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73–737CC 2001

CONTINUING CONCERNS OVER IMPORTED

PHARMACEUTICALS

HEARING

BEFORE THE

SUBCOMMITTEE ON

OVERSIGHT AND INVESTIGATIONS

OF THE

COMMITTEE ON ENERGY AND

COMMERCE

HOUSE OF REPRESENTATIVES

ONE HUNDRED SEVENTH CONGRESS

FIRST SESSION

JUNE 7, 2001

Serial No. 107–30

Printed for the use of the Committee on Energy and Commerce

(

Available via the World Wide Web: http://www.access.gpo.gov/congress/house

2

COMMITTEE ON ENERGY AND COMMERCE

W.J. ‘‘BILLY’’ TAUZIN, Louisiana, Chairman

MICHAEL BILIRAKIS, Florida

JOE BARTON, Texas

FRED UPTON, Michigan

CLIFF STEARNS, Florida

PAUL E. GILLMOR, Ohio

JAMES C. GREENWOOD, Pennsylvania

CHRISTOPHER COX, California

NATHAN DEAL, Georgia

STEVE LARGENT, Oklahoma

RICHARD BURR, North Carolina

ED WHITFIELD, Kentucky

GREG GANSKE, Iowa

CHARLIE NORWOOD, Georgia

BARBARA CUBIN, Wyoming

JOHN SHIMKUS, Illinois

HEATHER WILSON, New Mexico

JOHN B. SHADEGG, Arizona

CHARLES ‘‘CHIP’’ PICKERING, Mississippi

VITO FOSSELLA, New York

ROY BLUNT, Missouri

TOM DAVIS, Virginia

ED BRYANT, Tennessee

ROBERT L. EHRLICH, Jr., Maryland

STEVE BUYER, Indiana

GEORGE RADANOVICH, California

CHARLES F. BASS, New Hampshire

JOSEPH R. PITTS, Pennsylvania

MARY BONO, California

GREG WALDEN, Oregon

LEE TERRY, Nebraska

JOHN D. DINGELL, Michigan

HENRY A. WAXMAN, California

EDWARD J. MARKEY, Massachusetts

RALPH M. HALL, Texas

RICK BOUCHER, Virginia

EDOLPHUS TOWNS, New York

FRANK PALLONE, Jr., New Jersey

SHERROD BROWN, Ohio

BART GORDON, Tennessee

PETER DEUTSCH, Florida

BOBBY L. RUSH, Illinois

ANNA G. ESHOO, California

BART STUPAK, Michigan

ELIOT L. ENGEL, New York

TOM SAWYER, Ohio

ALBERT R. WYNN, Maryland

GENE GREEN, Texas

KAREN MCCARTHY, Missouri

TED STRICKLAND, Ohio

DIANA DEGETTE, Colorado

THOMAS M. BARRETT, Wisconsin

BILL LUTHER, Minnesota

LOIS CAPPS, California

MICHAEL F. DOYLE, Pennsylvania

CHRISTOPHER JOHN, Louisiana

JANE HARMAN, California

DAVID V. MARVENTANO, Staff Director

JAMES D. BARNETTE, General Counsel

REID P.F. STUNTZ, Minority Staff Director and Chief Counsel

SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS

JAMES C. GREENWOOD, Pennsylvania, Chairman

MICHAEL BILIRAKIS, Florida

CLIFF STEARNS, Florida

PAUL E. GILLMOR, Ohio

STEVE LARGENT, Oklahoma

RICHARD BURR, North Carolina

ED WHITFIELD, Kentucky

Vice Chairman

CHARLES F. BASS, New Hampshire

W.J. ‘‘BILLY’’ TAUZIN, Louisiana

(Ex Officio)

PETER DEUTSCH, Florida

BART STUPAK, Michigan

TED STRICKLAND, Ohio

DIANA DEGETTE, Colorado

CHRISTOPHER JOHN, Louisiana

BOBBY L. RUSH, Illinois

JOHN D. DINGELL, Michigan,

(Ex Officio)

(II)

3

C O N T E N T S

Page

Testimony of:

Christian, James, Vice President and Head of Global Corporate Security,

Novartis International .................................................................................. 157

deKieffer, Donald, deKieffer & Horgan .......................................................... 173

Durant, Elizabeth G., Executive Director of Trade Programs, U.S. Customs Service .................................................................................................. 40

Gibbs, Landon S., First Sergeant, Virginia State Police ............................... 58

Glover, John D., Vice President, Corporate Security, Bristol-Myers Squibb

Company ........................................................................................................ 153

Haislip, Gene R., Consultant ........................................................................... 166

Hubbard, William K., Senior Associate Commissioner for Policy, Planning

and Legislation, Food and Drug Administration ........................................ 45

Leshner, Alan I., Director, National Institute on Drug Abuse ..................... 55

Nagel, Laura M., Deputy Assistant Administrator, Office of Diversion

Control, Drug Enforcement Administration ............................................... 37

Rode, Rev. Edwin and Helen ........................................................................... 24

Shepherd, Marvin, Professor, College of Pharmacy, University of Texas ... 146

Trundley, William, Vice President of Corporate Security Investigations,

GlaxoSmithKline ........................................................................................... 163

Vereen, Donald R., Jr., Deputy Director, Office of National Drug Control

Policy .............................................................................................................. 33

(III)

(1)

CONTINUING CONCERNS OVER IMPORTED

PHARMACEUTICALS

THURSDAY, JUNE 7, 2001

HOUSE OF REPRESENTATIVES, COMMITTEE ON ENERGY AND COMMERCE, SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS, Washington, DC.

The subcommittee met, pursuant to notice, at 10 a.m., in room

2123, Rayburn House Office Building, Hon. James C. Greenwood,

(chairman) presiding.

Members present: Representatives Greenwood, Bilirakis,

Stearns, Gillmor, Largent, Burr, Whitfield, Bass, Deutsch, Stupak,

DeGette, and Dingell (ex officio).

Staff present: Alan Slobodin, majority counsel; Ray Shepherd,

majority counsel; Will Carty, legislative clerk; and Chris Knauer,

minority counsel.

Mr. GREENWOOD. Good morning. A quorum being present, this

hearing of the Oversight and Investigations Subcommittee of the

House Energy and Commerce Committee will come to order.

The Cambridge Dictionary of American English defines the word

‘‘huckster’’ as a person who sells things or puts forward ideas in a

very determined way that is often not completely honest.

Sadly, there is a long and infamous history of hucksterism in

America. Today, we are here to examine the latest incarnation of

this unscrupulous practice of selling people what they either don’t

need or shouldn’t buy. In this case, it is the sale of unapproved

mis-branded or adulterated drugs.

Usually ineffectual, and often unsafe, and increasingly over the

Internet, the disreputable promoters of these illicit products have

added a new twist to the way that modern day stake oil salesmen

prey on the needy and the unsuspecting.

Their model might very well might be there is a sucker logging

on every minute. A few weeks ago, Congressmen Deutsch, Stupak,

and I visited the international mail facility near Dulles Airport,

and what we found was truly frightening.

And these are some examples of the drugs that we found. This

one is labeled, ‘‘Jungle Juice.’’ It is amyl nitrite and it is a drug

that is abused, usually by young people on dance floors I am told,

and in discos.

This is a vial of drugs. It is a powder labeled, ‘‘Gamma

hydroxybuterate.’’ We have no idea what it really is. We found all

kinds of pills, and a virtual drug cabinet full of all kinds of products; steroids, illegal drugs, legal drugs, misbranded drugs, all very

dangerous to the American public.

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Overall, I believe that prescription drugs in the U.S. are extremely safe, but it is important to remember that the risk is not

zero. There is no magic force-field that protects the U.S. from imported counterfeit or diverted products.

We must be aware of the latest threats in the global pharmaceutical market and we must deal with them. Perhaps nothing

more clearly illustrates the dangers of drug importation than the

evidence turned up in a joint U.S. and Thai customs enforcement

effort in March 2001.

Called Operation Chokepoint, it shows what lurks behind some

of these foreign based Internet pharmacies. This operation targeted

thousands of illegal pharmaceutical shipments of viagra and

steroids exported from Thailand by mail from a notorious Internet

pharmacy to U.S. customers.

The results of the operation showed a British national, still

under treatment for hepatitis, operating an illegal pharmaceutical

processing center in his residence, processing the drugs in a filthy,

vermin infested kitchen.

Representatives in the U.S. Congress enact the laws to protect

consumers from the dangers of unapproved, misbranded, or adulterated drugs. As such Representatives, we have a responsibility to

raise public awareness about these risks, and to put an end to

them.

The subcommittee is particularly concerned about the dangers of

personal importation. In 1998, in response to concerns about the

personal importation of controlled substances at the Mexican land

border, the Congress enacted legislation that required a valid U.S.

prescription for any personal import of a controlled substance that

was more than 50 dosage units.

Unfortunately, it appears from the committee’s staff’s investigation that this 50 dosage unit policy has become well known and exploited by drug traffickers. One can even find controlled substances

blister-packed in 50 dosage units amounts.

Consider also the massing of pharmacies that provide easy access

to controlled substances at our southern borders. For example, in

Tijuana, Mexico, it is estimated that there are approximately 1,700

pharmacies.

In contrast, 20 miles north in San Diego, California, which has

roughly the same population, there are 125 pharmacies. Clearly,

there is a need to further strengthen Federal policy in the area of

personal imports of controlled substances.

I want to note my particular appreciation to Congressman John

Dingell, the ranking member of the full committee, for forcefully

raising this important public safety and public health issue.

Mail deliveries represent another personal importation problem.

In January and February of 2001, the FDA conducted a pilot program with the Customs Service on mail deliveries of prescription

drugs at the international mail facility at Los Angeles.

The FDA was only able to review 1,908 of nearly 16,000 parcels

that came in, roughly 12 percent. Out of these, 554 were ultimately

refused entry. A large percentage of the 554 refused entries were

shipped via a South Pacific Republic called Vanuatu.

It is believed that those shipments were from a single source currently under criminal investigation. Extrapolating from the pilot

3

program data nationally, it is estimated that up to 200,000 parcels

per month could be coming into the U.S. unexamined.

Clearly, a serious policy decision needs to be made and new procedures instituted. What are the dangers of the prescription drugs

that are allowed in? We will hear of one tragic story from Edwin

and Helen Rode.

I want to thank Reverend and Mrs. Rode for testifying at this

hearing. It takes a lot of courage to relate their painful experience

publicly, but by stepping forward, they hope to save the lives of

others.

But what about unsuspecting customers who are getting drugs

within the U.S. health care delivery system? What are the risks to

them of purchasing counterfeit or substandard drugs? Recent

events in the U.S. pharmaceutical market have justified this subcommittee’s vigilance over counterfeiting.

Last month, three different drug companies reported finding

counterfeit versions of their drugs in the U.S. One bogus drug was

for treating patients with AIDS wasting disease, a particular vulnerable population.

So far there do not appear to be any life threatening adverse

events linked to the counterfeits, but they did make their way on

to pharmacy shelves and into patient’s medical cabinets.

I want to thank the Chairman of the Energy and Commerce

Committee, Congressman Billy Tauzin, for his support of this investigation, and hearing about imported drugs. I also want to

thank the ranking minority member of the subcommittee, Congressman Peter Deutsch, for his support and interest in this investigation.

Likewise, I express my appreciation to Congressman Bart Stupak

for his particular participation and contribution to this subcommittee’s efforts. I am well aware of the hard work and the preparation

for these hearings by all of the witnesses on behalf of the subcommittee, and I thank you and I look forward to your testimony.

[The prepared statement of Hon. James C. Greenwood follows:]

PREPARED STATEMENT OF HON. JAMES C. GREENWOOD, CHAIRMAN, SUBCOMMITTEE

ON OVERSIGHT AND INVESTIGATIONS

INTRODUCTION

When the subject is pharmaceuticals, people usually talk about the high prices.

But today’s hearing will show we still also need to pay attention to safety.

We in Congress are acutely aware of the problem of high prices of prescription

drugs in the U.S. About a third of our elderly are without access to adequate prescription drug coverage. Many Americans, especially our senior citizens on fixed incomes, struggle to balance their finances to pay for prescription drugs that help

keep them alive or maintain a decent quality of life.

Out of these desperate circumstances, some cash-strapped Americans are traveling to border pharmacies to obtain what they believe are cheaper versions of the

U.S. drugs in Mexico or Canada. Some Americans are ordering drugs through the

mail from foreign-based internet pharmacies to obtain prescription drugs without

real physician supervision. Perhaps it is a measure of the success of the high regulatory and industry standards in the U.S. that many Americans in their pursuit of

affordable medicine appear to take the safety of prescription drugs for granted.

However, what we will learn today, is that drugs obtained from outside the

United States without proper controls pose real risks to American consumers. This

hearing will examine these risks by focusing on four particular areas of continuing

concerns over imported pharmaceuticals:

1. controlled substances from Mexican border pharmacies;

2. prescription drugs ordered from foreign-based internet pharmacies;

4

3. counterfeit or substandard bulk drugs; and

4. international pharmaceutical counterfeiting and diversion.

In all of these areas, there is a mass of evidence from studies and investigations

that shows the safety risks. I understand that some Americans who feel desperate

are willing to take risks purchasing prescription drugs from a border pharmacy or

a foreign-based internet pharmacy. Under current circumstances, I don’t want to

interfere with seniors who are desperately looking for cheaper buys. But I feel sure

that many senior citizens don’t want to see their grandchildren harmed by controlled substances from border pharmacies or drugs obtained without a prescription

from some phantom, foreign website.

Recent events in the U.S. pharmaceutical market have justified the Subcommittee’s vigilance over counterfeiting. Last month, three different drug companies reported finding counterfeit versions of their drugs in the U.S. One bogus drug was

for treating patients with AIDS wasting disease, a particularly vulnerable population. Another counterfeit purported to be a growth hormone that contained human

insulin, which could be deadly to some individuals. The third fake drug was labeled

as an anti-infective that had no active ingredient. So far, there do not appear to be

any life-threatening adverse events linked to the counterfeits, but they did make

their way to pharmacy shelves.

We have a responsibility to raise public awareness about the dangers of unapproved, misbranded or adulterated drugs, these risks, and to help minimize these

risks through public education, working with the Administration to take sensible

and restrained administrative actions, and passing new legislation, if necessary. I

want Americans to get cheaper prescription drugs in the U.S. I don’t want any

Americans hurt in trying to get cheaper drugs from abroad.

BACKGROUND: THE FOOD, DRUG & COSMETICS ACT

Prescription drugs are highly regulated and require physician supervision for a

reason. Drugs are inherently dangerous unless they are manufactured precisely and

properly, dosed correctly, and used appropriately. When used under competent physician care and in accordance with instructions, drugs are life-saving. But there is

often not a large margin between life and death.

For these reasons and others, it is illegal under the federal Food, Drug and Cosmetic Act to import misbranded, adulterated or unapproved prescription drugs.

However, in a bow to common sense, the FDA decided over 40 years ago not to

strictly enforce the Act against U.S. residents who obtained unapproved foreignmade prescription drugs to treat sickness or injury while on travel in a foreign country. Over time FDA created a guidance on personal importation of prescription

drugs that in effect says for reasons of enforcement priorities and limited resources,

FDA will not enforce the Act against U.S. residents who bring in a 90-day supply

of foreign drugs for medical purposes either from traveling abroad or through mail

delivery.

With regard to personal importation, the Subcommittee is particularly concerned

about two areas: (1) controlled substances obtained at the land border pharmacies

(especially Mexico), and (2) prescription drugs obtained through mail deliveries.

Controlled substances represent the most dangerous class of prescription drugs, because they can be addicting, and even deadly when used non-medically. Because of

their high abuse potential, these prescription drugs are scheduled under federal law

requiring additional regulation.

BORDER CROSSINGS

In 1998, in response to concerns about the personal importation of controlled substances at the Mexican land border, the Congress passed an amendment to the Controlled Substances Import and Export Act. That amendment required a valid U.S.

prescription for any personal import of a controlled substance that was more than

50 dosage units. Perhaps sensing that this 50-dosage unit law represented an opportunity for clearer guidance to overwhelmed Customs border inspectors, some in the

Customs Service interpreted the 1998 amendment as justifying an enforcement

practice that would allow personal imports of 50 dosage units or less for each drug

per border crossing.

Unfortunately, it appears from the Committee staff’s investigations at the Southwest border crossings, internet postings and chat rooms, and other information, that

this 50-dosage unit policy has become well-known and exploited by drug traffickers

and individuals interested in bringing in controlled substances for abuse purposes.

One can even find controlled substances blister-packed in 50-dosage unit amounts.

Although we lack comprehensive and definitive data on controlled substances importation, it is reasonable to observe that the 50-dosage unit policy is contributing

5

to a national drug abuse problem. Consider the massing of pharmacies that provide

easy access to controlled substances at our borders. For example, in Tijuana, Mexico, there are estimated to be up to 1700 pharmacies, up from 500 pharmacies in

1997. In contrast, twenty miles north, in San Diego, California, there are only 125

pharmacies.

In December 2000, the Texas Commission on Alcohol and Drug Abuse noted that

a major substance abuse problem is Mexican pharmacies selling many controlled

substances to U.S. citizens who declare these drugs and bring in personal import

amounts into Texas. We will hear testimony from Landon Gibbs of the Virginia

State Police about the emerging abuse problem of one controlled substance called

oxycontin, a powerful painkiller drug with a 12-hour time-release targeted by drug

traffickers because of the huge narcotic rush when the drug is crushed and snorted.

Although the vast majority of abuse cases involves drug unlawfully obtained within

the U.S., recent investigations indicate some oxycontin is coming from Mexico, probably some through personal importation from Mexico.

In response to the Committee’s bipartisan concerns, several federal agencies—the

Office of National Drug Control Policy, the Drug Enforcement Administration, the

FDA, and the Customs Service—have been meeting to develop recommendations for

strengthening federal policy in the area of personal imports of controlled substances.

I understand that the Drug Enforcement Administration has developed a proposal

that we hope to be a vast improvement over the status quo. I look forward to hearing about this proposal and discussion of this issue with our witnesses. I want to

note my particular appreciation to Congressman John Dingell, the Ranking Member

of the Full Committee, for forcefully raising this important public safety and public

health issue.

MAIL DELIVERIES

Mail deliveries represent another personal importation problem. In the last few

years, especially with the explosion of internet pharmacies, personal mail deliveries

of prescription drugs have skyrocketed, overwhelming the Customs Service and the

FDA. In January-February 2001, the FDA conducted a pilot program with the Customs Service on mail deliveries of prescription drugs at the international mail facility at Los Angeles.

Typically, the Customs Service screens the parcels by sight and through an x-ray

machine. Customs sets aside the parcels of prescription drugs for an FDA officer to

review. The FDA officer usually comes for a half-day, once a week, to review the

parcels. Under the pilot program, two FDA officers were on-site, five-days a week,

processing the set-aside parcels for 30 days. Even under these ideal circumstances,

FDA was only able to review 1,908 parcels out of a possible 16,000 or only about

12% of the likely universe of prescription-drug parcels. Out of these parcels, FDA

detained about 700 out of the 1900, because they appeared violative. Out of the 700

detained parcels, 554 were ultimately refused entry, usually because it was determined that the mail order lacked a valid prescription. A large percentage of the 554

refused entries were shipped via a South Pacific republic called Vuanuatu and New

Zealand. It is believed that those shipments were from a single source currently

under criminal investigation. It is important to note that the parcels that FDA is

unable to review are released. Extrapolating from the pilot program data nationally,

it is estimated that up to 200,000 parcels per month could be coming in unreviewed.

In September 2000 the Customs Service conducted a study called Operation Safeguard of two U.S. facilities showed that none of the pharmaceuticals examined were

reimportations of U.S. manufactured drugs. None of the 512 parcels fulfilled all the

personal use requirements. Only three parcels had evidence of medical supervision

and ten percent of the parcels analyzed contained no active ingredients.

What are the dangers of the prescription drugs that are allowed in? We will hear

of one tragic story from Edwin and Helen Rode. Their son, Todd, was found dead

on November 16, 1999. They believe his death was a direct result of prescription

drugs obtained through the mail from a foreign-based internet pharmacy. Although

Todd was being treated for severe depression, he ordered a combination of prescription drugs without any physical examination by a physician. The medical examiner’s

report states that some of these drugs were ingested by Todd at the time of his

death. I want to thank Reverend and Mrs. Rode for testifying at this hearing. It

takes a lot of courage to relate their painful experience publicly. But by stepping

forward, they may help save some lives.

O&I FIELD TRIP TO DULLES AIRPORT

Just a few weeks ago, Congressmen Deutsch, Stupak, and I visited the international mail facility near Dulles Airport. We viewed firsthand the processing of

6

prescription drug parcels. Here is one example. Many of these parcels contained prescription drugs that had been withdrawn from the US market, highly dangerous

combinations of drugs for one person, drugs lacking labeling or instructions, drugs

masked as something else or not in its original container. The overwhelming numbers of prescription-drug parcels is a daunting challenge, that would require a tremendous and unrealistic increase in personnel and resources. Even if such an increase occurred, the legal requirements in processing parcels impose massive burdens. Clearly, a serious policy decision needs to be made and new procedures considered. In response to a bipartisan inquiry in this area, the FDA in consultation with

the Customs Service has devised several proposals for improving the public health

protections related to mail deliveries. These proposals and a recommendation are

pending with the Secretary of Health and Human Services. I look forward to working with the Secretary to move in a reasonable and responsible way.

In the area of personal importation, individuals usually are in some way assuming some risk. But what about unsuspecting consumers who are getting drugs within the U.S. healthcare delivery system? Are there any risks to them of getting counterfeit or substandard drugs? Over the last decade, there has been a surge in shipments of bulk drugs or ‘‘active pharmaceutical ingredients’’ (APIs) from overseas.

About 70-80% of brand-name APIs and 90-95% of generic APIs are made overseas.

Any foreign firm that makes bulk ingredients for the U.S. market must be inspected

by the FDA. This surge of imports has overwhelmed FDA and outstripped its

inspectional resources. Last year, the FDA advised the Committee that 242 foreign

API firms appeared to have shipped misbranded drugs to the U.S. in 1999 but were

never inspected by the FDA.

Even for those firms that have been inspected, the Subcommittee’s past investigations have shown how the approved foreign firm in a few cases becomes the front

for counterfeit or unapproved bulk drugs shipped to the U.S. Sophisticated counterfeiting in the chemistry and documentation of the drugs is difficult to detect. Last

year’s Subcommittee hearing revealed a link between serious reactions in a 155

American patients from an antibiotic and a Chinese bulk drug manufacturer. The

FDA committed to a number of strategies for handling imported counterfeit and unapproved drugs. The Subcommittee will want to learn how the FDA has approved

its intelligence gathering on counterfeiting. We will want to find out how the FDA

plans to use its personnel and equipment to better monitor U.S. ports of entry. We

are also interested in what, if any, security measures FDA has added and what additional resources may be needed.

Overall, prescription drugs in the U.S. are extremely safe. But it is important to

remember that the risk is not zero. There is no magic force-field that protects the

U.S. from imported counterfeit or diverted product. We must be aware of the latest

threats in the global pharmaceutical market and deal with them. We are very fortunate to have some of the leading experts on pharmaceutical counterfeiting and diversion before us today. Their testimony should greatly assist the Subcommittee’s

understanding of the issues.

I want to thank the Chairman of the Energy and Commerce Committee, Congressman Billy Tauzin, for his support of this investigation and hearing about imported drugs. I also want to thank the Ranking Minority Member of the Subcommittee, Congressman Peter Deutsch, for his support and interest in this investigation. I likewise express my appreciation to Congressman Bart Stupak for his

participation and contribution to the Subcommittee’s efforts.

I am well aware of the hard work and the preparation for these hearings by all

of the witnesses. On behalf of the Subcommittee, I thank you and look forward to

your testimony.

Mr. GREENWOOD. With that, the Chair yields 5 minutes to the

ranking member of the full committee, Mr. Dingell.

Mr. DINGELL. Thank you. I commend you for holding this hearing. I am saddened that we are again having to relearn the lessons

that should be all too familiar to this Congress and to the subcommittee.

I will not elaborate on why we passed the Prescription Drug

Marketing Act more than decade ago, because I believe that my

views were made rather clear during last year’s misguided attempt

to lower drug prices by opening up the borders of the United

States.

7

It is sufficient to say, however, that PDMA was specifically designed to prevent the kinds of activities we are reading about

today, and discovering through the investigative efforts of this subcommittee.

Our systems for protecting the U.S. consumers from drugs of

poor or dangerous quality are eroding, as recent evidence bears out:

First, last week, it was discovered that not one, but three counterfeit drugs—Amgen-Serono, and Genentech—being the victimized

innovator companies, have been found on the shelves of U.S. pharmacies.

It is unclear how much more exists, nor is it even clear where

counterfeit drugs may next surface. Second, drugs shipped into this

country by mail are overwhelming existing safeguards.

A recent pilot project conducted by the U.S. Customs Service and

the Food and Drug Administration stopped 16,000 parcels as you

mentioned in approximately 1 month that were being illegally

shipped into the United States from foreign sources.

Because the regulatory system at the Nation’s mail facilities is

so overwhelmed and antiquated, 14,000 of these parcels were simply sent to the public without any regulatory review whatsoever.

And each day this scene is played out all over the country as

hundreds, if not thousands, of products enter this country from

abroad, and are sent to consumers without any safety check whatsoever.

In testimony that will be given today, the FDA now admits that

approximately 2 million parcels containing FDA regulated products

are entering the United States each year through international

mail facilities, and most of these appear to have received no review

by FDA, and are simply released by Customs.

This is not a new problem, and the FDA has been put on notice

about it for years. Countless letters have been sent by this subcommittee, by the Customs, to FDA warning about the disintegration of the system and the hazards to the American public that

stem therefrom.

Customs now freely admits that while the present system envisions that its staff hold all pharmaceuticals for FDA review when

they enter the country, in reality most are delivered to consumers

without knowing whether the drugs are safe, or without any testing whatsoever, to protect American consumers.

The FDA has so far demonstrated virtually no leadership on how

to fix a failed system that springs in large measure from its own

reimportation policies, and which we will examine today.

We have never expected miracles nor instant success, but after

countless meetings, letters, discussions held by this subcommittee

and Customs imploring the FDA to retool a system that places the

public at severe risk, the FDA continues its foot dragging.

Third, prescription drugs are flooding into the country across the

Mexican border. As you know, hundreds of Mexican pharmacies

now dot the border from Texas to California on the Mexican side.

These pharmacists sell almost any type of drug to any person

wishing to buy them. As in the words of one of our witnesses, ‘‘like

some stores sell candy.’’

Buttressed by the FDA’s vague and often misused and misunderstood personal use policy, thousands of U.S. residents cross the borVerDate 11-MAY-2000 15:01 Oct 18, 2001 Jkt 010199 PO 00000 Frm 00011 Fmt 6633 Sfmt 6602 E:\HEARINGS\73737 pfrm07 PsN: 73737
8

der each day to purchase their drugs from Mexico. This practice

raises many public health and safety issues as we will hear from

witnesses today.

How safe are these drugs and where do they come from? How

were they manufactured and how have they been stored, and are

the drugs counterfeit? Do they contain ingredients that will harm

a consumer? Have good manufacturing practices—required by U.S.

law—been practiced with regard to these pharmaceuticals?

Today, the testimony will suggest that the quality of Mexican

drugs are often difficult, if not impossible, to determine. Some are

perfectly safe, and some are counterfeit, and some contain no active

ingredient, and others contain too much or too little active ingredient, posing similar risks.

Some, while clearly intended to be used under the close supervision of a doctor, are prescribed with little or no guidance, and

most are prescribed without any significant follow-up supervision.

Despite having policies that encourage this activity, our government has almost no meaningful data from Customs, the Drug Enforcement Administration, or the FDA, to address these issues and

questions.

And the budgets of the three agencies to carry out their responsibilities on these matters is grossly inadequate, as are the number

of their personnel. Fourth, a questionable U.S. policy allows U.S.

residents to legally bring in large amounts of potentially addictive

and dangerous scheduled drugs without a prescription.

This policy is open to significant abuse, and I believe that we will

find significant abuse is taking place. Last year in a letter that I

sent to the FDA concerning this matter, I raised a number of questions relating to this problem by citing the rather sobering findings

of Dr. Marvin Shepherd.

I note that he is here today, and I hope that he will receive the

commendations of the committee. I thank him in advance for his

testimony, as well as the excellent work that he has done on these

matters over the years.

I also look forward to hearing from other witnesses, including the

DEA and the White House, as to whether they believe that the potential good of the current policies outweigh the enormous opportunity and potential for abuse inherent in this policy.

Mr. Chairman, we indeed have several major policy problems

coming together here today. Our citizens are looking to other countries to lower the cost of prescription drugs. They are increasingly

taking desperate measures to obtain them.

They are traveling to Mexico, and they are buying drugs from

Thailand, from China, from India, and everywhere else through the

Internet. The Federal Government must act and soon to protect the

safety of prescription drugs supplied, and American consumers.

The Federal Government, however, must do more. Some citizens

are seeking alternative sources for drugs because they believe that

they have no choice. The high costs of prescription drugs is driving

them to take both legal and health risks.

We must face that reality and seek to address the problem of

cost, whether it is through meaningful Medicare prescription drug

benefits intended through the use of expanded generic drugs, the

9

exercise of governmental purchasing power, or otherwise, and action is needed and soon.

I hope that this hearing and continued subcommittee work can

lead to the long and short term steps needed to resolve these problems, and again I commend you and thank you, Mr. Chairman.

[The prepared statement of Hon. John D. Dingell follows:]

PREPARED STATEMENT OF HON. JOHN D. DINGELL, A REPRESENTATIVE IN CONGRESS

FROM THE STATE OF MICHIGAN

Mr. Chairman, thank you for holding this hearing. I am somewhat saddened that

we are yet again having to go over lessons that should be all too familiar to this

Subcommittee by now.

I will not elaborate on why we passed the Prescription Drug Marketing Act

(PDMA) more than a decade ago because I believe I made my views rather clear

during last year’s misguided effort to attempt to lower drug prices by opening up

our borders. Suffice it to say, however, that the PDMA was specifically designed to

prevent the kinds of activities we are reading about today and discovering through

the investigative efforts of this Subcommittee. Our systems for protecting U.S. consumers from drugs of poor or dangerous quality are eroding, as recent evidence

bears out.

First, last week, it was discovered that not one, but three counterfeit drugs—

Amgen, Serono, and Genentech being the victimized innovator companies—have

been found on the shelves of U.S. pharmacies. It is unclear how much more exists,

nor is it even clear where counterfeit drugs may surface next.

Second, drugs shipped into the country by mail are overwhelming existing safeguards. A recent pilot project conducted by the U.S. Customs Service (Customs) and

the Food and Drug Administration (FDA) stopped 16,000 parcels in approximately

one month that were being illegally shipped into the United States from foreign

sources. Because the regulatory system at the nation’s mail facilities is so overwhelmed and antiquated, 14,000 of these parcels were simply sent to the public

without any regulatory review. And each day, this scene is played out all over the

country as hundreds, if not thousands, of products enter this country from abroad,

and are sent to consumers without any safety check. In testimony that will be given

today, FDA now admits that approximately two million parcels containing FDA-regulated products are entering the U.S. each year through the international mail facilities, and most of these appear to receive no review by the FDA, and are simply

released by Customs.

This is not a new problem, and FDA has been put on notice about it for years.

Countless letters have been sent by this Subcommittee, and by Customs, to FDA

warning about the disintegration of this system. Customs now freely admits that

while the present system envisions that its staff hold all pharmaceuticals for FDA

review when they enter the country, in reality, most are delivered to consumers

without knowing whether these drugs are safe.

FDA has so far demonstrated little leadership on how to fix a failed system that

springs in large measure from its own reimportation policies. We have never expected miracles or instant success. But after countless meetings, letters, and discussions held by this Subcommittee and Customs imploring FDA to retool a system

that places the public at risk, the FDA continues its foot-dragging.

Third, prescription drugs are flooding into the country across the Mexican border.

As you know, hundreds of Mexican pharmacies now dot the border from Texas to

California. These pharmacies sell almost any type of drug to any person wishing to

buy them—as in the words of one of our witnesses, ‘‘like some stores sell candy.’’

Buttressed by FDA’s vague and often misused personal-use policy, thousands of

U.S. residents cross the border each day to purchase their drugs from Mexico. But

this practice raises many public health and safety issues, as we will hear from the

witnesses today. How safe are these drugs and where do they come from? How are

they manufactured, and how are they stored? Are these drugs counterfeit? Do they

contain ingredients that can harm a consumer?

Testimony today suggests that the quality of Mexican drugs is often difficult, if

not impossible, to determine. Some are perfectly safe. Some are counterfeit and contain no active ingredient. Others can contain too much or too little active ingredient,

posing similar risks. Some, while clearly intended to be used under the close supervision of a doctor, are prescribed with little or no guidance, and most are prescribed

with little or any followup supervision.

10

Despite having policies that clearly encourage this activity, our government has

almost no meaningful data from Customs, the Drug Enforcement Administration

(DEA), or the FDA to address any of these issues and questions.

Fourth, a questionable U.S. policy allows U.S. residents to legally bring in potentially large amounts of potentially addictive and dangerous scheduled drugs without

a prescription. This policy is open to significant abuse. Last year, in a letter I sent

to the FDA concerning this matter, I raised a number of questions relating to this

problem by citing the rather sobering findings of Dr. Marvin Shepherd. I see that

he is before us today, and I thank him in advance for his testimony as well as the

excellent work he has done on this matter over these years. I also look forward to

hearing from our other witnesses, including the DEA and the White House, on

whether they believe the potential good outweighs the potential abuse inherent in

this policy.

Mr. Chairman, indeed, we have several major policy problems coming together

here. Our citizens are looking to other countries for lower cost prescription drugs,

and are increasingly taking more desperate measures to obtain them. They are traveling to Mexico. They are buying drugs from Thailand, China, India, and everywhere else, through the Internet. The Federal Government must act, and soon, to

protect the safety of the prescription drugs supply.

But the Federal Government must do more. Some citizens are seeking alternative

sources for drugs because they believe that they have no choice. The high cost of

many prescription drugs is driving them to take both legal and health risks. We

must face that reality and seek to address the problem of cost. Whether that is

through a meaningful Medicare prescription drug benefit, expanded use of generic

drugs, exercise of governmental purchasing power, or otherwise, we must act, and

soon.

I hope this hearing, and continued Subcommittee work, can lead to both the shortterm and long-term steps needed to solve these problems.

Mr. GREENWOOD. The Chair thanks the ranking member of the

full committee, and recognizes now the chairman of the Subcommittee on Health, Mr. Bilirakis, from Florida.

Mr. BILIRAKIS. Thank you very much, Mr. Chairman. I, too, am

grateful that you are holding this hearing, and of your interest in

this particular subject. Access to affordable prescription drugs, particularly for our seniors, is a very serious concern.

Many Members of Congress, myself included, and particularly

myself because of the district that I represent in Florida, have

heard from constituents who are upset about paying more for prescription drugs than citizens of other countries.

And some of these Americans travel outside the United States to

purchase their pharmaceuticals. The Food and Drug Administration currently allows under certain circumstances and bounds for

patients to bring in a 3 month supply of prescription drugs for their

personal use.

Today, drugs are often purchased by an individual through the

mail or the Internet. However, the policy allowing the importation

for these uses was not intended, I think, to promote these practices

on such a broad, broad basis.

As I understand it, the consensus view within the FDA and the

Customs Service is generally not to interfere with seniors who decide to assume the health risks of buying drugs for personal use.

Furthermore, the FDA and Customs are overwhelmed by the

amount of drugs coming in over our borders and through the mail,

and I know, Mr. Chairman, that I have heard you talk about your

visit out to Dulles and seeing the amount of drugs coming in and

how it has overwhelmed Customs out there.

Over the last decade, there has also been an increase in the shipments of bulk or active pharmaceutical ingredients from overseas.

11

Any foreign firm that makes bulk ingredients for the U.S. market

must be inspected by the FDA.

Therefore, it is important to understand the impact of these developments on the agency’s limited resources. I am hopeful that today’s hearing will shed light on these and other important issues

related to the safety of imported pharmaceuticals.

Mr. Chairman, I have to go and do an organ transplant type of

a thing in a few minutes, and so I will break loose, but I would

like to come back, because this is of great interest. Thank you very

much, sir.

[The prepared statement of Hon. Michael Bilirakis follows:]

PREPARED STATEMENT OF HON. MICHAEL BILIRAKIS, A REPRESENTATIVE IN

CONGRESS FROM THE STATE OF FLORIDA

Thank you Chairman Greenwood for holding today’s hearing on the safety of imported pharmaceuticals. I look forward to hearing from our witnesses and learning

more about this important issue.

Access to affordable prescription drugs, particularly for our seniors, is a serious

concern. Many Members of Congress—myself included—have heard from constituents who are upset about paying more for prescription drugs than citizens of other

countries. Some of these Americans now travel outside the United States to purchase their pharmaceuticals.

The Food and Drug Administration (FDA) currently allows patients to bring in

a three-month supply of prescription drugs for their personal use. Today, drugs are

often purchased by an individual through the mail or the Internet. However, the

policy allowing importation for personal use was not intended to promote these practices on such a broad basis.

As I understand it, the consensus view within the FDA and the Customs Service

is generally not to interfere with seniors who decide to assume the health risks of

buying drugs for personal use. Furthermore, FDA and Customs are overwhelmed by

the amount of drugs coming in over our borders and through the mail.

Over the last decade, there has also been an increase in the shipments of bulk

or ‘‘active pharmaceutical ingredients’’ from overseas. Any foreign firm that makes

bulk ingredients for the U.S. market must be inspected by the FDA. Therefore, it

is important to understand the impact of these developments on the agency’s limited

resources. I am hopeful that today’s hearing will shed light on these and other important issues related to the safety of imported pharmaceuticals.

Mr. GREENWOOD. Hopefully that is testimony and not surgery.

The Chair thanks the subcommittee chairman and recognizes the

ranking member of the Oversight and Investigations Subcommittee, the gentleman from Florida, Mr. Deutsch.

Mr. DEUTSCH. Thank you, Mr. Chairman, and thank you for

holding this hearing. Mr. Chairman, this committee has always

had a great interest in the safety of the U.S. drug supply, and has

always had a rich tradition of monitoring any threats to that system.

Lately, however, there are a number of issues with which we

must concern ourselves. Several years ago, this subcommittee

began an investigation into how prescription drugs were being sold

both domestically and internationally through the Internet.

When this subcommittee first began its inquiry only a handful of

firms existed, and only a trickle of drugs were entering the U.S. as

a result of these activities. It was predicted then that if this problem was not quickly addressed by the FDA and other key agencies

that the existing systems used to process incoming parcels of mail

would quickly be outpaced by the volume of foreign shipments.

This prediction has become a reality, Mr. Chairman. But once

merely an annoyance to the regulatory system, the volume of unVerDate 11-MAY-2000 15:01 Oct 18, 2001 Jkt 010199 PO 00000 Frm 00015 Fmt 6633 Sfmt 6602 E:\HEARINGS\73737 pfrm07 PsN: 73737
12

regulated drugs now entering the U.S. through the Nation’s 13

international mail facilities threatens to undermine the original intent of the Prescription Drug Marketing Act, legislation passed by

the Committee on Energy and Commerce for the purpose of protecting our citizens from adulterated or substandard drugs from

abroad.

Currently, tens of thousands of unregulated parcels containing a

variety of drug products enter the U.S. each week. U.S. Customs

inspectors can’t keep pace with the workload, nor do they have

meaningful guidance or sufficient help from the FDA to properly

process them.

Instead, the U.S. Customs is overwhelmed. They are often forced

to release the shipments to the public without any FDA scrutiny.

It now appears more the exception that the FDA examines the bulk

of these incoming parcels.

The situation at many of these ports of entry has thus become

a ticking public health time bomb. Indeed, the amount of wholly

unregulated drug parcels coming into this country through our

mail facilities is not trivial.

Just a few weeks ago, Mr. Stupak, Chairman Greenwood, and I,

visited the Dulles Airport facility. What we found was sobering. Before our arrival, the U.S. Customs inspectors detained 167 parcels

containing drugs in just 4 hours.

Most of what we saw was a haphazard collection of unmarked

and misbranded drugs. Many contained no labels, while many

drugs were mixed with other drugs. Some parcels had false declarations, while most contained no prescription nor any indication

that a drug was being taken under supervision of a doctor or a

pharmacist.

In recent pilot projects at the Los Angeles mail facility, Customs

detained an astonishing 16,000 shipments in just over a 1-month

period. But because the system used today is so archaic and understaffed, the FDA had time to examine only about 1,900 of these

parcels.

What happened to the other 14,000 parcels? The same thing that

happens every day across this country. They were released to the

public without any FDA review. Were they safe? Who knows. Were

they real? Who knows.

Were they properly stored? Who knows? But what is known is

that this practice is the pharmaceutical version of Russian Roulette, placing the public at risk. Nevertheless, despite mounting

evidence for the past several years that this system is spiraling out

of control, and after receiving numerous letters from the U.S. Customs Service and this subcommittee to examine this system to put

forth rational proposals on how to address this problem. The FDA,

which is responsible for the system, has failed to act. Instead, by

taking a head in the sand approach and ignoring years of warning

signs, the agency inaction has only contributed to the chaos.

I look forward to this hearing and hearing from FDA, who is finally making proposals, specific proposals, to retool a very broken

system.

Mr. Chairman, let me quickly shift gears here to mention another issue that we will be discussing today, which is the matter

of drugs coming in from Mexico. Currently, tens of thousands of

13

U.S. citizens are making monthly trips to Mexico to buy a group

of drugs from the hundreds of pharmacies that exist within easy

walking distance of the border.

Currently, a number of policies now exist that allow and may

even encourage U.S. citizens to shop for their drugs in Mexico.

Aside from the fact that our regulatory agencies seem to know almost nothing about the quality or sources, many of our witnesses

will voice concerns about some of these practices.

For example, current policy allows for a U.S. citizen to walk

across the border and bring back a vast array of powerful and potentially addictive controlled substances as long as they are declared to U.S. Customs upon reentering the U.S.

This means that while U.S. citizens must have a prescription

from a doctor to obtain a potentially dangerous substance in San

Diego, if they walk across the border to Tijuana, they can buy an

almost endless supply of Schedule II to V drugs as long as each

drug does not exceed 50 tablets.

Why is that, Mr. Chairman? As many controlled substances also

have inexpensive generic versions available here in the U.S., serious questions must be raised about the objective of such a policy.

And as Dr. Shepherd, who will testify here later, points out, evidence suggests that many of these drugs are being purchased by

younger persons for recreational use or resale on the street.

But whatever our decisions are to be in this regard, at a very

minimum, we need better information. If we intend to allow persons to obtain drugs from Mexico, we should better assess what

risks are involved in this practice to at least allow U.S. citizens to

make informed choices.

Currently, despite the fact that tens of thousands of U.S. Citizens purchase their drugs from Mexico every month, there is little

data to tell us what the public health implications of such practices

are.

If we are going to have policies that permit and even encourage

such behavior, we must better assess all the risks involved. Let me

conclude, Mr. Chairman, by also saying that we must also attempt

to analyze why is it that many U.S. citizens are purchasing their

medications through these poorly regulated channels.

This is not an easy task, but it is an essential ingredient in attempting to address some of the public safety issues raised by the

activities that we will discuss today. Clearly, while some might be

seeking drugs for their abuse potential, others clearly travel to

Mexico or purchase their drugs through the Internet because they

feel such practices save them money.

In some cases involving certain countries, this may be a dangerous practice. Providing better and affordable alternatives to

these practices is an essential stepping stone toward effective solutions to some of these problems.

I believe that if we wish to be successful in addressing the massive amounts of drugs entering the U.S. through unregulated channels, we need to come to an agreement on how to make prescription

drugs more affordable for all U.S. citizens that need them, and I

welcome this debate.

Thank you, Mr. Chairman, and I look forward to hearing from

the witnesses today.

14

[The prepared statement of Hon. Peter Deutsch follows:]

PREPARED STATEMENT OF HON. PETER DEUTSCH, A REPRESENTATIVE IN CONGRESS

FROM THE STATE OF FLORIDA

Thank you Mr. Chairman, and thank you for holding this hearing.

Mr. Chairman, this Committee has always had a great interest in the safety of

the U.S. drug supply and it has always had a rich tradition of monitoring any

threats to that system. Lately, however, there are a number of issues with which

we must concern ourselves.

Several years ago, this Subcommittee began an investigation into how prescription drugs were being sold both domestically and internationally through the Internet. When this Subcommittee first began its inquiry, only a handful of firms existed

and only a trickle of drugs were entering the U.S. as a result of these activities.

It was predicted then that if this problem was not quickly addressed by the FDA

and other key agencies, existing systems used to process incoming parcels of mail

would quickly be out-paced by the volume of foreign shipments. That prediction has

become a reality, Mr. Chairman.

While once merely an annoyance to the regulatory system, the volume of unregulated drugs now entering the U.S. through the nation’s 13 international mail facilities threatens to undermine the original intent of the Prescription Drug Marketing

Act, legislation passed by the Committee on Energy and Commerce for the purpose

of protecting our citizens from adulterated or substandard drugs from abroad.

Currently, tens of thousands of unregulated parcels containing a variety of drug

products enter the U.S. each week. U.S. Customs inspectors can’t keep pace with

the workload, nor do they have meaningful guidance or sufficient help from FDA

to properly process them.

Instead, U.S. Customs is overwhelmed. They are often forced to release the shipments to the public without any FDA scrutiny. It now appears more the exception

that FDA examines the bulk of these incoming parcels. The situation at many of

these ports of entry has thus become a ticking public-health time bomb.

Indeed, the amount of wholly unregulated drug parcels coming into this country

through our mail facilities is not trivial. Just a few weeks ago, Mr. Stupak, Chairman Greenwood, and I visited the Dulles airport facility.

What we found was sobering. Before our arrival, U.S. Customs inspectors detained 167 parcels containing drugs in just four hours. Most of what we saw was

a haphazard collection of unmarked and misbranded drugs. Many contained no labels, while many drugs were mixed with other drugs. Some parcels had false declarations, while most contained no prescription nor any indication that the drug was

being taken under the supervision of a doctor or a pharmacist.

In a recent pilot project at the Los Angeles mail facility, Customs detained an astonishing 16,000 shipments in just over a one-month period. But because the system

used today is so archaic and understaffed, FDA had time to examine only about

1,900 of these parcels.

What happened to the other 14,000 parcels? The same thing that happens every

day across this country—they were released to the public without any FDA review.

Were they safe? Who knows. Were they real? Who knows. Were they properly

stored? Who knows. But what is known is that this practice is the pharmaceutical

version of Russian roulette, placing the public at risk.

Nevertheless, despite mounting evidence for the past several years that this system is spiraling out of control, and after receiving numerous letters from the U.S.

Customs Service and this Subcommittee to examine this system to put forth rational

proposals on how to address this problem, the FDA—which is responsible for this

system—has failed to act. Instead, by taking a ‘‘head-in-the-sand’’ approach and ignoring years of warning signs, the agency’s inaction has only contributed to the

chaos. I look forward to hearing whether the FDA finally has any meaningful proposals on how to retool a very broken system.

Mr. Chairman, let me quickly shift gears here to mention another issue that we

will be discussing today, which is the matter of drugs coming from Mexico.

Currently tens of thousands of U.S. citizens make monthly trips to Mexico to buy

a myriad of drugs from the hundreds of pharmacies that exist within easy walking

distance of the border. Currently, a number of policies now exist that allow—and

may even encourage—U.S. citizens to shop for their drugs in Mexico. Aside from the

fact that our regulatory agencies seem to know almost nothing about the quality or

sources, many of our witnesses will voice concerns about some of these practices.

For example, current policy allows for a U.S. citizen to walk across the border and

bring back a vast array of powerful and potentially addictive controlled substances,

as long as they are declared to U.S. Customs upon reentering the U.S. This means

15

that while a U.S. citizen must have a prescription from a doctor to obtain a potentially dangerous substance in San Diego, if they walk across the border to Tijuana

they can buy almost an endless supply of schedule II-V drugs, as long as each drug

does not exceed 50 tablets. Why is that, Mr. Chairman?

As many controlled substances also have inexpensive generic versions available

here in the U.S., serious questions must be raised about the objective of such a policy. And as Dr. Shepherd, who will testify later today, points out, evidence suggests

that many of these drugs are being purchased by younger persons for recreational

use or resale on the street.

But whatever our decisions are to be in this regard, at a very minimum we need

better information. If we intend to allow persons to obtain drugs from Mexico we

should better assess what risks are involved in this practice to at least allow U.S.

citizens to make informed choices. Currently, despite the fact that tens of thousands

of U.S. citizens purchase their drugs from Mexico every month, there is little data

to tell us what the public health implications of such practices are. If we are going

to have policies that permit and even encourage such behavior, we must better assess all risks involved.

Let me conclude, Mr. Chairman, by also saying that we must also attempt to analyze why it is that many U.S. citizens are purchasing their medications through

these poorly regulated channels. This is not an easy task, but it is an essential ingredient in attempting to address some of the public safety issues raised by the activities we will discuss today. Clearly, while some might be seeking drugs for their

abuse potential, others clearly travel to Mexico or purchase their drugs through the

Internet because they feel such practices save them money. In some cases involving

certain countries, this may be a dangerous practice. But providing better and affordable alternatives to these practices is an essential stepping stone toward effective

solutions to some of these problems.

I believe that if we wish to be successful in addressing the massive amount of

drugs entering the U.S. through unregulated channels, we need to come to agreement on how to make prescription drugs more affordable for all U.S. citizens that

need them, and I welcome that debate.

Thank you, Mr. Chairman, and I look forward to hearing from our witnesses

today.

Mr. GREENWOOD. The Chair thanks the gentleman, and recognizes for 5 minutes the gentleman from Michigan, Mr. Stupak.

Mr. STUPAK. Thank you, Mr. Chairman, and thank you for holding this very important hearing on imported pharmaceuticals, and

thanks for your work on this issue.

Mr. Chairman, we are facing a problem of immense proportions

and are simply unprepared to deal with it. Unregulated and unsupervised drugs are pouring into this country, and with the advent

of Internet pharmacies, the volume of pharmaceutical products

being shipped into the United States has exploded.

Unfortunately, the resources that we have put together to deal

with this problem has not met the needs, and the hearing that we

are holding today is the first of hopefully more hearings that we

will have on this all too familiar topic for me.

In the last Congress, I, myself, Mr. Dingell, Mr. Klink, Mr. Waxman, and others, actually tried to introduce a bill, and did introduce a bill to specifically deal with the sale of prescription drugs

through the Internet.

And I intend to reintroduce a very similar bill again shortly. This

bill will help, but will not stop, the flow of unregulated drugs into

this country. We simply cannot allow this situation to continue unchecked, and we need to work with all the authorities to make sure

that when we do pass a bill that we get it right.

Mr. Chairman, you, I, and the ranking member, Mr. Deutsch,

saw the problem of mail order prescription drugs first-hand several

weeks ago on our trip down to the Dulles Airport mail facility.

16

Hundreds of packages of illegal drugs pulled from a mere 3 days

worth of international mail lay on the tables in the Customs area

for our inspection, and I suppose that some of those packages there

are what we saw at Dulles.

