settle its civil liabilities and to
    resolve allegations that its fraudulent drug pricing schemes, and
    sales and marketing misconduct had caused false and fraudulent
    claims to be filed with Federal and state health care programs.

-   AstraZeneca agreed to payments of \$266,127,844 to the U.S.
    government for claims filed with the Medicare, TriCare, Department
    of Defense and Railroad Retirement Board Medicare programs, and
    \$24,900,000 to the U.S. and state governments for claims involving
    state Medicaid programs.

The investigation, which is continuing, also resulted in charges against
three physicians for conspiring with AstraZeneca to bill patients and
third party payers for free Zoladex samples. Two of the prescribers have
pleaded guilty.

#### Procrit

##### As previously stated, on May 21, 2003, the U.S. Attorney's Office for the Southern District of Florida filed charges against Eddy Gorrin, William Chavez and Duviel Gonzalez for unlawful sale and wholesale distribution of counterfeit versions of the prescription drug Procrit. In early June 2003, all three defendants plead guilty to criminal charges in the Southern District of Florida. Subsequently, the defendants received sentences of 3 years, 1 month in prison; 3 months in prison; and 6 months' house arrest, respectively. 

##### [Lipitor]{.underline} 

As described in detail above, FDA's ORA is conducting a significant
investigation to respond to unscrupulous counterfeiting activities
involving Lipitor. FDA is conducting this activity in close cooperation
with health professionals, particularly pharmacists and pharmacy
associations and has issued statements to alert the public about this
counterfeit product.

Number range CHAPTER[Kwikmed]{.underline}

On October 1, 2002, a Federal Grand Jury in Arizona returned a 198 count
indictment against Kwikmed, Inc., Cymedic Health Group, Inc., four
owners of these corporations, and two physicians associated with the
corporations. The indictment alleges that defendants operated Internet
websites, two of which include kwikmed.com and cymedic.com, through
which they sold prescription drugs, including Viagra, Celebrex, Xenial,
and Propecia. The websites did not require a consumer to have a
prescription before receiving the drugs. Instead, the customers were
required to complete a questionnaire, which the website told customers
would be reviewed by a physician.

Customers were charged a fee for this purported medical consultation.
The indictment alleges that in the overwhelming majority of
applications, no medical reviews, consultations, or physical
examinations by a physician took place before drugs were shipped to
customers. Defendants repackaged drugs obtained from a drug wholesaler,
even though defendants were not a registered manufacturer or a licensed
pharmacy and there was never a licensed pharmacist involved. The drugs
dispensed were adulterated because of the defendants' failure to follow
cGMP in packaging, holding, and labeling of the drugs.

The indictment alleges that during the course of the conspiracy the
defendants and others generated sales in excess of \$28 million, which
was billed to consumers as charges for prescription drugs, Number range
CHAPTERdoctor consultations, and shipping. These sales resulted from the
defendants' distribution of at least 48,816 new orders for prescription
drugs and 41,817 refills of those orders. The indictment charges
defendants with several violations of the FD&C Act, as well as
conspiracy, mail fraud, and money laundering. The charges were the
result of an investigation by FDA and the U.S. Postal Inspection
Service. In October 2003, one of the physicians entered a guilty plea.
Legal proceedings against the other defendants are ongoing.

#### Norfolk Men's Clinic

On February 16, 2002, a Federal jury in Alabama convicted Anton Pusztai
and

Anita Yates of charges arising out of the operation of an online
pharmacy that illegally sold prescription drugs over the Internet to
consumers. On June 18, Pusztai and Yates were sentenced respectively to
more than 15 and 6.5 years. Pusztai, an Australian citizen, and Yates, a
resident of Clanton, Alabama, were convicted of conspiracy to commit
violations of the FD&C Act, conspiracy to commit money laundering, mail
fraud, dispensing misbranded drugs, and operating a drug repackaging
facility not registered with FDA. From fall 1998 to the summer of 2000,
the defendants operated a website called Viagra.au.com, also known as
Norfolk Men's Clinic, and related sites, that sold a variety of
prescription medications.

In September 1999, OCI received information regarding the Norfolk Men's
Clinic and the website. Based on this information, several covert
purchases were made via the Internet. Search warrants were executed in
October 1999 that resulted in the seizure of prescription drugs and
business records. Based on these purchases and information gathered
through numerous interviews, several individuals were indicted. In
addition to defendants Pusztai and Yates, the president of a
prescription drug wholesaler located in Miami, Florida, plead guilty to
five misdemeanor counts of dispensing drugs without a valid prescription
(21 USC 331\[k\]). The company also plead guilty to obstruction of
justice. In conjunction with the indictment, a second search warrant was
executed in Clanton, Alabama, along with two search warrants in West
Virginia. While most of the drugs sold in this operation were domestic
product, some appeared to have been manufactured in New Zealand for
distribution in Australia.

