U.S. GOVERNMENT PRINTING OFFICE

58–498CC WASHINGTON : 1999

DRUGSTORES ON THE NET: THE BENEFITS AND

RISKS OF ON-LINE PHARMACIES

HEARING

BEFORE THE

SUBCOMMITTEE ON

OVERSIGHT AND INVESTIGATIONS

OF THE

COMMITTEE ON COMMERCE

HOUSE OF REPRESENTATIVES

ONE HUNDRED SIXTH CONGRESS

FIRST SESSION

JULY 30, 1999

Serial No. 106–51

Printed for the use of the Committee on Commerce

(

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COMMITTEE ON COMMERCE

TOM BLILEY, Virginia, Chairman

W.J. ‘‘BILLY’’ TAUZIN, Louisiana

MICHAEL G. OXLEY, Ohio

MICHAEL BILIRAKIS, Florida

JOE BARTON, Texas

FRED UPTON, Michigan

CLIFF STEARNS, Florida

PAUL E. GILLMOR, Ohio

Vice Chairman

JAMES C. GREENWOOD, Pennsylvania

CHRISTOPHER COX, California

NATHAN DEAL, Georgia

STEVE LARGENT, Oklahoma

RICHARD BURR, North Carolina

BRIAN P. BILBRAY, California

ED WHITFIELD, Kentucky

GREG GANSKE, Iowa

CHARLIE NORWOOD, Georgia

TOM A. COBURN, Oklahoma

RICK LAZIO, New York

BARBARA CUBIN, Wyoming

JAMES E. ROGAN, California

JOHN SHIMKUS, Illinois

HEATHER WILSON, New Mexico

JOHN B. SHADEGG, Arizona

CHARLES W. ‘‘CHIP’’ PICKERING,

Mississippi

VITO FOSSELLA, New York

ROY BLUNT, Missouri

ED BRYANT, Tennessee

ROBERT L. EHRLICH, Jr., Maryland

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

RON KLINK, Pennsylvania

BART STUPAK, Michigan

ELIOT L. ENGEL, New York

THOMAS C. 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

JAMES E. DERDERIAN, Chief of Staff

JAMES D. BARNETTE, General Counsel

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

SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS

FRED UPTON, Michigan, Chairman

JOE BARTON, Texas

CHRISTOPHER COX, California

RICHARD BURR, North Carolina

Vice Chairman

BRIAN P. BILBRAY, California

ED WHITFIELD, Kentucky

GREG GANSKE, Iowa

ROY BLUNT, Missouri

ED BRYANT, Tennessee

TOM BLILEY, Virginia,

(Ex Officio)

RON KLINK, Pennsylvania

HENRY A. WAXMAN, California

BART STUPAK, Michigan

GENE GREEN, Texas

KAREN MCCARTHY, Missouri

TED STRICKLAND, Ohio

DIANA DEGETTE, Colorado

JOHN D. DINGELL, Michigan,

(Ex Officio)

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C O N T E N T S

Page

Testimony of:

Abromowitz, Herman I., Member, Board of Trustees, American Medical

Association ..................................................................................................... 251

Behrens, Christine, WWMT ............................................................................. 16

Bernstein, Jodie, Director, Bureau of Consumer Protection, Federal Trade

Commission ................................................................................................... 44

Catizone, Carmen A., Executive Director, National Association of Board

Pharmacies .................................................................................................... 246

Culmo, Cynthia T., Director, Division of Drugs and Medical Devices,

Texas Department of Health ........................................................................ 260

Egan, Kathy, NBC10/WCAU Philadelphia ..................................................... 14

Fong, Ivan K., Deputy Associate Attorney General, Department of Justice .................................................................................................................. 87

Michel, Bob ....................................................................................................... 17

Neupert, Peter, President and CEO, Drugstore.com ..................................... 269

Razzouk, William, Chief Executive Officer, PlanetRx.com ........................... 265

Stovall, Hon. Carla J., Attorney General, State of Kansas ........................... 18

Woodcock, Janet, Director, Center for Drug Evaluation and Research,

Food and Drug Administration .................................................................... 93

Yui, Ellen .......................................................................................................... 9

Material submitted for the record by:

Kocot, S. Lawrence, Senior Vice President, Government Affairs and General Counsel, National Association of Chain Drug Stores, prepared

statement of ................................................................................................... 283

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DRUGSTORES ON THE NET: THE BENEFITS

AND RISKS OF ON-LINE PHARMACIES

FRIDAY, JULY 30, 1999

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

The subcommittee met, pursuant to notice, at 9 a.m., in room

2123, Rayburn House Office Building, Hon. Fred Upton (chairman)

presiding.

Members present: Representatives Upton, Bilbray, Whitfield,

Blunt, Bryant, Bliley (ex officio), Klink, Stupak, Green, McCarthy,

and DeGette.

Also present: Representative Brady.

Staff present: Lori Wall, majority counsel; Amy Davidge, legislative clerk; and Chris Knauer, minority professional staff.

Mr. UPTON. Good morning.

Before we begin this hearing this morning, I want to remind witnesses that are testifying here today that the committee expects to

receive testimony 2 days prior to the hearing. The purpose of this

rule is so that members and their staffs have time to adequately

review the statement and are able to educate themselves on the

testimony that they will be giving at the hearing as well as prepare

questions.

I would note that, with the exception of one witness, every piece

of testimony was late. In fact, the testimony from the FDA was not

received until after 8 o’clock last night, and that is unacceptable.

This committee noticed the hearing more than 2 weeks prior to

this date and provided ample time for invited witnesses to provide

testimony. Ironically, those witnesses who were notified last were

the first ones to have their testimony submitted to the committee,

and in the future I would ask all of you to extend the courtesy of

having your testimony at least 2 days prior to the hearing.

I would also note for the record that last night we had votes after

midnight. There are a number of subcommittees that are already

meeting this morning and so we expect members to straggle in over

the next couple of hours. And I would note for the record that all

members, by unanimous consent, will have their opening statement

made as part of the record.

Today, this subcommittee is holding the first hearing in the history of the Congress on the issue of on-line pharmacies. Several

years ago, no one would have even known what the term meant,

sort of like Y2K. Today, technology allows us to order everything

from daily prescription medication to contact eye solution to Q-Tips

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from one Web site over the Internet, have it delivered to our door

promptly and often at a lower price than the neighborhood drugstore. Clearly, electronic commerce is growing at a rapid pace

across the country and across the world.

With this growth in electronic commerce, we also need a dose of

caution. The Internet can often pose dangers to consumers who are

not able to distinguish legitimate Web sites from those that may

be violating the law. Many Web sites today allow consumers to

order prescription medication, often without ever seeing a doctor

face-to-face and sometimes even without a valid prescription.

Among the concerns is the product quality of these drugs and

whether patients may be at risk of serious and even fatal drug reactions due to lack of oversight from a physician.

Since this committee began its investigation of on-line pharmacies over 7 months ago, the number of Web sites selling pharmaceuticals has increased rapidly. Estimates are that there are some

400 Web sites on the Internet today selling instant prescriptions.

Some of these sites operate for a short period of time at one Web

site address before disappearing and showing up under another

name, making it difficult for anyone to track them down. Others

prey upon Y2K fears of consumers. These sites advertize that in

order to make sure the consumer has enough medication at the

turn of the century they should order their pharmaceuticals from

a particular Web site, often at a higher price than the consumer

would otherwise pay.

As part of our investigation, we have met with Federal regulators, State medical and pharmacy boards, health care associations and a host of other interested parties. Like these organizations, our first and foremost interest has been the public health

care concern arising from unscrupulous Web sites selling products

without a valid prescription or situations where the customary physician-patient relationship simply does not exist.

In my home district of Kalamazoo, Michigan, Channel 3 News

was able to order Viagra for a cat, dog, a deceased individual and

a man with a heart condition. I would note that the cat’s name was

Tom, and they even admitted that he had been neutered. The ease

at which these transactions happened was more than alarming.

These unscrupulous sites pose a threat to the health and safety of

the American public and certainly undermine the public’s confidence in legitimate on-line pharmacies.

Our hearing today is an attempt to discover the jurisdictional

lines that exist dividing State responsibility with that of the Federal Government. As many here well know, the issue of licensing

pharmacies and doctors lies within the States. Other issues, such

as dispensing without a prescription at all, lie within the FDA.

Clearly, in order for us to begin to solve some of the problems associated with on-line pharmacies, we must all work together. The

Internet poses new challenges that did not exist certainly 10 years

ago. Technology is outpacing our abilities to react in many instances.

This is not to say that we have had no success. Some States and

even some Federal agencies have had limited success in enforcing

the laws currently on the books. We need to make sure that these

enforcement actions against unscrupulous sites continue.

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Just as we need a dose of caution in dealing with the growth of

on-line pharmacy, we also need a dose of caution in responding to

abuses of it. We will hear today of the positive ways in which this

technology is serving the needs and pocketbooks of consumers. We

don’t want to inadvertently strangle the further growth of this

technology in an effort to prevent its abuse by some. It is a doubleedged sword.

It is my understanding that an interagency working group has

been established to look at how best to prevent the misuse of this

technology most effectively. I think that is an appropriate first

step. I would like to see this effort intensified and broadened to include the States and other parties which have responsibility under

current law for the regulation of pharmacy and interstate commerce.

I will continue to be vigilant in looking at this issue and am committed to holding additional hearings. I would like to thank all of

the witnesses who are here today, especially Christine Behrens

from WWMT-News 3 in Kalamazoo; and I welcome the ranking

member of the subcommittee, Mr. Klink from Pennsylvania.

Mr. KLINK. Thank you, Chairman Upton, for having this hearing

and really thank you for your cooperation and the majority’s cooperation in working so closely with us in the minority on what I

think is probably one of the most important issues that we will

take on this year. The ramifications are just unbelievable.

Without a doubt, the promise and the potential of the benefit of

on-line pharmacies are very dramatic. The ability to prescribe a

wide range of medications without the need to wait in long lines

or to discuss one’s ailments in public are significant. So, too, is

some of the health information being dispensed by certain legitimate sites, but with these benefits come some significant risks.

Presently, any U.S. Citizen can logon to the Internet and purchase

almost any prescription drug and often without a prescription or

providing only minimal information.

Mr. Chairman, the sale of potentially dangerous drugs and the

potential volume of such activity is not trivial. At last glance, our

subcommittee staff has identified nearly 200 sites. You can look at

them. Many of these sites operate from abroad, and they sell everything from extremely addictive pain killers to steroids. The National Association of Boards of Pharmacy has identified perhaps as

many as 400 sites, and such lists grow longer each day. We have

identified another 30 or so sites each week that we have looked.

Many sites, both domestic and international, are able to sell to

U.S. Consumers with no scrutiny at all. I am extremely troubled

by the vacuum of regulatory oversight that now exists at both the

State and Federal level, particularly given the endless laundry list

of drugs that are now available.

Today we are going to hear from the many regulators, including

officials from the Food and Drug Administration, the Federal Trade

Commission, the Department of Justice and from several States.

They will tell us what they are doing, and they will say that they

are doing bold and magnificent things in overseeing the explosion

of Internet pharmacies. They also will try to convince us that they

have a framework in place to diligently address this matter.

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But I want to tell you something. So far, I am not convinced that

either the States or the Federal Government is even close to getting a handle on this problem. The States seem overwhelmed and

indeed in need of resources, while the Federal Government is still

trying to determine which agency or which department is in

charge; and, meanwhile, these sites are proliferating.

Alarmingly, no Federal or State agency has so far been able to

provide this subcommittee with the most basic of information regarding the bulk of the pharmacy sites now operating on-line. For

example, we still don’t know the physical location of most of these

sites or even if they operate with a U.S. State-issued license. We

also know very little about the persons behind such sites or whether they hold all the appropriate license for the State in which they

are doing business.

There are other concerns. For example, are such practitioners in

good standing with the State boards of pharmacy or medicine from

which they hold credentials? How would we know? These are simple questions that should be answerable in a matter of minutes,

and they can be for the average brick and mortar pharmacy located

in your neighborhood. Yet because we are so awed by e-commerce

we tolerate a system that discloses almost no information to the

consumer or to the regulator.

Now, I appreciate the sensitivity of using the words rules and ecommerce both in the same sentence. But I will tell you, Mr. Chairman, I am concerned that a wild-west world is unfolding before us,

where many consumers are accessing potentially dangerous drugs

with little or no practical guidance. Yet because it is e-commerce

there is a mentality it must be progress.

But is it progress if a 6- or 7-year-old child can purchase a prescription drug over the Internet and have it delivered to her door

with no questions asked? Is it progress if people posing as cats or

dead people are able to get drugs that they ordered, even though

they disclosed that information on-line with their consultations?

And is it progress if a person that discloses that they are taking

a drug that would produce severe interactions with the other drugs

that they are taking that they receive that drug anyway with no

questions asked? That is not progress. That is greed, and it is sloppy public policy.

My constituents and, frankly, all of the citizens of this great Nation deserve the same level of protection with on-line sites that

they have with their corner drugstore, nothing more, nothing less.

Mr. Chairman, under the present regulatory system, getting a

drug to market is an extremely rigorous process. This subcommittee has dealt with it. It takes years of trials and review before a drug is approved. If approved, a host of State and Federal

licensing requirements exist over the manufacturer and the doctors

and the pharmacists that issue and fill the prescriptions. This system is designed to protect consumers from addiction, drug interactions and the use of unapproved or dangerous substances. Yet, in

many cases with just a click of the mouse, we now have managed

to turn this entire system upside down and inside out. What is it

about e-commerce that permits us to tolerate a system with almost

no rules when the stakes are so high? Indeed, the stakes are life

and death.

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Mr. Chairman, just what protection should a consumer have

when purchasing potentially dangerous drugs from the Internet?

Presently, there is nothing that requires a drug-dispensing Web

site to disclose anything to the public. Buyers usually don’t know

if a site is licensed or if the site uses licensed doctors or pharmacists. In many cases, the buyers don’t even know the physical

address of the site or if it has ever been inspected. That is because,

under the current laws, elevators, escalators and hair stylists are

required to display more licensing information than Web sites that

are selling potentially lethal drugs.

Let me conclude by saying that because so many sites appear to

be operated in this unregulated gray zone and report to almost no

one, the true quality and source of these drugs might be viewed

with caution. Counterfeit and expired drugs can be repackaged and

sold as new, and the public may never know they are at risk. And

I, frankly, would like to know the sources of many of these drugs

as well as their quality.

Further, I would be interested to hear from the makers of

Xenical, Propecia and Viagra, just to name a few, but these are

three of the drugs that are most prevalent on these sites. I want

to know about how they think their products are getting into the

market through e-commerce. How have they penetrated this

stream of commerce? Are they legitimate and thus being diverted

or are these counterfeit products? What do the manufacturers

know?

Like the many Federal agencies that are being asked to explain

their actions in this area, perhaps the drug makers should be invited, Mr. Chairman, to one of our next hearings. They may have

some of their own accountability issues.

I thank you for your patience, and with that I yield back my

time.

Mr. UPTON. Thank you.

The gentleman from Tennessee, Mr. Bryant.

Mr. BRYANT. Thank you, Mr. Chairman. I do appreciate your

holding this hearing today and would especially like to welcome

Mr. William Razzouk of PlanetRx.com. As you may know, Mr.

Chairman, Memphis, Tennessee, is the distribution center of the

Nation, and we are proud to welcome PlanetRx.com’s pharmacy to

our State of Tennessee.

Mr. Chairman, first, do no harm is sage advice for and from our

medical community. The Internet offers a vast opportunity for consumers and businessmen alike. This new and seemingly limitless

resource provides everyone who can click their index finger with

access to a wealth of information, instant communication and the

convenience for shopping for goods and services from the comfort

of their own home. But for all the Internet does now I think it is

safe to say that it is still in its infancy and, as such, it is very susceptible to the actions or perhaps even inactions of government,

both State and Federal.

I feel very strongly that government, both Congress and this administration, must tread carefully, though, that we ensure not to

hurt the delicate new business opportunities that are available on

the Internet. At the same time, however, e-commerce can only continue to grow if consumers feel secure about shopping on the InterVerDate 13-MAR-2000 09:18 Mar 20, 2000 Jkt 010199 PO 00000 Frm 00008 Fmt 6633 Sfmt 6633 E:\HEARINGS\58498.TXT pfrm02 PsN: 58498
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net, and I think the two speakers that have given very excellent

statements before me have indicated the potential for problems out

there. Businesses such PlanetRx.com and Drugstore.com have invested significant resources in building a solid reputation with

their customers, but this reputation can be tarnished by the unscrupulous Web sites offering consumers the chance to purchase

medications without a prescription.

Mr. Chairman, this is an important hearing because I think it

will help show us what the role of government should or perhaps

should not be with respect to e-commerce, and I am looking forward to hearing from our distinguished witnesses, and I thank the

Chair.

Mr. UPTON. Thank you.

The gentleman from California, Mr. Bilbray.

Mr. BILBRAY. Thank you, Mr. Chairman.

Mr. Chairman, I have reviewed some of the written testimony,

but I would ask my colleagues to reserve our conclusions until we

hear from the witnesses, are able to dialog with the witnesses and

develop some kind of consensus.

There has been a reference of the fact that e-com is actually

maybe turning into the wild west. Well, let me tell you, as a Californian, that is not necessarily a negative thing. I want to say,

though, that there is going to be problems. I think that we have

problems. I think we have problems not only with pharmaceutical

drugs but I think we have problems with consumer products across

the board, including the sale of alcohol over the e-com. But I think

that we should approach this as saying that e-com is a great challenge, but it is a great opportunity.

You know, one of the major clashes that this country had with

Great Britain before we broke away was the fact that Great Britain

figured that it was easier not to allow any settlers to move into the

wild west, that we should outlaw them and keep them east of the

Alleghenies, and that would have been easier for government to restrict the individual’s ability to move to the west and get into trouble. I think that we do have troubles in the wild west, and I think

that we need to address them. But I hope that as we approach this

that the issue with the challenge of Congress, the challenge of government and the challenge of the community at large is to work

out the problems, maintain this great opportunity for individuals,

for economic and social progress but at the same time avoid the potential for gross abuse of a new technology.

And so I look forward to finding those answers, a way to be able

to tap into the good of the e-com and avoid the bad.

So, Mr. Chairman, I look forward to this testimony and yield

back my time.

Mr. UPTON. Thank you.

[Additional statements submitted for the record follow:]

PREPARED STATEMENT OF HON. TOM BLILEY, CHAIRMAN, COMMITTEE ON COMMERCE

Today, this committee continues the work it began last year, examining various

aspects of doing business on the Internet—known as e-commerce.

I have been a strong advocate and promoter of the consumer benefits of electronic

commerce. This marketplace grows by leaps and bounds every month, revolutionizing the way America and the world conduct business.

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As e-commerce continues its extraordinary growth, it can greatly improve the

lives of ordinary Americans. This is especially true when it comes to the delivery

of necessary prescription medication. Millions of Americans are dependent on prescription medication. On-line pharmacies have the potential to increase access and

lower the cost of prescription drugs for millions of Americans.

In an age in which the words ‘‘time deficit’’ have entered the popular vocabulary,

the ability to have necessary prescriptions delivered to the front door by overnight

delivery, and at a real cost savings, is a tremendous convenience for time-pressed

working families.

For the disabled and for the millions of senior citizens who have difficulty getting

around, this new marketplace has the potential to drastically improve their access

to medications, and thus their quality of life.

However, we must not be blind to the vast potential of the Internet to attract unscrupulous operators, who set up sites to sell their wares, without the best interest

or safety of consumers in mind. Many web sites are offering prescription drugs prescribed by an unseen on-line doctor or without even a prescription. Many of these

sites give no indication of their location or the individuals operating it, raising concerns about the legitimacy of the web site. Because of their slick packaging, many

of these sites fool consumers into believing that they are legitimate providers, when

in fact they are unlicensed to dispense drugs or do so in ways that violate state or

federal laws.

I want to stamp out these bad actors. We need to encourage strong enforcement

action by the States and the Federal government of the laws already on the books.

Some states, such as Kansas, take action against on-line pharmacies and web doctors who have violated the laws of their respective states. Several other States are

beginning to follow the lead of Kansas to shut down these sites. We applaud their

efforts.

Additionally, I believe that the Federal and State governments must work together to address illegal or unscrupulous practices by on-line pharmacies. I suggest

the establishment of a joint Federal-State task force to examine whether current

laws and regulations are adequate to protect purchasers of drugs on the Internet—

and if not to recommend changes to those laws.

At the same time, it is important that we do not over react by piling layers of

new regulations on to an emerging marketplace—one that provides great benefits

to consumers. I am excited about the promise this new marketplace brings to working families, the disabled, and senior citizens across the country. Let’s continue our

oversight of this new marketplace, to ensure that its promise is fulfilled in a way

that also protects on-line purchasers. I would like to thank all of our witnesses for

joining us here today.

PREPARED STATEMENT OF HON. BART STUPAK, A REPRESENTATIVE IN CONGRESS

FROM THE STATE OF MICHIGAN

Thank you Mr. Chairman. I applaud you for holding this very important hearing

today.

With the explosion of internet commerce over the past several years, we have realized a significant change in the way business is conducted. It seems that every

day there is a new internet business coming on-line or going public on the stock

market. There are 10,000 new internet domain names being registered each day.

Many of the new domains belong to well established businesses who are making the

transition to E-commerce. Others are being assigned to speculative upstart businesses who hope to take advantage of this fantastic and relatively new medium of

commerce. Still others are starting up questionable businesses with little regard for

the health, safety, or welfare of the internet consumer. Mr. Chairman, it is those

unscrupulous businesses that concern me greatly.

In preparation for this hearing I took the time to surf many of the websites which

provide drugs over the internet. In very few instances was it clear that companies

took reasonable and necessary safeguards when filling prescriptions over the internet. Sites such as Drugstore.com and PlanetRX.com appear to be among the sites

that provide such safeguards. I applaud their efforts to supply safe, physician prescribed pharmaceuticals.

Unfortunately, there are countless other sites that are peddling drugs with very

little, if any, verification of prescription or health needs. On many of the sites I

found that there is no way to tell whether the site is operated by legitimate licensed

pharmacists or if there is even a medical doctor who reviews the application for the

drugs. I could not tell where the supplier, or website operator, was located. Are they

located in the United States/Europe/Asia/the Middle East? Are they receiving their

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drugs directly from the manufacturer or a licensed wholesaler? Are the drugs you’re

ordering truly of the purity and potency that you need or even actually the drug

that you thought you ordered? If not, what is the consumer’s recourse with no address, phone number or identification for follow-up questions, let alone follow-up

monitoring based on drugs provided to you? These are just a few of the questions

that I have and I am sure today’s hearing will raise many more.

When I go to my local neighborhood pharmacy to have a prescription filled, I walk

in and have a face-to-face conversation with the pharmacist. That pharmacist is required by the State of Michigan to abide by many regulations in order to operate

his or her business. They must have completed the requisite education in order to

dispense the prescription drugs, the pharmacy must be licensed, and they purchase

the medications from licensed, reputable and accountable wholesalers and manufacturers. In order to receive my medication, I must present a prescription from my

doctor. Before filling the prescription, the pharmacist will check to ensure that the

medication I’m receiving will not cause a harmful or deadly reaction with other prescription drugs that I may be taking.

Why then, do we not have these same precautions for internet businesses acting

as pharmacies? Why do these web sites not have to disclose where they are doing

business from or give a number to call for questions let alone for an emergency,

should there be a problem. Why do they not have to post who the doctor is who

is reviewing the request that is being sent in? And why do these sites not have to

list the states or countries that they are licensed in? I have had the opportunity to

review some of the written testimony and it appears that the FTC and Ms. Culmo

of the Texas Department of Health have expressed many similar concerns and I look

forward to their testimony today.

Lastly, I am concerned about the issue of privacy for those who may choose to

purchase prescription drugs over the internet. If a person decides to purchase prescription medication via an internet pharmacy, what provisions do we have in place

that would prohibit the internet drugstore from selling information about you and

your health records or financial transactions to other businesses? Will your medical

history now become the newest item for sale on the internet so you can be

spammed? If you order viagra from one of these unregulated businesses will this

personal information suddenly be sold to other net businesses who want to peddle

you products or services associated with the prescriptions.

Mr. Chairman, I look forward to hearing answers to the questions I’ve outlined

here this morning. This is not merely an issue of E-commerce, it is a matter of public health and individual privacy.

Mr. UPTON. I have been alerted a number of members are on

their way down, but I think in the meantime we will ask the witnesses for the first panel to take their place at the table. Ms. Ellen

Yui; Ms. Kathy Egan from NBC10/WCAU in Philadelphia; Ms.

Christine Behrens, WWMT and Channel 3, Kalamazoo; Mr. Bob

Michel; and the Honorable Carla Stovall, Attorney General from

the State of Kansas, if you would take a place at the table.

As you may know, this subcommittee has a long tradition of taking testimony under oath. There is a vote on, but I think I will

swear you in at this point, and then I think we will take a break.

And if members could come back promptly after this vote, we will

continue with the testimony when I get back.

We have a long tradition of taking testimony under oath. Do any

of you have objection to that? We also, under House rules, allow

you to have counsel if you would like. Do any of you desire counsel?

If you would stand and raise your right hand.

[Witnesses sworn.]

Mr. UPTON. You are now under oath, and we will take a brief adjournment for us to go vote, and we will return with your testimony in about 10 minutes.

[Brief recess.]

Mr. UPTON. We will reconvene.

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The good news is we are going to have only one more vote that

will interrupt us today, in all likelihood, and that won’t be for a

couple of hours so we can get into this in earnest.

Okay. You have been sworn in. I was with Mr. Klink. He should

be back within a minute or 2. So I think we can get started with

your testimony.

We will start with Ms. Yui. Did I say that right?

Ms. YUI. Yes.

Mr. UPTON. Welcome to the subcommittee.

Let me just make a point for all witnesses. We would like, if you

can, to limit your remarks to about 5 minutes. I have a little timer

that is here that is pretty fancy. You will see these lights go on and

off.

I guess it is not a pretty neat timer. It doesn’t work. We will

watch the clock, I guess. We need two light bulbs, but if you limit

your remarks to 5 minutes, that will be perfect.

Your entire statement, obviously, will be made part of the record.

Please go ahead.

TESTIMONY OF ELLEN YUI; BOB MICHEL; KATHY EGAN, NBC10/

WCAU PHILADELPHIA; CHRISTINE BEHRENS, WWMT; AND

HON. CARLA J. STOVALL, ATTORNEY GENERAL, STATE OF

KANSAS

Ms. YUI. Mr. Chairman, thank you for inviting me here today to

testify about the benefits of drugstore shopping on-line.

I am very familiar with the world of e-commerce because I spend

a good part of my day in front of the computer, and it is that personal computer that has afforded me the opportunity to run a small

business from my house, enabling me to continue my career as a

communications consultant, earn money, and be near my two boys,

all at the same time. My husband also runs his own business,

which would not be possible without the Internet. We conduct our

banking on-line and purchase personal computers, software, books,

CDs, plane tickets, even great cheese from France, on-line.

With that in mind, I wish to talk to you today about three

thoughts that come to mind when I think of on-line pharmacies:

convenience; privacy, which has a double meaning here; and cost.

Time, or the lack of it, is the overriding theme of my life. I actively seek services and products that will save me time, make me

more efficient, educate me and, of course, save money for those

looming college tuitions.

Permit me to take a minute and describe for you my typical day

as a working mom, and you will understand why.

When I wake up at 6 o’clock in the morning a clock watch—a

stopwatch clicks on in my brain, and I start running from one juggling act to another. I try to get out of bed before my family to

walk my two dogs. This is not always possible because my husband

travels 3 to 4 days a week, basically making me a single mom

much of the time. I get myself dressed, my kids dressed, feed everybody breakfast, get the kids off to school and then race back to

my desk at home before the phone starts ringing. I work all day.

If I am lucky, I can squeeze in a personal errand, such as running to the supermarket, the dry cleaners, car wash, maybe volunteer at my children’s school, but getting away from my desk seems

10

to be more and more problematic. At 5 o’clock, my wonderful child

care provider goes home; and it’s another dog walk, homework, dinner, baths, reading to the boys, sometimes a little more work or

bills, and then I collapse. You could poll 1,000 working moms

across this country, and I would venture to guess you would hear

1,000 similar renditions of that story.

Juggling all of this leaves me almost no time for shopping, any

kind of shopping. I am almost embarrassed to admit how often I

run out of basic supplies at home. So the opportunity to purchase

cough syrup, ibuprofen, Band-Aids, tissues, vitamins, hair spray or

my favorite nail polish, without long lines, crowded aisles, slow

cashiers and parking hassles is a dream come true. For me it’s a

luxury that translates into 1 more hour of quality time with my

kids. And dragging them to stores is not pleasant for the kids, for

me or for anybody in that store.

But also important to me is the good health care information

that is provided on these sites. I am very skeptical of any drug,

prescribed or over-the-counter, and I am always a bit nervous

about their possible side effects, particularly in my children’s small

bodies. I was thrilled to discover the wealth of information that I

can access on-line.

In my family, we do require some regular medication; and on-line

pharmacies can take my order and payment in minutes, deliver the

prescription directly to my home and even send me a reminder email that it’s time to refill my prescription. Now, for me, that’s a

Godsend.

For years, I purchased prescription drugs from our local family

pharmacy conveniently located in my doctor’s building; and, frankly, he is who I want to do business with. I am a small business

owner. I support small businesses. But, unfortunately, he’s nearing

retirement age, he’s scaling back and he’s not as convenient anymore. To my chagrin, the age of personal service at pharmacies has

passed. Because of many negative experiences I’ve had with impersonal service and multiple incorrectly filled prescriptions at major

chain pharmacies, I don’t believe I am missing out on customer

service by buying on-line.

In fact, today’s drug counters don’t offer an opportunity for a private discussion between a pharmacist and a consumer. You can picture what I mean. You’re down on the floor, you’re looking up at

the pharmacist and often shouting questions, letting the whole

world know that your kids have caught something at school, like

whooping cough, head lice or something else you don’t want to

share with the world.

With some on-line pharmacies, I can even e-mail questions directly to a pharmacist in the privacy of my own home 24 hours a

day, 7 days a week. Now, that’s a service and a convenience I need

in my life.

That’s not to say I don’t have quite a few reservations, and here’s

the flip side of the privacy issue. I’m always cautious about on-line

purchases and sometimes worry that I might expose myself to financial fraud or that a company will sell my name and data about

my buying purchase patterns to another firm. And of course, as a

mother, I hope Congress can find a way to prevent children from

buying inappropriate or illegal drugs over the Internet.

11

I am also making the assumption, perhaps naive, that I am just

as protected on-line as I am protected at any major chain pharmacy. I know that protecting consumers is a daunting task for Congress, the FDA and other regulatory bodies.

Finally, cost. On-line pharmacies can offer products at reduced

cost. As they become more accepted by consumers and health

plans, their ability to offer products at competitive prices will increase, and that is good news for consumers, not to mention that

more time for my family is priceless.

Thank you very much, and I’d be happy to answer any questions.

[The prepared statement of Ellen Yui follows:]

PREPARED STATEMENT OF ELLEN YUI

Mr. Chairman, thank you for inviting me here today to testify about the benefits

of drugstore shopping online.

I am very familiar with the world of e-commerce because I spend a good part of

every day in front of a computer. And, it is that personal computer that has afforded

me the opportunity to run a small business from my house, enabling me to continue

my career as a communications consultant, earn money, and be near my two boys,

all at the same time. My husband also runs his own business, which would not be

possible without the Internet. We conduct our banking on-line, and purchase personal computers, software, books, CDs, plane tickets, even great cheese from France,

on-line.

With that in mind, I wish to talk to you today about three thoughts that come

to mind when I think of on-line pharmacies: convenience; privacy—which has a double meaning here; and cost.

Time, or the lack of it, is the overriding theme of my life. I actively seek services

and products that will save me time, make me more efficient, educate me, and of

course save money for those looming college tuitions.

Permit me to take a minute and describe for you my ‘‘typical day as a working

mom,’’ and you’ll understand why. When I wake up at 6:00 am, a stopwatch is

clicked on in my brain, and I start running from one juggling act to another. I try

to get out of bed before my family and walk my two dogs. This is not always possible, as my husband travels three to four days a week, basically making me a single mom much of the time. I get myself and my kids dressed, feed everybody breakfast, get the kids off to school, and then race back to my desk at home before the

phone starts ringing. I work all day.

If I’m lucky, I can squeeze in a personal errand, such as running to the supermarket, the dry cleaners, car wash, maybe volunteer at my children’s school, but

getting away from my desk seems to be more and more problematic. At 5:00, my

wonderful childcare provider goes home, and it’s another dog walk, then homework,

dinner, baths, reading to the boys, sometimes a little more work or bills, and then

I collapse. You could poll 1,000 working moms across this country, and I would venture to guess you’d hear 1,000 very similar renditions of that story.

Juggling all of this leaves me almost no time for shopping, any kind of shopping.

I am almost embarrassed to admit how often I run out of basic supplies at home.

So, the opportunity to purchase cough syrup, ibuprofen, Band-Aids, tissues, vitamins, hairspray, or my favorite shade of nail polish—without long lines, crowded

aisles, slow cashiers, and parking hassles—is a dream come true. For me, it’s a luxury that translates into one more hour of quality time with my kids. And dragging

them to stores is not pleasant for the kids, for me, or for anybody in that store.

But also important to me is the good healthcare information that is provided on

these sites. I am very skeptical of any drug—prescribed or over-the-counter—and

am always a bit nervous about their possible side effects, particularly in my children’s small bodies. I was thrilled to discover the wealth of detailed information

available about prescription drugs through on-line pharmacies.

In my family, we require some regular medication. On-line pharmacies will take

my order and payment in minutes, deliver the prescription directly to my home, and

even send me a reminder email that it’s time to refill the prescription, now that’s

a Godsend.

For years, I purchased prescription drugs from our local family pharmacy, conveniently located in the same building as our doctors’ offices. And as a small business

owner, I go out of my way to support small businesses. Unfortunately, now that our

pharmacist is nearing retirement age and cutting back his hours, he’s not as conVerDate 13-MAR-2000 09:18 Mar 20, 2000 Jkt 010199 PO 00000 Frm 00014 Fmt 6633 Sfmt 6621 E:\HEARINGS\58498.TXT pfrm02 PsN: 58498
12

venient anymore. To my chagrin, the age of personal service at pharmacies has

passed. Because of negative experiences I have had with impersonal service and

multiple incorrectly filled prescriptions at major chain pharmacies, I do not believe

I am missing out on customer service by buying on-line.

In fact, today’s drug counters do not offer an opportunity for a private discussion

between customers and the on-duty pharmacist. You can picture what I mean. You

are down on the floor, looking up at the pharmacist and often shouting questions,

letting the whole world know that your kids caught something from school, like

whooping cough, or head lice, or something else that you don’t really want to share.

With some on-line pharmacies, I can even email questions directly to a pharmacist in the privacy of my home 24-hours, 7 days a week. Now that’s service, and

a convenience I need in my life.

This is not to say I don’t have reservations, and here’s the flipside of the privacy

issue. I am always cautious about on-line purchases and sometimes worry that I

might expose myself to financial fraud, or that a company will sell my name and

data on my buying habits to another firm. And of course, as a mother, I hope Congress can find a way to prevent children from buying inappropriate or illegal drugs

over the Internet.

Finally, cost. On-line pharmacies can offer products at reduced cost. As they become more accepted by consumers and health plans, their ability to offer products

at competitive prices will increase. And that is good news for consumer—not to mention that more time for my family is priceless.

Again, thank you for inviting me here today. Now I would love to answer any of

your questions, so fire away.

Mr. UPTON. Maybe we should operate with the lights not on in

the future. It worked pretty well.

Mr. Michel.

TESTIMONY OF BOB MICHEL

Mr. MICHEL. Good morning. My name is Bob Michel.

Mr. UPTON. If you could put the mike a little built closer, that

would be terrific. It moves.

Mr. MICHEL. Will that work?

Mr. UPTON. Better. No, no, just keep moving it a little closer.

Mr. MICHEL. All right. Can you hear me now? Is it on or off? Can

you hear me, sir?

Good morning. My name is Bob Michel. Chairman Upton and

members of the Commerce Subcommittee on Oversight and Investigations, thank you for the opportunity to appear before you today

to testify on the importance and value of reputable Internet drugstores to senior citizens.

On-line pharmacies provide senior citizens a source of low-cost,

easily available pharmaceutical products literally at their fingertips.

I am 65 years old, semi-retired. I do management consulting

work for a number of companies, and I am an active member of the

Seniors Coalition, a 3 million member organization that supports

legislation aimed at protecting the best interests of seniors in our

country.

I come before you today representing myself as an advocate for

all senior citizens. It’s been widely reported that seniors are the

fastest growing segment of Internet users today. A survey last year

by the Nielsen Media Research and CommerceNet found that 7.6

million Internet users are 50 years or older, making up about 15

percent of the Internet-using population in the United States and

Canada.

I have used the Internet for some time now, and I rely on the

Internet for a number of e-commerce transactions. I understand

13

you’re holding this hearing today to discuss the safety of on-line

pharmacies. Of course, I support public safety on the Internet. If

someone is circumventing the law by distributing drugs without a

valid prescription, it is likely they’re already breaking an existing

State or Federal law. My advice is, shut them down if they are unlicensed or illegally dispensing drugs over the Internet.

However, I don’t think you want to overcontrol or overregulate

the on-line pharmacies who are performing a valuable, legitimate

service to millions of Americans who can enjoy the convenience of

turning on their computer and ordering medication that may otherwise be difficult to obtain.

I am a cancer survivor. I’m on blood pressure medication. My

wife is diabetic and requires daily doses of insulin. If my wife needs

to go to a doctor on one side of town and then make a trip to a

pharmacy on the other, it can make for a long, stressful day.

Nowadays, my wife talks to her doctor regularly on the phone.

He calls her prescription in to a local pharmacy. When we retire

to the wilds, in the not-too-distant future, we intend to have her

doctor and mine send our prescriptions to a legitimate, on-line

pharmacy such as PlanetRx, Drugstore or Soma.com and receive

the medication via mail.

On-line pharmacies offer tremendous opportunities to make life

easier for seniors, many of whom are feeble or unable to navigate

about very easily, by allowing them to get their prescriptions filled

electronically and mailed directly to them. I think on-line pharmacies could especially be helpful to seniors who live in rural areas

where getting to the local pharmacy in the middle of winter can be

very taxing and at times hazardous.

Furthermore, my wife and I both love to travel, and when we do,

we often carry a laptop. It would be great to be able to have our

doctor write a prescription, fax it to our on-line pharmacy and then

have the pharmacy deliver it to us anywhere in the world.

I am watching the legislation Congress is working on to give seniors more accessible, affordable prescription drug benefits. I hope

that on-line pharmacies are factored into the mix when the final

legislation is enacted.

Mr. Chairman and members of the subcommittee, I think you

recognize that e-commerce is the new and exciting wave of the future. It should not be stymied by a well-intended but overzealous

regulatory system. Please don’t inhibit legitimate on-line pharmacies from effectively complementing or even competing with

storefront pharmacies in this country.

Thank you for allowing me to express my views.

[The prepared statement of Bob Michel follows:]

PREPARED STATEMENT OF BOB MICHEL

Good morning. My name is Bob Michel.

Chairman Upton and members of Committee on Commerce Subcommittee on

Oversight and Investigations, thank you for the opportunity to appear before you

today to testify on the importance and value of safe Internet drugstores. Online

pharmacies provide senior citizens low cost, easily available pharmaceutical products at their fingertips.

I am 65 years old and semi-retired. I do management consulting work for a number of companies. I am an active member of the Seniors Coalition, which is a 3 million-member organization that supports legislation aimed protecting the best interest of seniors in the United States.

14

I come before you today representing myself as an advocate for all senior citizens.

It has been widely reported that senior citizens are the fastest growing element of

Internet users. A survey last year by Nielsen Media Research and CommerceNet

found that 7.6 million Internet users are 50 or older, making up about 15 percent

of the Internet-using population in the United States and Canada.

I have used the Internet for five years now and I rely on the Internet for a number of e-commerce transactions.

I understand you are holding this hearing today to discuss the safety of online

pharmacies. I support public safety on the Internet. My opinion is that if someone

is breaking the law by distributing drugs without a prescription, it is likely they

are already breaking an existing state and or federal law. My advice is to arrest

them if they are illegally dispensing drugs over the Internet.

However I don’t think you want to overcontrol or regulate the online pharmacies

who are performing an valuable service to millions of Americans who can enjoy the

convenience of turning on their computer and ordering medication that may otherwise take them all day to order.

I am a cancer survivor and I need to take blood pressure medication. My wife is

diabetic and requires daily doses of insulin. If my wife needs to go to her doctor on

one side of town and then make a trip to the pharmacy on the other side of town,

it can make for a stressful day. Nowadays, my wife talks to her doctor regularly

on the phone and he calls in her prescription to the pharmacy. It would be so much

easier if she can have her doctor send in her prescription to a legitimate online

pharmacy like PlanetRx.com or Drugstore.com. or Soma.com.

Online pharmacies are a terrific opportunity to make life easier for senior citizens

by allowing them to get their prescriptions filled electronically. I would think online

pharmacies could especially help senior citizens who live rural areas where getting

to the local pharmacy in the middle of winter can be very taxing.

Furthermore, my wife and I both love to travel and when we do, we always carry

a laptop computer. It would be great to be able to have our doctor write a prescription, fax it to our online pharmacy and then have the pharmacy deliver it to us anywhere in the world.