The packages were breathtaking in their variety; pink pills, red

pills, green pills, white pills, yellow liquid, brown liquid, clear liquid, capsules, tablets, powder, paste, blister packs, zipped lock

baggies. You name it, it was there.

We saw pills stuffed in bras, pills stuffed in cotton, pills stuffed

in carbon paper, because the smugglers think that the x-ray will

be fooled with the carbon wrapped around their pills. And pills

wrapped in birthday presents. All of these were headed to the

American public.

American citizens have no idea if the pharmacy that they receive

their pills from is an FDA-approved facility, or a vermin-filled

kitchen table in a flophouse, run by an individual in Thailand with

hepatitis, working with a prostitute as his assistant.

But I am sure that they have a very nice video web page or

website to get us all to buy their drugs. And these are just the pills

that the individuals order. It does not take into account or begin

to address the problem of bulk and counterfeit drug ingredients

and products, more and more which are showing up in today’s

health care market.

Mr. Chairman, a lot of us reviewed the report of the L.A. Airport,

in which we looked at and found what was coming into L.A. in just

4 to 5 weeks. We have a list here today, and there were over 16,000

parcels that came in within that 4 to 5 weeks.

And in that 4 to 5 weeks, like in one parcel, three bottles of unknown medication, approximately 300 tablets. The tablets are

green and the bottles are labeled in a foreign language. No English.

Or another one, 1,080 dosage units; 1,080 tablets of an unknown

tablet, dark brown in color. That is what we are seeing coming

through the mail. And today it is estimated that over 2 million parcels a year comes into this country unknown, unmarked, and where

they are going, and what they contain. The American consumer has

no idea.

And this number is only going to continue to grow unless we do

something about it. What we need to do in today’s hearing is not

to simply figure out who is responsible for these illegal drugs coming into our country, but take some action, and take some action

now.

The FDA has been asked time and time again for direction. Letter after letter has been sent to the FDA, not only from Customs,

but also from this Congress and this subcommittee, asking for

guidance.

These letters and pleas have not yielded any substantive answers, strategies, nor proposals. Because of the FDA’s failure to

act, what started out to be a small problem is now flooding this

country.

It is time for the FDA to move off-center. We also have the 50

fill problem, 50 pills without prescription, at the Mexican border;

and Mr. Dingell, and Mr. Deutsch, and others have spoke up today,

and that needs to be addressed, and once again, we need to address

it now.

17

We have in front of our committee today all the interested parties, and I hope that we can come up with a defined consensus on

what should be done on each of these issues.

I look forward to continuing to work with you, Mr. Chairman,

and others on this committee, on this very, very important and

deadly matter. Thank you.

Mr. GREENWOOD. The Chair thanks the gentleman from Michigan, and recognizes for an opening statement for 5 minutes the

gentlelady from Colorado, Ms. DeGette.

Ms. DeGette. Thank you, Mr. Chairman, and thank you for holding this hearing today. This is at least the third hearing in a row

that we have had annually regarding the importation of pharmaceuticals.

I hope this hear that we can actually make some progress so that

we don’t find ourselves again next year about the same time in this

same room, in the same chairs rehashing the information, when

frankly our constituents’ lives continue to be at risk.

I am hopeful that it won’t take another t.v. expose, a newspaper

series, some reporter ordering viagra for their dog, or worse, and

seriously, an incident of patient deaths, and for meaningful action

to be undertaken immediately.

As I said last year in my opening statement about this same

time, on-line access to pharmaceuticals can be a wonderful took

and one that has opened up a whole new world of convenience to

patients.

One thing that hasn’t been focused on today is the ease with

which chronic patients can get information and can easily get their

prescription drugs on-line at a decent price.

That can be a benefit to patients.

I am the Co-Chair of the Congressional Diabetes Caucus, and for

those with chronic long term illnesses, it can be an enormous convenience to use the Internet. But with this ease comes risks. One

of the biggest risks as we have heard is the explosion in the counterfeit prescription drug market and its potential to do great harm

to individuals.

Mr. Chairman, I know how this can affect a community, because

it happened right in my district in Denver, Colorado. In 1998, six

patients at a Denver hospital had toxic reactions to counterfeit

pharmaceuticals.

According to Dr. Michael Earnest, who is a physician at the Denver Health Medical Center, failure of the FDA to adequately inform

the hospital of the potential for counterfeit pharmaceuticals contributed to this frightening occurrence.

Health officials in other States according to U.S. News and World

Report, have echoed this concern. This problem is beginning to be

a real threat to the health of the American people when you can’t

even count on avoiding counterfeit pharmaceuticals in a hospital.

If the United States does not begin to seriously address this

problem and step up oversight activities, there will be more counterfeit drugs in the United States and more Americans put in

harm’s way.

Improper oversight has permitted individuals to remove both the

doctor’s role of prescribing drugs and equally important the pharVerDate 11-MAY-2000 15:01 Oct 18, 2001 Jkt 010199 PO 00000 Frm 00021 Fmt 6633 Sfmt 6602 E:\HEARINGS\73737 pfrm07 PsN: 73737
18

macist’s role in providing the patient another source of medical advice.

We need to have standard policies regarding pharmaceutical purchases. It doesn’t make sense to require a prescription for drugs

purchased in the United States, but then to look the other way

when someone walks back into the States with regulated substances, or purchases them on the Internet without a prescription.

We simply cannot any longer allow the elimination of important

safeguards. Purchasing pharmaceuticals without the help of real

doctors, or without the advance of real pharmacists, is extremely

dangerous.

Mr. Chairman, these issues are a product of a larger living problem for our Nation; the explosion in the cost of health care, including pharmaceutical drugs. And Mr. Stupak talked about this for a

moment.

One of the reasons that folks are turning toward these Internet

pharmaceuticals or the border is because they are trying to obtain

needed medications as a way to stretch or fix on limited budgets.

We cannot, however, lose sight of that larger story. We owe it to

our constituents to provide protections wherever the pharmaceuticals are purchased. As Dr. Shepherd, who is testifying today,

suggests, many purchases are not made by the Nation’s poor and

elderly to save costs.

Individuals who do not intend to personally use them purchase

a significant amount of these drugs, and this is further substantiated by the DEA’s testimony which we will hear today, which is

stating that a healthy stream of people is going across the border

to purchase controlled substances.

Enforcement of the current laws is going to be critically important in this effort. According to an FDA pilot program that ran for

30 days earlier this year, potentially 16,000 parcels could have

been referred by Customs to the FDA.

Clearly, there is a torrential flood of prescription drugs entering

the U.S. I think it is safe to assume that a large percent of them

are illegal and potentially lethal. If controlling this flow is a matter

of resources, Mr. Chairman, we need to know what the magnitude

of the problem is, and we need to allocate the resources for enforcement of current laws.

I think it is important that we discuss today the current law, and

whether that is being adequately enforced, and whether we need

changes to the law or more resources; what is the extent of the

problem, and what do we need to do to resolve the situation.

Mr. Chairman, I look forward to hearing the witnesses’ testimony, and their responses to questions posed by members, and I

yield back the balance of my time.

Mr. GREENWOOD. The Chair recognizes the arrival of Mr.

Whitfield and Mr. Gillmor. Do either of those gentlemen have opening statements to make?

Mr. GILLMOR. I waive my opening statement.

Mr. WHITFIELD. I waive.

Mr. GREENWOOD. The gentlemen both waive their option of making an opening statement.

[Additional statements submitted for the record follow:]

19

PREPARED STATEMENT OF HON. CLIFF STEARNS, A REPRESENTATIVE IN CONGRESS

FROM THE STATE OF FLORIDA

Thank you Chairman Greenwood for holding this important hearing. I also want

to thank our witnesses for being here today and I look forward to hearing their testimony.

Today we will hear about several very troubling aspects related to imported pharmaceuticals. A chief concern is that many individuals are purchasing pharmaceuticals along the Mexican borders. What many of these consumers may not know

is that they may not necessarily be getting what they think they are purchasing.

Without strict standards such as those required in the United States, these drugs

could be nothing more than placebos, or could contain ingredients that could pose

a health risk. In particular, seniors seek these cheaper prescription drugs. While

they do so at their own risk and this is not against the law, it is nevertheless puts

them at risk. Hearings such as this will provide individuals who cross the border

to buy their drugs with valuable information about the potential dangers involved.

More and more individuals are going on-line to order prescriptions through the

mail from foreign countries. How can consumers know whether these products are

genuine? Another question that individuals who purchase their prescription from

overseas need to consider is how safe is to go on-line and divulge personal information about themselves. There is no way to verify whether the companies selling

these products are legitimate. Let the buyer beware is very apt when such buying

practices are being conducted.

I wonder if it would be beneficial to have more regulation of these drugs that are

flowing into our country through the mail. Counterfeiting of bulk drugs has become

one of the most lucrative and also one of the most potentially dangerous issues associated with imported drugs.

These look a like drugs are produced all over the globe and make their way to

this country in vast quantities. I have seen these drugs and they appear to be authentic because they look identical to drugs produced by pharmaceuticals made in

this country. The packaging looks identical and sadly enough can have detrimental

effects because the patients will not be getting the medications they need to treat

their illness.

I hope today’s hearing will provide us with some answers and perhaps some reassurance that we can stop these dangerous products from entering our country.

PREPARED STATEMENT OF HON. W.J. ‘‘BILLY’’ TAUZIN, CHAIRMAN, COMMITTEE ON

ENERGY AND COMMERCE

Chinese cough medicine filled with poisonous anti-freeze kills 89 children in Haiti.

Counterfeit imported anti-seizure drugs suspected of killing several epileptics in

the U.S.

Thousands of drugs sold to Americans through the mail from foreign internet

pharmacies made in filthy, vermin-infested labs.

Powerful, deadly painkillers declared and brought from Mexico or Canada into the

U.S.

People who die or are injured by self-medicating with prescription drugs of unknown quality, unknown dosage levels, unknown impurities, unknown side effects,

and unknown interactions.

These are examples of the dangers of many imported pharmaceuticals.

Drum-by-drum, parcel-by-parcel, consumer-by-consumer, imported pharmaceuticals are arriving from unapproved sources, border pharmacies, and even bathtubs or dirty kitchens. Many of these products threaten the public health.

The problem of counterfeit drugs is not just a phenomenon of the developing

world. Our lucrative market and ineffective import controls are increasingly making

the United States an attractive target for drug counterfeiters and diverters. Last

month, three counterfeit prescription drugs were found in the shelves of pharmacies

of several states. It is not known whether these fake drugs were made in the United

States or overseas. But such a cluster of counterfeits has not been seen for years

in this country.

This public health threat of imported pharmaceuticals is getting worse virtually

by the day. More Mexican border pharmacies. More foreign internet pharmacies.

More drugs in the international mail. More pharmaceutical ingredients from overseas. More people in desperate straits who seek cheaper medicines from abroad.

More hucksters, criminals, snake-oil salesmen, slick-willies, and con artists who

prey upon consumers, distributors, and manufacturers.

Meanwhile, our federal agencies responsible for keeping out dangerous drugs are

no longer maintaining the pretense that the problem can be controlled. For example,

20

in its December 2000 Performance Plan Summary, the Food and Drug Administration stated: ‘‘The Agency is unable to assure the U.S. public that it can prevent unsafe imports from entering the country.’’ The data from a recent joint project between the FDA and the U.S. Customs Service show only a small fraction of drugs

in the mail ever gets examined by the FDA and even a visual examination of these

products cannot detect the full extent of counterfeit or substandard product. On one

side, the FDA and the Customs Service are overwhelmed by a flood of commercial

shipments of imported bulk ingredients. On the other, these agencies are confronted

by thousands of individuals with personal imports, an army of ants overrunning the

system.

Unless we find new effective solutions soon, I believe it is only a matter of time

that these uncontrolled imported drugs will lead to an epidemic here that will kill,

maim or severely sicken people. Fortunately, this hearing is an important start in

reaching solutions. In so doing, we won’t lose sight of the real-life problems seniors

and other Americans are facing with high drug prices. I know many Americans are

resorting to getting what they believe—or have been told to believe—are cheaper

versions of U.S. drugs in Canada and Mexico. In many cases, these foreign drugs

are not cheaper and they are not the same as U.S. drugs. But the problem of high

drug prices and prescription drug coverage is one that we will deal with directly in

this Committee. While we tackle affordability, we will pursue safety solutions that

target the greatest health risks, and at the same time, minimize disruption and

risks for those who feel they must avail themselves of pharmaceuticals in Canada

and Mexico.

I congratulate the Subcommittee Chair, Congressman Jim Greenwood, for this essential hearing. He has invited an impressive array of expert witnesses to assess

the issues and to discuss proposals and recommendations. I look forward to hearing

the testimony, examining the evidence, and getting some answers.

PREPARED STATEMENT OF HON. BOBBY L. RUSH, A REPRESENTATIVE IN CONGRESS

FROM THE STATE OF ILLINOIS

Mr. Chairman, thank you for holding this important hearing on the importation

of drugs. More than ever before, Americans rely on drugs to treat chronic health

conditions, protect themselves from disease and improve the quality of their lives.

Whether the illness be high blood pressure, diabetes or cholesterol, pharmaceuticals

allow many to enjoy a better quality of life. Some of the safety concerns surrounding

the issue of imported drugs could potentially undermine this ability.

A New York Times article from April of this year reported that American law enforcement officials have estimated the percentage of counterfeit and substandard

imported drugs could be as high as 25 percent of the imports. In the past two years,

this Committee has investigated the FDA’s oversight of counterfeit foreign bulk

drugs and uncovered a severe failure by FDA to identify and pursue counterfeit

drug makers and distributors, despite internal FDA documents highlighting the

dangers posed by specific imported medicines.

We must continue to ensure that Americans have access to safe drugs and I look

forward to hearing from the witnesses as to what we can do.

Mr. GREENWOOD. For the benefit of the witnesses, the bells that

you just heard indicate that we have a vote on the floor.

And since we would all like to be here for your testimony, the

committee will recess for 15 minutes, and reconvene at 11 o’clock.

[Brief recess.]

Mr. GREENWOOD. The committee will reconvene. Without objection, a statement from U.S. Representative Gil Gutknecht will be

entered into the record, and hearing no objection, it is so ordered.

[The prepared statement of Hon. Gil Gutknecht follows:]

PREPARED STATEMENT OF HON. GIL GUTKNECHT, A REPRESENTATIVE IN CONGRESS

FROM THE STATE OF MINNESOTA

Mr. Chairman, as a Member of Congress long concerned with our Nation’s policy

regarding imported pharmaceuticals, and who authored legislation regarding mail

order imports signed into law just a few months ago (PL 106-948, § 746), I appreciate this opportunity to offer my opinion about the direction our drug import policy

should take. I have a long-term vision for what our wholesale importation policy

should be, but today I want to address the narrower subject of this hearing: governVerDate 11-MAY-2000 15:01 Oct 18, 2001 Jkt 010199 PO 00000 Frm 00024 Fmt 6633 Sfmt 6621 E:\HEARINGS\73737 pfrm07 PsN: 73737
21

ment treatment of prescription drugs mail-ordered from another country for personal use. My point is simple. The FDA’s personal use importation policy is currently fatally flawed, as it favors the most dangerous, unapproved drugs, while

disfavoring commonly prescribed, FDA-approved drugs that can be safely imported

for personal use.

I learned about this issue several years ago, when some of my constituents—who

would soon be joined by thousands of Americans—traveled to Canada on buses to

buy commonly-prescribed, FDA-approved drugs available at about half the price for

which those same drugs are sold in the United States. These constituents’ faced no

difficulty at the border importing their Coumadin, Prilosec, and Lipitor—commonly

prescribed, FDA-approved drugs. However, when they tried to reorder those same

drugs through the mail, the FDA stopped the packages, opened them, and enclosed

warning letters saying the drugs appeared to be illegal and might be confiscated if

they were imported again.

Needless to say these constituents were confused by the FDA’s disparate treatment of the same product—easy admission on the bus at the border, strict warnings

in the mail. As it turns out, my constituents had encountered what is only one of

the many inconsistencies and, indeed, flaws in the FDA’s personal use importation

policy—a patchwork quilt of written and unwritten rules that finds no basis in statute. Because I’ve explained these flaws in detail in a letter to the Secretary of

Health and Human Services, Tommy Thompson, I will only briefly outline them

here and request that my letter to the Secretary be entered into the Record.

The first problem with the FDA’s personal use policy today is that it favors unapproved drugs over approved drugs. In the early 1990s, the FDA evolved a ‘‘compassionate use’’ policy regarding importation of prescription drugs. This policy allowed

individuals seeking medical treatments not available in this country to bring unapproved drugs into the United States for their personal use. However, in the last few

years, this policy has evolved into the FDA’s current, unwritten, ‘‘personal use’’ policy. Under this policy, the FDA allows individuals to bring up to a three-month supply of drugs into the United States on their person, whether the drugs are approved

for use in the United States or not. My constituents took advantage of this policy

when they brought lower-cost drugs back into the United States by bus.

Thus, the FDA’s written policy expressly allows imports of unapproved, experimental drugs, but disallows imports of FDA-approved drugs. This doesn’t make any

sense. As I wrote to Secretary Thompson, ‘‘While I certainly agree that the very sick

should have formal access to unapproved products, it makes no sense...that the

very poor should not have formal access to approved products.’’ The second problem with the FDA’s personal use policy is that it favors drugs carried across the border to drugs mailed across the border. As my constituents found

out, the FDA currently allows drugs to be carried across the border that it disallows

when they appear at the border in the mail. This, too, makes no sense. Why should

the FDA allow an individual to carry a drug into the United States on their person,

but stop that individual from refilling the very same prescription from the same

pharmacy through the mail? I have yet to hear a compelling answer to this question.

But perhaps what is most interesting, and disturbing, about the FDA’s complex

array of written and unwritten drug importation rules is that none of them has a

basis in statute. The FDA has used its discretionary authority to create an ad hoc

drug importation system that favors the most dangerous products while stopping

the safest. To put it in Biblical terms, the FDA’s policy strains out a gnat, but swallows a camel. When I have raised this point with the FDA, the Agency claims that

all importation of prescription drugs—experimental or FDA-approved—is technically

illegal. I’m not convinced this is the case. But even if it is, the question remains:

if the FDA can make up an importation system out of whole cloth, shouldn’t such

a system make sense? If the FDA can use it’s discretion to allow Americans to carry

experimental and FDA-approved drugs into the United States, shouldn’t the Agency

be able to use that same discretion to allow Americans to mail-order commonly-prescribed, FDA-approved drugs from countries like Canada? Our goal, as I told Secretary Thompson, should be ‘‘a clear and logical, written regulatory program that

allows consumers access to imported, U.S.-approved drugs’’ while stopping dangerous, unapproved medicines imported without a prescription.

Supporters of prescription drug importation are often criticized for jeopardizing

patient safety. However, we must remember to balance legitimate safety concerns

with very real safety concerns for seniors who cannot afford high American drug

prices. Often living on fixed incomes, it is not unusual for seniors to break pills in

half to make their prescriptions stretch further. At the least, taking the wrong dosages detracts from a drug’s desired effect. In addition, I believe what safety concerns

do exist might be solved by simply re-allocating the FDA’s current border enforceVerDate 11-MAY-2000 15:01 Oct 18, 2001 Jkt 010199 PO 00000 Frm 00025 Fmt 6633 Sfmt 6621 E:\HEARINGS\73737 pfrm07 PsN: 73737
22

ment resources. At present, the FDA appears to be focusing its staff resources on

the wrong borders, intercepting what are almost certainly the safest drug packages.

According to the FDA’s website, this year the FDA has stopped and detained 18

times more packages coming from Canada (54) than from Mexico (3). Last year, the

FDA stopped 90 packages coming from Canada and only one from Mexico. This is

inexplicable, particularly given the FDA’s testimony today concerning dangerous

medicines entering the United States through Los Angeles.

In conclusion, the FDA must certainly address legitimate safety concerns in its

approach to mail ordered prescription drugs. However, such concerns should not discourage the Agency from overhauling what has become a confusing, contradictory

array of written and unwritten policies that prevent importation of safe, FDA-approved products. At the end of the day, the FDA should not be standing between

the American consumers and safe, lower-cost prescription drugs.

I thank the Chairman again for the opportunity to contribute to this discussion.

CONGRESS OF THE UNITED STATES

HOUSE OF REPRESENTATIVES

May 2, 2001

The Honorable TOMMY G. THOMPSON

Secretary of Health and Human Services

200 Independence Avenue SW

Washington, D.C. 20201

DEAR TOMMY: When you visited the House Budget Committee recently, I mentioned my concern that the Food and Drug Administration (FDA) is inappropriately

interfering with mail order shipments of prescription drugs from Canada for the

personal use of Americans. I have looked into this matter further, and I find that

not only is the FDA acting in violation of a new law requiring due process for mail

order importers, but the Agency’s entire policy regarding personal use importation

is deeply flawed and inconsistently applied. I write to ask you to give both problems

your prompt attention.

Personal Use Policy

In the 1990s, the FDA evolved a written policy allowing individuals seeking medical treatments not available in this country to bring drugs not approved for use in

the United States for their personal, ‘‘compassionate use.’’ Additionally, the FDA allowed licensed practitioners in the United States to prescribe for their patients

drugs approved in a foreign country but not in the United States. In the last few

years, this sensible compassionate use policy has further evolved into the current,

unwritten ‘‘personal use’’ policy. Under the personal use policy, the Agency allows

individuals to bring up to a three-month. supply of drugs into the United States,

whether the drugs are approved for use in this country or not.

This combination written/unwritten personal use policy is flawed for a number of reasons. First, it favors unapproved drugs over approved drugs. Written FDA policy explicitly allows foreign, unapproved drugs into the United States (Regulatory Procedures

Manual, Chapter 9). Yet that same written policy explicitly rejects importation of

products available domestically. While I certainly agree that the very sick should

have formal access to unapproved products, it makes no sense to me that the very

poor should not have formal access to approved products. When I’ve proposed extending the written ‘‘compassionate use’’ policy to medications available in the

United States, the FDA has responded that such imports are technically illegal.

While I am not convinced this is the case, this argument, if true, would also destroy

FDA’s written personal use exemption for unapproved drugs as well, as, according

to the FDA, that policy finds no basis in the law either. My point is this: if FDA

can compassionately use its discretion to allow, in writing, experimental, unapproved

drugs into the United States, it surely ought to be able to use its discretion to allow,

in writing, common, FDA-approved medications into the United States—given the

FDA’s position that both types of imports are technically illegal.

Second, the FDA’s unwritten personal use policy favors drugs carried across the

border to drugs mailed across the border. This is yet another layer of discrimination

and inconsistency in the FDA’s drug importation policy. Under current FDA practice—which is what the unwritten personal use policy amounts to—Americans are

freely allowed to carry common, FDA-approved drugs across the border on their person. Yet, when the same individuals have tried to refill the same prescriptions

through the mail, the FDA has stopped the packages, opened them, and sent importers threatening warning letters. (As you know, this egregious aspect of the

FDA’s unwritten personal use policy prompted me to write the Drug Import FairVerDate 11-MAY-2000 15:01 Oct 18, 2001 Jkt 010199 PO 00000 Frm 00026 Fmt 6633 Sfmt 6621 E:\HEARINGS\73737 pfrm07 PsN: 73737
23

ness Act, which requires due process to mail order importers. Unfortunately the

FDA is violating the letter and spirit of this law. I discuss this matter further,

below.) When approached on this disparate and illogical treatment of mail orders,

the FDA responds that all imports of FDA-approved drugs are technically illegal.

Again, while I am not convinced this is the case, this argument, if true, would also

destroy the FDA’s unwritten policy of allowing FDA-approved drugs to be carried

across the border. That is, if FDA can use its discretion to allow approved drugs into

the United States if carried across the border, it surely ought to be able to use its

discretion to allow approved drugs if mailed across the border—given, again, the

FDA’s position that both types of imports are technically illegal.

In light of these flaws and inconsistencies, which only benefit Americans wealthy

enough to travel abroad, I am requesting that your Department oversee an immediate revision of FDA’s personal use policy. Our goal should be a clear and logical,

written regulatory program that allows consumers access to imported U.S.-approved

drugs, whether those consumers live in San Diego or Kenosha. Given the FDA’s apparently broad discretion in these matters, why not have a policy that makes sense

for all Americans? I would love to sit down with you to discuss how this might work.

Warning Letters

Another reason I believe the FDA’s personal use policy is fatally flawed is the immense difficulty I have had forcing the Agency to give mail order importers a simple

explanation of what the FDA believes the importers are doing wrong. I mentioned

earlier the Drug Import Fairness Act, which required the FDA to give mail order

importers due process. Simply put, the law directs the FDA to advise mail order importers, in detail, why the particular import appeared to violate the law,

The FDA has defied this law and is now holding up mail order shipments from

Canada and sending intimidating detention letters to American consumers stating

that the drugs, such as Lipitor, appear to be unapproved and misbranded and therefore are refused admission—and may be destroyed. While the letters state that the

consumer is not being accused of breaking the law, they state that the package appears to be unapproved and they threaten the consumer that future shipments may

be denied entry thus sounding very much like the warning letters the FDA was

sending before. (Indeed, under the definitions section of the Drug Import Fairness

Act, these letters are, in fact, warning letters.)

But what’s most disturbing about the new letters is that, while some of them cite

which section of the law the packages appear to violate (the Drug Import Fairness

Act requires this of all such letters), the letters do not give reasons, based on the

facts of the particular package, for making that determination. This is a patent violation of the Drug Import Fairness Act (section 746(g)(1)(C)). It also violates longestablished case law (L&M Industries v. Kenter, 458 F.2d. 968, 970-71 (2nd Cir.

1972)).

I request that your Department examine the FDA’s current policy regarding letters to individuals mail ordering prescription drugs. Specifically, I would like to

know what the Agency will be doing to fully comply with the Drug Import Fairness

Act’s requirement that such letters ‘‘state the reasons underlying the [FDA’s]’’ decision that an import appears to be unapproved-including an explanation of the facts

involved in each specific imported package.

Our own FDA should not stand between sick seniors, living on fixed incomes, and

lower drug prices. Basic fairness won’t tolerate it. And neither will the Congress.

Thank you for your attention to both of these important matters.

Sincerely,

GIL GUTKNECHT

Member of Congress

Mr. GREENWOOD. The Chair welcomes our first witnesses, the

Reverend and Mrs. Edwin Rode. We thank you very much for coming to Washington, and we thank you very much for your patience.

As I explained to you last night, you have to listen to us first,

and then we will listen to you. We are very pleased that you have

joined us. As we mentioned to you last night, you are aware that

the committee is holding an investigative hearing, and in doing so,

we have had the practice of taking testimony under oath.

Do either of you have any objections to testifying under oath?

Seeing that you do not, the Chair also advises you that under the

rules of the committee that you are entitled to be advised by counsel. Do you desire to be advised by counsel during your testimony?

24

Mr. RODE. No.

Mr. GREENWOOD. Seeing your response in the negative, would

you please rise then and raise your right hand, and will swear you

in.

[Witnesses sworn.]

Mr. GREENWOOD. You are now under oath, and you may give

your testimony. You are recognized for 5 minutes, but you may testify for as long as you care to. Thank you.

TESTIMONY OF REV. EDWIN AND HELEN RODE

Mrs. RODE. Good morning, Chairman Greenwood, and good

morning to the rest of the committee. My name is Helen Rode, and

this is my husband, Ed Rode. We are grateful for the opportunity

to speak before this committee to share what has happened to our

family.

Our son, Todd, was found dead in his apartment on November

16, 1999. We are convinced that his death was caused by drugs

that he obtained from a foreign country through the Internet. I

would like to tell you a little bit about our family. Todd’s death has

changed the lives of all of us.

My husband is a retired United Methodist pastor. I am a wife,

a mother, and a homemaker. We moved from the Chicago area to

Athens, Georgia in 1992 when we retired.

Our daughter, Lisa, is a registered nurse. She and her husband,

Kevin, live in a suburb of Chicago with their children, Nathan,

Neal, and Claire. Our younger son, Curt, lives in Knoxville and

teaches in the English Department at the University of Tennessee.

Todd was our middle child. Until the age of 15, he was a high

achieving child, interested in music and sports. In high school, he

began exhibiting the behavior of teenage depression syndrome. He

battled this illness the rest of his life.

Todd had the heart and soul of a musician and wanted to make

this his major in college. However, he was drawn to the field of

psychology and counseling. He graduated magna cum laude with a

major in psychology and a minor in music. The faculty named him

the outstanding senior in the Psychology Department.

Todd worked for several years as a counselor with young people

in a hospital setting. Discovering that this was not good for his own

mental health, he took a post-graduate course at DePaul University in Chicago to become a computer programmer.

He worked in this field for a number of years, constantly fighting

bouts of depression and anxiety. Periodically, he would check himself into the hospital, but become anxious about insurance coverage

and check himself out.

At the time of his death, Todd was on disability leave and losing

his job and health insurance. During this time he was under the

care of a psychiatrist and counselor at a mental health facility in

Chicago.

In October 1999, when no one in the family could reach Todd by

phone or E-mail, we became seriously alarmed. We assumed that

he had checked himself into a hospital without telling us, or was

too sick to be in communication with anyone.

My husband called the Chicago Police Department on November

16, 1999 and they, along with his sister, went into Todd’s apartVerDate 11-MAY-2000 15:01 Oct 18, 2001 Jkt 010199 PO 00000 Frm 00028 Fmt 6633 Sfmt 6602 E:\HEARINGS\73737 pfrm07 PsN: 73737
25

ment and discovered that he had died. When our daughter went to

his apartment, she gathered all the medications she could find.

It was at this time that we learned that Todd had ordered controlled drugs from a pharmacy and doctor in another country. In

going through Todd’s records, we could trace the Internet source,

the medications ordered, the date they were ordered, and how he

paid for them.

These drugs were Venlafaxine, Propoxyphene, and Codeine. All

of these drugs are controlled substances, which were secured from

an overseas pharmacy without any safeguards. The report of Chicago’s Medical Examiner and Coroner stated that Todd’s death was

due to an accidental massive overdose of these drugs.

After a few weeks of numbing grief, I began to feel intense anger

that someone as ill as our son could be tempted to obtain medication that required nothing but filling out a questionnaire on the

Internet.

We tried to channel that anger into action. We sent a letter to

every elected official and agency that we could think of. We were

pleased that we received replies from most of these letters.

Agents from the FDA and Customs Departments in Atlanta came

to our home in Athens on two different occasions. We gave copies

of all our information to them. Sometime later, they contacted their

counterparts in Chicago, who then visited our daughter and took

from her the medications that Todd had received from the foreign

pharmacy.

This all happened a number of months ago, and we had heard

nothing more until a counsel from Chairman Greenwood’s committee called us. He told us about this hearing concerning Internet

use to order drugs from foreign countries.

We then sent to him all of our information regarding Todd’s use

of the Internet to obtain these drugs. It was then asked by this

counsel if we would be willing to speak to this panel and tell our

story. We agreed to do this, knowing that other very ill people and

their families are suffering and grieving like we are.

This grief extends beyond our immediate family. Todd’s aunts,

uncles, cousins, friends, nephews and niece have felt Todd’s death

very deeply. Todd will never hear Nathan play saxophone in the

middle school jazz band. He will not see Neal’s skills playing first

base. He will never read Clare’s or Curt’s poetry.

He will not grow into middle and old age with his brother and

sister. And, we, his parents, have lost a child of our hearts. We are

left to grieve, not only for the struggles that he constantly faced in

his life, but also the horrifying circumstances of his death.

Our plea to you is to do whatever is possible to enact legislation

and allocate funds to the appropriate agencies to control and eliminate this dangerous use of the Internet. We want to thank you for

permission to tell our story before this committee.

[The prepared statement of Helen Rode follows:]

PREPARED STATEMENT OF HELEN RODE

Good Morning.

My name is Helen Rode. This is my husband Ed Rode.

We are grateful for this opportunity to speak before this Committee—to share

what has happened to our family. Our son, Todd, was found dead in his apartment

26

on November 16th of 1999. We are convinced that his death was caused by drugs

that he obtained from a foreign country through the internet.

I would like to tell you a little bit about our family. Todd’s death has changed

the lives of all of us.

My husband is a retired United Methodist pastor. I am a wife, a mother, and

homemaker. We moved from the Chicago area to Athens, GA in 1992 when we retired.

Our daughter, Lisa, is a registered nurse. She and her husband, Kevin, live in

a suburb of Chicago with their children, Nathan, Neal, and Claire.

Our younger son, Curt, lives in Knoxville and teaches in the English Department

at the University of Tennessee.

Todd was our middle child. Until the age of 15, he was a high achieving child,

interested in music and sports. In High School, he began exhibiting the behavior

of teen-age depression syndrome. He battled this illness the rest of his life.

Todd had the heart and soul of a musician and wanted to make this his major

in college. However, he was drawn to the field of psychology and counseling. He

graduated magna cum laude with a major in psychology and a minor in music. The

faculty named him the outstanding Senior in the Psychology Department.

Todd worked for several years as a counselor with young people in a hospital setting. Discovering that this was not good for his own mental health, he took a postgraduate course at De Paul University in Chicago to become a computer programmer. He worked in this field for a number of years, constantly fighting bouts

of depression and anxiety. Periodically, he would check himself into the hospital, but

become anxious about insurance coverage and check himself out.

At the time of his death, Todd was on disability leave and losing his job and

health insurance. During this time he was under the care of a psychiatrist and

counselor at a Mental Health facility in Chicago.

In October of 1999, when no one in the family could reach Todd by phone or

Email, we became seriously alarmed.

We assumed that he had checked himself into a hospital without telling us or was

too sick to be in communication with anyone.

My husband called the Chicago police department on November 16, 1999 and

they, along with his sister, went into Todd’s apartment and discovered that he had

died.

When our daughter went to his apartment, she gathered all the medications she

could find. It was at this time that we learned that Todd had ordered controlled

drugs from a pharmacy and doctor in another country.

In going through Todd’s records we could trace the internet source, the medications ordered, the date they were ordered and how he paid for them. These drugs

were Venlafaxine, Propoxyphene, and Codeine. All of these drugs are controlled substances which were secured from an overseas pharmacy without any safeguards.

The report of Chicago’s Medical Examiner and Coroner stated that Todd’s death

was due to a massive over-dose of these drugs.

After a few weeks of numbing grief, I began to feel intense anger that someone

as ill as our son could be tempted to obtain medication from a source that required

nothing but filling out a questionnaire on the Internet.

We tried to channel that anger into action. We sent a letter to every elected official and agency that we could think of. We were pleased that we received replies

from most of the letters.

Agents from the FDA and Customs Departments in Atlanta visited us in Athens

on two different occasions. We gave copies of all of our information to them. Sometime later, they contacted their counterparts in Chicago who then visited our daughter and took from her the medications that Todd had received from the overseas

pharmacy.

This all happened a number of months ago, and we had heard nothing more until

a counsel from Chairman Greenwood’s committee called us. He told us about this

hearing concerning Internet use to order drugs from foreign countries. We then sent

to him all of our information regarding Todd’s use of the Internet to obtain drugs

from a foreign country. It was then asked by this counsel if we would be willing

to speak to this panel and tell our story. We agreed to do this, knowing that other

very ill people and their families are suffering and grieving like we are.

This grief extends beyond our immediate family. Todd’s aunts, uncles, cousins,

friends, nephews and niece have felt Todd’s death very deeply.

Todd will never hear Nathan play saxophone in the middle school jazz band. He

will not see Neal’s skills playing first base in baseball. He will never read Claire’s

or Curt’s poetry.

He will not grow into middle and old age with his brother and sister. And, we,

his parents have lost a child of our hearts. We are left to grieve, not only for the

27

struggles he constantly faced in his life, but, also, the horrifying circumstances of

his death.

Our plea to you is to do whatever is possible to enact legislation and allocate

funds to the appropriate agencies to control and eliminate Internet access to drugs.

We want to thank you for permission to tell our story before this committee.

Mr. GREENWOOD. Thank you, Mrs. Rode, for your testimony. We

know how difficult this is for both of you. We are indeed sorry for

your loss. Your son had prescriptions, or is it correct that your son

had prescriptions at one point? Both of you can share that microphone and either one of you can respond to the questions.

Mrs. RODE. All right.

Mr. GREENWOOD. Is it the case that your son at one point in the

course of his psychiatric care had prescriptions for certain drugs;

is that correct?

Mr. RODE. Yes, sir, that’s true.

Mr. GREENWOOD. Do you know what they were?

Mr. RODE. At this point, I do not. Todd was very secretive about

that. He kept a lot of this information to himself. I think he was

embarrassed by his sickness, and at that point was a very private

person.

Mr. GREENWOOD. So you are not sure if he had prescriptions

prior to this for drugs?

Mr. RODE. I was sure that he did, yes, because he was under psychiatric care.

Mr. GREENWOOD. So you assume so, although I understand from

talking to you last night that for reasons of confidentiality the psychiatrist is not willing to share or not able to share that information?

Mr. RODE. Well, we have of course talked to the—not to the psychiatrist, but talked to the office of the psychiatrist, and we never

did talk to the psychiatrist. And we were told at that time that we

were not by law permitted to get the information that we requested.

That the only people that could get that information was the

FDA and a subpoena.

Mr. GREENWOOD. Okay. But he certainly had no prescriptions for

the drugs that he obtained?

Mr. RODE. That’s correct. That is absolutely correct.

Mrs. GREENWOOD. And he did not use a prescription to obtain

those drugs. And how many different drugs were found in his body?

Mr. RODE. Three.

Mr. GREENWOOD. So Todd purchased three drugs and there was

no one able to monitor whether he should be taking any or all of

those drug?

Mr. RODE. That is correct, sir.

Mr. GREENWOOD. And no doctor, no psychiatrist, no pharmacist

to monitor that, let alone to describe to him the interactions and

the dangers of taking those drugs in certain dosages.

And I would assume that we don’t know yet whether the dosage,

the actual dosage of the pills that he was taking, was equal to what

was written on the label; is that right?

Mr. RODE. I think that is correct. Todd was pretty astute with

understanding drugs, but I think that we—we assume that the

drugs that he received from overseas were probably heavier dosages, and were not his proper dosage, even though on the informaVerDate 11-MAY-2000 15:01 Oct 18, 2001 Jkt 010199 PO 00000 Frm 00031 Fmt 6633 Sfmt 6602 E:\HEARINGS\73737 pfrm07 PsN: 73737
28

tion that we received, in which the comptroller for this particular

group has—there was a dosage listed, but whether it was the actual dosage that he received, we are not sure of.

Mr. GREENWOOD. Well, from what we have seen, when one orders prescription drugs over the Internet from foreign countries,

there is no way of knowing what the drug that is actually ingested

contains.

And there is no way of knowing what is in it, or what the dosage

is, because the labels are often counterfeit, and the container is

counterfeit, and that is of course that we are trying to get at here.

Mr. RODE. This hearing has opened up a new aspect to us of the

whole problem.

Mr. GREENWOOD. Right. Now, all of this information was shared

with the Food and Drug Administration how long ago?

Mrs. RODE. I am not sure when they first came to our house. We

sent our letter out to these agencies in July of last year,and within

a few weeks, I think we heard. I am not really sure when they first

contacted us.

Mr. GREENWOOD. Have they given you any indication to date as

to where their investigation has led them?

Mrs. RODE. No, we do not know that.

Mr. RODE. Prior to our coming here, we were in Chicago to visit

our daughter, and a person from Customs called and warned us not

to give the foreign country name or the pharmacist’s name.

Mr. GREENWOOD. Because there is an ongoing criminal

investigation——

Mr. RODE. Yes, sir, that is correct.

Mr. GREENWOOD. [continuing] underway, and hopefully we will

find the source of the drugs and prosecute the perpetrators if there

is evidence of criminal wrongdoing. I would yield back my time and

recognize for purposes of inquiry the gentleman from Florida, Mr.

Deutsch.

Mr. DEUTSCH. Thank you very much, and again, I know how

painful it must be for you to be here, and again thank you for really sharing this with us. I think all of us are hoping that by this

hearing, and by our actions, and by your actions, we can at least

attempt to make sure that no other parents in America would ever

experience what you have experienced.

Do you have any specific suggestions of—I am asking maybe beyond, but any recommendations of what you think Congress should

be doing to prevent these kinds of tragedies in the future?

Mrs. RODE. Well, I think that the Oversight Committee—we

know nothing about all of this, let me assure you. But I feel that

it has to be approached from several different angles.

I think certainly the Legislature needs to be involved with the

laws, and see that the laws are carried out. If we need more laws,

and then the appropriate agencies, then we need to do what is

needed to be done.

Mr. RODE. They need to be funded in order to be able to do the

things that are required by the law. It is just a horrendous problem. The Customs man, when he first came out, he said that most

of the Customs things came through Memphis, and he said it was

just impossible to investigate all of them.

29

We were kind of surprised that Customs and the FDA came together. They both came together out to visit us twice.

Mr. DEUTSCH. Now, have you heard from any of the parents or

any of the relatives of people that this has happened to also?

Mr. RODE. No, sir, we have not; or from Customs or the FDA either.

Mr. DEUTSCH. I thank you, and I yield back the balance of my

time.

Mr. GREENWOOD. I recognize Mr. Stupak for questioning.

Mr. STUPAK. Thank you, Mr. Chairman. I am sorry to hear about

your loss. Let me just leave it at that. You indicated that your son

was taking heavier dosages than what he should have been, and

that is what you assumed, correct?

Mr. RODE. No, this is what the coroner and the medical examiner’s report told us.

Mr. Stupak. Was it a specific drug then that caused this?

Mr. RODE. We did name the drugs in our presentation.

Mr. STUPAK. Is that drug obtainable in the United States?

Mr. RODE. I am not familiar with drugs, and so I can’t answer

your question. I’m sorry.

Mr. STUPAK. When we introduced our legislation last year, we

asked for simple things like the pharmacist, who is supposed to

be—when you go on the Internet, and you order your prescription,

there has to be a licensed pharmacist who would display his license

and certificate from the State where they are practicing in.

We asked that there be a physical location, where you can know

whether it is in Menominee, Michigan, or Chicago, Illinois, or

wherever; as opposed to using some bogus address, and you know

it is really back in Thailand or China where these drugs are being

produced.

And then we put penalties in there if they did not have these two

simple requirements; a licensed physician or pharmacist, excuse

me, and a physical location. And we were accused of trying to stifle

freedom of speech under the Internet, and trying to regulate the

Internet.

Do you think that that is asking for too much of these web pharmacy companies to at least display the license of their pharmacist

and a physical location so you will at least know where they drugs

are coming from?

Mr. RODE. I would hope that that would be essential. I really do.

Mr. STUPAK. I understand that there is some restrictions on what

we can say because of an ongoing investigation, but you said something in response to a question from the Chairman about some information that you would like to obtain. And is that information

from the FDA? Who is that that you would like to obtain some information from?

Mr. RODE. We were told by the counsel that—in fact, we have a

session scheduled with Customs later in the day. We just want to

know what is being done. That’s all. We have had no knowledge

at all, and we have been told nothing as to what is being done. And

coming back to your previous question—— Mr. STUPAK. Before you do that, if there are some questions that

you need to know after you meet with counsel or the FDA, and

they don’t tell you, would you let us know? Would you let us know?

30

Mr. RODE. We will inform you; yes, sir, we will. We want to cooperate in every way we can. That’s why we are here.

Mr. STUPAK. This is the Oversight Committee, and we have extra

power that we can get some of these things questioned. We are not

trying to stifle an investigation, but you certainly have a right to

know.

Mr. RODE. I understand.

Mr. STUPAK. You had another question?

Mr. RODE. Well, coming back to your question, I think the Freedom of Information is important, but I think that there are some

things that just can’t be put out, you know? I think there should

be some restrictions.

And I don’t feel telling the information that you were suggesting

about the Internet and the pharmacy, and the pharmaceutical

number or whatever it is, I feel that information should be very

vital to helping solve this kind of problem.

Mr. STUPAK. Well, when we started looking at this almost 18

months ago, some of us—there were maybe a dozen or two dozen

of these pharmaceutical sites, and when we had our hearing last

year, it was like 300 or 400, and now I think we are closer to a

thousand.

And we introduced our legislation, and we were told not to

worry, and that the Internet community will police ourselves, and

we will take care of that. Obviously, they are not, and the number

of websites continue to explode. And as I said in my remarks, they

are very attractive when you think you are getting a good deal, and

you think you are getting the drugs that you want.

But as we have seen, whether it was L.A. or Dulles, it is anything but what you can imagine is coming through, and people are

consuming it. They have no idea. You know, we are still searching

for a direction.

And we have other cases like yours throughout this country, and

it is time that we do something together as a Congress and regulatory agencies in this country. That is what we rely upon them to

do for the American public, and to offer that simplest degree of protection, and obviously they are not doing it.

Mr. RODE. Thank you.

Mr. STUPAK. Thank you, Mr. Chairman, and I yield back.

Mr. GREENWOOD. The Chair thanks the gentleman, and recognizes the gentleman from Florida, Mr. Bilirakis.

Mr. BILIRAKIS. Thank you, Mr. Chairman. Reverend and Mrs.

Rode, I, too, offer my sympathy. As I was on the elevator, and I

don’t remember whether it was on the way up or the way back,

with Mr. Dingell, the Ranking Democrat, who sat over on the other

side, said Mike, we have got to do something about this. Well, yes,

I guess we do, but I don’t know what. This is the sort of thing that

we are going to be looking at over a period of time.

I am curious though. Let me ask you, and forgive me again for

bringing up Todd, but if there were warnings, educational statements. For example public service announcements, where the t.v.

studios are required to offer so much time.

In other words, if there were warnings out there, would Todd

still have gone forward? Forgive me, but is that a difficult question?

31

Mr. RODE. I think that is a hard question to answer, because

Todd’s circumstances were that he was chronically depressed, and

chronically depressed people don’t always make the wisest decisions at certain times. And I think that more needs to be done than

just warnings.

Mr. BILIRAKIS. Yes, and I am not disputing that. Maybe there is

a lack of education out there, in terms of the concerns. I knew

someone going through medical school in Australia, who befriended

my family, and I guess somebody said something about a bad stomach, and the next thing I knew, we received this stuff from China

in the mail that he made arrangements for.

So, those things take place. Well, you understand. I had a lot of

confidence in the gentleman, but I didn’t take it. But again I wasn’t

sure. So I wonder if that might be of some help from an immediate

standpoint.

Mr. RODE. I am sure that it will be, but it is not the total answer.

Mr. Bilirakis. No, it is not the total answer. All right. Thank you,

Mr. Chairman.

Mr. GREENWOOD. The Chair thanks the gentleman, and recognizes the gentlelady from Colorado for questioning.

Ms. DEGETTE. Thank you, Mr. Chairman. I just echo what everyone else has said, and let me say that part of the frustration that

this committee has had is the very nature of the Internet, and how

someone can go on a computer, and they find a site that says this

is a pharmacy, and order these drugs, and fill out a questionnaire,

and unlike a traditional pharmacy, which has a physical location,

the Internet doesn’t have that.

And so we are really stricken with a very high degree of uncertainty as to what should the laws that we pass say. But having

said that, I think you heard in my opening statement and others

that some of us are very frustrated that we keep having these

hearings, and these drugs keep coming in.

And people like your son are dying, and it seems that there is

an approach. Congressman Stupak and others have a bill, and I

just want you to know that we intend to redouble our efforts to

both enforce existing laws to stop this from coming into the country, and also to pass any news laws that we can.

But I think you have realized, and I think other families like

yours need to realize just passing a law banning this on the Internet is not going to immediately stop it, because it is hard to shut

down these sites.

Having said that doesn’t mean we shouldn’t try. And I guess I

would just ask you a simple question, which is don’t you think that

other families like yours, who maybe have not experienced a tragedy yet, knew of the dangers and risks, and knew of the regulatory

challenges, they would support any efforts Congress might make

both to enforce existing laws and to try to pass new laws?

Mrs. RODE. I certainly think so.

Mr. RODE. I would hope so.

Ms. DEGETTE. And I will yield the balance of my time to Congressman Stupak.

Mr. STUPAK. Thanks for yielding. In your statement here, we

have seen the drugs that your son was taking, and all of those

32

were controlled substances. Therefore, there should have been a

prescription. Do you know if with any of those containers there was

a prescription for him to receive these drugs?

Mr. RODE. What we picked up in his apartment, counsel has

that. So the prescriptions were listed.

Mr. STUPAK. Was there a prescription with the packaging? You

see, underneath current law, and I am sure that someone will correct me if I am wrong, but under current law, he could not have

even received them unless there was a valid prescription with that

package, because you have to have a prescription with it. That’s

what I am asking.

Mr. RODE. Rephrase this question. I am having a little trouble

with it.

Mr. STUPAK. Sure. In order for a drug to be received through the

mail in the United States, especially a controlled substance, there

has to be a number of requirements if it is going to come through

the m ail, and that’s where he got the drugs, through the mail,

right?

Mr. RODE. That is our assumption, yes, sir.

Mr. STUPAK. Okay. One of them is that there has to be a prescription if it is a controlled substance.

Mr. RODE. Well, we did not find anything like that.

Mr. STUPAK. And technically you can’t even ship it without a

valid prescription and that is what is getting flooded in this country.

Mr. RODE. Well, this is what we were told by Customs.

Mr. Stupak. Okay.

Ms. DEGETTE. I yield back, Mr. Chairman.

Mr. GREENWOOD. The Chair thanks the gentlelady, and recognizes for 5 minutes for inquiry the gentleman, Mr. Whitfield.

Mr. WHITFIELD. Thank you, Mr. Chairman, and thank you all for

coming today to help us examine what we might be able to do to

alleviate problems like this in the future. I just have a couple of

questions.

One, would you repeat for me the drugs that were involved in

this instance? I think you were pronouncing them, but I wasn’t

sure. You said one was codeine?

Mr. RODE. One was codeine.

Mrs. RODE. The drugs that we were mentioned were the ones

that were named on the death certificate as being having toxic

doses, the ones that I mentioned earlier.

Mr. WHITFIELD. Okay. And do you have the spelling of those?

Mrs. RODE. Yes. I can spell it better than I can pronounce it. It

is b-e-n-l-a-f-a-x-i-n-e.

Mr. WHITFIELD. And what was the other?

Mrs. RODE. P-r-o-p-o-x-y-p-h-e-n-e. And the third substance that

was found to be toxic was codeine.

Mr. WHITFIELD. Okay. And all of those were listed on Todd’s

death certificate?

Mrs. RODE. On Todd’s death certificate, yes.

Mr. WHITFIELD. And how old was Todd?

Mrs. RODE. Thirty-eight.

Mr. WHITFIELD. Okay. And you know from which country this

came, but you have been requested not to talk about it?

33

Mr. RODE. That is correct.

Mrs. RODE. All this information has been given though to the

agencies.

Mr. WHITFIELD. Okay. And I think they will be here today, and

so I will yield back the balance of my time, Mr. Chairman.

Mr. GREENWOOD. The Chair thanks the gentleman for his information. The common names of two of those drugs are Darvon and

Zanax. The Chair recognizes for inquiry for 5 minutes the gentleman from Oklahoma, Mr. Largent.

The gentleman passes. Mr. Bass. The gentleman passes. In that

case, we have completed our inquiry. Again, Reverend and Mrs.