[Medications Express]{.underline}

On June 7, 2001, Gerald Bevins was convicted in U.S. District Court for
the Southern District of California of conspiracy to defraud the U.S.
and commit offenses against the U.S. by introducing misbranded drugs
into interstate commerce and smuggling. On September 4, 2001, Bevins was
sentenced to 2 years in prison. The case was initiated on information
received from BCBP concerning an Internet website called Medications
Express. Bevins sold Mexican prescription pharmaceuticals from this
website and claimed that a doctor's prescription was not necessary. He
continued to sell Mexican prescription pharmaceuticals through the mail
from Sun City, California, even after discontinuing the Medications
Express website. Bevins, his wife and daughter would receive orders via
mail, travel to Tijuana, Mexico, to purchase the pharmaceuticals, and
smuggle them back into the U.S. The three packaged the pharmaceuticals
into commercial courier boxes and shipped them to customers around the
U.S. The drugs supplied by Bevins were labeled in Spanish.

# [Dagoberto Paz-Tamez diet drug case]{.underline}

This case involved the sale of unlabeled/adulterated diet drugs in
Pasadena, Texas by an alleged medical doctor from Mexico. The alleged
doctor, Dagoberto Paz-Tamez, is not licensed to practice medicine in the
state of Texas or anywhere else within the U.S. This case was assembled
in conjunction with the Harris County Precinct 6 Constable's Office, the
Texas Department of Public Safety (DPS), and the U.S. Postal Inspection
Service.

Investigation revealed that Paz-Tamez had been selling unlabeled diet
pills to patients for several years in the Pasadena, Texas area. A
sample of the diet pills was submitted to the Harris County Precinct 6
Constable's Office by a confidential informant. These samples were later
submitted to FDA's Forensic Chemistry Center and were found to contain
amphetamines and other dangerous substances.

On August 22, 2002, Paz-Tamez was arrested in Pasadena, Texas. Law
enforcement officials seized diet drugs and U.S. currency consisting of
the following: \$10,236 in U.S. currency, 4,350 tablets, 30,488 gelatin
capsules, and 44.5 pounds total weight of unlabeled diet drugs. The diet
pills and tablets seized were found to contain mazindol (an amphetamine
discontinued in the U.S.), diethylpropion (an amphetamine), diazepam
(generic for Valium), and hydrochlorothiazide (a diuretic).

On March 16, 2002, Paz-Tamez was convicted of Possession of a Controlled
Substance and Delivery of a Dangerous Drug. He was later sentenced to
ten years of deferred probation.

# CONCLUSION

The standards for drug review and approval in the U.S. are the best in
the world, and the safety of our drug supply mirrors these high
standards. The employees of FDA constantly strive to maintain these high
standards. However, a growing number of Americans are obtaining
prescription medications from foreign sources. U.S. consumers often seek
out Canadian suppliers, sources that purport to be Canadian, or other
foreign sources that they believe to be reliable. While some foreign
drug manufacturers submit their products to FDA for approval, the
imported drugs arriving through the mail, through private express
couriers, or by passengers arriving at ports of entry are often
unapproved new drugs that may not be subject to any reliable regulatory
oversight. FDA cannot assure the safety of drugs purchased from such
sources.

The vigilance of FDA and BCBP inspectors is an important tool in
detecting imported products that violate the FD&C Act. Given the
available resources and competing priorities facing these agencies,
however, experience shows that inspectors are unable to visually examine
many of the parcels containing prescription drug products that arrive
through the mail and private courier services each day. Many of the
packages that the Agency is able to examine appear to contain foreign
versions of U.S.-approved products. The growing volume of unapproved
imported drugs, which often are generated from sales via the Internet,
presents a formidable enforcement challenge.

The Agency has responded to the challenge of importation by employing a
risk-based enforcement strategy to target our existing enforcement
resources effectively in the face of multiple priorities, including
homeland security, food safety and counterfeit drugs. As an example, the
Agency utilizes Import Alerts to identify particular shipments that may
pose significant potential risk to public health, e.g., drugs that
require careful risk management and products from shippers known to
present significant safety problems. However, this system is already
overwhelmed by the number of incoming mail packages that must be
evaluated and this state of affairs presents a significant ongoing
challenge for the Agency. In sum, at this time the Agency cannot assure
the American public that drugs purchased from foreign sources are the
same as products approved by FDA, or that they are safe and effective.

FDA firmly believes that we can and should do a much better job of
making safe and innovative drugs more affordable in the United States,
but to succeed we need to find safe and affordable solutions that, when
implemented, do not put consumers at risk. We appreciate and support the
commitment to making drugs more affordable for seniors and other
consumers and are working hard to achieve this goal. However, the Agency
continues to believe that we must focus on solutions that do not put at
risk safety in an effort to achieve increased affordability.