I am watching the legislation Congress is working on to give seniors more accessible prescription drug benefits. I hope that online pharmacies are figured into the

mix when the final legislation is enacted providing low-cost prescription drugs to

senior citizens.

Mr. Chairman, members of the Subcommittee on Oversight and Investigations,

thank you allowing me to express my views that e-commerce is the new and exciting

wave of the future and should not be stymied by a regulatory regime. Please don’t

try and stop legitimate online pharmacies from competing with other pharmacies in

this country.

At this time, I am prepared to answer any questions you may have.

Mr. UPTON. Thank you.

Ms. Egan.

TESTIMONY OF KATHY EGAN

Ms. EGAN. Good morning. I’m Kathy Egan from NBC10 in Philadelphia. I want to thank you, Mr. Chairman and members of the

subcommittee, for allowing me to appear today. We were asked to

share what our investigation uncovered.

Most of us know the Internet has the potential for great things.

It can educate, make life easier and be a great tool to exchange

ideas. But our NBC10 investigation also revealed it can allow people access to dangerous prescription drugs without a prescription.

Our 2-month investigation shows the Internet has become the

1990’s version of the wild, wild west. Anything goes. You can find

a Web site that will sell you almost anything. Last year, the Internet economy generated an estimated $301 billion in U.S. Revenue,

according to a University of Texas study. Many people today turn

to the Internet like they used to turn to their mom and pop corner

store as the place to buy things. One study estimates 56 percent

of U.S. Companies will sell their products on-line by the year 2000.

With consumers spending more on drugs per year than on books,

15

CDs and videos combined, it is easy to see why prescription drug

Web sites are growing in popularity.

We had absolutely no problem finding Web site after Web site

that would sell us a virtual candy store of prescription drugs like

Viagra and Prozac. Worse yet, many of these sites required no prescription and very little prescreening, if any, to weed out people

who don’t need the drugs. In many cases, the most crucial information you need to give is your credit card number.

In researching and producing our story, it was difficult to discern

who is actually regulating these Internet drug companies. We

called the U.S. Food and Drug Administration, the Federal Trade

Commission, U.S. Customs, the Pharmaceutical Manufacturers Association, other national pharmacy groups and the State boards of

pharmacy in our tri-state area. Since we also purchased a controlled substance, we called the U.S. Drug Enforcement Agency.

Virtually every agency we talked to said they were interested in

the problem, but they referred us to another group or agency.

What’s more, one government official told us no agency is up to

speed on this problem.

As you know, this is not an issue to be taken lightly. More and

more people are gaining access to the Internet. One study says that

seven new people get on the Internet every second. To give you an

idea, that means that in the time it takes me to testify it means

nearly 2,000 people have become Internet subscribers for the first

time.

Once more, the group that’s most Internet savvy is the younger

generation, our children. They know how to surf the net, where the

sites are and how to work the system.

To give you an example, recently in Philadelphia in a suburb

there, teens from Conestoga High School were hospitalized after ingesting a drug ingredient purchased on the Internet. The drug

DMX, dextro-meth-orphan, is the ingredient that stops the cough

in cough syrup. This shows how children can get access to dangerous drugs and drug ingredients.

In our NBC10 report, we showed even a 7-year-old buying a prescription diet drug that wasn’t yet approved in the United States,

no questions asked. We are going to show you that in just a

minute, but we also want to tell you what kinds of responses we

got when we confronted some of the Internet drug companies. One

company squarely put the burden on the consumer, saying people

need to educate themselves on the medication they are taking. Another company just flat out denied they even sold prescription

drugs to us, and we found this company didn’t have a license to sell

in the U.S.

In summary, some experts we’ve spoken to say Internet companies selling prescription drugs without prescriptions are light years

ahead of the regulatory agencies, and they fear if something isn’t

done soon Americans may overdose, improperly use or suffer drug

interactions that could injure or even kill them.

Again, thank you for letting me to testify today, and we’d like to

show you an excerpt of our News 10 investigation.

[Video played.]

[The prepared statement of Kathy Egan follows:]

16

PREPARED STATEMENT OF KATHY EGAN, NBC/WCAU PHILADELPHIA

Thank you, Congressman Klink, and members of the subcommittee, for allowing

me to appear today. We were asked to share what our NBC 10 investigation uncovered. Most of us know the Internet has the potential for great things. It can educate,

make life easier, and be a great tool to exchange ideas. But our NBC10 investigation

also revealed, it can allow people access to dangerous prescription drugs when they

shouldn’t be able to get them.

Our 2-month investigation shows the Internet has become the 1990’s version of

the wild, Wild West. Anything goes! You can find a website that will sell you almost

anything. Last year, the Internet economy generated an estimated 301.4 Billion dollars in U.S. revenue according to a University of Texas study. Many people, today,

turn to the Internet like they used to turn to their Mom and Pop corner store as

the place to buy things. One study says an estimated 56 percent of U.S. companies

will sell their products on-line by the year 2000. With consumers spending more on

drugs per year than they do on books, CDs, and videos combined, it’s easy to see

why prescription drug websites are growing in popularity.

We had absolutely no problem, finding website after website, after website that

would sell us a virtual candy store of powerful prescription drugs like Viagra and

Prozac. Worse yet, many of these sites required very little prescreening, if any, to

weed out people who don’t need the drugs. In many cases, the most crucial information you need to give is your credit card number.

In researching and producing our story, it was difficult to discern WHO is actually

regulating these internet drug companies. We called the U.S. Food and Drug Administration, the Federal Trade Commission, the Pharmaceutical Manufacturers Association, Other National Pharmacy groups, and the state boards of pharmacy in

our tristate area. Since we also purchased a controlled substance, we called the U.S.

Drug Enforcement Agency. Virtually every agency we talked said they were interested in the problem but referred us to another agency or group. What’s more, one

government official told us NO agency is up to speed on this problem.

As you know this isn’t an issue to be taken lightly. More and more people are

gaining access to the Internet. In fact, one published estimate says 7 new people

get on the Internet every second. To give you an idea that means in the time it

takes me to testify nearly 2,000 people have become Internet subscribers for the

first time. What’s more, the group that’s most Internet savvy is the younger generation, our children. They know how to surf the net, where the sites are, and how to

work the system.

To give you an example: Recently in a Philadelphia suburb, teens from Conestoga

High School were hospitalized after ingesting a drug ingredient purchased on the

Internet. The drug, dextromethorphan, is the ingredient that stops the cough in

cough syrups. This shows how children can get access to dangerous drugs and drug

ingredients.

In our NBC 10 report, we showed even a 7-year-old buying a prescription diet

drug that wasn’t approved yet in the United States. No questions asked. We’ll show

you that in a moment. But we also want to tell you what kind of responses we got

when we confronted some of the internet drug companies. One company squarely

put the burden on the consumer, saying people need to educate themselves on the

medication they’re taking. Another company just flat out denied they sold prescription drugs to us, and we found this company didn’t have a license to sell in the U.S.

In summary, some experts we’ve spoken to say Internet companies selling prescription drugs are light years ahead of the regulatory agencies. And they fear if

something isn’t done soon, Americans may overdose, improperly use, or suffer drug

interactions that could injure or even kill them.

Thank you again for the opportunity to speak to you today. Let’s go ahead now

and show you an excerpt of our NBC10 investigation.

Mr. UPTON. Thank you for that report.

Ms. Behrens.

TESTIMONY OF CHRISTINE BEHRENS

Ms. BEHRENS. Good morning.

My name is Christine Behrens. I am a reporter from WWMTNews 3, which is a Grand Rapids-Kalamazoo television station in

Michigan.

In February of this year, we did a series of investigative reports

on Internet pharmacies. The reports were entitled, Prescription for

17

Danger. We tested a number of Web sites that had been advertising prescriptions for the anti-impotence drug Viagra. Many of

the advertisements said, ‘‘No prescription, no problem’’, and we

found that it wasn’t a problem, and I’d like to go ahead and show

the tape.

[Video played.]

Ms. BEHRENS. Thank you.

Mr. UPTON. Just glad you spelled Fred with a PH.

[The prepared statement of Christine Behrens follows:]

PREPARED STATEMENT OF CHRISTINE BEHRENS, WWMT NEWS 3 REPORTER

In February of this year WWMT-News 3, a Grand Rapids-Kalamazoo, Michigan

television station, did a series of investigative reports on Internet Pharmacies. The

reports were titled ‘‘RX for Danger.’’ We tested a number of web sites that had been

advertising prescriptions for the anti-impotence drug Viagra.

The drug has become very popular since being introduced in the spring of 1998,

perhaps one of the most popular drugs in America. But, it has also been linked to

more than 120 deaths since it hit the market, most often occurring in men with

heart disease. The drug carries warnings that it should not be used in conjunction

with nitrate drugs, as combining the drugs could lower blood pressure to dangerous

levels.

Some of the Internet pharmacies tout how easy it is to get the drug. One site

(http:kwikmed.com) advertises, ‘‘No prescription, No problem?’’ Another site

(www.medservices.com) says, ‘‘Viagra, from the privacy of your home or office. Next

day delivery.’’ We decided to find out if it really is easy to get an order filled.

All of the web sites we tested post warning signs for heart disease victims, and

many on line pharmacies ask prescription buyers list a health history and medications taken as part of the application. The application, which most on-line pharmacies refer to as an ‘‘on-line consultation’’ costs up to $85. The News 3 probe found

pharmacists or doctors who review these consultations seem to be paying little attention to what the applicant/prescription buyer types in the blanks.

In one case, we logged on to www.WorldExpressRx.com and filled out the ‘‘On line

consultation,’’ on behalf of a cat named Tom. Tom’s owner, honestly filled out Tom’s

medical history. The questionnaire asked about past surgeries. The answer that was

typed in was ‘‘Neutered, 12/15/88.’’ We indicated his weight was 15 and his height

6. Tom’s 10 pills of 100 mg. of Viagra were shipped after a charge of $167 was made

to a family credit card. The lack of physician attention to the information listed suggests that no review was done at all.

In a second case, a prescription application was made on behalf of a News-3 employee’s dog, under the name of ‘‘Phrederick L. Schnauzer.’’ A similar reference was

included in the application that the applicant had been neutered, but the web site

did not question that. Instead, ‘‘Phrederick Schnauzer’s’’ application was turned

down because he lives in the United States. The British firm ‘‘CCNow cannot legally

sell prescription drugs to customers who are in the U.S.’’ stated a return e-mail to

Phred’s owner. The order was not processed and the credit card was not charged.

In a third case, to again test the potential for on-line pharmacy abuse, a prescription was made on behalf of my dead grandfather, Jess Sprague whose date-of-birth

was clearly stated May 6, 1900. Jess Sprague died 24 years ago. The order was

placed with the Pill Box Pharmacy, based in San Antonio, Texas. With no question

of the applicant’s stated age, which would have been 98 years old had he been alive

in February of this year, grandpa’s Viagra arrived within two weeks.

But perhaps the most alarming case involves a News-3 employee who truthfully

filled out an application for a Viagra prescription including his detailed health history of heart trouble. Steve Kelso clearly listed his current prescription for a nitrate

drug, one of those listed on the web site (www.WorldExpressRx.com) as a potential

danger for a person using Viagra.

‘‘I certainly thought that I would be denied Viagra, that given my condition, and

given the medications I am on, it would seem totally contraindicated to prescribe

me Viagra,’’ said Kelso. But he got it within days after a charge was made to his

credit card.

Doctors and pharmacists we interviewed told us they were worried about the lack

of face-to-face consultants with these types of operations. They are raising questions

about who is evaluating the ‘‘on-line consultations,’’ and writing and approving prescriptions.

18

In addition, we also found that other popular prescription drugs are available

from web sites; others the News-3 investigation discovered include the anti-histamine medication Claritin, and the hair growth pill Propecia, as well as several

weight loss drugs.

SUMMARY:

In talking with state and federal agencies and lawmakers over who is responsible

for regulating on-line prescription drug sales, we found there seems to be confusion.

In fact, it doesn’t seem to be against the law. And it is difficult to find out where

many of these pharmacies originate.

I am not advocating for or against on-line pharmacies. But, our investigation revealed some alarming facts and raised a number of questions. Is anyone reviewing

the ‘‘on-line consultations?’’ Did anyone bother to read Steve Kelso’s application, or

any of the other applications we submitted? We provided glaring clues when filling

out ‘‘on-line consultations.’’

We presented situations that obviously would not have been approved if there was

a face-to-face doctor/patient consultation.

Mr. UPTON. Ms. Stovall.

TESTIMONY OF HON. CARLA J. STOVALL

Ms. STOVALL. Thank you very much for the opportunity and the

invitation to be here. What I would start off by saying is if the

Internet is indeed perceived as the wild, wild west, then I think

that Attorneys General offices, State regulatory agencies and Federal agencies are the Matt Dillon of the new frontier. Because we

are armed with appropriate weapons to try to deal with this issue,

just like we deal with other crimes that are committed in this country.

There are certainly benefits to pharmacies being available online, and we heard from the first two conferees, and I certainly

agree with that. There are some great benefits. But, obviously,

stopping the illegal activity that we heard a lot about is what’s important. We wouldn’t wink and nod if somebody wrote their own

prescription out and took it into the local downtown pharmacy to

get it filled. Patients cannot write their own prescriptions, and yet

what we see going on in the Internet is very much that same thing.

So just like we would stop it from going on in our local communities physically, we would also try to stop it over the Internet.

My office has engaged in some of the same sort of stings that you

heard about from the first TV stations, so I won’t belabor the way

that it’s so easy to have that happen. But, nonetheless, what we

see happening is not physicians prescribing medications but simply

orders for medication being filled, and there’s a big difference in

that.

As you know, some drugs carry tremendous side effects and

health consequences that someone who is knowledgeable, with the

regard of those contraindicating factors, ought to be involved with

performing.

Viagra that we’ve heard a lot about from the TV stations is one

of the most popular drugs apparently that’s out there now, and yet

between March and November, 1998, 130 men died while taking

Viagra. Many of them had heart conditions that resulted in their

death. That was cardiovascular incidents they call them. It’s not

been determined what part Viagra played in that, and I don’t mean

to suggest that, but, nonetheless, when 130 people die by taking

that particular medication, it’s something that would cause us concern. The number of men who died taking Viagra is not listed on

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the Web sites that I have looked at that offer Viagra, nor is the

fact that those 130 men that died ranged in age from 29 all the

way up to 87. So those are what are our concerns.

We filed in the Kansas Attorney General’s office under consumer

protection saying it’s deceptive and unconscionable for prescription

drugs to be given out over the Internet without a physician licensed in my State, without a pharmacy licensed in my State being

involved in the process. We are armed with appropriate weapons

we think to combat these Internet activities, just as we already

have done with other kinds of consumer protection scams over the

Internet, with gambling over the Internet, with pornography on

Web sites as well.

The State Attorneys General wouldn’t want to see this area Federalized just because Internet companies do cross State boundaries.

We think the growth of e-commerce, the good as well as the bad,

that comes with that give Attorney General Offices, State regulatory agencies and Federal agencies the opportunity to work together in addition with the AMA, for example, as well as the National Association of Boards of Pharmacy. The pharmacy board has

come out with, I’m sure you know, a kind of seal of approval that

legitimate pharmacies could put on their Web sites. And while

that’s not certainly the full answer to the problem and I don’t think

the pharmacy association would tell you that it is, it’s at least a

step in the right direction.

What I will recommend to colleagues of mine is that we encourage State legislatures to require a certain amount of information

be disclosed on any web sites that are giving prescription medication. What was so difficult for us when we sued was trying to locate

who it was that we were doing business with. And very much as

Congressman Klink talked about, it’s the identity of those people

and their whereabouts that present problems. So we would require

and ask that legislatures require current and accurate addresses of

the corporate offices, of any of their affiliate offices, the identities

of the principals involved and their locations, as well as information about what State the pharmacy and/or the doctors involved are

located in.

What we found is that there will be a Web site company with a

particular incorporation status and then there will be the pharmacy company or the company that actually dispenses the drugs,

and you’ve got many shelves to go through. So if all of that information was required to be on the Internet, we find that that would

be most helpful.

If there is Federal legislation that this committee comes forward

with, we would hope that it would be a floor and not try to be a

ceiling to preempt States from doing anything but to be able to

allow us to work in the areas that we traditionally have done with

the licensing and regulating of the practice of medicine and pharmacology, and we would want to continue to do that.

There is one thing that we would like and that is, if we were able

to have Federal authority, much like we have in the telemarketing

area, which would allow, pursuant to the FTC rules, State Attorneys General to go to Federal court and get nationwide injunctive

relief, that would be of use, I think, to the Federal Government as

well as to all State governments. We can do that now, as I indiVerDate 13-MAR-2000 09:18 Mar 20, 2000 Jkt 010199 PO 00000 Frm 00022 Fmt 6633 Sfmt 6602 E:\HEARINGS\58498.TXT pfrm02 PsN: 58498
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cated, with the telemarketing rules and would find that helpful.

Then one Attorney General in one action in Federal court could get

the company to cease and desist doing business across the country,

and that would be the fastest way we think to adequately protect

consumers and constituents.

I really thank you for the opportunity to be here and share what

it is we have done in Kansas and what other States are doing as

well. Missouri has filed similar suits, and I know other of my colleagues are getting ready to do that. So we have been involved, but

I’m happy to answer questions that you might have.

Thank you.

[The prepared statement of Hon. Carla J. Stovall follows:]

PREPARED STATEMENT OF CARLA J. STOVALL, KANSAS ATTORNEY GENERAL

Chairman Upton, Ranking Member Klink, members of the Subcommittee, thank

you for the invitation to testify today and for your leadership on the important

issues the Subcommittee is considering. Let me also thank Chairman Bliley and

Ranking Member Dingell of the full Committee for taking part in this hearing and

for your attention and concern about the issues involved.

The Internet and the World Wide Web offer countless opportunities for Americans

as we move into the 21st Century. In Kansas, we view the Internet as an important

lifeline for rural America. We know that, through cyber technology, it will soon be

possible to participate as fully in the global economy from Dodge City or Goodland

as from New York or Los Angeles. Our state is soon to be the site of the largest

distribution center for Amazon.com, and we are proud to be the home of Sprint,

which is on the cutting edge of telecommunications technology. So we welcome the

dawn of the Information Age and the burgeoning growth of ‘‘e-commerce’’.

But we also know that the Internet brings with it new opportunities for old-fashioned lawlessness and fraud, and for repackaged challenges to States’ rights. Law

enforcement authorities around the country, both state and federal, are struggling

to combat pornography, pyramid schemes, gambling, and a host of other ancient

evils that have cropped up anew online. Investigating and prosecuting online offenders in all these areas raise new challenges for law enforcement. But two principles

should always guide us: (first) an illegal act does not become legal merely because

it is committed through the Internet, and (second) a state does not become powerless merely because a threat to the health and welfare of its citizens invades online

rather than in person, by mail, or in some other traditional manner.

Those are the principles that led the State of Kansas to challenge web site operators who are recklessly—and illegally—selling prescription-only drugs to Kansans

via the Internet. And let me be very clear—our law enforcement actions are aimed

at stopping the illegal Internet sale of drugs to Kansans, not at stopping online drug

sales entirely. We have no quarrel with doctors who prescribe to Kansas patients

who use the Internet, so long as those doctors are properly licensed by the State

of Kansas and meet all substantive requirements for practicing in the State. And

we have no objection to legitimate pharmacies that dispense prescription medications to Kansans using the Internet, so long as those pharmacies are properly registered with the State of Kansas and operate by the same standards as the drug

store on Main Street standards designed to protect the health and welfare of our

citizens.

We do object strenuously to those who believe they can sell potentially dangerous

drugs to our citizens, without complying with state laws, merely because they set

up a web page. As a Kansas Board of Pharmacy official said, the click of a mouse

does not establish a physician-patient relationship.

We have filed six lawsuits, naming as Defendants eight companies, six doctors

and four other individuals. All of them participated in the sale of prescription drags

to Kansans. None of them required any in-person examination or consultation prior

to prescribing and dispensing those drugs. Some of them sold ‘‘lifestyle’’ drugs, such

as Viagra, to minors without any apparent hesitation. None of these Defendants is

properly licensed or registered in the State of Kansas.

I have submitted with my testimony a summary of this pending litigation filed

by the State of Kansas, and I would ask that this summary be included in the hearing record.

The theory of our cases is simple: By prescribing drugs to Kansans, certain Defendants practiced medicine in our state without the required legal authority. By

21

dispensing drugs to Kansans, certain Defendants practiced pharmacy in our state

without the required legal authority. And by recklessly dispensing drugs without

any doctor-patient relationship whatsoever, while failing to disclose to consumers

material information such as health risks associated with use of some of these

drugs, all of the defendants committed deceptive and unconscionable acts in violation of our Consumer Protection Act.

Will we win these cases? We certainly think so! There are tough problems, such

as overcoming jurisdictional challenges and locating elusive Defendants using multiple shell corporations and mail drops. But we are confident our basic approach is

sound, and we are confident the Courts will continue to apply Kansas law to protect

Kansans within our State!

And make no mistake about it—this is very much about protecting the health and

welfare of Kansas citizens. Many of these medications have potentially serious side

effects. If used improperly, many of them can kill. We would not even consider repealing our State laws that establish standards for dispensing dangerous medications within the State, and there is no reason to accept a lesser standard when dangerous drugs are sold to our citizens online. In fact, this issue first came to our attention when physicians in our state expressed concern that patients under their

care could receive prescription drugs without the treating physician’s knowledge, increasing the risk of inadvertent drug interactions.

Kansas is in front on this issue, but we are not alone. I know my colleagues in

other states are increasingly active in opposing illegal Internet drug sales. I believe

a united, coordinated effort among states will serve us well in this matter.

We welcome Federal involvement as well, although the solution is not to ‘‘federalize’’ this problem. States historically have had a dominant role in regulating doctors and pharmacies for the protection of local citizens. We should strengthen, not

diminish, that role.

To that end, I believe states should explore the possibility of establishing disclosure requirements for entities that sell prescription medications across state borders. One of the most difficult challenges in the Kansas prosecutions has been finding the companies and people responsible for selling into our State. We have had

to sort through multiple shell corporations, addresses that turned out to be mail

drops, overlapping addresses shared by different entities, and similar evasive tactics. I believe companies selling dangerous drugs across state lines should be required to maintain current, accurate, accessible information about their principals,

their physical addresses, and their identities. We should not have to struggle to find

them.

To the extent new federal legislation is considered, I hope you will keep in mind

two important principles:

First, any federal requirements should be only a floor, not a ceiling. Do not preempt the States. Allow us to continue to set substantive requirements for the regulation of doctors and pharmacies that operate within our borders, and let us continue to have tougher requirements than the federal government as we see fit.

Second, any new federal enforcement scheme should retain states as key actors.

I know there is discussion of a regime modeled on the FTC’s Telemarketing Sales

Rule that would allow state Attorneys General to take action in federal court to curb

illegal online pharmacies and to obtain nationwide injunctive relief. I believe there

is a certain appeal in this, and NAAG certainly has no objection.

Each of these ideas may help. But, ultimately, the answer to this problem will

not be to reinvent the wheel. Each jurisdiction in this country, including the federal

government, has requirements in place to ensure that dangerous drugs are dispensed safely. We do not need new standards. Rather, we need new cooperation

among states, and with federal agencies, to ensure that our existing standards are

followed and applied to Internet sales.

That is the effort we in Kansas are trying to lead. That is the effort that the National Association of Attorneys General supports. And that is the effort that, I hope,

the Congress will help us to continue.

Thank you.

Mr. UPTON. Thank you very much.

We will try this timer again. No, I give up.

Okay, we are going to recognize members for 5 minutes for questioning, and I will give a little tap of the gavel when that occurs.

First of all, I very much appreciate all of your testimony. Clearly,

as I think was given in many of the opening statements, it is a

double-edged sword. There are many positives, as Mr. Michel—by

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the way, I hope you retire to Michigan; it is a great State—but obviously many, many positives, but there are negatives as well.

Ms. Stovall, I know that there is an association of attorneys generals, and I don’t know if this has been a topic at some of the meetings—national meetings that you have had. Has that been the case

and what interaction have you had with other attorneys generals

across the country?

Ms. STOVALL. We met just recently in June in Nashville and

talked about this issue. It has been an issue that has been discussed within our organization even prior to that but not on quite

as formal a basis. I can assure you there is great interest with attorneys general on this issue, and I think we will see additional action within days, I think more lawsuits will be filed by attorneys

general.

Mr. UPTON. You indicated in Kansas that you have filed I think

six complaints, is that right? Are you planning to do more?

Ms. STOVALL. We filed six actual lawsuits. We don’t frankly at

this point intend to do more because of limited resources. And it

is really not any shortage of law enforcement ability that is our

problem, it is the shortage of resources to shut these down. So that

is our difficulty.

Mr. UPTON. Have any of those six cases culminated in a final decision? Are they all pending?

Ms. STOVALL. They are still all pending. We have had service on

almost all of the defendants we have sued, but many of those companies we sued now have an indicator on their web site if you are

from Kansas, don’t call us, because they will now no longer sell to

Kansas citizens. So that was the relief, frankly, we were after. So

although we are a long way from final disposition, the immediate

relief is granted.

Mr. UPTON. I know as we have looked over much of the information our staffs were able to complete, one of the big problems with

the Internet is that you could live in Michigan, the on-line situation could be in Florida, as was indicated in Ms. Egan’s testimony,

with the particular suite or P.O. Box there, and often if you have—

in some cases where they do have you sort of walk through a

checklist of physicians to make sure that they are adequately reviewed, we found one case where actually the physician was licensed in Mexico and did not have a U.S. License.

As Ms. Egan’s report indicated, as they tried to talk to who can

be responsible for this, and they talked with the FDA, Customs,

DOJ, State boards, DEA, pharmaceutical boards, and her testimony through the video was that no agency was up to speed. Have

you witnessed that same problem? Are you getting cooperation

from Federal agencies in terms of who ought to have the lead?

Ms. STOVALL. Certainly there has been cooperation, and State

Attorneys General are not looking for the Federal agencies to take

the lead at all. We appreciate the assistance that they have given

us when requested on this and other issues.

But even right now, when we talk about the Internet, we talk

about the physical drugstore on Main Street, there isn’t any one

agency now that is responsible for all the business that goes on

there or at a doctor’s office. So I don’t know that we would be correct in assuming that there should only be one agency now that

23

regulates the prescriptions as well as the dispensing of them, just

because it is on the Internet.

Mr. UPTON. For Ms. Behrens and Ms. Egan, what kind of reaction or follow up have you had since your program aired and have

you had any further thoughts about investigating a variety of

things and what are the positives you have seen as well?

Ms. BEHRENS. Well, the reaction we got from people at the local

State and Federal level was similar to what she was saying here,

that they are not really sure whose jurisdiction it is, but they are

aware of the problem, and they are trying to get a handle on it.

As far as any follow-up, we—Tom the Cat received E-mails

checking to see how he was doing with his Viagra and asking if he

needed more.

As far as checking into any other drugs, we talked about Zenecal,

and I know that some of the State officials in Michigan were concerned a lot more about the weight loss drugs because of the danger.

Ms. EGAN. I know the DEA told me they wanted to look into this

problem. They were really concerned about it, but they felt like the

Internet is just so far ahead of them at this point that they are trying to figure it out, that the laws are in place is what I was told,

but they just need to be able to catch up with the people that are

selling drugs on the Internet without a prescription.

I want to stress the ‘‘without a prescription’’ also. Because we

didn’t look at prescription drugs with a prescription.

Mr. UPTON. Thank you.

Mr. Klink.

Mr. KLINK. I just thought I would let the bells finish ringing, Mr.

Chairman.

First of all, Mr. Chairman, this has been a very enlightening

hearing. I want to thank you.

Before I start, I just wanted to identify the gentleman who has

joined us up here, our dear colleague, the Honorable Robert Brady

from Philadelphia. Bob is on the Small Business Committee. In

fact, he has been working with us on this issue; and he asked if

he could come in and observe the hearing today. I thank you for

the courtesy of allowing him to serve.

I would ask unanimous consent if my friend, who has been working on some legislation on this matter with us, could have 30 seconds to welcome his constituent, Ms. Egan from Philadelphia.

Mr. UPTON. Without objection.

Mr. BRADY. Thank you, Mr. Chairman. Thank you ranking member, my dear friend from Pennsylvania.

I just wanted to welcome Ms. Kathy Egan to our congressional

hearing. It is a unique situation where an elected official and a politician from the city of Philadelphia welcomes somebody from the

news media. I don’t want to miss that opportunity. But she is a

unique lady, and I just wanted to thank her for publicizing this

problem, doing all you are doing and thank you for your tireless

efforts in dealing with this problem. I wanted you to know myself

and anybody else I can convince—I don’t think I need much convincing to assist you in any effort you can take to rectify this.

I thank you, and I welcome you here.

24

And I thank you, Mr. Chairman, and thank the committee for

your indulgence.

Mr. KLINK. Mr. Chairman, I will tell you this. What I appreciate

about Mr. Brady’s efforts in this matter—he is on the Small Business Committee. About a month ago, this issue came up, and so

they began to look at this themselves within the Small Business

Committee. He told me the interest he had, but he automatically

realized that we in the Commerce Committee could do so much

more. I thought that was very enlightening.

Mr. UPTON. That is true. I suggest the Judiciary Committee be

removed.

Mr. KLINK. So, at this point, I am happy that he has worked

with us on this issue. It is nice when we can work across our jurisdictions together.

Ms. Egan, you know, you mentioned in your testimony that there

was virtual candy stores. I remember that being in your report.

Would it surprise you if some of the web sites out there apparently

are willing to sell on-line drugs like Comprageisic and Codipront,

both highly addictive painkillers, by answering a medical questionnaire and submitting credit card numbers? Does that at all surprise you?

Ms. EGAN. That doesn’t surprise me, based on what we saw. All

we had to put in on a number of these drugs was name, address

and credit card. I put in I worked at NBC10 in Philadelphia, and

we got the stuff Fed-Ex’d right to our door, and it was no problem.

Left at our door, I might add, where anybody could pick it up. They

didn’t make sure someone was there to get it. It raises another concern. I have two little kids, and that raises a concern as far as that

is concerned.

Mr. KLINK. Anybody could have picked it up?

Ms. EGAN. It was left right outside the door.

Mr. KLINK. I was looking at another news article here, and the

reason I mentioned Codipront and Comprageisic, there was a news

report from a month or so ago, U.S. News and World Report. It

says, both of these drugs sent by Pharma Group contained codeine,

a narcotic painkiller, and are on DEA’s list of most addictive medication. ‘‘if you went to the post office to pick these up,’’ a spokesperson said, ‘‘it is not inconceivable that the DEA could put you in

jail.’’ that is how serious it is. Yet things like this are dropped on

people’s door step every day.

I think it is important, and I know it is very difficult, and I

apologize, but what we have done is blown up some charts of some

of the pain relievers. I am going to read through some of the

names, those I can pronounce. I don’t know a lot of these things.

I am not a pharmacist.

Too often, we dwell on things like Senecal, Viagra, and they are

the most prevalent, but they are indeed not the only kinds of medications. So we are not picking on any manufacturer. We are not

picking on any particular drug. But there are things like Fiorinal

Codeina, Codeisan, Perduretas de C., Termalgin, Codipront,

Darvon, and it goes on and on and on. So the list of drugs, and it

really does read like a virtual candy store of narcotics, could cause

a lot of problems.

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So let me ask both Ms. Behrens and Ms. Egan, I imagine both

of you talked to a number of State and Federal regulatory officials

about the kind of drugs you were able to access when you were

doing your reports. Could each of you elaborate a little further on

what the response was by those agencies? I take it that you didn’t

feel those agencies really had their act together and that they were

able to communicate to you and the news media, and you are the

ones going to be telling the public what is going on, that they really

had come to grips with how they could control these controlled substances.

Let me start with Ms. Behrens.

Ms. BEHRENS. That is exactly the response we got. We talked

with someone from the Department of Consumer and Industry

Health Services in Michigan, and they seemed to have the best grip

on it. But they were focusing more, like you were saying, on the

drugs that were narcotics, that they were concerned that people

may be able to get narcotics. What we focused on was Viagra and

didn’t test any other drugs in our series. But when we talked with

some State officials, that was the concern a little bit more than the

narcotic drugs that might be available.

Mr. KLINK. I think the committee has found the same thing.

Ms. Egan?

Ms. EGAN. The agencies we talked to were definitely concerned,

but they didn’t seem to have anything in place to go after right

then and there. They didn’t seem to be up to speed on it, as I had

said. The FDA gave us a news release from 1992 talking about

mail order drugs when we brought this to their attention. So I

just—we couldn’t find anybody who said yes, this is who is in

charge, this is what we are doing about it, this is what needs to

be done. They said it was just such a new problem that nobody

knows.

Mr. KLINK. Some have argued that the on-line pharmacy industry should be able to be self-regulating. Let me ask first Ms. Stovall

and then each of the reporters your opinion of that. Have you seen

evidence that they would be able to be self-regulating?

Ms. STOVALL. Absolutely not. We wouldn’t want that any more

than we would like regulation lifted on pharmacies that are on

Main Street or physicians on Main Street. Regulation needs to happen in the way that we do now, but not just to regulate through

the Internet.

Mr. KLINK. Reporters?

Ms. BEHRENS. Well, I interviewed someone from one of the online pharmacists and that was exactly his opinion, is that they can

self-regulate.

When I said, but how are you prescribing to—why are you prescribing to a dead man? He said, that shouldn’t have got by. I don’t

know how that got by.

I asked him, what would be your concern if a teenager ordered

Viagra or any other drug over the Internet? And his response was,

teenagers don’t have credit cards. My response to him was, my

grandfather didn’t have a credit card either.

As far as an opinion on—obviously, from our report it simply—

there are no regulations. But I am not here to give an opinion on

whether there should be or shouldn’t be.

26

Ms. EGAN. Likewise, I can’t give an opinion either, but I feel that

from what we found and the experts we talked to, that the biggest

problem was without a prescription and that it was getting into the

hands of children, and that the experts we talked to had a real

problem with that, with the danger that is involved with so many

kids able to get on the Internet. It is so easy for them to do this,

and it was so easy for us to do this.

Mr. KLINK. Mr. Chairman, I see the red light, but I would point

out, of the 200 sites we found and with the 400 sites that we are

being told by the National Boards of Pharmacy are out there, there

is no sign that any of these sites—that few of them, anyhow, have

done any kind of self-regulation. So I think we need to look further

into this.

I yield back my time.

Mr. UPTON. Thank you.

I would note that my dad used to be in charge of consumer affairs for Whirlpool and helped develop the first 800 number; and

the first question on the checklist when something was wrong was,

is it plugged in? And it is now plugged in.

I recognize Mr. Bryant.

Mr. BRYANT. Thank you, Mr. Chairman. I think we have an outstanding panel here, and I appreciate the contribution you have all

made.

Ms. Stovall, good to see you again today on another matter.

I think it was mentioned maybe in the testimony of Ms. Yui or

Mr. Michel, one, that we have to be careful and remember in going

through all this very important debate that there is a difference between using an on-line pharmacy to fill a prescription legitimately

and the misuse of the system through illegally using that system

to dispense drugs, legal drugs, over the Internet. I think it is important that we remember that. Because I think, for the most part,

the people involved in this are honest and legitimate. But, again,

it is the minority out there that are doing bad things and that are

making a lot of money. And certainly profit is why they are out

there in any illegal trade, whether it is this type of trade or anything else.

Ms. Stovall, I think you suggest some good ideas, and I am particularly intrigued by the thought of some sort of seal of approval

that would be on the site. Then I thought, well, of course, they

could make one up and counterfeit that very quickly. But that

would have to tie hand in hand with some type of State registration, with numbers and locations where people, real people, can be

identified and found, and periodically these things could work together in some sort of network, I would think, that could give us

a little better assurance.

Ms. STOVALL. I think that is exactly right, Congressman, and

that is what we would advocate.

Right now, there can be a pharmacy in the neighboring State of

Missouri, for example, that is licensed to do business in my State,

and that can be lawful. But they do have to be licensed, have to

be approved by the Kansas Board of Pharmacies. So pharmacies in

other places that are selling over the Internet can indeed be lawfully engaging in business, but they have got to register, got to give

27

that information that you have talked about. So I think you are

right. They can partner really well.

Mr. BRYANT. I think to the extent we are talking about drugs

that are regulated when they are sold in pharmacies in States by

the States, that as much as we can, without interfering with the

flow of commerce, replicate that on the Internet for things like

drugs—I am not talking about you have to get licenses for everything you sell over the Internet. But I think in an area as important as this, we have to do that.

You mentioned you feel like, as a State Attorney General, you

are armed sufficiently right now, but you suggest perhaps some

way to better assist you in working interstate, with other States.

Would something in the nature of a uniform act maybe giving State

attorneys generals the ability to work together across State lines—

would a uniform act or something like that——

Ms. STOVALL. I don’t know that we even need to go that far. I

think, for the most part, attorneys general are pretty satisfied with

their own commercial codes or their own consumer protection codes

rather that they deal with now for non-Internet kinds of fraud. So

those tools can apply.

What I referenced was the ability for us just to be able to go to

Federal Court, and if I were to go to Federal Court in Kansas City

and get an injunction against a company that was doing business

in my State but in 30 other States, we would be able to enjoin

them by that one action and stop them from distributing the drugs.

So that would be more of a help in my view than a model code.

It doesn’t mean there isn’t some benefit to it, but it is not anything

we have thought would be necessary.

Mr. BRYANT. Let me close my portion of this by stating that, in

keeping this distinction out there between people who are legitimately and honestly doing business, I want to, with unanimous

consent, introduce into the record a news release and two additional pages accompanying that news release from Pfizer Company,

who everyone knows is a maker of Viagra and many other fine

products, and also who has a distribution center in my district, by

the way, what efforts they are making to work with the Federal

agencies, the State agencies, such as Kansas, the professional associations, the pharmaceutical associations, as well as using the

courts and litigation lawsuits to enforce trademarks and things like

this, to assist in this effort. I would like to make that a part of the

record.

Again, I would commend all of the companies—all the legitimate

companies out there who are working hard and together with other

people working hard to solve this, what can be a very difficult problem. I yield back my time.

Mr. UPTON. Without objection, it will be made part of the record.

[The information referred to follows:]

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Mr. UPTON. Mr. Stupak from Michigan.

Mr. STUPAK. Thank you, Mr. Chairman.

I apologize for being a few minutes late. I was at the Health and

Environment Subcommittee. Senator Levin from Michigan, of

course, testified there, so I had to be there. But I certainly enjoyed

the tapes and the testimony of our witnesses.

I am sure Pfizer and others are trying to do what they can to

stop this, but, Mr. Chairman, if I may, it reminds me a little bit

like Yogi Berra says, it is deja vu all over again. Here we go. I love

Yogi Berra, but I don’t like what is going on on the Internet.

Go back, this subcommittee, a number of years ago, Mr. Chairman, and you were part of it, we spent years investigating the

issues of drug counterfeiting and drug diversion; and those investigations ultimately led to the Prescription Drug Diversion Act

under the leadership of John Dingell. And we had all these assurances it wasn’t needed, yet we spent time investigating.

Our investigation back then revealed that—all manner of dangerous activities that directly threatened the lives and health of all

Americans, and that is what we have going on here today.

All manner of prescription pills and tablets back then were removed from their required packaging and resold into a black market estimated to be about $500 million annually. Liquid prescription medicines were removed from their lawfully labeled packaging

and sold in containers such as used pop bottles. In 10 separate incidents substances were sold to Americans as prescription drugs that

were simply counterfeit. The packaging was duplicated perfectly,

but the drugs were not, just like we saw in Ms. Egan’s tape. Two

million fake birth control pills were sold in this country from overseas. Approximately half of those birth control pills contained no

active ingredient whatsoever.

In another case, thousand dose bottles of prescription pain reliever in packages and with labels indistinguishable from the real

thing contained aspirin as the only active ingredient, endangering

the lives of anyone with a fairly common allergy.

Mr. Chairman, I don’t want to see us do this, repeat the same

mistakes that were made in the past. We are seeing it all over

again, just a new forum for counterfeiting, for black marketing, for

hoodwinking the American people.

Mr. Chairman, we started this investigation in January. There

were 26 web sites. There is close to 400 now. So from January, 26

to close to 400 right now.

Everyone has come here and told basically their story, and I

agree there may be some legitimate web sites out there, but of the

400, I can’t think of more than two that we have found. So there

is 398 out there still selling and trying to pull it over. As long as

you have your credit card, you get what you want.

So as we take a look at this, Mr. Chairman, I hope we don’t

make the same mistakes. I hope we go at this aggressively, and we

really get at the crux of the problem.

I guess as we listen to all this—I know, Ms. Yui, you are a very

caring person and want to do what is right for your children and

all that. You talk about buying on the Internet and the benefit. I

agree there are some benefits there. But how do you determine

32

whether you are getting safe drugs, legitimate drugs, for your children? How do you know that, if there are 400 sites there?

Ms. YUI. You don’t know. I did say that I do rely quite a bit on

the media. I do read quite a bit. And I would look for companies

that have been covered by consumer reporters. I think it would be

of great value to have some sort of Federal or State insignia or perhaps a society of doctors—a Federal society of doctors that would

approve a site. I don’t know if they would want to get into that liability issue.

But I think with any product you buy over the Internet there is

that risk that you run. You may not be with a legitimate site. And

you need to hold off as a consumer and wait to see which are the

sites that survive, which are the sites again that are covered by the

press and which you hear about.

Mr. STUPAK. Have any of these companies you purchased from

ever contacted you to make sure you are who you say you are and

you have a prescription for the medicine?