Rode, thank you so very much for coming to Washington to testify,

and you can be assured that this committee is going to work very,

very hard to come up with a solution so that this doesn’t happen

to the parents of other Americans. Thank you very much for coming.

Mrs. RODE. Thank you very much.

Mr. RODE. We appreciate all you have done, sir.

Mr. GREENWOOD. You are excused. The Chair then calls forward

the second panel, Dr. Donald Vereen, Office of the National Drug

Control Policy; Ms. Laura Nagel, of the Drug Enforcement Administration; Mr. William Hubbard of the Food and Drug Administration; Ms. Elizabeth Durant, of the U.S. Customs Service; Dr. Alan

I. Leshner, Director of the National Institute on Drug Abuse; and

Landon Gibbs, First Sergeant, of the Virginia State Police. Will you

please come forward and be seated.

I thank the witnesses for their presence. You are aware that the

committee is holding an investigative hearing, and when doing so,

we have had the practice of taking testimony under oath. Do any

of you have objections to testifying under oath?

Seeing no objections, the Chair then advises you that under the

rules of the House, and of the committee, you are entitled to be advised by counsel. Do you desire to be advised by counsel during

your testimony?

Seeing no such interest, the Chair asks if you please rise and

raise our right hand, and I will swear you in.

[Witnesses sworn.]

Mr. GREENWOOD. Please be seated, and you are now under oath.

And we will recognize first for testimony Dr. Vereen. Thank you,

sir. You are recognized for 5 minutes.

TESTIMONY OF DONALD R. VEREEN, JR., DEPUTY DIRECTOR,

OFFICE OF NATIONAL DRUG CONTROL POLICY; LAURA M.

NAGEL, DEPUTY ASSISTANT ADMINISTRATOR, OFFICE OF

DIVERSION CONTROL, DRUG ENFORCEMENT ADMINISTRATION; ELIZABETH G. DURANT, EXECUTIVE DIRECTOR OF

TRADE PROGRAMS, U.S. CUSTOMS SERVICE; WILLIAM K.

HUBBARD, SENIOR ASSOCIATE COMMISSIONER FOR POLICY,

PLANNING AND LEGISLATION, FOOD AND DRUG ADMINISTRATION; ALAN I. LESHNER, DIRECTOR, NATIONAL INSTITUTE ON DRUG ABUSE; AND LANDON S. GIBBS, FIRST SERGEANT, VIRGINIA STATE POLICE

Mr. VEREEN. Good morning. Chairman Greenwood, Ranking

Member Deutsch, and distinguished members of the subcommittee,

34

my name is Dr. Donald Vereen, and I have the distinct honor of

coming before the subcommittee today as the Deputy Director of

the Office of National Drug Control Policy.

First, as the father of two children, I want to extend my heartfelt condolences to Reverend and Mrs. Edwin Rode on the loss of

their son, Todd. Drug prevention, education, and treatment for

youth and adults must remain the heart and soul of our counterdrug efforts in the Federal, State, and local levels of drug control.

On May 10, President Bush stated that the most effective way

to reduce the supply of drugs in America is to reduce the demand

for drugs in America. Therefore, this administration will focus unprecedented attention on the demand side of this problem. We recognize that the most important work to reduce drug use is done in

America’s living rooms and classrooms, churches, synagogues,

mosques, the work place, and in our neighborhoods.

ONDCP is committed to continuing to improve our drug prevention efforts to avoid such tragedies in the future. I want to thank

the subcommittee for the opportunity to testify on the subject of

personal importation of controlled substances.

ONDCP greatly appreciates your continuing interest in this public health and safety issues associated with the importation of

pharmaceuticals. I realize that my time is limited, and I will keep

my opening remarks brief, and focused on ONDCP’s coordinating

role in this issue. I respectfully request that the subcommittee

enter my written statement into the record.

Mr. GREENWOOD. That will be done, sir.

Mr. VEREEN. ONDCP recently began to assist in coordinating a

response to the challenges posed by the personal importation of

controlled substances across the land border of the United States.

Although ONDCP is well suited to provide assistance on issues

transcending the jurisdictional boundaries of several departments

and agencies, we recognize the institutional expertise that resides

in other agencies that are represented here today.

The DEA, the FDA, the Customs Service, and NIDA, the National Institute on Drug Abuse, are working closely together to ensure that citizens of our country can continue to rely on the guidelines established for using controlled substances in a manner that

maximizes health, safety, and efficacy.

The solution to these challenges is complex. We must consider

the interaction among a variety of statutes, regulations, enforcement practices, research, and citizen awareness.

Let me be clear that despite the challenges, the DEA and FDA

have assured us that they will continue to provide the U.S. Customs Service with the guidance that they require to carry out their

mission relating to the importation of pharmaceuticals effectively,

and with limited inconvenience to licit commerce and personal

travel.

Since becoming involved in assisting and coordinating a U.S. response to the personal importation of personal-use pharmaceuticals, and in particular controlled substances, ONDCP last

month convened four separate meetings with the DEA, FDA, U.S.

Customs Service, and NIDA.

We have made substantial progress, and I believe that we are

moving forward toward forms of resolution. We know that there is

35

some diversion of legally produced pharmaceutical controlled substances in the U.S., and that drug users and traffickers also obtain

these controlled substances from other places. For example, Mexican pharmacies.

Both the U.S. and Mexican governments understand the issues

and will continue to work together to address them. In fact, the

DEA has two diversion investigators assigned to Mexico City— where they are responsible for coordinating bilateral regulatory efforts in any investigations of this sort of diversion.

Turning to the science, we are fortunate to have NIDA providing

the scientific basis for our policies. In fact, I would like to commend

NIDA for the major initiative that it recently launched on prescription drug abuse and misuse.

Unfortunately, there are a number of factors that indicate prescription drug use and abuse are increasing. I will give an illustrative example of this research, and I am certain that Dr. Leshner

will address this issue more completely in his remarks.

In 1999, more than 9 million Americans, age 12 and older, reported past year use of prescription drugs for non-medical reasons.

That is from the National Household Survey from SAMHSA at

HHS. Of these 9 million people, one-quarter or more misused prescription drugs for the first time the year prior to the survey.

Furthermore, of these 9 million people, an estimated 4 million reported using prescription drugs for non-medical purposes in the

month prior to the survey. So, in conclusion, developing policy and

implementing procedures to manage effectively the use and movement of controlled substances requires a holistic, long-term, and research-based approach.

ONDCP is confident that the agencies involved will continue to

make steady and significant progress on all of those fronts. Mr.

Chairman, I am pleased to answer any questions at this time, or

whenever it is appropriate.

[The prepared statement of Donald R. Vereen follows:]

PREPARED STATEMENT OF DONALD R. VEREEN, JR., DEPUTY DIRECTOR, OFFICE OF

NATIONAL DRUG CONTROL POLICY

INTRODUCTION

On behalf of the Office of National Drug Control Policy (ONDCP), I want to thank

the Subcommittee for the opportunity to testify before you on the subject of personal

importation of controlled substances. Chairman Greenwood, Ranking Member

Deutsch, distinguished members of the Subcommittee, we greatly appreciate your

continuing interest in the public health and safety issues associated with the importation of pharmaceuticals. The critical oversight of this Subcommittee assists

ONDCP in its coordinating role in ensuring continuity and consistency in the Executive Department and agency efforts to provide a comprehensive response to the

issue of personal importation and potential diversion of controlled substances. This

comprehensive response is essential to our success in reducing drug use and its consequences in our nation. We know that there is no single solution that can effectively address this multifaceted challenge. Drug use prevention, treatment, and research; as well as law enforcement, protection of our borders, drug interdiction, and

international cooperation remain necessary components of our efforts.

COORDINATION ISSUES SURROUNDING THE PERSONAL IMPORTATION OF CONTROLLED

SUBSTANCES

As the Subcommittee is aware, ONDCP is a unique organization within the Executive Office of the President that has the dual mission of serving as the President’s

primary Executive Branch support for counter-drug policy and program oversight

while managing several diverse programmatic responsibilities. ONDCP’s policy role

36

consists primarily of developing national drug control policy, developing drug control

budget priorities, coordinating and overseeing the implementation of that policy,

and evaluating drug control programs to ensure that federal departments and agencies remain focused and coordinated for maximum efficiency and effectiveness.

ONDCP was recently asked to assist in coordinating a response to the challenges

posed by the personal importation of controlled substances across the land border

of the United States. ONDCP is particularly well-suited to provide such assistance,

as this issue transcends the typical jurisdictional boundaries of one department or

agency. However, ONDCP recognizes the great institutional expertise that resides

in the other agencies represented today. ONDCP takes great pride in the fact that

the Drug Enforcement Administration (DEA), the Food and Drug Administration

(FDA), the United States Customs Service (USCS), and the National Institute on

Drug Abuse (NIDA) are working closely together to ensure the citizens of our country can continue to rely on the guidelines established for using controlled substances

in a manner that maximizes health, safety, and efficacy.

ONDCP is committed to supporting our inter-agency counterparts in their efforts

to implement a system with respect to the import of controlled substances that

draws the appropriate balances among the need to prevent diversion, promote public

health and safety by permitting travelers to have the pharmaceutical controlled substances they need, and the need for straightforward standards for Customs to apply

at our busy ports of entry. Clearly, the solution to these challenges, is complex; it

involves a variety of statutes, regulations, enforcement practices, research, and citizen awareness. As with any complex, multi-jurisdictional solution to a public health

and safety issue, the perfect solution will not be conceived, or implemented overnight. There is no silver bullet approach; all affected departments and agencies

must bring their own expertise and authorities to bear if we are to succeed. Recognizing that ONDCP only recently became involved in this coordination, the DEA

and FDA have advised us that they will continue to provide the USCS with the

guidance they require to carry out their mission relating to the importation of pharmaceuticals effectively and with limited inconvenience to licit commerce and personal travel. Clear guidance is essential if we expect Customs officials to continue

their efforts, which typically process 1.3 million passengers and nearly 350,000 vehicles at ports and border crossings across the United States each and every day of

the year.

The cross-border diversion of pharmaceutical controlled substances obviously has

an international component. Some diversion of foreign produced pharmaceutical controlled substances involves U.S. drug users or traffickers who obtain controlled substance pharmaceuticals, including Rohypnol and OxyContin, from Mexican pharmacies. The U.S. government highlighted the need to better control the movement

of prescription drugs during the April 2-3, 2001, U.S/Mexico Senior Law Enforcement Plenary. The Mexican government understands the issues and agreed to address them, although they have not yet presented a specific course of action. We will

continue to follow-up with them. DEA has two diversion investigators assigned to

Mexico City where they are responsible for coordinating bilateral regulatory efforts

and any investigations of this sort of diversion.

We cannot forget that the basis for our involvement is preserving the safety of

our citizens. In order to maintain credibility with those we seek to protect, the approaches we employ must be rational and research-based. We are fortunate to have

NIDA providing the scientific basis for our policies. In fact, I would like to commend

NIDA for the major initiative it recently launched on prescription drug abuse and

misuse, resulting in a Research Report on Prescription Drugs Abuse and Addiction.

NIDA should also be recognized for its ability to translate its findings into clear,

concise messages which it disseminates to professionals and the general public

alike.

Unfortunately, there are a number of factors that indicate prescription drug use

and abuse are increasing:

• In 1999, more than nine million Americans aged 12 and older reported past year

use of prescription drugs for non-medical reasons. (National Household Survey

on Drug Abuse)

• Of those nine million people, one quarter or more misused prescription drugs for

the first time the year prior to the survey.

• Furthermore, of those nine million people, an estimated 4 million reported using

prescription drugs for non-medical purposes in the month prior to the survey.

• NIDA’s Community Epidemiology Work Group which monitors 21 major U.S. metropolitan areas for community-level drug use and abuse trends, also reports a

general increase in abuse of selected prescription drugs in several cities in recent years.

37

CONCLUSION

Developing policy and implementing programs and procedures to manage effectively the use and movement of controlled substances requires a holistic, long-term,

and research-based approach. While we cannot expect to resolve these challenges

overnight, we can and will continue to make steady and significant progress on all

fronts. Since becoming involved in this issue, ONDCP has convened several interagency meetings to identify the myriad of issues involved in maximizing the effectiveness of our policy concerning the personal importation of controlled substances

across the U.S. land borders. ONDCP will remain an active participant in the decision-making and implementation processes.

We look to this Subcommittee, and indeed the entire Congress, to continue providing bipartisan leadership in this effort. ONDCP is committed to working within

the Executive Branch, as well as with Congress, state and local governments, international participants, and private citizens to reduce drug use and its consequences

in our nation.

Mr. GREENWOOD. The Chair thanks the gentleman and we will

hear from each of our witnesses, and then begin the questioning.

Ms. Nagel.

TESTIMONY OF LAURA M. NAGEL

Ms. NAGEL. Chairman Greenwood, Ranking Member Deutsch,

and other members of the subcommittee, I would like to thank you

for the opportunity to address the subcommittee regarding current

Federal law and DEA regulations which allow for the importation

of controlled substances under the personal medical use exemption.

I would also like to extend my personal condolences to the Rode

family. Mr. Chairman, on behalf of Administrator Marshall, I

would like to thank the subcommittee for its interest and support

in assisting the DEA in carrying out our mission of enforcing the

Nation’s drug laws.

The U.S. is party to two international treaties which control the

international trade in licit narcotic and psychotropic substances:

The United Nations Single Convention on Narcotics of 1961; and

the United Nations Convention on Psychotropic Substances of

1971.

The DEA is designated as the U.S. competent authority for ensuring the U.S. meets its obligations under these treaties. A critical

obligation is our regulation and control of the import and export of

licit narcotic and psychotropic substances.

The U.S. law pertaining to licit controlled substances is contained in the Controlled Substances Act of 1970. Enforcement of

the CSA is the responsibility of the DEA. The FDA also plays a

critical role in regard to controlled substances.

As the Federal authority for regulating all controlled and noncontrolled prescription drugs from a health and safety perspective,

the FDA’s authority is contained in the Food, Drug, and Cosmetic

Act.

Thus, controlled substances are subject to regulation by both the

FDA and DEA. Together, the FDCA and the CSA provide a framework to protect the health and safety of the American public, and

collaboratively, the DEA and FDA strive for consistent application

of Federal laws.

Additionally, the United States Customs Service is responsible

for enforcing the import and export provisions of the CSA at U.S.

land borders. The CSA contains a personal medical use exemption

to allow international travelers, both U.S. citizens and others, to

38

leave and enter the U.S. with controlled substances for their personal legitimate medical use.

This exemption is consistent with the 1971 Convention on Psychotropic Substances. The treaty clearly seeks to provide a means

to allow international travelers to carry personal use quantities of

controlled substance medications while visiting foreign countries.

The CSA exemption does the same. However, neither the treaty

nor the U.S. statutes permit controlled substances to be imported

under the medical use provision via overnight courier, unaccompanied baggage, parcel service, U.S. or international mail.

Nor does the exemption permit one person to enter the U.S. with

controlled substances intended for the personal use of another person. The Controlled Substances Trafficking Prohibition Act was introduced in the U.S. House of Representatives on April 1, 1998, to

amend the medical use exemption.

It was signed into law by the President on November 10, 1998.

The Act addressed the fact that large quantities of controlled substances were being brought into the U.S. from Mexico by individuals misusing the exemption in order to divert pharmaceutical controlled substances into illicit channels.

The bill amended the Controlled Substances Act to prohibit any

U.S. resident from entering the U.S. with more than 50 dosage

units of a controlled substance through a land border crossing with

Mexico or Canada unless they could demonstrate they possessed a

valid prescription for the substance, and it was issued by a properly licensed U.S. physician.

This does not mean that any U.S. resident may enter the U.S.

with up to 50 dosage units of a controlled substance, no questions

asked. Rather, the resident must satisfy all the requirements set

forth in 21 CFR 1301.26.

This includes the requirement that the importation is authorized

or permitted under other Federal and State law. For example, if

there is evidence that the drugs are not for legitimate personal

medical use, and the same person makes repeated attempts over a

short period of time to import new packages of controlled substances for claimed personal medical use, or the person has a variety of different controlled substances under circumstances that are

indicative of diversion, the importation does not comply with either

9569a)(1), or the DEA regulations, and therefore must be disallowed.

Since the passage of the Act, the DEA has received information

from the U.S. Customs Service that indicates that individuals are

circumventing provisions of the personal medical use exemption.

We are currently considering ways of addressing this problem,

such as amending our regulation to provide the clarity and guidance that the Customs Service needs to develop a clear, concise,

and enforceable policy for its inspectors at the Nation’s borders.

Before concluding, I would like to thank my colleagues at the

FDA and U.S. Customs Service, and ONDCP for their cooperation

in addressing this very important issue. Finally, Mr. Chairman, I

think you and the members of the subcommittee for the opportunity to comment on this topic. I look forward to addressing any

questions that you may have.

[The prepared statement of Laura M. Nagel follows:]

39

PREPARED STATEMENT OF LAURA M. NAGEL, DEPUTY ASSISTANT ADMINISTRATOR, OFFICE OF DIVERSION CONTROL, DRUG ENFORCEMENT ADMINISTRATION

Chairman Greenwood, Ranking Member Deutsch, and other members of the Subcommittee, I would like to thank you for the opportunity to address this Subcommittee regarding current federal law and DEA regulations which allow for the

importation of controlled substances under the personal medical use exemption. Mr.

Chairman, on behalf of Administrator Marshall, I would like to thank the Subcommittee for its interest and support in assisting the Drug Enforcement Administration (DEA) to carry out our mission of enforcing the Nation’s drug laws.

The United States is a party to two international treaties which control the international trade in licit narcotic and psychotropic substances: the United Nations Single Convention on Narcotics (1961) and the United Nations Convention on Psychotropic Substances (1971). The DEA is designated as the U.S. competent authority

for ensuring that the United States meets its obligations under these treaties. A

critical obligation is DEA’s regulation and control of the import and export of licit

narcotic and psychotropic substances.

The U.S. law pertaining to licit controlled substances is contained in the Controlled Substances Act of 1970 (CSA). Enforcement of the CSA is the responsibility

of the DEA. The Food and Drug Administration (FDA) also plays a critical role with

regard to controlled substances. As the federal authority for regulating all controlled

and non-controlled prescription drugs from a health and safety perspective, the

FDA’s authority is contained in the Food, Drug and Cosmetic Act (FDCA). Thus,

controlled substances are subject to regulation by both the FDA and the DEA. Together, the FDCA and the CSA provide a framework to protect the health and safety

of the American public, and collaboratively, DEA and FDA strive for consistent application of federal laws. Additionally, the United States Customs Service is responsible for enforcing the import and export provisions of the CSA at U.S. land borders.

The CSA contains a personal medical use exemption to allow international travelers, both U.S. citizens and others, to enter and leave the U.S. with controlled substances for their legitimate personal medical use. Specifically, Section 956(a) of the

CSA, entitled ‘‘Exemption Authority, Individual Possessing Controlled Substance,’’

states that the ‘‘Attorney General may by regulation exempt from sections 952(a)

and (b), 953, 954 and 955 of this title any individual who has a controlled substance

(except substances in Schedule I) in his possession for his personal medical use, or

for administration to an animal accompanying him, if he lawfully obtained such substance and he makes a declaration (or gives such other notification) as the Attorney

General may by regulation require.’’

This exemption is consistent with the 1971 Convention on Psychotropic Substances. Article 4 (a) of the Convention states, with respect to psychotropic substances other than those in Schedule I, parties may permit: ‘‘The carrying by international travellers of small quantities of preparations for personal use; each Party

shall be entitled, however, to satisfy itself that these preparations have been lawfully obtained[.]’’ The official commentary to the treaty explains the purpose of this

provision: ‘‘[This provision] applies only to small quantities needed for personal use,

i.e. to such quantities as the traveller may require during his journey or voyage and

until he is able to provide himself with the medicine in question in the country of

destination . . . In view of the express provision that each Party (i.e. the countries of

transit and destination) is entitled to satisfy itself that the preparations have been

lawfully obtained, it would be useful to require the traveller to carry a medical prescription or in cases in which the prescription is withheld by the pharmacist, a duplicate or satisfactory copy of the prescription showing that the preparations have

been lawfully acquired.’’

Clearly, the treaty seeks to provide a means to allow international travelers to

carry personal use quantities of controlled substance medications while visiting foreign countries. The CSA exemption does the same; however, neither the treaty nor

U.S. statutes permit controlled substances to be imported under the personal medical use provision via overnight courier, unaccompanied baggage, parcel service, U.S.

or international mail. Nor does the exemption permit one person to enter or depart

the U.S. with controlled substances intended for the personal medical use of another

person.

As set forth in the DEA regulation on this issue, 21 CFR Section 1301.26, anyone

who seeks to import a controlled substance for personal medical use must satisfy

all of the following requirements:

(a) The controlled substance is in the original container in which it was dispensed

to the individual; and

(b) The individual makes a declaration to an appropriate official of the U.S. Customs

Service stating:

40

1) The controlled substance is possessed for his/her personal use, or for an animal accompanying him/her;

2) The trade or chemical name and the symbol designating the schedule of the

controlled substance if it appears on the container label, or if such does not

appear on the label, the name and address of the pharmacy or practitioner

who dispensed the substance and the prescription number, if any; and

(c) The importation of the controlled substance for personal medical use is authorized or permitted under other Federal laws and state law.

The ‘‘Controlled Substances Trafficking Prohibition Act’’ (‘‘the Act’’) (Pub. L. 105-

357), was introduced in the U.S. House of Representatives on April 1, 1998, to

amend the Personal Medical Use Exemption. It was signed into law by the President on November 10, 1998. The Act addressed the fact that large quantities of controlled substances were being brought into the U.S. from Mexico by individuals misusing the exemption in order to divert pharmaceutical controlled substances into illicit channels. The bill amended the CSA to prohibit any U.S. resident from entering

the U.S. with more than 50 dosage units of a controlled substance through a land

border crossing with Mexico or Canada unless they demonstrate that they posses

a valid prescription for the substance, issued by a properly licensed U.S. physician.

This does not mean that any U.S. resident may enter the United States with up

to 50 dosage units of a particular controlled substance ‘‘no questions asked.’’ Rather,

the resident must satisfy all the requirements set forth in 21 CFR 1301.26. States

may impose additional requirements as well.

For example, if there is evidence that the drugs are not for legitimate personal

medical use (e.g., the same person has made repeated attempts over a short time

period to import new packages of controlled substances for claimed personal medical

use; or the person has a variety of different controlled substances under circumstances that are indicative of diversion), the importation does not comply either

with § 956(a)(1) nor the DEA regulations and must, therefore, be disallowed.

Furthermore, the requirement specified in 21 CFR 1301.26(c)—that the importation for personal medical use is authorized or permitted under other Federal laws

and state law—must be satisfied regardless whether the person importing is a U.S.

resident with no more than 50 dosage units of a controlled substance. For example,

if a person were seeking to import a particular controlled substance for personal

medical use, and the Food and Drug Administration advised the United States Customs Service that importation of the drug should be disallowed under the Food,

Drug, and Cosmetic Act, the importation would not comply with 21 CFR 1301.26(c)

and would have to be denied.

In the same way, if a person sought to import a controlled substance for purported

personal medical use when entering the United States in a border state that prohibits either the importation or possession of the controlled substance, such importation must be disallowed under 21 CFR 1301.26(c).

Since the passage of the Act, DEA has received information from the United

States Customs Service that indicates that individuals are circumventing provisions

of the Personal Medical Use Exemption by making repeated trips across the border

to obtain controlled substances. We are currently considering ways of addressing

this problem, such as amending DEA’s regulations to provide the clarity and guidance that the Customs Service needs to develop a clear, concise and enforceable policy for its inspectors at the Nation’s land borders.

Before concluding, I would like to thank my colleagues at the Food and Drug Administration, the United States Customs Service, and the Office of National Drug

Control Policy for their cooperation in addressing this very important issue. Finally,

Mr. Chairman, I thank you and the members of this Subcommittee for the opportunity to comment on this topic. I look forward to addressing any questions that you

may have at the appropriate time.

Mr. GREENWOOD. The Chair thanks the gentlelady for her testimony, and recognizes Mrs. Elizabeth Durant from the U.S. Customs Service for hers.

TESTIMONY OF ELIZABETH G. DURANT

Ms. DURANT. Mr. Chairman, and members of the committee,

thank you for this opportunity to testify. I man Elizabeth Durant,

Executive Director of Trade Programs at the U.S. Customs.

Today, I would like to discuss with you the U.S. Custom’s efforts

to address the rising trend of personal and bulk importations of

pharmaceutical products into the United States. I would also like

41

to extend our sympathy on behalf of the U.S. Customs to the Rode

family.

The Customs Service enforces over 400 regulations for more than

40 other Federal agencies at U.S. borders. These include the laws

that prohibit the importation of illegal or unapproved pharmaceuticals that fall under the jurisdiction of both the FDA and DEA.

The Customs Services is concerned with three particular aspects

of the importation of pharmaceuticals; those that are purchased

through the Internet and shipped through our international mail

facilities; those carried into the United States by individuals

transiting our land borders; and imports of bulk shipments of pharmaceuticals.

The growth of the Internet has spawned a wave of pharmaceutical purchases on-line. These purchases are most commonly

sent through the U.S. mail. We have Customs Inspectors stationed

at 14 international mail branches at postal facilities across the

United States to contend with these shipments.

Detecting prohibited pharmaceuticals among the tens of millions

of parcels passing through our mail facilities each year presents a

massive challenge. Our limited resources require a risk management approach with which we utilize advance intelligence, records

of past seizures, and other factors to locate packages that present

the most significant threat.

Customs laboratories also play a critical part in our investigations. Their expertise is world-renowned. We maintain fully

equipped labs at seven locations around the country. In addition,

we have three mobile labs to deploy at any point along our borders.

We are confident in the forensic capability of our labs to find discrepancies in shipments of bulk and finished pharmaceuticals. But

where we do require assistance, specifically from the Food and

Drug Administration, is in the establishment of effective national

standards for the interdiction of pharmaceuticals subject to FDA

laws.

The development of such standards is critical to customs. To that

end, we have been working closely with FDA to develop the needed

guidelines. We began by forming a joint task force to examine

pharmaceutical purchases shipped by U.S. mail.

The task force set up a pilot in Los Angeles at the Carson mail

facility. During that time the FDA detailed four full-time employees, who observed first-hand the daunting volume of packages

screened by Customs every day.

Over a period of 24 work days, the FDA detained a total of 721

parcels, or just over 93 percent of this amount were denied entry,

and only 44 were released. It is important to note that without the

presence of FDA inspectors, U.S. Customs would have had to detain 3,000 packages per week, or about 16,000 packages over an

equal time span under the existing guidelines provided to your personnel.

In light of these results, we understand that the FDA is revising

its current policy to reflect a more practical and workable approach. Customs is working with the FDA to devise additional

means to improve screening for these products.

However, we are awaiting the FDA’s final policy before we decide

whether or not to move ahead with these initiatives. Travelers who

42

attempt to import pharmaceuticals upon their return to the U.S.

are also a source of concern.

Again, we are seeking guidance from FDA and DEA on this

front. Recently, Customs proposed a plan that more sharply defines

the current broad discretion given to Customs Inspectors to decide

whether or not an importation is for a legitimate personal medical

use. That plan is currently under review by both agencies.

While the Customs Service is currently focusing a great deal of

effort on the interdiction of finished pharmaceuticals, we also recognize the threat posed by the importation of bulk pharmaceuticals.

In meetings with the Pharmaceutical Security Institute and

other members of the pharmaceutical security community, the

problem of counterfeit bulk pharmaceuticals continues to be a priority.

PSI asserts the opinion that foreign trade zones that produce finished pharmaceuticals habitually import cheap counterfeit bulk

pharmaceuticals to support their production. In response, Customs

initiated a multi-faceted counterfeit pharmaceutical interdiction

program called Operation Safeguard.

Operation Safeguard was carried out between September and October of 2000 at the International Mail Branches at Dulles Airport

and Oakland, California. The operation was intended to give Customs a snapshot of the types of pharmaceutical products entering

the United States.

That snapshot revealed that a vast percentage, perhaps as much

as 90 percent of the pharmaceuticals that enter the U.S. via the

mail do so in a manner that violates FDA and/or DEA requirements.

Counterfeit pharmaceuticals enter in both wholesale and retail

quantities. Additional problems include expired materials, products

that have not been approved by the FDA, products made in facilities not under proper regulation, and products not having the proper usage instructions.

To offer an example, our seizures included a 3,000 tab shipment

of a counterfeit drug with an expiration date of 1980.

Under the second stage of Operation Safeguard, scheduled to

begin shortly, Customs will focus on bulk pharmaceuticals processed in various facilities around the country, including foreign

trade zones. This will help us to determine the level of counterfeiting taking place.

In addition, our Office of Investigations is continuing to work

with the FDA and DEA to combat the sale of prohibited pharmaceuticals via the Internet. Customs’ CyberSmuggling Center is

playing a leading role in these cases. Our efforts to date have included a successful investigation with authorities in Thailand that

closed down seven on-line pharmaceutical sites operating in that

country.

Just last March, Thai authorities, again using information developed by Customs, executed three search warrants at the headquarters of an illegal Internet pharmacy marketing steroids and

Viagra.

From an overall perspective, a spiraling volume of goods at our

borders has put immense pressure on our ability to enforce the NaVerDate 11-MAY-2000 15:01 Oct 18, 2001 Jkt 010199 PO 00000 Frm 00046 Fmt 6633 Sfmt 6602 E:\HEARINGS\73737 pfrm07 PsN: 73737
43

tion’s laws while facilitating international trade. We have taken

many steps to address the anticipated challenges.

I want to thank you and the members of the committee for considering the Customs Service in your review of the importation of

personal and bulk pharmaceuticals. This is an issue that speaks directly to our mission.

We will continue to make every effort possible to work with Congress and our fellow inspection agencies to address the health and

safety concerns of the American people. Mr. Chairman, we have a

short video. If you have time, we would like to show you so that

you can see.

Mr. GREENWOOD. Without objection, we would be delighted to see

the video.

[Video shown.]

Ms. DURANT. This is a video of operations at our mail facility at

Dulles International Airport. You can see that the mail comes to

us on conveyer belts delivered from the Postal Service. We x-ray all

packages of foreign mail. From the x-rays and other factors, based

on the experience of our inspectors, sort from this vast number to

determine those that present the greatest risk for evasion.

The Dulles facility receives approximately 70,000 packages a

week. I know, because I was just in Memphis that our Fed Ex hub

receives 70,000 packages a night. So it is quite a daunting task for

us to refine our sorting so that we have the best chance of capturing those that are at most risk to the American public.

You can see the kinds of drugs that come in through the mail.

They are not even in bottles many times, just loose in paper. We

have counterfeit drugs. We have grey market drugs. We have prohibited drugs, and we have unapproved drugs, the whole gamut of

illegal substances through our mail facility at Dulles. This is a situation that is pretty much replicated around the country.

While many of the illegal substances are smuggled and are hidden on purpose, some are just in packages, in boxes. I guess they

figure they will take their chances that we won’t catch them. This

is a daily occurrence at Dulles. Thank you.

Mr. Chairman, I have a few examples to show you of the kinds

of things that we find that we know could not possibly be for personal use. This first parcel is multiple types of prescription drugs

in a single package. This particular package was imported from

Thailand. We believe it’s for black market distribution in the

United States. We believe that these kinds of shipments then go

to garage type pharmacies that may be operating domestically in

the United States, as well as the ones overseas.

These are grey market drugs which are available in the United

States. We don’t know what the strength of them is. There is no

guarantee that the user has the correct warning implications, all

the issues this committee brought up earlier today about the supervision of taking prescription drugs that’s needed.

This is a scheduled substance. This is actually fen-phen, which

has been prohibited in the United States.

This substance is gammahydroxybutyrate, which is used in conjunction with the date rape drug. It is used in club scenes known

as liquid X. It is linked to date rape because of the confusion and

unconsciousness that it causes.

44

This is your seizure, Mr. Chairman. This is the amylnitrate labeled as Jungle Juice, that you saw when you were out at our Dulles facility. So you can see it is an amazing array of the different

types of things that we’re finding every day.

Thank you, sir. I will be happy to take questions later.

[The prepared statement of Elizabeth G. Durant follows:]

PREPARED STATEMENT OF ELIZABETH G. DURANT, EXECUTIVE DIRECTOR OF TRADE

PROGRAMS AT THE U.S. CUSTOMS SERVICE

Mr. Chairman, members of the Committee, thank you for this opportunity to testify. I am Elizabeth Durant, Executive Director of Trade Programs at the U.S. Customs Service. Today I would like to discuss with you U.S. Customs’ efforts to address the rising trend of personal and bulk importations of pharmaceutical products

into the United States.

The Customs Service enforces over 400 regulations for more than 40 other federal

agencies at U.S. borders. These include the laws that prohibit the importation of illegal or unapproved pharmaceuticals that fall under the jurisdiction of both the

FDA and DEA.

The Customs Service is concerned with three particular aspects of the importation

of pharmaceuticals: those that are purchased through the Internet and shipped

through our international mail facilities; those carried into the United States by individuals transiting our land borders, and imports of bulk shipments of pharmaceuticals.

The growth of the Internet has spawned a wave of pharmaceutical purchases online. These purchases are most commonly sent through the U.S. mail. We have Customs Inspectors stationed at fourteen international mail branches at postal facilities

across the United States to contend with these shipments. These facilities are located at New York’s John F. Kennedy Airport; Newark, New Jersey; Dulles Airport

in Virginia, Chicago, Detroit, Buffalo, Miami, Dallas, Charlotte, Honolulu, Carson

Airport in Los Angeles, Seattle, and Oakland/San Francisco.

Detecting prohibited pharmaceuticals amongst the tens of millions of parcels passing through our mail facilities each year presents a massive challenge. Our limited

resources require a risk management approach, with which we utilize advance intelligence, records of past seizures, and other factors to locate packages that present

the most significant threat.

Customs laboratories also play a critical part in our investigations. Their expertise in analyzing everything from textiles, to foreign oil, to food products to determine point of origin and composition is world-renowned. We maintain fully equipped

labs at the following locations: New York; Chicago; Savannah; New Orleans; Los Angeles; San Francisco and San Juan. In addition, we have three mobile labs to deploy

at any point along our borders.

We’re confident in the forensic capability of our labs to find discrepancies in shipments of bulk and finished pharmaceuticals. But where we do require assistance,

specifically from the Food and Drug Administration, is in the establishment of effective national standards for the interdiction of pharmaceuticals subject to FDA laws.

The development of such standards is critical to Customs. To that end, we have

been working closely with FDA to develop the needed guidelines. We began by forming a joint task force to examine pharmaceutical purchases shipped by U.S. mail.

The task force set up a pilot program in Los Angeles at the Carson mail facility.

The pilot ran for thirty days, from January 15th through February 15th of this year.

During that time, FDA detailed four full-time employees who observed first-hand

the daunting volume of packages screened by Customs every day.

Over a period of twenty-four work-days, the FDA detained a total of 721 parcels.

677 parcels, or just over 93 percent of this amount, were denied entry and 44, or

six percent, were released for delivery by the Postal Service. It is important to note

that without the presence of FDA inspectors, U.S. Customs would have had to detain some 3,000 packages per week, or about 15,000 packages over an equal time

span, under the existing guidelines provided to our personnel.

In light of these results, we understand that the FDA is revising its current policy

to reflect a more practical and workable approach. Customs is working with the

FDA to devise additional means to improve screening for these products, such as

implementation of a pre-approval process and the installation of digital cameras in

mail facilities to supplement staffing shortfalls. However, we are awaiting the FDA’s

final policy before we decide whether or not to move ahead with these initiatives.

Travelers who attempt to import pharmaceuticals upon their return to the U.S.

are also a source of concern. Again, we are seeking the guidance of the FDA and

45

DEA on this front. Recently, Customs proposed a plan that that more sharply defines the current broad discretion given to Customs inspectors to decide whether or

not an importation is for a ‘‘legitimate personal medical use’’. That plan is currently

under review by both agencies.

While the Customs Service is currently focusing a great deal of effort on the interdiction of finished pharmaceuticals, we also recognize the threat posed by the importation of bulk pharmaceuticals. In meetings with the Pharmaceutical Security Institute (PSI) and other members of the pharmaceutical security community, the problem of counterfeit bulk pharmaceuticals continues to be a priority. PSI asserts the

opinion that foreign trade zones that produce finished pharmaceuticals habitually

import cheap counterfeit bulk pharmaceuticals to support their production.

In response, Customs initiated a multi-faceted counterfeit pharmaceutical interdiction program called ‘‘Operation Safeguard’’. Operation Safeguard was carried out

between September and October of 2000 at the International Mail Branches at Dulles Airport and Oakland, California. The operation was intended to give Customs

a snapshot of the types of pharmaceutical products entering the United States. That

snapshot revealed that a vast percentage—perhaps as much as eighty to ninety percent—of the pharmaceuticals that enter the U.S. via the mail do so in a manner

that violates present FDA and/or DEA requirements. Counterfeit pharmaceuticals

enter in both wholesale and retail quantities. Additional problems include expired

materials, products that have not been approved by the FDA for usage, products

made in facilities not under proper regulation and products not having the proper

usage instructions. To offer an example, our seizures included a three thousand-tab

shipment of a counterfeit drug with an expiration date of 1980 on it.

Additionally, it was found that many parcels contained different types of pharmaceuticals that, if taken simultaneously, could cause dangerous interactions. These

products could easily be purchased by individuals not under the direct supervision

of a physician. Thus, we cannot assume that they would be used properly.

It is important to note that after three weeks of Operation Safeguard, the quantity of illegal and defective pharmaceutical shipments slowed significantly.

Under the second stage of Operation Safeguard, scheduled to begin shortly, Customs will focus on bulk pharmaceuticals processed in various facilities around the

country, including Foreign Trade Zones outside the United States. This will help us

to determine the level of counterfeiting taking place.

In addition, our Office of Investigations is continuing to work with the FDA and

DEA to combat the sale of prohibited pharmaceuticals via the Internet. Customs’

CyberSmuggling Center is playing a leading role in these cases. Our efforts to date

have included a successful investigation with authorities in Thailand that closed

down seven, on-line pharmacy sites operating in that country. As a result, we saw

a marked decrease in subsequent pharmaceutical seizures from Thailand. Just last

March, Thai authorities, again using information developed by Customs, executed

three search warrants at the headquarters of an illegal Internet pharmacy marketing steroids and Viagra.

From an overall perspective, a spiraling volume of goods at our borders has put

immense pressure on our ability to enforce the nation’s laws while facilitating international trade. We have taken many steps to address anticipated challenges, including refinement of our targeting approach and development of a resource allocation

model to project future staffing needs across the country. But we still face a

daunting workload.

I want to thank you and the members of the Committee for considering the Customs Service in your review of the importation of personal and bulk pharmaceuticals. This is an issue that speaks directly to our mission. We will continue to

make every effort possible to work with the Congress and our fellow inspection

agencies to address the health and safety concerns of the American people.

Mr. GREENWOOD. We thank you very much for your testimony.

The Chair recognizes Dr. Alan Leshner, Director of the—I apologize. Next we will hear from Mr. William Hubbard of the Food and

Drug Administration.

TESTIMONY OF WILLIAM K. HUBBARD

Mr. HUBBARD. Thank you, Mr. Chairman. I am joined by John

Taylor and Jeffrey Shuren from FDA in case we need further expertise. I, too, have cluttered up your table, and I apologize for

that. Of course I have written testimony for the record.

46

Mr. Chairman, the committee has been examining a number of

issues dealing with drug safety, counterfeiting, foreign inspections,

controlled substances, and personal importation. I would like to

focus today on the personal importation issue, if I may.

When I testified here last May on Internet sales, I think that we

and the committee agreed that the State and Federal authorities

had the tools and the will to perhaps get some of the domestic sites

under control with various existing laws, perhaps supplemented by

new laws that might be necessary. But I think we recognized at the

time that the bigger problem was foreign sites. We were very concerned about that. I think we were right, because these things that

Ms. Durant and others are showing you and the things I have in

front of me are evidence of that.

We took some of the same sorts of samples and asked physicians

at FDA to tell us about them, what they are. Of course, they do

come in the same way that Ms. Durant stated—this is one with

four drugs in it, four packages. Inside is a little bag of pills. We

don’t know what that is. So it’s a wide variety. We have injectibles

from Spain. We have a seasonal allergy drug that’s approved here

in a form, but this one is not. We have an over-the-counter drug.

We have an anti-psychotic drug. We have drugs for heart conditions. We have oxycontin. We have an interesting one here. This

is labeled as a seasonal allergy drug, but if you look more closely,

inside is a controlled substance. I’m not sure the folks at the ports

will be able to very easily make that distinction.

So we see a wide range of these sorts of products. They really

do pose risk. As you saw when you came to Dulles, they come in

packages with clothing and personal effects, all kinds of things.

They are very small packages that really overwhelm our ability to

do much with them.

So we have been examining this issue, Mr. Chairman. We have

been surveying the drugs that come in. We have been consulting

with our sister agencies, and we have been carefully considering

what to do about this. The inescapable conclusion for us is that

these drugs are virtually all unapproved in the United States. They

are provided without proper manufacturing controls. They often

lack instructions for safe use, and they may be counterfeit, or

worse. These factors, combined with the rapid increase in the Internet that’s caused the explosion of these things, leads us to believe

that they pose a risk to our citizens that must be reduced.

So, accordingly, we have recommended to Health and Human

Services Secretary Thompson that he approve our recommendation

to request that the Customs Service deny entry of all of these

drugs, and to return them to their sender. We would create one exception for patients with serious diseases, such as cancer, who need

an unapproved drug from a foreign country to save their life, at

least to give them hope of saving their life. We would need to set

up some sort of a compassionate use process to allow those drugs

in. But that would be the only exception.

I will say that if the administration agrees with us on this, we

are going to need to come back to the Congress, because now the

process requires us to give the recipients of these products notice.

If you take our data from the California example and extrapolate

it to an annual rate, it’s perhaps 2 million of these a year at curVerDate 11-MAY-2000 15:01 Oct 18, 2001 Jkt 010199 PO 00000 Frm 00050 Fmt 6633 Sfmt 6602 E:\HEARINGS\73737 pfrm07 PsN: 73737
47

rent rates, and perhaps growing. We can’t go through the process

that we must now go to, which is to mail a letter to the recipient,

receive a response back, and go through that 2 million times. We

need to be able to make a blanket assessment that these things are

not safe for American consumers and should be turned back. I believe the Customs Service agrees with that. So if Secretary Thompson and the administration agree, that will be the approach we intend to take.

[The prepared statement of William K. Hubbard follows:]

PREPARED STATEMENT OF WILLIAM K. HUBBARD, SENIOR ASSOCIATE COMMISSIONER

FOR POLICY, PLANNING AND LEGISLATION, FOOD AND DRUG ADMINISTRATION

INTRODUCTION

Mr. Chairman and Members of the Committee, I am William K. Hubbard, Senior

Associate Commissioner for Policy, Planning and Legislation, Food and Drug Administration (FDA or the Agency). I appreciate the opportunity to discuss our mutual concerns related to the importation of drugs into the United States (U.S.). This

topic encompasses a range of issues, including the importation by individuals of prescription drugs at land borders or through the mail; the introduction into the U.S.

of controlled substances from foreign sources under the guise of personal importation; the potential introduction of counterfeit bulk drugs into the U.S. drug supply;

and the purchase of drugs from foreign sources over the Internet. We appreciate the

leadership this Committee has taken in keeping these issues at the forefront. Let

me begin by discussing one of our greatest challenges in this area.

PERSONAL IMPORTATION OF DRUGS THROUGH THE MAIL

The amount of prescription drugs for personal use imported through the mail has

increased in recent years. According to testimony by the U.S. Customs Service (Customs) before the Government Reform Committee in May of last year, seizures of

parcels containing scheduled or controlled substances at international mail facilities

increased by 450 percent in FY 1999, primarily due to drug sales over the Internet.

We estimate that approximately two million parcels containing FDA-regulated products for personal use enter the U.S. each year through international mail facilities

that Customs could set aside for FDA review for possible violations of the Federal

Food, Drug, and Cosmetic (FD&C) Act. This estimate is based on an extrapolation

of data obtained during a pilot project conducted at the international mail facility

in Carson, California (see below).

Under the FD&C Act, unapproved, misbranded, and adulterated drugs are prohibited from importation into the U.S., including foreign versions of U.S.-approved

medications, as is reimportation of approved drugs made in the U.S. In general, all

drugs imported by individuals fall into one of these prohibited categories.

From a public health standpoint, importing prescription drugs for personal use is

a potentially dangerous practice. FDA and the public do not have any assurance

that unapproved products are effective or safe, or have been produced under U.S.

good manufacturing practices. U.S.-made drugs that are reimported may not have

been stored under proper conditions, or may not be the real product, because the

U.S. does not regulate foreign distributors or pharmacies. Therefore, unapproved

drugs and reimported approved medications may be contaminated, subpotent, superpotent, or counterfeit. In addition, some foreign web sites offer to prescribe medicines without a physical examination, bypassing the traditional doctor-patient relationship. As a result, patients may receive inappropriate medications because of

misdiagnoses, or fail to receive appropriate medications or other medical care, or

take a product that could be harmful, or fatal, if taken in combination with other

medicines they might be taking.

Personal Importation Policy

Under FDA’s personal importation policy, as described in guidance to the Agency’s

field personnel, FDA inspectors may exercise enforcement discretion to permit the

importation of certain unapproved prescription medication for personal use.

First adopted in 1954, the policy has been modified several times over the succeeding years. It was last modified in 1988, in response to concerns that certain potentially effective treatments for AIDS patients were not available in the U.S., but

were available in other countries. The Agency expanded the guidance for humanitarian purposes to allow individuals suffering from serious medical conditions to acVerDate 11-MAY-2000 15:01 Oct 18, 2001 Jkt 010199 PO 00000 Frm 00051 Fmt 6633 Sfmt 6621 E:\HEARINGS\73737 pfrm07 PsN: 73737
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quire medical treatments legally available in foreign countries but not approved in

the U.S.

The current policy permits the exercise of enforcement discretion to allow entry

of an unapproved prescription drug if:

• the product is for personal use (a 90-day supply or less, and not for resale); • the intended use is for a serious condition for which effective treatment may not

be available domestically (and, therefore, the policy does not permit inspectors

to allow foreign versions of U.S.-approved drugs into the U.S.); • there is no known commercialization or promotion to U.S. residents by those involved in the distribution of the product; • the product is considered not to represent an unreasonable risk; and • the individual seeking to import the product affirms in writing that it is for the

patient’s own use and provides the name and address of the U.S. licensed doctor

responsible for his or her treatment with the product or provides evidence that

the product is for the continuation of a treatment begun in a foreign country.

FDA has not officially permitted the importation of foreign versions of U.S.-approved medications, even if sold under the same name, because these products are

unapproved, and the Agency has no assurance that these products are safe or effective, while safe and effective versions are already available in the U.S.

FDA believes that the need for its personal importation policy is far less now than

it was when the current version of the policy was developed in 1988. Now, due to

faster review times and various regulatory mechanisms through which patients can

obtain unapproved treatments for humanitarian purposes, the need to import therapies not available in the U.S. has diminished. According to a Tufts University study

presented in September 2000, 80 percent of new molecular entities approved in the

U.S. in 1996 through 1998 received that approval within a year of its first introduction on the world market, almost double the rate during the years 1991 through

1995.

Implementation of the Personal Importation Policy

At mail facilities, Customs officials identify parcels that may be violative of the

FD&C Act. FDA inspectors then determine if these products should or should not

be permitted to enter the country. If detained, FDA must issue a notice to the addressee describing the potential Federal violation and provide the individual with

an opportunity to respond. If the addressee does not respond or provides an inadequate response, FDA will give the parcel back to Customs to have it returned to

the exporter. Due to the requirements for notice and the opportunity to respond, the

process for detaining and further processing mail parcels consumes large amounts

of FDA resources. In addition, much storage space would be needed to hold the large

number of detained parcels pending replies from the addressees.

FDA’s personal importation policy, as written, is difficult to implement. This is

due, at least in part, to the difficulty faced by FDA inspectors, or even health care

practitioners, in identifying a medicine by its appearance, and labeling may falsely

identify a product. From a practical standpoint, FDA inspectors cannot examine

drug products contained in a mailed parcel and accurately determine the identity

of such drugs or the degree of risk posed to the individual who will receive these

drugs.

FDA detains and refuses few mail imports for personal use. As a consequence, the

tens of thousands of parcels that FDA does not review are eventually released by

Customs and sent on to their addressees, even though the products contained in

these parcels may appear to violate the FD&C Act and may pose a health risk to

consumers. We do not believe this is an acceptable public health outcome and are

working to develop a solution.

HHS Plan to Address Mail Imports for Personal Use

Due to the inability of FDA to cope with the volume of medications imported for

personal use through the mail, and because of the public health risks associated

with these products (as discussed below), FDA has been working to develop a more

effective personal importation policy. In addition, we recognize that Customs is dependent on guidance from FDA, and one of our goals is to provide clear and simple

standards for assessing parcels containing drug products. We are discussing options

for revisions to the Agency’s personal importation policy with Secretary Thompson.

CARSON MAIL FACILITY PILOT

Earlier this year, FDA and Customs conducted a survey of imported drug products entering the U.S. through the Carson City, California mail facility (the Carson

pilot). The Carson pilot was proposed by Customs as a means to examine incoming

mail shipments of pharmaceutical products over a specified time frame in order to

49

identify both the volume and the types of drug products entering the U.S. We also

hoped to better assess the efforts required to cover drug importations at a mail facility, and to gain a better understanding of the public health implications these importations may have for U.S. consumers.

The Carson pilot ran for a five-week period, with FDA inspectors present for 40

hours per week. At the onset, Customs took a ‘‘baseline’’ sample in the first week

by setting aside all international packages that were suspect, or that they would

have set aside for FDA review had FDA been able to process them. The number of

packages set aside was approximately 3,300. Multiplying that number by five weeks

provides an estimated total of 16,500 international packages (650 packages per day)

that Customs could have set aside for FDA review during the Carson pilot, if the

ability to process them was not a factor. After the first week, however, Customs actually set aside the number of packages they believed FDA would be able to examine. In general, during each week of the Carson pilot, more packages were set aside

than FDA was able to handle.

FDA was actually able to examine 1,908 packages during the five-week pilot, an

average of approximately 381 packages per week. Neither FDA nor Customs kept

a count of the packages that were set aside but not examined. Unexamined packages were sent on to the addressees.

Of the 1,908 packages examined by FDA, 721 parcels were detained and the addressees notified that the products appeared to be unapproved for use in the U.S.,

misbranded and/or a drug requiring a doctor’s prescription. The parcels were

shipped from a total of 19 countries, and overall, there was no obvious evidence of

the products being imported for further commercial distribution. On average, the

Agency was detaining at a rate of 144 packages per week, or about 38 percent of

those examined.

Clearly, the Carson pilot demonstrated that the rate of packages coming into the

U.S. exceeds FDA’s capacity to manage, thus, Customs is left with little choice but

to forward the majority of packages to addressees. As we stated, we do not believe

this is an acceptable public health outcome, and we are working to develop a solution.

