# Peter Neupert, chairman, drugstore.com

# Planned Oral Statement

# FDA Drug Importation Hearing

# April 14, 2004

Dear Mr. Chairman:

Thank you for the opportunity to speak today. I am Peter Neupert,
chairman of drugstore.com, inc., a leading online provider of health,
vision, beauty and pharmacy products. We were one of the first fully
licensed online pharmacies.

The Internet has empowered consumers to comparison shop for their
prescriptions. For example, drugstore.com was the first to make all of
its prescription drug prices available online to any consumer -- because
we believe that empowerment is a positive thing. However, it is this
same medium, the Internet, that has made it so easy for unscrupulous,
unregulated and untouchable entrepreneurs to take advantage of and put
U.S. consumers at real risk for their health.

Since 1999, our safety and privacy claims have been substantiated by a
thorough audit conducted by a trusted, unbiased, independent
organization: the National Association of Boards of Pharmacy. Trusted
verification is especially important on the Internet, because the
consumer does not have the visual cues available in the physical world
-- such as neighborhood, cleanliness, orderliness and the like.

As cross-border importation of prescription drugs becomes more popular
and widespread, the problems will get only worse -- exponentially. This
is the nature of the Internet. Trends accelerate at breakneck pace.
Consumer demand will create supply while more marginal players set up
shop to tap into bigger and more lucrative markets. Any problems that
exist with the current laissez-faire approach of cross-border
importation, from therapeutic failures to life-threatening events, will
be exacerbated. An uncontrolled free-for-all without mandatory
certification and enforcement can never claim to put the patient's
health interests first.

By harnessing the Internet, we think drugstore.com is on to something
quite important -- and possibly revolutionary. To date, drugstore.com
has safely dispensed more than 2.3 million prescriptions to consumers in
all 50 states. We leverage the power of the Internet to provide
discounts of 20 to 30 percent off the prices of traditional
brick-and-mortar pharmacies. Moreover, we are providing important health
information that can improve health outcomes. And we do all this while
conforming to all applicable federal, state, and local regulatory
controls.

For the safety of consumers and the viability of the Internet as lower
cost drug delivery channel, it is critical that all Internet pharmacies,
whether here or outside the United States, play by the same rules.
Without appropriate standards and enforcement mechanisms in place,
opening our borders undermines confidence in the safety, reliability and
affordability of the Internet distribution channel. Health Canada, for
example, does not regulate pharmacies catering to U.S. citizens.

A spot check on the popular search engine Google by drugstore.com
identified literally hundreds of suspicious websites that dispense
drugs.

-   Many don't provide a company address or phone number;

-   Many provide medications without a prescription or with a
    prescription procured through a short online "consultation"; and

-   Many dispense compounds that are either illegal or subject to
    special controls here in the U.S.

The average consumer cannot say, with any degree of confidence, which
foreign sites are safe and which are not. Right now, the situation is
buyer beware.

Below is just one example of a suspicious advertisement I received as
spam just a few days ago:

  ---------------------------------------------------- -----------------------------------------------------
  ![](media/image1.jpeg){width="5.78125in"             
  height="1.1458333333333333in"}                       

  ![](media/image2.jpeg){width="4.083333333333333in"   ![](media/image3.jpeg){width="1.6979166666666667in"
  height="2.1875in"}                                   height="2.1875in"}

  ![](media/image4.jpeg){width="5.780555555555556in"   
  height="1.2597222222222222in"}                       
  ---------------------------------------------------- -----------------------------------------------------

I would venture to say that this site is not FDA approved, even though
the "FDA approved" logo appears to be making that claim. This site
undermines the doctor patient relationship -- and patient safety -- by
requiring no prior prescription. It showcases the U.S. flag, presumably
to look like a U.S. company, but the address is in Canada. There are
thousands more suspicious sites like this. I would guess that we all
have received ads similar to this one in e-mail boxes.

I recommend that we adopt a uniform standard similar to the National
Association of Boards of Pharmacy's Verified Internet Pharmacy Practice
Sites, or VIPPS, program.

Once such a uniform standard has been adopted and introduced, I
recommend the following three-tiered approach to help enforce that
standard:

1.  Make it illegal for online pharmacies to advertise on search engines
    unless they meet the approved certification standard and prohibit
    search engines from accepting advertisements from online pharmacies
    that are not properly certified.

2.  Stop credit card payments to pharmacies that do not meet the
    certification standard criteria (i.e., illegal pharmacies), to stop
    funding at the source.

3.  Motivate third party shippers to refuse shipments from pharmacies
    who do not meet the certification standard.

Buying drugs online should be a superior experience: convenient,
affordable, and private. But in today's world, purchasing drugs online
is fraught with peril.

Yes, affordability is a big issue. There's no doubt that the Internet is
part of the answer. But encouraging consumers to embark on a worldwide
shopping spree based on lowest price -- without regard to safety -- is
no solution either. There must be a way to create a system that is
appropriately balanced, allowing for innovation and the creation of
miracle drugs while allowing tiered pricing for those with special
needs.

All Americans deserve a system they can trust. This means finding a
solution that combines safety with affordability. We deserve to be
protected from fly-by-night operations and unscrupulous profiteers who
set aside all safety concerns to make a buck. We require a system where
Internet pharmacies all play by the same rules and the rules ensure
consumer safety is not compromised.

Thank you.