Ms. YUI. Unfortunately—and this is very new to me—my health

care plan does not cover—does not allow me to purchase on-line

and I would only do it for convenience. Until it is convenient for

me, and I am also hoping through health care plans signing on to

some of these sites or affiliating with some of these sites, that is

my protection. If the health care plan says they are legitimate, they

allow me, cover me, allow me to use my copay payment to pay on

it, which is still rare, unfortunately, for consumers.

Mr. STUPAK. You have no way of knowing whether it is legit,

what you are getting? They don’t double-check with you?

Ms. YUI. I would assume that if my health care plan has accepted the company, that they hopefully have done that for me, just

like they have done with the doctor.

Mr. STUPAK. Well, do you order it, or does your health care plan

order the drugs for you?

Ms. YUI. That you order, but my doctors prescribed them. I

would never order something that my doctor hasn’t prescribed, just

like I wouldn’t at any——

Mr. STUPAK. How do you know what you are getting is what you

ordered? How do you know what you are getting over the Internet

is what you ordered, what your doctor prescribed? Do you have any

way of knowing it is——

Ms. YUI. I guess I would have no more way of knowing than if

a major chain pharmacy or any pharmacy has put the right pills

in the bottle. I am trusting. That is true. I think any consumer you

have to assume—and it would be, as I said, be of great value to

know—have something that alerts a consumer that the FDA or

State regulatory body and also maybe some professional groups

have checked out this site, they are legitimate, and I think that is

true of probably any consumer product that is sold on-line.

Mr. KLINK. Would the gentleman yield one moment?

The difference I think—Ms. Yui, you said you have no difference,

no better way of knowing if it is a legitimate drug that you were

prescribed than if you go to the corner pharmacy. The difference

is the corner pharmacy has a license on the wall from the State,

and they are inspected. These 400 sites on the web, there is no eviVerDate 13-MAR-2000 09:18 Mar 20, 2000 Jkt 010199 PO 00000 Frm 00035 Fmt 6633 Sfmt 6601 E:\HEARINGS\58498.TXT pfrm02 PsN: 58498
33

dence that they have been licensed. There is no evidence that they

have been inspected. We don’t know where the drugs come from.

So from the perspective of the corner pharmacy, we know who

made the drugs. There has been a chain of custody and control of

those medications. We don’t know about that with the Internet

pharmacy, because they are dropped off via the mail, UPS, Federal

Express. We don’t know where they came from. It is like they were

dropped out of the sky. As Ms. Egan said, dropped on the porch.

Anyone could grab them.

Ms. YUI. That is what I said.

I certainly appreciate that regulating this is a daunting task for

Congress, for regulatory bodies. I don’t know how you can do that.

I don’t know how you regulate Internet commerce. It is full of problems. But I did order—for instance, I was on a health care plan

once that I was able to order prescription drugs through the mail,

and it was wonderfully convenient.

Mr. STUPAK. From your health care plan?

Ms. YUI. Yes.

Mr. STUPAK. Have you ever gone on the Internet and ordered?

Ms. YUI. I have not been able to. My health care plan doesn’t

allow me to, and I am not going to pay out of pocket for it.

Mr. STUPAK. I agree——

Ms. YUI. I have done research on the Internet, but, no, I haven’t

been able.

Mr. STUPAK. Some of these are great. Like this one here has a

very nice-looking doctor here that really I would like to trust him,

but you can’t. There is not even a phone number on here to call

this nice-looking doctor to see if you are getting what you want.

How do you check it out?

Ms. YUI. I wouldn’t do business with that site. You have to be

smart as a consumer. I would also talk to my doctor. I think doctors play a great role in this. I think doctors need to be educated

about what is out there. And doctors can say to you, you know, this

is a good site; this isn’t a good site. I think there needs to be consumer public education and education of professionals.

Mr. STUPAK. You have got to be smart. Our reporters were very

smart. They put down ‘‘Cat,’’ ‘‘Dog,’’ ‘‘Dead Person’’ and ‘‘person

who shouldn’t receive it,’’ but the person filling on the other side

sent it anyway. Once they got their money, they didn’t care how

smart, how trusting, or what your health condition was. All they

wanted was your money.

Ms. YUI. It is alarming. That is what I am saying. It is a big job.

I don’t know how do it. But there are definite benefits to this.

Mr. STUPAK. I agree.

Ms. YUI. And the benefit is what we also need to protect.

Mr. STUPAK. I agree, and that is the dilemma we are in.

Mr. Chairman, if I may, I know I said there are two legitimate

sites that I have found. I understand there are probably more, but

I can only think of two that I have found in cruising the net to get

prepared for this hearing.

Thank you for your indulgence, Mr. Chairman.

Mr. UPTON. Thank you. That is why we have the best and the

brightest on this committee.

Mr. Bilbray.

34

Mr. BILBRAY. Thank you, Mr. Chairman. I hope through the hard

work of this committee we will be able to not only identify more

legitimate sites but be able to develop more.

One of the points that was brought up basically, I guess, by

Kathy about the issue about no prescriptions, you know, personally

if a dead man is getting drugs, you know, that is not my concern.

At least we know it is not going to hurt him. My concern, though,

is that you are talking about people gaining access to prescription

drugs without a prescription. I am going to be really interested to

hear from the third panel about how we want to justify that you

can’t go to the street corner, you can’t go to the grocery store, you

can’t go to a pharmacy and purchase prescription drugs without a

prescription. Do you want to make a comment about that?

Ms. STOVALL. To do that now would be illegal, just like to do it

over the Internet without a prescription is illegal. So it is illegal.

Laws are broken all the time. We know that. That is why we have

law enforcement. That is what I want us to continue to focus on.

Mr. BILBRAY. You hit on the issue about the fact it is not so

much we don’t have the laws on the book. It is like everything else

that technology has done in the last two decades. It is so far ahead

of government, we just haven’t figured out how to catch up yet.

Ms. STOVALL. The bad guys are always ahead of the good guys.

Law enforcement is always catching up and cleaning up after they

have committed crimes, and this area is no different, unfortunately.

Mr. BILBRAY. I think we need to admit, too, that the bad guys

are intermixed with a whole lot of good guys sometimes, and so we

definitely don’t want to just line everybody up. That is one of the

concerns I have, is when we get into this prescription issue—and

I would just, you know, say this to ask the questions—are we going

to reach a place to where consumers need scanners to be able to

transmit prescriptions, to be able to communicate that they do

have the prescription? How else are we going to do this?

Ms. STOVALL. I think either faxing it—if the patient has their

prescription and they fax it to this on-line pharmacy who then calls

the doctor’s office to verify or the doctor’s office just originally contacts your on-line pharmacy of choice to verify, I think that is what

has to happen to make sure we are dealing with physicians licensed in the State and pharmacies licensed in the State.

Mr. BILBRAY. In California, there has been enforcement of physicians selling over the Internet. In fact, I know of physicians who

have had their licenses temporarily revoked because they basically

violated the physician responsibility of oversight, I guess is what

it was. This is a new field of physicians saying, how much of the

oversight do I do? I think the outrage is when you get people actually asking for information, like you did in your reports, and then

ignoring the information, not using that in considering it. That

should be at least—what a ridiculous thing, of asking the consumer

to go through the whole rigmarole and then not consider it and

throw it out.

The question is, is that, when we go through this oversight, are

States enforcing this segment universally to physicians who are

using the Internet, or is it just a California-specific item you are

hearing?

35

Ms. STOVALL. Absolutely not just specific in California. Many

other States that have their healing arts board or their board that

looks at physicians and regulates them have been involved in it.

Mr. BILBRAY. In monitoring the Internet.

Ms. STOVALL. I can’t say monitoring the Internet as they look at

all the sites. But when referrals are made or things come to their

attention, most certainly administrative actions have been taken

against physicians in more States than just California and my

State of Kansas.

Mr. BILBRAY. California has so many public employees that we

get them to do something every once in a while.

Ms. STOVALL. You have a lot of physicians, too, so there is a lot

of opportunity there.

I would say, if I could, AMA has very much spoken out against

the practice you have talked about, prescriptions—just on-line prescribing medications for people they don’t know, haven’t seen and

have no connection with. So the physicians themselves also are trying to police them as well.

Mr. BILBRAY. You know, I want—when we talk about a lot of

these items, Mr. Chairman, I think we need to be careful as we use

brand names, the perception of danger or whatever. I mean,

Minoxidal used to be a prescription drug. There was a whole lot of

cold medicines that used to be prescription drugs. We shouldn’t

perceive that a prescription drug is automatically dangerous and

threatening. It is just many of them are going through a period before they become over the counter. So I think, in all fairness to a

lot of these name drugs and treatments, that we are going to see

a lot of things that was discussed here that are going to be over

the counter.

My big question is, when we get into this, and I am really speaking because other panels are coming up, this issue of how we do

oversight, I really believe and I would ask law enforcement this,

again and again and again, when we are talking about issues of

child pornography being sold to young people, accession to the

Internet and a lot of these other things, don’t you agree that somewhere down the line we are going to have to develop user ID capabilities so we know that the person who is hitting that keyboard

is actually the person who claims to be?

Ms. STOVALL. I won’t go so far as to agree with that. But I would

say that because of E-commerce and what is available, we do need

to find, I think, some way to restrict age access to certain sites. Because we know young people buy alcohol, they buy prescription

drugs, they get pornography, and that is a problem. I don’t for a

second pretend to have the technical capability to figure that out.

You are right. We need to protect our young people.

Mr. BILBRAY. On our committee we are just working on the electronic signature stuff. That is all the technology we are looking at.

I yield back, Mr. Chairman.

Mr. UPTON. Ms. DeGette.

Ms. DEGETTE. Thank you, Mr. Chairman.

Mr. UPTON. You need to turn your microphone on.

Ms. DEGETTE. Just like Ms. Egan, I have a 9-year-old daughter

who likes to order things on the Internet, and in fact she just orVerDate 13-MAR-2000 09:18 Mar 20, 2000 Jkt 010199 PO 00000 Frm 00038 Fmt 6633 Sfmt 6601 E:\HEARINGS\58498.TXT pfrm02 PsN: 58498
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dered the third Harry Potter book from England because you can’t

yet get it in the United States.

I look at all of these scores of web sites that people can get drugs

from, and it seems to me the problem is not really are you getting

drugs from a P.O. Box in Florida. We can take care of that. The

problem is, like this one, ‘‘Viagra, no prescription needed for Viagra

in Europe.’’ It says here a doctor’s prescription is recommended but

not required to order Viagra, because, it says, if you do not have

a prescription, we can refer you to one or more doctors who issue

them on-line. That must be the dog and cat doctors who do it.

Then here is another one, Pharma Group, issuing all kinds of

things from Europe—antibiotics, antidepressants, including Prozac,

on and on and on.

So my question is to Ms. Stovall. What you are saying is we have

the laws on the books and the States attorneys general can enforce

them. What is the mechanism you see for the States to be able to

enforce these laws against foreign companies, which I think is

probably our biggest problem?

Ms. STOVALL. Again, not just State AG’s but the regulatory agencies in States as well as the Federal agencies, too. It is just like

when we deal with any other issues over the Internet or otherwise

when the companies are not located within the continental United

States. Getting them is difficult. There isn’t any question when

they are foreign companies about that. But what other kinds of

laws can be initiated to help us, I don’t know, because it is illegal

now for them to do those things.

Ms. DEGETTE. That goes to my next question. You say that you

are enforcing your fraud laws, and that is good, and there may be

some fraud involved. But if, for example, this Viagra company, if

they actually claim to have doctors taking the medical history and

issuing a prescription, then I don’t quite understand how a fraud

law would be broken in that case?

Ms. STOVALL. It is deceptive and unconscionable. It is deceptive

because they say they have a physician who is going to provide you

a prescription.

Ms. DEGETTE. What if they do?

Ms. STOVALL. They are not doing it pursuant to medical standards, which is that you have an examination and you know the actual history of the patient.

Ms. DEGETTE. Let me ask you this. Of the three cases you say

you have pending right now——

Ms. STOVALL. Six.

Ms. DEGETTE. Of the six cases you have pending, how many of

those are involving overseas operations?

Ms. STOVALL. None of them that I am aware of.

Ms. DEGETTE. That is going to be, I would think, an attorney

general’s problem, how do you find that person and bring them into

your local jurisdiction—especially—well, it is worse with the Internet, because there is no place from which they sell these drugs.

They are selling them over cyberspace. That is a law enforcement

issue.

Ms. STOVALL. Mail order fraud is that way. Child pornography

is that way. It is difficult when they are overseas, no question.

37

Ms. DEGETTE. Let me follow up a little bit with our reporters,

because a lot of the big issues we have got here seem to involve

big-name-brand drugs—Viagra, other kinds of drugs like that. Let’s

start with Ms. Behrens. Pfizer makes Viagra. My question would

be, assuming the cat and the dog and the dead person and everyone else are getting real Viagra, what is the responsibility of the

pharmaceutical companies to work with these mail order places to

restrict improper use of their product?

Ms. BEHRENS. I interviewed someone from Pfizer, and the response I got was they are aware of the problem and concerned

about the problem, but the answer I got wasn’t really an answer.

They were saying that they don’t directly distribute to the pharmacies that are selling these. They distribute to someone in the

middle, a warehouser, and then that is where the pharmacies are

getting the Viagra.

Ms. DEGETTE. Let me follow up with Ms. Egan. Do you think

that the drug manufacturer should keep a closer control over where

their products are going?

Ms. EGAN. I don’t feel like I can really answer that. I talked to

some people from Merck and some of the other drug companies.

Likewise, like Christine said, they were very concerned, and they

want to get a handle on this, too, is what they had told us. They

are launching investigations as well. But I don’t feel like I can answer that question.

Ms. DEGETTE. Mr. Chairman, it might be useful at a future hearing to bring some of the drug manufacturers in and see if they can

work collectively with us to try to resolve this really increasing

problem.

Mr. UPTON. Good idea. Thank you.

Mr. Whitfield.

Mr. WHITFIELD. Thank you, Mr. Chairman.

Ms. Stovall, I am assuming—I didn’t hear your testimony, but I

would assume two legal theories that you pursue are that, one,

there is not a pharmacist licensed in the State of Kansas that

would distribute—that would prescribe these medicines on the

Internet; and, two, that the physician—I mean, that would not fill

the prescriptions. Two, the physician is not licensed to practice

medicine in Kansas. So those would be the two legal theories that

you would pursue?

Ms. STOVALL. That is exactly right, Congressman. That is why

we allege it is a violation, deceptive and unconscionable behavior

for physicians and pharmacies not licensed in my State to give

medication to patients.

Mr. WHITFIELD. I assume the second big problem would be finding out who you are going to serve your papers on for legal suits.

I did notice, just looking at part of your testimony, there has been

one doctor that you have not been able to find, but you have been

able to obtain temporary injunctions or restraining orders or something to prevent them from selling, is that right?

Ms. STOVALL. They have stopped selling into the State of Kansas,

and we have enjoined them from doing that. Many of their web

sites now say, if you are a Kansas patient, don’t call us.

Mr. WHITFIELD. I was reading an article not too long ago that

there was a web site that came out of Bogota, Colombia, that was

38

selling home abortion and female self-sterilization kits. The way

the FDA determined they didn’t have authority over this company

was because it was out of Bogota, Colombia, but the Internet provider had a service contract that whoever sold over this web site

had to meet all U.S. Laws, and in doing that they were able to stop

them from selling by going to the provider.

Have you all worked in that way?

Ms. STOVALL. We haven’t had to go that way. We maintain we

have got jurisdiction over any company that advertises in our State

on the Internet, and that is the sufficient nexus with my State to

get legal jurisdiction. So we haven’t had to go as far as that. But

we could, if needed.

Mr. WHITFIELD. Ms. DeGette was talking about if it was a company doing business in Bogota, Colombia, how would you obtain

process over them?

Ms. STOVALL. It would be very difficult to do it. But, nonetheless,

it would be illegal for them to have a market the State of Kansas.

So any time it is a foreign jurisdiction that presents problems.

There is no question about that.

Mr. WHITFIELD. I think you did indicate one thing that would be

quite helpful, if there was at least some sort of Federal requirement of an address and principal parties involved so that you

would always know who they are and where they could be located,

at least theoretically.

Ms. STOVALL. Theoretically, and where they are licensed, what

States they are licensed to practice medicine or pharmacology in,

and whether it is a series of State or Federal requirements. Either

way, we find that would be helpful.

Mr. WHITFIELD. Right now I guess there is no requirement like

that. Is that true?

Ms. STOVALL. I am not aware of any State that has that requirement. Again, States are trying to catch up with the Internet, so we

would introduce it in our next legislative session. I think we will

see lots of changes in laws because of the Internet.

Mr. WHITFIELD. But it seems like this contract that the Internet

service providers can require that all U.S. Laws must be met to

distribute a particular product would be one pretty effective way to

go after this, it would seem.

Ms. STOVALL. But assuming that company in Colombia signed

that contract and then violated it by selling a product that is not

lawful in Kansas, you still have the difficulty of going to get them.

Mr. WHITFIELD. But in this case the FDA informed the service

provider that it was violating the law by aiding the distribution of

an unapproved drug and that they could be held liable.

Ms. STOVALL. Right. I understand where you are headed. We

have had good success with Internet providers that have gambling

web sites as well, that when we have contacted them and said this

is illegal in Kansas, they stopped the service.

Mr. WHITFIELD. Right. Well, it is quite an interesting dilemma,

and a lot of public policy issues are there.

I see my time has expired, Mr. Chairman.

Mr. UPTON. Thank you.

Mr. Green.

39

Mr. GREEN. Thank you, Mr. Chairman. I apologize for being late,

but I have a committee meeting upstairs. I would like to ask unanimous consent to place my statement into the record.

Mr. UPTON. Without objection.

[The prepared statement of Hon. Gene Green follows:]

PREPARED STATEMENT OF HON. GENE GREEN, A REPRESENTATIVE IN CONGRESS FROM

THE STATE OF TEXAS

Mr. Chairman, I would like to start by thanking you for holding this important

hearing.

While the growth over the past several years in e-commerce has been a positive

experience for both consumers and retailers alike, in the past, this Committee has

tried to look at ways to balance the right of open access to the Internet with responsible safeguards to protect consumers from online predators.

To ensure this continued growth and prosperity, we need to provide appropriate

safeguards to protect consumers from online scams. An emerging area of concern is

the growth of on-line pharmacies who operate without regard for standard practices

of medicine.

Recent reports of a Viagra prescription being filled for a cat and broader concerns

that legitimate prescriptions are being filled inappropriately, underscore the fundamental need for action.

At the same time that this Congress is attempting to reduce the cost of prescription drugs for seniors, we have a responsibility to ensure that the cheaper alternatives are safe and effective.

In my home state of Texas, seniors frequently travel to Mexico to purchase prescription drugs at below-market prices. Unfortunately, the drugs they purchase in

Mexico are unregulated and therefore, potentially harmful.

On-line pharmacies present not only this problem, but the additional fact that it

is nearly impossible to regulate the Internet.

While I do not support regulation of e-commerce as a matter of practice, there are

steps that can be taken to improve the system before the drugs are sent to the consumers. First, we should make sure pharmaceutical wholesalers are only selling their

products to legitimate and credible pharmacies.

This means you can’t send thousands of pills to someone .just because they are

willing to pay for them.

Second, the FDA or FTC should help consumers navigate the maze of online pharmacies by highlighting both the good and bad players in the industry.

While we can and should pass safeguards to guide online pharmacies, we have

to recognize that enforcement of these guidelines will be nearly impossible.

However, by educating the public and highlighting unethical behavior, we can

hopefully reduce the number of individuals who are victims of online scams.

Mr. GREEN. I think the first panel we have—and, one, I want to

welcome you. My home is in Houston, and particularly in Texas

what we see is my senior citizens drive from Houston to the border

to buy their prescriptions. They will come back across, and they

have a limit of the 30-day supply or something like that. I know

from the testimony of Mr. Michael, for seniors, it is much cheaper

on-line.

The frustration we have as policymakers, whether it be in Austin

or Kansas or Texas, in trying to regulate it yet still allow for the

opportunities that economies of scale benefit. The frustration, I

guess, we have because they are violating State law or maybe Federal law on postal regulations, to use the U.S. Mail.

On Monday, we are going to debate a bill on alcohol sales. You

know, people are buying wine over the Internet, and yet each State

has different laws and—although we all have the same drinking

age, I guess, now. But how do you check someone’s drinking age

over the Internet anymore than you can do—my first question, I

guess, Ms. Stovall, do you know of any other States that are being

as aggressive as Kansas is in dealing with this?

40

Ms. STOVALL. I would certainly like to say we are the lead, but

that is from my own desire to brag. But my neighboring State of

Missouri has filed suit against a company. Texas is doing a lot with

their administrative agencies as well. There are other State AG offices very close to filing and many administrative agencies that already have pursued administrative actions.

Mr. GREEN. Okay. Anybody on the panel, is there a way we can

balance it? Because, again, people in the northern part of our country go to Canada to buy their prescriptions, and obviously in the

western or southern part, you go to Mexico. Is there any way we

can balance it and still have the savings sometimes that our seniors literally have to take advantage of to be able to benefit from

their own prescriptions?

Ms. STOVALL. I think we just enforce the laws that are on the

books. There are legitimate pharmacies now that prescribe over the

Internet and do so within the full parameters of lawful activity,

and we just need to be able to have the resources to enforce the

law against those that don’t. Then we do get the benefits of good

service when it is a licensed pharmacy. Then you know it is a legitimate drug that has been approved by the FDA being dispensed,

so the questions raised earlier would be resolved, and then that is

how I think you get those benefits.

Mr. GREEN. So you are not suggesting we need any new Federal

laws to deal with this, just the resources to apply current law, both

State and maybe Federal?

Ms. STOVALL. The only Federal help I think that would be of assistance is if there is the ability of a State AG to file in Federal

court and get nationwide injunctive relief, like we have with telemarketing. That would be the only thing at this point I see that

might be particularly helpful.

Mr. GREEN. Any response from any other witnesses?

Ms. EGAN. I think one of the problems we saw was you order

from one company, it seems to get shipped from another company,

and then there is like another company. It is not one company. It

comes from Germany, Japan, Hong Kong, you name it. So it is like

a shell game.

Mr. GREEN. And you are——

Ms. EGAN. It makes it hard to get a handle on who it is you are

actually seeking.

Mr. GREEN. Much less the location. Of course, if they are within

the United States, you have that ability. It is tougher when you go

to Colombia, Germany, Japan, wherever else.

What responsibilities do you feel like the major manufacturers—

because in the testimony in the news media, you know, again, a lot

of our pharmaceuticals that are in the United States are the ones

we are actually buying from overseas. Do you think there is a responsibility of the drug manufacturers with regard to the pharmaceuticals? Anyone?

Ms. STOVALL. I think from a practical standpoint those major

manufacturers know it is in their own best interests to try to control the flow of their product. As Congressman Bryant indicated,

Pfizer has stepped forward to our office and said we want to help

and be involved in this process. I think from a liability standpoint

that is what they need to do to protect themselves.

41

Mr. GREEN. Thank you, Mr. Chairman. I thank this panel.

Mr. UPTON. Thank you.

I would like to say a number of members have a couple of additional questions, so we will proceed along that line. And, hopefully,

not all members will have questions; and those questions will, in

fact, remain at just a couple.

I have—I guess as I have listened to the testimony and to try to

sum things up, this is a very perplexing problem. You have a drug

manufacturer that might be headquartered in one State. Their actual manufacturing site may be in another State. You have got an

individual in whatever State using the Internet, which is national.

You have got a physician who may or may not be licensed in this

country but perhaps from another State, and you are using an

interstate carrier, whether it be the Postal Service or Federal Express or UPS.

Whereas the system has worked for decades and decades under

State regulation and authority, as physicians—and physicians are

licensed differently in different States with different regulations

and different information that is allowed to be dispensed to the patient, you have got a question of, which laws are you enforcing? Are

you enforcing the State of Kansas laws or the State of Michigan

laws or the State of Pennsylvania laws? And you have got a number of probably unscrupulous characters, as was illustrated in Mr.

Stupak’s exhibit, of some over 300 Internet providers that may not

be licensed or regulated at all.

So, Ms. Stovall, when you say you don’t really want Federal legislation because the Kansas legislation—and all of a sudden, if you

are from Kansas and they have now got that little disclaimer, if

you are from Kansas, don’t bother to register, reminds me of some

of those sweepstakes winners. If you are from, I don’t remember

what State it was, but don’t bother to apply. That doesn’t always

work.

If you want to go to Federal Court, that is one of your comments

here, you would like the access to Federal courts. Again, it is sort

of difficult to go to Federal Court perhaps without a Federal law

versus a State law that might be on the books. So it really is a very

perplexing problem.

You know, as we sort of struggle with clear abuses, you know,

as we talk to the pharmaceutical manufacturers, they distribute to

other wholesalers, and it is sort of a hands-off operation. That is

how the system works. And, obviously, they are in the business of

doing billions of tablets or whatever of a variety of different things,

as Mr. Klink illustrated. You would have to have almost a pretty

radical approach to the way they currently distribute their medication, which is, I think, most observers would say we have a better

system in this country than just about anyplace else in the world.

So the system, that system, isn’t necessarily broken, but with the

advent of the Internet, yes, we do have problems, whether it is

Phred the dog or Tom the cat or someone who died 20-some years

ago, let alone any other wild-eyed example that I think we can

come up with.

So I would just appreciate maybe further input from you. I will

be talking to my State Attorney General to see what her thoughts

are as she interacts with her colleagues, including you, in terms of

42

what we can do to particularly help the States enforce their laws

in a more reasonable and careful manner.

I yield to Mr. Klink.

Mr. KLINK. Thank you, Mr. Chairman.

I just wanted to read into the record, this is the FDA Week from

this week, July 23: An unapproved HIV test kit highlights problem

with Internet promotion. Highlighting the recent difficulties FDA is

having in regulating methodical products promotioned on the Internet, FDA recently issued a warning to consumers about unapproved HIV testing kits being sold on-line. This test was found to

indicate false negative results, FDA said. In other words, blood

samples from known HIV patients came back as negative. FDA

sources say this is not an unprecedented case and may highlight

the problems that FDA is facing with the new medium.

It goes on to say, one of the ways that FDA gets involved in these

cases, whether it is Internet sale of pharmaceuticals or these test

kits, is you have to get a complaint from somebody that feels that

they have been ripped off. It is like it is okay to sell heroin on the

street corner or crack cocaine. We will only send out the drug officers after one of the customers complains.

Think about it. That is literally what is happening. The FDA, the

Federal Trade Commission, seem ill-equipped to deal with this.

They are going to testify a little later on and tell us they have

these task forces. My question is, what have these task forces accomplished?

We want to work with the States. I am willing to bend over backwards to preserve States rights, but there has to be some universal

method of dealing with this problem. We haven’t gotten it.

This is a great panel. You all have been great witnesses. We

haven’t gotten there yet. I am really thankful for this beginning

hearing.

The question that we have is, General Stovall, I will start with

you, it appears that if we—at a very minimum, we had some regulations that said, all right, tell us where you are located, where

your offices are, on the web site, they have to be there. Where is

your web site located? Where you operate from? Where is your

warehouse? Who are your doctors? Who are the principals? Who licenses you? By what authority are you selling these medications?

And if you are not doing that, then there should be authority, either the States and the Federal Government working together, to

shut those web sites down. That seems to me to be a start. I am

asking your opinion.

Ms. STOVALL. Absolutely. That was in my testimony as well. I

agree with you wholeheartedly, that either all the States or the

Federal Government need to make those requirements for disclosure.

Mr. KLINK. Well, we began, as Chairman Upton said, 7 or 8

months ago looking at this issue. For the last couple of months, we

have been drafting a bill to do exactly that.

We would like to work with you, General, and with other State

officials; and we have sent staff, majority and minority staff, across

the country. We have been stymied by the fact that it appears that

the States are overwhelmed by this.

43

One State official told us, and this is not negative toward the

States, we don’t have time to sit and play on the Internet all day.

That is the way they viewed it. I understand that.

But it is a serious problem, and that is what it would require.

It would require somebody actually sitting there on the Internet.

And we are finding, as I said in my opening statement, I think, 30,

40 different sites every week. So it is very difficult to do that.

Does that begin to get us then—let me ask Ms. Egan and Ms.

Behrens—get us where we need to be, if at least those sites are

then held accountable for who operates them, who they are licensed

by, where they are located? In other words, some disclosure of who

is responsible, that we could begin to determine the chain of control

of these controlled substances? We are then doing it by law.

Ms. EGAN. I think it certainly gives consumers a better idea of

what they are dealing with, and they could call a board of pharmacy and run that by them if they had a license and number and

name. Even if somebody put in a fake one, they could check it. If

they wanted to be that diligent, a consumer could do that.

Mr. KLINK. You know, I am sure some of you have heard about

this, there is the VIPPS program, which is voluntary. The Board

of Pharmacy is not a law enforcement agency. The question I would

have is, how often would they go out and inspect, and if they inspect and found out something was wrong, then what do you do?

Somebody on the majority side mentioned the fact that you could

counterfeit the VIPS’ Good Housekeeping Seal of Approval. We all

recognize that. So the question here is whether or not there is a

role to be played between those of us in the Federal Government—

and, again, somebody else mentioned a floor, not a ceiling. We can’t

have some States taking action and some not, a patchwork of one

set of regulations in one State, one set in another, when these

things are not only, as the Chairman said, sold across State linings

but are international as well. How can we have the States—and I

would ask General Stovall, how would you be prepared from the

State of Kansas to send your people out to other nations and go to

New Zealand, Singapore, China——

Ms. STOVALL. We have a lot of volunteers.

Mr. KLINK. When you get there, what authority do you have to

take action?

Ms. STOVALL. We don’t. That is the difficulty, and what I mentioned earlier. For companies doing business on foreign soil, it is

very difficult for us. There isn’t any question about that.

Mr. KLINK. Well, we are looking forward to drafting our bill, and

we would like to work with you before we do to make sure that,

again, we want State input, make sure that we are working together with the States on this issue, but we think that there is a

role hand in hand for the State and Federal Governments to work

together.

Ms. STOVALL. The National Association of Attorneys General

would be delighted to work with the committee on that.

Mr. KLINK. Thank you, Mr. Chairman.

Mr. UPTON. Do other members have pressing questions that

would otherwise prevent us—thank you very much, members and

panel, appreciate your very good testimony. We look forward to

working with all of you, and we may have additional questions that

44

we may forward on, particularly for those members that are at

other subcommittees, and if you would respond to that, that would

be terrific.

You are now formally excused. Thank you.

Our second panel consists of Dr. Janet Woodcock, the Director for

the Center for Drug Evaluation and Research at the Food and

Drug Administration; Ms. Jodie Berstein, Director of the Bureau of

Consumer Protection in the Federal Trade Commission; and Mr.

Ivan Fong, Deputy Associate Attorney General, Department of Justice.

If you could take seats at the table, and before you sit down, you

might have heard me tell the first panel that we have a long tradition of taking testimony under oath. Do any of you have objection

to that?

Hearing none, under House rules, you are allowed to have counsel if you desire. If you would raise your right hand.

[Witnesses sworn.]

Mr. UPTON. You are now under oath. Your testimony is made

part of the record in its entirety, and we would like to ask you, if

you can, to summarize your testimony in 5 minutes or less.

Mr. UPTON. Ms. Bernstein, we will start with you.

TESTIMONY OF JODIE BERNSTEIN, DIRECTOR, BUREAU OF

CONSUMER PROTECTION, FEDERAL TRADE COMMISSION;

IVAN K. FONG, DEPUTY ASSOCIATE ATTORNEY GENERAL,

DEPARTMENT OF JUSTICE; AND JANET WOODCOCK, DIRECTOR, CENTER FOR DRUG EVALUATION AND RESEARCH,

FOOD AND DRUG ADMINISTRATION

Ms. BERNSTEIN. Thank you, Mr. Chairman, members of the subcommittee. I am pleased to be here to present the testimony of the

Federal Trade Commission and to work with the committee on

these important issues. The Commission’s been monitoring the

marketing of health care products and services on the Internet and

pursuing law enforcement in this area for some time. The agency’s

conducted enforcement and consumer education initiatives to

combat——

Mr. UPTON. If you could put the mike just a little closer, there

is a little noise coming from the hallway. That would be great.

Ms. BERNSTEIN. [continuing] to combat on-line health fraud and

is leading the effort to protect consumer privacy on-line. We are

monitoring on-line pharmacy Web sites as well, conducting investigations, and making referrals to other State and Federal authorities as appropriate.

Prescription drugs available through on-line pharmacies offer

consumers convenience and value. You have heard that a lot this

morning, and we would reiterate that. Many on-line pharmacies

appear to operate the same way as mail order pharmacies do; that

is, in keeping with standards of State licensing authorities. Nevertheless, our review of the current practices of some on-line pharmacies and physicians that provide on-line prescription services indicate the potential for consumer injury is significant.

For example, just imagine the possibilities, and you’ve heard

some this morning, for harm when prescriptions are issued without

an adequate review of a consumer’s medical history or when unapVerDate 13-MAR-2000 09:18 Mar 20, 2000 Jkt 010199 PO 00000 Frm 00047 Fmt 6633 Sfmt 6602 E:\HEARINGS\58498.TXT pfrm02 PsN: 58498
45

proved drugs are sold to consumers over the Internet by overseas

pharmacies.

I know you have heard some of the anecdotes already, but we

have one that I thought I would share with you as well. Our staff

engaged in two mock on-line consultations in order to obtain the

prescription drug Viagra. They were people, not dogs or cats, but

nonetheless are illustrative. Although a number of factors were described in the medical history by our folks, and those medical histories should have raised serious concerns about the appropriateness of using a prescription for Viagra, such symptoms as bypass

surgery, obesity, family history of heart disease and no information

about other medications, a prescription was issued without question. Our staff were able to purchase Viagra on-line. Fortunately,

through careful investigation we were able to identify both the doctor and the pharmacy involved in the sale and refer them to the

relevant State and medical pharmacy boards.

The rapid growth in on-line sales of prescription drugs and the

increase in the practice of on-line prescribing occurring across

State, even international, borders present significant technological

logistical challenges to the traditional regulatory framework. State

medical and pharmacy boards have expressed concerns that their

existing enforcement tools are not adequate to police the on-line

marketplace. In many cases it can be difficult without extensive investigations to identify the name, location, State of licensure or

registration for the physicians, pharmacies and Web site operators

involved in the practices.

Our review of the 90 sites that Representative Dingell and Representative Klink sent us found—and we do have a visual—that

there are very few that are providing adequate identifying information, sometimes no more than a mail drop. As you can see from the

Pill Box that we’ve put in our graphic, this is what our review of

those sites found. We have tried to summarize it for you.

Seventy percent of the sites were registered to a U.S. Address,

although it was not easy to ascertain that. Forty percent provided

a physical address on the site. Eighty percent offered an on-line

consultation as a way to obtain a prescription, and most required

a consultation. Twenty percent sold prescription drugs without a

prescription, and only four sites appeared to require the patient to

provide a prescription from the patient’s own physician before

they’d sell the drug.

Although medical information is the most sensitive kind of personal information, and these are some findings we made on the

issue of privacy, none of the sites posted an adequate privacy statement describing what information’s collected, how it would be used

and whether it’ll be disclosed to third parties. Sixty percent of the

sites simply said that the information would be treated confidentially without saying how it would be used, and 40 percent of the

sites provided no notice, not a word, about how they would handle

the information from the consumers.

As to the identity of the prescribing physician or dispensing

pharmacy, virtually none of the on-line pharmacy sites provided

that information. Even when these parties can be located, it’s difficult and expensive for any State medical or pharmacy board to

pursue law enforcement against an out-of-State physician or pharVerDate 13-MAR-2000 09:18 Mar 20, 2000 Jkt 010199 PO 00000 Frm 00048 Fmt 6633 Sfmt 6602 E:\HEARINGS\58498.TXT pfrm02 PsN: 58498
46

1This written statement presents the views of the Federal Trade Commission. Responses to

questions reflect my views and do not necessarily reflect the views of the Commission or any

Commissioner.

macy, as you just heard from General Stovall, and we agree with

that, with her analysis.

The Commission can protect consumers that use on-line pharmacies by bringing cases against specific deceptive practices, and

we can and we have assisted other Federal and State authorities

in their investigatory work, but the FTC’s authority is limited and

may not fully address the important consumer protection issues relating to the appropriate standards for prescribing and dispensing

drugs traditionally regulated by the States. Based on our experience, we have recommended, and we do recommend and you’ve already heard much about it, that help for the State authorities in

their investigations is necessary.

We would hope the subcommittee, and it already has stated that

it probably will, consider legislative measures to mandate the posting of identifying information about physicians, pharmacies and

Web site operators. Very specific information is required, and I

won’t go through that because I believe, Congressman Klink, you

just identified the appropriate information.

We also would like to recommend that the subcommittee consider

whether other measures are necessary, and again, General Stovall

mentioned the FTC’s experience in the telemarketing area. When

telemarketing proliferated without a Federal statute, the same

kinds of interstate problems arose; that is, the States were able to

enforce within their own borders, but found the difficulties of stopping at the border to be a severe impediment. The Congress adopted the Telemarketing Sales Act which set a Federal standard and

for the first time authorized the States to pursue those claims in

Federal court.

We have worked very closely with the States, and in effect, we

have 51 cops on the beat instead of one. It has been a very valuable

experience from a federalism point of view, and we think the same

kind of response could be helpful here. Thank you for giving us the

opportunity to present our testimony this morning.

[The prepared statement of Jodie Bernstein follows:]

PREPARED STATEMENT OF JODIE BERNSTEIN, DIRECTOR, BUREAU OF CONSUMER

PROTECTION,

Mr. Chairman and members of the Subcommittee, I am Jodie Bernstein, Director

of the Bureau of Consumer Protection of the Federal Trade Commission (‘‘FTC’’ or

‘‘Commission’’). I am pleased to have this opportunity to review with you the Commission’s consumer protection activities relating to the practices of online pharmacies.1

I. INTRODUCTION

The Commission is well aware of the rapid growth of the marketing of health care

products and services via the Internet and has been actively monitoring and pursuing law enforcement in this area for some time. The agency, for instance, has conducted enforcement and consumer education initiatives to combat health fraud on

the Internet; has been a leader in protecting consumer privacy in the online medium; and is now monitoring online pharmacy websites, conducting investigations,

and making referrals to other federal and state authorities as appropriate. This

morning I will discuss our authority in this area, how the FTC’s role relates to that

of other federal and state authorities, and describe some of our enforcement efforts

and other activities to protect the online consumer from the deceptive marketing of

47

2 Cyberdialogue, Inc. (June 1999).

3 Id.

4We have received very few complaints about online pharmacies. In one complaint filed with

the FTC, however, a parent reported that her minor son had obtained Viagra over the Internet.

Part of the parent’s concern was the fact that her son had bipolar disorder, neurocardiac syncope, and was taking blood pressure medication at the time, clearly increasing the potential for

injury from using this drug. 5See, e.g., letters from the Connecticut Medical Examining Board, dated March 19, 1999 (‘‘the

difficulties of exercising jurisdiction over an out-of-state physician who does not have a Connecticut license in these circumstances are substantial’’); Louisiana State Board of Medical Examiners, dated January 29, 1999 (‘‘Regrettably, our investigations have revealed that those individuals who have advertised and dispensed Viagra without physical examination, have been

physicians licensed in states other than Louisiana and located beyond our jurisdictional reach.’’);

Board of Medical Licensure & Supervision of the State of Oklahoma, dated February 19, 1999

(‘‘Oklahoma law does require establishment of valid doctor/patient relationship and proof of

medical necessity for any type of treatment but obviously this Board has no jurisdiction across

state lines.’’); Tennessee Board of Osteopathic Examination, dated March 10, 1999 (‘‘Having jurisdiction over the issue is one thing; practically enforcing the situation is quite another issue.’’);

and State of Wisconsin Department of Regulation & Licensing, dated February 12, 1999 (‘‘Wisconsin does not have the ability to police this kind of activity all around the country.’’).

health care products generally, and prescription drugs specifically. I would also like

to identify what the Commission believes are the most significant challenges facing

federal and state authorities with enforcement authority over online pharmacies and

suggest possible solutions.

The Internet offers significant consumer benefits in the form of greater and easier

access to detailed health information, as well as more convenient, and often cheaper,

access to health care products and services. In 1998, 22.3 million adults in this

country sought health and medical information online, nearly 70% before visiting a

doctor’s office.2 The number is predicted to increase to 30 million by the year 2001.3

More and more often, consumers are turning to the Internet not just for health information but to purchase health care products. Unfortunately, the online medium

also provides an easy opportunity for irresponsible marketers to prey on sick or vulnerable consumers with potentially serious consequences to consumers’ health and

pocketbooks.

Like other health care promotions on the Internet, the availability of prescription

drugs via online pharmacies offers potential benefits to consumers, including convenience and value. Many online pharmacies appear to operate in essentially the

same manner as mail order pharmacies and in keeping with standards of state licensing authorities. Nevertheless, our review of the current practices of some online

pharmacies and of some physicians that provide online prescription services indicates the potential for serious consumer injury. Significant potential for injury exists

when prescriptions are issued without adequate review of the consumer’s medical

history or when unapproved drugs are sold to consumers over the Internet by overseas pharmacies. The Commission has limited anecdotal evidence of specific occasions where consumers have, in fact, received a prescription drug via the Internet

that would be clearly inappropriate or even dangerous because of the age, health,

or other drug use of the consumer.4

As the Subcommittee is aware, the rapid growth in online sales of prescription

drugs and the increase in the practice of online prescribing, both of which are occurring across state and even international borders, present significant technological

and logistical challenges to the traditional regulatory framework. State medical

boards and state pharmacy boards have both expressed concerns that their existing

enforcement tools are not adequate to police the online medium.5 In many cases it

can be difficult, without extensive investigation, to identify the name; location; and

state of licensure or registration for the physicians, pharmacies, and website operators involved in these practices. Our review of almost 100 sites provided by Subcommittee staff found that very few provided adequate identifying information.