Analysis of the Carson Pilot Drug Parcels

In order to define better the nature of the risk to public health from the types

of products coming into the U.S. through personal importation, FDA’s Center for

Drug Evaluation and Research (CDER) reviewed listings of the products detained

during the Carson pilot. CDER’s review demonstrates that there are serious public

health risks associated with many of the 721 drug shipments (composed of 197 different drugs) intercepted at Carson. In general, there are two types of risks that

consumers of these drugs would face. The first type of risk is that associated with

taking drugs of unknown origin or quality. Second are the very significant risks associated with taking many of these drugs without first obtaining a physician’s prescription and without the continued oversight of the physician.

Risks Associated with Drugs of Unknown Origin or Quality

In general, FDA has no information to establish where these drugs were actually

manufactured and whether necessary current Good Manufacturing Practice requirements were followed. There is also no assurance that the drugs were packaged and

stored under appropriate conditions to avoid degradation or contamination.

Approximately eight percent of the shipments contained drugs that could not be

identified because they contained no labeling; some of these contain only foreign language labeling. Most of these drug shipments were contained in plastic bags; one

shipment contained drugs taped between magazine pages.

Several drugs do not appear to correspond with any U.S.-approved drugs and the

risks are therefore difficult to assess. One drug was evaluated for FDA approval but

was denied approval. This drug is associated with cardiac abnormalities and its efficacy could not be successfully demonstrated. Another drug approved abroad but not

in the U.S. is associated with medically serious gastro-intestinal complications. Several shipments contained three drugs that were once approved by FDA but have

been withdrawn from the market based on serious safety concerns, including:

• fatal arrhythmia and dangerous drug interactions;

• loss of white blood cells (agranulocytosis) associated with fatal infections; and

• hemorrhagic stroke.

Risks Associated with the Absence of Physician Oversight

The vast majority of the shipments were identified as containing prescription

drugs, which by definition, have serious toxicities and risks associated with them

such that they are ‘‘not safe for use except under the supervision of a practitioner

50

licensed by law to administer such drug.’’ (Title 21, United States Code, section

353(b)). Although some foreign Internet sites might offer an online questionnaire,

we believe that very few, if any, require a prescription from a practitioner licensed

in the U.S. before dispensing such drugs to U.S. residents. Moreover, after detention

notices were issued to the intended recipients of the 721 drug shipments, fewer than

four percent presented evidence of prescriptions to document their relationship with

a physician in association with the drugs purchased from abroad. The lack of adequate English language labeling accompanying many of these shipments exacerbates the risks associated with the absence of physician oversight.

During the Carson pilot, as in normal practice, Customs generally separated out

controlled substances for processing by the Drug Enforcement Administration (DEA)

before the remaining shipments were provided for FDA review. However, in FDA’s

review, six controlled substances were identified, including lorazepam, codeine sulfate, loperamide, chlordiazepoxide, chloral hydrate, and diphenoxylate. These drugs

have the potential to cause addiction or be abused. Life-threatening overdoses are

possible. A physician’s prescription and oversight are essential for managing these

risks.

There are numerous drugs identified on the Carson list that are intended to treat

conditions that consumers need physicians to properly diagnose. As a result, consumers who bypass physician diagnosis and prescribing may be exposing themselves

to risks and toxicities that cannot be justified by offsetting benefits to those patients.

• For example, almost ten percent of the shipments were for antibiotics, despite the

fact that consumers are generally not able to diagnose whether their symptoms

are caused by bacterial infections. The overuse of antibiotics continues to be a

serious public health concern because it is linked to the growth of antibiotic resistant-bacteria.

• Several drugs listed are potent steroids, which are generally prescribed for conditions that are not self-diagnosable. In addition, potential adverse events associated with these drugs, including diabetes, hypertension, and serious infection

require prompt attention and careful monitoring.

There are many drugs on the list for which it is essential that the proper dose

be delivered into the bloodstream at the proper rate. Some of these drugs have a

narrow range in which they can safely achieve their therapeutic effect. At least

seven such drugs were identified on the Carson list. Without FDA oversight, there

is the risk that these drugs may not have been manufactured with the necessary

quality controls to ensure a consistently safe and effective product.

• One seizure medication on the Carson list, for which there were three shipments,

could be very dangerous if not manufactured to these rigorous standards. Any

change in potency could render the drug ineffective or highly toxic.

• Another seizure drug on the list for which physician monitoring is also essential

has a narrow therapeutic range and FDA labeling provides a black-box warning

for hepatoxicity, teratogenicity, and pancreatitis.

More than 30 drugs on the list have serious contraindications and/or drug interactions for which physician oversight is essential. For instance, almost 20 percent

of the shipments were for various estrogen products for which there are multiple

serious contraindications that a physician needs to consider before making prescribing decisions and in monitoring the patient.

It is impossible to make a scientifically definitive statement on the public health

impact of the drug shipments encountered during the Carson pilot without extensive

chemical testing and analysis of the incoming pharmaceuticals, which would be prohibitively expensive. Based on the observations noted above, however, FDA believes

that these drugs pose substantial risks to the public health, and we further believe

that significant changes to the policies governing personal importations through the

mail are warranted.

BORDER SURVEYS

Over the last year, FDA has initiated three other surveys to gather data on drug

products imported by individuals into the U.S. Although these border surveys involve land traffic rather than mail importation, the results of these surveys show

some similarities to the findings from the Carson mail pilot, as well as some significant differences.

Southwest Border Survey (August 2000)

A survey of prescription drugs being brought by pedestrians into the U.S. at eight

ports of entry along the 2,000 mile border with Mexico was conducted by FDA’s

Southwest Import District (SWID) with the assistance of other agencies including

51

Customs, the DEA, the U.S. Department of Agriculture, and others. The survey

looked at activity during four hours on a Saturday (August 12, 2000) at eight border

ports in California, Arizona, and Texas. The purpose of the survey was to interview

individuals walking across the border into the U.S. from Mexico who had purchased

prescription drugs in Mexico to determine 1) what specific types of products are

being imported, and 2) who is importing these products.

The data collected from over 600 interviews indicated that the most common importer of prescription drugs during the survey was an older male Caucasian with

a prescription from the U.S., bringing back primarily antibiotics or pain relievers

for his own use. Prescriptions were held by 63 percent of the persons interviewed

(59 percent U.S. prescriptions and 41 percent Mexican). The most common drugs

and their indications that were purchased in Mexico during the survey were as follows: Amoxicillin (antibiotic), Glucophage (diabetes),

Premarin (estrogen), Dolo Neurobion (vitamin supplement), Vioxx (inflamation),

Retin-A (acne), Tafil (anxiety), Celebrex (arthritis), Penicillin (antibiotic), Viagra

(impotence), Carisoprodal (analgesic).

Canadian Border Survey

On January 6, 2001, in cooperation with Customs, FDA conducted a survey to obtain a snapshot of prescription drug products being brought into the U.S. from Canada via passenger vehicles. During the eight-hour survey at three ports of entry in

New York, Michigan and Washington, a total of 10,374 passenger vehicles and 58

buses crossed into the U.S. Of these, 33 passenger vehicles (35 individuals) were referred by Customs to be interviewed. These individuals brought in a total of 47 containers of drug products from Canada.

The types of products included pain medicines—primarily ‘‘222’’ (a combination of

acetaminophen, caffeine, and codeine) or similar products. The indicated reason for

import was that the products were available over the counter in Canada and cost

less than in the U.S. The next largest group of products was herbal products, with

the reason for importation being that the products were not available in the U.S.

Other products included Tobradex (antibiotic/steroid opthalmic for individuals having laser eye surgery); Claritin and Allegra (allergies) purchased over-the-counter

(OTC) in Canada; Sibelium capsules (calcium channel blocker); and a variety of OTC

products sold in Canada and not available in the U.S.

Southwest Border Survey (April 2001)

On April 11, 2001, FDA, Customs, and other agencies conducted a survey of prescription drugs being brought into the U.S. at seven ports of entry along the U.S./

Mexican border. This survey coincided with both Easter vacations from many colleges and the end of the ‘‘snowbird’’ season, when tourists from Northern states visiting along the Southern border return home.

During the four hour ‘‘blitz’’ a total of 586 persons brought in a total of 1,120

drugs. Approximately 56 percent had a prescription for the medicines (61 percent

were U.S. prescriptions, 39 percent were Mexican). The most common drugs purchased in Mexico were: Amoxicillin (antibiotic), Premarin (estrogen), Claritine (allergy), Terramicinia (antibiotic), Ampicillin (antibiotic), Ibuprofen (analgesic), Penicillin (antibiotic), Vioxx (inflammation), Tafil (anxiety), Dolo Neuorobian (vitamin

supplement), Glucophage (diabetes), Celebrex (arthritis), Naproxen (analgesic),

Retin-A (acne), Ventolin (pulmonary disease), and Valium (controlled substance/

nervous system depressant).

CONTROLLED SUBSTANCES

Although we do not know, nor is it possible to clearly determine, the amount of

controlled substances brought into the U.S. purportedly for personal use, it is likely

that such medicines are frequently imported for resale and pose a public health risk.

The Agency has been working with both Customs and DEA to streamline and clarify

Federal import policies specifically related to the importation of controlled substances.

Counterfeit Bulk Drugs

As we stated in testimony before this Committee last year, FDA believes that the

authenticity and quality of drugs dispensed in the U.S. remains high. We do take

very seriously, however, any allegation regarding the possible counterfeiting or adulteration of imported bulk drugs, also referred to as active pharmaceutical ingredients (APIs). The Agency agrees that more should be done to help ensure that imported bulk drugs (APIs) and finished drug products meet the requirements of the

FD&C Act. We are actively pursuing a number of initiatives to better detect and

prevent the importation of counterfeit or adulterated APIs.

52

Let me provide the Committee with a brief update on the five initiatives that we

announced at the hearings last year.

1. In February 2000, additional funds were allocated to the Forensic Chemistry Center (FCC) by the Office of Regulatory Affairs (ORA) for sampling, analytical work and assessments of APIs gathered through targeted inspections of importers.

During FY 2000, the FCC conducted 20 targeted inspections, including nine at importers of foreign APIs, ten at domestic finished dosage manufacturers and one at

a domestic animal drug manufacturer. The FCC collected more than 1,000 samples

of 130 APIs and related documents and records during the inspections. Samples of

two drug substances have been analyzed.

The information and results of analysis obtained during the investigations indicate a need for follow-up at two foreign API manufacturers. Provisions are being

made to have ORA laboratories in New York and San Juan assist in the analytical

evaluation, and some training has already been provided.

2. Make the FCC API database available electronically to all field inspectors by January 2001.

Direct electronic access to the FCC’s API database was made available to all District offices beginning in January 2001. Enhancements to the system’s capabilities

and training for the user community are ongoing and we expect to complete these

efforts by the end of the current FY. Information continues to be added to the API

database, which currently contains 566 label images and other packaging information for foreign APIs. This database is one important tool that FDA can use to more

quickly identify whether or not a product is authentic or counterfeit.

3. Expand the Philadelphia pilot nationwide by the end of 2000.

A pilot program was begun in the Philadelphia District office in 1997, to provide

import inspectors with access to information on the approval status of drug applications, as contained in the Establishment Evaluation System (EES) database maintained by CDER. Access to this data allows inspectors to obtain relevant approval

information in about three to four minutes on any API entry, which increases the

probability of confirming that the API being offered for import is from a proper foreign source manufacturer and is intended for use by an appropriate end-user.

The program has now been expanded to all of our districts. In December 2000,

ORA provided training to field import personnel nationwide on the use of the EES

database. Since then, District Offices have been actively using EES to insure that

imported APIs are, when required, shipped from a firm identified as an approved

source in the finished dosage manufacturer’s new drug application (NDA). FDA’s inspectors report that access to EES information has been very useful in helping to

assure that the declared source and destinations of imported APIs are appropriate.

The Operational and Administrative System for Import Support (OASIS) records

indicate that 12 API entries have been refused admission since January 1, 2001,

based upon the appearance that the API was misbranded because it was not from

an approved source for use in the manufacture of a finished dosage drug requiring

an NDA. OASIS records indicate that under the guidance relating to the use of EES

for evaluation of API entries, FDA has detained 499 distinct entry lines of imported

APIs among 437 API entries since January 1, 2001. However, all but the 12 refused

shipments were resolved when Districts received evidence that the API was intended for a use other than an application finished dosage manufacturing process

or was manufactured by an approved source. Consequently, the vast majority of

these entries were released into commerce after FDA review.

4. Put all importers and customs house brokers on notice that they are required to provide the name of the foreign manufacturer upon entry

into the U.S., and that the entry of their products into the U.S. will be

contingent upon it.

Last year, the Agency placed the import and customs broker industries on notice

regarding the existing requirement to provide FDA with accurate data regarding the

identity and location of the manufacturer of imported drugs. Although these requirements were previously communicated to importers and brokers on a number of occasions, we were not satisfied with the level of compliance with this requirement. On

July 20, 2000, the Agency posted an updated version of this requirement on the

Internet with links to and from FDA’s import operations pages. On July 28, 2000,

a Customs Automated Broker Interface (ABI) system administrative message regarding this requirement was issued to all brokers.

Compliance with this requirement is routinely assessed as the Agency carries out

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tronic filing privileges on OASIS. Customs has informed FDA that these types of

reporting failures may be the basis for Customs civil actions. Since January 2001,

FDA has initiated four separate cases with Customs requesting broker penalties

against brokers who have failed to provide adequate or accurate data to FDA when

they filed entries. In three of these cases, Customs has approved the requests, while

a fourth case is pending. Since June 1, 2000, 12 filers have been removed from

paperless status and are required to submit paper entry documents due to their failure to electronically transmit accurate data for a variety of FDA products.

5. Require domestic manufacturers to provide information to FDA when

they discover that the bulk materials they receive are substandard, ineffective, or appear not to be from the approved source.

FDA is concluding the process of drafting a proposed regulation to require such

reports, which would apply to both domestic and foreign manufacturers. We appreciated the Committee’s suggestion to initiate this requirement.

Let me now provide you with a brief update on some other initiatives.

API Quality Sampling and Analytical Surveys

ORA and CDER are planning to perform a sampling survey in FY 2002 targeting

imported APIs for quality and, where indicated, authenticity evaluation. This survey, which is now being designed by CDER and ORA, will broadly evaluate the

quality of foreign manufactured APIs, and specifically target APIs that are potentially substandard or counterfeit.

Information Technology (IT) Assessment and Enhancement

We know that one of the issues of great concern to the Committee is the Agency’s

lack of a well-integrated IT system for the regulation of drug imports. FDA currently relies on several independently developed databases of critical information

that need to be integrated.

Last July, FDA engaged the services of a private contractor to assess the Agency’s

IT needs for import operations and to recommend changes to provide field staff with

ready access to the information necessary for making informed admissibility decisions. ORA has already implemented several IT enhancements. First, electronic access to Agency data sources are being provided to all FDA resident posts, either by

wide area network (WAN) or by satellite technology. Second, ORA is initiating the

establishment of an enterprise portal system, which will provide a common user

interface to all of FDA’s information databases. The statement of work containing

the technical requirements for this project has been drafted and the Agency hopes

to award a contract for system design by July 2001. Through these initiatives, FDA

plans to provide more information to its field inspectors and investigators on a much

more consistent basis through a single information access point.

Joint FDA-Customs Pilot Targeting Broker Misdeclarations

FDA is currently piloting a joint operation with Customs in one U.S. port to specifically target FDA filers that have demonstrated a pattern of inaccurately declaring information material to FDA’s admissibility decisions (whether in drug entries

or other regulated commodities). Available remedies against repeat offenders include

a possible FDA request that Customs demand physical redelivery of the shipments

entered using inaccurate information, and an initiation of broker penalties, which

may be substantial. FDA has seen recent success in initiating civil broker penalties

when filers fail to provide correct data for FDA’s evaluation upon entry. Much of

this success is a direct result of cross training of FDA’s import operations field and

headquarters personnel in Customs law and regulations and civil remedies that are

currently available to FDA when an importer or broker fails to adhere to declaration

or FDA examination requirements.

INTERNET DRUG SALES

Based on surveys conducted in early 2000 by Office of Criminal Investigations

(OCI) and subsequently by the General Accounting Office (GAO), it appears that

there are roughly 300 to 400 Internet sites selling prescription drugs, with approximately half located domestically and half located outside the U.S. FDA has long

taken the position that consumers are exposed to a number of risks when they purchase drugs from Internet sites or other mail order outlets that dispense foreign

drugs. These outlets may dispense expired, subpotent, contaminated or counterfeit

product, the wrong product, a contraindicated product, an incorrect dose, or medication unaccompanied by adequate directions for use. FDA cannot provide consumers

with any assurance that these products were manufactured under current good

manufacturing practice standards. Taking an unsafe or inappropriate medication

54

puts consumers at risk for dangerous drug interactions and other serious health

consequences.

Internet sites that provide prescription drugs by having consumers fill out a questionnaire rather than seeing a doctor pose serious health risks. A questionnaire generally does not provide sufficient information for a healthcare professional to determine if that drug is appropriate or safe to use, if another treatment is more appropriate, or if the consumer has an underlying medical condition where using that

drug may be harmful. FDA has undertaken widespread public relations efforts to

warn consumers about the dangers of buying drugs online, and we have provided

extensive information on these dangers on FDA’s own Internet site. FDA’s Buying

Medical Products Online web page is one of the most frequently requested pages on

FDA’s website. It consistently ranks among the top twenty requested pages, averaging almost 13,000 hits per month.

Currently, FDA has 90 sites under active review for possible regulatory or civil

action. Warning letters have been sent to 48 domestic online sellers. Additionally,

FDA has sent 121 ‘‘cyber letters’’ to operators of Internet sites offering to sell online

prescription drugs or unapproved drugs. These sites may be engaged in illegal activity such as offering to sell prescription drugs to U.S. citizens without valid (or in

some cases without any) prescriptions. Cyber letters are sent over the Internet to

the suspect websites to warn the operators that they may be engaged in illegal activities, and inform them of the laws that govern prescription drug sales in the U.S.

While cyber letters may not be the most effective enforcement tool, they certainly

have a deterrent effect and FDA has seen positive results from using them. FDA

has received positive responses from twenty percent of the cyber letter recipients

and we are continuing to monitor these sites.

FDA also sends copies of its cyber letters to the home governments of targeted

websites, when the locations can be identified. Follow-up depends on the ability and

willingness of the foreign regulatory bodies to investigate and take actions against

website operators who are illegally shipping drugs to other countries.

In cooperation with the Department of Justice (DOJ), five preliminary injunctions

have been imposed on the sale of a illegal products, including one product marketed

as a weight-loss aid containing a potent thyroid hormone which could cause heart

attacks or strokes, and an unapproved cancer therapy. FDA and DOJ also are pursuing an injunction against the sale of another unapproved cancer therapy over the

Internet. Additionally, 15 product seizures, 11 product recalls, and the voluntary destruction of 18 violative products have been achieved, generally pertaining to unapproved new drug products including gamma hydroxybutyric acid, gamma butyrolactone , Triax, 1,4 butanediol, and laetrile. Thirty-six foreign shippers have been

placed on Detention Without Physical Examination and added to Import Alert 66-

57 for targeting sales of unapproved new drug products to the U.S.

During FY 2001, FDA’s OCI initiated approximately 40 Internet-related investigations and will continue to conduct investigations involving suspected criminal activity related to Internet drug sales as well as other Internet-facilitated criminal violations of the FD&C Act. Of the 133 currently open Internet-related investigations,

64 are Internet pharmacy cases, where the focus is on the possible dispensing of

prescription drugs without a prescription.

In recent years, OCI has initiated 285 Internet investigations and each of these

investigations have involved a variable number of actual websites—typically ranging from one to 25 or more. OCI has effected 88 Internet-related arrests, 70 of these

in drug-related investigations. Of the 70 drug-related arrests, 11 have involved

Internet pharmacy cases. These arrests have resulted, thus far, in 48 Internet-related convictions, 42 of these in drug-related investigations. Of the 42 drug-related

convictions, five have involved cases involving the sale of prescription drugs without

a valid prescription.

In addition, OCI has an ongoing initiative at the Dulles International Airport

Mail Facility that had its genesis in their first Internet case, which began in 1994.

The case, which involved a site selling steroids over the Internet, resulted in a successful prosecution and shutdown of the website. The partnership resulting from

this case has continued, and in the past 18 months, OCI has been involved with

local law enforcement in the Washington metropolitan area in 98 drug seizures. The

seizures represent dozens of types of drugs coming in from 13 different countries.

Of the 98 seizures, 87 of the drug seizures were ordered over the Internet and

mailed to U.S. citizens; six were mailed to the U.S. by family or friends living

abroad; four were ordered via a 1-800 telephone number from Canada and mailed

to the U.S.; and one was transported via an airline passenger in two suitcases from

Romania. The efforts of OCI, Customs, and local law enforcement have yielded the

execution of eight search and seizure warrants and led to the arrest and prosecution

of nine people.

55

CONCLUSION

Mr. Chairman, FDA remains concerned about any possibility that counterfeit or

otherwise unsafe drugs may find their way into the American drug supply. We will

remain vigilant as we refine and improve the programs and procedures that we use

to ensure the availability of safe medications for consumers.

We appreciate the continued interest of the Committee in these important issues,

and look forward to continuing to work with you. Thank you again for the opportunity to participate in today’s hearing. I will be happy to answer any questions.

Mr. GREENWOOD. The Chair thanks the gentleman for his testimony, and calls upon Dr. Alan Leshner, Director of National Institute on Drug Abuse.

TESTIMONY OF ALAN I. LESHNER

Mr. LESHNER. Good morning, Mr. Chairman, members of the

committee. Thank you for the opportunity to join this distinguished

panel and comment on some of the scientific aspects of prescription

drug abuse. Like my colleagues, I would like to extend our sympathy to the Rode family for their terrible loss.

Let me start by emphasizing that from a public health point of

view, many substances can be two things at once. On the one hand,

medications like morphine and methylphenidate are extremely effective when used properly as prescribed. They can save lives, and

they certainly improve the quality of life for millions of Americans.

However, when these same substances are misused, they can be

highly addictive, dangerous, and even fatal drugs. Right now, we

are seeing the prescription drug misuse or abuse as posing a major

public health threat.

A variety of indicators that I have gone through in my written

statement in much greater detail suggests that prescription drug

misuse is increasing. For example, according to SAMHSA’s National Household Survey on Drug Abuse, more than 9 million

Americans reported that they used prescription drugs for non-medical reasons at least once in 1999. One-quarter of them, over 2 million people, acknowledged that they had begun their prescription

drug abuse in that 1 year.

Now prescription drug abuse, of course, is not a new problem. It

has been around for a long time. What is particularly alarming

right now is the significant increase in misuse and the increase in

young, first-time users of these drugs. The most dramatic increases

are found in 12- to 17-year-olds, and 18- to 25-year-olds. Depending

on the specific drug, between 60 and 90 percent of the abusers are

in these age groups. These adolescents and young adults of course

are at tremendous risk of wasting the potential of their lives.

Now we don’t know for certain why people are abusing increasing

amounts of prescription drugs, but we believe that the ready availability and all of the glorification of these drugs are contributing

to the problem. It has long been known that changes in the perception of risk or changes in the perception of harm always drive drug

use rates. For that reason, we and a variety of partners in April

launched a major prescription drug abuse education and research

initiative to try to get ahead of the increasing rates in prescription

drug misuse.

We also believe that people are developing their addictions

through different pathways. There is one group who are intentionally abusing these drugs, just as one might abuse so-called

56

street drugs, like heroin or crack cocaine. But there also appears

to be another group who may initially begin to use these medications appropriately as prescribed, but over time they slowly begin

to deviate from their prescription regimen for some reason. Then

they may find that they have become addicted, without ever planning or attempting to abuse the drug in the first place.

It is important to mention here, however, that it is extremely

rare for people to become addicted when medications are taken as

prescribed. As just one example, the combined data from three clinical studies showed that in patients with no prior history of drug

abuse, using opiates for the treatment of pain was associated with

only seven cases of addiction out of a total sample of 25,000 people.

This tells us that pain can be addressed safely using opiate medications without over-concern about addiction, but only so long as patients are well educated about their use.

The stimulate methylphenidate, known commonly as Ritalin, is

another example of a drug that’s extremely beneficial when used as

prescribed, but can be very dangerous when abused.

I will stop here. I would be pleased to answer any questions that

you may have. I do want to thank you for bringing added attention

to this very important issue, and for asking that biomedical science

be a part of this hearing. Thank you very much.

[The prepared statement of Alan I. Leshner follows:]

PREPARED STATEMENT OF ALAN I. LESHNER, DIRECTOR, NATIONAL INSTITUTE ON

DRUG ABUSE, NATIONAL INSTITUTES OF HEALTH, DEPARTMENT OF HEALTH AND

HUMAN SERVICES

Mr. Chairman, and Members of the Subcommittee, I am pleased to be here to

present what science has taught us about psychoactive prescription drugs and their

potential for abuse. This discussion is particularly timely given that the National

Institute on Drug Abuse (NIDA) has recently launched a major initiative on prescription drug abuse and misuse. NIDA’s renewed efforts to encourage more research into this area and to educate the public about the consequences of abusing

prescription drugs is a preemptive strike on our part to curtail what our surveillance systems suggest is a growing problem in this country.

At the outset, I would like to emphasize that many substances can be two things

at once. They can be very effective medications when used properly; and highly addictive, dangerous, substances when misused. When used for legitimate medical

purposes, controlled substances such as morphine and diazepam (Valium), improve

the quality of life for millions of Americans with debilitating diseases and conditions. It is only when these medications are used improperly that they begin to pose

a serious public health threat. It is the increasing use of these medications for purposes other than how they were intended that is of growing concern to us.

Several indicators suggest that prescription drug misuse and abuse are increasing

in the U.S. population. We know that in 1999 more than 9 million Americans aged

12-and-older reported that they used prescription drugs at least once in the past

year for non-medical reasons. One quarter or more of those 9 million people misused

prescription drugs for the first time in the year prior to the survey. And 4 million

reported that they used prescribed medications for non-medical reasons in the past

month. These data come from the National Household Survey on Drug Abuse, supported by the Substance Abuse Mental Health Services Administration.

NIDA’s own Community Epidemiology Work Group, a network of epidemiologists

and researchers from 21 major U.S. metropolitan areas who monitor and report on

community-level trends in drug use and abuse, are also seeing increases in abused

prescription drugs. The latest CEWG report, for example, reports that the opioid

hydrocodone (e.g. Lorcet, Lortab, Vicodin) appears to be one of the mostly widely

abused prescribed medications. The number of emergency room mentions of

hydrocodone has grown by 139 percent, or from 6,115 mentions in 1993 to 14,639

in 1999. Other prescribed drugs that are emerging on the scene and are causing increases in emergency room visits, according to CEWG, are oxycodone and

clonazepam.

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Prescription drug abuse is not a new problem. The significant increase in the

numbers of people misusing these prescription drugs is what is new. From 1990 to

1998, for example, the number of individuals initiating misuse or abuse of pain relievers increased by 181%, new initiates to stimulants have increased by 165%; tranquilizers by 132%; and initiates into sedative use have increased by 90%. The most

dramatic increases are found in 12-17 year-olds and 18 to 25 year-olds. Females in

this younger age bracket appear to be particularly vulnerable to prescription drug

abuse.

Determining one’s vulnerability to addiction is an important part of NIDA’s re- search portfolio. The fact that we do not fully understand what makes some individuals more vulnerable to addiction than others makes our concern about prescription

drugs even more compelling. There are major differences among individuals in sensitivity to various drugs of abuse. Using advanced technologies, we recently found

that differences in brain chemistry may be one of the factors that predisposes people

to respond differently to abusable drugs. Other determinants of drug use preferences and patterns include genetic and environmental factors, a possible underlying medical illness, as well as factors such as the availability of drugs.

What is significant about the brain chemistry finding that I just mentioned is that

all abusable drugs—from alcohol and nicotine, to cocaine, methamphetamine, and

morphine—share some common mechanisms of action. They all activate the

neurotransmitter dopamine, which is part of the reward pathway or pleasure center

for the body. It is this pleasurable effect that is likely the reason that 26.2 million

Americans used an abusable drug in the past year in 1999.

Although dopamine is a common factor among all drugs of abuse, each class of

drug acts at different sites in the brain to produce its intended effect. For example

opiates, such as morphine, codeine, and oxycocodone, work predominantly at the mu

opioid receptors found in the brain and spinal cord, to block the transmission of pain

messages to the brain.

Another commonly abused class of drugs is the Central Nervous System (CNS)

depressants. CNS depressants modulate actions of gamma-aminobutyric acid

(GABA) to slow down normal brain function. This resulting calming effect is what

makes CNS depressants so useful in the treatment of anxiety and sleep disorders.

Barbiturates such as mephobarbital and pentobarbital; and benzodiazepines such as

diazepam and alprazolam, are two categories of CNS depressant medications that

are commonly prescribed for anxiety and sleep disorders.

The final class of commonly abused prescription drugs that I will briefly mention

today is stimulants. As the name suggests, stimulants are a class of drug that enhance brain activity. They cause an increase in alertness, attention, and energy by

displacing two of the brain’s key neurotransmitters, norepinephrine and dopamine,

which in turn increases blood pressure, heart rate, respiration, and blood glucose.

Stimulants such as dextroamphetamine, methylphenidate, and sibutramine are generally prescribed for narcolepsy, attention-deficit hyperactivity disorder, obesity, as

well as depression, and asthma.

When taken properly all of these prescription drugs that I have just mentioned

can be extremely helpful in relieving a wide variety of medical problems. It is when

they are used non-medically, that prescription drugs can be dangerous, addicting

and even deadly.

Research has not yet completely revealed all the reasons why people would abuse

a prescribed medication. Some may just intentionally abuse these drugs to receive

the pleasurable effects, in the same way that people abuse and become addicted to

heroin or crack cocaine. Others seem to begin to use them appropriately as prescribed, but then over time they slowly begin to deviate from the prescription regimen and may become addicted without ever intentionally setting out to abuse the

drug in the first place. It is important to note that physical dependence does not

equal addiction. Physical dependence can be relatively easily managed, whereas addiction—the compulsion to use drugs—is a chronic reoccurring illness that requires

long-term treatment.

As I mentioned earlier, the same substance can be both a very effective medicine

and a dangerous addictive drug. Morphine, is the perfect example. Morphine is a

powerfully addictive drug. However, when it is used to treat pain it is an extremely

beneficial medicine. The medical use of prescribed opiates effectively relieves both

chronic and acute pain, and allows millions of individuals to function normally. Addiction under these circumstances is very rare. In fact, the combined data from

three clinical studies found that in patients with no prior history of abuse, opiates

used for the treatment of pain was associated with only 7 cases of addiction in a

sample of about 25,000 people.

Another example of how beneficial medications can be when used as prescribed

can be seen with the stimulant methylphenidate, known commonly as Ritalin.

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Data accumulated over 30 years shows that methylphenidate is a safe medication

when appropriately used for the treatment of attention-deficit hyperactivity disorder

(ADHD). ADHD affects about 3 to 5 percent of the general population and is now

one of the most visible childhood mental disorders. A number of studies indicate

that ADHD youth that are appropriately treated with stimulant medications have

a reduction in the risk of later substance abuse.

In conclusion, I would like to thank you for allowing me to be here to have science

be a part of your discussion on this topic. NIDA is increasing its research efforts

into this area and will be pleased to keep you abreast of any new findings that

emerge that may help guide your policy decisions.

Mr. GREENWOOD. Thank you for your testimony.

The Chair recognizes for his testimony, Sergeant Gibbs.

TESTIMONY OF LANDON S. GIBBS

Mr. GIBBS. Good morning. My name is Landon Gibbs. I am an

Assistant Special Agent in charge of the Drug Enforcement Division within the Virginia State Police. I supervise a unit that concentrates solely on pharmaceutical drug diversion and abuse.

I want to speak to you about three things basically this morning.

The first is a drug that’s causing tremendous problems within Virginia. It’s called Oxycontin. I want to talk to you about what that

drug is, how it is abused, and more importantly, I want to talk to

you about how it is impacting the communities in Virginia by the

rapid onset of abuse. Then I would like to address some of the personal importation that we have made cases on in Virginia.

Oxycontin is a very effective pain drug.

Mr. GREENWOOD. Pull your microphone just a tad closer, please,

Sergeant. Thank you.

Mr. GIBBS. Oxycontin is manufactured to relieve from severe to

moderate pain, terminal pain, a very effective good drug when used

as prescribed. The problem comes in when it is used otherwise.

The drug abuser in Virginia will take the drug and crush it, and

either chew it and swallow it, inject it, or snort it. When the drug

is crushed, it bypasses its time release formulation, which gives the

abuser the full impact of pure Oxycodone in a rush. It creates a

high similar to heroin.

When it is used in this fashion it becomes extremely addictive,

and the person gets hooked on it very, very quickly. They develop

a mindset that all they want is more and more of the drug. They

will do whatever it takes to obtain that drug.

This is how it is affecting the communities in certain parts of

Virginia. The crime rates, particularly property crime, have skyrocketed in some of the rural areas where these people are burglarizing homes to find anything they can to sell, to buy the drug.

There are increased armed robberies of pharmacies, where they actually go in at gun point, bypass the cash register, and go straight

to the drug stock or ask the pharmacy techs to give me the Oxys.

That’s all they are after.

The drug is extremely profitable if they can steal it, even if they

are not an addict, because it sells for about a dollar a milligram

on the streets. This drug is now available in 10, 20, 40, and 80 milligram strengths. So if I can steal a bottle of 100 40-milligram pills,

I have got $4,000 that I can sell very, very quickly.

The abuse problem increases to the point that women will become prostitutes to obtain money to buy the drug. They will steal

from their families. They don’t work any more. It has created a treVerDate 11-MAY-2000 15:01 Oct 18, 2001 Jkt 010199 PO 00000 Frm 00062 Fmt 6633 Sfmt 6602 E:\HEARINGS\73737 pfrm07 PsN: 73737
59

mendous financial impact on those communities. Unfortunately,

the experiences that Mr. and Mrs. Rode told you about today is not

uncommon. Virginia has experienced about 50 overdose deaths related to this one drug within the last year.

It is not just one drug that causes the problem. As they have

mentioned today, there is significant number of drugs, but the

Schedule IIs are the ones that appear to be causing the deaths of

the people that abuse it.

Going back to the personal importation of the drug, we have experienced that in Virginia. For a number of years, we heard rumors

about people bringing Oxycontin and other drugs in from Mexico.

With the system of allowing 50 dosage units per person, again,

we’ll go back to the 40 or the 80-milligram pill. As you can see, the

financial incentive for a person to go across, obtaining a drug such

as Oxycontin in Mexico and bring it back.

We recently were working cases in cooperation with the DEA and

made several arrests of individuals who would go into Mexico, and

each person would bring 5,000 dosage units of Oxycontin back. The

pharmacists at the little border towns would actually help them

conceal the drugs on their body because they knew that the Customs Service would x-ray packages or bags, purses, and things like

that. So they would tape or hide the medication on their bodies

themselves.

After they were arrested, this group of six submitted three separate trips of obtaining 5,000 dosage units each to bring back into

Virginia to sell. They were arrested when they were selling it back

in the State.

In April of this year, I went to the border crossing at Tijuana

personally. Quite frankly, I was overwhelmed at what I saw. It is

hard to imagine the volume of vehicles and individuals coming into

the United States from Mexico. On this particular day, I made a

mistake and drove across the border. I missed the exit. You are not

supposed to do that with a rental car, but I did. There was so much

traffic coming back, I waited in line for about an hour to get

through the border crossing, and was simply waved through, as

were hundreds of cars. I parked the car on the U.S. side and

walked back into Mexico and spoke with Customs officers working

there. There were only three that day, trying to handle the bus and

foot traffic across. I spoke to him about the problems that we are

having with people importing the drugs. He said if you look at the

volume of traffic that we have, you will understand why we are so

overwhelmed, that there is very little enforcement effort that can

be done.

They were doing as much as they could such as x-raying purses

and suitcases and things like that. But for the individuals that

were not carrying this baggage, they just simply came across.

I watched a child of about 14 on roller blades make two trips.

He would go across the border into Mexico, roller blade back across

and meet some people in a parking lot on the U.S. side, and then

go back. I was quite certain of what that young man was doing.

The importation is a serious problem. Most of the problems that

we are having with pharmaceutical drug abuse in Virginia is

through over-prescribing by physicians. They are just prescribing,

for example for Oxycontin, more than is truly medically needed.

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That makes it available for sale on the street. Then once the person that is abusing it becomes addicted, then if the supply from the

physician is cutoff, we have arrested several doctors for this, then

they will go to Mexico or wherever they can to get it to bring it

back in.

I have heard testimony today concerning having a valid prescription to obtain the stuff and import it. The validity of a prescription

comes into play if you go on the Internet, fill out a form, and supposedly a physician will look at it in another State, perhaps, and

issue a prescription.

Virginia passed a law last year that causes a prescription to be

issued by a physician only when a true doctor-patient relationship

exists. That code defines what that doctor-patient relationship is.

It says there must be some type of an examination of the patient

by the prescriber. That way, we are hoping to try to stop some of

this Internet stuff from even getting a foothold in Virginia that

way. So far, that has worked very, very well.

I will be glad to answer any questions that you have.

[The prepared statement of Landon S. Gibbs follows:]

PREPARED STATEMENT OF LANDON S. GIBBS, ASSISTANT SPECIAL AGENT IN CHARGE, BUREAU OF CRIMINAL INVESTIGATION, DRUG ENFORCEMENT DIVISION, VIRGINIA

STATE POLICE

Good morning Mr. Chairman and members of the Committee. My name is Landon

Gibbs. I am an Assistant Special Agent in Charge within the Drug Enforcement Division of the Virginia State Police. I thank you for the invitation to speak with you

today concerning the impact of prescription drug abuse and the personal importation of one of the most abused drugs.

My testimony will focus on three areas:

A brief description of the drug Oxycontin, it’s intended use and how it is abused

The impact on individuals and the community of Oxycontin abuse

Personal importation of prescription drugs

Oxycontin, its use and abuse

Oxycontin is a very effective analgesic, designed for moderate to severe pain relief,

chronic pain control and terminal cancer pain relief. It is a time-released form of

the narcotic analgesic Oxycodone. Oxycodone has a high abuse potential and is similar to Morphine in dependence liability.

Oxycontin is currently available in 10, 20, 40 and 80 mg tablets, as the manufacturer has ceased shipment of the 160-mg tablet. Oxycontin is pure Oxycodone, with

no other active ingredients, as compared to other analgesics such as Percocet, Tylox

and Percodan. The time release formulation allows patients 8 to 12 hours of pain

relief from a single dose.

There are relatively few known incidents of addiction, or physical dependence, to

Oxycontin when the drug is taken as prescribed by a physician. It becomes highly

addictive when the time release formulation is bypassed by crushing the drug, then

either inhaling the powder or mixing the powder with water and injecting the solution. This allows the abuser to receive the full effect of the pure Oxycodone almost

immediately. This creates an effect similar to illicit opioid narcotics, such has heroin.

In Virginia, most of the Oxycontin sold on the street and abused comes from legitimate prescriptions written by physicians. It is quite obviously being over prescribed and prescribed to individuals who do not need it for pain relief.

Impact of abuse on individuals and communities

Individuals who abuse Oxycontin by inhaling or injecting the crushed tablets

quickly become addicted. This creates a mindset in which the only goal of the individual is to obtain more of the drug. Interest in work, family and personal well

being simply disappears. The individual often develops a drug-seeking behavior in

which jobs, family, friends will all be sacrificed in an effort to obtain money to buy

more Oxycontin. Thefts of money or items to sell from family members are all too

common. Some result to prostitution or other criminal acts to fund their habit.

Oxycontin has a street sale value of one dollar per milligram.

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The community also suffers when Oxycontin, or other drugs, are abused by a significant number of the population. Virginia has had over 50 deaths related to

Oxycontin abuse, through overdosing or combining the drug with other substances,

such as alcohol or other prescription drugs. In addition to the emotional tragedy of

these deaths, the financial impact on families, the community and welfare programs

is quite significant. In southwest Virginia, local police are overwhelmed with the increase in property crime related to Oxycontin addicts. Armed robberies and burglaries of pharmacies are becoming a very real problem. Thefts from homes and

business, writing bad checks, car jacking and other crimes are increasing as the

drug addicted individuals seek anything they can sell for money to buy the drug.

In northern Virginia, a woman was arrested for illegal possession of Oxycontin

and teaching her 15-year-old son how to crush and inhale the drug. In another case,

an undercover buy of Oxycontin was made in a home where a 10-year-old was

crushing the drug and preparing to inhale it, in the presence of his father. The drug

is reportedly being widely abused by college students.

Personal importation of prescription drugs

Over the last two years, rumors have been heard concerning the street sale of

Oxycontin that was obtained in Mexico. The price of the drug is Mexico is approximately ten cents per milligram. The street resale value in Virginia is one dollar per

milligram. Under current federal guidelines, an individual is permitted to bring in

up to 50 dosage units of a prescription drug. If that individual purchases 50

Oxycontin tablets of 80 mg each, he or she would pay approximately $400 in Mexico.

That same amount would be worth $4,000 on the street in Virginia. I believe that

what is taking place is that groups of people are making multiple border crossings

in a short period of time to import this drug. The profit margin is very high. There

is no risk of being detained at the border as no laws have been violated at this

point.

The State Police, working with the Drug Enforcement Administration, have made

several arrests of individuals selling Oxycontin that was obtained in Mexico. These

individuals were traveling to Mexico and obtaining 5,000 dosage units each per trip.

In statements made after their arrest, they said they purchased the Oxycontin for

10 cents per milligram and the Mexican pharmacists helped them conceal the drugs

on their body. These individuals made at least three trips to Mexico and none were

ever checked entering the United States. They remarked that as long as a person

did not carry any bags or a large purse, the Customs officers would not do any serious checking or questioning.

In April of this year I visited the border crossing at Tijuana. The volume of vehicle and foot traffic entering the United States overwhelms the efforts of both the

Immigration Service and the Customs Service. On this particular day there were

only three Customs officers at this border crossing. One was assigned to deal with

bus traffic and the other two dealt with foot traffic. I spoke with one Customs officer

who stated that it is impossible for them to really check what is being imported.

Hundreds of vehicles were streaming into the United States. On this day I did not

see any being searched.

The importation of prescription drugs is a serious problem. If the importation is

for a true medical need, then the issue of why such a significant price discrepancy

between the United States and other countries is a matter of concern. And if the

50 dosage unit regulations stay in place, should the returning U. S. citizen be required to produce a copy of a U. S. issued prescription? If the importation is not

based on medical necessity, then no amount should be permitted into this country.

Finally, all the importation regulations are, in reality, useless unless there is an

effective system in place at the border to enforce them.

I thank you for the opportunity to speak with you today and will be glad to answer any questions.

Mr. GREENWOOD. Thank you for your testimony.

The Chair recognizes himself for 5 minutes for inquiry.

When we went out to Dulles Airport, we saw the overwhelming

number of packages that were coming in. We saw how many of

them contained pharmaceuticals, but we also saw that not only is

Customs completely overwhelmed by the flow of illegal drugs into

this country, but FDA completely overwhelmed given its current regime.

It seems to me we have two choices. We can throw up our hands

and say it’s an overwhelming volume coming in through the mail,

62

an overwhelming volume coming across the border in Mexico. We

don’t have the manpower. We don’t have the resources to do anything about this. Then we can continue to bury kids in this country. We can bury kids as the Rodes did, 50 overdoses from one drug

alone in Virginia. Or we can get serious about this and get down

to a tolerance level that puts an end to this.

Now I am very pleased to hear the testimony from the Food and

Drug Administration today that the recommendation has been

made to the Secretary of Health and Human Services that in fact

we don’t throw our hands up. In fact, we get down to essentially

zero tolerance. This is, to me, good news.

Now the question will be it is one thing to say that. It is one

thing to say every single package that comes into the United States

that has a drug in it, pharmaceutical product, legal in this country,

not legal in this country, with a prescription, without a prescription

it is going to be turned down except for a very minute percentage

that might be for compassionate use. The question is, can that be

implemented?

I want to address that question first to Customs, because you are

first online. Then to the FDA. We are delighted that you come here

to this hearing and tell us that this is going to be essentially a zero

tolerance. The question is, can that be implemented? Are we likely

to hear from the Health and Human Services Secretary that this

will be the policy, go to work, shut this stream of dangerous drugs

down, and feel that we have solved this problem? Or are we likely

to hear that it is a nice idea, but it is impossible to enforce and

we can’t do it.

Ms. Durant?

Ms. DURANT. The Customs Service was also very pleased to hear

this. We believe that this will, while we might miss one in the xray once and a while, our inspectors are very astute using the xray and other factors, packaging and some intelligence on occasion

in the sort. For us administratively, this is a giant leap forward because we can then simply redeliver the mail to the Post Office and

say return it. We do not today have the authority to refuse admission. So this would give us that ability. I think it would make a

very big difference.

Mr. GREENWOOD. Do we need, either for Customs or for the FDA,

do you need a change in the law to do this or just a change in the

policy within the Food and Drug Administration?

Mr. HUBBARD. Well we have examined that, Mr. Chairman. We

believe we might be able to do this by regulation. We actually have

the authority now to stop this material. But as I said earlier, we

have to go through these notice requirements that are so burdensome with the numbers and small staff we have, that it makes it,

as a practical matter, impossible.

We think the better thing to do though would be to come to the

Congress and get explicit authority to eliminate that notice, obviously just for these sorts of things, not for all shipments of things.

Obviously commercial shipments of drugs and that sort of thing

would continue under the existing regime.

Mr. GREENWOOD. Well, it seems to me that—and you and I have

had this conversation informally—but it seems to me that what we

have here is we have this firehose of drugs coming across the borVerDate 11-MAY-2000 15:01 Oct 18, 2001 Jkt 010199 PO 00000 Frm 00066 Fmt 6633 Sfmt 6602 E:\HEARINGS\73737 pfrm07 PsN: 73737
63

der and coming in through the mail. In part, we have it because

the policies that have been in place, and the border policies that

have been in place at the airports has been relatively permissive.

It has been it’s too much to handle kind of an approach.

It seems to me that if we take a zero, essentially zero tolerance,

that what is going to happen is the people who are ordering these

drugs are going to find that they never show up. Just as they found

out through word of mouth, through the Internet, through Internet

chatrooms that we have looked at some of the conversation that

goes on in Internet chatrooms about how to get these drugs, just

as they learned how to get them illicitly, they will begin to learn

that the party is over, that they are not going to come in any more,

and that they are going to waste their money.

When somebody uses a credit card or other means to pay for a

drug that never arrives, one would assume that they would stop

doing that, that their friends would stop doing that, that their associates would stop doing that. Eventually, these illicit facilities,

both in Mexico, physical facilities and the cyber facilities, the

websites that access drugs in other continents, would eventually go

out of business for lack of demand.

So I am delighted to hear that this is going to be the recommendation. You can be assured that this Member of Congress,

and I think the others on the panel, will support that recommendation to the Secretary, and that we will be more than happy to pass

the legislation that is necessary in case there is any question with

regard to your authority in this matter.

The Chair yields back the balance of his time, and recognizes Mr.

Dingell for 5 minutes for inquiry.

Mr. DINGELL. Mr. Chairman, thank you for your courtesy.

Ms. Durant, two questions. A simple yes or no answer I think

will suffice. In your Carson City project, in 4 or 5 weeks Custom

inspectors could have stopped approximately 16,000 parcels containing pharmaceuticals or something that appeared to be a pharmaceutical. Is that correct?

Ms. DURANT. That is correct.

Mr. DINGELL. It is also true that FDA could process only a tiny

fraction of these, approximately 30 a day? Is that right?

Ms. DURANT. That is also correct.

Mr. DINGELL. So they could only then have reviewed a minute

portion of this?

Ms. DURANT. That is correct.

Mr. DINGELL. Now this to Food and Drug: That was because of

lack of attention, lack of personnel, lack of money, or why?

Mr. HUBBARD. It is clearly lack of staff. We have 150 inspectors

around the country to do import work, Mr. Chairman. We do not

have the resources to look at these small packages.

Mr. DINGELL. Thank you.

Now, Ms. Durant, FDA could not handle this volume and Customs was forced to release about 14,000 parcels to customers without any formal FDA review. Is that right?

Ms. DURANT. Yes, sir.

Mr. DINGELL. That could have been controlled substances, Category 1 substances, which are absolutely forbidden either to manufacture, possess, or sell. Is that right?

64

Ms. DURANT. We have authority to make some seizures on our

own authority.

Mr. DINGELL. But I am talking about the 14,000 that you released. That could have been anything?

Ms. DURANT. They were not all reviewed, then it could have been

anything, yes, sir.

Mr. DINGELL. It could have been almost anything.

Now, Ms. Durant, FDA has written guidance to Customs that

says as follows, ‘‘It is expected that a Customs Officer from the

Customs Mail Division will examine a parcel and will set it aside

if it appears to contain a drug, biological or device. Reality in the

field: A small number of pharmaceuticals are referred to FDA by

Customs and by the two IMBs. For the most part, if the parcel

doesn’t contain a scheduled substance, it is released back to the

Postal Service for delivery.’’ Is that right?

Ms. DURANT. Yes, sir.

Mr. DINGELL. That is a major contributor, if it not, to the situation that we confront?

Ms. DURANT. Yes.

Mr. DINGELL. Because Customs has to do the work, gets no examination or scrutiny by FDA, and almost anything can get by this

rather curious kind of net. Is that right?

Ms. DURANT. It is an overwhelming challenge, yes.

Mr. DINGELL. Now, is it my understanding that currently we

have 13 mail facilities across the country that process international

mail? Is that correct?

Ms. DURANT. Yes, sir.

Mr. DINGELL. Now I would note that most major cities have such

facilities in it, New York, Dallas, Miami, Washington, D.C.

Now, Ms. Durant, isn’t it the case that similar to what we are

experiencing in the Los Angeles facility, these other mail branch facilities are being overwhelmed?

Ms. DURANT. It is generally correct. The degree of being overwhelmed depends on the source country of the packages to those

facilities, but that is generally correct.

Mr. DINGELL. And we must infer that this overwhelming is leading to a substantial risk of unsafe, counterfeit, or prohibited substances that should not be permitted in under the law. Is that

right?

Ms. DURANT. Yes, sir.

Mr. DINGELL. Does Food and Drug deny this?

Mr. HUBBARD. Yes, Mr. Chairman. We see a huge diversity of

every sort of drug you can imagine that’s coming in these packages.

Mr. DINGELL. Thank you.

Now, Ms. Durant, isn’t it the case that before the recent visit to

the Dulles mail facility 2 weeks ago, in just 4 hours your inspectors

found 160 parcels containing pharmaceuticals?

Ms. DURANT. Yes, sir.

Mr. DINGELL. Now isn’t it true also that your agency is finding

on a regular basis pharmaceutical products that are being shipped

into this country that are expired, shipped in plastic bags with no

labels or instructions as to their use, or pharmaceuticals that your

agents can’t even identify as FDA-approved products? Is that right?

Ms. DURANT. That is correct.

65

Mr. DINGELL. So this question to FDA. On these matters, you

have no way of knowing whether these substances coming in meet

the requirements that the United States has with regard to safety

or efficacy of prescription pharmaceuticals. Indeed, you have no

way of knowing whether they have been manufactured using good

manufacturing practices?