Even when parties can be located, it can be difficult and costly for a state medical

board or a state pharmacy board to pursue law enforcement against an out-of-state

physician or pharmacy prescribing or dispensing prescription drugs inappropriately

via the Internet.

The Commission can play a role in protecting consumers who use online pharmacies by bringing cases against specific deceptive practices. The agency can also

assist other federal and state authorities in their investigatory work. The FTC’s authority, however, is limited and may not fully address the important consumer protection issues raised here. To a large extent, the practices that present the greatest

concerns involve issues relating to the appropriate standards for prescribing and

dispensing drugs, both of which have been traditionally regulated by the states. The

Commission suggests that the Subcommittee consider whether additional legislative

48

6 15 U.S.C. § 45 (a). In addition, Section 12 of the FTC Act prohibits the false advertisement

of ‘‘food, drugs, devices, services, or cosmetics.’’ 15 U.S.C. § 52. Under Section 4 of the FTC Act

the agency has jurisdiction over marketers based outside the U.S. border selling in the U.S.

market that violate Sections 5 and 12. 15 U.S.C. § 44. 7See Deception Policy Statement, appended to Cliffdale Associates, Inc., 103 F.T.C. 110, 174

(1984). 8 In fact, the Commission has challenged such claims in both the online context and in other

media. See, e.g., American College for Advancement in Medicine, Dkt. No. C-3882 (June 22, 1999)

(settlement resolving allegations respondent made unsubstantiated claims for effectiveness of

therapy using prescription drug for treating heart disease); FTC v. Pacific Medical Clinics, 1992-

1 Trade Cas. (CCH) ¶ 69,777 (S.D. Cal. April 8, 1992)(defendants misrepresented effectiveness

of prescription drug for treating obesity). 9The Commission has been very active in the protection of consumer privacy particularly in

the online context, as discussed below. The agency has also specifically challenged misrepresentations about the use of a consumer’s medical information, although not in the online context.

See, e.g., Equifax, Inc., 96 F.T.C. 844 (1980), rev’d on other grounds, 678 F.2d 1047 (11th Cir.

1982)(deceptive to represent, inaccurately, that medical information would be released only to

specified insurance companies). 10See Unfairness Policy Statement, appended to International Harvester Co., 104 F.T.C 949,

1070 (1984); 15 U.S.C. § 45 (n). 11See 21 U.S.C. §§ 351 et seq. 12See 21 U.S.C. §§ 353(b)(1); 331(a), and 333. 13Working Agreement Between FTC and FDA, 3 Trade Reg. Rep. (CCH) ¶ 9,859.01 (1971).

Under this longstanding formal liaison agreement the FDA has primary responsibility to regulate claims made in labeling and advertising of prescription drugs if those claims are made by

a manufacturer, packer, or distributor. See Working Agreement Between FTC and Food and

measures are necessary to address the unique characteristics of this medium and

ensure greater protections for consumers. Specifically, requirements for clear and

prominent disclosure of identifying information for the online prescribing physician,

the online pharmacy and the website owner, if different, as well as the states where

prescriptions will be dispensed, would greatly assist state law enforcement efforts.

We also recommend that additional consideration be given to assisting states with

extraterritorial jurisdiction issues.

II. SCOPE OF COMMISSION AUTHORITY

The Commission’s authority derives from the agency’s mandate to prevent deceptive or unfair acts or practices in commerce, pursuant to Section 5 of the Federal

Trade Commission Act (‘‘FTC Act’’).6 The marketing of prescription drugs online

would be deceptive in violation of FTC law if it involved a misrepresentation or

omission likely to mislead consumers acting reasonably under the circumstances to

their detriment. Thus, the Commission has authority to bring an enforcement action

where an online pharmacy makes false or misleading claims about the products or

services it provides.7 For example, the Commission would have authority to take action if an online pharmacy or website operator made false or misleading claims

about the safety or efficacy of the drug it was offering.8 Another example of a deceptive practice within the Commission’s jurisdiction would be the misrepresentation

by an online pharmacy of its privacy practices, for instance, false statements about

how the site collects and uses medical information about the consumer.9

The Commission also has authority under its unfairness jurisdiction to regulate

marketing practices that cause or are likely to cause substantial consumer injury,

which is not reasonably avoidable by consumers, and not outweighed by countervailing benefits to consumers or to competition.10 Although some parties have suggested that certain online prescribing practices by physicians may be so inadequate

as to be unfair, these practices raise difficult issues involving physician practices

that the Commission has traditionally refrained from regulating.

III. INTERACTION WITH FEDERAL AND STATE REGULATORY AUTHORITIES

As we have noted, many aspects of the online prescribing and dispensing of prescription drugs do not fall clearly within the agency’s traditional scope of authority

or expertise and have been the primary responsibility of other federal and state

agencies.

The other principal federal agency with authority in this area is the Food and

Drug Administration (‘‘FDA’’). The FDA has primary jurisdiction to regulate labeling

and advertising claims made by the manufacturer, distributor or packer of prescription drugs.11 In addition, the FDA has the authority to take action against the dispensing of a prescription drug without a valid prescription.12 Because the FTC and

the FDA have such closely related and overlapping authority over a number of products, including prescription drugs, the two agencies coordinate closely pursuant to

a longstanding liaison agreement.13 In fact, the Commission recently referred to the

49

Drug Administration, 3 Trade Reg. Rep. (CCH) ¶ 9,859.01 (1971). The agreement establishes the

basic division of responsibilities of the two agencies with respect to the regulation of foods, drugs

(both over-the-counter and prescription), cosmetics and devices. With the exception of prescription drugs, the FTC regulates advertising of these products, while the FDA regulates labeling. 14 In contrast, the Commission does address situations where medical professionals have made

false or misleading claims in advertising or other promotional literature distributed to potential

consumers about the efficacy, safety, cost or other benefits of the services or products they provide. Dr. Scott M. Ross, 115 F.T.C. 54 (1992) (consent agreement resolving misrepresentations

of safety, recovery period, discomfort of liposuction). 15See, e.g., attached letters from Alabama State Board of Medical Examiners, dated March

11, 1999; State of Colorado, Department of Regulatory Agencies, dated March 23, 1999; State

of Connecticut, Department of Consumer Protection, dated December 17, 1998; Government of

the District of Columbia, Department of Health, Office of Professional Licensing, dated March

5, 1999; Kansas Board of Healing Arts, dated January 5, 1999; Louisiana State Board of Medical

Examiners, dated January 29, 1999; State of Nevada, Office of the Attorney General, dated

March 25, 1999; New Mexico Board of Pharmacy, dated January 19, 1999; State of Oklahoma,

Board of Licensure & Supervision, dated February 19, 1999; State of Tennessee, Department

of Health, Health Related Boards, dated March 10, 1999; State of Wisconsin, Department of

Registration & Licensing, dated February 12, 1999.

FDA’s Office of Criminal Investigation two matters involving U.S. websites that

were offering prescription drugs without requiring prescriptions.

Many of the concerns expressed about online pharmacies relate to the practice of

physicians engaging in online medical consultations with consumers and issuing

prescriptions without any pre-existing doctor-patient relationship. The question of

when and under what circumstances, if at all, it is safe and appropriate to prescribe

medications without actually seeing a patient is difficult and raises issues that fall

beyond this agency’s traditional expertise.

The Commission has long refrained from challenging practices that fall within the

doctor-patient relationship, including communications between doctors and patients

about course of treatment decisions.14 The FTC does not have the authority to revoke an individual physician’s license or to enforce state licensing requirements. The

agency believes that judgments about the practice of medicine are better left to the

individual state medical boards, which establish standards of practice and oversee

the licensing of individual physicians. It is our understanding that many states currently prohibit the issuing of prescriptions based solely on a consumer’s answers to

an online questionnaire.15

Similarly, the licensing and regulation of pharmacies, like the licensing of physicians, has traditionally taken place at the state level by state pharmacy boards. The

Commission does not have authority to revoke a pharmacy’s license or to enforce

regulations relating to licensing of pharmacies. Again, issues about what constitute

appropriate practices by an online pharmacy are better left to the state authorities

with the relevant expertise.

While the Commission believes that state authorities should continue to have responsibility for enforcement of licensing requirements for physicians and pharmacies, the FTC has and will continue to provide assistance to those authorities in

individual investigations.

IV. SPECIFIC COMMISSION ACTIVITIES RELATING TO ONLINE PHARMACIES

The Commission believes its role with regard to online pharmacies is limited

under the current legal framework and that the primary responsibility should remain with the states and FDA. Within the scope of our authority, we have taken

a number of actions in this area: monitoring websites; conducting investigations;

and making referrals to other federal and state authorities. In addition, we coordinate many of our activities through an interagency working group.

Because there are many federal and state authorities with specific roles in the

regulation of physicians and pharmacies, it is critical that the various agencies coordinate closely. On April 26, 1999, an interagency working group, comprised of the

FTC, FDA, the Department of Justice (DOJ), the Drug Enforcement Agency (DEA),

and other federal and state agencies, met to consider the regulation of online pharmacies and other issues relating to the sale of drugs over the Internet. One of the

group’s tasks is to explore enforcement issues and potential jurisdictional gaps. One

follow-up meeting has been held and an additional meeting is scheduled for September 1999. The FTC will continue to participate in the meetings of this group and

to consult informally with appropriate authorities as specific issues arise.

Another important function of the Commission is that of monitoring the practices

of online pharmacy sites and using our Internet expertise to assist other state and

federal authorities in their enforcement efforts. The FTC has the technical capacity

to monitor and investigate Internet marketing and is continuing to upgrade our curVerDate 13-MAR-2000 09:18 Mar 20, 2000 Jkt 010199 PO 00000 Frm 00052 Fmt 6633 Sfmt 6621 E:\HEARINGS\58498.TXT pfrm02 PsN: 58498
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16The FTC has developed a unique concept known as a ‘‘surf day.’’ Together with other law

enforcement partners, FTC staff use common search engines to surf the Internet for a specified

period of time and send business education messages via e-mail to websites making potentially

deceptive claims. 17See Arthritis Pain Care Center (APCC) et al., File No. 982 3182 (June 24, 1999)(consent subject to final approval challenging arthritis claims for CMO dietary supplement); Body Systems

Technology, Inc., File No. 982 3177 (June 24, 1999)(consent subject to final approval challenging

claims for treatment/cure of several diseases including cancer and AIDS for shark cartilage capsules and Cat’s Claw herbal supplement); Pain Stops Here! Inc., et al., File No. 982 3175 (June

24, 1999) (consent subject to final approval challenging claims for magnetic therapy to treat cancer, liver disease, arthritis and other conditions); and Magnetic Therapeutic Technologies, Inc.

et al., File No. 982 3150 (June 24, 1999)(consent subject to final approval challenging claims

for magnetic therapy devices to treat various diseases and conditions including cancer and high

blood pressure). Operation Cure.All also included a consumer education campaign that provided

links on our website, www.ftc.gov, to sources of reliable health information, gave tips to consumers on how to avoid ‘‘virtual health fraud’’ and set up ‘‘teaser’’ sites to alert Inter 18 New Vision International, FTC Dkt. No. C-3856 (March 3, 1999); FTC v. Rose Creek Health

Products, Inc., CS-99-0063-EFS (E.D. Wash.) (case pending). 19See, e.g., ‘‘Self-Regulation and Privacy Online,’’ Prepared Statement of the Federal Trade

Commission before the Subcommittee on Telecommunications, Trade, and Consumer Protection

of the U.S. House Committee on Commerce (July 13, 1999); Federal Trade Commission, SelfRegulation and Privacy Online: A Report to Congress (July 1999). 20See, e.g., GeoCities, C-3849 (Feb. 12, 1999)(consent order challenging misrepresentations

about the website’s use of personal information collected from children and adults).

rent technology. For example, our computer equipment permits staff to locate and

preserve websites for evidentiary purposes.

The Commission’s monitoring activities have led to a few preliminary investigations. In one situation, staff completed two mock online consultations in order to obtain the prescription drug Viagra. For one of these consultations, staff described

a number of factors in the ‘‘patient’s’’ medical history that should have raised serious concerns about the appropriateness of issuing a prescription for Viagra, such

as bypass surgery, obesity, family history of heart disease and the absence of any

information about other medications. In both cases, staff was issued a prescription

without question and was able to purchase the Viagra online. This investigation

led to referrals to the relevant state medical and pharmacy boards. To the extent

possible, Commission staff have also assisted state authorities in identifying and locating specific online pharmacies and physicians.

The Commission has also played a role in other closely related areas involving the

marketing of health care products on the Internet and the protection of consumer

privacy online. For example, the Commission recently announced ‘‘Operation

Cure.All,’’ a comprehensive consumer education and enforcement initiative to combat health fraud on the Internet. The project was the outcome of two ‘‘surf days’’ 16

in which the FTC and other government and private partner organizations identified nearly 800 websites making questionable claims that a product or treatment

could cure or treat diseases like cancer, arthritis, AIDS, multiple sclerosis, diabetes

and heart disease. As part of this project, the Commission announced four cases

against companies marketing non-prescription health products on the Internet and

is currently pursuing additional cases.17 The Commission has also filed other cases

against Internet marketers of health care products in recent years, including a dietary supplement program purported to cure Attention Deficit Disorder and another

dietary supplement referred to as ‘‘Vitamin O’’ for the treatment of several diseases

including cancer and pulmonary disease.18

Finally, the Commission has been active in the protection of consumer privacy online, an area that has great relevance to the subject of online pharmacies given that

highly sensitive medical information is often collected as part of the online consultation. The Commission, for instance, has engaged in extensive monitoring of the privacy practices of websites, has conducted workshops on the issue, prepared reports

to Congress on the self-regulatory efforts of industry on this topic, assisted in the

development of legislation to protect children’s online privacy, and issued proposed

rules to implement that legislation.19 The Commission has also brought enforcement

actions against websites engaged in deceptive practices relating to the collection and

use of personal consumer information.20 Online pharmacies that make false or misleading representations about how they collect and use personal information would

be subject to similar FTC challenge.

V. CONCLUSION

The Federal Trade Commission will continue to do its part to combat deceptive

practices by online pharmacies and to assist other authorities in their investigative

work. For the most part, however, the practices that present the greatest concern

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21Specifically, it is our understanding that the National Association of Boards of Pharmacy

is currently developing a certification program for online pharmacies, the ‘‘Verification of Internet Pharmacy Practice Sites (VIPPS).’’ In addition, the Federation of State Medical Boards is

currently addressing the issue of online prescribing by physicians and considering a recommendation that prescribing, electronically or otherwise, without an adequate patient evaluation be considered unprofessional conduct under state medical practice. Finally, we understand

that the AMA has adopted a resolution on this issue and is developing principles regarding online prescribing services.

and risk of consumer injury are those involving the professional conduct of individual physicians or issues relating to the licensing of pharmacies and safeguards

on the dispensing of prescription drugs that have traditionally been regulated by

state authorities. Those state authorities appear to have laws that are substantively

adequate to stop irresponsible prescribing and dispensing of drugs via the Internet.

The real challenge lies in dealing with the logistical difficulties of identifying responsible parties and enforcing laws across state boundaries. State authorities and

other groups are attempting to address the most troubling practices through

issuance of guidelines, certification programs and other non-legislative approaches,21

but those efforts, while valuable, still do not provide the tools necessary for effective

and meaningful enforcement.

Based on the Commission’s experience in this area, we recommend that the Subcommittee consider legislative measures that would assist state authorities in their

investigations by mandating that certain identifying information about physicians,

pharmacies and website operators be posted. Specifically, we suggest that each

website offering prescription drugs for sale be required to disclose the following information clearly and prominently:

1) the name, business address, and phone number of the pharmacy that will dispense the prescription and the state or states where such pharmacy is licensed

or registered to do business;

2) the name, address, and phone number of each physician providing the online prescribing services and the state or states where such physician is licensed or authorized to practice medicine, if such service is offered;

3) the name, business address, phone number, and principal officers or owners of

the online business offering prescription drugs, if different from the pharmacy

or physician; and

4) the state or states from which the website will accept orders for prescription

drugs.

Finally, the Commission recommends that consideration should be given to determining what other measures are necessary to assist state pharmacy and medical

boards with enforcement of state laws against extraterritorial prescribing practices,

including possibly granting states the authority to bring actions in federal district

court.

Thank you for this opportunity to present the Commission’s views. I will be happy

to respond to your questions.

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Mr. UPTON. Thank you.

Mr. Fong.

TESTIMONY OF IVAN K. FONG

Mr. FONG. Good morning, Mr. Chairman, members of the subcommittee. Thank you for inviting the Department of Justice to testify today on this important topic. I will summarize the written testimony that you have received.

We are not at this time advocating any particular legislative action, but would hope to inform you about our efforts to respond to

the many complex legal and policy issues raised by this new development.

The growth in Internet prescription drug sales undoubtedly has

the potential, as you’ve heard this morning, to provide significant

societal benefits. Individuals who might otherwise have difficulty

going to a pharmacy to obtain needed medications—shut-ins, the

elderly, those in rural communities, for example—will surely benefit from the convenience of being able to order and obtain their

prescription drugs on-line. On-line sales are also likely to foster

price competition for prescription drugs among licensed sellers.

Recognizing these benefits is consistent with the administration’s

general policy concerning the Internet and electronic commerce.

That policy includes support for industry self-regulation where possible, technology-neutral laws and regulations, and an appreciation

of the Internet as an important medium, both domestically and

internationally, for commerce and free speech.

In the area of on-line sale of prescription drugs, this means that

any enforcement initiatives that we undertake should be carefully

designed to deter unlawful pharmacy practices to accomplish important public health goals without stifling the growth of the Internet generally or chilling its use as a communication medium, including its use for lawful commercial purposes.

In the context of law enforcement, we believe this means that the

government should treat physical activity and cyberactivity in the

same way; that is, if an activity is prohibited in the physical world

but not on the Internet, then the Internet becomes a safe haven for

that criminal activity. Similarly, conduct that is not a Federal

crime in the physical world should not be subjected to Federal

criminal sanction simply because it is committed in cyberspace.

In short, as a matter of policy, the same laws and regulations

that currently apply to the corner pharmacy ought to apply to online pharmacies. The Internet, of course, has the strong potential

to magnify the problem of unscrupulous activity or unlawful conduct in an unprecedented way. From a strictly legal standpoint,

however, we believe that sales over the Internet ought not be treated any differently from, for instance, sales from your neighborhood

pharmacy or sales that involve the use of the telephone.

The Department of Justice is affirmatively responding in several

ways to the recent growth of on-line pharmacies. We have begun

to analyze the legal bases for possible enforcement actions. We’re

continuing to investigate and prosecute conduct that has long been

illegal, but is only recently reappearing on the Internet, and we are

working with other Federal agencies, States and relevant profesVerDate 13-MAR-2000 09:18 Mar 20, 2000 Jkt 010199 PO 00000 Frm 00090 Fmt 6633 Sfmt 6601 E:\HEARINGS\58498.TXT pfrm02 PsN: 58498
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sional associations to develop coordinated public education as well

as civil and criminal enforcement efforts.

As you have heard this morning, there are a number of different

kinds of on-line pharmacies. Some of them require a prescription

from a licensed physician. Others offer an on-line diagnosis and

will use the medical questionnaire that we have seen, and a third

category allows consumers to purchase prescription drugs without

a prescription at all.

These kinds of pharmacies raise different questions, and they are

different in the following respects. Some consumers are able to purchase drugs from physicians without the traditional protections afforded by the doctor-patient relationship, such as an office visit

that allows for a physical examination or critical interactive questions or follow-ups. A second area of concern are situations in

which consumers purchase drugs that are mislabeled or counterfeit. Finally, there are concerns that certain Web sites are nothing

more than scams, collecting credit cards and cash, but providing no

product.

In our legal analysis, I want to highlight something that was

mentioned this morning, which is that to the extent there is any

question about the illegal nature of the obtaining of a prescription

drug without a prescription, it’s useful for me to quote directly from

existing law. This is part of the FDA statute: ‘‘The act of dispensing

a drug contrary to the provisions of this paragraph,’’ which requires

a written prescription from a practitioner licensed by law to administer such drug, ‘‘shall be deemed to be an act which results in the

drug being mislabeled while held for sale.’’ And as you know, introduction or distribution of misbranded drugs into interstate commerce is a Federal offense.

We believe that the Department of Justice is and stands ready

to prosecute these cases. We work very closely with our investigative agencies, and we look forward to answering your questions,

and thank you for this opportunity to testify on this topic.

[The prepared statement of Ivan K. Fong follows:]

PREPARED STATEMENT OF IVAN FONG, DEPUTY ASSOCIATE ATTORNEY GENERAL,

DEPARTMENT OF JUSTICE.

Mr. Chairman and Members of the Subcommittee: Good morning. My name is

Ivan Fong. I am a Deputy Associate Attorney General at the Department of Justice.

The Office of the Associate Attorney General is responsible for the management and

oversight of, among other areas, the Department’s civil litigating components, which

include the Antitrust, Civil, Civil Rights, Environment and Natural Resources, and

Tax Divisions. My particular responsibilities include civil litigation and technology

policy issues, which include Internet and electronic commerce issues, as well as the

enforcement of certain consumer statutes. This morning, at your invitation, I will

address the Department’s views regarding the sale of prescription drugs over the

Internet. We are not at this time advocating any particular legislative action with

respect to the sale of these drugs over the Internet. Rather, we hope to inform you

about our efforts to respond to the many complex legal and policy issues raised by

this new development.

A. ADDRESSING UNLAWFUL CONDUCT THAT INVOLVES THE USE OF THE INTERNET

Before I outline what the Department is doing in the area of Internet prescription

drug sales, it is important to underscore, by way of background, a simple, and by

now almost trite, point: The Internet has revolutionized and will continue to revolutionize the way in which we communicate, transact business, and indeed interact

with one another.

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The growth in Internet prescription drug sales, for example, undoubtedly has the

potential to provide significant societal benefits. Individuals who might otherwise

have difficulty going to a pharmacy to obtain needed medications—such as shut-ins,

the elderly, and those in rural communities—will surely benefit from the convenience of being able to order and obtain their prescription drugs online. Online sales

are also likely to foster price competition for prescription drugs among licensed sellers.Recognizing these benefits is consistent with the Administration’s general policy

concerning the Internet and electronic commerce. That policy includes support for

industry self-regulation where possible, technology-neutral laws and regulations,

and an appreciation of the Internet as an important medium both domestically and

internationally for commerce. In the area of online sale of prescription drugs, this

means that any enforcement initiatives that we undertake should be carefully designed to deter criminal and illegal pharmacy practices on the Internet to accomplish important public health goals without stifling the growth of the Internet generally or chilling its use as a communication medium, including its use for lawful

commercial purposes.

In the context of law enforcement, we think the Administration’s overall policy

can be translated into the following general principles.

• First, the government should treat physical activity and cyberactivity in the same

way. If an activity is prohibited in the physical world, but not on the Internet,

then the Internet becomes a safe haven for that criminal activity. Similarly,

conduct that is not a federal crime in the physical world should not be subject

to federal criminal sanction simply because it is committed in cyberspace. • Second, laws and policies relating to enforcement must account for technological

change, but should endeavor to be technology-neutral. Laws and policies tied to

particular technologies may quickly become obsolete and require further change

or may unintentionally provide an advantage to one type of technology over another. • Third, the Internet is different from prior modes of communication in that it is

a multi-faceted communications medium that allows not only point-to-point

transmission between two parties (like the telephone), but also the widespread

dissemination of information to a vast audience (like a newspaper).

These general principles form the starting point for our analysis of the legal and

policy issues relating to the sale of prescription drugs over the Internet. They suggest that, as a matter of policy, the same laws and regulations that currently apply

to the corner pharmacy ought to apply to online pharmacies. The Internet, of course,

magnifies the problem of unscrupulous activity or unlawful conduct in an unprecedented way. For example, searching Internet sites for the prescription drug ‘‘Viagra’’

and the word ‘‘buy’’ results in an overwhelming number of sites where Viagra can

be purchased on line. Nevertheless, from a legal standpoint, we believe that sales

over the Internet ought not be treated differently from, for instance, sales from your

local pharmacy or sales that involve the use of the telephone.

B. THE ROLE OF THE DEPARTMENT OF JUSTICE IN INTERNET PRESCRIPTION DRUG SALES

The Department of Justice is affirmatively responding in several ways to the recent growth in online pharmacies and prescription medical device distributors. We

have begun to analyze the legal bases for possible enforcement against illegal practices of online pharmacies. We are continuing to investigate and prosecute conduct

that has long been illegal, but that is only recently reappearing on the Internet. And

we are working with other federal agencies, states, and relevant professional associations to develop coordinated public education as well as civil and criminal enforcement efforts.

At the outset, it is important to note that we are only beginning to appreciate the

complex and highly diverse operations involved in sales and distribution of pharmaceutical products over the Internet. We have learned, for example, that online pharmacies can generally be classified into three basic categories:

• The more traditional online pharmacies require consumers to obtain a prescription from a licensed physician before ordering the drug. A valid prescription is

then submitted to the pharmacy before the drug is dispensed.

• A second category of online pharmacies offers services to ‘‘diagnose’’ a patient online, ‘‘prescribe’’ the medication, and distribute it without a physician ever physically seeing the patient. These pharmacies typically use an online medical

questionnaire, which asks for the patient’s health profile, current medication,

and medical history. Based on this questionnaire, a doctor who may be affiliated

with the website ‘‘diagnoses’’ the patient’s ills and prescribes medication, which

the website’s pharmacy then distributes.

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• A third category of online pharmacies allows consumers to purchase prescription

drugs without any pretense of a prescription.

Cutting across these categories are different concerns that may be raised by online pharmacies. One area of concern arises from situations in which consumers are

able to purchase drugs from physicians without the traditional protections built into

the doctor-patient relationship, such as an office visit that allows for a physical examination and for the doctor to ask the patient critical questions designed to limit

the harm caused by drug allergies and interactions. A second area of concern are

situations in which consumers purchase drugs that are mislabeled or counterfeit. Finally, there are concerns that certain websites are nothing more than scams, collecting credit cards and cash, but providing no products. Each of these situations

raises different legal issues and policy concerns and implicates the jurisdiction of

different governments and agencies.

1. Overview of Legal Issues

The Department of Justice—through its Civil and Criminal Divisions, local United

States Attorney’s Offices, the Federal Bureau of Investigation, and other components—enforces numerous consumer protection statutes for which the primary regulatory authorities are administrative agencies such as the Food and Drug Administration (FDA), the Drug Enforcement Administration (DEA), and the Federal Trade

Commission (FTC).

(a) Enforcement under the Food, Drug and Cosmetic Act—The federal Food, Drug

and Cosmetic Act (FDCA) generally prohibits the manufacture and distribution of

misbranded and adulterated drugs, thus requiring drugs to be labeled accurately

and handled in ways that prevent them from becom ing contaminated or misused.

In 1951, to protect the public from abuses arising from the sale of potent prescription drugs, and to relieve retail pharmacists from burdensome and unnecessary restrictions on the dispensing of over-the-counter drugs, Congress established the system that currently governs the sale of prescription drugs. See, 21 U.S.C. § 353(b)(1).

Under that system, Congress relied on two health professionals—the patient’s physician and a pharmacist—to protect patients from the knowing or accidental misuse

of medicines that are toxic or that have the potential for causing harm.

Accordingly, drugs that are considered prescription drugs under the FDCA may

be distributed only with a valid prescription under the professional supervision of

a physician. See, 21 U.S.C. § 353. A prescription drug is considered ‘‘misbranded’’ if

it is not dispensed pursuant to a valid prescription in accordance with 21 U.S.C.

§ 353(b). Introduction or distribution of misbranded drugs into interstate commerce

violates the FDCA. See, 21 U.S.C. § 331(a). An online pharmacy that provides prescription drugs without a prescription—the third category of online pharmacies

noted above—would therefore be in violation of this requirement.

Legal action to curtail such conduct—including the drugs distributed without a

valid prescription—may be brought criminally or civilly. For a felony conviction, the

government must establish that the defendant acted with an intent to defraud or

mislead either the consumer or the government, or that the defendant is a repeat

offender. Civil cases and misdemeanor prosecutions do not require proof of an intent

to defraud or mislead.

For online pharmacies that offer online diagnosis, prescription, and distribution

of medication—the second category of online pharmacies noted above—the issue is

whether the online interaction results in a valid ‘‘prescription’’ under 21 U.S.C.

§ 353(b). If not, then the online pharmacy may be found to be distributing ‘‘misbranded’’ medication in violation of the FDCA.

In analogous situations, the Department has successfully prosecuted doctors and

veterinarians for dispensing drugs without a valid prescription. For example, in several recent cases, we found that certain doctors were prescribing and distributing

anabolic steroids to athletes and entertainers. The evidence showed that they distributed steroids not to treat medical conditions, but for purely cosmetic purposes,

and that they did not examine the patients before dispensing the steroids. In those

cases, we successfully argued that under section 353(b), one may distribute prescription drugs only if (1) there is a bona fide doctor-patient relationship, and (2) the

distribution is pursuant to a course of individualized treatment for a legitimate

medical purpose.

Whether a particular online pharmacy, such as one that provides an online questionnaire for the consumer to complete before the drug is dispensed, can satisfy

these standards will depend on the specific facts involved and evidence presented.

It may also depend on whether the resulting ‘‘prescription’’ is a valid prescription

under relevant state law. The states of Kansas, Maryland, and Washington, for example, have taken legal action against doctors, websites, and pharamacies that dispense prescription drugs over the Internet in violation of state law.

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(b) Other Enforcement Theories—Apart from enforcement under the FDCA, the

Department can also rely on other legal authorities. For instance, the Controlled

Substances Act prohibits the dispensing of a controlled substance without a valid

prescription. See, 21 U.S.C. §§ 822, 829, and 841. A regulation issued by DEA defines ‘‘prescription’’ in a way that may exclude ‘‘prescriptions’’ for controlled substances that are obtained through an online questionnaire. As an example of a prosecution in this area under the Controlled Substances Act, a grand jury in Maryland

recently returned a 34-count indictment against a physician for dispensing several

controlled substances, including phentermine and fenfluramine, without a legitimate

medical purpose.

Another potential avenue for enforcement involves the Federal Trade Commission

Act (FTC Act), 15 U.S.C. § 45 et seq., under which we could proceed with a civil enforcement action in conjunction with the FTC. The FTC Act protects consumers from

unfair or deceptive acts or practices. Many online pharmacies operate by making important representations to consumers. For example, the FTC has found websites

that advertise that a physician reviews each application to purchase prescription

medications. To the extent these representations are false or deceptive, or if a

website operator sells prescription drugs and represents that the drugs are safe and

effective without disclosing their possible adverse effects, then such operators may

be engaging in unfair or deceptive trade practices.

Indeed, some online pharmacies may suggest that completion and analysis of an

online medical questionnaire is the equivalent of a visit to a doctor’s office. Yet it

seems clear that in almost all circumstances, filling out an online questionnaire is

not the same as seeing a doctor. In fact, some prescription drugs, such as Viagra,

have package insert labeling that specifies that a physical examination is required

for proper prescribing of a product and physician follow-up. Because some of these

websites appear to provide deceptive information, these sites may violate the FTC

Act, and thereby subject the website operator to a civil enforcement action.

The Department could also pursue similar theories under the federal mail and

wire fraud statutes whenever an online or other pharmacy defrauds consumers in

any way. Whether such a suit would be criminal or civil, under 18 U.S.C. § 1345

or 21 U.S.C. § 332, would depend on the precise facts of the case and the evidence

of fraudulent intent. Schemes involving the sale of drugs or health products over

the Internet may violate other related federal criminal laws. Some websites offer to

bill private or public health care programs or insurers for a ‘‘doctor’s’’ advice or for

the price of the drug or product itself. If any false representations are made to the

insurer to obtain payment, violations of a number of federal criminal laws may

occur, and the civil fraud laws may also be implicated.

(c) Prescription Drugs Sales from Foreign Sources—The FDA has found that a fair

percentage of online drug distribution is conducted by firms operating outside of the

United States. These firms may be in countries where quality standards or manufacturing practices do not approach what the FDA requires for the approval of prescription drugs in the United States. Any effort to prohibit these firms from selling

prescription drugs in the United States would be complicated, especially if the activity in question is legal in the country where it is originating.

In addressing the online sale of prescription drugs, the United States must continue to enlist the cooperation of foreign governments in enforcing the laws of the

United States relating to such sales. Although international awareness and cooperation on fighting crime has grown, we must continue to resolve philosophical differences between countries on combating the sale of illegal goods online and also

to develop practical ways to enforce our laws. For example, our concern with prescription drugs from foreign countries is not necessarily with the Internet aspect of

the sale, but with the illegal introduction of those drugs into the United States. Law

enforcement agencies in the United States will have to obtain the cooperation of

their counterparts in foreign countries with online prescription firms to prevent the

shipping of such drugs into the United States. Such cooperation is particularly important because interdiction of relatively small quantities of prescription drugs sent

through traditional mailing channels is not feasible. Overall, the Department supports the efforts being made to develop a comprehensive and global response to

crimes facilitated by the Internet.

2. The Department’s Experience in Related Areas

The Department has successfully prosecuted doctors and pharmacists for prescribing drugs without a valid prescription. In the 1950’s, for example, the Department prosecuted doctors and pharmacists who sold amphetamine and Benzedrine to

undercover agents without any prior examination or diagnosis. In the 1980’s and

early 1990’s, before steroids became a controlled substance, several doctors received

significant sentences for supplying high-profile athletes and entertainers with preVerDate 13-MAR-2000 09:18 Mar 20, 2000 Jkt 010199 PO 00000 Frm 00094 Fmt 6633 Sfmt 6621 E:\HEARINGS\58498.TXT pfrm02 PsN: 58498
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scription steroids for illegitimate cosmetic reasons. The DEA has investigated and

we have prosecuted many physicians for dispensing controlled substances without

a legitimate medical purpose.

As I mentioned, online prescribing of approved drugs can present difficult legal

issues. Nevertheless, we believe that the recent surge in online prescribing is ultimately a new version of an old problem. In the 1950’s, individuals purchased drugs

without valid prescriptions from doctors working out of truck stops. In the 1980’s,

doctors sold steroids out the back door of their offices. Today, it is the Internet, and

not a truck stop or the back door, that can serve as an unscrupulous doctor’s means

to peddle drugs without prescriptions. When investigators bring those cases to our

attention, we stand ready and able to prosecute them.

The Department has already begun to investigate doctors and websites that dispense drugs based exclusively upon an online diagnosis, which usually consists of

a medical questionnaire that the patient either fills out online or prints off her computer and mails or faxes to the website. For example, as I mentioned above, a grand

jury in Maryland recently returned a 34-count indictment against a physician for

dispensing controlled substances without a legitimate medical purpose. I should

note that this doctor has since turned in his medical license to the state of Maryland. The Department is actively working with state officials, both from attorneys

general offices and state medical boards, to identify other doctors and pharmacists

who unlawfully prescribe drugs online.

The Department has also taken an active role in prosecuting website operators

who illegally sell FDA-regulated products, such as unapproved drugs and devices,

over the Internet. For example, in February 1999, a seller of bogus HIV self-test

kits was sentenced to 63 months for mail fraud, wire fraud, and money laundering.

We are also prosecuting cases against the operators of websites that sell the components necessary to make gamma hydroxy butyrate, commonly known as GHB, a

dangerous unapproved drug often used in sexual assaults to incapacitate victims.

Although I cannot discuss the details of these cases, I can say that the Department’s

efforts regarding GHB have made obtaining this drug over the Internet more difficult than it once was.

3. Coordination of Enforcement Efforts

One of the most significant challenges we face in this area is coordination of enforcement policies and initiatives among a variety of federal, state, and other entities. We rely heavily, for example, on the hard work and dedication of federal and

state investigating agencies in all of our cases. Our investigative agencies, with

training and resources, will be able to develop cases that we can prosecute against

online pharmacies and doctors affiliated with such pharmacies, should they dispense

prescription drugs in ways that violate federal law.

We have also engaged in and will continue to engage in substantial efforts to coordinate our work with that of FDA and other federal agencies. We will work closely

with FDA as it begins to implement its action plan to address Internet drug sales.

We are also endeavoring to coordinate with the FTC, the FDA, and the National

Association of Attorneys General on issues such as the fraudulent or misleading

marketing of prescription drugs over the Internet.

Of equal importance is the need to train criminal investigators to deal with the

special problems that Internet investigations pose. We have found that many

websites that we are investigating disappear as quickly as they appear. If the site

has not been ‘‘mirrored’’ or otherwise retained, an opportunity to take enforcement

action disappears. It is vital that agents know how to conduct Internet investigations from their inception.

In sum, the Department has taken and will continue to take an active role in coordinating with other federal agencies to respond to the potential risks to public

health and safety that may accompany the growth of Internet sales of prescription

drugs. We are participating with FDA and other agencies to explore what recourse

is available to enforce existing laws that govern Internet prescription drug sales,

particularly against foreign drug firms selling to U.S. consumers. As I have noted,

foreign-based online pharmacies and their online sale of pharmaceutical drugs

present particularly difficult and complex enforcement issues. We recently met with

representatives from the FTC, FDA, FBI, the Customs Service, the Postal Service,

and the National Association of Attorneys General to discuss this issue. With the

other agencies, we will be evaluating existing laws and determining whether to recommend changes to address the problems we have identified.

Thank you for the opportunity to present the views of the Department on this important topic. I would be pleased to answer any questions you might have.

Mr. UPTON. Thank you.

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Dr. Woodcock.

TESTIMONY OF JANET WOODCOCK

Ms. WOODCOCK. Thank you for this opportunity to discuss the

benefits and risks of pharmaceutical sales over the Internet. I was

very happy to rearrange my schedule to accommodate this important hearing because this is a very significant issue for our agency.

Now, at FDA, we regard the Internet as an important new tool

that opens up vast opportunities for our citizens to share information, to communicate and engage in new forms of commerce, as

other witnesses have already alluded to. It’s rapidly becoming an

essential mechanism that more and more Americans use for their

personal and professional needs.

The Internet also plays a prominent role in FDA activities. Our

scientists use it to support regulatory research and to exchange

data with scientists worldwide. We rely heavily on our Web site

and other Internet tools to communicate drug information to consumers and health professionals and to inform industry and other

FDA constituencies about our policies and procedures.

And we applaud the fact that the Internet has facilitated drug

dispensing by reputable pharmacies. As in other sectors, ethical

Internet pharmacies can offer advantages to consumers such as

speed and ease of ordering, wide product selection, on-line pharmacists’ consultation, reliable drug information and economic benefits of competition. But as a public health agency, we must be and

we are concerned about emerging on-line practices that pose health

risks to the public.

Mr. Chairman, members of the committee, as you know, Congress has established a system of drug regulation that has served

this country well. As part of this system, FDA protects consumers

and patients by reviewing new medicines for safety and effectiveness and by monitoring their performance once marketed. The

States also play a key role by licensing and oversight of the health

care professionals, mainly medical doctors and pharmacists who

are authorized to prescribe and dispense FDA-approved drugs.

This traditional system that relies on professional accountability

and responsibility to protect the public is being challenged by the

Internet. There have always been unscrupulous people who have

tried to circumvent the system by selling unapproved drugs, by

selling drugs without a prescription, by offering expired or illegally

diverted drugs or marketing products with fraudulent health

claims. Any of these illegal practices may expose consumers to risk,

such as life-threatening adverse drug effects, dangerous drug interactions or contaminated drugs. The power of the Internet to reach

millions of unsuspecting consumers across all borders increases

both the opportunity for these unscrupulous people and the magnitude of the public risk from their actions.

In addition to the potential for expansion of illegal drug sales, we

are also concerned about drug prescribing via the Internet based

solely on the buyer’s answers to a simple questionnaire outside of

the context of a traditional physician-patient relationship. According to the AMA, the American Medical Association, a health care

practitioner who offers a prescription for an unseen and

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unexamined patient based solely on an on-line questionnaire has

generally not met an appropriate standard of medical care.

Over the past several years, FDA has countered illegal on-line

drug sales by taking successful enforcement actions. We have not

been idle in this regard. Today we are announcing a multifaceted

program that is designed to intensify our efforts. We’ve committed

to the following action plan, which is fully described in my submitted testimony. We will expand the agency’s surveillance and enforcement activities on the Internet. We will enter into agreements

with State regulatory and law enforcement officials to work cooperatively to enforce Federal and State laws against unlawful sellers

and prescribers.

We have signed principles of understanding with the National

Association of Boards of Pharmacy and the Federation of State and

Medical Boards. These principles have been endorsed by the American Medical Association and the APA.

We will work with Congress and Federal agencies to address illegal Internet marketing by foreign sites, and we will expand our

public health outreach activities to alert consumers to the risk, because, as we know from other areas, we must work on the demand

side as well as the supply side of this problem.

Over the coming year we will resource these initiatives by focusing on illegal Internet drug marketing, tapping resources that are

currently focused on these illegal activities in a non-Internet context.

We believe these initiatives are consistent with the administration’s framework for global electronic commerce announced in July

1997, and the President’s memorandum on successes and further

work on electronic commerce issued last November.

In conclusion, I want to give notice to those who are illegally selling drugs on the Internet that we are taking action. Misuse of the

Internet for illegal sale of potentially dangerous drugs must stop.

This concludes my oral testimony, and I will be glad to answer

your questions.

[The prepared statement of Janet Woodcock follows:]

PREPARED STATEMENT OF JANET WOODCOCK, DIRECTOR, CENTER FOR DRUG

EVALUATION AND RESEARCH, FOOD AND DRUG ADMINISTRATION

INTRODUCTION

Mr. Chairman and Members of the Committee, I am Dr. Janet Woodcock, Director, Center for Drug Evaluation and Research (CDER), Food and Drug Administration (FDA or Agency). I am pleased to have this opportunity to participate in this

discussion of the benefits and risks of pharmaceutical sales over the Internet. The

sale of consumer products over the Internet has grown rapidly, including the sale

of drugs. While the growth in online drug sales by reputable pharmacies is a trend

that can benefit consumers, online drug sales also present risks to unsuspecting

purchasers and some unique challenges to regulators, law enforcement and policymakers. FDA is concerned about the public health implications of Internet drug

sales, and we are responding to these concerns as part of our overall goal of developing and implementing risk-based strategies to protect public health and safety.

It is important to recognize that other products regulated by the Agency, such as

medical devices, biological products, and foods, including dietary supplements, also

are sold online, and when sold unlawfully, may pose risks to the public health. This

testimony, however, will focus on the advantages and risks of online pharmaceutical

sales, outline the authority and enforcement activities of FDA in this area, and discuss new initiatives that FDA is taking to better respond to the regulatory challenges. FDA believes these initiatives are consistent with the Administration’s July

1, 1997 Framework for Global Electronic Commerce (Framework) and the PresiVerDate 13-MAR-2000 09:18 Mar 20, 2000 Jkt 010199 PO 00000 Frm 00097 Fmt 6633 Sfmt 6621 E:\HEARINGS\58498.TXT pfrm02 PsN: 58498
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dent’s November 30, 1998 Memorandum on Successes and Further Work on Electronic Commerce.

The Framework suggested a set of principles to guide the government’s approach

as we face the new and ever changing challenges posed by the Internet. Five principles were articulated that apply to the policy questions raised by Internet prescription drug sales.

These are:

1) The private sector should lead.

2) Governments should avoid undue restrictions on electronic commerce.

3) Where governmental involvement is needed, its aim should be to support and enforce a predictable, minimalist, consistent and simple legal environment for

commerce. 4) Governments should recognize the unique qualities of the Internet.

5) Electronic Commerce over the Internet should be facilitated on a global basis.

In the context of prescription drug sales over the Internet, government should encourage private sector leadership in achieving a safe marketplace. The private sector

has an important role to play in promoting consumer education and in providing

seals of approval and other verification for legitimate sales. Government should refrain from imposing any unnecessary regulations, but should protect consumer

health and safety through effective enforcement of existing law on illegal drug sales.

If new regulations are needed these should be designed to support a predictable,

minimalist, consistent and simple legal environment for commerce. Rapid technological developments will change the nature of the challenges we face today and we

must remain flexible in developing solutions. Finally, the global nature of electronic

commerce poses particular problems in the area of Internet drug sales and we

should strive for consistent principles across State, national, and international borders that lead to safe and predictable results regardless of the jurisdiction in which

a particular buyer or seller resides.

As I will describe in more detail later in my testimony, FDA has developed and

begun implementing an action plan to address the problems associated with online

drug sales. The steps FDA is taking under its action plan include:

• The expansion of enforcement efforts against illegal online sales. FDA has established priorities for taking enforcement actions involving online sales, expanded

its capability to monitor violative Internet sites through advanced technology

search tools, and established a process to triage and monitor ongoing cases.

Using existing resources, through this process, FDA expects to establish a higher profile enforcement presence regarding unlawful online sales.

• FDA is working with other Federal agencies and State agencies to better coordinate enforcement efforts. FDA worked closely with the Federal Trade Commission (FTC) in developing the cases announced as part of Operation Cure-All and

has been working with the Department of Justice (DOJ) and others regarding

online sales issues.

• FDA has initiated a series of meetings with State regulatory bodies and other organizations to discuss better ways to regulate online sales.

• FDA will expand public outreach efforts to warn consumers about the dangerous

practices involving online purchases.

As described below, the Agency will seek to enforce existing statutory and regulatory provisions when illegal online drug sellers engage in unlawful conduct without imposing burdensome restrictions on legitimate sellers. Therefore, the Agency’s

efforts should help foster consumer confidence in electronic commerce through effective consumer protection online without imposing undue restrictions on legitimate

electronic commerce.

BENEFITS OF ONLINE DRUG SALES

The growth and development of the Internet in recent years has opened up vast

new opportunities for the exchange of information and for the enhancement of commerce. Electronic mail and chat groups have facilitated communications dramatically. Information gathering that once took hours or days of research, whether for

a highly technical scientific paper or an elementary student’s homework assignment,

can now be accomplished in minutes.

The Internet is rapidly transforming the way we live, work, and shop in all sectors of the economy. In the health sector, telemedicine allows people in remote areas

to access the expertise of doctors in urban hospitals. The Internet permits increasing

numbers of individuals to obtain medical information helping them to better understand health issues and treatment options. In fact, more than 22 million Americans

used the Internet last year to find medical information. According to Investor’s Business Daily, 43 percent of web surfers access health care data online each year.

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Health concerns are the sixth most common reason that people use the Internet,

and according to the market research firm, Cyber Dialogue Inc., this number is

growing by 70 percent a year.

Legitimate prescription drug sales on the Internet can provide tremendous benefits to consumers. These benefits could include: lower prices through increased competition among licensed sellers; greater availability of drugs to shut-in people for

whom going to the pharmacy can be difficult; increased availability to people who

may live a great distance from the pharmacy; the ease of comparative shopping

among many sites to find the best prices and products; and, greater convenience and

variety of products for all customers who prefer online ordering of prescription

drugs.

Perhaps the chief attractions to purchasing consumer goods online are the speed

and ease of choosing and ordering products. Many reputable online pharmacies

allow patients to consult with a pharmacist from the privacy of their home. Moreover, online pharmacies are able to provide customers with written product information and references to other sources of information much more easily than in the

traditional storefront. Finally, as the use of computer technology to transmit prescriptions from doctors to pharmacies expands, a reduction in prescription errors is

possible.

While online sales will be important for some customers, the more traditional

pharmacies can offer benefits and services often not available through the Internet.

Such pharmacies are an essential component in the delivery of effective health care.

We are not aware if composite sales figures for online pharmacies have been compiled. But the increasing recognition of the Internet as a legitimate and important

vehicle for drug sales is evidenced by the recent activity of major drugstore companies and Internet retailers in financing, supporting and sponsoring online pharmaceutical outlets. Earlier this year, for example, CVS Corporation acquired the online

pharmaceutical retailer Soma.com, and announced last month that the online retail

sites of the two companies will merge. Also last month, Rite-Aid Corporation announced a partnership with Drugstore.com to combine the benefits of online ordering with access to traditional retail locations and insurance reimbursement services.

We expect this expansion of the online drug sales industry to continue over the next

few years.

As beneficial as this new technology is, however, there are some concerns. The

Internet also creates a new marketplace for sales that are already illegal in the nonwired world (and wired world), such as unapproved new drugs (including counterfeit

drugs), prescription drugs marketed without a valid prescription, and products marketed with fraudulent health claims. The unique qualities of the Internet, including

its broad reach and ability for anonymity, pose new challenges for the enforcement

of existing laws. The global nature of the Internet creates particular problems for

effective law enforcement. Different approaches to drug approval and marketing in

foreign countries further complicate law enforcement issues for U.S. officials. FDA

and other U.S. government agencies will need to work closely with foreign governments to share information on the drug approval process and develop mechanisms

to cooperate on law enforcement with respect to certain prosecutions.

The challenge for government is to promote policies that will allow legitimate electronic commerce to flourish by creating a marketplace where consumers can have

confidence in the quality of the medical prescription and of the medicine delivered.

A safer marketplace can be fostered through effective enforcement of existing laws

and by taking steps to encourage programs that provide certification, or seals of approval, to legitimate doctors and pharmacists operating in the virtual world.

CONCERNS ABOUT ONLINE SALES

As you know, the establishment of FDA as it exists today grew out of a time early

in the century when consumers were victimized by dishonest purveyors of fraudulent potions and compounds that were ineffective, dangerous, or both. A system of

drug regulation was established in this country that has served us well. Under this

system, FDA reviews new drugs to ensure their safety and effectiveness. In addition, certain types of drugs must be prescribed and dispensed by health care professionals licensed and overseen by the State in which they practice. But even with

this system in place, there are those who still try to sell unapproved or unsafe drug

products, and the Internet provides them with new opportunities for reaching

unsuspecting and vulnerable consumers and undermining established safeguards. It

is fair to say that the speed and ease of ordering products on the Internet that attract consumers likewise entices some unscrupulous sellers to use the Internet as

their new medium of choice. Unlike some other forms of electronic commerce, the

unauthorized sale of prescription and unapproved drugs poses a potential threat to

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the health and safety of consumers. Moreover, consumers who are desperate for a

cure to a serious medical problem are particularly vulnerable. Thus, they may be

more susceptible to the hype surrounding an unapproved product or more likely to

fall prey to the sale of an adulterated product.

Internet drug sales raise public health issues similar to those raised by sales, in

other contexts, of unapproved new drugs (including counterfeit drugs); the sale of

prescription drugs without a valid prescription; the sale of expired or illegally diverted pharmaceuticals; and the marketing of products based on fraudulent health

claims.

Congress and State legislatures have enacted laws to protect patients from harm

resulting from the use of unsafe drugs, counterfeit drugs, and the improper practice

of medicine and pharmacy. Under these laws, to receive a prescription drug for the

first time, generally a patient must be physically examined by a licensed health care

practitioner who determines the appropriate treatment and issues a prescription for

an FDA-approved drug. The patient then has the prescription filled by a registered

pharmacist working in a licensed pharmacy that meets State practice standards.

However, the Internet makes it easy for individuals to bypass these safeguards

when selling drugs to patients. A web site can be easily created to look like a legitimate pharmacy when in fact both the seller and product are illegitimate.

Patients who buy prescription drugs from an illegitimate site are at risk of suffering life-threatening adverse events. For example, one type of dangerous product

commonly sold on the Internet is a kit for preparing gamma hydroxy butyrate

(GHB). This unapproved drug, which is sold for bodybuilding and recreational use

and is used also in sexual assaults to incapacitate the victims, is a clear threat to

public health when sold in this manner. Other risks include potential side effects

from inappropriately prescribed medications, dangerous drug interactions and contaminated drugs, as well as the possible ill effects of impure or unknown ingredients

found in drugs manufactured under substandard conditions. Further risk to patients

is posed by their inability to know what they are really getting when they buy these

drugs. Although some patients may be purchasing the real thing, some may be buying counterfeit copies that contain inert ingredients, outdated legitimate drugs that

have been diverted to illegitimate resellers, or dangerous sub-potent or super-potent

versions that were improperly manufactured.

Besides magnifying existing problems by reaching millions of consumers worldwide, online drug sales create unique issues for regulatory and law enforcement bodies. Internet technology can obscure the source of the product as well as the persons

responsible for making and shipping the product. The participants in a transaction

can be widely dispersed geographically and they may well never meet. For example,

a consumer in one State, using an Internet site emanating from a computer in a

second State, may order a drug actually dispensed from a third State, under a prescription from a doctor in a fourth State. Thus, issues cross traditional regulatory

boundaries as well as Federal and State jurisdictional lines. If one or more participants in the transaction are located outside of the United States, the task of regulating the activity is further complicated. Similarly, the fact that sellers can easily

change the location and appearance of their Internet sites makes enforcement all

the more difficult.

The Agency is particularly concerned about the apparent absence of a doctor-patient relationship in some Internet transactions. FDA believes that the selection of

prescription drug products or treatment regimens for a particular patient should be

made with the advice of a licensed health care practitioner familiar with the patient’s current health status and past medical history. In situations where the customary physician-patient relationship does not exist, the patient is essentially practicing self-diagnosis. Consequently, the risk of negative outcomes such as harmful

drug interactions, allergic reactions, contraindications, or improper dosing is greatly

magnified. We also are concerned about the proliferation of sites that substitute a

simple questionnaire for a face-to-face examination and patient supervision by a

health care practitioner. Another concern in such situations is that the legal protections for privacy of medical records, which the Administration strongly supports,

may not be available. According to the American Medical Association, a health care

practitioner who offers a prescription for a patient they have never seen before and

based solely on an online questionnaire has generally not met the appropriate medical standard of care.

The sale of drugs to U.S. residents via foreign web sites is another area of concern

to the Agency. Some medications sold on the Internet may be legal in foreign countries but not approved for use in the United States, and some products may include

addictive and dangerous substances. Products not approved for sale in the United

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tion drug available from a foreign pharmacy is either a product for which there is

no U.S. approved counterpart or a foreign version of an FDA-approved drug. It is

illegal for a foreign pharmacy to ship such drugs into the U.S. Additional requirements, enforced by the Drug Enforcement Administration, are imposed on the importation of controlled substances. Foreign sales pose a difficult challenge for U.S.

law enforcement because the seller is not within U.S. jurisdiction.

FDA AUTHORITY AND ENFORCEMENT ACTIVITY

The types of unlawful conduct involving online drug sales that FDA has identified

are similar to unlawful activities that occur in other sales contexts. Under the Federal Food, Drug, and Cosmetic (FD&C) Act, FDA has the legal authority to take action against:

• the importation, sale, or distribution of an adulterated or misbranded drug;

• the importation, sale, or distribution of an unapproved new drug;

• illegal promotion of a drug;

• the sale or dispensing of a prescription drug without a valid prescription; and,

• counterfeit drugs.

When the Internet is used for an illegal sale, FDA must establish the same elements of a case, bring the same charges, and take the same actions as it would if

another medium, such as a storefront or a magazine, had been used.

FDA already has investigated and referred cases for criminal prosecution and civil

enforcement actions against some online sellers of drugs and other FDA-regulated

products, particularly sellers of drugs not approved by the Agency. FDA intends to

significantly expand its enforcement activities regarding online sales. The Office of

Regulatory Affairs (ORA) and the Office of Compliance in the Center for Drug Evaluation and Research (CDER) are the primary organizations within FDA with responsibility for regulating online drug sales. These offices review web sites that consumers, industry, health professionals or government personnel report as appearing

violative. Since June 1998, the Agency has taken numerous compliance actions

based on violative labeling claims. In at least 27 of these cases, the violative claims

had an Internet component. To date, the Agency has identified over 60 cases related

to suspected illegal Internet sales, with the first Internet prosecution having been

undertaken in 1994. Actions included sending warning letters to firms illegally selling unapproved new drugs online and issuing Import Alerts to online sellers of illegal foreign pharmaceuticals. FDA has also contacted web site managers and asked

for their voluntary cooperation in removing violative sites. Warning letters to online

pharmacies based in foreign countries are shared with the government of that country. Additionally, CDER’s Division of Drug Marketing, Advertising, and Communications has taken steps against online drug promotion that violates the FD&C Act by

making unsubstantiated claims or misrepresentations of drugs, or by a lack of fair

balance in describing risks and benefits.

The Office of Criminal Investigations (OCI) is the entity within FDA responsible

for conducting and coordinating investigations of suspected criminal violations of the

FD&C Act, the Federal Anti-Tampering Act (FATA), and other statutes including

applicable U.S. Criminal Code violations. OCI maintains liaison and cooperative investigative efforts with other Federal, State, Local, and international law enforcement agencies.

In November 1998, a defendant in California began serving a five year Federal

prison term after being convicted of selling online unapproved HIV home test kits

which used fabricated test results. For the first time in FDA history, the individual

was convicted on wire fraud charges stemming from the use of the Internet to sell

an illegal medical product. Previous wire fraud charges involving illegal medical

products were based only on telephone and facsimile use.

In another case, in November 1998, a police department in Illinois advised OCI

it had discovered an unconscious male individual in a hotel parking lot. The subject

was taken to a local hospital and treated for a drug overdose. Police contacted family members and determined that the individual had been taking GHB. Police found

suspected GHB in the subject’s possession and found additional suspected GHB in

his hotel room. Police requested OCI assistance with lab work and a technical computer search as they suspected the subject had obtained GHB kits and preparation

instructions from the Internet. OCI identified the subject’s source of supply, which

was on an Internet site located in Canada. The investigation by OCI and the police

department established that the subject had purchased a quantity sufficient to warrant a GHB felony distribution charge under Illinois law. The individual was found

guilty of possession of a controlled substance in Illinois and sentenced to two years

state probation.

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In a third case, OCI was advised by a State Board of Pharmacy that an Internet

site was offering prescription drugs to U.S. customers from foreign manufacturers,

by acting as an authorized ‘‘buyers club’’ using the ‘‘personal importation policy’’ of

FDA. OCI notified the U.S. Customs Service (USCS) at a particular U.S. international mail facility to watch for suspicious shipments bound for the operator of

this Internet site. As a result, USCS intercepted what appeared to be steroid shipments to the web site’s address. Search warrants were obtained and over a period

of approximately four weeks, nine incoming shipments of steroids were searched and

control delivered by USCS and OCI agents. Deliveries coordinated with surveillance

of the suspect revealed a sophisticated operation centered out of an apartment

building. OCI and USCS arrested the suspect and simultaneously served a search

warrant at the business location. The primary suspect was sentenced in Federal

court.

As a last example, in July of 1996, OCI headquarters was contacted by a women’s

health care provider to advise that several clients had directed her to an Internet

site promoting an abortion kit. She believed the site contained several unfounded

statements. The FDA Division of Urology and Reproductive Drug Products reviewed

the Internet site and determined that the drugs in the kits presented a serious

health risk to women when used without a doctor’s supervision because of a possibility of heavy vaginal bleeding and death. Using computer technology and the help

of computer security companies, OCI traced the site to Easy Life Labs in Colombia,

South America. OCI placed an anonymous order for the kit. The company responded

and FDA laboratory analysis showed the drugs to be those warned against by the

Agency’s experts. The company’s web site temporarily went off line, but in March

of 1997, the original health care provider called back to say the company was operating again using a different name. One of the drugs provided was unapproved for

use in the U.S. OCI contacted the foreign drug company’s U.S. Internet service provider (ISP) and told them that one of their subscribers was using its service to promote and sell this unapproved drug. Additionally, the ISP was informed of FDA’s

public health concerns about the proposed use of the unapproved drug and that this

was in criminal violation of the FD&C Act. The service provider voluntarily removed

the violative ads.

Although FDA has taken action against unapproved drugs sold over the Internet

and will continue to do so in the future, as you know, FDA does not generally regulate the practice of pharmacy or the practice of medicine—the States traditionally

have regulated both the prescribing and dispensing of drugs. Several States, however, have found it difficult to identify and locate violators and to bring effective enforcement actions because the seller and the purchaser of a drug may reside in different States and because it is often difficult to identify the persons responsible for

a web site. As a result, FDA and State agencies need to work cooperatively to enforce the FD&C Act and State laws in this area.

FDA has initiated contacts with other agencies and States to address these issues.

For example, on February 8 of this year, the Agency hosted a meeting with representatives of health professional organizations that looked at the prescribing and

dispensing of drugs on the Internet. FDA, the Federation of State Medical Boards

of the United States, the National Association of Boards of Pharmacy (NABP), the

American Medical Association and the Association of Food and Drug Officials gave

presentations. Discussions centered on the roles that each organization plays in regulating prescribing and dispensing on the Internet and how the various roles could

better compliment each other. At that meeting, the NABP announced a new program to verify the legitimacy of Internet sites dispensing prescription drugs. The

program, known as the Verification of Internet Pharmacy Practice Sites, or VIPPS,

will provide a NABP ‘‘seal of approval’’ to sites meeting the organization’s standards. Over time, this seal of approval may assure consumers that the designated

sites are offering FDA approved pharmaceuticals.

FDA believes that by working with the States, we can regulate the domestic sale

of both approved and unapproved drugs (except for controlled substances where the

Drug Enforcement Administration generally takes the lead for the Federal government), as well as the sale of prescription drugs without a valid prescription. When

a sale involves health fraud, multiple Federal agencies have authority to take action, including the Department of Justice, the Federal Bureau of Investigation, the

Federal Trade Commission, the Postal Service, the Office of the Inspector General

in the Department of Health and Human Services and FDA. The States also have

similar authority. FDA has worked with many of these agencies in bringing cases

involving health fraud and will continue to do so.

The most difficult problem to address is the online sale of drugs to U.S. residents

by sellers in foreign countries. FDA, and the other Federal agencies and State bodies, possess limited jurisdiction over sellers in foreign countries and must work with

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1 A significant public health risk exists when a consumer is at risk for harm (1) from the use

of the product, (2) as the result of not taking approved drugs for a specific disease or condition,

or (3) by delaying medical treatment recognized as safe and effective for a specific disease or

condition.

foreign governments to bring action against such individuals. FDA, the Customs

Service, the Postal Service, and the Drug Enforcement Administration have greater

authority to stop drugs imported illegally into the United States when the product

reaches the U.S. border. These agencies have been successful in stopping some products from entering the country. The difficulty of finding these products at the border

makes this a very challenging task. The sale of drugs to U.S. residents by foreign

sellers poses the greatest challenge for the Federal government.

FDA’S INTERNET DRUG SALES ACTION PLAN

FDA has drafted an action plan outlining expanded activities the Agency will take

to address the unlawful sale of drugs over the Internet. This plan is based on internal deliberations, meetings with Federal and State regulatory and law enforcement

bodies, as well as organizations representing consumers, health care practitioners,

and the pharmaceutical and pharmacy industries. FDA has identified five major

areas of focus pertaining to the regulation of online drug sales, which are to:

• customize and expand the Agency’s regulatory and criminal enforcement efforts;

• identify when and with which Federal agencies FDA should partner in joint activities;

• partner with State bodies to address domestic Internet sales;

• engage in public outreach; and,

• provide input to Congress regarding legislation.

1) Customize Enforcement Efforts

FDA’s role in regulating online drug sales should be consistent with its traditional

regulatory role. We also believe that, given the Agency’s current limited resources,

our existing approaches to enforcement should be adapted to focus more effectively

on the problems posed by online drug sales. An effective Internet enforcement process requires establishing priorities, identifying and monitoring potentially violative

web sites and making appropriate referrals for criminal prosecution and/or refer/

pursue civil enforcement. The Internet action plan calls for FDA to enhance its enforcement efforts by undertaking the following actions.

Establish Priorities—FDA will initially focus its online drug sales-related enforcement activities to the following areas, particularly where there is a significant

public health risk: 1

• Unapproved new drugs,

• Health fraud,

• Prescription drugs sold without a valid prescription.

Increase Data Acquisition—FDA will expand its capability to monitor the

Internet and identify violative sites by acquiring an advanced search tool and upgrading its data capabilities. This will allow the Agency to determine the kind and

extent of unlawful conduct on the Internet and provide a measurement by which

the Agency can judge whether its enforcement efforts have had an impact on illegal

Internet behavior.

Coordinate Triage—The Agency has established a three-member case assessment team with representatives from the Office of Enforcement and OCI within the

Office of Regulatory Affairs (ORA) and from CDER. This team will evaluate violative sites; and make appropriate referrals for criminal prosecution and/or refer/pursue civil enforcement; and, ensure that criminal and civil enforcement actions are

efficiently coordinated. Any Agency employee who identifies a potential violation on

the Internet will refer the information to the team. This process should ensure that

decisions are made in a timely way with appropriate balance in terms of achieving

a maximum deterrent effect while taking action, if needed, to remove harmful products from the market. The team will continue to oversee Internet-related enforcement activities while they are being investigated and will ensure that they are

brought to appropriate completion.

Increase Enforcement Presence—FDA believes that to effectively curb unlawful conduct involving online drug sales, more cases must be pursued. To do this, the

Agency will draw from existing activities to increase its current enforcement efforts

because we believe that illegal online drug sales pose a significant public health

risk. The Agency will begin this effort with a modest reallocation of current fiscal

year funds.

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2) Identify Federal Agency Partners

Several Federal agencies, as well as the States, have the authority to regulate

and/or enforce U.S. laws related to the sale of drug products online. Due to the

growth of potential cases involving the Internet, there may be instances when working with another agency or State could result in a more effective enforcement action.

In fact, FDA worked closely with FTC in developing the Operation Cure-All cases

and also has been working with DOJ and State regulatory bodies.

To ascertain whether and when FDA should coordinate efforts with one or more

governmental bodies, above and beyond the relationships that exist today, the Agency has researched the roles that the various Federal and State bodies should play

regarding online drug sales. FDA also has met with several of those agencies, as

described above, to identify opportunities for partnering in enforcement actions.

FDA believes that an important area where cooperation among Federal agencies

can be quite beneficial is the sale of drugs to U.S. residents by foreign sellers. The

Customs Service, the Postal Service, FDA, and the Drug Enforcement Administration all play important roles in taking action against the illegal importation of

drugs. However, the Federal government’s limited ability to bring enforcement actions against sellers in other countries, as well as the feasibility of stopping drugs

from entering the United States, pose difficult challenges for law enforcement. Generally, a determination of when and with whom FDA would engage in joint enforcement should be based on the kinds and severity of violative conduct identified

through continuous Internet monitoring. Although FDA is expanding its Internet

monitoring capabilities, the Agency also is developing partnering arrangements with

other agencies. In addition, FDA will participate in any Administration-led working

groups that address online drug sales.

3) Partner with State Bodies and Other Organizations

FDA has met with and continues to meet with organizations representing State

regulatory and law enforcement bodies, consumers, health care practitioners and industry. The purpose of these meetings is to gather information on 1) how issues relating to online drug sales should be addressed, 2) who should regulate and how

they should regulate, 3) whether and what changes to the current law should be

enacted, and 4) when to develop partnering arrangements. These organizations include:

• the National Association of Boards of Pharmacy, • the Federation of State Medical Boards, • the National Association of Attorneys General, • the American Medical Association, • the American Pharmaceutical Association, • the American Association of Retired Persons, • the National Consumers League, • the American Society of Health-Systems Pharmacists, • the National Association of Chain Drug Stores, • the National Community Pharmacists Association, and, • the Pharmaceutical Research and Manufacturers Association.

FDA believes that illegal selling and prescribing of approved prescription drugs

over the Internet can be effectively addressed through cooperative efforts by FDA

and the States. FDA is drafting partnering agreements with several State bodies to

coordinate Federal and State activities aimed at illegitimate sellers and prescribers

of prescription drugs.

4) Engage in Public Outreach

Every drug sale involves at least a purchaser and a seller. Although different purchasers buy drugs on the Internet for different reasons, all may be targets of unscrupulous business practices, such as the selling of unsafe, expired, or counterfeit

drugs. Public outreach offers one mechanism by which the Agency can help protect

consumers from dangerous or inappropriate drugs. Using the following media, FDA

will expand its public outreach to explain what compliance and enforcement actions

we already have taken and to inform the public about dangerous practices involving

Internet purchases:

• Talk papers • Articles in FDA Consumer Magazine • Information on FDA’s web site to inform consumers about what to avoid if purchasing drugs online, for example, buying prescription drugs without a prescription

• Work with the media.

The Agency also chairs the public education subgroup of the Interagency Internet

Sales Working Group. The subgroup met last week to begin addressing whether and

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in what coordinated outreach activities the Federal agencies could engage. Some

agencies have already issued educational materials. The subgroup will seek to build

on existing activities and avoid pursuing duplicative efforts.

Finally, the Agency will keep working with consumer groups, health care practitioner organizations, and industry to encourage these parties to keep their constituents and the public informed about safe practices for purchasing drugs online.

5) Provide Input to Congress Regarding Legislation

Congress did not enact the current laws governing drug sales with the Internet

in mind. Additional fact-finding will be needed to determine whether and to what

extent existing regulatory and law enforcement frameworks do not adequately address Internet-related conduct. FDA believes that any decision to pursue new legislation should be made only after a careful and thorough analysis of the issues based

on sufficient information, including discussions with relevant non-governmental bodies. FDA has met with and continues to meet with Federal and State governmental

bodies and non-governmental organizations to obtain their perspectives on how online drug sales should be regulated. Where appropriate, the Agency will provide

input to Congress regarding whether and what legislation is needed in this area.

CONCLUSION

Mr. Chairman, online shopping for pharmaceutical products clearly provides certain benefits for consumers. But it also has a number of risks. Additionally, the nature of this technology presents law enforcement and policy makers with unique

challenges. FDA is grappling with the challenges posed by online drug sales, and

with our need to carefully balance consumer access to information and products

with protecting the public health. We believe we can adapt our compliance and enforcement techniques to the new electronic marketplace, and we will continue to assess what changes in our procedures or the law might be appropriate. We look forward to working with Congress on this important issue.

I would be happy to answer any questions you may have.

Mr. UPTON. Well, thank you very much.

You know, as we began to get evidence for this hearing and

began to schedule it, and Mr. Klink and I talked a number of times

over the last number of months in terms of the problems, and you

were here for the first panel, and whether it be our own local

media in our own districts or really across the Nation, it seems like

this is just the tip of the iceberg. I mean, if any dog or cat can get

this, or folks that have been dead for decades, with pretty relative

ease, 9-, 10-year-olds as well, we have a problem. We have a big

problem.

As we listen to our own Attorney General speak, and again, for

Kansas, they are looking after six—only six cases that they have

identified, but just because of those six cases, all of the sudden

many of the Internet pharmaceutical groups have, in fact, said

Kansas is the State that we don’t want to mess with, let us look

at the other 49.

Mr. Fong, you indicated at the end of your testimony that the act

of dispensing drugs illegally and improperly is, in fact, a Federal

offense and that you stand ready to prosecute those in violation.

How many—I mean, knowing some of the evidence that we have

seen today, how many cases are you actively pursuing at this time?

Mr. FONG. We have, as I indicated in my testimony, been working with our investigative agencies. We work in partnership. We

are at the tail end of the process in many ways, and we are only

a piece of the puzzle, but we are in the process of working on investigations, and I can’t tell you today that we have complaints that

we’ve filed in this area, but we have filed numerous actions in

analogous situations involving precisely the fact pattern that you

mentioned, as I indicate in my written testimony, cases against inVerDate 13-MAR-2000 09:18 Mar 20, 2000 Jkt 010199 PO 00000 Frm 00105 Fmt 6633 Sfmt 6602 E:\HEARINGS\58498.TXT pfrm02 PsN: 58498
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dividuals selling unapproved drugs as well as drugs without a prescription, steroids for example.

Mr. UPTON. So there are cases pending?

Mr. FONG. Some of these cases are more than pending. Some individuals have been sentenced.

Mr. KLINK. Will the gentleman yield to me for a moment?

Mr. UPTON. Sure.

Mr. KLINK. Could you tell us how many cases there have been,

not necessarily now, but could you present the subcommittee with

verification as to how many cases there are and what the adjudication has been of those cases?

Mr. FONG. I can certainly ask and get back to you.

Mr. KLINK. Thank you.

[The following was received for the record:]

From September 1985 to May 1999, there were 236 convictions of distributing

drugs without prescriptions: 151 steroid cases; 59 animal drug; and 26 GHB.

Mr. UPTON. Ms. Bernstein, there was—when you get your picture

in the Wall Street Journal, that’s always sort of an extra little

mark, prominence. In a story today by John Simons, it indicates

that Ms. Bernstein is watching, but she walks a fine line within

the Clinton administration, which has a hands-off stance toward

Internet regulation. The administration would prefer that the industry police itself. Yet in your testimony you indicated that you

do think you would support the mandating of—the posting of information, similar, I would presume, to some of the thoughts Mr.

Klink raised with the earlier panel.

Who is speaking for the administration on this, as we have heard

from Dr. Woodcock and Mr. Fong, and is this statement on the

mark in terms of what the Journal reported today?

Ms. BERNSTEIN. Mr. Chairman, I guess John Simons wasn’t

sworn as I was this morning, but I think the Journal statement is

correct.

Mr. UPTON. He may be over here. I don’t know what he looks like

so——

Ms. BERNSTEIN. I think that statement was—was correct. The

Commission voted to support legislation that required the disclosure of that identifying information. I do not believe the administration has objected to the Commission’s position on that. Does that

respond to your question?

Mr. UPTON. Well, the comment in the story says that the administration would prefer that the industry police itself. So that would

seem to the casual reader that they would oppose legislation that

you commented on.

Ms. BERNSTEIN. Let me expand further if I may, Mr. Chairman.

The administration has favored a self-regulatory approach on the

Internet in connection with privacy particularly; that is, generalized privacy protection, not on this issue where existing laws have

already been violated, and do raise public health concerns. The

Federal Trade Commission has supported that nonregulatory position in connection with privacy as well. So I view them as different

issues, if you will, and I believe the Commission and the administration do as well.

Mr. UPTON. My time has expired. I yield to Mr. Klink.

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Mr. KLINK. Mr. Chairman, before I begin my questioning, might

I take care of a bit of housekeeping with you? I would ask unanimous consent that at this point in the record that the majority and

minority counsels work together to insert into the record at this

point in the hearing all of the correspondence between our subcommittee and committee with the agencies represented on this

panel and their responses.

Mr. UPTON. Without objection.

Mr. KLINK. Thank you, Mr. Chairman.

[The information referred to follows:]

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Mr. KLINK. In response, and in the same vein, Dr. Woodcock, on

June 14 we sent to Commissioner Henney a letter asking a number

of questions, and we finally did get a response. It took a great deal

of time, but in the response absent was response to question number 4, and you won’t need the letter in front of you. I will read this

to you. We asked as part of the response, please provide the committee the following information regarding the enclosed copies of

Internet sites—and you saw the stack of sites if you were here earlier—the physical location of the site; what State they sell their

products in; a description of the products sold through the site; the

source of such pharmaceutical products sold through the site;

whether the site is licensed in the U.S.; if so, by what States; if not

licensed in the U.S., please determine whether the site is licensed

by a foreign regulatory authority; or, if at all, whether the site has

ever been reviewed; the site for any advertising or usage claims

made in regard to any pharmaceutical product sold, and the accuracy of such claims that were made by the site that fall under

FDA’s jurisdiction.

Those items were not responded to. I would simply ask if you

would work post haste, if you could, when you get back to FDA,

to see if we can get some responses to that because this really gets

to the guts of the matter that we are dealing with here.

Ms. WOODCOCK. Certainly. I think it also illustrates that a lot of

investigative work is required at the current time for any site to

get the kind of information that you’re talking about for any site

that’s simply a—a Web site in cyberspace. It requires a fair amount

of investigation to see what’s actually behind that, and it may be,

as other witnesses said, that numerous other corporations or entities may be involved in shipping, billing, obtaining medicine and so

forth.

[The following was received for the record:]

The June 14, 1999 letter from the Chairman and various Members of the Commerce Committee asked several detailed questions regarding 104 web sites, primarily selling Viagra, that were enclosed with the letter. In our July 30 response

letter, we indicated that FDA had not developed information at that time on most

of the Internet web sites. FDA has performed WHOIS searches on domain name

registrars to identify the administrators of these operations and their locations. A

WHOIS search enables persons to obtain information about or related to a domain

name registration record.

The results of these WHOIS searches indicate that 75 of the sites list a domestic

address and 28 list a foreign address. Using the basic information obtained from

this search, FDA is further evaluating the sites using the process described in our

testimony of July 30. The Agency’s Internet case assessment team (consisting of representatives from the office of Enforcement and the Office of Criminal Investigations

(OCI) within the Office of Regulatory Affairs and a representative from CDER) is

reviewing information on the sites and will make referrals for further investigation,

as appropriate, to FDA compliance and field offices and to state regulatory agencies

and/or pharmacy board representatives. If warranted, such referrals could result in

regulatory compliance or civil enforcement actions, professional board disciplinary

actions, or criminal prosecution.

We will provide the Committee with additional information as our evaluations

and activities proceed.

Mr. KLINK. If I could just interrupt, I know there’s a lot of work,

I know there’s a lot of sites, and we held them up. We sent the

same letter to the Federal Trade Commission after we sent the letter to the Food and Drug Administration. They were able to answer, and you weren’t, and I am bothered by that. I am troubled.

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They showed up, they have their analysis, and we have nothing by

the FDA.

Can you tell us what—how many people are being put on the

case to determine how many of these sites are and whether or not

you believe that any of them have the appropriate State licenses?

How many people are looking at that, and do you have any determination as to whether or not any of these sites are licensed and

how many there are?

Ms. WOODCOCK. What we have found is 104 sites.

Mr. KLINK. You found 104?

Ms. WOODCOCK. Yes.

Mr. KLINK. We found 200. So apparently we have done a better

job of looking for the Easter eggs than you have. Does that bother

you? We have got three people on the minority side staff. How

many people do you have working at the FDA?

Ms. WOODCOCK. Total people at the FDA?

Mr. KLINK. Yeah, how many total people?

Ms. WOODCOCK. There are 9,000 people.

Mr. KLINK. You have 9,000; we’ve got three. You found 104; we

found over 200, and we’re still finding, and we understand there

is over 400. That is troublesome. How many of the 9,000 people are

working on this?

Ms. WOODCOCK. I can’t give you a specific answer.

Mr. KLINK. Do you suppose that you can later on once you go

back and check it out?

Ms. WOODCOCK. Yes.

[The following was received for the record:]

At the present time, there are four people reviewing the 104 web sites provided

by the Committee. These individuals have been assisted by additional staff at various times, including persons providing technical assistance. It should be stressed

that review of these sites is an involved process. A web site is examined and a full

check is run on all of the potential links as well as the data known about the web

site itself. This entails a complete analysis through various databases identifying all

known addresses, credit records, law enforcement records and other comprehensive

information. As the review progresses and expands, more people are being involved.

The number of people will increase again if the Internet assessment team determines there is a need to pursue additional action with respect to any Internet site.

There are about 10 FTEs (full time equivalent personnel) devoted to the issue of

regulating illegal activity in which the Internet may play a role. It is anticipated

that this will increase gradually to 20 FTEs as resources are shifted to address the

increased activity expected in this area.

Mr. KLINK. I understand that you made an announcement today

that you are going to expand your surveillance, and I mentioned

before this panel came up, we’ve had promises before that this is

a new day, we have got a new task force, we have got a new initiative. Yet you come here today to say that you have seen 104 sites.

How many of those sites are licensed?

Ms. WOODCOCK. I will have to consult with my colleagues.

Mr. KLINK. Of the sites you looked at, of the 104 you found, how

many actually have a license?

Ms. WOODCOCK. I’d like to introduce Jeff Shuren if I may.

Mr. KLINK. Jeff, are you sworn in?

Mr. SHUREN. No, I’m not.

Mr. KLINK. Mr. Chairman, would you swear him in, please.

[Witness sworn.]

Mr. KLINK. If you’d introduce yourself, speak into the mike.

225

Mr. SHUREN. My name is Jeffrey Shuren. I’m a medical officer

at the FDA.

The 104 sites we were referring to are the sites that you sent to

us, and what we did is——

Mr. KLINK. So you found the sites that we sent to you?

Mr. SHUREN. No. You asked us to look at those sites.

Mr. KLINK. Oh, okay. How many sites are you aware of total

then?

Mr. SHUREN. An exact number I can’t tell you. We’ve looked at

hundreds.

Mr. KLINK. Hundreds; 200’s, 300’s, 400’s, 900’s? There are hundreds. There’s a lot of hundreds. Give us an idea, if you would.

Mr. SHUREN. I’d be estimating. I’d say to the 300 to 400’s at this

point.

Mr. KLINK. 300 to 400. How many of those are licensed?

Mr. SHUREN. I could not tell you the number that are licensed.

Mr. KLINK. Are you looking at how many of them are licensed,

and what methodology are you using to determine, A, how many

sites there are and, B, whether or not they are licensed?

Mr. SHUREN. Well, in terms of whether the site is licensed as a

pharmacy, traditionally the States have regulated that. We do not

have authority over the licensing of pharmacies. In fact, under our

statute pharmacies are exempt from registering with FDA. What

we did do with those sites that you sent to us, is conduct a ‘‘who

is’’ search on domain name registrars to try to find out the name

of the contact person and the location of those sites. As a result of

this search, we found that 75 of those sites are domestic, 28 of

those sites are foreign.

Mr. KLINK. Now, where does the consumer go today to determine

whether or not it is safe to buy pharmaceutical supplies or pills or

whatever else from these sites? We have already heard from the

States. They are ill-equipped. These things are coming in from outside the country. They are post office boxes and warehouses that

are moving around from one location to another. We have discussed

with the FDA, with the Department of Justice, with the FTC all

of these problems for many months. Where does the consumer go

to find protection? And if we are so concerned about not impeding

the growth of the Internet, what about those students that Ms.

Egan told us about in the past panel from Philadelphia who acquired the ingredient from cough syrup over the Internet and were

injured? And what about the potential for death from taking these

drugs? Who is protecting the American public? Which one of your

agencies is doing it? What activities have you undertaken in cooperation with the States to make sure that the health and the

safety of the American public is, in fact, being protected?

Ms. WOODCOCK. Let me tell you about what actions we will be

taking. We have acquired what’s called a Web crawler which is a

technology that will enable us to rapidly scan sites and locate sites

that are illegally selling drugs. We are shifting more of our criminal investigators onto investigating these sites.

Mr. KLINK. How many more? Percentagewise, total number, how

many people?

Ms. WOODCOCK. We are doubling our resources from now on.

Mr. KLINK. From what to what?

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Ms. WOODCOCK. We estimate we have about 10 people right now

working specifically on Internet full time.

Mr. KLINK. Full time, thank you.

Ms. WOODCOCK. So we will double that to 20. We are working,

as I said in my testimony, with the States attorney general, with

the National Association of Boards of Pharmacy to get to your

question of how do consumers know. It is not safe right now probably to purchase drugs from an on-line pharmacy that is not a wellestablished entity.