Mr. HUBBARD. I would go even further, Mr. Dingell, and say they

probably do not. Here is one particular package from Thailand. We

spent a week with some of the best drug data in the world trying

to find out what that is. There are three types of pills in here that

we cannot determine what these pills are.

Mr. DINGELL. Was it addressed to a drug cartel member?

Mr. HUBBARD. No. It was addressed to a citizen in Northern Virginia, to the best of my knowledge.

Mr. DINGELL. Now, Ms. Durant, it is also the case your agency

are seeing schedule I drugs, such as Ecstacy being blister wrapped

and being sent into the United States through the mail. Is that not

true?

Ms. DURANT. That is true.

Mr. DINGELL. Let me go over some of the findings you made regarding Operation Safeguard, and see if I understand them.

There’s one point that I want to address particularly. Not even a

single parcel that you received in this met all of FDA’s criteria for

importation of prescription drugs. Is that so?

Ms. DURANT. That is so.

Mr. DINGELL. Not a single one?

Ms. DURANT. Not a single one.

Mr. DINGELL. Isn’t it the case, Mr. Hubbard, that many of the

thousands of the products being shipped into the United States are

from unknown origins, that they pose considerable risks to consumers because they may be counterfeit, expired, super-potent,

sub-potent, simply tainted, or mislabeled so as to constitute something other than what appears to be, possibly even including

Schedule I substances?

Mr. HUBBARD. I think it is highly likely that is correct. Perhaps

certainly correct.

Mr. DINGELL. Now, Ms. Durant, in the Los Angeles project, your

agents had to send thousands of parcels to consumers because the

system that the FDA and Customs relied on cannot handle the volume that you were now seeing. Is that right?

Ms. DURANT. That is correct.

Mr. DINGELL. Ms. Durant, has the United States Customs asked

for guidance from FDA?

Ms. DURANT. Yes, sir. We have.

Mr. DINGELL. What has happened as a result? Have you received

guidance?

Ms. DURANT. We have not received all of the guidance that we

need to be effective in this area. However, we have been working

together to come to practical guidance. This announcement today

is very good news for us.

Mr. DINGELL. It is very clear, however, that the guidance that

you have up until now is not adequate to address the problem. Is

that not so?

Ms. DURANT. That is so.

66

Mr. DINGELL. Mr. Hubbard, isn’t it the case that a U.S. citizen

cannot walk into a pharmacy and purchase a controlled substance

such as Darvon, Percocet, or Valium without a prescription, because these drugs pose inherent risks of addiction?

Mr. HUBBARD. That is correct.

Mr. DINGELL. All right. But, however, they can do the same thing

in Mexico, purchase these very same drugs legally and bring them

back into the United States as long as they are declared to U.S.

Customs and have less than 50 tablets per drug. Is that right?

Mr. HUBBARD. I understand that is correct, that they can purchase it in Mexico. I will defer to DEA on the bringing back part.

Mr. DINGELL. Does anybody wish to deny that statement? Well,

then we will let that stand for the record.

Now to all witnesses, do any of you have evidence that Oxycontin

is available in Mexico? Is it being brought into the United States

under the 50 dosage unit policy?

Do any of you have evidence that Oxycontin is available in Mexico and is being brought into the U.S. under the 50 dosage unit policy? That question to all members of the panel.

Ms. NAGEL. If I could try to address it. We have received information that Oxycontin is being smuggled.

Mr. GREENWOOD. Ms. Nagel, will you flip on your microphone?

Ms. NAGEL. Thank you. Excuse me. We have information specifically from Virginia that Oxycontin is smuggled in large quantities.

We have no specific information about the 50-dosage-unit exemption being used to specifically bring in Oxycontin in any kind of organized manner.

Mr. DINGELL. Can you deny that Oxycontin is coming in through

the 50-dosage exemption?

Ms. NAGEL. I have no specific information other than that individual, sir.

Mr. DINGELL. Now you are with DEA, are you not?

Ms. NAGEL. Yes, sir. I am.

Mr. DINGELL. And DEA doesn’t know then whether Oxycontin is

coming in or not. Is that right?

Ms. NAGEL. I said it is coming in, but whether it is coming in

in any organized group, we have one case that we are aware of.

Mr. DINGELL. But you don’t know whether it is coming in under

the 50-unit exemption?

Ms. NAGEL. If it is, sir, it is coming in individual-by-individual

case.

Mr. DINGELL. Okay. Can you deny that it is coming in?

Ms. NAGEL. No, sir.

Mr. DINGELL. Is there any reason to believe that it could not

come in under this 50-unit exemption?

Ms. NAGEL. It would come in under the 50-unit exemption if the

individual met all the requirements of the exemption.

Mr. DINGELL. If the exemption is not enforced, he comes in and

shows 50 units, and walks through the Customs checkpoint. Is that

right?

Ms. NAGEL. It is my understanding that can happen.

Mr. DINGELL. You say it could happen.

Ms. NAGEL. Yes, sir.

67

Mr. DINGELL. Is there any reason to believe that it has not happened?

Ms. NAGEL. No, sir.

Mr. DINGELL. Does the Customs have any evidence or comments

on this particular point?

Ms. DURANT. We do have evidence that it is coming in under the

50 dosage units.

Mr. DINGELL. Under the 50 dosage unit?

Ms. DURANT. Yes.

Mr. DINGELL. Have you communicated that to DEA?

Ms. DURANT. We are gathering the data now.

Mr. DINGELL. You are gathering the data now.

Just quickly, perhaps the DEA can inform us. What is this

Oxycontin? It is a very, very powerful substance, is it not?

Ms. NAGEL. Yes, sir. It is.

Mr. DINGELL. It is absolutely banned for sale or marketing in the

United States. It is Schedule I, is it not?

Ms. NAGEL. No, sir. It is not. It is a Schedule II.

Mr. DINGELL. It’s a Schedule II?

Ms. NAGEL. It is a legitimately manufactured pain medication. It

is Oxycodone. It is a long-term release formulation that allows you

to take it every 12 hours instead of having to take your pain medication every 4 or 3 hours. It is a Schedule II, sir, and it is legitimately manufactured and prescribed in this country.

Mr. DINGELL. And it is highly addictive, is it not?

Ms. NAGEL. Yes, sir. It can be highly addictive if misused.

Mr. DINGELL. I think my time has expired, Mr. Chairman. I

thank you for your courtesy to me.

Mr. GREENWOOD. The Chair thanks the gentleman.

The Chair would note, Mr. Hubbard, that those of us who have

served on this committee for more than 6 years still affectionately

refer to Mr. Dingell as the Chairman, but we do not encourage our

witnesses to do so.

Mr. DINGELL. Mr. Chairman, I would like to just make a brief

observation. I don’t care how the witnesses refer to me, as long as

they answer the questions.

Mr. HUBBARD. I do apologize to the current chairman. Former

Chairman Dingell was with us for so many years that it is difficult

to—you know, habits do grow.

Mr. GREENWOOD. After I am here for 20 more years, you will get

used to it.

The Chair recognizes the gentleman, Mr. Whitfield, for questioning.

Mr. WHITFIELD. Thank you, Mr. Chairman. I also would like to

say that I was delighted to hear Mr. Hubbard outline his proposal

to Secretary Thompson. With Mr. Greenwood, I certainly think that

would be the most effective way to deal with this problem, because

obviously the authorities do not have the manpower or the money

to be very effective in preventing these drugs from coming in. So

I am delighted that you all are going to recommend that, have already recommended it, and would like to reiterate what Mr. Greenwood said, that I know most of the people on this committee I am

sure would look forward to working with you in implementing that.

68

On the drug Oxycontin, obviously it is an effective drug, pain

killer, and it is legal when it is manufactured in the U.S., it is prescribed. I guess from my understanding, most of the problem relating to Oxycontin appears to be by theft, robbery, whatever. I mean

is it a gigantic problem that it is coming into the country illegally?

Ms. NAGEL. If I could answer your question, sir. Our best information is that we have illegal prescribing, improper prescribing,

pharmacy thefts, fraudulent prescriptions, doctor shopping. We do

believe that Mexico could in fact be contributing to our problem.

When we received this information, we took some pretty aggressive steps. There is a single manufacturer of this narcotic. We have

met with the company. We explained that we had information. We

specifically had one case where people were smuggling it. As a result of our request, they have agreed to change the indicia of the

drug. The drug that is now going to be exported to Mexico will appear different. If we then encounter it on the U.S. territories, I will

then have the evidence and data I need to determine that it is

being reimported.

Additionally, the company stopped shipping the 40 milligrams to

Mexico. The 40 milligrams that were in-country in Mexico were

moved from the border pharmacies. They were moved inland. So at

this time, you can get the 10 milligrams and 20 milligrams.

If I am given the evidence and the data to demonstrate that in

fact it is coming back in, I am prepared to meet with the company

and look at some drastic measures. But what I need is the evidence. So we are hopeful, as everyone is gathering evidence, we

have a national action plan that we have put forward where we are

trying to gather the data and get our arms around the problem domestically and internationally. As we get the data and we can support the actions, we are more than prepared to move forward and

take whatever action we can to limit the diversion and abuse in

this country.

Mr. WHITFIELD. Now is Oxycontin exported to other countries as

well?

Ms. NAGEL. Yes, sir. It is.

Mr. WHITFIELD. Okay. So that is being done legally. Basically

what’s happening, once it gets to these other countries, then it is

illegally smuggled back into the U.S. to be used for purposes other

than medicinal purposes?

Ms. NAGEL. At this point, we have information about Mexico. My

concern was also that we could in fact experience the same thing

from Canada. So at the same time, I asked the company to change

the indicia of what goes to Canada. Fearing that my land borders

would make me the most susceptible to having it come back. They

are going to do that for me also. So that if I start to see it on the

street, I will be able to identify the source.

I have no information of it coming back from any of the European countries or anywhere else.

Mr. BURR. Would the gentleman yield?

Mr. WHITFIELD. Yes, I would yield.

Mr. BURR. For one question. From what you have said, is

Oxycontin only manufactured here?

Ms. NAGEL. There is one manufacturer, sir. They have plants in

other places. But it is manufactured by one company.

69

Mr. BURR. But is the product that you speak of in Canada actually manufactured in the U.S., sold to Canada?

Ms. NAGEL. It used to be manufactured in the U.S. It is now

manufactured in the U.K. It is exported from the U.K. to Canada.

But the company has agreed to change the indicia as it is made in

the U.K. so I can identify it if it comes back from Canada.

Mr. BURR. Thank you for that clarification.

Mr. WHITFIELD. Well, I appreciate you going into that explanation. Of course this is an important drug to a lot of cancer patients and others. So we certainly don’t want to do anything to

make it unavailable to them when it is prescribed legally in the

U.S. But we also want to make sure that we minimize the illegal

use of it. So it sounds like you all are making progress in that area.

Mr. Chairman, I will yield back the balance of my time.

Mr. GREENWOOD. The Chair thanks the gentleman, and recognizes the gentleman from Florida for 5 minutes for purposes of inquiry.

Mr. DEUTSCH. Thank you, Mr. Chairman. I want to take a little

bit of a different tack to focus in terms of what we actually find,

because again, having gone out to the Dulles facility, what is clear

is that not everything that is coming in is a controlled II substance,

controlled I substance. In fact, what appears, when we were there,

is the vast majority of stuff that is coming in is either potentially

supplements of some kind, foreign type supplements, or just homeopathic type things, or for that matter, prescription drugs, antibiotics, hypertension medication.

I think that is something that I think in the testimony and the

questions up to this point has not been clear. I mean for all of us,

and we can say it again and again, the volume of substances coming in is astronomical. I mean we are talking literally tens, hundreds of thousands, literally millions of substances coming in.

First, I mean if specifically I guess to Ms. Durant, would you sort

of contradict or would you confirm what I just said in terms of the

volume of the stuff coming in?

Ms. DURANT. The volume is astronomical.

Mr. DEUTSCH. Right. But the types, if you would categorize.

Ms. DURANT. The types are—I have looked at the lists of things

in these various operations. The types are mixed. You are correct.

There are some herbal drugs. There are some cardiovascular medications. But there are also a lot of steroids and narcotics and painkillers, and those sorts of things.

Mr. DEUTSCH. Right. Again, we were only out there for 1 day, although they did prepare for our visit by doing a sort beforehand.

But I think what is important to note is that again, we are talking

about the millions. We really literally are talking about millions of

substances coming in.

I think what was clear from Chairman Dingell’s comments and

from the questioning, and I think what really from the perspective,

and again I know this is on C-SPAN as well, and hopefully they

will get some coverage about this, is I don’t think on the prescription drug side if it is an antibiotic or if it is a hypertension medicine, that someone really is legitimately looking for the least expensive pharmaceutical. No one wants to buy something that is going

to kill them in that type of situation.

70

But I think one of the issues that again, you know it is hard for

you to address, but I will tell you that one of the perspectives I

have is that there are many Americans, millions of Americans,

maybe even tens of millions of Americans who can not afford prescription drugs, who don’t have prescription drug coverage, and for

that matter, don’t have medical coverage.

Mr. Hubbard, you made a great comment of your recommendation to the Secretary in terms of not allowing anything for anyone

unless they have a medical doctor’s direct supervision. Great theory

if we have universal coverage. I mean I hope that you add in your

recommendation, obviously I am being a little bit facetious in this,

but that you add that the administration also support universal

healthcare coverage for all Americans so that all Americans will

have the opportunity to have physicians prescribe them drugs, and

then have the supervision of those physicians for those drugs.

But until we get to that point in time, that is not America. I

mean that is not America. I mean America is a country with literally tens of millions of Americans, working Americans, who get

up in the morning every morning and go to work and work hard

and support their families, do not have let alone doctor coverage,

let alone prescription drug coverage.

So in the real world, and one of the things that we haven’t done

enough of, and again looking at the prescriptions and looking at

what is coming in in the tens of thousands, and the hundreds of

thousands of prescription drugs, not Schedule II, and again I am

not discounting the Oxycontin phenomenon, which is a very, very

serious issue. But I would assume that the percentage of the drugs

coming in at that is a relatively small percentage. Yes, we found

steroids. Yes, we found Ecstacy. But in terms of the volume, if you

were there with us, if you spent time looking at it, it is a small

percentage. It might be 5 percent. It might be less of the overall

volume. So these are normal prescriptions.

I guess that is the question that I am saying to you, is maybe

we are looking at this the wrong way. Maybe what we are really

looking at is absolutely that 5 percent is really significant. All

right? But the 95 percent very well might be hardworking, legitimate Americans who can not afford to go to a doctor to get a prescription, but are self-medicating. The answer that you gave is a

simple answer, it would stop this completely. But what do you say

to those people that can not afford going to the doctor, let alone

paying a normal prescription? I mean I am asking you as a question because you are making that recommendation to the Secretary.

Mr. HUBBARD. First, I am sure the Secretary shares your concern

about the availability of prescription drugs to all Americans. It is

virtually impossible to differentiate here, the diversity is so great.

There is every sort of drug coming in.

The problem is many of them allege to be a perfectly fine, an allergy drug, in this case. But we don’t know that. We do not know

anything about it. All we know is it has a name on it. We don’t

know what is in it. You can not test a box of ten drugs. It costs

between $6,000 and $15,000 to do what we call authenticity testing

of drugs. So to have the taxpayer pay to test that little package

would be obviously absurd.

71

So our fear is that it is an all or nothing thing, that you can not

distinguish between all of these millions of little packages. There

is just no way that we know of. I assure you, we have spent considerable effort in the last couple of years trying to assess what these

things are and what we might be able to do to parse out the most

dangerous, the less dangerous, whatever. We just do not know a

way.

Mr. DEUTSCH. Again, I guess, and this is a final question because

I know we are in a vote and my time is up as well. I mean there

is no one who is in that legitimate category that wants to purchase

a drug that does not have the right dosage, that is a counterfeit

drug, that is a misdiagnosed drug, that is impure in terms of facility. Obviously none of this stuff is really safe. I mean I think we

can all acknowledge that. We have no oversight of the facility in

Thailand. We have no oversight of the gray market stuff. We have

nothing.

One of the things about our system in America is when you go

to a pharmacy you have it. FDA does a great job in terms of its

oversight, in terms of that. There is a safety level unparalleled in

the world, unparalleled in world history in terms of drugs in the

U.S. No one wants to do that.

But I guess one of the things that I think of when I am looking

at this is what is driving people to put themselves at risk, to put

their families at risk, to put their children at risk. They are not

doing it for fun. I mean they are doing it because they want to save

money. There are people out there who are using the Internet to

purchase prescription drugs which again, the sites are nice looking

sites and the description of my colleague from Michigan very well

might be that in Thailand it is a beautiful website, but it is a ratinfested hellhole that is producing this stuff in Thailand.

I mean we saw literally dozens of boxes that were clearly from

the same location in Thailand. I mean it was clear that it just so

happened we got a batch of drugs being sent from a facility in

Thailand. We opened them with the Customs officials, and they

were different drugs. They were prescriptions, prescription drugs

that people were clearly self-medicating.

I guess I mean we would think that a meaningful drug benefit

would deal with this. But I mean that is why I do not think it is

as simple as you are saying. I think that you will find a lot of opposition in Congress just to ban this across the board, because in fact

there are a great deal of legitimate people using this avenue, not

out of choice, but almost out of desperation.

Mr. GREENWOOD. The Chair thanks the gentleman. We could

also solve the universal healthcare problem by allowing auto body

shops to set up surgical centers, but that would be pretty dangerous too.

We are going to recess now for this vote until 1. We will reconvene then. We thank the witnesses for their patience.

[Brief recess.]

Mr. GREENWOOD. The subcommittee will reconvene again. We

thank the witnesses for their forbearance.

The Chair recognizes for 5 minutes for purposes of inquiry the

gentleman, Mr. Burr.

Mr. BURR. I thank the chairman.

72

Mr. Hubbard, let me say to the FDA I was shocked at what you

told us. I was pleasantly pleased though that the FDA had taken

a very strong position on this, and I want to commend you and

commend the agency because I think the problem is severe. I think

it needed a drastic recommendation.

Let me ask you what the Secretary’s response to the proposal has

been so far.

Mr. HUBBARD. Well, we talked to him on Monday. I think he certainly understands the issue. But he wanted to have more opportunity to talk to us, to understand the risks, to understand the procedure. I think he feels he needs a little more information. We will

be giving him that, I think very soon. Of course he will probably

want to consult further within the administration as well.

Mr. BURR. How long will it take us to get some indication from

the Secretary as to whether the agency will adopt this proposal?

Mr. HUBBARD. I can’t tell you, Mr. Burr. That is his prerogative.

Mr. BURR. How urgent on behalf of the FDA does the FDA think

this problem is?

Mr. HUBBARD. Well I think by the very fact that we have characterized the risk here as so great, we would call it pretty important.

The Secretary and his staff, we have already had discussions with

them. They are very attentive to this. This is not something where

they can’t find time to think about.

They do want to have information.

Mr. BURR. Ms. Durant, is the mail that is received at JFK higher

in the number than it is received at Dulles?

Ms. DURANT. Yes, sir.

Mr. BURR. How many packages discussed in x-ray at JFK?

Ms. DURANT. Twenty to 30 times Dulles.

Mr. BURR. Do you x-ray all the packages at JFK?

Ms. DURANT. Not all of them at JFK.

Mr. BURR. What percentage?

Ms. DURANT. Ten to 15 percent.

Mr. BURR. Ten to 15 percent?

Ms. DURANT. About. I could get a better number for the record.

Mr. BURR. Let me state that we understand the constraints that

Customs is under. We understand how difficult it is to operate in

a policy that today is so loosely written whether you are any of the

agencies that are up here. But if the Secretary needs a nudge on

the urgency, we have seen the degree of the problem with just the

10 or 15 percent that we check. Think about the 85 percent that

we are not.

The burden that is placed on Customs today is huge. My hope

is that in that proposal they have got the ability when there is a

drug shipment that comes in, to stamp ‘‘return to sender,’’ and it

is over with. It is out of their hands. It does not need the FDA to

send somebody in. It does not need a letter to go to somebody. We

need to eliminate that from the process so Customs can get to the

next piece of the puzzle in their job responsibility.

Is this proposal, does it include all prescription drugs?

Mr. HUBBARD. Yes, it would, Mr. Burr, except for the exception

I mentioned of the compassionate use.

Mr. BURR. Compassionate use.

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Mr. HUBBARD. Now it would not include at this point the socalled walk-across folks that go to Canada or Mexico. There, we

would like to think about that some more. There, you have a faceto-face interaction. The patient actually stands in front of a pharmacy and purchases a drug, say in Canada. There is an opportunity because of that to go back if there is a problem and find the

source of the drug. There is an opportunity for FDA or Customs or

others as the patient is coming back across the border, say the Canadian border, to be warned, to be given perhaps a slip of paper

saying if you have bought drugs, you need to be——

Mr. BURR. Are they required when they cross in person to show

a prescription for what they——

Mr. HUBBARD. I believe they are required to declare, but I will

ask Ms. Durant to answer that.

Ms. DURANT. For the 50 dosage units, they are not.

Mr. BURR. They are not, are they?

Ms. DURANT. No.

Mr. BURR. In the next panel, panel three, Marvin Shepherd, the

College of Pharmacy, University of Texas, will testify that he has

just been to the border. He has seen Oxycontin packaged in blister

packs, 50 pills, so that it meets the requirements not to be scrutinized as you cross the border. They are just sending it across dayin and day-out. I hope that the DEA will in fact listen to his testimony because it is happening. It will continue to happen. We won’t

stop it with that exception to the proposal that you have in fact

made to the Secretary. So I would ask you to really go back and

look at that. We do not want to just narrow the problem to two borders that we already have significant problems with.

Let me ask you, would it include over-the-counter products?

Mr. HUBBARD. Generally, over-the-counter products like this are

also unapproved. We have given them less attention because they

are viewed generally as safe, but yes, it would.

The theory is that any drug bought in another country that is

unapproved can not be safe.

Mr. BURR. Customs would not have to make a determination?

Mr. HUBBARD. That is correct, Mr. Burr.

Mr. BURR. Let me ask you on one other subsection, animal drugs.

Mr. HUBBARD. Animal drugs?

Mr. BURR. Yes, sir. Currently in this country for animals, we access quite a few drugs from Europe and from Canada. Do you see

animal drugs included under this or do you look at an exception

for that?

Mr. HUBBARD. To be honest, we have not had any discussion

about that. I am not aware that that is a problem, but I will be

glad to check that out and get back to you.

Mr. BURR. Granted, animal drugs are not in the volume of

human drugs. But I think when you look at the access that they

need from international markets, it is much greater than the access that we need for human drugs. But I would ask you to look

at that.

Does Mexico have an equivalent to the FDA?

Mr. HUBBARD. Yes, they do. But obviously different countries

have different levels of regulation.

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Mr. BURR. Do we have a harmonization agreement with the approval process with the Mexican agency that is the equivalent?

Mr. HUBBARD. No, we do not.

Mr. BURR. Have we been able to harmonize the standards on

drug approvals with the EU yet?

Mr. HUBBARD. We made great progress in a number of areas of

drug testing and development, yes. We are not 100 percent there,

but that is certainly the goal, to make them the same in both EU

and here. The Canadians are involved in that as well.

Mr. BURR. But the reality is that we don’t even have the confidence in their systems that we can interchange the standards

that we use even in the European Union. That is correct, isn’t it?

Mr. HUBBARD. That is correct. Although perhaps some day under

the constructs that are being envisioned, that may be possible.

Mr. BURR. I would like to read just a piece out of your testimony.

I will comment on it and let you comment as well. ‘‘The FDA has not officially permitted the importation of foreign

versions of U.S. approved medications, even if sold under the same

name.’’ ‘‘The FDA has not officially permitted the importation of

foreign versions of U.S. approved medications.’’ That one statement

right there would say that the only products that could the under

even today’s standard come back in are products that were manufactured in the United States.

Mr. HUBBARD. Or in a foreign plant that was approved and inspected by the FDA.

Mr. BURR. Well, this says, ‘‘The FDA has not officially permitted

the importation of foreign versions of U.S. approved medications

even if sold under the same name.’’ That would be products manufactured.

Mr. HUBBARD. No. I think what that refers to, let’s say Viagra

might be made in Pfizer’s Irish plant, which is approved by FDA

and it might be made in Pfizer’s—I am making up this example,

of course—Spanish plant that is the drug that’s sold in Europe and

Asia. We might not have inspected and approved that plant. So the

Irish plant could bring the drug to the United States and the Spanish plant could not.

Mr. BURR. Let me read one other piece. ‘‘Therefore, unapproved

drugs and reimported approved medications may be contaminated,

sub-potent, super-potent, or counterfeit.’’ Given that that is part of

the FDA’s testimony today, let me just ask you one question. How

could the FDA sit silent over the past 2 years when the debate of

reimportation took place in the Congress of the United States?

When today that is a great threat in your testimony, reimportation

of approved medications contaminated, sub-potent, super-potent,

and counterfeit. How could the FDA sit silent during that debate?

Mr. HUBBARD. I think we have been consistent in expressing our

concern about the safety of these products during the debate last

year about the bill that passed Congress to allow large shipments,

commercial shipments to come in. I do believe, Mr. Burr, we have

been fairly consistent in saying that the system that Congress created in 1938 serves the public very well. It is a fairly rigid system.

These sorts of drugs from other countries, whether they are large

commercial shipments or these personal amounts, can not be as

easily assured of safety.

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Mr. BURR. Given your proposal to the Secretary relevant to this

issue that we are here talking about today, what would the FDA’s

position be to this committee if the Congress were considering reimportation legislation like we saw last year?

Mr. HUBBARD. I think we would be saying the same thing to the

committee that we said last year to the various Members of Congress, which is we are very concerned that a system, if designed

to be a different system than the current system, poses risks and

we can not be assured that we could successfully implement such

a system and bring in safe drugs because we do not have the same

level of confidence about where it was manufactured, and how it

was manufactured, and by whom it was manufactured, that we

have under the current system.

Mr. BURR. Let me suggest if you get asked the question again,

that you give the response of the recommendation that you made

to the Secretary as boldly and forcefully as you said it. Today we

have an unwritten policy for products coming in, if they meet a certain dose—and you have said there is no way for us to do this. We

need to shut it down. There is no way you can look at this and say

we have got to shut it down, the problem is so great, and look over

here and try to make an issue of reimportation work.

We can not ask Customs to determine where it was made, where

it came from, how it was stored, whether it is counterfeit, whether

it is adulterated. You know, I said to some of my colleagues I hoped

everybody read the New York Times article this week about three

fake drugs are found in U.S. pharmacies, hormone drugs, wellknown manufactured companies that their product had been contaminated on the shelf with counterfeit product. Because of the

great work of the FDA and their ability to track from wholesaler

to wholesaler to wholesaler, I think they have got a pretty good

handle on how this happened. Does it eliminate it again? No.

But the reality is that even the shelves of the pharmacies that

we go to in this country are susceptible to having contaminated

products with the absolute gold standard in the world as far as

drug approval and review.

My hope is that we will not open that system up to the ability

for it to deteriorate with something that sounds good like reimportation or something that sounds good like personal use. We

ought to always be the compassionate country that has a compassionate use exception to the standard. But for God’s sake, let us

have a standard. I think that is the only hope of this committee.

Mr. Chairman, I thank you. I yield back.

Mr. GREENWOOD. The Chair thanks the gentleman, and recognizes Mr. Stupak. Before doing so, I understand Dr. Leshner has

a pressing need to leave and excuses him from further testimony.

Mr. Stupak?

Mr. STUPAK. Thank you, Mr. Chairman.

In response to Mr. Burr’s question, Mr. Hubbard, you indicated

that the FDA is consistently concerned. With all due respect, consistently you have been doing nothing about this problem. I’m

going back to 1996 when Dr. Shepherd gave you a copy of his report about these drugs coming across the Mexican border, and

nothing has happened.

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We hear from the Rodes today that you go there and you got

their information in July of last year. Again, they have heard nothing back from the FDA. At least the Customs has agreed to at least

meet with them. Can you make a commitment to the Rodes you are

at least going to meet with them and tell them what is going on?

They lost their son. It is a year later, and you don’t even respond

to them?

Mr. HUBBARD. I spoke to Reverend Rode before the hearing, Mr.

Stupak, and expressed my condolences, and assured him that the

most vigorous investigation was underway. The question of feedback to him is not one that I can answer well. These investigations

are kept, for obvious reasons, pretty quiet because we have to do

that.

Mr. STUPAK. I am not here asking for an answer. I am saying

at least show the people some respect and get back with them. You

met with their daughter. You took the drugs. They don’t even know

what it is. You have done basically nothing. They had to come here

to Washington, D.C. to figure out what you are doing, if you are

doing anything.

Mr. HUBBARD. I told, Mr. Stupak, that we have talked to them

and given them some feedback. But I will be glad to confirm that.

Mr. STUPAK. That is not what they are telling us.

Mr. HUBBARD. Yes. I understand.

Mr. GREENWOOD. Would the gentleman yield?

Mr. STUPAK. Yes, I would, Mr. Chairman.

Mr. GREENWOOD. Very briefly. We would appreciate it if FDA

and Customs would arrange—we will arrange for the staff if you

would brief interested members of this subcommittee on the status

of that investigation in a confidential matter. I think that would be

useful. I would like you to take that back to your offices.

I yield back to the gentleman.

Mr. STUPAK. Thank you.

This recommendation you made to Secretary Thompson on Monday, is that in writing?

Mr. HUBBARD. Well, yes. As well as we have met with him and

with his staff more than once. There will be further discussions.

Mr. STUPAK. Will you submit that for this committee?

Mr. HUBBARD. I will certainly determine if we can do that, yes.

Mr. STUPAK. How long will it take to make this recommendation

become a reality?

Mr. HUBBARD. Well, as I said, if we——

Mr. STUPAK. No, no. I want some answers.

Mr. HUBBARD. Okay. I hate to say it, but have to throw it back

to Congress because we can’t do this.

Mr. STUPAK. Throw it back to Congress? You need us to do it?

Mr. HUBBARD. I’m sorry.

Mr. STUPAK. Do you need us to do it? Was it quicker for us to

do it or to wait for the Secretary?

Mr. HUBBARD. We explained two avenues, Mr. Stupak, to implement this. One is to write a regulation.

Mr. STUPAK. Write a regulation, get it approved, you have got to

publish it in the Register, 180 days comment period. We are at

least a year away, are we not?

Mr. HUBBARD. If we do a regulation, that is correct.

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Mr. STUPAK. And if Congress moves, good grief, it could be 5

years away. Right?

Mr. HUBBARD. The only alternative is for us to try to accept

these things now, and I do not think we can do that.

Mr. STUPAK. My impatience not only goes back to 1996 Dr. Shepherd, but I will start here with January 6, 2000, letters from Commissioner of Customs, letters back and forth not only from this

committee, but from Customs and others, asking you to address

this issue. We get back a lot of nice letters saying we are concerned, we are consistently going to do something, but nothing ever

happens. I am trying to pin you down to a timeframe because this

can not go on.

In the recommendation you made to the Secretary, the same recommendation the chairman and the rest of us made to you at Dulles, the same recommendation we made to you before we went to

Dulles when we had a briefing. We are getting tired of making recommendations to you. You are the agency, lead agency who has to

take the bull by the horns here, and you are not.

So when I say, with all due respect, consistently doing nothing,

for some of us it is getting a little frustrating.

Mr. Chairman, I move that these letters from Customs and others back and forth to the FDA on this matter be made part of the

record.

Mr. GREENWOOD. Without objection, they will.

Mr. STUPAK. I also move that Dr. Shepherd’s 1996 study to the

FDA and Customs, the rest of it, also be made a part of the record.

Mr. GREENWOOD. Without objection.

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Mr. STUPAK. Thank you, Mr. Chairman.

So in this recommendation, you have guidelines, do you not, that

says—important guidelines on all prescription drugs—all of the following criteria need to be met before legal importation is allowed

in this country. Written declaration affirming personal use, 90-day

supply or less of medication, evidence of medical supervision or prescription, and product unavailable in the United States. Correct?

Mr. HUBBARD. That guidance is limited to unapproved drugs for

serious and life-threatening diseases. It is a tiny number of drugs.

Mr. STUPAK. What percentage of what we are seeing coming into

this country would be taken care of just with the enforcement of

this guideline?

Mr. HUBBARD. Enforcement of that guideline would presumably

exclude 99.9 percent.

Mr. STUPAK. So why don’t we just enforce the guideline that is

on the books?

Mr. HUBBARD. Because we have to physically receive the drug

from Customs. I am sorry, Mr. Stupak, but we have to do that. It

is required by the statute.

Mr. STUPAK. Mr. Hubbard, we have seen the video. We have

been there. When that parcel comes through the mail and you look

at it, either the Custom agent or yourself or me, if it doesn’t have

the written declaration affirming personal use, if it is more than

90 days, if there is no evidence of medical supervision or prescription, if the product is available in the United States, you could

automatically reject it without having to go through all these hurdles that you gave us.

Mr. HUBBARD. But understand, Mr. Stupak, we open this package. It doesn’t have those things in it. So the idea is you send a

note to the person and say do you meet the requirements? Can you

demonstrate to us that this is a legal product or you meet the requirements? Then that person has an opportunity to come back and

explain to the FDA.

Mr. STUPAK. Why is the burden on the person who is supposed

to be receiving it, and not on the shipper? If you put the burden

on the shipper, and if 99.9 of them don’t meet these four criteria,

why can’t you just ship it back?

Mr. HUBBARD. Again, I have to fall back on the wording of our

law, which requires us to give notice to the recipient that we have

held the drug and not allowed it to move on to the recipient.

Mr. STUPAK. Same question, just a little different, Ms. Durant.

You have 13 mail sites. One mail site being Oakland. When they

get this stuff through the mail, they just send it back, don’t they?

Ms. DURANT. Yes, sir.

Mr. STUPAK. So if one out of 13 sends it back, why can’t all 13

send it back?

Ms. DURANT. One of the problems that we have faced is non-uniformity, which is one of the reasons we have gone to the FDA for

a uniform national standard. We should not be sending it back, according to the FDA.

Mr. STUPAK. But if Oakland is sending it back, is Oakland doing

it right then?

Ms. DURANT. No.

Mr. HUBBARD. No.

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Mr. STUPAK. So the other 12 are doing it right, Oakland is doing

it wrong?

Ms. DURANT. According to FDA guidelines.

Mr. STUPAK. According to their guidelines.

Ms. DURANT. To their guidelines.

Mr. STUPAK. Has FDA told Oakland that they have got to keep

it all there for them? Have you told them that?

Mr. HUBBARD. We have now.

Mr. STUPAK. You have now. Since when? This morning or Monday?

Mr. HUBBARD. Just recently we learned of this. There has been

a fair amount of discretion among the districts for this.

Let me explain it. Historically, Mr. Stupak, this was a small

amount of mail. An investigator could look at it and make some

judgments about safety.

Mr. STUPAK. Two years ago, we told you this was a small problem that was growing. Two years ago you did nothing. Last year

we got up to 455 websites. Today we are over a thousand. We keep

telling you, and we keep getting nothing in return.

You are right. It was a small problem with myself, Mr. Waxman,

Mr. Dingell, some of us pointed out 2 years ago. So see, your small

problem has become a big problem. I just for the love of me can’t

figure out why your guidelines are not enforced. If one facility is

sending it back, why aren’t all 13 sending it back? Then we

wouldn’t be here. We would not be having this hearing, and maybe

the Rode’s young man would still be with us.

Mr. HUBBARD. The Oakland process was not sanctioned by our

folks in headquarters.

Mr. GREENWOOD. The time of the gentleman has expired.

The Chair recognizes the gentlelady from Colorado for 5 minutes.

Ms. DEGETTE. Mr. Hubbard, you just told Congressman Stupak

that you had asked Secretary Thompson verbally and in writing to

do this new policy which we are all hopeful could happen, this policy. Then when Mr. Stupak said can you submit it to this committee, you said ‘‘I will determine if I can do that.’’ What would be

the barrier?

Mr. HUBBARD. If there is some need for discussion with the committee about whether this is—— Ms. DEGETTE. Let me be clear. We would like a copy of the written request you made to Secretary Thompson for this new policy.

Would that be—— Mr. HUBBARD. I will certainly ask Secretary Thompson today to

give it to you, absolutely.

Ms. DEGETTE. Well you sent it to him, I assume. Didn’t you say

you made a request of the Secretary?

Mr. HUBBARD. Generally I think we would want the recipient to

concur with that. But we will.

Ms. DEGETTE. Yes, we would like to have it, if possible. Thank

you.

Now I am glad about this policy about the importation, or just

stopping all of the drugs. I think that is what you are going to have

to do. Unfortunately, I could not go out to Dulles with my colleagues. I had to go to Denver that day. But just watching this

video and listening to the testimony, I mean it is a problem that

137

you can’t even get your arms around. It seems to be worsening

every day.

So I really think this is an important policy. I agree with my colleagues, it should be implemented right away. I mean the agency

should work on it. Congress should work on it. We should all work

on it.

Here is the concern I have. I am wondering if you can tell me

how this will work, Mr. Hubbard. You said that you would stop all

of these drugs except for drugs needed for compassionate care. I am

concerned about compassionate care just like everybody else. But

listening to that, I was very concerned that that could be the exception that overwhelms the rule.

I will give you an example. How do you know that those yellow

pills you had up there that you can’t identify won’t be considered

by someone to be for compassionate care? What standard? I mean

it seems to me to be one of those bureaucratic loopholes through

which you are going to let all the drugs come in.

Mr. HUBBARD. I think Mr. Stupak read some of the requirements

of the current policy which would be applicable, such as that the

person have a serious and life-threatening disease.

Ms. DEGETTE. Okay. When all of these drugs come in from overseas, how are you going to apply that policy to them? Won’t you

be back in the same box you are in right now?

Mr. HUBBARD. We will have to work out a system. Perhaps, for

instance, we could request that any such drugs come in via the

Federal Express process or one of the common carriers, and have

some sort of indicia on it so that Customs knows that this one has

pre-clearance by the FDA. These things can be worked out.

Ms. DEGETTE. Well, I am concerned that we are supposed to

have a policy right now, and it seems like that is not working out.

Wouldn’t all of the people sending the drugs simply start putting

a statement on there saying ‘‘for compassionate use,’’ a declaration.

Mr. HUBBARD. What we would do is we would ask the patient to

go to our physicians at our drug center and say I want to go get

this drug from a foreign country. It is unapproved. I have this condition. May I do so? It is what we call an IND.

Ms. DEGETTE. How are you going to separate that out from all

of the rest of the drugs coming in?

Mr. HUBBARD. Then a thing that had that permission could have

some sort of a note from FDA or indicia or something. We can work

that out and make sure that that doesn’t get intercepted.

Ms. DEGETTE. My recommendation would be that that would be

as narrowly drawn and easily identifiable by the Customs agents

as possible.

Mr. HUBBARD. Of course.

Ms. DEGETTE. Ms. Nagel, I am wondering if you can comment on

whether you think a policy like that could be practicably enforced

as all of these drugs are coming in.

Ms. NAGEL. I think that if we have something in advance, something that is easily recognizable, there will be attempts to evade it.

There are always attempts to evade whatever enforcement sort of

action we have. But I do believe that having the ability to free up

our resources on the ones where we are supposed to hold them but

we can’t——

138

Ms. DEGETTE. Right. So you think it could actually help improve

your job.

Ms. NAGEL. I think it will help, absolutely.

Ms. DEGETTE. Okay. Now, Sergeant Gibbs, I wanted to ask you

about something. I want to ask Ms. Nagel as well. A lot of folks

have talked about these pharmacies in Mexico. You can just walk

in and buy anything. I have a constituent who just came in to see

me. He has this horror story that none of us ever want to live

through as a parent. His kid went down to Mexico. The roommate

said just go into a pharmacy and buy this controlled substance for

me, and it is legal in Mexico, so no problem.

So the kid walked into the pharmacy, bought the controlled substance, no problem. Walked out of the pharmacy, and was immediately arrested by the Mexican authorities in a sting operation,

and to this day is still sitting in a Mexican jail.

My question to you, I mean there are a whole lot of disturbing

ramifications to this story. One is these poor American college students who don’t seem to understand the repercussions. We keep

hearing though that these are basically sources for free flow of

drugs across the border. I am wondering what the enforcement efforts of the Mexican government have been, and if there is some

way we can enter into some kind of international agreement to get

these pharmacies shut down, or at least to have improved enforcement?

Mr. GIBBS. When I was in Tijuana in April, the proliferation of

the pharmacies are all over the border. There were policemen, uniformed officers outside these pharmacies. I saw no one questioned.

I saw no one apprehended by these officers. I really don’t know

what undercover operations are taking place.

I went into one pharmacy and said, ‘‘Could I have some

Oxycontin, please?’’ He hesitated. He looked me up and down for

a minute and said, ‘‘No.’’ I guess I looked like a cop. But there was

a guy behind me, walked into a little shop that was selling handbags. He asked the proprietor for MS Contin. That man said, ‘‘It

is in the back.’’ So he went in the back.

Ms. DEGETTE. So the story that my constituent tells me would

be an anomaly in your experience?

Mr. GIBBS. I couldn’t answer that question. I don’t know.

Ms. DEGETTE. Ms. Nagel, maybe you can.

Ms. NAGEL. The Mexican government, like our government, is

taking under the new president, some very affirmative actions. We

are actually fairly optimistic that we can see more cooperation in

this area. There are circumstances where they have specifically targeted the pharmacies that they believe are just giving out controlled substances without any legitimate need. They are also, as

we are, trying to stem the flow of illegal drugs.

The one point that I would like to make, if I could address something Mr. Burr made, the information that we have received about

the Oxy coming over in the recent surveys are specific to three different people. My best recollection was each one was listed as having had a prescription.

So under those circumstances, they would not have been brought

in under the 50-dosage unit exemption. They would have in fact

then come in under a prescription. So there is a lot of confusion as

139

to when something comes in, when it is in a policy and not in a

policy. I think that is where we and the Customs Service are working diligently to provide clear guidance to the inspectors for someone who has a valid prescription can obtain it, and in fact come

back. Those that do not will be scrutinized, so that they don’t believe they can go over and get anything they want on a day trip

and come back with it.

Mr. GREENWOOD. The time of the gentlelady has expired.

I just would ask one question of Ms. Nagel about Oxycontin also.

Just as an illustration of how addictive this drug is and what a

problem it is, we had Sergeant Gibbs talk about 50 deaths in Virginia. In my district, Bucks County, Pennsylvania, outside of Philadelphia, we had a physician arrested. He had written 1,200 prescriptions for Oxycontin and Xanax in a 4-month period. He was

writing them for children as young as 15 years of age. I am reading

from the Philadelphia Inquirer.

Investigators said they visited his office at such-and-such an address several times, observing male and female patients crowding

a waiting room for hours to get prescriptions for the medications,

paying $59, $66 in cash for office visits that usually involve no examinations. Most of the patients were gaunt. Their eyes were dilated, and their faces were sunken, like they were on drugs, and

irritable as if they were going through withdrawal. So imagine one

physician’s office in my little neck of the woods. This is a gigantic

problem.

You mentioned in one of your statements that if you had evidence of this stuff coming across the border in significant measures

from Mexico, that the DEA was prepared to take drastic action.

Can you tell us what you mean by that?

Ms. NAGEL. I have spoken to the company. I have discussed with

them if we get the evidence that in fact it is coming back, it is

being reimported, I can request that they stop shipping it to Mexico. To do that, I need the evidence. I also think it is important,

sir, that I address with you I share your concerns.

Before taking this job, I had the State of West Virginia as one

of my areas of responsibility. It is one of the States that is seeing

the most wide abuse of Oxycontin. As a result, DEA has done

something we have never done before. We have created an action

plan on a specific narcotic drug. It is not on a class of drugs. It is

not on Oxycodone. It is on Oxycontin, the drug itself.

DEA Chief of Operations has signed it. We are actively engaged

in trying to determine, through enforcement and intelligence, regulatory administration, industry cooperation, awareness and outreach, we are literally trying to find out exactly what the extent

of the problem is. It is huge, because the information we are getting from the narcotic treatment programs is frightening. It is absolutely frightening that they are being overwhelmed with their patients being addicted to Oxycontin.

So please do not ever think that I tried to belittle or minimize

the dangers from Oxycontin, because that was not my intention.

But what I need is evidence. I need to take steps based on facts

and evidence. The agency is more than ready to do that.

Mr. GREENWOOD. If I may, I had no intentions of minimizing

your concern about this, but what I do want to know is what do

140

you mean by needing evidence? What evidence do you need? It

seems like it wouldn’t be very difficult to find. Sergeant Gibbs

walks down informally and found a lot of evidence. A lot of staff

have gone down and seen plenty of evidence of Oxycontin coming

across the border. What do you need?

Ms. NAGEL. Well, so far I have the one case that I am aware of

from Virginia that caused us to ask the company to change the indicia, to stop shipping the 40’s, to move the 40’s in. I think that

was a reasonable action as a result of one investigation.

We have also gotten anecdotal information from the Customs

Service and other people that they are seeing it come over. Short

of Dr. Shepherd’s recent study that showed me three instances of

it coming over, that is what I have. I need to know exactly how

much is coming over. The Customs Service has assured me they

are going to provide that kind of information.

I have gone to my country attache in Mexico. I have asked him

for specific information on abuse and diversion within the country.

I have gone to my diversion investigators, and to my intelligence

people in the agency. I have asked them to get me comprehensive

information on the abuse and diversion within country, and what

they perceive is coming back.

As a result of that, if I get something that candidly is reasonable,

I can then go to the company and first ask them. I believe they will

voluntarily do so.

Mr. GREENWOOD. This is some language that we picked up on a

chat center from someone who says, hydrocodone, Oxycodone, morphine are all available in Mexico. It says the key here is to make

a project out of it. Look around. Ask questions of the pharmacist.

What doctor would he recommend for chronic back pain, headache,

tooth pain, et cetera. It says I am looking right now at three boxes

of 40-milligram Oxycontin I obtained from a medium-sized pharmacy after getting the ‘‘in’’ with a local doctor. So a lot of other

stuff in the backroom, morphine being one of them.

So it seems like the evidence is overwhelming. I am not going to

press you any further on it. But it wouldn’t seem to us that it

would take very long to get the evidence that you need to take the

drastic actions that you have taken. It is not dramatic to say that

lives are in the balance on a daily basis over this one drug.

Let me just ask you this question. If you have an action plan for

this one drug, and that is impressive and that is appropriate, can

that action plan not include zero tolerance for Oxycontin coming

across the border in any number at all?

Ms. NAGEL. To do zero tolerance, sir, again, there are people who

have a legitimate medical need to have this drug.

To say that everybody coming over the border does not have a

legitimate medical need is not appropriate. What we need to do is

take the laws as written and enforce them, and to ask people why

you need it, why you’re coming over and what is the legitimate

need for the drug. Once that’s done people that are trying to subvert it or someone on their roller skates isn’t going to be permitted

to bring in 50 dosage units and that’s what we’re working with the

Customs Service on is trying to say here’s the law, here’s the policy, here’s the guidance, ask the questions——

141

Mr. GREENWOOD. Let me ask this. Do you have any evidence of

Americans who have legitimate prescription for Oxycontin going to

Mexico, buying 50 doses or fewer of Oxycontin and coming back

and taking that medication as per their doctor’s orders?

Ms. NAGEL. I have no specific information, no sir.

Mr. GREENWOOD. Okay, so in a perfect world we might behave

in one way, but in the real world we’ve got, it seems to me, tons

of evidence of Oxycontin killing people, being abused on a daily

basis all over this country and coming across the Mexican border

by the truckload and no evidence of legitimate use of Oxycontin

and a decision has to be made using good judgment. I hope and expected that you’ll do that and you’ll do that very soon.

We would also like you to submit a copy of that action plan to

the committee for our record. I thank the witnesses for this Panel

again.

Mr. BURR. Mr. Chairman?

Mr. GREENWOOD. Oh, Mr. Burr has another question.

Mr. BURR. If I can be recognized for 1 minute.

Mr. GREENWOOD. Without objection.

Mr. BURR. Ms. Nagel, you said that what you wanted to do was

follow the law. The scenario that you described to us of product

manufactured here, sent to Mexico was brought back into the country. You do understand that that is against U.S. law today?

Ms. NAGEL. If it is smuggled back into this country, sir, it absolutely is against the law.

Mr. BURR. The reimportation of any drug manufactured in this

country, based upon U.S. code is against the law.

Ms. NAGEL. Sir, if the individual is bringing it back into this

country for legitimate personal use, my understanding is, sir, that

is legal.

Mr. BURR. And I would ask you to meet with Justice, get them

to interpret the patent protection that exists in U.S. Code that does

not permit the reimportation of pharmaceuticals.

Ms. NAGEL. Yes sir, I’d be happy to.

Mr. BURR. Because I think that if we look at that, the patent protection laws trump everything right now until we change that. We

had this discussion with Customs officials last year. It is impossible

to expect that Customs can sit at the border and determine whether that product was manufactured here or manufactured anywhere.

Members of this committee have looked at the pills that have come

out of China, that it is impossible without the expertise of an FDA

official to test something and know whether there’s actually an active ingredient in it or not, but there’s one thing that I rest assured

have researched and that is that U.S. code today makes it illegal

to reimport products manufactured in this country. If it happens

today, then we have flatly turned our backs on it and I would ask

you to research that just for your own purposes.

I want to say one precaution to my colleagues and to everybody

here. Oxycontin is used in this country by many individuals with

cancer as a pain relief pharmaceutical. My understanding is when

taken as it’s supposed to it is certainly not as addictive as the

crushing and the inhaling that the sergeant described to us and it

is a vital therapy for those cancer patients. So I don’t want everyVerDate 11-MAY-2000 15:01 Oct 18, 2001 Jkt 010199 PO 00000 Frm 00145 Fmt 6633 Sfmt 6602 E:\HEARINGS\73737 pfrm07 PsN: 73737
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body to rush out and demonize this one product because there is

a need for it.

Let me also remind you that sometimes just the surroundings

suggest what the problem is. In Tijuana today, it’s believed there

are 1,000 pharmacies. Now with a population of 1.3 million, that’s

one pharmacy for every 1300 people.

In San Diego, California there are 125 drug stores. That’s one

drug store per 10,800 residents. Just on the surface, I think we can

see that in fact there’s every attempt to circumvent the process and

to make sure that the supply exists to come back into this country.

I thank the Chairman for the time. I yield back.

Mr. GREENWOOD. The Chair recognizes the gentleman from Florida ready to inquire. If not, this gentleman from Florida would be

happy to give you some preparatory time.

Mr. STEARNS. Yes.

Mr. GREENWOOD. Okay.

Mr. STEARNS. I ask for unanimous consent just for a minute, just

one follow up question.

Ms. Durant, you mentioned, I guess Mr. Hubbard did as well

that the open facility has a different procedure than the other 11

facilities. They’re just sending everything back right now, is that

accurate?

Ms. DURANT. They’re not today. They were sending everything

back.

Mr. DEUTSCH. For how long was that going on?

Ms. DURANT. Over a year.

Mr. DEUTSCH. We’re talking about tens of thousands of packages

that were just going back. I’m just trying to get a sense.

Ms. DURANT. It would be many packages, yes.

Mr. DEUTSCH. How did they distinguish between supplements

and prescription drugs? What was going on at that facility?

Ms. DURANT. There was no distinction. It all went back, unless

it was approved by FDA.

Mr. DEUTSCH. It’s just for 12 months it’s going on, were you getting complaints, was anyone getting complaints that they’re receiving their supplements or anything?

Ms. DURANT. No.

Mr. DEUTSCH. And tens of thousands of packages, no complaints.

Okay, all right, thank you.

Mr. GREENWOOD. The Chair recognizes the gentleman from Florida, Mr. Stearns, for 5 minutes.

Mr. STEARNS. Thank you, Mr. Chairman. This is a question that

is directed to Ms. Nagel. The DEA personal importation regulations

are important—are, let’s see—an importation of controlled substance for personal use cannot be admitted unless it is authorized

or permitted by the Federal laws and State laws. Is that true?

Ms. NAGEL. Yes sir.

Mr. STEARNS. The Food and Drug and Cosmetic Act is a Federal

law that prohibits importation of drugs that are misbranded, adulterated or unapproved. Controlled substances from Mexico are misbranded because they have labeling in Spanish. Controlled substances made in Mexico are unapproved because they have not

been cleared by the FDA. I understand that both Texas and California laws prohibit importation of controlled substances. Given the

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requirement that importation must be authorized or permitted

under Federal and State laws and the fact that by definition these

controlled substances would not be authorized under either FDA or

State law, doesn’t the DEA’s current regulation prohibit the personal importation of controlled substances regardless of the

amount?

Ms. NAGEL. No sir, when it comes to the personal importation of

controlled substances, both laws apply. There’s no conflict between

the Food, Drug and Cosmetic Act and the CSA. They’re both designed to protect the public health and safety.

In the Controlled Substance Act, Congress explicitly addressed

the personal importation exemption. DEA’s regulation implements

that statute. It’s only when FDA advised Customs that the importation of the drug should be disallowed under the FDCA would the

importation be disallowed.

Going to something that Mr. Barr said and I will go back to the

lawyers, it’s my understanding—— Mr. BURR. Burr.

Ms. NAGEL. Don’t tell me I need glasses already. I apologize. I

will have to find out on this specific instance, but from talking to

the lawyers because Congress explicitly addressed the importation

in the Controlled Substance Act and permitted up to 50 dosage

units for legitimate travel with a variety of things that need to be

met, it’s my understanding that the Controlled Substance Act applies. I don’t know about the patent law, sir. I don’t know.

Mr. STEARNS. Well, staff seems to indicate that this is not true,

that more than a certain amount is under your authority. Let me

just hold for a second because there seems to be a conflict what

staff understands and what you’re saying.

[Pause.]

More than 50 doses under the current regulations are prohibited.

[Pause.]

It does not speak to less than 50 doses. Does that make sense

to you?

Ms. NAGEL. If I could try? This is one of the few times in my life

I wish I had a lawyer with me.

Mr. STEARNS. Me, too.

Ms. NAGEL. If I could try to do this. The way the law is written

to permit international travelers who have a legitimate need to

have medication with them, the law permits you to bring up to 50

dosage units.

Mr. STEARNS. Without any kind of check or anything?

Ms. NAGEL. Correct. Without a prescription, without——

Mr. STEARNS. Where does it say that? Because a person could go

50 times with under 50 doses and be able to get these drugs.

Ms. NAGEL. The problem is with the implementation of the policy

to enforce the law. The law does not say you can go 10 times a day.

That absolutely is not in the spirit of the law. The spirit of the law

is to allow an international traveler with a bona fide need to bring

something back that will get them home until they can get medical

attention. That’s not the way it’s been interpreted and it’s not

being enforced and that’s what we’re working with the Customs

Service so we don’t have someone coming back on roller skates. But

if someone comes back in without a prescription, they’re asked the

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legitimate questions and if they don’t have the right answers, it

does not come in.

Mr. STEARNS. Well, I’m reading from the Controlled Substances

Import and Export Act. Section 1007 and it mentions the statute

in accordance with applicable Federal and State law they may not

import the controlled substance into the United States in an

amount that exceeds 50 dosage units of the controlled substance.

Now just what that says, it’s not saying that it can come in with

less than 50, so you’re making a policy decision.

Ms. NAGEL. It’s not a policy decision, sir. In the law, the way

again I understand it is, it says if I can—a U.S. resident who enters the United States who does not possess a valid prescription

may not import exceeding 50 dosage units.

Mr. STEARNS. And then you assume that somebody could come

in with less than 50, 40?

Ms. NAGEL. If, in fact, they can demonstrate the personal medical necessity, it’s in the original container, the trade and chemical

name appears on it, they can demonstrate the valid need for it, yes.

It doesn’t mean no questions asked. Anything comes in, it means

if you have a need, you can bring in what you need to get home.

Mr. STEARNS. But in my first question to you I was giving you

the State laws in California and Texas that prohibit importation of

controlled substances, so what you’re doing is preempting State,

California and Texas laws?

Ms. NAGEL. I wouldn’t want to say that, sir, without talking to

my lawyer.

Mr. STEARNS. But that’s what you’re saying by saying that you

interpret this to mean that they can come in with less than 50

doses.

Ms. NAGEL. If they meet the requirements of the statute and the

requirements of the regulation and they can demonstrate the personal necessity, the Controlled Substance Act permits the entry.

Mr. STEARNS. And I think you would agree though that Texas

and California is interpreting this different.

Ms. NAGEL. I don’t know, sir, and I would be more than happy

to come back with more information, being the only one who didn’t

come with a lawyer, once again, that was a major mistake in judgment.

Mr. STEARNS. What staff is contending is that under State law

there is a requirement and it’s not interpreted that people can

come in with under 50 doses. So what you’re doing by interpreting

that, you’re opening it up and a person can come in 50 times with

under 50 doses and do that. What is the number that the person

can do before they are against the law, in your opinion, 5 times,

10 times, 100 times—— Ms. NAGEL. Sir, this is not for someone to be making day trips.

It never was implied——

Mr. STEARNS. But you and I both know people make day trips.

Ms. NAGEL. That’s why we’re working with the Customs Service

so that they understand exactly what the policy is, exactly what

the law is, the questions to ask to ensure it’s implemented appropriately and people are not waived into the country because you

have 49 or 50 of 10 different substances. That’s exactly what we’re

working actively on now.

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Mr. BURR. Will the gentleman yield?

Mr. STEARNS. Just 1 second. Would you admit that the person

would take more than one trip in a day?

Ms. NAGEL. Can a person? Absolutely.

Mr. STEARNS. Could they take more than two trips?

Ms. NAGEL. Sir, anything is possible.

Mr. STEARNS. They could then skirt the law that you just interpreted this way.

Ms. NAGEL. If they were—if they declare it, which is part of it,

they declare it, they talk to the Customs Inspector, they explain

what their personal need is, I don’t believe that drug would be permitted to come into the country.

Mr. STEARNS. See, no one keeps track of it. For example, if I get

a prescription under Blue Cross or with my doctor, if I try to get

a prescription for more than let’s say, let’s say I get a prescription

for 60 days and at the end of 30 days I try to get another prescription for 60 days, I can’t do it because you can’t have too much of

this drug. Now in some cases if I pay for it myself, I can. So the

pill instead of being 50 cents becomes $5, so my point is that the

way you’ve outlined this is it’s sort of a loophole and I think in

Texas and California that they have laws that prohibit the importation of controlled substances and so I think that’s an area that

Mr. Chairman, I think they should clarify and if they don’t, Mr.

Chairman, they probably should come back in writing to us.

Ms. NAGEL. I’d be happy to, sir.

Mr. STEARNS. That would be helpful for us and I yield my time.

Mr. BURR. I was only going to point out to everybody who’s on

the panel. I know each one of you individually thinks you’re very

specific on what you’ve asked Customs to do. In many cases, there

are other laws on the books in the State of California and in Texas

that sort of run opposite, but one of the things that I’ve heard from

Customs last time they were in, this time, is that they don’t understand what they’re supposed to be doing. Today, you brought specificity to it. My only hope is that when you leave, we will all push

the Secretary to adopt this. If it needs legislation, legislation; if it

needs regulation, regulation. Let’s ram it through as fast as we

can. Let’s prove that we can address a problem just like the FDA

approved a leukemia drug in 21⁄2 months and let’s close this up so

we don’t have this worry any more. That’s the specifics that we

need so that Customs knows how to do their job, so DEA can confidently address the legal side of it that is so rampant in every

community.

I’d yield back.

Mr. STEARNS. Mr. Chairman, I thank you for your courtesy and

I yield back.

Mr. GREENWOOD. The Chair thanks the gentleman and thanks

the witnesses and would care to remind Mr. Hubbard that pursuant to Ms. DeGette’s request, the committee asks for a written copy

of the recommendation to the Secretary and these witnesses are excused. Thank you.

The Chair then calls Panel 3, our final Panel to come forward:

Mr. James Christian, Vice President and Head of Global Corporate

Security at Novartis International AG; Dr. Marvin Shepherd, Professor, College of Pharmacy, University of Texas; Dr. John Glover,

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Vice President, Corporate Security, Bristol-Myers Squibb Company;

Mr. Gene Haislip of Leesburg, Virginia; Mr. Donald deKieffer of

deKieffer & Horgan and Mr. William Trundley, Vice President,

Corporate Security and Investigations at GlaxoSmithKline.

The Chair welcomes the witnesses and thanks them for their patience for the past 4 hours. You are all aware that this committee

is holding an investigative hearing and when doing so has had the

practice of taking testimony under oath.

Do any of you have objections to taking, giving your testimony

under oath? Seeing no objections, the Chair then advises that

under the rules of the House and the rules of the committee you

are entitled to be advised by counsel. Do you desire to be advised

by counsel during your testimony? In that case, will you please rise

and raise your right hands and I’ll swear you in?

[Witnesses sworn.]

Thank you, you may be seated. You are under oath and we will

begin with Dr. Shepherd. You are recognized, sir, for 5 minutes for

your testimony.

TESTIMONY OF MARVIN SHEPHERD, PROFESSOR, COLLEGE

OF PHARMACY, UNIVERSITY OF TEXAS; JOHN D. GLOVER,

VICE PRESIDENT, CORPORATE SECURITY, BRISTOL-MYERS

SQUIBB COMPANY; JAMES CHRISTIAN, VICE PRESIDENT

AND HEAD OF GLOBAL CORPORATE SECURITY, NOVARTIS

INTERNATIONAL; WILLIAM TRUNDLEY, VICE PRESIDENT OF

CORPORATE SECURITY INVESTIGATIONS, GLAXOSMITH

KLINE; GENE R. HAISLIP, CONSULTANT; AND DONALD

deKIEFFER, deKIEFFER & HORGAN

Mr. SHEPHERD. Thank you, Mr. Chairman. I hope to give a pretty

clear testimony and I hope to also clear up some what I consider

false statements being made earlier today. Well, maybe not false

statements, statements that are not true in the State of Texas or

in Mexico, the way I understand it. I hope we can get some clear

air here on what’s a prescription and what’s required in Mexico

and what’s not, get that done.

Let me begin. My name is Marvin Shepherd. I’m from the University of Texas. I’ve been interested in this problem of importation

of pharmaceuticals into this country for about 8 to 10 years now.

It all came about because of some problems with U.S. pharmacists

when people from Mexico or U.S. residents would go to Mexico and

buy a bag load of drugs and then bring them in or cross the border

and land on to the U.S. pharmacists and say tell me how to take

these and what are they for? And that’s when I first got notice of

the wind of the problem because they didn’t have any instructions,

everything was written in Spanish and it was a real problem.

So it’s a pleasure to be here and I find it striking that before the

Internet pharmacy operations really no one cared and everyone

seemed to blame the importation of pharmaceuticals a border problem. Well, I’ll tell you right now, it is not a border problem and the

Internet really emphasized that. It was nota border problem before

because in my study in 1995, 40 percent of the drugs purchased out

of Nuevo Laredo were going outside of Texas. They went as far

away as Maine, Michigan and Washington, Virginia, you name it.

They went there and that’s 41 percent of all males who went down

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there out of State and 20 percent of all females who went down

there and bought drugs in Mexico our out of the State of Texas.

They were not part of the community. Now admittedly, 60 percent

of all the other purchases down there were from the State of Texas.

Sixty percent of all the purchasers were from the State of Texas

down there. So we faced this problem for a long time and we’ve

been struggling with the controlled substance incidents and the

problem and we’ve even prosecuted a lot of people coming across

the border with Ritalin, Valium and Neopercodan and the whole

works.

We’ve been turned down by Federal courts too, on that.

But I want to reemphasize that I invite any and all of you to

come down to a border town. You won’t believe it. Farmacias are

a major tourist attraction in any border town. They’re on every corner, every other street and the major purchaser of the drugs are

U.S. residents. You walk in any of them and you talk to the owner,

the owner will say 95 percent of the people who purchase drugs

here are U.S. residents and that’s what they’re made for. It’s a

huge economy and if we look at the 15 drugs that I found, the top

15 drugs coming across the border in 1995 were all controlled substances. The volume of those 15 drugs is $135 million just in 1997.

It was 6 percent of the total Mexican drug distribution right there.

Six percent coming out of a little town called Nuevo Laredo. I don’t

even want to think about what’s coming out of Juarez or

Metamoras or Tijuana because those have got huge volumes. In

Nuevo Laredo, they have maybe 25,000 to 30,00 walkovers on a

Saturday afternoon and about an estimated anywhere from 25 to

40 percent of those walkovers are coming back with a pharmaceutical product. So it’s a big business and I feel sorry for U.S. Customs when they’ve got two people scanning people who come across

and the line is from here to the parking lot getting back into the

check point. It’s impossible to check them all. They’re just lined up

and it takes more than an hour sometimes to get through the border at 5 o’clock on a Saturday afternoon standing in the hot sun

trying to across. It’s a huge problem and it’s a big business. Huge

business for the Mexican economy.

There are three major reasons and I’ll give my opinion as to why

they do this and it’s not price is the No. 1. The No. 1 reason why

U.S. residents go to Mexico is easy access. Very easy access to prescription drug products. Mexico has two drug products, basically,

an over-the-counter drug product which includes antibiotics, all

your cardiac medications, all your cholesterol drugs, all your GI

tract drugs, birth control, estrogen compounds and some steroids.

They’re over the counter. As recorded earlier, they sell those like

candy and gum. So if you want tetracycline, erythromycin, ampicillin, Claritin, Claritin-D, Allegra, you name it, you can get it over

there without a prescription, without anything, just ask for it.

Many of the pharmacies over there will have an American PDR,

Physicians Desk Reference on the counter, along with the Spanish

or Mexican references. Oh, I don’t remember the name of my drug

and he’ll say well, go over there and find it and I’ll see if I can find

the equivalent drug here. Sometimes they’re lucky to find equivalent drug, sometimes they cannot find the equivalent drug, but

they’ll find the next best one they can for that product and they’ll

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say well, by the way, while I’m here, Aunt So and So needs this

and my neighbor or here needs this and my other friends over

there need this and I also need some tetracycline, hopefully not for

their children, but I also need erythromycin or ampicillin for colds

that pop up in my family. And they purchase it all. That’s not talking about the controlled substance. That’s just talking about prescription drugs.

I want to emphasize one other point for you. I’ll bet you 98 percent of those prescription drugs are not FDA approved. I’ve got a

list of the FDA-approved drugs coming out of Mexico right now and

there’s about 12 and most of those are in bulk form. I don’t know

if it’s the finished product or not. They’re not FDA approved, so

what FDA was saying earlier about what’s the quality of these

drugs, they don’t know. I don’t know. No one knows because they

haven’t fit the quality standards of what those prescription drugs

look like. So easy access.

If you want to buy a controlled substance and let’s clarify the law

for the Congresswoman, if you want to buy a controlled substance

in Mexico, you have to have a prescription from Mexico. It’s got to

be written by a doctor in Mexico. The law in Mexico says and the

prescription has to be in duplicate form because they will keep one

copy in the pharmacy. That’s the only thing they really have a

record of. They log it into a log book and there’s only three groups

of compounds. The No. 1 group are injectables, primarily; the No.

2 group of controlled substance are most of what we consider IIIs

and IVs in this country, the Valiums, that kind of product, some

of the narcotics, Tylenol 3. The third group are some steroids, testosterone and some—I’ve got a list of them here if you want a list,

but those are the three groups. The No. 1, it’s pretty difficult to get

a prescription from a community pharmacy, but it is possible.

Just recently I saw Demerol come across in 50 ampoules last

month and a box of ampoules. Now I don’t know if it hits the 50

dosage units or not, but it was a box of Demerol, 50 ampoules and

a box of syringes come across the border.

Now the other drugs, as I said, you need a prescription for them.

Now when you come across you need two prescriptions, a U.S. doctor, and a Mexican doctor to do it. Now let’s get this clear, and I’ll

be quite frank and I’ll probably get shot outside this building, but

there’s a heck of a lot of collusion going on between the Mexican

docs and the pharmacies, a lot of collusion. You go into them and

you won’t even see the doc, you’ll see a clerk who writes the prescriptions. I’ve been there. I’ve seen it. Somebody is at the front

desk says what do you need? I said I need Rohypnol, Valium,

Asylex, you name it and they’ll write it for you. As a matter of fact,

the last time I was in there he wrote all three of them out on one

prescription and gave it to me. He said I recommend you go to the

international pharmacy two blocks up on the right.

The next Sunday I went in with CNN News. I went to the pharmacy. I knew the prescription writer was closed. I went into the

pharmacy and I said I’ll need Valium. I can’t remember the other

three drugs, I needed. I wrote them on a piece of scrap paper, gave

them to a 12-year-old kid. The kid went upstairs and down the

street somewhere, came back with a prescription written on one

prescription form for three drugs. Then the pharmacist, and it

149

wasn’t a pharmacist either, just a clerk, gave me the prescription and says write your name at the top of this prescription. $300 later

you walk out with them. But they want documentation? Ritalin

was the other drug because Ritalin is a popular product coming

across.

It’s easy and you can see the collusion between the docs are get- ting their $30 to $50 for the controlled substance and the pharmacist getting his money up front on the controlled substance. No

directions, no labels, everything is written in Spanish and no one

knows how to take it whether it’s a controlled substance or a noncontrolled substance and it’s a huge mill, economic mill for Mexico

right now. Huge.

The lower prices. Everybody has talked about the lower prices.

Let’s—— Mr. GREENWOOD. I’m sorry, we are all fascinated and as a result

of that I’ve been extraordinarily indulgent with the time.

Mr. SHEPHERD. I’ll close.

Mr. GREENWOOD. We’ll ask you lots of questions, but we need to

go on to the other witnesses.

Mr. SHEPHERD. Sure. That’s fine. Do you want me to close it

or——

Mr. GREENWOOD. Do you have a concluding paragraph, why don’t

you go there and then we’ll get back to you with questions.

Mr. SHEPHERD. Concluding paragraph. You can enforce existing

law. I tend to agree with a couple of Congressmen here, the existing law could do the job. I think you need to harmonize. You need

to get a group together with the Mexicans and the U.S., harmonize

the business. Some kind of panel has got to be put together to look

at the problem. No. 3, to stop the diversion, you could ban controlled substances completely. We already talked about that one.

No. 4, the public education needs to be done. Most Americans think

that if it’s made by Eli Lilly or Squibb or Pfizer, whoever it is, it’s

FDA approved. They think anything with that kind of a label is

FDA approved. Even if it was made by Eli Lilly of Mexico City, it’s

not the truth. That’s a false. It’s not true at all. And I think we

need to teach Customs and FDA people the realities of the real

world out there and what’s going on.

Customs people cannot make the determination whether it’s

medical necessary or not or it’s compassion. They can’t do that.

They don’t have the training for that. I don’t know how they’re

going to do that and I’ll close with that. I’ll wish you the best.

[The prepared statement of Marvin Shepherd follows:]

PREPARED STATEMENT OF MARV SHEPHERD, DIRECTOR, CENTER FOR

PHARMACOECONOMIC STUDIES, COLLEGE OF PHARMACY, UNIVERSITY OF TEXAS

INTRODUCTION

It is pleasure being here today to discuss the issue of the importation of pharmaceutical products. I have been involved with this area for close to a decade, but my

involvement has been on the issue of Mexican prescription drugs entering the U.S.

I find it striking that before internet pharmacy operations, it was difficult to get

anyone’s interest and attention with the problems of importation of pharmaceuticals

from Mexico, but now with the growing international pharmaceutical market via the

internet concern for all methods of pharmaceutical importation has risen. I applaud

you for taking on the task and looking in depth at the issues and problems created

by the importation of pharmaceutical products. There are many social, legal and

medical issues to address, but the main concerns I have involve patient safety and

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lack of control. People have been hurt and some have died due to the importation

of pharmaceuticals. Unless we can find a better method of controlling the problem,

more people will suffer.

As mentioned, Texas has faced the problem of drug importation from Mexico for

decades but in the last five to ten years the practice has escalated. It is estimated

that from 25 to 40 percent of all U.S. residents who enter Mexico bring back prescription pharmaceutical products. Many people repeatedly visit Mexico to obtain

drug products for themselves, family and friends. It has also been documented that

from one El Paso, Texas clinic serving US residents, over 80 percent of the patients

go to Mexico to obtain their prescription drugs. If you want a full perspective of the

size of this importation industry, I invite you to visit anyone of the Mexican border

towns of Texas. Rows of farmacias line the streets of Nuevo Laredo, Juarez, Reynosa

and Metamoras. Farmacias are a major tourist draw for the Mexican economy, especially border town economies.

The customer base for this industry is U.S. residents and it is huge; it is so huge

that U.S. Customs struggles with just handling the volume of people. How do check

25,000 to 30,000 people who walk across one bridge and returning the same afternoon? And what about the vehicular traffic? Over a million vehicles cross and return

from Nuevo Laredo each month. In 1997, over 7 million U.S. residents used the Laredo border crossing between Mexico and U.S.

The size of the retail pharmacy business enterprise in border communities is

huge. For example, the estimated 1997 annual dollar volume for just the top 15

pharmaceutical products entering the U.S. from Nuevo Laredo was $134

million. This is a conservative estimated because it only assumed 25% of the U.S.

residents entering Nuevo Laredo purchased pharmaceuticals. To get a better perspective, this $134 million makes up nearly 6 percent of the total Mexican pharmaceutical market and this was just for 15 products from one border city. Another view

is to look at the volume of drugs. Our research documented a conservative estimated

of over 11,000 Valium tablets were coming across from Nuevo Laredo per day by

U.S. residents in 1995. I have do not believe this number has decreased, in fact I

tend to think that it has increased.

Don’t be thinking that this is a Texas problem or a California, Arizona or New

Mexico state problem, because my research documents that 41 percent of males and

27 percent of the females who purchased prescription drugs in Nuevo Laredo were

NOT from Texas; we found that these U.S. residents were from 37 states; some were

as far away as Washington, Maine, Minnesota and Massachusetts. The Mexican

pharmaceutical importation practice has been an ongoing problem and affects more

than just border states and communities.

REASONS WHY PEOPLE VISIT MEXICO FOR DRUGS

There are many reasons why U.S. residents visit Mexico to purchase pharmaceuticals. The main reasons why U.S. residents obtain their pharmaceuticals from

Mexico are:

1.) Easy access to pharmaceuticals,

2.) Lower prices for selected drug products; and

3.) The drug product is not available in the U.S.

Also, farmacias have done well marketing their products to tourists. They have

internet sites, they have put ads in newspapers papers and there have been many

magazine and newspaper articles which describe the process and document the cost

savings. Few of these articles describe the legal problems nor do they describe the

drug safety problems and risks. Let me take a minute to talk about each of these

reasons.

EASY ACCESS

Most prescription drug products in Mexico are sold as over-the-counter products.

You can purchase antibiotics, high blood pressure medications, heart medications,

gastrointestinal medications, antihistamines, birth control pills, plus many other

pharmaceutical products without needing a prescription. These products are sold

like candy bars and gum are sold in the U.S. In fact, if you do not know the name

of the product you want, many of the farmacias will have a U.S. Physician Desk

Reference on the counter for reference. This compendium list all drugs available in

the US. So you can look up the drug you want and the farmacia clerk will try to

find the Mexican drug equivalent or a similar product. Many times there is no Mexican equivalent available. Also, please note there are no prescription drug labels as

we have in the U.S. No drug directions for use are given, all the products are labeled with the manufacturer’s label in Spanish.

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Controlled drug substances in Mexico do need a prescription written by a physician practicing in Mexico. However, this requirement is no barrier to purchasers of

controlled substances. Some Mexican physicians in border towns have established

their practice just to provide prescription for U.S. customers. In fact, they have developed business relationships with neighboring farmacias.

LOWER PRICES

Some Mexican prescription pharmaceuticals do have a lower price with many

have a substantial lower price. However, not all Mexican drug products have a

lower price and for many products the U.S. prices are very competitive, especially

when you compare prices of antibiotic therapies or generic drug prices. For example,

the price of Dimetapp 12 capsules in Juarez Mexico is $16.15 while the price in

the U.S is $6.85. Claritin D, 12 capsules in Juarez is $16.38, in the U.S. it is

$19.75. An example, of a major difference in price of Vasotec 10mg in Juarez is

$16.24 and the price in Austin Texas is $47.88. Overall, prices are cheaper in Mexico, but it is product dependent. The perceived major differences in prices do draw

many people to Mexico to purchase pharmaceutical products, especially for those

people who do not have limited funds such as those on a fixed income, retired or

lack prescription drug insurance coverage.

PRODUCTS NOT AVAILABLE IN THE U.S.

As mentioned, some Mexican pharmaceutical products are NOT available in the

U.S. Either the manufacturer decided not to market the product or in some cases

the product does not have FDA approval. Examples of Mexican products not available in the U.S. are Asenlix (clobenzorex a stimulant product),Chloromycetin

(Chloramphenicol, antibiotic), Ponderex (fenfluramine, weight reduction), and

Rohypnol (flunitrazepam, sedative hypnotic). Also, some Mexican products are

combination products which are not available in the U.S. For example, the product

Qual contains acetaminophen 200mg, Valium 2mg, and Darvon 50mg. Except

for products banned from the U.S., Customs officials do allow people to bring into

the U.S. pharmaceutical products which are not available in the U.S. as long as the

patient has proper documentation for using the product. In addition, if people begin

a drug therapy in Mexico, they are allowed to import the continuation of such therapies to the U.S.

PATIENT SAFETY CONCERNS

As mentioned earlier, I have some grave concerns about patient safety and the

use of Mexican pharmaceuticals. My concerns revolve the lack of medical supervision of the patient’s therapy, the patient’s lack of understanding on how to use

the product correctly and the indiscriminate use of products. Finally, I have a concern about the assurance of product quality. To me, all of these have a potential

to harm, severely injure or kill people.

First, the vast majority of Mexican drug products are NOT FDA approved. There

are only a handful of products made in Mexico which have an FDA approval and

most of these are bulk products and not finished goods. Based on this fact alone,

the vast majority of people who enter the U.S. from Mexico with a prescription

pharmaceutical product are in violation of U.S. law. The key point I want to make

here, is that U.S. customers of Mexican pharmaceuticals need to be informed that

foreign made versions of U.S. approved drugs may not have been manufactured in

accordance and pursuant to FDA. In other words, the products may not be the same.

The health concern I have is when a U.S. resident, who is successfully being treated and is stabilized on a U.S. manufactured drug product, goes to Mexico obtains

what he/she considers to be the identical product, but it is not. The potential harm

is great depending on the therapeutic agent and the clinical outcome. Switching

back and forth from U.S. made product to Mexican product may be dangerous, especially for those products which have a narrow therapeutic index.

My second concern is the indiscriminate use of prescription products, especially

antibiotic products, but other therapeutic agents are also affected. The indiscriminate and self-medication use of antibiotics increase the problem of antibiotic resistance. This has already been documented with the high antibiotic resistance rates

for tuberculosis in Mexican border cities. Some U.S. residents visiting Mexico purchase tetracycline, penicillin and erythromycin like candy bars. They save the products and self-treat themselves, family members and friends. Also, with self-treatment, medication compliance is usually lower which contributes to the antibiotic resistance problem. The lack of understanding and the poor use of pharmaceutical

products has the potential of seriously affecting the health of many.

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As mentioned earlier, when U.S. customers purchase Mexican drugs little if any

information is given to the customer as to how to use the product. There are no drug

labels giving directions for use and the labels are written in Spanish which may be

of no value to some. Thus, the opportunity to learn about the Mexican product is

limited. This can be very dangerous for those who want to ‘‘try-out’’ a new product.

Final note, few farmacias have a college educated pharmacists on there staff. In

fact, farmacias which do not sell controlled substances are not required to have a

college educated pharmacists on their staffs. Most farmacias are staffed with clerks,

thus limiting the customer’s opportunity to get competent help and information

about the medication. Even if the farmacias does provide controlled drugs, there is

no requirement that a college educated pharmacist must be present. As a side note,

upon returning to the U.S., many Mexican drug purchasers visit U.S. pharmacists

and inquire as to how to use the products purchased in Mexico.

RECOMMENDATIONS

Enforce Existing Law

The recommendation I want to make is to ban the import of all non-FDA approved pharmaceuticals from foreign countries. Basically, this recommendation is

asking for the enforcement of the current written law (Federal Food Drug and Cosmetic, 21U.S.C. Section 331). I realize that this is a difficult political decision, especially with the elderly contingent and those who do not have the financial resources

to purchase therapeutic remedies. It would also cause international political problems, especially with Mexico and the NAFTA agreement.

Develop a Strategic Plan to Harmonize Pharmaceutical Business Between U.S. and

Mexico

I believe the major problem between Mexico and U.S. on the pharmaceutical trade

is the vast differences in regulation, education and professional pharmacy practice.

Efforts need to be made to bring health care practitioners and officials together from

both countries and develop a plan to try to harmonize the medical and pharmaceutical industries. U.S. residents have been using the Mexican health care system

for decades. However, currently, more U.S. residents are taking advantage of and

abusing the Mexican health care system for personal gain. Medical and pharmaceutical regulations and practice behaviors within the border communities need to

be examined and perhaps modified on both sides to better provide patient care. This

is a long term approach and will take a lot of effort, but it is a positive step forward.

Ban Controlled Substances from Entering the U.S., especially from Mexico

While waiting for the long term approach in addressing the professional and regulatory climate between the two countries, my recommendation would be to try to

control the personal import of controlled substances from Mexico. In my research, it

was found that the most popular drugs coming across the border from Mexico at

the Laredo border crossing were controlled substances. All of the15 most frequently

declared products entering the U.S. were controlled substances. These included narcotic analgesics (Neopercodan, Nuban Tylex), tranquilizers (Valium), sedative/

hypnotics (Rohypnol, Qual, Halcion), stimulants (Ritalin, Tenuate Dospan, Diminix,

Aselix) antipsychotic/antianxiety (Antivan), and muscle relaxant (Somalgesic). What

alarmed me the most was that the vast majority of these products were imported

by people under 35 years of age. If you are worried about the impact such a recommendation would have on the elderly, I can say that few elderly purchase controlled substances in Mexico. My study found that only 0.6 percent of all controlled

substances entering the U.S. were carried by someone over 65 years of age.

Although I have not compared the prices of controlled substances between the

U.S. and Mexico, it is my belief that the cost differences are small, mainly because

most controlled substances in the U.S. are available in generic form. My personal

feeling is that much of the controlled substances entering the U.S. are for recreational use and sold on the streets, but I have no data to support the belief. I

just question why so many youths travel to Mexico and bring back so many stimulants, tranquilizers and narcotics. Basically, this recommendation calls for a costbenefit analysis. Does the benefit of allowing the legitimate use of controlled substances from Mexico outweigh the black market and detrimental and addiction effects of recreational drug use? Personally, I do not think so.

Last month I spent a Saturday in Laredo assisting the FDA in collecting data on

the type and amount of pharmaceuticals coming across from Nuevo Laredo. I really

did not see many changes, of course I saw no Rohypnol, but I did see tranquilizers

(Valium) and narcotic analgesics( Neopercodan and Oxycotin) and most of these

were being carried by males in their 20s or 30s.

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Develop a Public Educational Program on the Risks Associated with Foreign Medications

My second recommendation is for the development of a major public educational

program informing the public about the potential problems which may result with

the use of Mexican pharmaceuticals or foreign made non-approved drug products.

Currently, the public believes that just because a well-known U.S. based pharmaceutical manufacturers label is on the product the product is FDA approved. Nothing can be further from the truth. Drug labels in Mexico are similar in size, type,

color and style with the U.S. and when the consumer sees Eli Lilly, Pfizer, or any

other manufacturer’s label they assume it is a FDA approved product. I recommend

that a public education program needs to be developed warning them that this is

not always the case.

In this recommended educational program, the threat of counterfeit medications

from Mexico needs to be highlighted. Recent reports have documented the increasing risk and threat of counterfeit medications coming into the U.S. from Mexico. The

public needs to be aware of the problem and the potential risk. In my opinion, I

think the threat of counterfeit medications will continue to increase with the high

prices of pharmaceuticals. We need to develop better and cost-effective surveillance

techniques.

Give U.S. Customs and FDA Technological Support

My last recommendation is to provide assistance to US Customs and the FDA in

developing programs to monitor the importation of foreign drug products. Data are

lacking on the extent of pharmaceutical products are entering the U.S. from Mexico.

I have worked with Customs agents in Laredo and they are overburdened with this

problem. The number of people crossing the border is tremendous. In fact, in my

opinion they are begging for assistance. They lack the pharmaceutical training, and

expertise to identify potentially hazardous prescription drug products. In addition,

they lack sophisticated computer technology to collect the needed data to properly

monitor the extent of drug importation. They are still using the handwritten form

method. New computerized methods need to developed to improve the efficiency and

effectiveness of their enforcement for prescription drug products.

CLOSING

Thanks for asking my input. I’ll be glad to work with you and other governmental

officials to explore our opportunities to assure quality care and patient safety on the

procuring and use of pharmaceutical products. Thanks for this opportunity.

Mr. GREENWOOD. Thank you very much.

Dr. Glover for 5 minutes, please.

TESTIMONY OF JOHN D. GLOVER

Mr. GLOVER. Thank you very much, Mr. Chairman and committee members. My name is John Glover. I’m Vice President for

Corporate Security for Bristol-Myers Squibb Company, a worldwide

medical and health care pharmaceutical company doing business in

over 100 countries. I have submitted a written report for the

record, but I’ll just make a few brief remarks at this time.

Before I became Vice President for Corporate Security with Bristol-Myers Squibb Company, I had a 24 year career in the FBI, an

investigative, administrative and executive positions. My last position in the FBI, I was Executive Assistant Director, one of three

positions reporting to the Director. Also, while I was in the FBI I

was assigned to the Atlanta FBI Office. During the early 1980’s we

conducted an investigation of pharmaceutical sample abuse. That

particular case we called in Atlanta at the time our farmity case,

among other factors, led to hearings on the Hill and the enactment

of the Prescription Drug Marketing Act. I have always believed in

the strict controls and the flow of prescription drugs are essential

to protecting the health and safety of Americans. Concerns about

the risk to public safety from adulterated and counterfeit imported

medicines, I can tell you, were paramount in the minds of the legisVerDate 11-MAY-2000 15:01 Oct 18, 2001 Jkt 010199 PO 00000 Frm 00157 Fmt 6633 Sfmt 6602 E:\HEARINGS\73737 pfrm07 PsN: 73737
154

lators at the time of the enactment of the PDMA. In my opinion,

concerns for the public health and safety of American citizens

should continue to be paramount in the minds of this legislature

and in any legislation passed by any Congress. I will only make a

few points.

Point number 1 that counterfeiting of prescription drugs is a

global and growing problem; that pharmacies, distributors and

criminal enterprises in Mexico and I agree with Dr. Shepherd are

significant sources of the counterfeit and diverted medicines that

we find on U.S. shelves and in U.S. medicine cabinets; that factories in India and China are the sources of most of the bulk

actives used in counterfeit pharmaceuticals worldwide; that improved technology and the Internet have contributed to the expansion of this trade in counterfeit pharmaceuticals and I also agree

that from my experiences that the FDA, the DEA and the Customs

Service lacked the resources necessary to police effectively for counterfeit and diverted pharmaceuticals.

As a Security Vice President with Bristol-Myers Squibb Company

we formed a group several years ago called the Pharmaceutical Security Institute. The Pharmaceutical Security Institute is an industry body whose primary purpose it is to conduct investigations

worldwide primarily addressing the international counterfeiting

problem in pharmaceuticals and we’ve conducted numerous studies

and investigations. We’ve conducted studies in China, studies or investigations in China and India and the Philippines, in Indonesia

and South Africa, Europe, South America, Mexico. Each of our

studies or investigations have resulted in the findings of the existence of counterfeit and diverted problems in those locations.

So I want to say that there’s a major problem of counterfeited

and diverted problems out there. What can we and should we be

doing to ensure that the problem of worldwide counterfeit and diverted problems did not become a significant U.S. problem. First,

we must recognize that the U.S. is the largest and most lucrative

market in the world, is the ultimate target, the ultimate target for

many counterfeiters and diverters. We must do what we can to

make sure that we don’t make it easier for these counterfeiting operations than we already have. Therefore, we should continue to

maintain our political will and not allow the desire for low cost

medicines to undermine our commitment to protecting the health

of U.S. citizens. Second, we must ensure that maintain comprehensive legislation to protect our pharmaceutical industry and encourage innovation. Third, we must aggressively enforce the laws to

combat the trade of spurious medicines. And then last, we must

maintain strong penal sanctions against individuals convicted of

violating the various drugs laws.

That’s the end of my brief remarks, Mr. Chairman and committee members. Thank you for the opportunity to express my view

on this important subject.

[The prepared statement of John D. Glover follows:]

PREPARED STATEMENT OF JOHN D. GLOVER, VICE PRESIDENT, CORPORATE SECURITY,

BRISTOL-MYERS SQUIBB COMPANY

Good morning Mr. Chairman and committee members. My name is John Glover.

I am the Vice President for Corporate Security at the Bristol-Myers Squibb Company. Bristol-Myers Squibb Company is a pharmaceutical and related healthcare

155

products company who’s mission is to extend and enhance human life. The company

does business in more than 100 countries around the world. I have been in this position for over 12 years. Before coming to Bristol-Myers Squibb, I spent 24 years in

the FBI investigating federal crimes.

I was in charge of the FBI’s Atlanta office when it conducted a major investigation

into pharmaceutical sample abuse. The findings from this investigation were among

the factors that led to the Congressional hearings that resulted in the enactment

of the Prescription Drug Marketing Act. I have always believed that strict controls

on the flow of prescription drugs are essential to protecting the health and safety

of Americans. Concerns about the risk to public safety from adulterated and counterfeit imported medicines were paramount in the minds of legislators when they

enacted the PDMA. In my opinion, concerns for the public health and safety of

American citizens should continue to be paramount in the minds of this legislature,

and should inform any legislation passed by this or any Congress.

The key points to my brief remarks today are as follows:

Counterfeiting of prescription drugs is a global problem.

Pharmacies, distributors, and criminal enterprise in Mexico are a significant source

of the counterfeit and diverted medicines on U.S. shelves and in U.S. medicine

cabinets.

Factories in India and China are the sources of most of the bulk active used in counterfeit pharmaceuticals worldwide.

Improved technology and the internet have contributed to the expansion of trade in

counterfeit pharmaceuticals.

FDA, DEA, and U.S. Customs Service lack the resources to police effectively for

counterfeit and diverted pharmaceuticals.

Counterfeiting of prescription drugs is a global problem.

Counterfeit pharmaceuticals are a global problem. The World Health Organization

(W.H.O.) has estimated that between 5 and 8 percent of the worldwide trade in

pharmaceuticals is counterfeit, and that the problem is worse in developing nations

than in developed nations such as the United States. the W.H.O. acknowledges that

5 to 8 percent is only an estimate, since no one has conducted a systematic worldwide study of the counterfeit medicines problem. Nevertheless, based on my 24

years of experience with the FBI and my 12 years with Bristol-Myers Squibb, I am

confidant that ‘‘5 to 8 percent’’ is, if anything, an underestimate.

Increasingly, the illicit pharmaceutical trade resembles the worldwide narcotics

trade, where product is sourced in one country, formulated into tablets or capsules

in another country, packaged in yet another country, and then transshipped through

other countries to its final destination.

Numerous dramatic stories of deaths and illness caused by counterfeits and diverted medicines in various countries such as south and subSahara Africa, Asia, Europe, and Latin America have been reported in the media.

A recent example of this nefarious trade was described in Scrip—World Pharmaceutical News in July 2000. The article reported that Italian authorities had seized

240,000 packs of counterfeit drug products in Genoa and Milan, and that the products were worth more than $1 million. The counterfeit products were from India and

China, and were intended for human and animal use. Italian authorities arrested

ten individuals involved in this organized criminal enterprise.

Separate and apart from news reports, over the past several years, the pharmaceutical industry has been involved in various studies and investigations regarding

counterfeit medicines.

A pharmaceutical security industry group conducted a 15-month study in the Philippines during 1994 and 1995. During this period, we collected 1,359 samples from

473 drugstores. we determined that 8 percent of the samples were counterfeit and

that 11 percent of the drugstores visited were dealing in counterfeit medicines. Fully

17 percent of the medicines obtained were illegally imported or illegally diverted

into the Philippines. The counterfeit medicines included cardiovascular, rheumatoid

arthritis, osteoarthritis, asthma, anti-infective and anti-inflammatory drugs.

In a similar study in Indonesia, we collected 1,309 drug samples. While the results were not as conclusive as the Philippines study, one company reported a significant counterfeit problem with one of their best selling drugs and a lesser problem with another.

The pharmaceutical security group subsequently conducted a study in China. We

collected 842 drug samples from 262 outlets in 11 cities. Five different counterfeits

of the same products were found. During this same period, we encountered one

state-owned pharmaceutical company that counterfeited three best-selling drugs

from three different manufacturers and shipped these products to the Philippines

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and to Europe. Counterfeiting in china has expanded in scope and sophistication

since that time.

Pharmacies and distributors in Mexico are a significant source of dangerous counterfeit and diverted medicines on U.S. shelves and in U.S. medicine cabinets.

The pharmaceutical security institute is a security group representing the pharmaceutical industry whose primary focus is addressing the trade in counterfeit

medicines. In a 1998 trip to Tijuana, a Pharmaceutical Security Institute representative visiting a pharmacy was steered to products which were said to be as ‘‘good

as the originals but at lower prices.’’ The packaging would have looked familiar to

a U.S. customer—the labels were in English and the bottles appeared to be American. Nevertheless, there were significant differences between these Mexican knockoffs and legitimate U.S. products. First, there was no guarantee of the quality of

the Mexican knock-offs. There was no way to know whether they had been manufactured in accordance with good manufacturing principles, or to know the conditions

under which they had been packaged, stored, handled, or shipped. Indeed, there

would have been no way for a consumer to know the true contents of the bottles.

Mexican knock-offs could contain the proper active ingredient in the wrong amount,

or they could contain a totally different active ingredient than the one listed on the

label. The pills could be superpotent, subpotent, or even toxic. Second, it is often

impossible for a consumer suffering from an adverse reaction to identify and contact

the manufacturer of one of these Mexican knock-off drugs. The investigator in question was unable to locate one manufacturer, even when he described an emergency

situation. Unfortunately, there was no company address or phone number on the

label. After several calls, the distributor of the product was located, but on three

successive days, he refused to provide a location of the manufacturer even when it

was mentioned that someone was injured by their product.

In August of last year, investigators made another visit to Tijuana. Again the

store clerk—who was not the pharmacist—directed the investigators away from

name-brand products to what he called ‘‘generics.’’ These products should not be

confused with ‘‘generic drugs’’ in the sense that you and I understand the phrase.

In the United States, when a drug loses its patent protection, the Federal Food,

Drug, and Cosmetic Act permits generic manufacturers to market ‘‘generic’’ versions

of the drug, subject to certain conditions. These U.S. generic pharmaceuticals must

be identical to the name brand products on which they are based. Also, the manufacturers are subject to good manufacturing practice regulations. So-called Mexican

generics are not approved in the U.S. and may not be manufactured in compliance

with U.S. good manufacturing practices. They are not true ‘‘generics’’—they are fake

products designed to fool U.S. citizens. in Tijuana last year, we found products with

familiar-looking packaging, English labels, and U.S. bottles. some of the labels on

these medicines identified listed a non-existent U.S. company as the manufacturer.

Factories in India and China are the sources of most of the bulk active used in counterfeit pharmaceuticals.

With the increase in international trade, it has become increasingly difficult to

trace the pedigree or lineage of any particular counterfeit drug product. As I stated

earlier, a product may be sourced in one country, formulated into tablets or capsules

in another, packaged in yet another, and then transshipped through other countries

to its final destination.

Recently we have found that companies in India and China are heavily involved

in manufacturing the counterfeit drugs that eventually make their way to the Mexican border and into the hands of U.S. consumers. In fact, we currently believe that

some products are sourced in India, fraudulently labeled in the San Diego area, and

then shipped into Mexico for sale to unsuspecting Americans. A 1997 customs seizure of more than $60 million worth of misbranded and counterfeit pharmaceuticals

that were destined for Tijuana drugstores tends to support this theory. The active

ingredients appear to have originated from India.

Also, in numerous instances we have found bulk active that was sourced in India,

shipped to various European countries, and then shipped to Mexico. The documentation provided with these products indicated fraudulently that the product was

sourced in Europe rather than India.

Finally, there is substantial consolidation in the border trade. During the PSI

visit to Tijuana in September 1998, it was estimated that there were approximately

800 pharmacies operating in the Tijuana area alone. In august of last year, the

number of pharmacies operating in the border area around Tijuana had been reduced to less than 100. Information has been received from reliable confidential

sources that Mexican organized criminal elements are involved in the distribution

and sale of counterfeit medicines in Mexico.

157

China is another significant source of the bulk active used in counterfeit pharmaceuticals. We have found counterfeit pharmaceuticals sourced from China all over

the world.

Improved technology and the Internet have contributed to the expansion of trade in

counterfeit pharmaceuticals.

As web-based pharmacies proliferate on the Internet, so does web-based counterfeiting. This is borne out by increased U.S. Customs seizures over the past few

years.

One dramatic example of web-based counterfeit was described by the New York

Times in March 2000. The U.S. Customs Service, along with Thai authorities, conducted searches of online pharmacies based in Thailand. Several arrests were subsequently made in Thailand along with six individuals in Albany, New York. Officials

seized 20 computers, 245 packages ready to be shipped, and over 2.5 million doses

of drugs. These counterfeit medicines are manufactured in unclean, nonsterile sites,

which certainly would not meet FDA approval.

FDA, DEA, and U.S. Customs Service lack the resources to police effectively for

counterfeit and diverted pharmaceuticals.

Improved packaging technology makes it difficult for even the expert eye to differentiate between manufactured labeled product and counterfeit labeled product.

Certainly it is expecting too much to expect a U.S. Customs inspector to make this

judgment. Further, limited resources affect the number of shipments that can be inspected at our ports and borders by U.S. Customs inspectors. FDA and DEA have

similar resource constraints.

Conclusion

What can we and should we be doing to ensure that the world problem in counterfeit and diverted pharmaceuticals does not become a significant U.S. problem?

We must recognize that the U.S., as the largest and most lucrative market in the

world, is the ultimate target of many counterfeiters and diverters. We must not

make it any easier for criminal counterfeit operations than we already have.

Therefore, we must continue to:

1. Maintain our political will and not allow the desire for low cost medicines to undermine our commitment to protecting the public health of U.S. citizens.

2. Ensure that we maintain comprehensive legislation to protect our pharmaceutical

industry and encourage innovation.

3. Aggressively enforce the laws designed to combat trade in spurious medicines.

4. Maintain strong penal sanctions against individuals convicted of violating the

various drug laws.

Mr. Chairman and committee members, thank you for the opportunity to express

my views on this important subject.

Mr. GREENWOOD. Thank you very much, Dr. Glover, for that testimony.

The Chair at this time would recognize James Christian, Vice

President and Head of Global Corporate Security, Novartis International. You’re recognized for 5 minutes.

TESTIMONY OF JAMES CHRISTIAN

Mr. CHRISTIAN. Mr. Chairman and members of the committee,

my name is James Christian and as has been indicated I am Vice

President of Global Corporate Security for Novartis. Prior to joining

Novartis I spent 20 years with the United States Secret Service,

the last 5 years as a Special Agent in Charge.

At Novartis, one of my responsibilities is to oversee the company’s worldwide anti-counterfeiting operations. In the past 5

years, Novartis has participated with law enforcement and health

authorities in over 100 counterfeiting investigations in 33 countries

and involving hundreds of drug products. I have witnessed a considerable ingenuity and resourcefulness that unlawful enterprises

utilize to manufacture and distribute ineffective and often unsafe

counterfeit products. Drug counterfeiters present a severe and

growing threat to the health and safety of U.S. citizens. Now is not

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the time to weaken the country’s defenses against such criminal activities. Novartis has a compelling interest in protecting the medicines that it currently markets as well as those under development.

This year alone, Novartis will spend more than $2.4 billion on research and development. More importantly, patients using

Norvartis’ products must have every confidence that the drugs are

safe and effective.

Counterfeit drugs are fake medicines, produced and packaged to

look like the genuine article. They include products containing correct ingredients, incorrect ingredients, no active ingredient, an insufficient quantity of active ingredient or too great a quantity of active ingredient and usually have phony packaging and labeling.

Counterfeiters are able to produce labels that are virtually indistinguishable from the true labels. They can also make and stamp tablets with company logos and put them in blister packs. We have

scores of examples of counterfeit expired and adulterated medicines. One quick example that I’ll show now is a product that is

developed and we’ve seized in Colombia. This is the raw material

used to make the tablets. This raw material is made up of boric

acid, floor wax and leaded highway yellow paint. From this they go

to the tablets and from the tablets they go to the blister pack and

the labeling. I have a number of other examples on the table and

a bagful of examples if committee members are interested later in

the program.

Production of counterfeit medicines is pervasive outside the

United States and is growing at an alarming rate. My written testimony contains detailed information about the extent of counterfeit

activity in Latin America and Asia. As a result of a fairly recent

investigation in Argentina, for example, 72 individuals were arrested, 7 tons of counterfeit pharmaceuticals were seized, 49 different counterfeit drugs were identified and 13 clandestine labs

were dismantled and 5 print shops seized. In Colombia last year,

more than 400 expired, adulterated or diverted or counterfeit products from 80 different pharmaceutical companies were seized by

INVIMA, the Colombian food and drug authority. Pharmaceutical

companies and law enforcement authorities have a difficult time

controlling international counterfeiting practices. Many counterfeit

pharmaceuticals are manufactured so cleverly that it is virtually

impossible for consumers, government officials, law enforcement

agencies, Customs officials to identify them as counterfeit. Detection is made more difficult by the practice now of mingling counterfeit, adulterated, expired, stolen and genuine product. When this

occurs random or sampling testing is totally ineffective. Counterfeiters do not care about the quality and safety of the product. The

goal is to sell a fake drug to an unsuspecting patient.