Mr. KLINK. So the FDA recommendation today to the general

public through the media in this hearing and for anyone else is it

is not safe today to be purchasing drugs from an on-line pharmacy

unless you have information as to who is the controlling person,

and whether they are licensed, and who they are licensed with so

that there is, in fact, some verification of the legitimacy of that

site?

Ms. WOODCOCK. Yes, through a known entity and a known chain,

or some other verification, you know who those people are, because

otherwise it could be a foreign site. It could be anywhere, that’s

correct.

Mr. KLINK. How many of the 400 sites do we know about that

are licensed, of the ones that we are expecting that are out there,

that are of quality that are licensed? How many do we know that

are legitimate, and what is being done about those that may not

be?

Ms. WOODCOCK. What’s being done about legitimate sites, as you

heard, there is a voluntary effort to have a certification program

through the National Association of Boards of Pharmacy, the seal

of approval that’s been talked about, the VIPPS program. The

other sites need to be investigated, and many of them are engaged

in illegal activities, as other people have said, already other witnesses, and those activities need to be stopped. We have already

taken cases and had convictions on Internet cases, but we need to

step up this activity.

Mr. KLINK. Thank you.

Mr. UPTON. Mr. Bryant.

Mr. BRYANT. Thank you, Mr. Chairman, and I apologize for my

absence. I am running between other subcommittee hearings, and

health care is having a hearing on drug addiction and cocaine addiction, interestingly enough, not absolutely totally unrelated to

what ultimately we could be talking about here with particularly

young people who are venturing out who violate the law to obtain

legal drugs and the possibility that could be a gateway ultimately

to doing other things, to get illegal drugs and the accompanying addiction.

Ms. Bernstein, I know that in August 1998, complaints were filed

with your organization regarding the prescribing and selling over

the Internet of Viagra, again without a prescription, and I know

you may not be prepared today to tell me the status of those complaints, but I would like to know and I would like for the committee to know the status of those complaints. So if you could add

to your testimony later with that information——

Ms. BERNSTEIN. I would be glad to do that.

Mr. BRYANT. [continuing] the status of those complaints.

227

1FTC staff also requested Pfizer to provide it with information concerning consumers who

purchased Viagra on the Internet who experienced adverse incidents. To date, Pfizer has not

submitted any such information. 2See 15 U.S.C. § 41 et seq. as amended. 3These websites were identified and reviewed prior to receipt of the ninety-four websites provided to the Commission by Representatives Dingell and Klink on June 29, 1999.

[The following was received for the record:]

FEDERAL TRADE COMMISSION

BUREAU OF CONSUMER PROTECTION

September 24, 1999

The Honorable FRED UPTON

Chairman

Subcommittee on Oversight and Investigations

Committee on Commerce

House of Representatives

Washington, D.C. 20515

DEAR MR. CHAIRMAN: This letter responds to the Subcommittee’s request, made

at the July 30, 1999 hearing on the Internet sale of prescription drugs, to provide

details regarding complaints filed by Pfizer, Inc. (‘‘Pfizer’’) with the Federal Trade

Commission (‘‘FTC’’) concerning the online sale of Viagra.

FTC staff first met with Pfizer representatives on August 25, 1998. Pfizer raised

concerns about Internet sites distributing Viagra without a prescription. Approximately one month later, Pfizer provided staff with specific information on six

websites.1

Staff’s review of Pfizer’s submission revealed that each website offered Viagra

to a consumer without a pre-existing prescription. The consumer was invited, for a

fee, to fill out an online questionnaire. All of the sites claimed that the completed

questionnaire would be reviewed by a physician who would determine whether

Viagra was appropriate for the consumer. If approved, the consumer would be sent

the prescription. None of the sites made any express or implied claims about the

effectiveness or safety of Viagra.

Pfizer’s principal concern with these websites appeared to be whether the actions

of the physicians met the minimum criteria for prescribing Viagra, However, as

we discussed in our July 29, 1999 letter to Representatives Dingell and Klink, and

in our testimony before the Subcommittee on July 30, 1999, the FTC has the authority to bring enforcement actions only where an online pharmacy engages in unfair or deceptive acts or practices in commerce.2 In contrast, the Commission has

traditionally refrained from regulating practices that may fall within the doctor-patient relationship, such as communications between doctors and patients about

course of treatment decisions. Moreover, the Commission does not have the authority to revoke an individual physician’s license or to enforce state licensing requirements. The licensing, revocation of licenses, and regulation of pharmacies has traditionally taken place at the state level by state pharmacy boards. As a result, the

FTC believes that the specific concern Pfizer raised is more appropriately addressed

by other state and federal agencies with primary regulatory authority over the practice of medicine and distribution of prescription drugs.

Commission staff met with Pfizer representatives again on November 2, 1998. The

company reported that it had met with a number of state regulatory agencies who

were concerned with the online prescribing of Viagra without a prescription, and

inquired about staff’s interest in hearing from those agencies. FTC staff welcomed

this contact, and later received letters from twelve states and the District of Columbia raising concerns about online prescribing practices and their ability to effectively

regulate online prescribing and dispensing. Copies of those letters were provided to

the Subcommittee as attachments to the Commission’s July 29, 1999 letter to Representatives Dingell and Klink.

Following the meetings with Pfizer, FTC staff has continued to identify and investigate online pharmacies. By using a variety of web search engines, reviewing Internet ‘‘message boards,’’ and traditional newspaper advertisements, staff identified approximately one hundred Internet pharmacies.3 Staff also made undercover buys

from some of these pharmacies to determine if physicians were, in fact, involved in

the transaction at the websites represented. While we are continuing to pursue

some of these matters independently, staff has also referred matters to the relevant

state and other federal authorities with the primary jurisdiction over the particular

practices identified in the investigation.

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Staff is working closely with other federal and state agencies, and other associations on issues relating to the sale of drugs over the Internet. We look forward to

continuing to work with your staff on this difficult and serious public health issue.

Thank you for this opportunity to provide additional clarification on this issue.

Sincerely,

JODIE BERNSTEIN

Director

Mr. BRYANT. Dr. Woodcock, does your agency have jurisdiction

over overseas companies that manufacture drugs or that counterfeit drugs and send them over to the United States?

Ms. WOODCOCK. It is illegal to import drugs into the United

States unless they are approved by the Food and Drug Administration, prescription drugs.

Mr. BRYANT. What authority do you have over that, and what

can you do?

Ms. WOODCOCK. Under the traditional pharmacy system, it was

easier, as I have already pointed out, to manage and regulate the

distribution of drugs, the coming into the United States. With the

ability of consumers to reach out to foreign sites and order drugs

that way, our authority starts at our border basically. We work

with the foreign governments and the foreign authorities onsites

that have been identified. We notify them, and we have gotten cooperation with them and with Internet providers to shut down ads

for such sites that are illegally selling drugs.

But as was already said, it’s difficult for us to go overseas and

actually do something about those sites. We can stop the drugs at

the border, and we share that authority with Customs, with the

DEA and other Federal agencies.

Mr. BRYANT. I assume your agency has counter or similar agencies, sister agencies so to speak, in other countries, and I assume

your best efforts are being used to work with those agencies; is that

right?

Ms. WOODCOCK. Countries that have established drug regulatory

systems are also struggling with the same issue that you are struggling with today.

Mr. BRYANT. Mr. Fong, from the Department of Justice, I compliment you on agreeing with me in many things in terms of—and

that is fairly often that I agree with the current Department of

Justice, and sometimes we don’t, but I know from your testimony

basically you indicate that this is kind of an old problem repackaged, and can I take it by that statement that you feel that existing Federal law is sufficient to handle this problem?

Mr. FONG. That is our current belief based on our analysis. We

are actively studying the question, and we are meeting with our

Federal agency partners and States, and to the extent we come to

the view that additional assistance in the way of legal authority is

necessary, we will come back to you, but at this point, as I indicated in my earlier remarks, existing law prohibits the dispensing

of a prescription drug without a valid prescription from a licensed

physician. We have prosecuted cases of violations of that statute.

We will continue to do so.

I want to add, if I might, in response to an earlier question from

Mr. Klink about whom does the consumer go to, and this responds

in part to your question as well. It depends in part on what the

substance is. It’s easy to miss the fact that some drugs are preVerDate 13-MAR-2000 09:18 Mar 20, 2000 Jkt 010199 PO 00000 Frm 00231 Fmt 6633 Sfmt 6602 E:\HEARINGS\58498.TXT pfrm02 PsN: 58498
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scription drugs, which are governed by certain laws, and others are

controlled substances, which are governed by different laws, and as

you know, are required by the Drug Enforcement Agency. DEA has

a very active investigation and enforcement effort in terms of controlled substances. So many of these problems that we are talking

about that involve controlled substances, especially those from

abroad, are being quite well, we believe, handled by existing DEA

efforts.

Mr. KLINK. Would the gentleman yield for just one moment?

Mr. BRYANT. Mr. Chairman, are we going to have a second

round? Okay. Could I have an additional minute based on the fact

that he spent time answering Mr. Klink’s question?

Mr. KLINK. I would ask unanimous consent for the gentleman to

have an additional minute and a half, and I would ask if he would

yield just briefly.

Mr. BRYANT. I would be happy to yield, if I am granted that.

Mr. KLINK. On that point about, you know, where does the public

go to, and it depends on what it is, how would we expect the general public—and I read some of this. I used to be a professional

reader. I used to be paid to read on the television. I was a news

anchor. It is hard enough for me to read some of these words, yet

alone to know what is over the counter, what is something that

would have to have a prescription. How would the average person

know that? Where do they go?

You know, the point is, no prescription, no problem, you can get

whatever you want. So what are you doing at DOJ? You have already acknowledged the fact that that is illegal. Give us an idea

of what you are doing to bust those people that are breaking the

law day in and day out. What percentage of the people are you arresting? What percentage of the people are you shutting down?

How recently have you shut down the most recent of these couple

of hundred sites that Mr. Stupak has in front of him? Have you visited them? Have you actually physically gone to any of those sites?

I thank the gentleman for yielding.

Mr. FONG. Well, you have asked a number of questions, and let

me just say I was expressing a view as to the legal structure. I

think it’s a fair point you make that an average consumer probably

would not know. On the other hand, the Internet does offer a

wealth of information, and it would be possible, though not—I

wouldn’t expect that to happen—that there would be mechanisms

for determining whom to go to. You know, there are many Internet

resources in other—in the area of fraud that the FTC has jurisdiction over.

Mr. KLINK. Excuse me, if the gentleman will suspend, I don’t

want to take any more of the gentleman’s time. When we get back

to the second round, I will ask the same question, and this time

I hope that you will answer.

Mr. UPTON. I was going to say the gentleman’s 30 seconds has

expired, and the remaining minute is back to Mr. Bryant.

Mr. BRYANT. Thank you, Mr. Chairman.

Again, you indicate that it is already against the law to sell

drugs illegally, but on the other side, the fraud side, I trust that

the Federal laws out there, whether they be mail fraud or whatever, are sufficient, in your opinion, to cover the counterfeit, the

230

people who set up phony Web sites and things like that. But it

seems to me—I know you said you met, in your statement, with all

the investigative agencies, the FBI, the DEA and your agencies on

either side, and the U.S. Attorneys out in the field. The 93 U.S. Attorneys are the ones that I assume do a lot of this prosecution, but

it seems to me it would also be a good idea to bring in the individual States, and as General Stovall indicated—from Kansas indicated, they are willing and prepared, as I assume most States are.

Do you agree with her, is my question, that possibly we could

enact some legislation that would be similar to what we did in telecommunications apparently to assist the cross-State, cross-boundary efforts of the States and get everybody working on this problem, not only Federal people, because I know they have got limited

assets and they have certain criteria before they take cases, to give

the States—empower the States with more authority to cross

boundaries? Would you agree that some type of legislation, whether

it be a uniform law or something, would be beneficial?

Mr. FONG. We would certainly want to seriously consider that

proposal, and I know we—to the extent we have experience with

the telemarketing provision, we would look to that, but we are very

open, I believe, to do those kinds of mechanisms; so, yes.

Mr. UPTON. Thank you.

Mr. Stupak.

Mr. STUPAK. Thank you, Mr. Chairman.

Having been in law enforcement for a number of years that I

was, we know it is illegal to sell a controlled substance without a

license. We know it is illegal to obtain a controlled substance without a prescription. We know it is illegal to use a controlled substance outside its prescribed use. So do you need a license to sell

controlled substance on the Internet? You are shaking your head

yes, Doctor, you do?

Ms. WOODCOCK. As we already said, selling prescription drugs on

the Internet without a prescription is illegal.

Mr. STUPAK. I asked, though, do you need a license to sell a controlled substance on the Internet? Pharmacy or medical license, do

you need one to sell it on the Internet?

Mr. FONG. Again, as I understand the question, it goes to a controlled substance rather than a prescription drug, and as I understand the law, all controlled substances must be, if they are dispensed or delivered—I am not positive because I haven’t looked at

the statute recently.

Mr. STUPAK. If it is controlled substance, is the person who is

selling—the person who is selling must be licensed. The person

who is receiving must have a prescription if it is controlled substance. We all agree with that, hey?

Mr. FONG. Regardless of Internet, mail, telephone.

Mr. STUPAK. So then what are you doing to enforce it? That is

what we are trying to ask you. January we had 26 sites. Today we

got 400. You say the laws are there. Back when I was a police officer many moons ago, they were there. We enforced them. We have

a new medium now called the Internet. What we want to know,

what are you doing to enforce it? It is proliferating. You go from

26 in January to 400 in July. What are you doing to actually enforce it? Where is the cop on the beat, if you will? Where is the cop

231

on the Internet to make sure this is being done and administered

right?

I mean, I am hearing promises, we are going to do some things,

we are going to do something. Where you been? Do we have to put

100,000 cops on the Internet? Anyone care to answer?

Ms. WOODCOCK. We have been working with the DEA as part of

the interagency working group, so——

Mr. STUPAK. Specifically, I mean. I am working with this agency,

I am working with that department, I am going to do this. What

specifically are you doing to get at this?

Ms. WOODCOCK. As I said, we have purchased a Web crawler. We

are going to have surveillance over the Internet. We will be able

to refer controlled substances illegally offered for sale to the appropriate enforcement people.

Mr. STUPAK. Do you have a task force or something that decided

to do a Web crawler now?

Ms. WOODCOCK. Yes. We have an Office of Criminal Investigation.

Mr. STUPAK. Office of Criminal Investigation. How often have

they met about this Internet problem?

Ms. WOODCOCK. The Interagency Task Force has met once, formally.

Mr. STUPAK. Was that after you got notice of this hearing or before you got notice of this hearing?

Ms. WOODCOCK. I believe it was before.

Mr. STUPAK. Okay. So you have met once. From that, have you

put any extra resources in trying to do something, or are you still

trying to come up with a scheme? You see, while you are taking

all this time to do something, next month there will be 500 and

then 600, then 700.

Ms. WOODCOCK. As I said in my testimony, the FDA’s doubling

its resources devoted against this.

Mr. STUPAK. When?

Ms. WOODCOCK. We are now. We have. We have a large number

of cases in progress that we are investigating.

Mr. STUPAK. What does a case in progress mean, you looked at

the site?

Ms. WOODCOCK. More than that. They’re being investigated.

Mr. STUPAK. What does that mean, investigated? What does the

investigation consist of? Who, what, when, where, why and how?

Ms. WOODCOCK. Yes. Basic police type of investigational activities, visiting the sites, obtaining evidence, purchasing and documenting an illegal sale by purchasing.

Mr. STUPAK. How many illegal sales have you purchased?

Ms. WOODCOCK. I don’t know the answer to that.

Mr. STUPAK. What else have you done?

Ms. WOODCOCK. What else are we doing?

Mr. STUPAK. How many of these are licensed? We gave you 104,

you said earlier, and you checked into it, and how many are licensed by the States in those 104 sites?

Ms. WOODCOCK. Again, I think Dr. Shuren said that we can’t

give you that answer right now. We don’t know the answer to that.

Mr. STUPAK. I don’t believe there is an investigation going on. I

think we are looking at a lot of papers, and that is about it.

232

Ms. WOODCOCK. We have taken quite a few actions. There have

been convictions. People have been put in jail for Internet violations.

Mr. STUPAK. Since January on selling drugs over the Internet,

people have been put in jail?

Ms. WOODCOCK. I can’t answer that specifically.

Mr. STUPAK. Well, that is what you just said, though, we are putting people in jail.

Ms. WOODCOCK. We have done that. This has occurred.

Mr. STUPAK. For what?

Ms. WOODCOCK. For example, there was a conviction in California, as we have in our testimony, for an individual who offered

HIV test kits, a bogus HIV test kit over the Internet. That individual was convicted.

Mr. STUPAK. Is an HIV test kit a controlled substance found

under the Controlled Substance Act?

Ms. WOODCOCK. No.

Mr. STUPAK. No, it is not.

Ms. WOODCOCK. That’s correct.

Mr. STUPAK. You haven’t done anything on this Internet problem. I mean, HIV test kits is not really the subject of this hearing.

I mean, I think it is frustrating, having been in law enforcement,

you see a problem that is growing leaps and bounds, you are talking about it, but nothing is really being done or were not prepared

for the hearing, either one of the two.

I yield back, Mr. Chairman.

Mr. UPTON. The gentleman’s time has expired.

Ms. DeGette.

Ms. DEGETTE. Thank you, Mr. Chairman. I would like to follow

up some of these questions because we have heard about now a

prosecution of someone selling a bogus HIV test kit. We heard a

little while ago about some people from South America selling an

abortion self-sterilization kit. Neither of those are legal in the

United States. And then we heard, Dr. Woodcock, from you about

how importing drugs which are not approved in the United States

is an illegal act, and here is what I am concerned about, and this

is following up on the questions I asked Attorney General Stovall.

I can understand what the States attorneys general are doing

and what others are doing to enforce laws that relate to U.S.-based

physicians, U.S.-based pharmacies who are dispensing drugs without a prescription, or overseas-based pharmacies and physicians

who are trying to send in controlled substances or nonapproved

drugs or kits, but it seems to me the real danger we have got lurking out there is overseas-based folks importing drugs that are not

controlled substances, that are approved in the United States, but

for which there is minimal, if any, pharmacy oversight and medical

approval.

First of all, are any of the cases that your agency or the Department of Justice, Mr. Fong, prosecuted involving cases like that, and

what are you doing for that set of cases? You know, this is the guy

from Denver, Colorado, who decides to order Viagra from a Mexican pharmacy and fills out the little questionnaire, and it is legal

in the United States, it is an FDA-approved drug, it is not a controlled substance, but it is an overseas pro forma kind of thing.

233

Ms. WOODCOCK. Would you like me to start? We have several

cases where we have identified sites that were shipping drugs into

the United States. We have alerted Customs, and some of the shipments have been detained. Sometimes they are United States importing agents that we are able to go after.

Ms. DEGETTE. And how many times has this happened; do you

know?

Ms. WOODCOCK. There are specifics in my testimony. We can get

back to you.

Ms. DEGETTE. If you could supplement the record.

[The following was received for the record:]

The Federal Food, Drug, and Cosmetic (FD&C) Act directs FDA to refuse admission of any article that appears to be in violation of the Act and the Agency regularly intercepts such products from foreign sellers at the border through the detention process. Some of these detentions are based on Import Alerts, which identify

problem commodities and/or shippers and provide guidance for import coverage.

FDA has identified in our Import Alert system several providers of unapproved

drugs that utilized the Internet.

Since 1997, FDA has detained the following number of products which were offered for importation into the United States:

Fiscal Year Number of

Detentions

1997 ............................................................................................................................................................................. 29,420

1998 ............................................................................................................................................................................. 39,329

1999 ............................................................................................................................................................................. *37,389

*(through August, 1999)

These figures are for all FDA-regulated products, including food, drugs, cosmetics,

medical devices and other items, and includes entries offered by both commercial

and personal importers. Thus, one detention could represent either one package or

a shipment of multiple packages. An examination of FDA import data for the twelve

months ending in July 1999 indicates that 12.4 percent of detentions are of human

drug products (5,067 drug detentions out of 40,855 total detentions). Finally, it

should be noted that importations initiated through Internet web sites are not

tracked as a separate category.

In a number of cases handled by OCI foreign sellers and importing agents have

been implicated. We are unable to determine the number of these cases because the

database can not be queried in this manner. Two of these cases, however, are discussed in Dr. Woodcock’s written testimony submitted for the July 30 hearing. Additionally, CDER has issued ten Warning Letters to firms in foreign countries concerning violative products that were offered or promoted over the Internet.

Ms. DEGETTE. And are those FDA-approved-type drugs or not?

Ms. WOODCOCK. Generally, I think we have been targeting our

efforts by risk.

Ms. DEGETTE. What kind of drugs are they? Are they generally

controlled substances or not?

Ms. WOODCOCK. They have generally been unapproved drugs of

different kinds, steroids, other kind of unapproved drugs.

Ms. DEGETTE. What about for the approved drugs, that the was

the question I had asked.

Ms. WOODCOCK. Yes. We can also do that.

Ms. DEGETTE. Have you done that?

Ms. WOODCOCK. I would have to get back to you.

Ms. DEGETTE. Thank you. If you can supplement your testimony,

I would appreciate it.

[The following was received for the record:]

When FDA approves a drug or biologic product for marketing, it is not only approving the formulation of the drug product and its labeling, but also the manufacVerDate 13-MAR-2000 09:18 Mar 20, 2000 Jkt 010199 PO 00000 Frm 00236 Fmt 6633 Sfmt 6602 E:\HEARINGS\58498.TXT pfrm02 PsN: 58498
234

turing facility that will produce the product. Most FDA-approved drugs are manufactured in the United States, but some are manufactured in foreign countries.

Thus, the drugs manufactured by foreign companies pursuant to an FDA-approved

new drug application (NDA) and shipped into the United States through recognized

distribution channels are just as legitimate as FDA-approved drugs manufactured

in this country.

A problem arises, however, when consumers import drugs purchased overseas, either through the mail or by personally carrying the drugs across a United States

border. Although it is possible that such a drug is FDA-approved (manufactured in

an FDA-approved facility pursuant to an approved NDA) this is rarely the case with

drugs purchased overseas. Most drugs purchased in foreign countries are not FDAapproved, and as such, are subject to seizure under the FD&C Act.

Ms. DEGETTE. Are you aware of any, Mr. Fong?

Mr. FONG. I am not aware of any. As you know, however, given

the questions you’ve asked, this is a very difficult area. It involves

a huge amount of international cooperation.

Ms. DEGETTE. Here’s the thing we are all really worried about.

Mr. Stupak has that big stack of sites that have proliferated just

this year, and I know it is very difficult from your perspective, but

this is why we are all so worried. My worry is not just with the

nonapproved abortion kits and the AIDS test kits that don’t work.

I am worried about other drugs that may not seem so risky, but

if your doctor doesn’t prescribe it and you have got a heart condition, you are going to keel over and die if you use it.

Ms. WOODCOCK. Prescription drugs are prescription for a reason.

That’s because——

Ms. DEGETTE. That is exactly right.

Ms. WOODCOCK. [continuing] they ordinarily would not be safe in

the hand of a consumer even if they were able to self-diagnose the

condition. They may still pose considerable risks.

Ms. DEGETTE. I understand all of that. So, Mr. Chairman, may

I have unanimous consent for just another 2 minutes because I

have to leave?

Mr. UPTON. Go ahead.

Ms. DEGETTE. Thank you.

I have got a chart up there, and this is along these same lines.

I know you can really read it about as clearly as I can, but what

it says in part is from First Pharmacy On-line, and it says, quote,

I understand that the information that I am providing will be

transmitted to a physician licensed to practice medicine in Mexico.

I understand the Mexican physician is not licensed to practice medicine in my State, and I acknowledge and agree that the Mexican

physician is not practicing medicine in my State, and then it says

the Xenical I will receive is real and will be sent to me by a pharmacy in Florida which has been in business since 1946. I understand that my credit card will be processed by M.D. By phone.

Now, I guess my question for Mr. Fong and Dr. Woodcock is,

number 1, do you know about this site? Number 2, is it legal? And

number 3, have you inquired into this site, and what are you doing

about the situation?

Why don’t we start with Mr. Fong.

Mr. FONG. I am not personally aware of that site.

Ms. DEGETTE. That is one of the ones we gave you according to

staff.

Mr. FONG. And I would have to study it to see, to form a legal

opinion about it. This is the kind of thing that we have been disVerDate 13-MAR-2000 09:18 Mar 20, 2000 Jkt 010199 PO 00000 Frm 00237 Fmt 6633 Sfmt 6602 E:\HEARINGS\58498.TXT pfrm02 PsN: 58498
235

cussing amongst ourselves. I know you want us to take action, and

we do take this problem very seriously, but we are also concerned

about rushing in and doing something with unintended consequences. I don’t—I don’t mean to minimize at all the fact that we

need to do more, but I also think we need to be thoughtful and considerate about what we do, and that’s why I want to study it.

Ms. DEGETTE. If you can get back to us and supplement your responses on this particular issue, I’d appreciate it.

[The following was received for the record:]

FDA is evaluating the First Pharmacy Online site as part of its ongoing efforts

to regulate the sale of prescription drugs over the Internet.

Ms. DEGETTE. Do you have anything to add?

Ms. WOODCOCK. The activities you’ve described I would think

would be illegal, and we can take action against this. I am sure

that if you have given us this site, this is one we’re looking into.

Ms. DEGETTE. Okay. If you can follow up and let me know for

certain.

Do you have any final comment, Ms. Berstein?

Ms. BERNSTEIN. On this subject?

Ms. DEGETTE. Yes.

Ms. BERNSTEIN. Only this, that I thought that that site was an

attempt by a company apparently to get a consumer to agree to violate the law basically, and I think it’s our position that a consumer

or any other person can’t waive State law. So I think it would be

an illegal site.

Mr. KLINK. Would the gentlelady yield for one moment?

Ms. DEGETTE. I would be happy to.

Mr. KLINK. Mr. Fong, with all due respect about your rushing in

answer, the fact is that you should know, coming from DOJ, you

can’t waive State law. This is as close to a signed confession as

anything I have ever seen. I don’t understand where you are rushing in. They are saying that the doctor is not licensed in your

State. Everything that you told us in your statement about controlled substances they are admitting to. This is a signed confession. Why would DOJ be rushing in?

Mr. FONG. I meant the comment to apply generally rather than

as to this specific site.

Mr. KLINK. What can you do about this site? You are aware of

it now. How long will it take you to take some action on it?

Mr. FONG. I can find out whether or not we can investigate, and

if so, we will do so.

Mr. KLINK. How would you determine whether you can investigate or not? Is it a jurisdictional question, or is it a question of

whether the law has been broken; whether, in fact, a doctor not licensed to practice in the United States can prescribe drugs in the

United States? Is that the question, or is the question whether or

not you have jurisdiction?

Mr. FONG. I would say that I think it’s a matter of—I don’t think

it’s a matter of jurisdiction per se, so I do think once we concluded

that it was a potential violation, we would investigate.

Mr. KLINK. Potential violation. I yield back. I thank the lady.

Ms. DEGETTE. Thank you, and I yield back to, Mr. Chairman.

Mr. UPTON. Thank you. Mr. Green.

236

Mr. GREEN. Thank you, Mr. Chairman. I, like my colleagues,

have to admit I didn’t bother to look at any of these things until

our committee hearing today. I have concerns not only of state law

but, for example, prescriptions now where you can—the question is

what is currently bothering you now, and I guess you fill it in, and

what currently is bothering you about your health, is your body

mass index above 25, and you agree to sign the waiver for

Phentermine.

I guess I am so surprised to see this, and one of the things I am

concerned about is this committee and the full committee and two

of our subcommittees are going to deal with hopefully telemedicine,

which is, again, a growth industry, and we have a little problem

with telemedicine working across State lines, so we will have to

deal with that.

But what I am worried about is companies like this, or physicians, no matter where they are at, are really going to hinder us

trying to use the Internet and use the technology that we are doing

safely. And with what we have, and the numbers we have seen

that my colleague passed—although I have to admit they are very

good entrepreneurs, because safe Web medical advertised Viagra,

along with a Bahamas cruise for $113.

I guess I am surprised that—is there cooperation? I know we had

the Attorney General from Kansas, but is the DOJ working with

our local State Attorneys General who are aggressively pursuing

this? Not only DOJ, but FTC and also the FDA?

Mr. FONG. I understand that representatives of the Department

have met with the National Association of Attorneys General on

this issue.

Mr. GREEN. Again, my concern is that we have—you can save on

your prescriptions if you order them by mail. We have that now.

Of course, you have to have a doctor’s prescription.

In the next step, it is ordering by Internet, and we are seeing a

lot of bad actors who may limit that for the people who really have

a prescription, instead of being self-diagnosed by the Web. It worries me we are going to limit—we are going to have to do it by statute, maybe, limiting it; and that way we will lose some of the benefits of what is happening with the revolution in telecommunications.

That is why I guess not only the agencies each of you represent,

but the States, need to be as aggressive as they can to prosecute

some of these folks who are violating not only State law, but I

know Federal law also.

I guess one of the things when I was in the legislature in Texas

we passed, and most States did at the urging of the Federal Government, triplicate prescriptions. How would that possibly be effective doing Internet—having prescriptions on the Internet? Can either of you answer that? Comply with any of the prescription laws

that we have concerning controlled substances?

Ms. WOODCOCK. Could you restate your question?

Mr. GREEN. Triplicate prescriptions. If I have some type of controlled substance, the doctors—doctors always used to complain

about it. How can we possibly ever have any kind of compliance

with that law?

237

Ms. WOODCOCK. Obviously, I would think that for safe Internet

prescribing, there may need to be new technologies for things like

that, electronic signatures and so forth that were alluded to earlier.

There has to be verification. This new field, cybercommerce, is really raising some new challenges.

Mr. GREEN. Okay. I know, Ms. Bernstein, I understand that

Pfizer has contacted several States and asked the States to contact

the FTC to take action against certain of these sites selling Viagra;

is that true?

Ms. BERNSTEIN. We have been in touch with Pfizer, yes.

Mr. GREEN. Was it initiated by Pfizer?

Ms. BERNSTEIN. Yes, it was.

Mr. GREEN. Thank you, Mr. Chairman.

Mr. UPTON. You know, I have heard a lot of things here this

morning, and I think a number of us have, have certainly a good

number of frustrations. Dr. Woodcock, when we hear you say that

you would not advise—when we hear the FDA in essence say we

would not advise anyone to use an on-line pharmacy without some

personal knowledge of the site, I started looking through a couple

of the 100 sites that Mr. Stupak—200 sites that Mr. Stupak offered. I daresay I haven’t heard of a single one of them. They have

Dr. Welby-like—I know he retired a long time ago, he may be deceased—but when I see pictures of folks that look a lot like he used

to, and different businesses on here in terms of looking like they

have a real clinic.

I come from a small town, and when my folks and I needed pharmaceutical drugs, we went to a place called Gillespie’s. Dr. Gillespie, it was a family held business, and his brother got into it as

well, and there are two little shops that are still in business today.

People know of the quality of care that you got when you went to

Gillespie’s, just like you knew your own physician.

And nobody knows, I can’t believe anyone on this panel would

know or recognize maybe any of these places. You would have no

personal knowledge of any of them, probably don’t even know a

neighbor or friend that might use them. Yet you say that no one

should be using these things without some personal knowledge.

There is no Good Housekeeping Seal of Approval. There is no way

that people can know.

When you hear Mr. Fong testify they stand ready to prosecute,

and yet there is really not a single case, other than maybe an AIDS

test kit out there, and his statement, too, that they don’t want to

rush in, yet in fact we hear—one of the bills that this panel began

to work on the last couple months, date rape drugs. One of the

things that alarmed all of us is their availability over the Internet

still today. We were able to pass legislation out of our Health Subcommittee last week, and it looks like—actually it was this week,

and it looks like we are going to have a full committee markup on

it next week and on the House floor soon. Everyone is on board.

It is bipartisan, as it should be, and we are moving forward because we recognized the problem.

Yet we hear the Department of Justice doesn’t want to rush in,

yet in essence you are not giving the seal of approval to any of

these, and it is literally impossible for an individual, a consumer,

238

to have some knowledge of this, so there really is a gigantic problem.

As we heard from, I believe it was the Attorney General from

Kansas, testify a little bit earlier, and particularly the reporters, no

one seems to be in charge. The reporter from Philadelphia indicated that they in fact had gone to Federal officials, the DEA, and

they said that they would look into it. But nothing has happened.

These are not isolated cases. I have got to believe in every single

community we can find abuse. Where are we to turn?

Ms. WOODCOCK. With regard to purchasing drugs over the Internet, I think consumers can go to their pharmacists and get a recommendation for a reputable chain, their physician, their health

care provider, their health care insurance company. But consumers

should not be purchasing prescription drugs over the Internet from

unknown sources, or without a prescription and without having

seen and having visited their health care provider.

Mr. UPTON. But it is happening, big time.

Ms. WOODCOCK. Okay. The Agency has taken numerous complaint actions on the Internet. I don’t want to give the impression

that we haven’t. We have had over 60 cases that we have taken

on suspected illegal Internet sales, including the first case that we

took in 1994.

Mr. UPTON. Is that 60 cases in 5 years? One a month? 12?

Ms. WOODCOCK. I have to stress that our resources are stretched.

As Congressman Stupak indicated earlier, we have the Prescription

Drug Marketing Act, we have numerous oversight of numerous

types of illegal sales, many of which have gone on in non-Internet

contexts. What we are going to do is shift resources from our surveillance in that area into the Internet because of the rapid growth

in this area.

Mr. UPTON. Mr. Klink.

Mr. KLINK. If I could just ask a basic question, Dr. Woodcock. We

are talking about of—what, the actions that you have taken

against those people who are distributing over the Internet of what

drugs?

Ms. WOODCOCK. I would have to get back to you.

Mr. KLINK. The 60 cases also you are talking about. Those 60

cases, tell us later.

Ms. WOODCOCK. I will.

[The following was received for the record:]

At this time, OCI has 55 ongoing criminal investigations involving on-line promotion and sales of FDA-regulated products. The 60 cases referred to in FDA’s written testimony included some non-criminal investigations.

The criminal investigations include six investigations involving sales on the Internet of 17 specific prescription pharmaceutical products, including several which are

controlled substances under the Controlled Substances Act. Potential charges include the sale of prescription drugs without a prescription, illegal importation of unapproved new drugs, illegal sale of controlled substances, and wire and mail fraud.

All of the six cases were opened in 1998 and 1999. These six cases do not involve

the operation of what would be normally recognized as legitimate pharmacies in this

country, although they may appear to be pharmacies to the unwary consumer.

The remaining 49 open cases do not involve the sale of approved prescription

drugs, but the promotion and sale of a variety of other products falling under FDA’s

regulatory authority. It is important to stress that in FDA’s view, these sales may

pose equally significant and, in some cases, possibly greater risk to the public health

than the cases described above. We believe the devotion of our limited resources to

these cases is essential to protecting the public health.

239

More than a third of the 49 cases involve the apparent illegal sale of gamma

hydroxybutyrate (GHB) or its relative, gamma butyrolactone (GBL), both extremely

potent unapproved drugs. These drugs are often used ‘‘recreationally’’ but also have

been used in ‘‘date rapes.’’ The use of these drugs has resulted in severe respiratory

problems, seizures, coma and death. As you know, GHB is currently not scheduled

under the Controlled Substances Act, but is the subject of both administrative and

legislative activity to accomplish such scheduling.

Other open Internet-related criminal investigations involve the sale of human

growth hormone; HIV test kits; adulterated medical-products; fraudulent medical

devices; fraudulent unapproved drugs, immune system ‘‘boosters,’’ HIV or AIDs

‘‘cures,’’ tampered products; and diverted or misbranded drugs. These cases date

from 1997 through the present.

FDA has a total of 12 closed criminal cases that involved the sale of drugs in

which the Internet played a role. Four of the 12 cases involved resulted in five arrests. Two of these cases were described in FDA’s written testimony. The following

provides more detail concerning two additional cases.

1. In the first case, a state prosecutor contacted OCI concerning a request for assistance from a therapist concerned about the health of a 16-year-old boy. Through

an Internet chat room dealing with transgender issues, the boy had been in touch

with an adult male subject in Arizona who was encouraging the adolescent to get

a sex change operation and supplying the boy with prescription drugs normally prescribed for presex change patients. To further this objective, the subject had been

selling the juvenile Premarin and Progesterone (female hormones) and Aldactone

(an androgen suppressant).

OCI contacted the FBI ‘‘Innocent Images Squad’’ to determine whether the man

was involved in approaching other children. Later the boy’s mother contacted OCI

and advised that her son had gone through extreme mood swings and consequently

she had searched his room. She found more of the sex change pills and a map showing the way to the subject’s home in Arizona. OCI and FBI interviewed the 16-yearold juvenile in his parent’s presence. The boy admitted his ongoing relationship with

the subject and agreed to cooperate in the investigation. He provided e-mail messages from the subject that clearly confirmed his parent’s fears and suspicions. The

boy’s parents provided the latest shipment of drugs to OCI for testing.

A search warrant was served at the subject’s residence in Phoenix, Arizona resulting in the seizure of drugs and documents related to this investigation. The subject

admitted going to Mexico to obtain the drugs, repackaging them and sending them

to the juvenile across State lines. A Federal grand jury indicted the subject for 12

felony counts concerning misbranded drugs. The subject pled guilty to two counts

of delivering misbranded drugs in interstate commerce and was sentenced to six

months home confinement, two years probation and $18,000 restitution to the boy’s

family for therapy costs.

2. In the second case, OCI received information from local police in Texas regarding the sale of GHB kits over the Internet to a juvenile. Investigation determined

that unapproved drugs were being mailed from a location in Florida. OCI, working

with state authorities, obtained a search warrant for a warehouse in Winter Park

and Oviedo, Florida. Evidence was recovered at both locations and a consensual

search was conducted at a third location where large quantities of GBL and sodium

hydroxide were seized.

State of Florida authorities and OCI arrested two subjects for violations of State

controlled substance acts. Later, one defendant died of undisclosed causes and the

second defendant was placed on pretrial diversion to include supervised probation

for a period not to exceed nine months.

As the Internet assessment team continues its review of web sites, it is anticipated that the reviews and assessments will be converted to more formal investigations.

Mr. KLINK. I don’t expect you to have that in front of you, but

we really need to have that information. I would also like to know

those 60 cases, over what period of time, so that we know from the

time that we have been—you know, the Internet is much more explosive today than it was yesterday. It much more explosive this

month than it was last month; this year than it was last year.

So as the Internet has gotten more active, as Mr. Stupak pointed

out—we have gone from 26 of these sites in January to as many

as 400 now—we want to see if your activities have similarly intensified during that period of time.

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Mr. Fong, what is the difference, the basic difference, from a law

enforcement standpoint, of a person going out on the street with

Valium, Percocet, any other kind of drugs that would have a street

value, and there are others that we would know about, and selling

them on a street corner, on a playground, in an alleyway? Obviously that person is not licensed, he is a common drug dealer.

There is a market in those drugs, and always has been.

I remember as a news reporter going out with law enforcement

personnel on drug raids all the time. It wasn’t always crack cocaine

or heroin, a lot of times it was controlled substances. What is the

difference between that and what is taking place on the Internet

right now, while we speak from a law enforcement standpoint?

Mr. FONG. Legally, there is very little difference.

Mr. KLINK. If there is little difference, what is it, other than volume of business because you have a bigger audience?

Mr. FONG. The difference is investigatory. These sites are difficult to investigate because they can come up and they disappear.

Our agents need to be trained to preserve the Web sites for use as

evidence in court.

Mr. KLINK. If I can just stop you for a second, because I want

to walk through this with you. What is being done, then, to do that

and under what kind of timeframe? Because we are not seeing a

whole lot of—I am disturbed by Dr. Woodcock’s comments that

there is an interagency task force that met once. What happened

at that meeting, if any of you can tell us? Apparently you didn’t

even agree to meet again.

Mr. FONG. One of the meetings was, I believe, scheduled for

today.

Mr. KLINK. That was coincidental. We would have invited the entire agency task force here, and we could—what is this task force

doing? If you have only met once during all of these months, how

can there be any coordination with just one meeting? What kind of

timeframe? Let’s just start with DOJ.

Mr. FONG. If I could respond first to the earlier question, we

have an ongoing effort to train our agents and our prosecutors.

This is a priority of the Department. We all know that computer

crime, the hacking cases, present very difficult challenges, and we

are responding to them. This is no different.

As was said earlier, we are trying to keep up with the truly bad

actors, and we are doing our best and we can do more.

Mr. KLINK. What kind of dedication of resources do you have? Do

you have any idea of the number? If you don’t have the number

now, you can get it to us later. Any idea of the number of agents

within the Department of Justice that are working on this and the

number you would expect within a month or year from now? If you

can give us those kind of details so we know the kind of resources

the DOJ is really putting into the problem.

Mr. FONG. I can give you a general sense. We have a computer

crime section within the criminal division. The fraud section has

people working on this. The civil division, the Office of Consumer

Litigation has responsibility for consumer protection laws. Each

U.S. Attorney office has somebody designated as a computertrained person, and there are often more than one. The FBI has inVerDate 13-MAR-2000 09:18 Mar 20, 2000 Jkt 010199 PO 00000 Frm 00243 Fmt 6633 Sfmt 6602 E:\HEARINGS\58498.TXT pfrm02 PsN: 58498
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dividuals who are trained. It is such a high-growth area that we

recognize the need to dedicate resources to this area.