The United States cannot rely on foreign countries to enforce

their counterfeiting laws and regulations. Many governments lack

the interest, resources and technological sophistication needed to

address the problem. Counterfeit products present a severe safety

risk to patients. They are deliberately fraudulently mislabeled with

respect to their identity and source. Active ingredients, if present,

are often in an incorrect amount. Frequently, there is no active ingredient at all, but a completely different ingredient. They might

be manufactured in garages, basements or warehouses under horVerDate 11-MAY-2000 15:01 Oct 18, 2001 Jkt 010199 PO 00000 Frm 00162 Fmt 6633 Sfmt 6602 E:\HEARINGS\73737 pfrm07 PsN: 73737
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rific conditions. I now have a videotape from Colombia that is very

short, but it will give you an idea of what these clandestine labs

that manufacture counterfeit money, counterfeit products look like.

[Video shown.]

Now as bad as that looks, the final product, the quality is almost

impossible to tell from the genuine and certainly now by a Customs

Inspector.

Criminal counterfeiting operations have become more aggressive,

more sophisticated. The resulting danger to U.S. consumer is greater than ever before. Now is not the time to diminish the capacity

of the United States to prevent counterfeiting drugs from reaching

our shores. it is time to strengthen our commitment to keeping our

medicines the best and safest in the world. To do this, additional

resources and a much stronger mandate are necessary for organizations such as U.S. Customs and the Criminal Investigative Unit of

the FDA. Their approach must be international in scope if we are

to maintain the present level of integrity in the U.S. pharmaceutical system. If you go to Bogota, if you go to Bangkok, you will

find the presence of the FBI, the Secret Service, the DEA. You will

not find a Criminal Investigative Unit of the FDA and yet this has

the potential to be a much bigger problem than the problems those

agencies were addressing.

Thank you.

[The prepared statement of James Christian follows:]

PREPARED STATEMENT OF JAMES CHRISTIAN, VICE PRESIDENT AND HEAD OF GLOBAL

CORPORATE SECURITY, NOVARTIS INTERNATIONAL AG

My name is James Christian and I am Vice President and Head of Global Corporate Security for Novartis International AG. Prior to joining Novartis, I was a

Special Agent in Charge with the United States Secret Service where my responsibilities included suppression of counterfeiting of U.S. currency in Latin America.

At Novartis, I oversee operations to protect the assets and reputation of Novartis

in the 140 countries in which the company markets its products or in which the

products or their raw ingredients are manufactured, packaged, stored, or shipped.

In this capacity, I have witnessed firsthand the considerable ingenuity and resourcefulness that unlawful enterprises in foreign countries utilize to manufacture and

distribute ineffective and often unsafe counterfeit products. There can be no question that foreign drug counterfeiters take full advantage of offshore mail-order pharmacies, the Internet, and visitors from other countries to market their goods. Furthermore, if the United States permits the reimportation of drugs as provided in legislation enacted last year, the financial rewards for drug counterfeiters will ensure

that they make every effort to penetrate deeply the U.S. marketplace causing considerable harm to the health and safety of U.S. citizens.

I. BACKGROUND

Novartis Group is a multinational research-based healthcare business

headquartered in Basel, Switzerland, with U.S. headquarters in New Jersey. We

have more than 67,000 employees worldwide with over 15,000 in the United States.

The company’s product line includes 126 prescription drugs to treat or prevent conditions as varied as rheumatoid arthritis, schiozophrenia, hypertension, Alzheimer’s

disease, high cholesterol, migraine headaches, epilepsy, cancer, and organ rejection

in kidney, liver, and heart transplants. Several weeks ago the FDA approved our

new orphan drug, Gleevec TM, for chronic myeloid leukemia, which represents one

of the most significant cancer treatment breakthroughs in many years. Novartis has

a compelling interest in protecting the assets represented by the drugs that it currently has in the market as well as those now under development. In this year

alone, Novartis will spend more than $2.4 billion on drug research and development.

More importantly, it is critical that patients using Novartis products have every confidence that the drugs are safe and effective. For these reasons, Novartis dedicates

considerable manpower and financial resources to addressing drug counterfeiting on

a global scale. Accordingly, Novartis works closely with law enforcement and health

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authorities in numerous countries to investigate and suppress the counterfeiting of

its products.

II. COUNTERFEITING

Counterfeit drugs are ‘‘fake’’ drugs, produced and packaged to look like the genuine article. Counterfeit drugs may include products containing correct ingredients,

incorrect ingredients, no active ingredient, an insufficient quantity of active ingredient, and have phony packaging and labeling. Illicit operations may combine counterfeit product with adulterated or expired product, or on occasion, with some genuine product to make detection more difficult. Counterfeiters employ state-of-the-art

technologies such as desktop publishing to produce counterfeit labels that are indistinguishable from the true original labels. These labels put false ‘‘new’’ expiration

dates on expired products and make adulterated or ineffective drugs look like the

real thing. Counterfeiters have the ability to make and stamp tablets with company

logos and even to package them in blister packs.

While we have scores of examples of such activities, there are some that demonstrate the deceit and danger inherent in drug counterfeiting:

(1) A raid on a counterfeiter’s facility uncovered tens of thousands of vials of a drug

whose expiration date had long-since passed. The vials were soaked in hot

water to remove the old labels, and counterfeit labels bearing a new expiration

date were affixed. In similar circumstances, drugs in vials and ampules have

lost their efficacy because their temperatures were raised to unacceptable levels

during the label-removing process.

(2) Our efforts also interdicted millions of yellow tablets that were virtually indistinguishable from the genuine product—including the company logo. These tablets

were made of boric acid, floor wax, and lead-based yellow paint used for road

markings. Sacks of these ‘‘raw materials’’ were stacked throughout the counterfeiter’s site.

Counterfeiting is prevalent outside the United States and is growing at an alarming pace. A joint workshop of the World Health Organization and the International

Federation of Pharmaceutical Manufacturers Associations concluded in 1992 that in

some countries as much as 60 percent of all drugs may be counterfeit. Since then,

every major pharmaceutical company has seen an increase in the volume of counterfeit medicines. Over the last five years, Novartis has assisted or otherwise been involved in over 100 investigations of counterfeiting operations, in over 33 countries,

involving more than 11 Novartis products and more than 200 products manufactured by other companies.

A survey of the international media demonstrates that the problem of counterfeit,

substandard, contaminated, and poisoned drugs is worldwide—fake Xenical in Hong

Kong, phony ampicillin and AZT in Vietnam, counterfeit Mefloquine in Cambodia.

Recently in the United States, counterfeit fertility drugs have been found in New

York and phony Propecia and Viagra discovered in Boston. Counterfeiting and diversion are particularly prevalent and dangerous in Latin America and Asia.

Mexico and Central America. Counterfeit products are a major concern in Mexico,

Central America, and the Dominican Republic. Counterfeiting in Mexico is particularly dangerous for American consumers because of the shared border between Mexico and the United States. U.S. consumers traveling over the border to Mexico to

buy products off pharmacy shelves may purchase dangerous counterfeit or adulterated products. A recent article in the New York Times reported that a chemical

analysis had found several sampled Mexican drugs to be counterfeit—including an

anti-depressant, an ulcer treatment, and a diabetes medication. American law enforcement officials opined that the amount of counterfeit and substandard medications in Mexico could be as high as 25 percent. Based on our knowledge, the problem could be much larger. Moreover, in my experience, U.S. Customs and FDA lack

the resources and infrastructure to police the border adequately to prevent criminal

smuggling of bulk counterfeits from Mexico to the U.S.

Argentina. From May 1999 until June 2000, Novartis worked with authorities in

Argentina to combat the counterfeiting of four Novartis products—Voltaren (an antiinflammatory), Tegretol (an anti-epileptic), Hydergine (dementia), and Reliveran (arthritis). As a result of that investigation, 72 individuals were arrested, 7 tons of

counterfeit pharmaceuticals were seized, 49 different counterfeit pharmaceuticals

were identified, 13 clandestine labs were dismantled, and 5 print shops were seized.

Brazil. In early 1999, it became apparent to the pharmaceutical industry that

there was a major counterfeit pharmaceutical problem in Brazil. At that time, 132

counterfeit products—from most major companies—were identified as being distributed in Brazil. The Pharmaceutical Security Institute (an industry organization

formed to support anti-counterfeiting efforts) working with the Brazilian Minister

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of Health trained a team of 25 investigators to attack the counterfeit medicine problem. Approximately 20 clandestine labs were seized and numerous arrests were

made.

Colombia. Counterfeit drugs are manufactured in Colombia for international distribution. In 2000 alone, more than 400 products from 80 companies, either expired,

adulterated, diverted or counterfeit, were seized by INVIMA (the Colombian food

and drug authority) working with Novartis and other multinational pharmaceutical

companies. Investigations, raids, and seizures are continuing with extraordinary results. So far, approximately 6 million ampules of counterfeit Voltaren have been

seized. Tens of millions of counterfeit tablets of another pharmaceutical company’s

non-steroidal anti-inflammatory drug have been seized. Dr. Miguel Rueda, Director

of INVIMA, believes that the counterfeit, expired, and altered drugs were to be distributed not only in Colombia but also in Ecuador, Peru, Venezuela, and Central

America. While INVIMA is working hard to combat the problem in Colombia, the

necessary resources are not always available.

Asia. The counterfeiting of pharmaceuticals is a burgeoning problem in China. For

example, in March 2001, Novartis and other pharmaceutical companies participated

in a raid with authorities in Shantou that resulted in the seizure of over 1800 cartons of counterfeit pharmaceutical products from 14 multinational companies.

India. Another threat to U.S. consumers relates to the distribution of bulk pharmaceutical products from India. India refuses to recognize intellectual property

rights and as a result, through process patents, Indian companies manufacture and

ship patent-protected bulk pharmaceutical products around the world. Technically,

the Indian products should only be shipped to countries that recognize process patents, but in fact much of this bulk product shows up in countries that recognize

product patents. In fact, there is reason to believe that some of this material is

shipped to the United States for manufacturing and packaging, and then exported

to other places such as Mexico. Often the product ends up back in the United States

when American citizens go to Mexico to purchase pharmaceuticals. Health authorities in a number of Latin American countries believe that India and Cuba use the

region as a dumping ground for batches of pharmaceuticals that are substandard.

For example, health authorities have discovered products without sufficient active

ingredient and contaminated with foreign materials including pieces of glass. Those

products can be sold to U.S. consumers in Mexico or may be smuggled into the U.S.

and placed on U.S. pharmacy shelves.

III. LACK OF CONTROL OF COUNTERFEITING

Novartis, like other drug companies, and, unfortunately, law enforcement authorities are hampered in the effort to control international counterfeiting practices by

several factors including: (1) the difficulty of detecting counterfeits; (2) the lack of

dedicated resources in local jurisdictions and the failure to give appropriate priority

to anti-counterfeiting activity; (3) the ingenuity of counterfeiters and the ease with

which criminal elements can resume operations at new sites; and (4) the lack of applicable criminal statutes and the prevalence traditionally light sentences.

Inability to detect. Many counterfeit pharmaceuticals are manufactured so cleverly

that it is virtually impossible for consumers, government officials, and law enforcement agencies to identify them as counterfeit. Counterfeiters do not care about the

quality and safety of the product. They concentrate their resources on the appearance of the product and its packaging. The goal is to sell a cheap, fake product to

an unsuspecting consumer, not to provide a safe and effective medicine to a patient.

It can be virtually impossible for consumers to tell the difference between a counterfeit and a genuine product. Even pharmacists, doctors, and government regulators

can be fooled. Field tests can determine whether the active ingredient is present,

but not whether the active ingredient is present in the appropriate amount, whether

there are any impurities or foreign substances in the product, or whether the product is expired.

The ability to detect counterfeit products is made more difficult by the practice

of combining counterfeit product, adulterated product, expired product, and genuine

product. Distributors supply the resulting intermingled combination to physicians,

hospitals, pharmacies, and health agencies. Such shipment might be 50 percent

‘‘bad.’’ If a test is performed on a genuine pill from the intermingled shipment, the

counterfeit shipment passes undetected.

Lack of enforcement. Many countries fail to enforce their counterfeiting laws vigorously. Local jurisdictions frequently lack the resources and technological sophistication needed to address the problem. Some countries spend their resources on other

national priorities and not anti-counterfeiting activities. In other countries, criminal

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operations have infiltrated the law enforcement and regulatory community, precluding effective enforcement of the law.

Professional criminal element. Drug counterfeiters may be extremely large, sophisticated and well financed operations or, at the other extreme, they may be small

opportunistic enterprises. In Mexico, for example, it is believed that most, if not all,

of the pharmacies located along the border, are owned and operated by Mexican organized crime groups. In Latin America, crime syndicates bring together manufacturing and printing skills and often link them with existing pharmaceutical distributors. By the time a counterfeiting operation is identified by a pharmaceutical

company, it has generally been in operation for some time. The subsequent investigation to develop facts, identify suspects, and determine the locations of clandestine labs and print shops can take years. During that time counterfeit drugs continue to be produced. Oftentimes the company’s investigation must be fully developed before the local government will take any official interest in the problem. Clandestine labs are usually crude and can be easily shut down and reopened elsewhere

by counterfeiters who suspect that they or the location have been compromised. In

my experience, the professional criminals who engage in counterfeiting of pharmaceuticals are able to elude arrest and prosecution by shifting their operations from

location to location and by taking advantage of delays in the investigation process.

IV. THE THREAT TO U.S. CONSUMERS

There is ample opportunity for counterfeit products to enter the United States

across the Mexican border. A recent survey by the Drug Enforcement Administration and U.S. Customs at the border between Tijuana and San Diego revealed that

a sample group of 200 travelers returned to the United States with 28,409 dosage

units. Assuming that 25 percent of Mexican pharmaceuticals are counterfeit or adulterated, those 200 patients alone may have brought 7000 counterfeit or adulterated

doses into the United States.

Counterfeit products present a severe safety risk to consumers. Counterfeit products are deliberately and fraudulently mislabeled with respect to their identity and

their source. They might be manufactured in garages, basements, and warehouses.

The manufacturers do not adhere to good manufacturing practices. There is no guarantee the products were manufactured in a sterile environment, and no information

about how the products were packaged, stored, handled, or shipped. Active ingredients, when present, are often in an incorrect amount. Often there is no active ingredient at all, or a completely different ingredient. If the medication is intended for

a serious condition, an unexpected change in the dosage, the substitution of an illegal ingredient, or the lack of an active ingredient could well be life threatening. If

the medication is intended for a serious and chronic condition, a month’s supply of

counterfeit drugs could place the consumer’s long-term health in jeopardy.

Additional problems arise with expired and adulterated medicines. Parallel trade

and diversion of medicines often results in labels being changed so that they are

in the local language. There are instances where the products lose efficacy during

the label change process. Labels are often added to outdated products, giving the

appearance that the shelf life is much longer.

V. CONCLUSION

In 1987, the House Energy and Commerce Committee concluded that permitting

re-importation of American drugs ‘‘prevents effective control or even routine knowledge of the true sources of merchandise in a significant number of cases.’’ As a result, ‘‘pharmaceuticals which have been mislabeled, misbranded, improperly stored

or shipped, have exceeded their expiration dates, or are bald counterfeits, are injected into the national distribution system for ultimate sale to consumers.’’ Indeed,

‘‘the very existence of the market for reimported goods provides the perfect cover

for foreign counterfeits.’’ Since 1986, criminal counterfeiting operations have become

more numerous, more sophisticated, and more aggressive. The resulting danger to

U.S. consumers is greater than ever before. Now is not the time to weaken the ability of the United States to prevent counterfeit drugs from reaching U.S. citizens. If

reimportation of prescription drugs resumes, Congress will soon be holding hearings

to determine how to stop the flow of dangerous counterfeit medicines into the

United States.

Mr. GREENWOOD. Thank you, Mr. Christian.

At this time, the Chair would recognize William Trundley, the

Vice President of Corporate Security Investigations, GlaxoSmith

Kline.

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TESTIMONY OF WILLIAM TRUNDLEY

Mr. TRUNDLEY. Mr. Chairman, members of the committee, thank

you for inviting me to testify today. My name is Bill Trundley, I’m

the Vice President of Global Corporate Security and Investigations

for GlaxoSmithKline and I’m based in London. I have responsibility

for investigating counterfeit crime against the company and its customers worldwide. Prior to joining GlaxoSmithKline I was the head

of Security for the Bank of England with additional responsibility

for the secure production, storage and distribution of the Euro

banknote including introducing anticounterfeiting measures. Prior

to that, Mr. Chairman and members, I was in the British Army for

24 years with the Special Investigation Branch with responsibility

for the conduct of some anti-terrorist and intelligence operations.

I intend now to make a short presentation to demonstrate the

widespread incidents of counterfeit product within the global marketplace. As you can see, it’s almost impossible for the consumer

to tell the difference between genuine and counterfeit products.

Look at the silver foils and the blister packs to see just how far

the counterfeiters will go to copy the real thing. This particular

counterfeit product was manufactured in Taiwan in sufficient

quantity to supply the local market for 3 months. It’s easy for the

counterfeiters to copy batch codes or make their own packaging.

Furthermore, there is simply no guarantee that reimported medicines are genuine or if they are genuine while out of the country

they have been stored under the appropriate conditions.

This particular product is an antibiotic and was found on the

market in South America. The product is designed to be used intravenously as well as in suspension in tablet form. This counterfeit

version has no active ingredient.

This product is used exclusively for the treatment of HIV. The

product was found to be totally ineffective. It was on the marketplace in Hong Kong. Criminals will exploit loose controls to introduce similar counterfeit medicines into the U.S. marketplace. The

net result will be to put the lives of patients at risk. The taxpayer

or the purchaser of the medicines becomes the victims of wholesale

fraud if they’re duped into using products that have been switched

for the counterfeits.

Dermavaid creme is used to treat skin complaints. this product

found its way on to the U.K. market from India, despite strict EU

importation laws. On analysis, it was found to be dangerous for use

on the human skin. And I have to say that by relaxing its import

conditions, the U.S. is making itself more vulnerable to this sort of

practice.

The package on the right is counterfeit, but can anybody here tell

the difference easily? This slide relates to a case that is only 3

months old, so please don’t think it’s an old problem that no longer

exists. This product is used for reducing pain and was found on the

market in the Far East and in Sub-Saharan Africa. One other

point, I should make is that if a product is potentially harmful, it

may be impossible to conduct proper recall as the audit trail will

be all but lost once the product has been sent abroad. One example

of a fatally harmful product is the case in 1994 which members

may be aware of when over 200 children in French Niger died as

a result of being vaccinated with what later transpired to be conVerDate 11-MAY-2000 15:01 Oct 18, 2001 Jkt 010199 PO 00000 Frm 00167 Fmt 6633 Sfmt 6602 E:\HEARINGS\73737 pfrm07 PsN: 73737
164

taminated river water. This was during a government-sponsored

vaccination program.

This particular product is used to treat acne. Personally, I would

not allow my teenage children to rub this counterfeit product into

their face. This was discovered in the Philippines and you can see

from the quality of the packaging the lengths to which the counterfeiters will go to.

This product is used for the treatment of asthma in children and

as you can see it was discovered in Brazil 23 years ago. The counterfeit version has no active ingredient.

Now please compare and contrast this appalling trade with the

companies that each invest billions of dollars every year in research and development to ensure the safety and efficacy of the

product where the products are manufactured in sterile conditions

and to high standards of GMP and GLP. And the ethical producers

are subjected to continual testing and quality control to ensure the

safety and efficacy by both in-house and the Federal authorities.

This is in marked contrast to criminal operations. This slide

shows how the counterfeit Zantac was manufactured in Taiwan.

The conditions are quite appalling.

This is a slide that shows how the counterfeit Panidol was made.

As you can see, the product was made in sweatshop conditions and

the circumstances that are wholly unacceptable.

This final slide shows the dreadful conditions in which counterfeit medicines are mass produced and stored. The photograph was

taken during a raid on premises in Manilla that resulted in the discovery of the counterfeit acne cream. I would like to emphasize,

Mr. Chairman and members of the committee that despite having

strong controls in the European market, counterfeit products still

find their way on to the marketplace. The United States represents

40 percent of the global pharmaceutical market. It is therefore the

most attractive and lucrative market and one which the counterfeiters would naturally turn to.

Counterfeit product is made in primitive, dirty and dangerous

conditions, often exploiting cheap, unskilled, local labor. At best,

counterfeits do not contain active ingredients. At worst, they can

be positively harmful and fatal.

Finally, more often now, medicines are sold direct to the customers through the Internet or mail order. This makes it even

more difficult for them and the authorities to know whether or not

the product they’re using is safe.

Mr. Chairman, members of the committee, thank you very much.

[The prepared statement of William Trundley follows:]

PREPARED STATEMENT OF WILLIAM TRUNDLEY, VICE PRESIDENT, CORPORATE

SECURITY AND INVESTIGATIONS, GLAXOSMITHKLINE

Mr. Chairman, members of the Committee, I am Bill Trundley, Vice President of

Corporate Security and Investigations, at GlaxoSmithKline which is a researchbased pharmaceutical firm. The company has US headquarters, research and development, and manufacturing facilities in both North Carolina and Pennsylvania.

GlaxoSmithKline employs over 20,000 personnel in the United States and 90,000

elsewhere around the world.

The purpose of this testimony to your subcommittee is to briefly discuss some of

the Company’s experience with those who produce counterfeits of our medicines, and

to give you some perspective on the scope of this problem. The issues are with public

safety because: there can be no guarantee that re-imported medicines have been

165

stored under the correct conditions to ensure their efficacy; the audit trail will be

all but lost once the product has left the country, making it almost impossible to

guarantee a successful recall of the product if this becomes necessary; and criminals

will exploit any perceived loosening of controls to place counterfeit product into the

US legitimate market.

First, as to scale, the World Customs Organization has estimated that ‘‘around

5% of all world trade may be falsified, and in view of the relative ease with which

pharmaceutical products can be counterfeited and transported, there is little reason

to expect a lower figure for such products.’’ Current estimates of the cost of counterfeit medicines range from 6 to 12 billion dollars each year.

Counterfeiting is most prevalent in developing countries, but there is always the

risk that these products could find their way into almost any country. Former FDA

Commissioner Jane E. Henney has said that she and her Canadian counterpart are

concerned that, if imports were allowed, the U.S. demand for drugs from Canada

could cause Canada, and I quote, ‘‘to somehow be used as a front for counterfeit or

contaminated products... one has to be concerned about safety issues here.’’ End

quote.

While the size of counterfeiting operations can vary from a small back-room unit

to a larger factory-like facility, the one common thread is the complete lack of regard the counterfeiters have for the regulatory and quality control framework that

exists for the manufacture of ethical pharmaceuticals.

Their formulations and raw materials have not been tested in clinical trials, monitored for adverse reactions nor proven to meet the label claims of efficacy or stability throughout the claimed shelf life. They may use cheap substitutes for active

ingredients, the wrong active, or even no active at all. Their processes and equipment are not validated, and they probably operate without any monitoring of product specifications. False documentation is used to help introduce the sub-standard

goods into the legitimate distribution chain.

Unfortunately, however, it is relatively simple to produce a counterfeit that, on

the surface, looks remarkably similar to the genuine article.

Counterfeit medicines are also a cynical exploitation of the trust patients place

in pharmacists and other health care providers. The counterfeiters rely on the reputation and good name of prescribers, manufacturers and their products in order to

defraud, and possibly harm, an unsuspecting and vulnerable public. The most troubling aspect of this crime is its negative impact on the lives and well being of patients. The net result is to put the lives of patients at risk, as they may unwittingly

be sold counterfeit or sub-standard medicines as part of life-saving treatment or for

pain relief. Patients may then lose confidence in the product and in the medical profession as a whole, causing them to stop their particular course of treatment. The

taxpayer will become the victims of fraud if they are sold products that have been

switched for counterfeits or for sub-standard medicines. This will result in serious

harm to legitimate business such as the manufacturers, the distributors and the retail pharmacies.

Let me quote a few examples:

• In Ghana, ten percent of all hospital deaths are due to fake or subpotent medicines.

• In 1996, hundreds of Nigerians either died or suffered permanent brain damage

from a counterfeit version of a meningitis vaccine.

• In 1997, fake medicine killed 88 children in Haiti.

• 223 children died in Bangladesh over a two-year period after taking fake anti-malarial pills.

• One study showed that only one quarter of all medicines bought from street vendors in Nigeria were genuine.

Let me leave you with the thought that, while the counterfeit productslook similar

to real medicines, the operations that produce counterfeit medicines bear little or

no relation to the facilities required to produce genuine medicines. I believe the

scale will increase in a very short period of time, particularly when internet and

mail order selling becomes more widespread as there will be even less opportunity

for the customer to be sure that it has been purchased from a trustworthy source.

Our manufacturing facilities and standards are complex and rigorous. Our whole

operation is subject to rigorous control and inspection both inhouse and by the Federal Authorities to ensure the safety and efficacy of the product. The counterfeit operations, on the other hand, are not. This is indeed a case where one cannot judge

a book (or a medicine) by its cover.

Thank you for allowing me to testify on this important topic. I will be happy to

answer any questions you may have relating to our interest in this issue.

166

Mr. GREENWOOD. Thank you, Mr. Trundley for your testimony.

We appreciate it.

Mr. Haislip for 5 minutes.

TESTIMONY OF GENE R. HAISLIP

Mr. HAISLIP. Good afternoon, Mr. Chairman, distinguished members of the committee, my name is Gene R. Haislip and I’m a consultant to the pharmaceutical and chemical industry.

Mr. GREENWOOD. Mr. Haislip, let me interrupt you. Is your

microphone turned on? Just pull it a little closer and speak into the

silver one, not the black one.

Mr. HAISLIP. Sorry. Thank you. I’ll start again. Good afternoon,

Mr. Chairman, distinguished members of the committee, my name

is Gene R. Haislip and I’m a consultant to the pharmaceutical and

chemical industry in the area of controlled substances and chemicals which, as you’ve heard this morning, are frequently diverted

from legitimate channels into the illicit drug traffic. Prior to that

I served most of my career in the Drug Enforcement Administration and during the last 17 years of my service I was the head of

the Office of Diversion Control which is the office in DEA that has

responsibility for all the programs, investigations and activities

dealing with that subject and I’m very pleased to have this opportunity to address you on I think what we all see as an extremely

important and sensitive area and a growing problem and that is

the problem of counterfeit pharmaceuticals.

I have submitted a lengthy statement for the record and with

your permission I’ll just proceed to summarize some of the main

points and then answer such questions as you may have.

Well, counterfeiting controlled substances is not new. It’s been

going on for quite some time. And it’s a very interesting and important problem and I have detailed some of the extraordinary experiences we have with that in my testimony. One of the situations

that I mention is very unique, I think, because it was a case in

which at its height really most of the factories that produced this

particular drug it was called quaaludes in those days, most of the

factories in the world producing that particular drug were really

just producing it for the illicit drug traffickers. They were virtually

the only real customers for that commodity. Very little of it was

being sold to any legitimate enterprise. And in addition to that, of

course, they were counterfeiting a product that was available in the

United States, but at that time the legitimate product had only become about 5 percent of the total quantity of that drug which was

available in the United States. In other words, about 95 percent of

it was the counterfeit product that had been smuggled into the

country from Colombia where it had been counterfeited. And so I

think that that case is interesting to me because it shows just how

far things can go.

Well now we see that in addition to this historical counterfeiting

of controlled substances, there’s a growing problem of counterfeiting of general pharmaceuticals of all varieties and for virtually

all medical purposes and like the counterfeiting of controlled substances, it too is almost exclusively an international problem. That

is to say, it’s a problem that probably could not exist in the serious

dimensions that we’re experiencing without the benefit of global

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commerce and what it can provide to criminal organizations and I’d

like to just emphasize a few points about that, if I may.

Well, the first thing I’d like to point out is this is not really something that’s very difficult to do. It’s quite easy to obtain all the raw

materials and all of the technology that you need to produce the

products that you have seen in the various demonstrations this

morning and a lot of times, I mean if you wish to, you can do this

indirectly and retain your anonymity by simply using brokers in

some of the major commercial cities of the world. It’s the broker

that finds the source of these materials and the source, the manufacturer, supplier, never knows who the customer is. The source is

dealing with the broker and the broker is dealing with the customer and by the way for whatever reasons, depending upon what

you’re trying to do, if you need for those goods or that you’ve purchased to change identity or to change their source, this can be

done for you too and it’s customarily done in some of the great free

trade zones of the world. These are special zones that you find particularly in the Caribbean and in Europe and also in parts of Asia.

We don’t really have that institution in the United States. Sometimes it’s called that, but it’s not really the same. Well, in those

free trade zones, the goods that are being purchased in this case

by criminal organizations come into the free trade zone. There is

very little record keeping required and no inspection of these commodities because they’re regarded by the country that they’re entering as being just in transit. So it cannot possibly be a problem

for them, whatever it is. They’re simply there in transit.

But they’re there in transit, you can take them into your own

warehouse. You can rent space within a free trade zone because it’s

not something like this room here. It’s more like a small city, usually behind a fence and there, you can do whatever you need to do.

You can even do your counterfeiting there, but if you need to

change the identity of those goods, or if you need to repackage

them or relabel them you can do that there and they leave the free

trade zone as something that did not—they were not, when they

arrived. So as I’ve often said, things come into that free trade zone

and they just disappear because they never come out the other end.

Something else comes out the other end. So I think that’s important to remember in terms of any idea of trying to control the

source of much of this international commerce. And as far as production, well, I think you’ve seen some of the examples of some of

the incredibly crude production that really dominates most of this

activity, but sometimes it’s quite sophisticated because we have

cases in which criminal organizations have gone to parts of the

world where for political and economic reasons, there’s a lot of desperation and they can corrupt the factory management. In one

case, in this particular case in Eastern Europe, a secret facility was

established within the factory, just known to a few employees just

to fill the orders of this particular criminal organization for the

particular commodity they wanted and even went so far as to purchase one of the top of the line brand new German tableting machines that could produce 400,000 tablets an hour to install in this

secret facility and if that’s not something that’s convenient, can’t

find the right factory to try to corrupt, then you can—some countries, you can rent a factory. You can go to India and places like

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that, you can rent a factory for the weekend or maybe just for night

time or a couple of weeks or whatever you want to do. All of the

equipment is there, they really don’t inquire as to what you’re

doing if you can pay the rent. So that’s another option. And then

we’ve seen in a number of cases an incredible thing of criminal organizations really establishing what amounted to their own little

miniature pharmaceutical factory, buying brand new reaction vessels, the vats, drying apparatus, all the piping, ductwork, everything they needed in a secret facility, usually somewhere in the

suburbs. This particular one was in a large European capital city.

Well, the second point that I’d like to make is that many of the

examples I’ve given in my testimony concern controlled substances,

but I want to make the point that in dealing with these problems

in regard to controlled substances, difficult as it is, DEA and others

do have some advantages. There is an international infrastructure

which exists. There are three——

Mr. GREENWOOD. Mr. Haislip, I don’t want to be rude, but we

need you to summarize and we’ll get back to you in questions.

Mr. HAISLIP. Thank you. I’ll try to do that quickly. So there are

some advantages in some of these cases, but in the case of general

pharmaceuticals there is no international infrastructure that we

can take advantage of. I’ll just close by mentioning three points

that I’d like for you to give some consideration to. The first is I

think this problem has to grow and so we do really need to increase

our law enforcement capability to deal with it. The second is I

think there’s a need to simplify our laws and make them more

practical and workable because really in many cases now they’re

too baroque and they probably will not really work and last is, it’s

time to consider some kind of major diplomatic effort to create the

kind of international infrastructure we do not have. I apologize for

going over time. Thank you very much.

[The prepared statement of Gene R. Haislip follows:]

PREPARED STATEMENT OF GENE R. HAISLIP, CONSULTANT, CONTROLLED DRUGS AND

CHEMICALS, LAW, POLICY, ADMINISTRATION AND ENFORCEMENT

Mr. Chairman and distinguished members of the Committee, my name is Gene

R. Haislip and I am presently a consultant to the pharmaceutical and chemical industry on issues involving controlled drugs and chemicals. I served for 29 years of

my government career in the US Drug Enforcement Administration and, for the last

17 years, was the head of the agency’s Office of Diversion Control from which I retired as a Deputy Assistant Administrator of DEA in March of 1997. This is the office responsible for all of the control and enforcement programs dealing with legitimate drugs and chemicals that are diverted into the illicit drug traffic. I am also

now assisting the United Nations Drug Control Program in the design and implementation of a chemical control program in the Central Asian Republics bordering

Afghanistan.

I am very pleased to have this opportunity to testify before you today on a subject

of great importance to our fellow citizens and one that has occupied so much of my

professional effort. It is my sincere hope that I will be able to make some small contribution to your deliberations.

Drugs and pharmaceuticals have become a major and pervasive social concern

both because of their life-giving benefits and, in many cases their debilitating abuse.

It is crucial that we take measures to minimize these abuses and at the same time,

seek to insure that our citizens can rely upon the efficacy, and purity of their medications. The extraordinary availability of technology, the speed and ease of global

commerce and the ingenuity of the criminal mind have resulted in the massive diversion and illicit manufacture of drugs of abuse and have also begun to undermine

the integrity of vital medicines by the trafficking in bogus, counterfeit products

which may cause the death or injury of innocent, unsuspecting persons.

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Much of what I will relate in my testimony deals with the problems of the diversion, clandestine manufacture and counterfeiting of that smaller group of pharmaceuticals known as controlled substances. However, the lessons of this experience

are absolutely critical to understand the challenges that we face in dealing with all

classes of pharmaceuticals. In most cases, the criminal technique employed for one,

are essentially the same for the other, except that in the case of non-controlled products, we lack many of the basic tools with which to attack these problems. Hereafter, I will attempt to develop this in greater detail, but first, some basic statement

of the situation is necessary to establish a context.

I. NATURE OF THE PROBLEM

The demand created by addicts and drug abusers is obviously of quite a different

nature than that of legitimate consumers for the medicines they require. Yet there

is a certain similarity which in both cases may result in stimulating the traffic in

counterfeit pharmaceuticals. Although most people commonly think of the illicit

drug traffic in terms of such drugs as heroin, marihuana or illicit cocaine, in fact,

many important legitimate drugs are also powerful narcotics, stimulants or depressants that are frequently sought by drug abusers.

Just like other consumers, drug abusers and addicts have learned the various

brand names and appearance of the drug products they are seeking. Consequently,

drug traffickers employ every criminal means they can to obtain these legitimate

products to sell to their customers at tremendously inflated prices. But because of

controls, it often happens that these products cannot be obtained in sufficient quantity from legitimate sources and drug traffickers undertake to counterfeit their own

dosage forms to meet the demand.

In a similar fashion, criminal organizations sometimes seek to meet the legitimate

demand for brand name pharmaceuticals by counterfeiting inexpensive, perhaps entirely bogus dosage forms in order to defraud both legitimate patients and manufacturers. If the legal and law enforcement situation is inadequate to prevent such

schemes, cheap, impure, ineffective and perhaps highly toxic counterfeits can drive

out the legitimate product. This is the subject with which we are concerned in this

hearing.

II. METHAQUALONE DIVERSION: A PROTOTYPIC EXAMPLE

I know of no finer example of the capabilities of international criminal groups to

corrupt global commerce than the massive illicit traffic in counterfeit Methaqualone

tablets known as ‘‘Quaaludes’’ which occurred in the early 1980s. It is for me, largely a personal story, but briefly worth the telling because it illustrates how far such

a problem can develop. All of these same conditions continue to exist and generally

characterize the traffic in all diverted and counterfeit pharmaceuticals.

During the late seventies, a strong depressant drug known as ‘‘Quaalude’’ became

a major drug of abuse, especially among adolescents. This resulted in increasing addictions, overdose deaths, and an extraordinary rate of automobile fatalities. At the

time, a US company was manufacturing about seven metric tons of the drug a year

for legitimate medical use and much of it was being diverted. Suddenly, it had become a drug which was producing as many deaths and injuries as either heroin or

cocaine.

By 1980, we had determined that the country was being inundated by these

Quaalude pills in such extraordinary quantities as to far exceed national production.

By reviewing the DEA daily enforcement reports, it soon came to my attention that

shipments containing one and two tons of these pills were being seized almost weekly from small aircraft that had originated in Colombia. The tablets turned out to

be counterfeits but were equally potent and usually contained the 300 milligrams

of the drug just like the legitimate US product.

A quick check revealed that this synthetic drug was not manufactured in Colombia and I set off for Colombia, and particularly the port of Barranquilla, with the

task of discovering the original source of this material. As a result, the Colombian

Customs and National Police were soon making the seizures which permitted us to

gradually piece together the entire story of this traffic and put an end to it. It is

one of the very few complete victories of our enforcement efforts, in that this huge

billion-dollar traffic was eliminated. Here is what we found.

The Colombian drug traffickers had identified every known source of the legitimate manufacture of this drug, which involved countries in Western Europe, Eastern Europe and Asia and brokers and free trade zones in many others. Through one

technique or another, they were purchasing virtually the entire global production of

bulk Methaqualone powder for eventual shipment to Colombia where it was rendered into counterfeit Quaalude tablets exactly like the popular legitimate product

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produced in the US. As a result of establishing the production capacities of these

foreign facilities and the large seizures which we began to make, I estimated that

approximately 150 metric tons of the bulk drug was being diverted and counterfeited each year. This was more than twenty times the quantity of the legitimate

pills then being manufactured. In other words, the world’s factories were mostly

supplying only the drug traffic, and the legitimate product represented only about

5% of the total availability. Congress finally eliminated all manufacture of this drug

in the US and it has also ceased to be manufactured globally.

III. DIVERSION TECHNIQUES

What is most instructive is the manner in which all of this was accomplished.

There were essentially two ways in which the material was obtained from source

manufacturers. The most common method was to place orders through brokers, usually operating in the great free trade zones such as Rotterdam or Hamburg, or in

Switzerland. In this way, neither party knows the identity of the other and the shipment is protected from scrutiny by Customs authorities that routinely make no examination of goods in transit. These are considered harmless because they are not

staying in the country and can do no harm to their temporary host! Moreover, if

special labeling and shipping arrangements are desired in order to evade attention

while in transit or upon arrival, it is easy to find a broker who will oblige. Essentially, the drugs enter the free trade zone and disappear from the face of the earth.

The manufacturer may wonder who is ordering such quantities of drugs but has no

legal responsibility to inquire.

The other method of obtaining the drug was to deal directly with the manufacturer. In one case, traffickers sent representatives to a foreign factory with suitcases

full of US dollars to negotiate for multi-ton shipments. Their attempt to corrupt the

management at this factory—which was partly owned by the foreign national government—was successful. As will be seen, similar, and even more blatant situations

of the absolute corruption of factory management have arisen.

IV. CLANDESTINE PRODUCTION AND COUNTERFEITING

In the case of Methaqualone, all of the active pharmaceutical ingredients (APIs)

were purchased from legitimate sources and the actual counterfeiting occurred in

Colombia. This is perhaps the easiest part of any clandestine operation. Used multistage tableting machines are readily available on the international market or they

may be purchased new without arousing suspicion. It is also probably easy to substitute candy machines, which perform essentially the same functions as tableting

machines. Counterfeiters are also quite capable of manufacturing capsules, ampoules, and blister packs. This is often seen on the Mexican border in the traffic

in counterfeit steroids, while capsules have been used for counterfeit amphetamines

(Black Beauties) beginning in the early seventies.

In the course of investigations of this type, it is quite common to find that persons

with professional experience in the legitimate chemical and pharmaceutical industry

have been recruited to perform the technical functions for which they were trained.

On occasion, these individuals will in fact contact former colleagues still employed

in legitimate enterprises and who are usually innocent of the purpose, to obtain

sources or supplies.

If the desired bulk material (APIs) can not be purchased, arrangements can be

made for its production. This is more likely to occur in those situations where legitimate facilities are experiencing financial difficulties, such as in Eastern Europe or

in developing countries. In one such case, arrangements were made with the director and chief chemist of a struggling East European factory to establish a secret production facility within the company’s 17-acre campus. It was easy to obtain the necessary chemicals without arousing suspicion and to relocate production equipment.

To complete the arrangement, a new, top-of-the-line tableting machine which could

produce 400,000 tablets per hour was purchased from a German firm. In another

case, in a neighboring country, it happened that this factory was a producer of an

important precursor material and some of the management and personnel decided

to use it to establish an illicit production facility within the company. Unfortunately,

as a result of political upheavals and marginal economies, there are many such situations like these, which are often ripe for corruption.

If it is not possible to corrupt the management of a suitable facility, in some countries a criminal organization may rent an existing facility during evenings or for

weeks or weekends. But it may be more expedient to build your own facility. There

are examples in both Western and Eastern Europe in which this has been done for

drugs such as MDMA and Methamphetamine. In these cases, very knowledgeable,

well-funded criminal organizations acquired a suitable site in the city or the suburbs

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and proceeded to purchase brand new, top-of-the-line reaction vessels, tableting machines and vats and piping and dryers. These were small but modern, up-to-date,

elegant production facilities costing more than a million dollars. In one of the more

fascinating cases, a group of traffickers purchased large lots of cocaine in Colombia

for distribution in Europe to finance their secret factory in a European capital. This

factory was intended to supply illicit markets in both Europe and the US.

V. PACKAGING AND DISTRIBUTION

Counterfeit packaging is generally no more difficult than counterfeiting tablets.

In most cases, only the original legal manufacturer of the real product can tell the

difference, and then only on close examination and search of records.

Distribution is probably the most difficult and risky activity of pharmaceutical

counterfeiters. If the product is destined for the illicit drug traffic, it involves all of

the risk attendant to the smuggling of heroin or cocaine. If the product were intended for legitimate consumption, the task would be much easier. The product

itself appears to be legitimate and would cross Customs barriers with less notice

and suspicion, especially since the services are focused on illicit drugs and commodities which require so much of their effort. Certainly, it is easy to establish a ‘‘front

company’’ with four or five employees to receive and market the goods to legitimate

distributors. Such ‘‘companies’’ have been routinely used in the US to import precursor chemicals for distribution to illicit manufacturers of Methamphetamine. Of

course, the ease with which this can be accomplished will depend on the strength

and enforcement of national legislation.

VI. DIVERSITY OF COUNTERFEIT PHARMACEUTICALS

A. Drugs of Abuse

In the examples above, I have dealt primarily with the controlled pharmaceuticals

that concern DEA. Before turning to other areas, I should like to complete this picture with a very brief summary, as the example given is only remarkable because

of its scope and effect upon the US.

In the early 1970s, large quantities of secobarbital and amphetamine were imported into Mexico for the clandestine production of counterfeit capsules for illicit

distribution in the US. These capsules closely resembled the products that had been

previously obtained by traffickers from the Mexican subsidiary of a US firm. When

their source of supply was cut off, they simply continued their illicit business with

counterfeits. The same situation appears to have developed as a result of the control

of steroids. When the diversion of these drugs was virtually eliminated by act of

Congress in 1990, sophisticated counterfeit products immediately increased along

the Mexican border.

In recent years, Europe, Africa, Asia, and the Middle East have all experienced

similar large-scale diversion and counterfeiting of drugs of abuse. These include a

variety of stimulant drugs ranging from amphetamine to Fenetylline, pemoline,

amfepramone, and phentermine. It appears that both legitimate and clandestine

manufacturing sources of bulk material have been used at various times. Clandestine laboratory and counterfeiting facilities producing such materials have frequently been seized in the Balkans and major points of sale and distribution are

focused on Africa and the Middle East. Other commonly counterfeited products include Mandrax (the European form of methaqualone), Diazepam (Valium),

Flunitrazepam (Rohypnol) and other benzodiazepines.

B. General Pharmaceuticals

The evidence suggests that the counterfeiting of other classes of pharmaceuticals

is equally widespread. The first international effort to define the problem was a

workshop organized by the World Health Organization (WHO) together with the

International Federation of Pharmaceutical Manufacturers Associations (IFPMA) in

Geneva in April of 1992. It found that the counterfeiting of medicines had greatly

increased and involved billions of dollars annually. A recent list of actual case reports from various countries included the following types of counterfeit medications:

antibiotics, diuretics, antimigraines, antiparkinsonians, analgesics, antispasmodics,

muscle relaxants, antianaemics, antihistamines, corticosteroids, anitfungals,

vasodilators, tranquillizers, vaccines, antimalarials, birth control pills and more. We

may say that most of the classes of drugs that can be marketed to consumers were

involved.

The WHO Department of Essential Drugs has continued this work and in 1999,

issued a very commendable set of guidelines for the development of measures to

combat the problem. This report took note of some of the increasingly common ‘‘horror stories’’ of the carnage caused by defective counterfeit products such as deaths

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of children resulting from liver damage caused by the inclusion of toxic substances

and unplanned pregnancies resulting from birth control pills containing no active

ingredient.

The reason for their growing availability and popular acceptance, as noted by

WHO executive Dr. Suzuki at the World Health Assembly in May 2000, is the combination of ‘‘profit and price’’, the usually dynamic of any drug traffic. Pharmaceutical counterfeiters, who do not have to trouble themselves with producing a

quality product, or paying for any of the expensive research that originally created

it, can concentrate on the authenticity of appearance and still offer a bargain price.

A speaker from the Health Ministry in Benin observed that people were dying from

counterfeit drugs daily, but continued to buy them because of their relatively cheap

price. While visiting Nigeria some years ago, I found that the usual ‘‘pharmacy’’

services were offered on the street from the trunk of beat-up vehicles where, according to experts, most of the modern medicines were counterfeits.

WHO reports that although counterfeit pharmaceuticals are extremely common in

developing countries, they have also been found in developed countries as well. Indeed, the principal consumer interest driving much of the counterfeit pharmaceutical market along the Mexican border is also the desire for cheaper medications.

Who wants to pay more when you can pay less? Who wants to pay for another office

visit to the doctor when you can buy the drug that you have been using at a cheaper

price on the other side of the border, and without a prescription!

VII. DEFICIENCIES IN CONTROL AND ENFORCEMENT

Perhaps the greatest service that WHO has rendered is to enumerate the current

massive deficiencies in national and international efforts to deal with the problem.

I think that those of us who work in the area of controlled drugs are particularly

aware of this because of the total lack of most of the tools, institutions and practices

that we regularly use. I am perhaps especially sensitive to this, having so often experienced the frustrations of laboring to organize international enforcement cooperation in the absence of clear and specific legal authority. This proved to be an excruciating problem in dealing with the example I gave of Methaqualone which, although the subject of an extraordinary illicit traffic was not under legal control in

most of the countries that were feeding it. The first attitude is always the same;

‘‘We don’t have an obligation, we don’t have the authority, and we don’t have the

time.’’ Let’s look at some of the specifics.

The counterfeiting of pharmaceuticals is a thoroughly international problem. Production and distribution seldom occurs within a single country and often involves

global commerce. Yet there is no specific multilateral treaty imposing obligations to

criminalize, report, or cooperate in the suppression of this traffic, nor any international staff to collect, analyze and disseminate information. This contrasts sharply

with our work in the area of drugs of abuse where we have had treaties since 1911

and a Board and staff, which monitors their compliance.

Perhaps of most importance is the fact that, as a result of efforts that DEA and

others have made, a functioning, effective informal international law enforcement

effort has been constructed around these agreements. The staff of the International

Narcotics Control Board is daily working with the law enforcement agencies of dozens of countries which all communicate and cooperate together in operations to suppress illicit diversion of both controlled drugs and chemicals. I assure you that the

results are quite impressive and have had significant impact on the traffic in a long

list of narcotics, stimulants, and depressants that are often diverted into the illicit

traffic, as well as chemicals for the manufacture of methamphetamine, amphetamine, MDMA, cocaine, and heroin. This structure does not exist in the area of

counterfeit pharmaceuticals.

Since there is no treaty, there are also no legal obligations to penalize certain actions, or designated agencies to systematically collect intelligence or assist each

other in investigations. I would defer to the FDA for an account of the situation in

the US, but in most cases, I doubt that there is specific assignment of clear enforcement responsibilities and mandate, together with dedicated personnel and resources. Usually, such laws as exit are of a regulatory nature and are generally the

responsibility of the Health Ministries. The national law enforcement agency may

help out on a selective, ad hoc basis. This approach is lacking in the advantages

that we possess in the area of controlled drugs and chemicals. In short, on a global

level:

• National laws are often inadequate,

• International shipments are not searched or verified in free trade zones,

• There is a lack of dedicated enforcement personnel and resources,

• There is no systematic data base and no requirement for one,

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• There is no specific treaty or set of uniform international obligations, • There is no dedicated staff to monitor compliance, and • There is no functioning, systematic international law enforcement effort.

VIII. FUTURE CHALLENGE OF THE GLOBAL ECONOMY

The pharmaceutical industry has become an increasingly important part of health

care and is deserving of specific attention, regulation and protection from crime and

corruption. It is clear that there are strong financial incentives to engage in pharmaceutical counterfeiting. The level of criminal activity can be expected to increase

rapidly with the globalization of commerce and the emphases on speeding this commerce through Customs barriers. Moreover, the increasing variety, effectiveness and

elegance of pharmaceutical remedies will also increase these financial incentives.

The potential damage from this criminal activity is enormous and includes:

• Injury to patients whose maladies go untreated because of reliance upon substandard or entirely bogus counterfeit preparations,

• Injury to patients who unwittingly consume counterfeit preparations containing

poisonous ingredients,

• Damage to the entire public health system by undermining public confidence in

medications and the pharmaceutical delivery system,

• Damage to the pharmaceutical industry in terms of lawful revenues and public

confidence, and

• Provision of additional financial support for crime, violence and corruption.

I think that in so far as the United States is concerned, we have thus far been

spared most of the consequences of this problem, although there is ample warning

on our southern border of what it will look like, if unattended. But to protect our

people in the future, and to establish an enforcement regime that will protect all

people, we must invent some things that do not now exist.

Thank you very much for your attention and for this opportunity to contribute to

your valuable work.

Mr. GREENWOOD. We appreciate your testimony.

Mr. deKieffer.

TESTIMONY OF DONALD deKIEFFER

Mr. DEKIEFFER. Thank you very much, Mr. Chairman. Good

afternoon to the committee. My name is Donald deKieffer and I’m

an attorney here in Washington, DC. I’ve been practicing international trade law for around 30 years now. Previously, I was the

General Counsel to the U.S. Trade Representative. In the last 15

years we’ve concentrated part of our practice on international

antidiversion and anticounterfeiting. In that period, we’ve identified thousands of international counterfeiters and diverters, including hundreds of individuals and companies who are selling counterfeit and diverted drugs right now in the United States.

Today I considered dozens of different issues that are relevant to

these hearings: intellectual property rights, R & D funding for the

next generation of drugs, improvements in cooperation between

various law enforcement agencies in the effective delivery of drugs

to impoverished nations. But rather than address all those, each

one of which might be the subject of a separate committee hearing,

I’d like to talk about three things. The first is that permitting diverted drugs into the United States market will destroy the current

regulatory regime. Second, the safety and efficacy of the U.S. drug

supply will be placed in jeopardy. And third, permitting uncontrolled imports of prescription drugs will not significantly reduce

costs to most consumers, but will enrich unscrupulous, cynical and

even criminal elements.

The purpose of this testimony, I’ll define diversion as the unauthorized transfer of prescription drugs from its intended recipient

to other unauthorized destinations.

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Getting back to my first point for a moment, permitting diverted

drugs into the United States market will destroy the current regulatory system. The U.S. regulatory scheme is built upon almost a

century of solid science and experience designed to protect Americans from unsafe and unproven drugs. But if anybody can buy anything from anyone without a prescription, the entire regulatory regime collapses. Congress may as well just abolish the FDA.