Mr. KLINK. The pharmaceutical manufacturers seem to be fairly

responsible people. I would ask the Department of Justice, FTC as

well as the FDA, do you think we could just let them go ahead and

self-regulate? Why would we want to inspect them? Why don’t we

just let them self-regulate themselves, as we are these sites? That

has been the suggestion. We kind of don’t interfere with e-commerce. Let’s let them self-regulate. Is there any kind of a problem?

Carry it on——

Mr. FONG. Of course, going back to first principles, we have

criminal laws because we don’t expect or trust individuals to selfregulate. That is the intersection of two sets of policies that we are

currently grappling with.

Mr. KLINK. What is the difference between us regulating how

these drugs are manufactured, how they are developed, how safe

they are, and then not regulating how they are being dispensed?

We don’t know when those drugs are shipped, where they were

manufactured, where were they manufactured in the case of

Viagra. Was it made by Pfizer or is it a knock-off drug? What was

the care and custody?

We saw a news report this morning they were repackaged to

avoid Customs. During that time were the drugs tainted? How

were they handled?

There is no protection. Is FDA doing anything to assure us of

this safety? Is the Department of Justice doing anything to prosecute, to see that in fact when these laws are broken, that someone

is going to be prosecuted? And in how many cases? We don’t have

answers. Unfortunately, we have too little time. But we don’t have

answers to any of these questions. I would say it is unfortunate,

Mr. Chairman, and I know we are going to continue to work on

this. We have barely scratched the surface on this. We have more

questions coming out of today’s hearing than we have answers. If

you have a response?

Ms. WOODCOCK. We agree it is illegal to perform many of these

sales on the Internet. We are trying to get control over this activity. We do not feel that illegal activity should be self-regulated.

Ms. BERNSTEIN. The FTC believes in self-regulation, but not in

the face of where laws are being broken. Self-regulation does play

a role if there is a basic law in place. That is our view. And it can

be effective in carrying out more kinds of controls that you would

not want to be in Federal law.

But in this instance, as I said before, we really believe that legislation that would mandate identifying information would be very

helpful to law enforcement generally, both to the States and the

Federal Government.

Mr. KLINK. Mr. Chairman, the question I have here is we have

three agencies in front of us. The FTC came in in their prepared

testimony—first of all, they responded in a fairly timely fashion to

all questions we asked them, and we appreciate that. The other

thing is they walk in saying, Look, basically we need to know who

is operating the site, who licenses them, where they are located,

and we think there ought to be a law to do that.

242

Yet the Department of Justice hasn’t done that. In fact you started off your testimony saying you are not here to suggest any laws.

We haven’t heard anything from the FDA. The most commonsense

step is to at least let us know who is doing it, who is licensing, who

is accountable; and yet the Department of Justice and the FDA to

this point in the hearing has not stepped up to the bath, saying we

are in favor of taking that preliminary step to assure the public

there is some level of safety.

Mr. FONG. May I respond? I will go back to something I said at

the very beginning, which is that the same laws that apply in the

physical world ought to apply to on-line conduct. If disclosure is required in the off-line world, to the extent State boards require the

posting of a license, which States do, that should also apply on the

Internet. There should be no distinction, in other words, and the

same laws should apply.

Mr. KLINK. Then we should have 50 different State laws to

apply? Because that is what it is now. Each State has their own

law. You are saying now for these sites, which as the Chairman

pointed out—and I thought he did a wonderful job doing it—the

pharmaceutical company is headquartered there, the manufacturing plant is there. We are sending the order to Mexico, to a doctor to who may or may not be a doctor. They are shipping the drug

from a drop box in Florida. Where do we license it? Do we go with

each State having their own set of regulations; or do you recommend from the Department of Justice that, if it would be easier,

for law enforcement at the Federal and State level to work together

if we had some uniform law that determined how we deal with this

display of licensing and the information that went out to the public

at these sites?

Mr. FONG. As Attorney General Stovall testified earlier, we have

to be very careful not to Federalize what has traditionally been a

State responsibility: regulating pharmacies and doctors. We do

want to work together in partnership, but we also want to respect

our traditional jurisdictions. We enforce Federal law, they enforce

those State provisions. We think we can do it together.

Mr. KLINK. In all due respect, and I think we are getting to the

point here, no one suggested Federalizing. But I would like you to

explain to me what jurisdiction, what amount of manpower any of

our States or Commonwealths would have to be able to track down

a site in New Zealand, in Singapore, in Mexico, in South America,

in Central America, in another State? What enforcement authority

would they have to be able to do that? If they are not working with

the Department of Justice to have a uniform standard of some

kind, is there any evidence that the Department of Justice has

been working with the various attorneys general to formulate some

method of attacking this problem? Has that begun to occur as we

sit here today?

Mr. FONG. We have begun to have some conversations with

them.

Mr. KLINK. How far along is the process?

Mr. FONG. I can say I know of meetings that have been held, but

I don’t know——

Mr. KLINK. Any suggested action from those meetings?

243

Mr. FONG. I assume we are working together to develop strategies, enforcement strategies.

Mr. KLINK. I would prefer that we don’t assume, Mr. Fong. I will

ask you to get back to this subcommittee with specifics. I don’t

want to hear you have had meetings. I have had a lot of meetings,

sit down and have a cup of coffee and donuts. That is as specific

as it gets. I want to know specifically what has come out of the

meetings. Have there been suggested actions? Is the Department of

Justice ready to step in and help the States beyond their borders

where they don’t have jurisdiction? I appreciate your telling us the

meetings are occurring.

But this subcommittee wants to know specifically what you have

done, because what you are doing for the public has been put at

risk. We have not in a timely fashion had the questions that we

have asked be responded to, and we are tired in this subcommittee

of hearing that you are just having meetings and that you have

these interagency task forces that have met once.

I want to know specifically what has been done. We will have a

list of questions for you, some of them which I have asked here

today, but counsel will get them to you, and we would like to have

them responded to.

Mr. Chairman, I thank you for your indulgence, but again, and

I hope you will agree, we are going to have to have follow-up hearings to this.

Mr. UPTON. Mr. Bryant, do you have additional questions?

Mr. BRYANT. Mr. Chairman, I do have just a couple of quick comments. I know we have got a vote on right now. I think our panel

has received somewhat of a message today that we are very concerned about what is going on, and obviously you are too, and we

have just got to get everybody working forward and working together on this.

Certainly I have heard the resources. That is something we hear

very frequently on the Hill: Our resources are stressed. Having

served as a United States Attorney at one time and having 29 lawyers working for me, and we were prosecuting white collar crime,

bank robberies, lots of drug cases and all kinds of Federal issues,

I know resources are stretched. That is why I think we have to—

you have to take out of this meeting that this has to be a priority,

has to go up there, and you have to get the U.S. Attorneys out

there, assigning their assistant U.S. Attorneys, making sure their

investigative agencies go out there and find these types of cases.

Certainly at main Justice, we have to see those international problems worked on. We certainly want to cooperate as much as we

can.

I don’t want to, again, overlook the fact that we have a great

number of State—not only State attorneys general, but State investigative agencies that can be used as much as we did in, I believe,

the telemarketing law. Again, if we have to as a Congress work together to pass legislation, then we need to know that, and how to

best do that.

I want to stress in closing that we have talked about the bad situations, and there is tremendous potential here for bad. But, on

the other hand, there is tremendous potential for good. I think

from our first panel, we see those that brought a good case for the

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ability to sell legally, in a legal process, drugs over the Internet,

and I think that can work. I think it can work, and I think it is

part of our jobs to make sure we ferret out the bad so that the good

can survive.

I want to hear from the next panel of experts, the people, the

good guys out there doing it. I believe there are two companies

here that will be represented on the panel that are doing it right.

We have got the AMA, we have the Texas Health Department representative, and we have the pharmacy people here. So we need

their suggestions. So if I will quit talking long enough, perhaps we

will get to that panel after we come back from voting. So I will

yield back my time.

Mr. UPTON. I would note that was the warning bells for going

back into session. The vote has not yet been ordered. Mr. Stupak?

Mr. STUPAK. If I may, Mr. Chairman. Mr. Fong, if the same laws

apply, then why does it take time—and I have heard take time,

analyze, study, train, computer section, fraud section, computer

section, U.S. Attorneys, FBI—if this is the same laws that apply

whether you are selling on the Internet or selling on the street,

why do we have to go through all of that?

I mean, I fail to see the difficulty here in doing an investigation.

Take the one we have been talking about here. First, Pharmacy

On-line. Here is what it says again: I understand that the information I am providing will be transmitted to a physician licensed to

practice medicine in Mexico. I understand that the Mexican physician is not licensed to practice medicine in my State, and I acknowledge and agree that the Mexican physician is not practicing

medicine in my State. It goes on to say, that Xenical will receive

its seal and will be sent to me by a pharmacy in Florida which has

been in business since 1946. I understand that my credit card will

be processed by M.D. By phone.

So, do we have a reciprocity agreement with Mexico that if you

are a licensed physician in Mexico you can practice in the United

States?

Mr. FONG. I don’t know the answer to that; I am sorry.

Mr. STUPAK. Let me help you. The answer is no. Second, is

Xenical a controlled substance? The answer is yes.

The third question: Is it a violation of the law for a Mexican doctor to prescribe controlled substances to a U.S. citizen?

Ms. WOODCOCK. It is a violation of U.S. law for the drug to be

brought into the country.

Mr. STUPAK. My question is: Is it a violation of law for a Mexican

doctor to prescribe a controlled substance to a U.S. Citizen? Remember, Xenical: Prescription drug, controlled substance.

Ms. WOODCOCK. Is it a DEA-type of controlled substance? It is

a prescription drug.

Mr. STUPAK. Right.

Ms. WOODCOCK. Right.

Mr. STUPAK. Same question.

Ms. WOODCOCK. Of U.S. Law, to bring that into this country.

Mr. STUPAK. No. Can a Mexican doctor prescribe a prescriptive

drug to a U.S. citizen? Yes or no? I am right here in Washington

DC, a Mexican doctor prescribes a substance for me, prescription

drugs. He is in Mexico. Is it legal?

245

Ms. WOODCOCK. No, he continues to send it to you.

Mr. STUPAK. Violation of law, isn’t it?

Ms. WOODCOCK. That is correct.

Mr. STUPAK. Is it a violation of law for a Mexican doctor to have

a prescription filled by a pharmacy in Florida?

Ms. WOODCOCK. Yes.

Mr. STUPAK. Violation number 2. Is it a violation of the law to

have a Mexican doctor, not licensed to practice in Florida or Michigan, prescribe a controlled substance or a prescription for someone

in Michigan? I think we already understand it is; right?

Ms. WOODCOCK. Yes.

Mr. STUPAK. When I use the mail, the telephone, or the fax machine to receive or send this prescription without a license, that is

also against the law, isn’t it?

Ms. WOODCOCK. Yes, okay.

Mr. STUPAK. Sure it is.

Ms. WOODCOCK. I am not a lawyer, sir.

Mr. STUPAK. I haven’t done police work in 12 years, but I just

found 4 violations there. Now, why do we have to study, analyze,

train, do all this stuff? Why don’t you just set up a sting operation

like the TV people did, don’t use a cat or dog because they can’t

testify in court, but use someone real. Use yourself. You got 400

sites. You have 9,000 people. Go to the Web sites, run them

through here, and you are going to get your violations.

Ms. WOODCOCK. We have been doing that. We have been doing

investigations, setting up sting operations. These cases are in

progress. It is not all of them, but we have been doing that.

Mr. STUPAK. How many buys do you have? How many times

have you bought on the Internet?

Ms. WOODCOCK. I can get back to you with that information, I

think. We don’t have it with us.

Mr. STUPAK. How about a guesstimation? Is it like your task

force, one meeting?

Ms. WOODCOCK. We will get back to you. It is more than one.

[The following was received for the record:]

In regard to the six open prescription drug cases referenced in response to question three above, 12 undercover buys have been made in these cases. With regard

to the other cases, we have not tabulated the buys because these cases are not directly related to the topic at hand (internet pharmacy practice). In any case involving sale of an illegal product, undercover buys are a routine practice, and cases in

which the Internet plays a role are not an exception. Initiation of such a case typically involves one to three undercover buys to establish a violation prior to execution

of search/arrest warrants or other judicially authorized investigative action.

Mr. STUPAK. I mean, again, we start off here in January with 26

sites, we are up to 400. You don’t have to be a rocket scientist to

figure out how to go after this and approach this problem. We are

not here trying to restrict the Internet. We are trying to protect

consumers, and nothing is being done, other than we will think

about it. That is our frustration up here.

Thank you, Mr. Chairman.

Mr. UPTON. Thank you very much. I think all of you recognize

our frustrations with the present system. I think we will be having

some additional hearings after the August break.

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You will be getting some questions from the two of us to be answered. Hopefully we will try to have a date certain, if you could

be fairly quick in turning that around, that would be helpful.

At this point you are now excused. Thank you very much.

Our last panel of the morning—afternoon—will include—no, it

will not be evening—Mr. Carmen Catizone, Executive Director of

the National Association of Board Pharmacies; Dr. Herman

Abromowitz, Member of the Board of Trustees of the AMA; Ms.

Cynthia Culmo, Director of the Division of Drugs and Medical Devices from the Texas Department of Health; Mr. William Razzouk,

CEO of PlanetRx.com; and Mr. Peter Neupert, President and CEO

of Drugstore.com.

As you heard from the earlier two panels, we have a longstanding tradition of taking testimony under oath. Do any of you

have objection to that? Do any of you desire to have counsel to protect you in the future?

[Witnesses sworn.]

Mr. UPTON. Thank you. You are now under oath. Mr. Catizone,

we will start with you. Again, the rule is your entire testimony is

made part of the record. If you could try to limit your remarks to

no more than 5 minutes, it would be terrific.

TESTIMONY OF CARMEN A. CATIZONE, EXECUTIVE DIRECTOR,

NATIONAL ASSOCIATION OF BOARD PHARMACIES; HERMAN

I. ABROMOWITZ, MEMBER, BOARD OF TRUSTEES, AMERICAN

MEDICAL ASSOCIATION; CYNTHIA T. CULMO, DIRECTOR, DIVISION OF DRUGS AND MEDICAL DEVICES, TEXAS DEPARTMENT OF HEALTH; WILLIAM RAZZOUK, CHIEF EXECUTIVE

OFFICER, PLANETRX.COM; AND PETER NEUPERT, PRESIDENT AND CEO, DRUGSTORE.COM

Mr. CATIZONE. Thank you, Mr. Chairman. I am not sure if the

Gillespie Pharmacy is the same Bob Gillespie that I used to interact with, who is a former member of the Michigan Board of Pharmacy and a past president of it.

Mr. UPTON. I am sure that it was.

Mr. CATIZONE. He was an outstanding gentleman and pharmacist.

Mr. UPTON. He also had a brother that was a police chief, so it

is good that you stood on the good side.

Mr. CATIZONE. Thank you. Mr. Chairman and members of the

subcommittee, I represent the National Association of Boards of

Pharmacy, which is the independent and impartial association of

State licensing authorities in the United States, the Virgin Islands,

Puerto Rico, Guam, 9 provinces of Canada, 3 Australian States,

and New Zealand.

NABP’s extensive research into this new and engaging area have

identified a wide array of legitimate practices as well as unscrupulous and dangerous on-line activities. The Verified Internet Pharmacy Practice Sites program is the beginning of a developing program to support the regulatory efforts of the State boards of pharmacy to better police Internet pharmacies.

VIPPS employs a multifaceted approach that combines the enforcement of laws, regulations, and the recently developed and valiVerDate 13-MAR-2000 09:18 Mar 20, 2000 Jkt 010199 PO 00000 Frm 00249 Fmt 6633 Sfmt 6602 E:\HEARINGS\58498.TXT pfrm02 PsN: 58498
247

dated Internet practice standards with effective consumer education and empowerment.

Of the 400 sites which the committee members have spoken

about this morning, we have broken down those sites into additional subdivisions. One hundred eighty-three of those sites are devoted exclusively to the distribution of Viagra; 150 of those sites

have been identified as to the registrant State of origin; 30 of those

sites are foreign registered; 20 States actually hold licensure.

I would make an offer to Mr. Stupak and other members of the

committee that if they would turn over to us that list of 400 pharmacies, or 200 pharmacies, that you have in your possession, within a few weeks’ time we will provide to you information as to which

sites and which pharmacies are actually licensed by State authorities in the United States.

The practices of those sites, the most egregious sites, to make

prescription medications available to consumers without a legitimate patient-prescriber relationship, and thus without a valid prescription order, are not only dangerous but, the opinion of NABP,

illegal.

It is NABP’s further position that pharmacists and pharmacies

dispensing prescription medication also pursuant to an invalid patient-prescriber relationship, are acting illegally and are subject to

disciplinary action by the appropriate State board of pharmacy.

State boards of pharmacy and medicine are developing the regulatory tools and have in place many of the regulatory tools they

need to curb these illegal activities.

The most recent example of such actions occurred in Missouri,

when the Missouri Attorney General obtained a temporary restraining order to halt the operations of a pharmacy licensed in

Texas, prohibited a physician involved, who was involved in the situation from using on-line consultations to support prescriptions,

and enjoined the pharmacy to indicate on its Web site that consumers in Missouri were not able to purchase or obtain prescriptions from that pharmacy.

This recent action by the State of Missouri is significant in many

regards. First, it demonstrates the willingness of States to act on

the inappropriate action of practitioners and pharmacies located in

other States. Second, it demonstrates the ability of these States to

take quick and prompt action in these critical situations. Third, the

current regulatory powers of the State also provide the means for

those pharmacists and pharmacies to be prohibited from practicing

in all 50 States.

An Internet site earning NABP’s VIPPS must meet and demonstrate compliance with all mandatory licensure, statutory and

regulatory requirements of State practice acts. There is no variance

from this requirement. NABP will independently verify this compliance directly with the States through its national clearinghouse

and data base program and physical onsite inspections of sites and

affiliated facilities. The NABP VIPPS seal will inform consumers

that the on-line site is a legitimate practice site licensed or registered with a State agency. It will also provide the consumer with

important information about the site and how to contact the appropriate governmental agency to record a concern or complaint.

248

The National Association of Boards of Pharmacy believes that existing State laws and regulations, in conjunction with the VIPPS

program and our partnership with the Food and Drug Administration and other Federal agencies, as well as the State medical

boards, provide an effective means to regulate and monitor U.S.-

based on-line sites. NABP acknowledges that foreign-based on-line

sites are outside the jurisdiction of the State boards of pharmacy

and operating without restriction or control, and are endangering

the citizens of the United States. We support legislation and intensified efforts to curb the activities of these foreign based on-line

sites.

We are grateful to the committee for your deliberations on this

timely and significant issue, and we offer any assistance we can

provide to your deliberations and actions.

Thank you.

[The prepared statement of Carmen A. Catizone follows:]

PREPARED STATEMENT OF CARMEN A. CATIZONE, EXECUTIVE DIRECTOR/SECRETARY, NATIONAL ASSOCIATION OF BOARDS OF PHARMACY

Mr. Chairman and members of the Committee, I am Carmen A. Catizone, Executive Director/Secretary of the National Association of Boards of Pharmacy (NABP).

NABP is the professional organization, whose membership consists of the state

boards of pharmacy in all jurisdictions of the United States, the Virgin Islands,

Puerto Rico, Guam, nine provinces of Canada, three Australian states, and New

Zealand. NABP is the international, independent, and impartial Association that assists its member boards and jurisdictions in developing, implementing, and enforcing uniform standards for the purpose of protecting the public health.

The availability of prescription medications online is a relatively new occurrence,

which provides certain benefits, as well as significant risks, to consumers. NABP’s

extensive research into this new and emerging area identified a wide array of legitimate practices and business operations as well as unscrupulous and dangerous online activities conducted with no apparent regard for laws, regulations, or the personal well being of the individuals accessing the sites. The Verified Internet Pharmacy Practice Sites TM (VIPPS TM) program was developed by NABP to support the

regulatory efforts of the state boards of pharmacy to better police Internet pharmacies. VIPPS employs a multifaceted approach that combines the enforcement of

laws, regulations, and recently developed and validated Internet practice standards

with effective consumer education and empowerment.

OVERVIEW OF ONLINE SITES

NABP identified more than 150 pharmacy-based and a comparable number of prescribing-based sites currently available to the public through the legitimate areas

of the Internet and the use of conventional search engines. In the context of our

research, pharmacy-based sites are defined as those sites that do not offer prescribing services and are associated with an identifiable pharmacy licensed/registered by a state board of pharmacy in the United States. Prescribing-based sites

are defined as those online outlets that provide medications to consumers utilizing

a cyberspace consultation or questionnaire. Almost without exception, the pharmacy-based sites are located in the United States and its territories and regulated

by a state agency. The prescribing-based sites are a complex mix of operations,

based both in the United States and its territories and foreign countries. The most

egregious and dangerous sites NABP identified are certain prescribing-based sites

that operate outside the jurisdiction of the United States with little or no regard

for the laws and regulations of the states.

The practices of these sites to make prescription medications available to consumers without a legitimate patient-prescriber relationship, and thus, without a

valid prescription order, are not only dangerous but, in the opinion of NABP, illegal.

The prescribing-based sites are often organized into an intricate arrangement of

portals and relocator pages designed to increase the accessibility to the services and

mislead the consumer into believing that such sites are legitimate simply because

of the vast number of similar sites. The system resembles fraudulent ‘‘pyramid operations’’ where a primary operation is often supported by a varying number of referral or access portals. To the unknowing consumer, the referral or relocator pages

249

appear to be independent and individual sites. In reality, however, such sites are

linked and serve only as a means for the primary site to forward sales into its distribution operations.

STATE REGULATION OF U.S.-BASED ONLINE SITES

Online sites located within the U.S. and its territories can be effectively controlled

by the state agencies constitutionally empowered to regulate the practices of pharmacy and medicine. It is NABP’s position that initiatives to circumvent this authority and assign responsibility for the activities of U.S.-based online sites to federal

agencies are unwarranted and preempt the constitutional authority of the states to

regulate professionals through the police powers.

Although NABP and its member boards work closely with our counterparts in

medicine, it is not appropriate for us to comment on their activities or scope of authority beyond addressing a critical question concerning the online prescribing of

medications. It is our interpretation of state medical practice acts that the primary

component of the practice of medicine is a valid patient-prescriber relationship.

NABP’s research into online sites indicates that sites operating illegally are ignoring

this requirement and confusing the public by inappropriately defining the use of

questionnaires or cyberspace consultations as constituting a valid patient-prescriber

relationship.

The Board of Trustees of the American Medical Association, in a report issued in

June 1999, challenged the use of questionnaires and online consultations that fail

to include: (1) the examination of the patient, (2) dialogue with the patient, (3) establishment of a reliable medical history, (4) providing information to the patient

about the prescribed medication, and (5) follow-up with the patient to assess the

therapeutic outcome. The report states further that, ‘‘Under existing law in the majority of states, prescribing drugs to a patient outside the state where the physician

is licensed is considered the unlicensed practice of medicine.’’ It is our belief that

state boards of medicine can, and will, effectively regulate these practices and establish appropriate regulations for the prescribing of medications online.

It is NABP’s position that pharmacists and pharmacies dispensing prescription

medications pursuant to an invalid patient-prescriber relationship are acting illegally and are subject to disciplinary action by the appropriate state board of pharmacy.

The regulation of the practice of pharmacy is rooted in state practice acts and regulations enforced by the state boards of pharmacy. The practice acts and regulations

of all U.S. jurisdictions prohibit any entity from operating or representing itself to

the public as a pharmacy without licensing/registering with the appropriate state

agency, complying with all applicable state and federal laws, and undergoing periodic and/or routine inspections.

Generally, the state boards have the authority to regulate online pharmacies pursuant to existing practice acts under which they presently regulate traditional instate and out-of-state pharmacies that distribute or dispense drugs within the state

borders. Out-of-state pharmacies’ regulations focus specifically on this practice sector and provide state boards of pharmacy with the enforcement mechanisms needed

to regulate their activities. The NABP 1998-99 Survey of Pharmacy Law notes that

forty (40) U.S. jurisdictions require the licensure/registration of out-of-state pharmacies (Attachment ‘‘A’’). An example of specific state regulations governing out-ofstate pharmacies is included (Attachment ‘‘B’’).

State boards of pharmacy and boards of medicine acting to curb the illegal and

dangerous activities of online pharmacies have been effective in closing sites and

disciplining practitioners. The most recent example of such actions occurred in Missouri, when the Missouri Attorney General obtained a temporary restraining order

to halt the operations of a pharmacy licensed in Texas. The attached press release

(Attachment ‘‘C’’) notes that the Texas physician involved is prohibited from using

online consultations to support prescriptions and the dispensing pharmacy must include a notice on its Web site alerting consumers that its services are not available

to consumers living in Missouri. This recent action by Missouri is significant in

many regards. First, it demonstrates the willingness of states to act on the inappropriate practices of online distributors of prescription medications. Second, it demonstrates the ability of states to regulate and discipline pharmacies located in other

states.

PRINCIPLES OF UNDERSTANDING WITH THE FDA AND FSMB

NABP has also executed an agreement with the Food and Drug Administration

(FDA) and Federation of State Medical Boards (FSMB) to agree in principle to work

cooperatively to encourage the enforcement of applicable statutes and regulations,

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including the Federal Food, Drug, and Cosmetic Act (FFDCA) and implementing

regulations and state statutes and regulations as regards such conduct, and to work

towards developing formal agreements to this effect. The parties of the ‘‘Principles

of Understanding’’ recognize that a cooperative effort of state and federal authorities

is the best means for resolving this problem and ensuring the safety and welfare

of the citizens we serve.

COMPLEMENTARY DISCIPLINARY ACTIONS

The Missouri action is also significant because of the ramifications it may hold

for the pharmacist and pharmacy. NABP currently maintains a National Disciplinary Clearinghouse and Database. The NABP Clearinghouse and Database contains

licensure and disciplinary information on pharmacists, pharmacies, technicians, interns, and wholesale distributors. The NABP Clearinghouse and Database is maintained by the state boards of pharmacy through NABP and utilized by the states

to determine the qualifications of individuals and entities seeking licensure in their

jurisdictions. It is also used by states to determine when it is necessary to take action against local licensees who hold licenses in other states and are disciplined by

another state board of pharmacy. For example, a pharmacist licensed in States A,

B, and C commits a serious violation of State A’s practice act and, after due process,

has his/her license to practice in State A revoked. Once that action is finalized, it

is provided to NABP’s Clearinghouse and Database and disseminated to the states

in which the pharmacist currently holds licensure (as noted by NABP’s Clearinghouse and Database) and to all other member states of NABP.

State practice acts and regulations empower the other states where that pharmacist holds licensure to take appropriate action against those licenses based upon

the revocation of licensure by State A. In most cases, such severe action by State

A will result in States B and C taking similar disciplinary action and revoking the

pharmacist’s license. These actions are again reported to the NABP Clearinghouse

and Database and reported to all states, specifically to states where the pharmacist

may be seeking licensure. A pharmacist whose license has been revoked will have

little chance of obtaining licensure in a new state until the license in the original

state(s) is restored to good standing.

The ability of state boards of pharmacy to discipline licensees based upon the actions of other states where the licensee holds licensure is an important enforcement

tool utilized by the state boards of pharmacy to effectively halt illegal and dangerous

activities.

NABP’S VIPPS TM PROGRAM

The NABP VIPPS program is a voluntary program that combines the mandatory

requirements of state regulation with Internet practice standards developed by an

expert panel of providers, federal agencies, and state regulators. The actual operation of the VIPPS program is detailed in NABP’s response to the Committee’s questions of July 1 (Attachment ‘‘D’’).

An Internet site earning NABP’s VIPPS seal must meet and demonstrate compliance with all mandatory licensure, statutory, and regulatory requirements of state

practice acts. There is no variance from this requirement. NABP will independently

verify this compliance directly with the states through its Clearinghouse and Database and onsite inspections of the sites and affiliated facilities. The NABP VIPPS

seal will inform consumers that the online site is a legitimate practice site licensed

or registered with a state agency. It will also provide the consumer with important

information about the site and how to contact the appropriate governmental agency

to record a concern or complaint. The NABP VIPPS seal will direct consumers to

the NABP Web site to confirm the site is legitimate and provide additional information about the online site. Elaborate security measures are being employed to avoid

misrepresentation or inappropriate duplication of the NABP VIPPS seal. This information is presented in more detail in our response to the Committee’s July 1 questions (Attachment ‘‘D’’).

CONCLUSION

The National Association of Boards of Pharmacy believes that existing state laws

and regulations in conjunction with its VIPPS program provide an effective means

to regulate and monitor U.S.-based online sites. State boards can be assisted in this

regard by the provision of funds and the cooperative efforts of federal agencies.

NABP acknowledges that foreign-based online sites may be outside of the jurisdiction of the state boards of pharmacy and operating without restriction or control.

Legislation and intensified efforts to curb these activities are desired and needed.

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NABP is grateful to assist the Committee in its deliberations for this timely and

significant issue of public health. We ask the Committee to carefully consider any

action that would preempt state authority by assigning legal responsibility for any

aspect of the regulation of pharmacy practice to federal authority. Such an action

will not address the serious problems and actions of the foreign-based online sites

and only precipitate a regulatory quagmire of conflict and confusion between state

and federal agencies. Thank you for providing NABP with this opportunity to testify

on this most important subject matter.

[Attachments A-D are retained in subcommittee files.]

Mr. BRYANT [presiding]. Thank you.

Dr. Abromowitz.

STATEMENT OF HERMAN I. ABROMOWITZ

Mr. ABROMOWITZ. Mr. Chairman, members of this subcommittee,

my name is Herman Abromowitz, and I am a member of the American Medical Association board of trustees and I’m a practicing

family and occupational medicine physician in Dayton, Ohio. We

thank you for the opportunity to appear before this subcommittee.

Let’s look at the serious problems associated with Internet prescribing. The AMA is concerned that some prescription drugs are

ordered and dispensed over the Internet in a manner that clearly

constitutes dangerous medical practice. This raises very serious

ethical questions and puts patients at great risk.

The American Medical Association’s council on Ethical and Judicial Affairs is currently reviewing the entire spectrum of telecommunications, Internet, e-mail telemedicine, and their impact on

the overall physician-patient relationship.

Often Web sites request insufficient data to fill a prescription

and provide limited information about the prescription, including

potential risk. Drugs may be provided without a physician’s consultation and, worse, the prescribing physician and may never have

obtained or have ready access to a patient’s medical history. Further, there is no physical examination or follow-up.

For example, as noted today many times, a typical Web site advertising Viagra will require the patient to waive liability, select a

quantity of Viagra, and fill out a very short questionnaire. It is

that easy, ladies and gentlemen, and potentially fatal. There is no

verification of the accuracy or truth of the patient’s statement electronically, and the physician is not able to use clinical expertise

and professional judgment to evaluate the appropriateness of this

medication for this patient.

Neither is there any discussion of the substantial risk, including

death. These Internet prescribing practices are compounded by the

fact that some foreign companies, as noted today, are illegally selling prescription drugs in the United States through their Internet

Web sites. This may permit patients in the U.S. To obtain nonFDA-approved drugs without a prescription and/or advice of a physician. This could threaten the whole concept of prescription drugs

in the U.S., which would be extremely dangerous to patients.

Drugs may be contraindicated and may react to other medications the patient is currently taking; the patient may be allergic to

a drug; and the risk, including death, are greatly enhanced, because there has not been any direct physician-patient relationship.

In my personal opinion as a practicing physician for over 30

years, it is vital and in the patient’s best interests to have a direct

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onsite visit with their physician before taking new or changing

medications. Otherwise you are potentially risking your life, as dramatic as it may seem. I ask you: Would any of you take medication

not prescribed for you by your own physician? If so, I would like

to talk to you after this meeting.

Obviously there is an urgent need to establish medical safeguards to restrict these dangerous prescribing practices. The American Medical Association has several recommendations:

One, a physician must establish or have ready access to reliable

medical history, which generally should include a physical examination of the patient. Otherwise this is far below the accepted

standard of care.

Two, there must be a dialog between the physician and the patient to discuss treatment.

Three, the physician should inform a patient about a drug’s benefits and risks.

Four, the physician should have appropriate follow-up to assess

patient outcome.

What can we do to ensure that safety requirements are met with

regard to Internet prescribing practices? The AMA will continue to

develop principles for appropriate use of the Internet in prescribing

medications and will coordinate our efforts with other professional

organizations.

As noted today, for example, we are working with the National

Association of the Boards of Pharmacy to develop its Verified Internet Pharmacy Practice Sites program. We also expect to work with

State and Federal authorities along with State medical societies.

States generally have primary jurisdiction over domestic-based

Internet prescribing activity, and some States currently are investigating physicians for inadequate on-line prescribing practices.

The Federal Government can build on State efforts. The American Medical Association supports the FDA’s principles governing

Internet prescribing. The FDA has an important role to play in prohibiting foreign companies from illegally selling unapproved and

approved prescription drugs over the Internet.

While State and Federal authorities and professional organizations must all coordinate efforts to assure appropriate Internet prescribing practices, I mention a word of caution: We need to protect

and even enhance legitimate electronic prescribing and dispensing

practices. For example, a number of licensed Internet pharmacy

sites allow computer order entry and on-line transmission of prescriptions ‘‘after,’’ after a physician has seen the patient.

Let me conclude by saying that as we discuss this fast-changing

world of Internet prescribing and telecommunications, please refer

to the time-honored oath of Hippocrates, taken by your physician

and myself: Do no harm.

Thank you. I am happy to answer any questions later. Thank

you, Mr. Chairman.

[The prepared statement of Herman I. Abromowitz follows:]

PREPARED STATEMENT OF HERMAN I. ABROMOWITZ, MEMBER, BOARD OF TRUSTEES,

AMERICAN MEDICAL ASSOCIATION

The American Medical Association (AMA) appreciates the opportunity to present

to the Subcommittee its views on prescribing pharmaceuticals over the Internet, and

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applauds the efforts of the Chairman and members of the Subcommittee for focusing

on this important issue.

The use of the Internet for prescribing and dispensing medications is a practice

that has become increasingly prevalent during recent years as the Internet has become more popular and accessible to consumers. The Internet can be an extremely

valuable medical resource under certain circumstances, and there currently are

many legitimate uses of the Internet for prescribing and dispensing medications.

The AMA, however, is gravely concerned about current misuse of the Internet for

prescribing purposes. The Food, Drug and Cosmetic Act requires physician involvement in making prescription drugs available. This requirement is part of the safety

analysis conducted by the Food and Drug Administration (FDA) prior to the approval of any new drug.

Everyday patients are endangered when they are permitted to receive prescription

medications via the Internet without adherence to proper safeguards that ensure

good medical practice. Use of the Internet does not obviate the physician’s obligation

to meet appropriate standards of care when treating any patient.

Recently the AMA considered Internet prescribing issues and set forth its concerns with this matter. Today our testimony addresses the concerns that must be

considered in connection with misuse of the Internet for prescribing and dispensing

prescription drugs.

In summary, we believe that before prescribing a medication, a physician must—

• Ensure that a medical history is obtained or readily available; • Provide information to the patient about the benefits and risks of the prescribed

medication; • Generally perform an examination of the patient to determine a specific diagnosis

and whether there actually is a medical problem; and • Initiate additional interventions and follow-up care, if necessary, especially when

the drug in question (e.g., Viagra) may have serious side effects.

These are the requirements that a physician must meet in a setting traditionally

used to visit with and treat patients. Treating patients via the Internet is no different, and thus these same requirements must also be met in this context. Web

sites that offer a prescription solely on the basis of a simple questionnaire are not

sufficient.

The Problem with Internet Prescribing

Internet prescribing has become more prevalent with the advent of certain drugs,

such as sidenafil (Viagra), a prescription drug used to treat erectile dysfunction.

Often, the information requested on a web site that is necessary to issue and fill

a prescription via the Internet is insufficient, as is accompanying information that

should be provided to the patient concerning the prescription.

For example, a typical web site will advertise the advantages of obtaining Viagra

via the Internet. In addition, the web site will require the purchaser to acknowledge

a liability waiver, select a quantity of Viagra to be purchased, and fill out a short

questionnaire. An example of such questionnaire is attached as Appendix I.

The questionnaire used does not meet standards that would be considered good

medical practice. It usually requests minimal information about the medical history

of the purchaser, and some terms used in the questionnaire (e.g., nitrates, arrhythmia, unstable angina, retinitis pigmentosa) are likely to be beyond the level of understanding of a lay person. Further, there is no mechanism to determine whether

the purchaser has answered the questions accurately or truthfully. Incorrect answers could be deliberate in order to obtain the medication or could result from a

failure to understand the questions. Moreover, some web sites make no attempt to

explain the potential risks of a drug, such as Viagra therapy, for example.

More important, the AMA is very concerned that prescription drugs are being ordered without the benefit of a physical examination, which allows full evaluation of

any potential underlying cause of a patient’s dysfunction or disease, as well as an

assessment of the most appropriate intervention. Clearly, current Internet prescribing practices for the most part do not involve any medical assessment or follow-up

to determine whether the medication has been effective or if there are side effects.

This type of prescribing practice can be extremely dangerous for patients. For example, while Viagra has been beneficial to many men with properly diagnosed

erectile dysfunction, it also carries substantial risks for some patients and over 100

deaths have been associated with its use. Without appropriate information and discourse between physician and patient, there is a substantial risk that a drug may

inappropriately be prescribed via the Internet that may cause significant harmful

side effects and even death.

Without medical standards to serve as a safeguard against these dangerous practices, Internet prescribing could become extremely problematic. Indeed, prescripVerDate 13-MAR-2000 09:18 Mar 20, 2000 Jkt 010199 PO 00000 Frm 00256 Fmt 6633 Sfmt 6621 E:\HEARINGS\58498.TXT pfrm02 PsN: 58498
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tions for an increasing variety of prescription drugs may become available to the

public through the Internet. Appendix II presents just a few examples of the many

Internet prescription and dispensing services, and many more such services exist on

the Internet. According to an article published June 16, 1999 in the Chicago Trib- une: ‘‘No one has a clear grasp of the scope of the phenomenon, but some experts

estimate that about 400 such instant-prescription Web sites exist, about half based

overseas.’’

Internet prescribing problems are compounded by the fact that some foreign companies are illegally promoting and distributing (selling) prescription drug products

in the United States through their Internet web sites. A recent example of this was

described in an article published May 11, 1999 in the New York Times: ‘‘a company

based in the Channel Islands of Britain called Direct Response Marketing is selling

Xenical over the Internet to just about anybody who electronically fills out a medical

questionnaire that is reviewed by a company doctor who then ‘prescribes’ the drug.’’

‘‘This wonder pill promises to be one of the defining drugs of the 90’s along with

Prozac and Viagra’’ the company states on its World Wide Web site. ‘‘Most overweight people harbor a sneaking suspicion that somewhere there is a product that

will solve all of their weight-loss problems. Well, now that product has arrived.’’

If this trend continues, a triple problem exists. First, patients in the United

States would easily be able to obtain drugs that have not been approved by the U.S.

FDA. Second, these drugs would not have been tested in rigorous clinical trials; and

third, patients would be receiving these drugs without the advice of a physician.

There virtually is no accountability and there are no safeguards that address drugs

obtained from foreign web sites. You should not allow this trend to continue. Accordingly, we again emphasize the importance of ensuring that minimum standards of

proper medical care are met with respect to prescribing, including Internet prescribing.

Minimum Standards for Proper Medical Care

To avoid the serious problems discussed above, the AMA strongly advocates that

diagnostic and treatment decisions made by physicians, including the issuing of a

prescription for medication via the Internet or any setting, should be supported by

appropriate information. The evaluation leading to diagnostic and treatment decisions generally includes an adequate medical history and an appropriate physical

examination. The length and complexity of this evaluation often is dependent upon

the problem being presented by the patient. At times, the history and/or the physical examination may not need to be repeated if it is already on record as part of

an ongoing relationship between patient and physician.

The AMA strongly believes prescribing practices over the Internet must at least

meet the following minimum standards of care—

• There generally must be an examination of the patient to determine a specific diagnosis and whether there actually is a medical problem;

• There must be a dialogue between the physician and patient to discuss treatment

alternatives and determine the best course of treatment;

• The physician must establish or have ready access to a reliable medical history;

• The physician must provide information to the patient about the benefits and

risks of the prescribed medication; and

• The physician must follow-up with the patient to assess the therapeutic outcome.

AMA Involvement in Ensuring Proper Internet Prescribing Practices

The AMA will continue its involvement in studying the issue of Internet prescribing practices. Recently, the AMA adopted a report on Internet prescribing at

our June 1999 annual meeting, and it included a number of recommendations for

AMA involvement in ensuring proper medical practice with respect to Internet prescribing practices.

In accordance with these recommendations, the AMA will, among other things,

develop principles describing appropriate use of the Internet in prescribing medications. These principles likely will be based on the guidelines discussed in the June

report and this testimony, and will support use of the Internet as a prescribing

mechanism where appropriate safeguards are in place to ensure standards for high

quality medical care.

In addition, the AMA will work with state medical societies in urging state medical licensing boards to ensure high quality medical care by investigating and, when

appropriate, taking necessary action against physicians who fail to meet local standards of medical care when issuing prescriptions through Internet web sites that also

dispense prescription medications. Finally, as discussed further below, we believe

there is a strong role that both state and federal authorities can play in this matter.

We wish to work with the Federation of State Medical Boards and others in endorsVerDate 13-MAR-2000 09:18 Mar 20, 2000 Jkt 010199 PO 00000 Frm 00257 Fmt 6633 Sfmt 6621 E:\HEARINGS\58498.TXT pfrm02 PsN: 58498
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ing or developing model state legislation to establish limitations on Internet prescribing, as well as with federal and state regulatory bodies to close down Internet

web sites of companies that are illegally promoting and distributing (selling) prescription drug products in the United States.