The second issue is linked to the first. Those who suggest that

the FDA merely become advisory or gold standard agency in other

words, just setting advice with regard to what the standard should

be without any enforcement at all ignore the clear danger of counterfeits. Well, counterfeits continue to be a minor problem. They’re

fast growing in the United States and they will overwhelm legitimate markets if current regulations are abolished. There is simply

no way for consumers to distinguish between legitimate and counterfeit goods unlike going down to K Street and buying a $30

Rolex. There is no way a consumer can tell a legitimate pharmaceutical from a counterfeit.

In countries where diverted pharmaceuticals are available, counterfeits have soon followed, displacing the legitimate products. Diversion is merely a Trojan horse for counterfeits.

This is not a free trade issue and I really want to emphasize this.

Any foreign manufacturer who meets U.S. standards can sell legitimate goods in the United States right now and I don’t think anybody wants to change that. But without regulation counterfeits can

wreck even the legitimate import market.

The third point is that cost of drugs will not significantly decline

for consumers if diverted prescription drugs are permitted into the

United States.

In other areas where diversion is permitted, for example, in overthe-counter pharmaceuticals and other consumer products, the

prices to consumers are only slightly below normal retail. It’s the

middle men who pocket enormous profits. In South Africa, for example, half of all the pharmaceuticals dispensed by the South African government itself are stolen. These goods that are stolen never

entered the bloodstreams of indigent Africans, but rather are sold

for huge profits abroad and in South Africa. The stolen and diverted goods are replaced in South Africa with counterfeits.

There is no cheap or easy solution to these problems we’ve discussed today, but we cannot jeopardize the safety or health of U.S.

consumers by artificial and dangerous gray market import

schemes. We need to have prescription drug coverage for all those

who really need it, rather than jeopardizing the safety and health

of all of us.

We need more effective enforcement, not the abolition of enforcement. In short, any proposal to permit the unregulated imports to

prescription drugs will destroy the U.S. regulatory scheme, jeopardize the safety and health of millions of Americans, and not result in significant cost savings to American consumers and I thank

you and would look forward to your questions.

[The prepared statement of Donald DeKeiffer follows:]

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PREPARED STATEMENT OF DONALD DEKIEFFER, DEKIEFFER & HORGAN

INTRODUCTION

Mr. Chairman and members of the Subcommittee: I appreciate the opportunity to

appear before you. I am Donald deKieffer, attorney at deKieffer & Horgan in Washington D.C. My firm specializes in the practice of international regulatory law. I

have over thirty years of experience in trade law and policy development and have

worked for more than a decade in tracking and investigating international diverters.

Today I will testify regarding the diversion and global counterfeiting of pharmaceutical products. Although many of the clients I represent are pharmaceutical companies, I am neither speaking on their behalf nor on behalf of the pharmaceutical

industry in general.

The objective of my testimony is to inform this committee of the existence of an

active pharmaceutical diversion trade and to demonstrate how failure to control this

practice opens the door for the entry of counterfeit drugs into the United States. I

will first present a foundational background on the law regarding drug imports. Secondly, I will discuss the nature of the diversion problem and its influence on criminal activity, the pharmaceutical market, and governmental regulatory agencies, in

particular the FDA. Thirdly, I will propose possible avenues to pursue in the development of solutions to these problems.

OVERVIEW

Drug Classifications

Controlled substances are classified into five different schedules. The schedules

are distinguished from each other based on the potential for drug abuse. Schedule

I identifies substances with a high potential for abuse that do not currently have

an accepted medical treatment use in the United States, such as heroin and marijuana. Schedules II through V are controlled substances with legitimate medical

purposes, such as Ritalin and Valium. Schedules II through V also include ‘‘lifestyle

drugs.’’ These substances, such as Viagra, target disorders affecting the quality of

life rather than specific diseases. Lifestyle drugs are commonly abused prescription

substances. Additional controlled substances, such as OxyContin, which are not lifestyle drugs, are also abused.

Diversion

International diversion is the importation of products originally intended for distribution in another country. Pharmaceutical diversion involves substances classified in schedules II through V. A classic diversion scheme begins when drugs that

are produced in the United States are either sold at low prices or are given philanthropically to other countries. Corruption and fraud in the countries of destination

permits third parties to obtain large quantities of U.S. produced drugs at low costs.

These drugs then make their way back into the U.S. market for resale at going market rates, thus generating large profits for the diverters.

Closely related to diversion is the practice of parallel importing, which is the importation of patented drugs by third parties without the authorization of the patent

owner. Drugs produced by U.S. pharmaceutical companies are available for a lower

cost in other countries where the foreign governments fix pharmaceutical prices.

Diverters purchase these drugs abroad and redistribute them in the U.S. market,

thus undercutting the U.S. market price and making a tremendous profit.

Another subcategory of diversion is smuggling. While diverted products re-enter

the country under the guise of legal imports, smuggled drugs are routed into the

country through illegal means. Smuggling is the preferred means of re-importing diverted drugs. These pharmaceuticals mainly come across customs borders or

through the mail system with fraudulent documentation. The sheer volume of diverted drugs entering the country prevents customs officials from detecting or seizing more than a mere fraction of them.

Counterfeiting

Many foreign countries permit the cross border exchange of imitation patented

drugs manufactured in countries other than the United States. Counterfeit drugs

are a tremendous problem in countries with lax import regulations. Counterfeit

pharmaceuticals are often purchased to replenish the dwindling drug supplies that

result from diversion. These counterfeits are not subject to any form of production

regulation, and once they get mixed into the system they are essentially indistinguishable from the legitimate product. While counterfeit drugs are not yet rampant

in the United States, the loosening of import regulations leads to a climate that increases the potential for counterfeit distribution.

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1Melody Petersen, 3 Fake Drugs Are Found in Pharmacies, N.Y. TIMES, June 5, 2001 at http:/

/nytimes.com/2001/06/05/business/05DRUG.html. 2Douglas Pasternak, Knockoffs on the Pharmacy Shelf: Counterfeit Drugs are Coming to America, U.S. NEWS, June 6, 2001 at http://www.usnews.com/usnews/issue/010611/usnews/

counter.htm. 3 21 U.S.C. § 331(d) (2000). 4 21 U.S.C. § 956 (a) (2000). 5 U.S. Customs, Importation of Prescription Medication/Drugs Consumer Alert, available at

http:// www.customs.ustreas.gov/travel/med.htm.

Diversion is a Trojan Horse for counterfeits. Drugs are no longer part of a regulatory infrastructure once they leave the control of the originally intended recipient

and enter the channels of diversion. Many of these drugs pass through countries

where there is rampant corruption and fraud in the drug industry, and counterfeits

are in abundance. Because there is no way to monitor where the diverted products

have been or how they have been handled, it is highly likely that counterfeits will

unknowingly be mixed with diverted drugs. Counterfeit products then enter the U.S.

system mixed with legitimately produced U.S. drugs.

Counterfeiting in the U.S. is already existent to a certain extent. For example,

between 1991 and 1995 the FDA and U.S. Customs officials seized enough evidence

to incriminate Flavine International Inc., a New Jersey based company, in a counterfeit drug scandal. Flavine bought bulk amounts of veterinary antibiotic ingredient base and other human antibiotics from an unapproved source in China for considerably less than the price of the legitimate products. Flavine then resold the material to unsuspecting U.S. drug companies at an inflated rate. The scheme posed

a risk to animals and humans because the counterfeit drugs were of unknown potency and quality. Six patients in Denver suffered toxic reactions.

More recently, the FDA has been investigating cases of counterfeit injectable

drugs. Instances of counterfeit Serostim, a growth hormone used by AIDS patients,

Nutropin, also a growth hormone, and Neupogen, a cancer drug, have been detected

in the past month.1 FDA investigations are ongoing and it is not yet clear whether

the drugs were produced in the United States or overseas. At least some of these

products ended up in U.S. pharmacies and were actually distributed to customers

who experienced adverse reactions.2

CURRENT REGULATIONS AND LAWS REGARDING DRUG IMPORTATION

The federal government has jurisdiction to control pharmaceutical importation

into the United States. The FDA, DEA and U.S. Customs are the federal agencies

primarily responsible for overseeing drug import regulation.

The law effectively prohibits the importation of any drugs, including foreign made

versions of U.S. approved drugs, that have not received FDA approval to demonstrate they meet the federal requirements for safety and effectiveness.3 FDA approved drugs can only re-enter the country if they are being shipped directly back

to the manufacturer. When customs officials receive a shipment that contains nonapproved pharmaceuticals intended for commercial distribution they notify the local

FDA district, and the FDA assumes responsibility for deciding whether or not to

seize the goods. FDA personnel are also responsible for monitoring mail importation.

Customs officers from the customs mail division will examine a parcel and set it

aside if it appears to contain a drug that the FDA has specifically requested be held

or an FDA-regulated article that appears to represent a health fraud or an unknown

risk to health.

The rules governing personal importation of approved drugs from foreign countries vary slightly. Congress recently stipulated that a United States resident may

import up to fifty dosage units of a controlled medication without a valid prescription at an international land border.4 Medications must be declared on arrival, be

for own personal use, and be in their original container. The FDA has the ability

to exercise discretion in the enforcement of this law and may permit the entry of

unapproved drugs under extenuating circumstances, such as the continued treatment by a foreign doctor. However, this policy does not apply to foreign-made chemical versions of drugs available in the U.S. The FDA cannot assure that such products have been properly manufactured and are effective. Their use would present

an unreasonable risk. Additionally, the FDA reserves the right to refuse entry or

seize any drug it considers unapproved and, therefore, illegal.5

The DEA has recently contributed additional regulations designed to help control

pharmaceutical imports from foreign markets. According to the DEA, consumers

must have valid prescriptions to legally obtain controlled substances. Consumers

cannot legally purchase controlled substances from foreign Internet sites and have

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6 Notice, Dispensing and Purchasing Controlled Substances over the Internet, 66 Fed. Reg.

21,181 (April 27, 2001) available at http://www.deadiversion.usdoj.gov/fedlregs/notices/2001/

fr0427.htm. 7 John Smith, A Prescription for Drug Abuse, WASH. HERALD, May 20, 2001. 8 National Drug Intelligence Center, OxyContin Diversion and Abuse, (January, 2001), available at http://usdoj.gov/ndic/pubs/651/overview.htm. 9 Id.

10FDA Admits to Lacking Control Over Counterfeit Drug Imports AMERICAN SOCIETY OF

HEALTH-SYSTEM PHARMACISTS available at http://www.ashp.com/public/news/breaking/counterfeit.htm. 11 21 U.S.C. § 956 (a) (2000).

them shipped to the U.S. unless the consumer is registered with DEA as a controlled substance importer and acts in compliance with DEA requirements.6

NATURE AND CONSEQUENCES OF PHARMACEUTICAL DIVERSION

Promotion of Criminal Conduct

Failure on the part of the U.S. government to control pharmaceutical diversion

encourages criminal behavior both domestically and internationally. The ease with

which pharmaceutical drugs are smuggled across the border makes diversion enticing as a low-risk criminal activity with high economic returns. Diverters and counterfeiters are able to exploit the American public because of increasing frustration

surrounding the high cost of medications and a market that has been traditionally

free from unapproved or dangerous products. The proliferation of an American gray

market, therefore, invites the theft of American drug products in foreign countries,

thus completing the vicious circle of criminal conduct.

The diversion trade also facilitates the abuse of prescription drugs in the U.S. An

estimated four million citizens in the United States are addicted to prescription

drugs.7 Many of these products are lifestyle drugs, such as Viagra, weight control

products, or tranquilizers. There is also a serious problem with the misuse of other

legitimate medications. For example, the pharmacological effects of OxyContin, a

central nervous system depressant designed principally as a pain medication for

cancer victims, make it a substitute for heroin.8 OxyContin overdoses have been the

cause of over forty deaths on the East Coast in the last year.9 Much of the illegal

OxyContin supply comes from diverted sources. Diversion increases the ability of individuals to receive drugs through improper channels without a prescription, thus

fostering the opportunity for misuse of these products.

Destruction of the Pharmaceutical Market

Diverters regularly import undetected pharmaceuticals into the United States.

Since 1997, more than 4,600 foreign drug manufacturers have shipped to the United

States without being inspected by the FDA.10 Additionally, Congress has relaxed the

regulations on the importation of controlled substances by allowing U.S. citizens to

legally import limited amounts of price-controlled drugs from Mexico and Canada

for personal consumption.11 Slackening of import standards increases the likelihood

of diverted drugs devastating the U.S. pharmaceutical market.

Diversion, in the form of parallel importing, is a violation of intellectual property

rights. Included in most patents is the exclusive right to the use, including importation and exportation, of the patented good. Intellectual property rights are the financial basis of the pharmaceutical industry. The more diverted and counterfeit drugs

permitted to enter the country, the less control the patent holders maintain. Taking

away the intellectual property rights of the pharmaceutical industry will render patents meaningless and will create major financial set backs for the market. Pharmaceutical companies may have to freeze research and development and may not be

able to financially justify pouring resources into the creation of new and improved

medications.

Diverted drugs destroy the predictability of supply and demand in the pharmaceutical industry. The U.S. government does not artificially control drug prices. The

U.S. pharmaceutical producers have not traditionally competed with international

drug distributors, principally for regulatory reasons. The result has been that pharmaceutical companies have freedom to incidentally set prices for the products they

develop. Consequently, as happens in many different markets, drug prices are disproportionate to actual production cost. However, inflated prices are necessary to

offset the marketing cost of the specific product, to finance research and development of new products, and to subsidize medical assistance to struggling nations. In

a regulated system such as this, the pharmaceutical industry bases production on

predicted market needs. Diverters destroy the market balance when they enter unknown and unregulated surpluses of any product into the country through the chanVerDate 11-MAY-2000 15:01 Oct 18, 2001 Jkt 010199 PO 00000 Frm 00181 Fmt 6633 Sfmt 6621 E:\HEARINGS\73737 pfrm07 PsN: 73737
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nels of diversion. Companies are unable to maintain any sort of meaningful records

regarding the distribution and consumption of drugs and cannot react proportionately to the market need.

Diverters exploit the price disparities between U.S and foreign pharmaceutical

prices. Pharmaceutical companies provide drugs to other countries either philanthropically or at much lower prices than they are sold domestically. Diverters capitalize on this price differential by obtaining low priced drugs in other countries.

They are then able to undercut the market price when re-selling drugs back in the

U.S. This practice generates a surplus in the American market and prevents pharmaceutical companies from meeting their projected sales quotas. Ironically, customers are not the ones financially benefiting from diverted drug sales. Diverted

drug products often barely undercut the normal retail prices. However, because

diverters obtain the drugs at a fraction of U.S. resale prices, the diverters assume

a tremendous profit while the customers reap only a fractional benefit.

The entrance of diverted drugs and counterfeit products into the market creates

a financial liability for the pharmaceutical industry. Prescription drugs carry a

strict liability for the producers. Strict liability means that drug companies are completely accountable for their products and must bear the cost of lawsuits and fines,

regardless of any question of negligence. Counterfeit drugs may easily be mixed

with diverted products. Counterfeit drugs are dangerous because they are entirely

foreign substances masquerading as the genuine product, and they may not even

consist of the same ingredients that they profess to contain. There is a high likelihood that customers who unsuspectingly ingest these products may be adversely affected. It is difficult, even for a professional, to distinguish between counterfeited

and legitimate drugs. Since these counterfeit products are difficult to distinguish,

companies may find themselves liable for situations that were not of their own causing. The potential financial hit that the pharmaceutical industry will bear, as a result of liability, will adversely affect the financial stability of U.S. drug companies.

Diversion also affects world pharmaceutical markets and finances criminal conspiracies. Many countries, such as South Africa, Israel, Russia and the Philippines

have open borders with respect to the importation and exportation of pharmaceutical products. Open border countries have lost strict regulatory control of their

drug markets. For example, in South Africa over fifty percent of the medication supplied to the government ends up stolen. Open border countries have also experienced a corresponding surge in counterfeit medicine entering under the guise of parallel imports. Frequently, the counterfeits enter the country as a means of replenishing the drug supply depleted due to the diversion of the legitimate drugs to more

lucrative markets in Europe and America. Consequently, the medicines intended for

a particular population are not getting to the people that need them; in their place,

false and dangerous counterfeits are being provided, and criminals reap the financial benefit.

Undermining the FDA

The American public is currently frustrated with high priced pharmaceuticals.

There is an outcry for access to pharmaceutical products that are cheap, readily

available, efficacious, and safe. However, permitting diversion and parallel imports

is not a viable solution. Safe and efficacious products come at a cost. The entrance

of diverted and counterfeit drugs into the U.S. will destroy drug control regimes currently in place and the FDA will lose its ability to monitor and control drug production and distribution in this country.

Increased diversion traffic through inefficient monitoring at the border will prevent the FDA from controlling drug entry and distribution. Unchecked pharmaceuticals currently enter the country through the mail system and across the Mexican border. Due to the sheer volume, this influx of drugs basically goes unmonitored

by federal regulatory groups such as the FDA. As a result, drugs in this country

are being distributed and sold without proper authorization. This diminishes the

ability of the FDA to control the distribution of drugs. Citizens are able to access

‘‘lifestyle’’ drugs and potentially addictive substances without prescriptions or the direction of a physician. Consequently, the FDA is losing its ability to manage prescription drug use.

Counterfeit drugs present a danger to citizens because the FDA is unable to monitor the products for quality and safety. Counterfeit drugs, principally produced in

countries such as India, are imitations of U.S. made products. However, it is impossible to know for certain what these medications contain, how they were produced,

where they were stored, or the potential side effects of ingestion. By allowing the

diversion trade to persist, the likelihood of distribution of these potentially lethal

medications increases, and the FDA loses the ability to regulate the quality and

safety of products being distributed to the unsuspecting U.S. public.

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12 U.S. GEN. ACCOUNTING OFFICE, REP. TO CONG. REQUESTERS GAO-01-69, INTERNET PHARMACIES 17 (2000). 13 Id.

Diverted drugs that leave the control of the original distributor place consumers

in jeopardy because the means of shipment and storage are unregulated. Diverted

drugs enter and exit the hands of multiple unknown parties before they eventually

reach a consumer. These drugs are commonly stolen in bulk from government agencies in foreign countries and are routed through countries such as Mexico before

they reach consumers in the United States. Most drug products have specific instructions regarding storage temperature and expiration date. With diverted drugs,

there is no guarantee that the products were properly handled during shipping and

storage. The FDA has always exerted strict controls on the production and distribution of drugs in the United States. Consumers have learned to expect pharmacies

and drug distributors to provide safe medications. Allowing diverted drugs into the

country will destroy the FDA’s ability to guarantee safety and will increase the danger to consumers who may unknowingly purchase and ingest these products.

Counterfeit drugs that enter under the guise of parallel imports likely come from

unapproved locations. Both counterfeit drugs and diverted drugs are huge risks to

the citizens of this country. The FDA has traditionally been able to approve the production location of drugs and foreign products. When drugs are smuggled into the

country, there is no way of knowing where they have traveled. Additionally, counterfeit drugs entering the country through diversion may have been produced anywhere. The FDA is, therefore, losing its ability to control and monitor the production

sites for pharmaceuticals being imported into this country.

Diverted drugs may contain incorrect informational material and directions or

may be mislabeled entirely. Medications are, of course, dangerous when misused

and require specific instructions as per their usage. Divergence from these requirements may prove extremely harmful and potentially lethal. Diverted goods are often

taken from their original packaging and distributed to many different importers.

The potential is high that drugs may be mislabeled or put into packages that lack

the appropriate informational material. As the diversion trade increases, the FDA

will in turn lose control over the packaging and instructions accompanying large

quantities of drugs in this country.

Additionally, the diversion trade destroys systems of record keeping for the U.S.

drug industry. With products being illegally mailed into the country and smuggled

across the borders, it is impossible for the FDA or the drug industry to keep track

of what is currently on the market. This makes it easier for people to obtain drugs

illegally and promotes the abuse of prescription products.

POTENTIAL SOLUTIONS

There needs to be better cooperation between the government agencies in charge

of enforcing laws relating to diversion and counterfeit trade. According to a report

issued by the U.S. General Accounting Office, the efforts of the FDA, DOJ, DEA and

Customs do not always support each other.12 For example, sometimes the FDA releases packages of drugs detained by Customs in an effort to conserve resources.

These kinds of actions are counterproductive, undermine the law, and send mixed

signals to the individuals involved.13 Laws have been put in place to control diversion; however, it needs to be clear who is in charge of enforcement. Efficacious systems of detection and seizure as well as substantial penalties for abusers must be

implemented and enforced.

Foreign Internet pharmacies dealing in illegal imports need to be eliminated. An

abundance of Internet pharmacies situated in foreign countries advertise prescription drugs. These sites do not require individuals to have a prescription from their

doctor in order to obtain drugs. Although DEA regulations and the Controlled Substances Act allow individuals to bring limited quantities of controlled substances

into the U.S for personal use, these regulations do not apply to shipments into the

U.S. from foreign Internet pharmacies. It is illegal to purchase drugs from such

sites. These pharmacies are aware that they are engaging in illegal activity. Many

sites explicitly justify their practice and include instructions on how to avoid having

the packages seized by U.S. Customs. This problem needs to be attacked at the

source. There must be a crack down on foreign Internet pharmacies dealing in illegal importation.

The government should look for solutions to help support/subsidize providing affordable prescription drugs for the elderly and others who are unable to afford necessary medications. The diversion trade seems to be supported in part by frustrated

Americans seeking cheaper drugs. It is contended that many of these individuals are

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seniors who are on tight budgets and cannot afford the medications they require.

The government should consider providing a means-tested subsidization for U.S.

citizens unable to afford the medications they require. Providing medication to those

who are feeding the diversion market will reduce the demand for smuggled drugs.

Penalties for prescription drug abuse must be increased. It is currently very difficult to detect prescription drug abuse, and many people fail to even recognize it

as a crime. Harsher penalties may decrease the demand for diverted pharmaceuticals and naturally cause that market need to decrease.

Finally, there needs to be cooperation between government agencies and the pharmaceutical industry in creating better systems for overseeing philanthropic drug distribution in other countries. Much of the aid that is sent to struggling countries is

well intended. However, it has been proven time and time again that these countries lack the infrastructure and integrity to properly distribute the products to the

intended recipients. It is counterproductive to provide mass quantities of free or lowpriced medication to countries that cannot properly handle or distribute it. Until a

more reasonable infrastructure can be put in place, bulk deliveries of U.S. pharmaceuticals to underprivileged countries should be severely restricted.

There likewise needs to be a better system of tracking drugs destined for distressed markets where there is a possibility of corruption or diversion. There are

FDA approved means of marking both drugs and packaging that would allow customs officials to quickly and efficiently monitor what crosses the border. Such a system would help catch diverted products before they entered the market.

CONCLUSION

In summary, drug diversion is a crime. Its occurrence is increasing. By permitting

this practice to continue, the government will open the way for counterfeit drugs

to enter the U.S., foster criminal conduct both internationally and domestically,

harm the pharmaceutical market, and undermine the regulatory structure of the

FDA. Measures should be taken to recognize and address these issues.

Mr. GREENWOOD. We thank you. All of you gave excellent testimony.

The Chair recognizes himself for 5 minutes for questioning. Let

me address a question to Dr. Shepherd. The law of unintended consequences tells us that when we try to fix something we usually

cause another set of problems. Even though we will try to minimize

that as much as we can, one of the concerns that will undoubtedly

be raised as we try to tighten the Mexican-U.S. border will be—

what about the poor senior citizen who doesn’t have access to prescription drugs in the United States and goes over to get the legitimate drug for legitimate purpose and are we going to foreclose that

opportunity?

Can you give a little information on to what extent you know, obviously, you know a lot about it, who it is that’s going back and

forth. Is there, in fact, (a) much in the way of legitimate seniors

going over for legitimate drugs and acquiring safe products as a result of that, and is there actually much of a savings when they do

that?

Mr. SHEPHERD. There is a legitimate market for seniors especially in the Presidio or McCallum, Texas area where they go

across over to Presidio and get it because there’s a lot of snowbirds

that come down from the Midwest and New England, spend their

winters down there and they purchase a year’s supply of Mexican

drugs and take them back with them, where they’re going. Laredo,

we didn’t see a lot of seniors in that market area and Juarez, I’m

not quite sure. El Paso area. But you’re right, there is a legitimate

market where a lot of seniors do take advantage of it and do get

them.

The question about whether the drugs they buy over there is

safe, I don’t know. I don’t know if they’re buying——

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Mr. GREENWOOD. How about the cost? Is the savings as significant as we’ve heard?

Mr. SHEPHERD. The savings are significant, but it’s product-dependent. It very much varies by each individual product. Some

products in Mexico are more expensive than here. Some products

may be a dime or more or $2 less in Mexico. But there are some

products where it could be 4 or 5 fold difference in price.

Mr. GREENWOOD. How do you recommend then that we deal with

that issue, because it’s a legitimate one and I am hopeful that we

will be able to provide a prescription drug benefit under Medicare,

but even that won’t necessarily solve the problem because there

will still be some——

Mr. SHEPHERD. That would be my recommendation, if we had a

prescription drug benefit I think that would dry up a lot of the

market. There’s another market over there that presents a bigger

issue and that is families who reside on this side of the border who

visit physicians on the other side of the border where the family

is split between both countries. That’s a huge problem. And I was

at a conference not too long ago where the Mexican Blue Cross and

Blue Shield was lobbying Texas to establish health care system

that U.S. residents could sign up for their health care insurance in

Mexico and therefore use Mexican providers and Mexican pharmaceutical products. That just opens up all kinds of other problems

when you think about it. Obviously, the best way to go would be

some kind of prescription drug benefit for the elderly or the poor

or indigent poor so that you could bring them back and forth, but

it is a problem. Both those populations.

Mr. GREENWOOD. Let me just question Mr. Trundley if I may on

the counterfeit problem which is a rather different, but important

aspect of this hearing as well. I’m not sure I heard a lot in the way

of recommendations from you. I saw a lot of parade of horribles

that is very worrisome, but what are your thoughts about how we

get a handle on this. How do we prevent the flooding of the U.S.

market with these counterfeit products?

Mr. TRUNDLEY. Well, first of all, Mr. Chairman, you need strong

legislation in place. Robust legislation to deter and help prevent

the incident.

Second point I’d like to make is——

Mr. GREENWOOD. By that do you mean tough criminal penalties?

Mr. TRUNDLEY. Tough criminal penalties which prevents and

also legislation to prevent the reimportation of goods as well into

the United States. Tough criminal penalties and also to support the

law enforcement effort.

I would like to echo the point made by Jim Christian, my colleague, it is becoming now more and more essential to have field

operatives in the countries where the problem lies. For instance,

the British government doesn’t employ the FDA equivalent agents

abroad. That means, Mr. Chairman and members, that the only

people who are combatting this counterfeit crime at the point of

manufacture are the pharmaceutical companies’ security representatives. That means that we are conducting inquiries by remote control 12,000 miles away and the sheer volume and scale of it means

that it’s becoming more and more difficult and we’re acting on our

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own with little or no support from the British or the U.S. governments.

Mr. GREENWOOD. Mr. deKieffer, the thought that occurred to me

as you were testifying about this situation in Africa, as the pharmaceutical companies in this country who have I think rather generously and compassionately decided to provide very low cost AIDS

drugs to the African continent where they’re gravely needed, what’s

going to happen in terms of diversion? Are there procedures in

place to prevent bad guys from getting their hands on these drugs,

sending them back, reimporting them to the U.S. at a tremendous

profit and then providing bogus drugs to AIDS people that AIDS

patients who will then obviously get no benefit at best?

Mr. DEKIEFFER. That’s a significant danger. In fact, the security

measures that have been taken to date have to be taken by the

companies themselves because of the demonstrated ineffectiveness

of the security measures that have failed already all over Africa.

Some of the philanthropies that have distributed goods there have

also been able to document the fact that massive amounts of goods

that were intended for good and philanthropic purposes have not

wound up where they’re supposed to be, so yes, there’s a very great

danger that a lot of the products that are being distributed in Africa will not remain in Africa and where they will all end up is anybody’s guess, but we do know that substantial amounts of goods

that are currently being distributed in Africa, including probably

the most advanced country in sub-Saharan Africa, South Africa,

never wind up or don’t stay there. They wind up in third markets.

And because South Africa is awash in counterfeit drugs as well,

there’s a significant chance that some of those products could wind

up in this country as well, perhaps via Mexico.

Mr. GREENWOOD. Thank you. The Chair recognizes the gentleman from Florida for 5 minute.

Mr. DEUTSCH. Thank you, Mr. Chairman. I think most of you sat

through the testimony prior to this, the other panels. And I guess

one of the questions I have in terms of the issue of the counterfeit

prescription drugs, I don’t know the exact number, no one knows

the exact number, but just from our oversight visit, a large percentage, maybe even up to 90 percent of the literally millions of products being sent by mail into the United States are prescription

drugs, very well might be from your companies. Now or at least labeled as if they were from your companies. I guess my question is

we’re talking about literally tens of thousands of drugs and we’ve

seen the labels and again from our perspective, from a naked eye

perspective, we can’t tell the difference. Obviously, the labeling is

very effective. Where are those drugs coming from? The tens of

thousands of ones on a daily basis or the thousands on a daily

basis that are coming into the United States via the mails, who’s

producing them? Are a majority of them counterfeit? Are they

being produced overseas in facilities of your companies? Are they

gray market overseas? I mean anyone want to attempt to answer?

Mr. GLOVER. I’ll try to answer that. It’s difficult to answer that

question directly. What we have seen is what we do know is that

in March of 2000 and January of about 2000, just recently as well,

there have been substantial actions in Taiwan of these kinds of factories that we have seen so we know that that is a location there,

183

so we know that there’s a problem there based on the actions that

we’ve seen so far. The problem that we have is that it is an international problem and it takes many forms. It starts out perhaps

even as legitimate product. It’s just bulk active. It then maybe

moves as was said to a free trade zone. It’s maybe tabletized. It’s

not really counterfeit maybe until somebody slaps a label on it that

says it’s from Company X when it indeed is not Company X. And

then, of course, there’s an enforcement problem for the same reason. We have the same enforcement problem here that you have

say in the narcotics traffic.

Mr. DEUTSCH. Let me just interject, we’re going to try to get

through 5 minutes of questions, and the Chairman has been very

liberal and I appreciate that on this issue, but what I’m trying to

really get a sense of is that there’s no question and you’ve shown

it by your testimony that there’s absolutely, there are people who

are counterfeiting your products. And illegal enterprises that are

doing it. Obviously, they’re making money from it and we’re not

getting all the enforcement. But I guess what I’m saying at least

this is a component of this hearing, but the issue what this subcommittee is really looking at is literally this phenomenon of millions of product coming into the United States via the mail and

some of that product is at least labeled as your product and I find

it not easy to believe that all of that’s counterfeit because if it was

I think you folks would a lot more concerned about it, that it really

is a product of your companies and whether it’s produced overseas,

I mean a lot of the product that Novartis sells in Hong Kong or

in Taiwan or in South Africa is legitimate Novartis product. I

would assume the vast majority of it is Novartis product. I mean

Mr. Christian, do you want to respond to that?

Mr. CHRISTIAN. Yes, I’d like to make a quick comment. This is

a counterfeit Voltaran ampoule. Last year in Colombia working

with the authorities we seized 6 million of these. That is 7 or 8

times what is sold in Colombia in a year. We see 6 million. That’s

not what was made in Colombia. This is what we caught, 6 million.

To answer another part of your question because we’re concerned

about counterfeit product. We’re concerned about expired product.

I have here a genuine antibiotic with an expired label. We seized

millions of these. I have here what they did with them. They put

them in hot soapy water and they took the labels off and I have

here the labels that we seized with the product and these go right

around, look just like genuine and they have a new expiration date.

So when those products come in, you have to be concerned yes,

about counterfeit products, but you also have to be concerned about

expired products, adulterated products. We don’t have time, but I

have overheads that show pieces of glass and other foreign material in vials and ampoules.

Mr. DEUTSCH. Let me try to follow up specifically on that though,

so again, we’re really talking about millions of product coming to

the United States and your assessment is that most of that is effectively fake or inappropriate?

Mr. CHRISTIAN. No, our assessment is that the potential is there

for in that grouping that you call those millions of packages coming

in at Dulles and JFK and Oakland, that they will contain a repVerDate 11-MAY-2000 15:01 Oct 18, 2001 Jkt 010199 PO 00000 Frm 00187 Fmt 6633 Sfmt 6602 E:\HEARINGS\73737 pfrm07 PsN: 73737
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resentative sample that is growing of counterfeit, of expired, of mislabeled, of adulterated product. There is no doubt.

Now what you’re probably looking for is it 5 percent, is it 50 percent? We don’t have that number, but we are very, very confident

that the percentage is growing.

Mr. DEUTSCH. Let me, go ahead, I’m sorry.

Mr. TRUNDLEY. I would just like to add to what Mr. Christian

has said that even though the product might be genuine, even

though it might not have met its expire date, we cannot be certain

that it’s been stored in the appropriate conditions. If a particular

life saving drug has to be stored at 5 degrees Centigrade, how do

we know unless it’s gone through the legitimate distribution and

supply chain that it’s been stored in those conditions and hasn’t

been left on the dockside somewhere in Central and South America

in baking hot conditions? And it’s then shipped into the United

States. It might be perfectly legitimate and bonafide a product.

Mr. DEUTSCH. I guess just one final question about this. It’s

probably the most visible website sale is for Viagara and we don’t

have a representative from Pfizer here today, but is—what would

your assessment be that most of the stuff that is being sold on the

Internet today for Viagara, is that Viagara or is that something beyond Viagara.

Mr. CHRISTIAN. I can comment on that. I think that there are

more than 20 pharmaceutical companies making Viagara in India.

Now one of them and because they honor the process patent, they

are allowed to ship to other countries that honor the process patent

which takes in some Middle East, African, Argentina, Brazil, Uruguay, limited number of countries that honor the process patent.

One of the 20 plus companies that manufacture Viagara shipped 40

tons in the year 2000 of Viagara, 40 tons bulk material. Now I can

tell you that the Middle East and sections of Africa and Argentina,

Brazil and Uruguay are not using 40 tons of Viagara and that’s

only one of more than 20 companies that shipped in 2000.

Mr. DEUTSCH. Thank you. Thank you, Mr. Chairman.

Mr. GREENWOOD. The Chair thanks the gentleman and recognizes the gentleman from Michigan, Mr. Stupak for 5 minutes.

Mr. STUPAK. Thank you, Mr. Chairman. What happens to your

expired products, Mr. Christian or anyone on the panel? If a product expires, how are they falling in the hands of these counterfeiters then who are soaking off the label and putting a new label

on there?

Mr. TRUNDLEY. Most companies, in fact, I’m sure that all companies have a policy of returning the expired product to the companies by the distributors and the companies then destroy them. The

problem lies when the distributors sell them on the more unscrupulous wholesalers and dealers who may be just using it as a front

to copy the product, to copy the packaging and design and putting

in the counterfeit rubbish inside the blisters.

Mr. GLOVER. I’d like to comment on that for a minute.

Mr. STUPAK. Sure.

Mr. GLOVER. A lot of the times you have a situation internationally. We’ve had one particular experience internationally where a

company was to destroy product when it expired. We found out

that the product—we ultimately found the product on the market.

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We conducted an investigation, surveillance and what we found

was that in this particular instance, there were two trucks. The

truck would take the product to the dump to be destroyed and it

would instead of going into the dump would be passed on to another company that brought it out, so there are unscrupulous people out there. We have processes in place, but sometimes they’re

avoided.

Mr. STUPAK. Dr. Shepherd, could you go back to the Oxycontin

issue we were talking about earlier.

Mr. SHEPHERD. Right.

Mr. STUPAK. Customs seems to know that these vials are coming

in or packages of 50, they’re packaged in Mexico and they’re coming across, but DEA did not seem to understand that today.

Can you elaborate a little bit more on that whole issue there?

Mr. SHEPHERD. I really can’t talk for why DEA wouldn’t know

because I don’t work for DEA—— Mr. STUPAK. Right.

Mr. SHEPHERD. But as a researcher in Laredo, I spent 3 months

down there collecting data, the only agents I saw down there were

U.S. Customs Agents. I don’t know, ever recall seeing DEA Agents

present, but they may have been present.

Mr. STUPAK. But it’s your testimony is that it really comes across

already packaged in these 50 or less or packages of 50?

Mr. SHEPHERD. Oxycontin was coming across in a vial of 50. We

saw it.

Mr. STUPAK. Were they stopped at the border by Customs Agents

or anything like that?

Mr. SHEPHERD. When we were collecting the data last month,

they went to the Customs Agent up front who screened the amount

of drugs coming across. Basically, he just asked the person did you

buy any prescription drugs. If the person said no, and this was the

extent of it, the person said no, they were passed on through. If the

person was honest and said yes, they were referred back over to

us where we asked them to fill out a little questionnaire of the

types of drugs and what you purchased. If the person said yes and

the participant, the Agent indicated they had purchased more than

the 50, then we never saw them. They went back to another room

with a Customs Agent. And at that time the drug was either confiscated by the Customs or the person was asked to go back across

the border and sell the drug back to the pharmacy which was—it’s

been a common practice.

Mr. STUPAK. But if I come up to the border I can have 50 pills

of just about anything I want, right, as long as I don’t go over that

magic number of 50?

Mr. SHEPHERD. That’s right.

Mr. STUPAK. Without a prescription? And I can just pass

through.

Mr. SHEPHERD. Right, but I warn you, you better have a prescription from a Mexican doc why you’re over there because you’ll

end up——

Mr. STUPAK. But that’s not hard to obtain at all, is it?

Mr. SHEPHERD. No, that’s not hard to obtain at all.

Mr. STUPAK. Part of the process.

Mr. SHEPHERD. That’s very easy to obtain.

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Mr. STUPAK. Okay.

Mr. SHEPHERD. We saw many people bring Valium and

Oxycontin in 50 units at one time.

Mr. STUPAK. You indicated earlier that when you did your research in 1996 most of the things that came across the border were

controlled substances and that the population buying it were not

the senior citizens that we all hear about and we all want to help

out. So what are the implications of these two findings? Do you

have any reason to believe that the situation has significantly

changed from what you found 5 years ago?

Mr. SHEPHERD. No.

Mr. STUPAK. Well, what are you seeing today, same type situation?

Mr. SHEPHERD. No. I have no reason to believe the situation has

changed at all. I do—it’s because it’s so difficult to check when they

come back into the border. The best way to check it is to stand in

a pharmacy in Nuevo Laredo and watch the people enter and what

they’re buying. Stand next to a shopper and you can see the drugs

being purchased, but when they come across, it’s so easy to put

them in your purse, put them in your back pocket and say I didn’t

buy anything and U.S. Customs will just let you walk on through.

Mr. STUPAK. If I may, Mr. Chairman, a couple more questions

here.

To representatives of the drug companies, Ms. Durant of Customs, I think she was Customs, right, Customs, testified that Customs’ Cyber Smuggler Center is playing a leading role in trying to

crack down on these websites and they talked about the successful

investigation in Thailand and how they closed down seven on-line

pharmacy sites. I really wanted to ask her seven of how many of

the hundreds that are out there from Thailand.

My question is with all the expertise we have on this Panel, has

the FDA or the DEA ever contacted any of your companies in saying man, we’ve got a problem here with drugs coming through the

Internet, mail orders, how would you approach it, do you have

any—have they ever asked for any assistance or help or requested

your input into this issue? Someone has been banging on them for

2 years to do something.

Mr. CHRISTIAN. We sometimes work with the Criminal Investigative Unit of the FDA, but it’s a small unit. It was only founded 8

years ago approximately. To my knowledge, it has about 125

agents and they’re domestically focused. I’m sure all over the issue

that was in the New York Times on Tuesday. It’s a domestic issue.

It’s internally. However, the threat to the United States lies internationally and that’s why I mentioned that we need an international focus on this. It’s a little late to throw investigative resources into the issue once the products are through Customs and

within country. We need to be out there the way DEA is and the

other agencies. Fighting to keep it up, not investigating it after it

came in. But of course, we’re talking limited resources, very limited

resources when it comes to and that’s one of the agencies that’s divided between regulatory and law enforcement and in that particular case the regulatory people are the dominant part of that

agency.

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Mr. STUPAK. But I take it from your answer they never contacted

you and said look, we’re having problems with mail orders through

the Internet and we have to do some work here. Do you have any

suggestions, ideas on how we can best combat this?

I take it the answer is no.

Mr. CHRISTIAN. In fairness to them they have appeared at what

John Glover referred to the prescription Pharmaceutical Security

Institute, PSI. They have appeared at our meetings. They have

given presentations. We have discussed issues. There is not daily,

weekly or even monthly contact, but that’s because we’re concentrating our efforts in Latin America, in Asia, Eastern Europe,

India. They’re concentrating their efforts internally in the United

States as far as I can tell.

Mr. STUPAK. Right, I agree, but all these websites, if you look at

them, they’re not U.S. websites. They may have a Post Office Box

in some city, but when you really look it through, they’re Thailand,

Asia, Latin America.

Mr. CHRISTIAN. Exactly. We’re missing that international focus

on this particular criminal problem.

Mr. STUPAK. Good. Thank you.

Mr. GREENWOOD. The Chair recognizes the gentlelady from Colorado for 5 minutes for questioning.

Ms. DEGETTE. Thank you, Mr. Chairman. Following up, Dr.

Shepherd, on Congressman Stupak’s question, I’m sure you heard

Ms. Nagel’s testimony that she was aware of one instance of this—

of the importation of less than 50 units of the Oxycontin and she

knew about, she had heard about three instances that you talked

about in your study. Now you just said here your researchers found

numerous examples. I’m wondering if you can give me some sense

of how much of the Oxycontin you saw being brought across the

border?

Mr. SHEPHERD. No, I can’t give you a sense of it. All I’m saying

is that the way the study was done, the FDA study, when you ask

the person if they purchased a prescription drug, they say yes or

no. If they said no——

Ms. DEGETTE. They just went across.

Mr. SHEPHERD. They just went across. I mean if they had lied

and said——

Ms. DEGETTE. I understand that. But——

Mr. SHEPHERD. If you go to the stores, you go to the farmacias

and as a consumer over there and you watch the business, you

know darn well and sure that there’s more than that one person

buying Oxycontin because you can see it coming across the counter.

Ms. DEGETTE. You can see based on what you’re seeing sold in

the farmacias on the Mexican side of the border.

Mr. SHEPHERD. Correct.

Ms. DEGETTE. Thank you. Let me talk about for a minute about

a drug we talked about quite a bit in this committee last year and

haven’t so much lately and that’s Rohypnol which, of course, is the

date rape drug. It’s my understanding that this drug is still made

in Mexico by Roche. Do you know, is this drug still available in

Mexico?

Mr. SHEPHERD. It’s still available in Mexico by Roche.

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Ms. DEGETTE. Do you have any sense as a researcher how much

of the drug is consumed in Mexico?

Mr. SHEPHERD. No, I have no idea.

Ms. DEGETTE. Do you know if it’s still coming across the U.S.

border?

Mr. SHEPHERD. I have no evidence it’s coming across the border.

Ms. DEGETTE. Have you talked to any of the farmacias down in

Mexico about how much Rohypnol they’re selling?

Mr. SHEPHERD. No, I’ve never asked.

Ms. DEGETTE. It might be a good question to ask next time you

go down.

Last question for you, and that is the Texas Commission on Alcohol and Drug Abuse has found that the practice of allowing persons

to buy controlled substances in Mexico and bring them back to the

U.S. has contributed to Texas’ drug abuse problem. Have you researched that and do you support the Agency’s finding?

Mr. SHEPHERD. I’ve never researched that, but I really support

the Agency’s finding. Just from following the zip codes of people declaring the drugs and find out where they’re going, we see, on our

campus, we see a resurgence of Ritalin, especially during exam

time when the youngsters want a stimulant. That’s a common

source.

Ms. DEGETTE. Do you know what the implications are of the

Commission’s findings?

Mr. SHEPHERD. No, I do not.

Ms. DEGETTE. Mr. Chairman, I’d ask unanimous consent to put

the Texas Commission on Alcohol and Drug Abuse Report into the

record.

Mr. GREENWOOD. Without objection.

Ms. DEGETTE. Thank you. I’d like to ask a question of our three

pharmacy representatives here, that is, I’m sure, I think you were

all in the audience when Mr. Hubbard of the FDA testified that

they had made a recommendation to Secretary Thompson that the

importation of all drugs should simply be halted with a very small

exception for severe illnesses like cancer with very, very narrow

guidelines. I’m wondering if you could each tell me whether you

support that recommendation.

Dr. Glover?

Mr. GLOVER. Speaking from a health and safety perspective only,

yes, I support it.

Ms. DEGETTE. Mr. Christian?

Mr. CHRISTIAN. Yes. I support it as well. I see the dangerous that

are out there. It’s a public health issue.

Ms. DEGETTE. Mr. Trundley?

Mr. TRUNDLEY. I concur. I also support it, but I would like to go

one stage further and say that if you’re going to go and introduce,

if you’re going to allow companies to import their products into the

United States technology these days does provide for more advanced counter measures to protect the product in transit to make

sure that it hasn’t been tampered with, the computer chips, satellite tracking, radio frequency, identification tags affixed to the

packaging in the cartons. These can be put on at the source of

manufacture and tracked throughout their journey into the United

States.

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Ms. DEGETTE. Well, I think that that’s an interesting point and

would be an important precaution, for example, for the many legitimate pharmaceuticals that are imported company to company, but

looking at the videotape of the Dulles facility, I think that it’s going

to be quite some long time before we can have safeguards like that

for small amounts that are imported from individuals to individuals and I’m sure you would agree with me that the public safety

would really say we just need to stop that right now.

Mr. TRUNDLEY. I do agree with you, yes. For the humanitarian

cases, then we have to have something, a process in place.

Ms. DEGETTE. But it can be very narrowly drawn.

Mr. TRUNDLEY. Yes.

Ms. DEGETTE. Thank you very much, Mr. Chairman.

Mr. GREENWOOD. The Chair thanks the gentlelady. One final

question from myself that I would address to Mr. deKieffer, Mr.

Haislip and Dr. Glover, anyone else who wants to comment, specifically on the counterfeit problem.

I think it’s clear that we have a sense of what we need to do

about the question of drugs being, coming into this country by the

mail. I think we have a notion of what we need to do on the Mexican border, but the counterfeit drug problem which is perhaps the

most insidious of all is probably the most difficult to solve and looking for specific recommendations, Mr. Trundley has said what we

need to do is pass robust legislation that makes for very severe

criminal penalties for those who are caught and I don’t know how

often they’re caught and I don’t know whether—maybe you could

shed some light on whether these counterfeiters in other countries

that are found as a result of these investigations ever go to jail, but

I’d like to know about that and I’d also like to know about specific

recommendations for legislation.

Mr. DEKIEFFER. I believe as far as legislation or regulation, as

was mentioned just a moment ago there is certainly now available

to the pharmaceutical companies some rather high tech technology

for at least being able to identify what are legitimate and not legitimate goods. These include all the way from the microchips that

were mentioned a moment ago to even DNA markers inside actual

pills so you can at least authenticate or track goods. This is a very

practical thing that can be done and it could be done, I think, without legislation. It could be done by legislation. There are certain

things that all of these companies do right now covertly, in other

words, covert labeling, covert markings and things like that, but

very often those get replicated very quickly, particular things like

holograms. It takes 6 weeks now to have a hologram counterfeited

or less. So as fast as they’re able to put on new security measures,

the bad guys figure out how to replicate them. But that’s one of the

answers to the counterfeiting issue. As has been mentioned today,

since a lot of the counterfeiting goes on outside our borders, the

thing that we need to do is be able to identify the counterfeit goods

as they’re coming into the country and whether that takes place

offshore or at the border, by the time it gets into the country and

whether that takes place offshore or at the border, by the time it

gets into the country and gets into the distribution system, it is

very, very difficult to do anything about it because it’s going to go

through six or seven hands. We saw this week one company that

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was mentioned, it’s Quality King, was mentioned in the New York

Times article. Quality King was identified by this very committee

in 1978 as one of the largest drug diverters in the country and now

they’re handling counterfeit products.

Here we have a company that’s been in business for 25 years and

identified repeatedly by this committee as still doing it and basically denying that they ever knew that they were dealing in counterfeit products. It’s surprising.

Mr. HAISLIP. Well, Mr. Chairman, I think we have several problems and I’ll try to be very quick with them. First of all, generally

speaking, there aren’t any—there is not any criminal law enforcement agency in most countries that’s targeting that issue specifically. Therefore, there is not an international cooperating group

that’s targeting that activity specifically. I mean there may be exceptions to that now and then, but by and large that’s the case.

The third thing is that we do lack the international instruments

and agreements to attack an international problem and the last

thing I’d mention is that there’s a danger of looking at this recent

legislation on allowing reimportation that we really don’t have the

apparatus to detect this kind of counterfeit problem when it’s going

to be presented to our front door. I think there’s a serious question

there. So those are quick, very quickly some points that I would

make.

Mr. GLOVER. Yes, I heard a word today a little earlier I think in

the previous panel that I think kind of explains it. The word holistic. And that pretty much, this is an insidious international problem and I think from looking at the legislature, harmonizing,

maybe agreements, conventions, those kids of things, because

again, if you look at what happens, we said the bulk starts say in

China and India and when the bulk starts there, there’s no problem with it. When it moves to other places, then it’s not a violation.

It only gets to be a violation as it starts to move in the stream and

I say it goes from legal to civil violations to criminal violations once

you slap a label on it. So that’s—this thing is being constantly

transforming, but I say enforcement, strong enforcement. I also say

I think the political will, I talk about that. It’s not this activity is

generally not high on everybody’s radar screen, it’s not murder, it’s

not mayhem, it’s usually a resource issue. They just don’t have the

issues because they’re dealing with more serious problems so I

think that’s important. I think also awareness is a part of the problem. Some of the stuff that I see, I realize it won’t deter everybody,

but I think if somebody sees the stuff that we see and some of

these labs that we see and they realize that that’s actually the kind

of stuff they’re ingesting, I think it may have an impact on a few

people so I just think a broad approach.

Mr. GREENWOOD. Thank you. Does the gentleman from Florida

wish to——

Mr. DEUTSCH. Actually, just a housekeeping thing that if we can

leave the record open just to submit some additional material.

Mr. GREENWOOD. The record will be kept open. We are blessed

in this country by pharmaceutical products and medicine that save

lives, extend lives, reduce pain and we’re very fortunate indeed.

But it’s clear from this hearing that the United States is also

awash in drugs that are misused and mislabeled and adulterated

191

and counterfeited and unprescribed and people are dying. People

are dying in every State of this country as a result. This committee

is going to act. We’re going to act decisively and swiftly with legislation. We’re going to expect a response from the Secretary of

Health and Human Services. I will publicly ask for his responses

in the next 60 days on this matter and you can be sure that the

time that you have spent here with us today will not be wasted.

We will not allow the time that has expired between 1978 to continue. We will act and we will act decisively. So thank you very

much for your testimony. The hearing is adjourned.

[Whereupon, at 3:23 p.m., the hearing was adjourned.]