Finally, we will continue our review of legitimate uses of the Internet and update

our recommendations concerning proper standards of practice on the Internet as

changes in technology may dictate changes in these standards or even permit additional legitimate Internet prescribing practices.

Legitimate Uses of the Internet for Prescribing and Dispensing Drugs

As discussed above, despite problems with misuse of the Internet for prescribing

and dispensing, the Internet can be a valuable source for prescription medications,

and a number of appropriately licensed Internet pharmacy practice sites are legitimately dispensing prescription medications pursuant to a valid prescription. Care

must be taken to protect and even enhance legitimate electronic prescribing and dispensing practices.

Some examples of the Internet being used for legitimate electronic prescribing

purposes are:

• Computer order entry and on-line transmission of prescriptions. After a physician

sees a patient and performs an adequate medical history and physical, computer order entry and on-line transmission of a prescription to a pharmacy provides an alternative mechanism for prescription transmission. Many experts believe computer order entry of prescriptions can reduce errors that occur from

failure to understand handwritten prescriptions. Because technology exists to

allow validation of electronic signatures and the encryption of prescription information, even the Drug Enforcement Administration (DEA) is considering allowing this route of prescription ordering, including the ordering of Schedule II

drugs.

• Ordering refills—either patient to pharmacy or physician to pharmacy. There is

a legitimate clinical decision under circumstances where the physician does not

see the patient at the time a refill is ordered, but the patient has been and remains under that physician’s care and has been seen in person in the recent

past. If the refills are authorized on the original prescription, the patient can

electronically contact the pharmacy directly and request the refill. This could

be a community, mail service, or legitimate Internet pharmacy. When no refills

are remaining on the original prescription, the patient could call or electronically contact the physician requesting that a refill be authorized. If the physician believes the refill is needed, the physician can electronically send the renewed prescription to the pharmacy.

• Electronic consults between physician and patient where the outcome is an ordered

prescription. There can be a legitimate clinical decision under circumstances

where the physician does not see the patient at the time a new prescription is

ordered. This occurs when the patient is under that physician’s care, the physician has the patient’s medical history and physical information in the medical

record, and the patient has been seen in person in the recent past. For example,

a patient may inform his or her physician via telephone or electronic mail of

a flare up in a seasonal allergy or a documented problem, and the physician

may then electronically transmit a prescription for an antihistamine to the

pharmacy without an additional office visit. It is critical here that the physician

and patient have an ongoing relationship, the patient routinely uses this physician, and the patient’s history and physical information are already in the medical record.

In addition to legitimate electronic prescribing via the Internet, there also are appropriately licensed Internet pharmacy practice web sites that provide an alternative consumer option for the dispensing of prescriptions. Recently, the National

Association of Boards of Pharmacy (NABP) announced its decision to develop the

NABP Verified Internet Pharmacy Practice Sites (VIPPS) program. The VIPPS program will verify the licensure of Internet pharmacy practice sites and inform the

public, through a database on the NABP web site, about whether those web sites

are licensed in good standing with the appropriate state board(s) of pharmacy or

other regulatory agencies. The AMA has participated on a NABP Task Force to develop criteria for the VIPPS program, and will continue to work with the NABP and

support their VIPPS program so that physicians and patients can easily identify legitimate Internet pharmacy practice sites.

State and Federal Involvement in Internet Prescribing

The AMA believes that Internet prescribing practices not based on appropriate

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priate. State authorities, including state medical and pharmacy boards, as well as

the federal government have a significant role to play in restricting these practices,

but must take care not to interfere with legitimate uses of the Internet.

For the most part, states have primary jurisdiction in these matters, and this is

appropriate. Under existing law in the majority of states, prescribing drugs to a patient outside the state where the physician is licensed is considered the unlicensed

practice of medicine. Additionally, under most state laws, state medical and pharmacy licensure boards have been delegated jurisdiction, respectively, over medical

and pharmaceutical professional practices.

Every state medical board agrees that prescribing drugs without physically examining a patient or reviewing his or her medical records is, in most cases, practicing

medicine at a level far below the acceptable standard of medical care. However, at

the close of the 1998 state legislative sessions, there were no state laws or regulations directly addressing the issue of Internet prescribing.

Some state licensing boards (Arizona, Colorado, Connecticut, Illinois, Nevada,

New Jersey, Ohio, Texas, Washington, and Wyoming) are continuing or initiating

investigations into physicians who participate in Internet prescribing. For example:

• On May 3, 1999, the Washington Medical Quality Assurance Commission initiated

a licensure action against a Seattle physician for unprofessional conduct for prescribing Viagra based only on questionnaires completed over an Internet drug- sales site. According to the Commission, the physician was earning $5,000 a

month for performing automated online medical reviews. • On May 5, 1999, the Illinois Professional Regulation Department suspended the

license of a physician who was writing Viagra prescriptions for a pharmacy web site based on a one-page health form and an $85 consultation charge. There

was no examination or discussion with the patient. On May 20, the physician’s

license was reinstated after he agreed to stop prescribing drugs over the Internet or for patients he has not examined. The physician was ordered to pay a

$1,000 fine.

These state medical licensure boards are acting well within their authority to uphold the standard of medical care when they investigate physicians who participate

in Internet prescribing, and the AMA encourages state boards to investigate any

physician or pharmacy that participates in any improper Internet prescribing practices.

Further, as discussed above, the AMA will be working with state boards to establish standards that ensure adherence to proper Internet prescribing practices. In addition, we expect that states will be maintaining their efforts in regulating prescription-selling web sites. It is reasonable to expect that state lawmakers will begin to

explore various methods of regulating the manner and in what medium prescription

drugs and other medical treatments may be prescribed.

Moreover, the Federation of State Medical Boards (FSMB) is addressing the issue

of prescribing medications via the Internet. At a February 8, 1999, meeting convened by the FDA on this issue, a FSMB representative stated that its Committee

on Professional Conduct and Ethics had taken a position that it is unprofessional

conduct for a physician to provide treatment recommendations, including the prescribing of medications, without taking an adequate medical history and doing a

physical examination. It is our understanding, however, that this Committee’s final

report is not scheduled for consideration and possible adoption by the FSMB until

next year.

In addition to state activity, the federal government also has a role to play in ensuring appropriate Internet prescribing practices by assisting and building on these

state efforts. Indeed, this is already occurring. For example, Pfizer, the manufacturer of Viagra, has filed a complaint with the Federal Trade Commission (FTC)

asking the FTC to assert authority over Internet prescribing of Viagra and to proceed against those who dispense Viagra on-line without adequate safeguards. According to the complaint, Internet sale of Viagra where a prescription is obtained

based on responses to a questionnaire is inadequate for a diagnosis and does not

adequately convey the risks of the product, including: (i) risk of concomitant use of

nitrates (resulting in possible heart failure from a large and sudden loss of blood

pressure when taken in conjunction with heart medication), (ii) underlying medical

problems that go undiagnosed because there is no real physical examination, and

(iii) risk arising from sexual activity itself.

The federal government, especially the FDA, also has an especially important role

to play with respect to addressing web sites of primarily foreign companies that are

illegally promoting and distributing (selling) unapproved and approved prescription

drug products in the United States, as discussed above. These web sites have multiplied with the growth of the Internet. Typically, these companies will post a price

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ucts at greatly reduced prices. In many cases, the advertisements state that the

medication can be ordered and obtained without a prescription.

Among the concerns with illegal distribution of drugs from foreign sources is the

product quality of these ‘‘foreign versions’’ of prescription drugs and whether patients are at risk of harm due to lack of physician oversight and inadequate directions for use. If obtaining prescription drugs from foreign companies without a prescription through the Internet becomes common, it threatens potentially to render

the whole concept of legend (by prescription only) drugs meaningless in the United

States. While the FDA has used its authority to prevent this illegal activity by some

foreign companies, it has been difficult to stop these and other companies from simply continuing these illegal activities from another web site.

In accordance with the above, it is clear that improper and illegal Internet prescribing practices threaten traditional mechanisms that have been long-established

to ensure good medical practice when prescribing and dispensing prescription drugs

to patients. An FDA-developed document, entitled, Principles of Understanding on

the Sale of Drugs on the Internet, addresses this concern, and we endorse these principles.

The AMA believes the states and their medical boards must carefully develop

standards that continue to ensure such good medical practice when the Internet is

used to prescribe and/or dispense prescription drugs, without impeding legitimate

use of the Internet. State medical boards must also initiate investigative and enforcement efforts of physicians who violate these standards. These state activities

should be accomplished in conjunction with industry organizations, such as the

AMA, state medical societies and other professional entities discussed throughout

this testimony. Finally, the federal government should coordinate with the states to

monitor and facilitate enforcement activity with respect to illegal, domestic-based

Internet prescribing activity.

We thank the members of the Subcommittee for your concern and for initiating

a review of this important matter. We look forward to working with state and federal authorities to establish standards that assist in the proper use of the Internet

for prescribing practices, and stand ready to work with the Subcommittee to further

those efforts.

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Mr. BRYANT. Thank you, Doctor.

Ms. Culmo. You have a ‘‘Mr.’’ in front of your name.

TESTIMONY OF CYNTHIA T. CULMO

Ms. CULMO. That is okay. Thank you. Mr. Chairman and members, thank you for inviting me here today on behalf of Commissioner Archer and the Department. TDH welcomes the opportunity

to present comments to the subcommittee.

The Department of Health is involved in the regulation of drugs

and medical devices and the manufacture and distribution and possession in the State of Texas, and we are very much involved in

the Internet sales and distributions of drugs and medical devices.

Our perspective regarding on-line pharmacies reflects the view of

a State regulatory agency. Our intent is not to prohibit, but place

some oversight, so consumers are assured of as much safety as possible. We can appreciate the fact that technology is rapidly evolving

and the concept of telemedicine on the surface appears progressive

and can serve as a method to extend health care and access. The

idea and the practices may have merit, but some of the actual practices encountered by State agencies are of concern, and there are

difficulties in applying the current laws to these Internet prescribing and dispensing businesses.

The Internet has afforded great benefits which have been particularly manifested in the delivery of information and education to

the public and the enhancements of commerce. But such information must be viewed with caution.

The information provided on the Internet is not reviewed or approved by any scientific or regulatory body, and to date no one assumes responsibility for the information provided via the

cyberhighway. As an example, we have encountered pseudo-docs,

presenting themselves on the Internet as physicians, when in reality they are not licensed medical practitioners. Not only is this

a national concern, requiring uniform regulation; the international

information should be harmonized and standardized in a manner

consistent with international harmonization efforts that are currently being pursued by several regulatory groups around the

world for drugs and medical devices.

Should new national regulations prove successful and regulatory

actions are initiated as necessary, equal or similar international

standards and enforcement, the control of foreign sites, products,

and therapies, will need to be addressed to assure international

compliance. Once regulatory authority is established, then each entity will then have the same or similar priorities.

We are aware this raises a completely different set of issues, but

want to point out we see benefits as well as concerns. We understand that the main benefit of the Internet for health care product

access is confidentiality and convenience. Since a number of prescription drugs obtained from the Internet sites are those categorized as lifestyle drugs, those for improved sexual performance,

weight loss, the treatment of hearing, et cetera, the Internet purchasing allows one to buy without being seen and affords one the

convenience of purchasing from home, office, or on the road. But

this benefit could also be recognized as one of the elements which

places a customer at an increased risk. The increased risk is due

261

to one of the checks and balances placed in our health care system

being eliminated.

Safeguards to protect patients from injuries resulting from the

use of unsafe drugs and devices, unapproved drugs and devices,

counterfeit drugs and devices, and the illegal practice of medicine

and pharmacy, have been legislatively mandated, both federally

and through State legislatures. These mandates have included or

implied the requirement that a patient first be seen and examined

by a licensed health care practitioner to receive a prescription for

prescription drugs and/or devices.

A physician-patient relationship must be established, and until

the advent of the Internet, this was understood or specifically noted

in State statutes as physical onsite examination. Everyone realizes

this is the ideal, and even with these mandates, errors occur in the

traditional health care world. There are occasions in the current

system when physicians will prescribe for patients without seeing

them, but it is not the norm.

The Internet site utilizes questionnaires and/or surveys, is creating a situation where this is the norm. These types of Internet

sales circumvent the elaborate controls that our country has placed

on dangerous drugs and/or restricted medical devices, and thus its

risks are increased. These also result in the majority of complaints.

These controls put in place by Congress and the States establish

the physician oversight and physician responsibility for proper use

based upon their education, knowledge, experience and best practices, as well as the requirement that a licensed pharmacist dispense the prescribed drug and/or device. There are several pharmacy Web sites which appear to be practicing legitimately and

similarly to the currently regulated mail order pharmacies. These

sites are of less concern to date.

These are two examples which highlight problems associated

with an on-line pharmacy:

We in Texas just recently had a complaint forwarded to us where

a pregnant attorney completed a survey and noted on the survey

that she was pregnant. She received Propecia, a prescription drug

with significant warnings and precautions for women who are or

could be pregnant.

Propecia is strictly contraindicated in women of childbearing age,

due to causing severe birth defects. The survey was supposedly reviewed by the site’s medical director and he approved the

cyberprescription for a pregnant consumer. This does not meet the

appropriate medical standard of care because they offered a prescription for a patient they have never seen before, and based solely on an on-line survey. The pharmacist also dispensed a prescription and, to our knowledge, did not receive the survey as well.

This demonstrates what happens when safeguards established to

address products classified as ‘‘dangerous’’ are bypassed.

Another site, to which there are attachments in the packets submitted earlier, not using a survey cyberform, but they advertise

Phen-fen, controlled substances, and steroids as just a few examples, available without a prescription. Phen-fen has been removed

from the market in the United States due to its adverse affects.

The others on the list are extremely dangerous as well.

262

There are currently Federal and State drug laws which address

specific drug and device regulations, and the consumer protection

acts which address deceptive advertising and sales practices. Nonetheless, these are not written to control the Internet sales and deliveries from State, national and international sources. There are

limited resources available to the State and Federal regulatory

agencies to carry out enforcement actions and the emphasis must

be placed on the word ‘‘limited.’’ .

Because there is a common element of limited resources between

the State and Federal regulatory agencies, interagency cooperation

in this arena is of particular importance.

For the sake of time, I will bypass the rest of that.

Many of the owners of the Internet Web sites have advocated a

position of opposition to oversight, regulatory oversight. The Internet sites, Soma.com in the ‘‘pink sheet’’ on April 5, 1999, was

quoted that several ‘‘watchdog organizations’’ are already reviewing

regulation of Internet prescription sales. Of the watchdogs referenced in their list who they believe are providing oversight, FDA

was the only one with requisite regulatory authority.

Another on the list, their list, is NABP, a non-regulatory association, the National Association of Boards of pharmacy. To us as a

regulatory agency, it is of little consequence that a pharmacy site

does not have one of NABP’s verified Internet Pharmacy Practice

Sites, or the VIPPS. The verification information provided by the

VIPPS seal could be obtained by the consumer via other Internet

sites and information. The point is, there is no guarantee for the

consumers and the self regulatory models being proposed by

Soma.com.

At a minimum, if these new prescription drug entrepreneurs are

to continue their Internet practices, then a start perhaps would be

a consideration given to a Federal requirement that physicians who

wish to practice and diagnose and prescribe on the Internet be regulated by the State medical boards at those Internet locations. We

should consider their Web sites as a practice location.

Additionally, the same considerations should be given to pharmacists and pharmacies practicing on the Internet. We should require licensing for those sites similar to that of mail order pharmacies. The sites and persons associated with the sites should be

required to display their Web-specific licenses on their home page.

These should be prominently located on the home page so the consumer and patient would clearly recognize they are conducting

business with a legitimate site and licensed health care professionals.

Patchwork enforcement is not effective. Each State has different

priorities and resources and Federal uniformity, we believe, is required.

In our view, these practices are not benign. They present a significant threat to public health and they necessitate serious consideration for close standardized and uniform regulatory oversight.

I would like to thank you again for allowing us this time to express our concerns, experiences, and views. And in closing, we too

commit to continuing our time, information, and resources in supporting this effort.

[The prepared statement of Cynthia T. Culmo follows:]

263

PREPARED STATEMENT OF CYNTHIA T. CULMO, DIRECTOR, DRUGS AND MEDICAL

DEVICES DIVISION, TEXAS DEPARTMENT OF HEALTH

This is the Texas Department of Health regulatory perspective regarding the online pharmacies. In short, it is an issue of great concern and it’s an issue in need

of immediate attention. The Internet serves as an electronic international hi-way for

access to, and sales of both legitimate therapies, products, and practices, as well as

untested, unapproved, and unsafe therapies, products, and practices. While the use

of the Internet for legitimate treatment modalities has merit, the actual practices

and products encountered on ‘‘the net’’ by regulatory agencies are of great public

health concern. In addition, we are experiencing great difficulties in applying current ‘‘brick and mortar’’ laws which were not designed to address this technology.

The Internet, with standardized and uniform regulation, could serve as a method

to extend healthcare and health education. We would recommend new legislation

which would require the medical practitioners to license their websites as practice

locations. The pharmacists and pharmacies should also license their websites in

their respective states. The home page should also be required to display the city

and state of the website.

The Texas Department of Health (TDH) welcomes the opportunity to present comments to the Subcommittee on Oversight and Investigations on this important public health issue—Drugstores on the Net: The Benefits and Risks of On-Line Pharmacies. TDH is involved in the regulation of drugs and medical devices manufacturing, distribution, and possession in the state of Texas, and is very much involved

in Internet sales and distribution of drugs and medical devices.

TDH’s perspective regarding on-line pharmacies reflects the views of a state regulatory agency. We can appreciate the fact that technology is rapidly evolving, and

that the concept of tele-medicine on the surface appears progressive and could serve

as a method to extend healthcare and access. The idea and practices may have

merit, but some of the actual practices encountered by state agencies are of concern,

and there are difficulties in applying the current laws to these Internet prescribing

and dispensing businesses.

The Internet has afforded great benefits which have been particularly manifested

in the delivery of information and education to the public, and the enhancement of

commerce. But such information must be viewed with caution. The information provided on the Internet is not reviewed or approved by any scientific or regulatory

body, and to date no one assumes responsibility for the information provided via the

cyber-hiway. As an example, we have encountered ‘‘pseudo-docs’’ presenting themselves on the Internet as physicians, when in reality they are not licensed medical

practitioners. Not only is this a national concern requiring uniform regulation, the

international information should be harmonized and standardized in a manner consistent with international harmonization efforts. Should new national regulations

prove successful and regulatory actions are initiated as necessary, equal or similar

international standards and enforcement, the control of foreign sites, products, and

therapies will need to be addressed to assure international compliance. Once regulatory authority is established, each entity will then have the same or similar priorities. We’re aware that this raises a completely different set of issues, but did want

to point out that we see benefits as well as concerns.

We understand the main benefit of the Internet for healthcare product access:

confidentiality and convenience. Since a number of prescription drugs obtained from

Internet sites are those categorized as ‘‘lifestyle’’ drugs (those for improved sexual

performance, weight loss, and treatment of hair loss, etc.) the Internet purchasing

allows one to buy without being ‘‘seen’’ and affords one the convenience of purchasing from home, office or ‘‘on the road.’’ This benefit could also be recognized as

one of the elements which places a customer at an increased risk.

The increased risk is due to one of the ‘‘checks and balances’’ placed in our

healthcare system being eliminated. Safeguards to protect patients from injuries resulting from the use of unsafe drugs and devices, unapproved drugs and devices,

counterfeit drugs and devices, and the illegal practice of medicine and pharmacy

have been legislatively mandated, both federally and through state legislatures.

These mandates have included or implied the requirement that a patient first be

seen and examined by a licensed healthcare practitioner to receive a prescription

for prescription drugs and/or devices. A physician-patient relationship must be established, and until the advent of the Internet, this was understood or specifically

noted as a physical on-site examination. Everyone realizes this is the ideal and,

even with these mandates, errors occur in the traditional regulatory world. There

are occasions in the current system when physicians will prescribe for patients without seeing them, but it is not the norm. The Internet sites utilizing questionnaires

and/or surveys create a situation where this is the norm. These types of Internet

264

sales circumvent the elaborate controls our country has placed on dangerous drugs

and/or medical devices, and thus the risks are increased. These also result in the

majority of complaints. These controls, put into place by Congress and the states,

established the physician oversight and physician responsibility for proper use based

upon their education, knowledge, experience, and best practices, as well as the requirement that a licensed pharmacist dispense the prescribed drug and/or device.

There are several pharmacy web sites which appear to be practicing legitimately

and similarly to the currently regulated mail-order pharmacies.

Two examples highlight problems associated with on-line pharmacies. We just recently had a complaint forwarded to us where a pregnant attorney completed a survey and noted on the survey that she was pregnant. She received Propecia, a prescription drug with significant warnings and precautions for women who are or

could be pregnant. Propecia is strictly contraindicated in women of childbearing

age due to causing severe birth defects. The survey was supposedly reviewed by the

site’s medical director and he approved the cyber-prescription for a pregnant consumer. This does not meet the appropriate medical standard of care because they

offered a prescription for a patient they have never seen before and based solely on

an on-line survey. This demonstrates what happens when safeguards established to

address products classified as ‘‘dangerous’’ are bypassed. Another site (see attachments) not using a survey cyber-form, advertises ‘‘Phen-fen,’’ controlled substances,

and steroids as available without a prescription. ‘‘Phen-fen’’ has been removed from

the market in the U.S. due to adverse events.

There are the federal and state drug laws addressing specific drug and device regulations, and the consumer protection acts which address deceptive advertising and

sales practices. Nonetheless, these were not written to control the Internet sales and

deliveries from state, national, and international sources. There are limited resources available to the state and federal regulatory agencies to carry out enforcement actions. The emphasis must be placed on the word, ‘‘limited.’’

Because there is a common element of limited resources between the state and

federal regulatory agencies, interagency cooperation in this regulatory arena is of

particular importance. This is not necessarily problematic since interagency cooperation (partnerships, contracts, and memorandums) already exist. For those agencies

not already involved in federal/state cooperative relationships, the template has

been established and can easily be duplicated. This interagency cooperation should

be utilized in all the areas mentioned above, as well as with education. The benefits

of the Internet in education outreach must be utilized. Because this regulatory playing field is huge, oversight will be an enormous challenge, and education must be

one of the components of that oversight.

Many owners of the Internet websites have advocated a position of opposition to

regulatory oversight. The Intent site, ‘‘Soma.com,’’ in ‘‘The Pink Sheet,’’ April 5,

1999, was quoted that several ‘‘watchdog organizations’’ are already reviewing regulation of Internet prescription sales. Of the ‘‘watchdogs’’ referenced in their list, who

they believe are providing oversight, FDA was the only one with the requisite regulatory authority. It is of little consequence that a pharmacy site does not have one

of the National Association of Boards of Pharmacy’s stamp of a Verified Internet

Pharmacy Practice Sites (VIPPS). The verification information provided by a VIPPS

seal could be obtained by the consumer via other Internet sites and information.

The point is that there is no guarantee for the consumers in the ‘‘self-regulatory’’

models being proposed by ‘‘Soma.com.’’

At a minimum, if these new prescription drug entrepreneurs are to continue their

Internet practices, perhaps consideration should be given to a federal requirement

that physicians who wish to diagnose and prescribe on the Internet be regulated by

the state medical boards at these Internet locations. We should consider their web

sites as a practice location. Additionally, the same consideration should be given to

pharmacists and pharmacies practicing on the Internet. We should require licensing

for these sites similar to that of mail order pharmacies. The sites and persons associated with those sites should be required to display their web-specific licenses on

their home page. These should be prominently located on the home page so the consumer/patient would clearly recognize they are conducting business with a legitimate site and licensed healthcare professionals.

In our view, these practices are not benign, they present a significant threat to

the public health, and they necessitate serious consideration for close standardized

and uniform regulatory oversight. I would like to thank you again for allowing us

this time to express our concerns, experiences, and views. In closing, we commit to

continuing our time, information, and resources in supporting this effort.

Mr. BRYANT. Thank you.

Mr. Razzouk.

265

TESTIMONY OF WILLIAM RAZZOUK

Mr. RAZZOUK. Mr. Chairman, members of the subcommittee, before I begin, allow me to thank you for giving us the opportunity

to share with you what PlanetRx.com believes the on-line pharmacy business is and is not, should and should not be.

My name is Bill Razzouk, the Chairman and CEO of PlanetRx,

a pharmacy chain with approximately 70 million branch stores,

each of which is on the desktop of a person with computer access

to the Internet.

Each of our customers, 70 million branch stores, is a traditional

NABP pharmacy. Each one of our branch stores is a place where

customers can come to buy over-the-counter products, obtain answers to their questions about prescription drugs and diseases, and

have a licensed pharmacist fill the prescriptions issued to them by

the properly trained and licensed physicians with whom they have

a traditional doctor-patient relationship. In other words,

PlanetRx.com is your NABP virtual pharmacy, an on-line pharmacy designed with guidance from leaders of the pharmacy profession.

Like your family’s pharmacy, we authenticate all prescriptions

before filling them. Like your family’s pharmacy, we check to confirm that the prescribing physician is a properly licensed physician

with a current DEA number.

Like your family’s corner pharmacy, at PlanetRx.com, we do not

prescribe drugs; we only dispense them. We do not interfere in any

way with the sanctity of the patient-physician relationship. All of

which is to say there is very little conceptual difference, but enormous difference, in terms of convenience between PlanetRx, traditional NABP pharmacies, and the mail order prescription services

that are used by tens of millions of Americans, many of whom are

elderly and housebound.

We fully understand that the concept of on-line pharmacies is

new and a bit mysterious to some people. However, discomfort with

the concept of e-commerce in general and 3-pharmacies in particular will not eliminate the reality of either. The Internet, as we

all know, is now a major positive force in American business, and

the legitimate emerging on-line pharmacies are an important part

of this new environment.

Mr. Chairman, there is no doubt that we are all concerned about

the irresponsible practices of Internet-based prescribers for hire,

‘‘doc in a box,’’ doctors whose only contacts with their patient comes

in reviewing an on-line questionnaire. Such practices are as abhorrent to us at PlanetRx as they are to our responsible competitors,

to the National Association of Boards of Pharmacy, to the American

Medical Association, and to you.

The elimination of the Internet equivalent of illicit drug sales

does not require new legislation. All it requires is vigorous enforcement of the existing State and Federal laws.

In addition to abiding by all existing laws and regulations,

PlanetRx also adheres to a code of principles we have developed for

ourselves. We support the VIPPS criteria of the National Association of the NABP. We actively protect the security and confidentiality of our customers’ personal information. We provide access to

licensed pharmacists 24 hours a day, 7 days a week, including holiVerDate 13-MAR-2000 09:18 Mar 20, 2000 Jkt 010199 PO 00000 Frm 00268 Fmt 6633 Sfmt 6602 E:\HEARINGS\58498.TXT pfrm02 PsN: 58498
266

days. All of these activities meet or exceed traditional requirements

for the practice of pharmacy as regulated by the States, and define

the next generation of standards followed by responsible on-line organizations.

Quite simply, unlike the NABP pharmacy, we do have some of

the most compelling health information on the Internet. A group of

disease-specific satellite sites that are designed for sufferers of

chronic diseases, including such domains as Diabetes.com, Arthritis.com, Depression.com. We provide easily accessible information

on drug interaction as well as a broad range of general medical and

personalized medical information. We offer the disabled, injured,

and seriously ill an easy way to go to the pharmacy without leaving

their homes.

Ultimately, we provide a place where people care about the needs

and problems of seniors, the disabled and those who suffer from

chronic disease and those who require ongoing follow-up.

The challenge for us as an industry is to manage patient safety,

security, and confidentiality while not limiting the creativity that

on-line access can offer the millions of Americans who require

health care products.

What is needed is an innovative, aggressive effort to enforce existing State and Federal laws that secure legitimate on-line pharmacy distribution. To that end, we would like to use this forum

today to call for a national summit meeting of on-line pharmacy industry and technology leaders to address the obvious questions and

problems posed by the rogue on-line operators whose practices concern us as much as they do you.

This summit, hosted by PlanetRx, would serve as an opportunity

to design tools and establish a system to enhance the enforcement

of existing laws and regulations, consider the reliability of the

VIPPS seal, and develop innovative ways to promote consumer education regarding responsible on-line pharmacy actions and consider

ways that ensure that patients have the choice to fill prescriptions

either on- or off-line.

Further, I suggest that the summit should take place within the

next 90 days and that the first item on the summit agenda be the

establishment of an industry-supported watchdog system that uses

technology and trained industry experts to seek out and immediately report to regulatory authorities on the State and Federal

level suspected sites that may be selling or prescribing medications

without properly sensing.

We believe it is certainly possible to maintain a daily check for

unlicensed or otherwise suspect sites in order to immediately report them to the appropriate authorities.

You may ask why you should allow our industry to act as a

‘‘neighborhood watch.’’ we are offering to participate in this activity

because we know the ‘‘neighborhood’’ well and we know the technology.

Mr. Chairman, we do not believe, however, that knew Federal

legislation is necessary at this time. What is necessary instead is

the development of innovative ways to apply the laws already in

place in an on-line environment that could not have even been

imagined when the various laws were written. In the summit we

267

are proposing, it will allow us together to develop those innovations, beginning with the daily check I just proposed.

Again, thank you for giving us the opportunity to appear before

you today. I hope I have clearly explained the practices of our company and provided you some viable solutions to the issues that confront us on this.

[The prepared statement of William Razzouk follows:]

PREPARED STATEMENT OF WILLIAM RAZZOUK, CHAIRMAN & CHIEF EXECUTIVE

OFFICER, PLANETRX.COM

Mr. Chairman, Members of the Subcommittee, before I begin, allow me to thank

you for giving me the opportunity to share with you what PlanetRx.com believes the

on-line pharmacy business is and is not, should and should not be.

My name is Bill Razzouk, and I am the Chairman and CEO of PlanetRx.com, a

pharmacy chain with approximately 70 million branch ‘‘stores,’’ each of which is on

the desktop of a person with computer access to the Internet.

Each of PlanetRx.com’s 70 million branch stores is a traditional neighborhood

pharmacy. Each of our branch stores is a place where customers can come to buy

over-the-counter products, obtain answers to their questions about prescription

drugs and diseases, and have a licensed pharmacist fill the prescriptions that have

been issued to them by the properly trained and licensed physicians with whom

they have a traditional doctor-patient relationship.

In other words, PlanetRx.com is your ‘‘neighborhood’’ virtual pharmacy—an online pharmacy designed with guidance from leaders of the pharmacy profession.

Like your family’s pharmacy, we authenticate all prescriptions before filling them;

Like your family’s pharmacy, we check to confirm that the prescribing physician

is a properly licensed physician with a current DEA number;

And, like your family’s corner pharmacy, at PlanetRx.com we do not prescribe

drugs, we only dispense them. We do not interfere in any way with the sanctity of

the patient-physician relationship.

All of which is to say, there is very little conceptual difference—but enormous difference in terms of convenience—between PlanetRx.com, traditional neighborhood

pharmacies, and the mail-order prescription services that are used by tens of millions of Americans, many of whom are elderly and housebound.

We fully understand that the concept of ‘‘on-line’’ pharmacies is new and a bit

mysterious to some people. However, discomfort with the concept of E-commerce in

general, and E-pharmacies in particular, will not eliminate the reality of either. The

Internet, as we all know, is now a major positive force in American business. And

the legitimate emerging on-line pharmacies are an important part of this new environment.

Mr. Chairman, there is no doubt that we are all concerned about the irresponsible

practices of Internet-based prescribers for hire, doctors whose only contact with

their patient comes in reviewing an on-line questionnaire. Such practices are as abhorrent to us at PlanetRx.com as they are to our responsible competitors, to the National Association of Boards of Pharmacy, to the American Medical Association—and

to you.

The question before us then, is how to eliminate these unprincipled operators,

while fostering the responsible, legitimate on-line pharmacy business in a way that

will benefit consumers and protect their health interests.

Eliminating the Internet equivalent of back-alley drug sales does not require new

legislation, all it requires is the vigorous enforcement of the existing state and federal laws. For example, PlanetRx.com, as a responsible on-line pharmacy, adheres

to all state and federal regulations governing the practice of pharmacy, just as a

traditional pharmacy does:

• We only fill prescriptions that are written by authorized prescribers;

• We maintain procedures that verify the authenticity of prescriptions;

• We are licensed to dispense and deliver prescriptions to all 50 states, the District

of Columbia, and all U.S. territories;

• We conduct an extensive drug utilization review (DUR) prior to dispensing a

medication in accordance with state law to help prevent harmful drug interactions;

• We do not practice medicine—we neither diagnose patients, nor prescribe medications.

In addition to abiding by all existing laws and regulations, PlanetRx.com also adheres to a ‘‘code of principles’’ we have developed for ourselves:

268

• We support the Verified Internet Pharmacy Practices Sites (VIPPS) criteria of the

National Association of Boards of Pharmacy; • We never sell, trade, rent, or intentionally disclose or access personal data without a customer’s consent, except when required to do so by law or legal considerations; • We actively protect the security and confidentiality of customers’ personal information and use the most advanced technology to take orders and to display prescription information. We encrypt all personal information for transactions over

the Internet; • We provide access to licensed pharmacists 24 hours a day, 7 days a week—including on holidays.

All of these activities meet or exceed traditional requirements for the practice of

pharmacy as regulated by the states, and define the next generation of standards

followed by responsible on-line organizations.

While I’ve made several references to our similarities to the traditional neighborhood pharmacy, I’d like to outline the numerous differentiators and benefits that

PlanetRx.com., an on-line pharmacy, offers consumers.

Quite simply, unlike the traditional bricks and mortar pharmacy:

• We have pharmacists available for private consultation by telephone or e-mail, 24

hours a day, seven days a week, 365 days a year, including all major holidays; • We are able to carry an enormous array of over 28,000 unique health and beauty

items; • We provide e-mail reminders when it’s time to refill prescriptions; • We have some of the most compelling health information on the Internet, and a

group of disease-specific ‘‘satellite’’ sites that are designed for the sufferers of

chronic diseases including such domains as Diabetes.com, Arthritis.com, and

Depression.com; • We provide easily accessible information on drug interactions, as well as a broad

range of general medical and personalized medical information; • Because our ‘‘stores’’ are on our customer’s desktops, rather than in invested overhead, we can offer lower drug prices to customers, which is particularly important to the millions of seniors who don’t have prescription insurance; • We offer the convenience and privacy of on-line ordering and consultation with a

pharmacist, making customers more likely to ask questions they might be embarrassed to ask in the middle of a crowded traditional pharmacy; • We offer the disabled, injured, and seriously ill an easy way to ‘‘go to the pharmacy’’ without leaving their homes.

Ultimately, we provide a place where people care about the needs and problems

of seniors, the disabled, those who suffer from chronic disease, and those who require ongoing follow-up. Using our disease specific ‘‘satellite’’ sites, we are developing a network of patient-oriented communities that provide the emotional and

group support many people lack when facing debilitating illness. At PlanetRx.com,

we believe that providing care is an essential step in the healing process.

The challenge for us as an industry is to manage patient safety, security, and confidentiality while not limiting the creativity that on-line access can offer the millions

of Americans who require healthcare products. What is needed is an innovative, aggressive effort to enforce existing state and federal laws that secure legitimate online pharmacy distribution. To that end, we would like to use this forum today to

call for a national Summit meeting of on-line pharmacy industry and technology

leaders to address the obvious questions and problems posed by the ‘‘rogue’’ on-line

operators whose practices concern us as much as they do you. This Summit, hosted

by PlanetRx.com, would serve as an opportunity to design tools and establish a system to enhance the enforcement of existing laws and regulations, consider the reliability of the VIPPS seal, develop innovative ways to promote consumer education

regarding responsible on-line pharmacy practices, and consider ways to insure that

patients have the choice to fill prescriptions either on or off-line.

Further, I suggest that this Summit should take place within the next 90 days,

and that the first item on the Summit agenda be the establishment of an industrysupported ‘‘watchdog’’ system that uses technology and trained industry experts to

seek out and immediately report to regulatory authorities on the state and federal

level suspected sites that may be selling or prescribing medications without proper

licensing. If it’s possible for an individual to screen his or her own e-mail, and conduct searches across the entire internet, it is certainly possible for an industry as

net-savvy as ours to maintain a daily check for unlicensed or otherwise suspect sites

in order to immediately report them to the appropriate authorities.

You may ask why you should allow our industry to act as a ‘‘neighborhood watch.’’

We’re offering to participate in this activity because we know the ‘‘neighborhood’’

well, and we know the technology. We are here to offer our assistance and industry

269

expertise to the numerous agencies in each of the 50 states, as well as federal agencies who are responsible for law enforcement. As Federal Trade Commission Chairman Pitofsky recently said, when speaking of the on-line privacy issue, ‘‘We continue to believe that effective self-regulation is the best way to protect consumer privacy on the Internet . . .’’ Similarly, we believe that effective self-regulation is the

best way to protect consumers using Internet business services.

Mr. Chairman, we do not believe, however, that new federal legislation is necessary at this time. What is necessary instead, is the development of innovative

ways to apply the laws already in place, in an on-line environment that had not

even been imagined when the various laws were written. And the Summit I’m proposing will allow us together to develop those innovations—beginning with the daily

check I’ve just proposed.

Again, thank you for giving me this opportunity to appear before you today. I

hope I have clearly explained the practices of PlanetRx.com, and provided you some

viable solutions to the issues that confront our infant industry.

Mr. BRYANT. Thank you.

Mr. Neupert.

STATEMENT OF PETER M. NEUPERT

Mr. NEUPERT. Thank you. My name is Peter Neupert, CEO of

Drugstore.com, another of the responsible competitors. Drugstore.com is a legitimate licensed pharmacy. We only ship valid

prescriptions from licensed physicians. We comply with all the

State and Federal laws required. We have licensed pharmacists

that serve our customers. We have been inspected already by the

State boards as a part of our ordinary course of business in Texas,

and in the State of Washington. Recently—we are now a publicly

traded company as of Wednesday.

Rather than talk about our business, I would rather show you.

So we have got these two monitors, they are both on. I thought I

would walk you through some of the benefits and opportunities of

a legitimate licensed pharmacy.

Here you see our home page. The mission of Drugstore.com is to

help consumers manage their well-being, using the Web for 5

stores in 1, to make it easy for them to save the trip to the drugstore. At the bottom of the front page you see our privacy policy

clearly displayed for anybody to find it.

Mr. BRYANT. Could we stop just a minute here? Could you turn

that TV around so people in the audience can kind of see that one?

We can probably see it up here on this one. Some of you may have

to move to see it better if you want to.

Please proceed.

Mr. NEUPERT. As was previously mentioned, one of the benefits

of an on-line drugstore is the readily available, 24 hours a day, information. Solutions is the area where we carry all of our information. You will see complete medical reference, buying guides, ask

your pharmacist questions. As our other competitors, we have 24-

hour access to our pharmacists and frequently asked questions that

have been answered, and one-to-one service for customers to get

their questions answered that they can’t get answered in any traditional means, because the people in the retail pharmacies or mail

order pharmacies don’t have enough time.We do significant research to help people with their public health questions.

Next I would like to go to the pharmacy, which is the department

where people can learn about their prescription drugs and order

their prescription drugs. You will notice that we have partnered

here with Rite-Aid to help communicate to customers the trust that

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they should get with our facilities, and to get access to the health

plans that were mentioned in the first panel that many competitors

are having a difficult time.

You can see here that we have a complete drug index which

makes it easy for customers to shop and learn about pricing and

get all the information that they typically get when the pills are

dispensed. I thought I would click on one. I think one of the main

benefits of the Web will be able to allow consumers to price shop.

Imagine how hard it is to price shop in the retail world today.

There is no display of what the pricing is or how to find out. This

will help lower costs.

You can see here that we advertise when there is a generic available. You can see what the cost of a brand drug is and what the

cost is of a generic. If I had time, you could look and get all of the

information about what this was indicated for, what the warnings

were for and everything else, available 24 hours a day.

Now, I have here, I am going to go into the prescription summary, which is where I have some information. First I have to log

in through our secure server. All of our information is stored in a

secure location. Let me see if I can do this to protect the privacy

and confidentiality of our patients.

We use industry standard technology to accomplish this.

This is my daughter, Kelly. She has an item ready to order. Another of the benefits of on-line prescriptions is the ability to always

manage and know how many refills you have, manage all of your

family’s needs, know all of the information you may want to know

to take care of your own individual health.

You can see here that the number of refills—I can update the patient profile; and in the patient profile is all of the allergy information, all the medical information that you would be required to give

to any pharmacy and all of the other things here. People have been

wondering, is it hard to get? As you notice, I have down here 1-

800-drugstore; customers can always get ahold of us. We’re not trying to hide from anybody.

The simplicity of ordering on-line is one of the main benefits,

particularly when it comes to refills. One of the key health issues

I mentioned, price. The other key health issue is compliance and

making sure that it’s convenient for people on chronic medications

to stay on their drugs.

We use E-mail as an effective communications tool to remind

people before they run out. They can come back to the site and simply hit refill and order their drugs. It makes it much easier for

them to stay compliant and avoid trips to the hospital or avoid

other emergency trips because they’ve run out of their medication.

I think the core issue that the panel has been discussing is how

do you get the benefits that we’ve—that I’ve just shown here, the

benefits of the on-line word for those legitimate pharmacies while

shutting down the illegality or rogue pharmacies. I think the doctor

said it well, the first is to do no harm.

There are huge benefits in terms of allowing people the convenience, the information, the price and the selection available on-line.

And I think those people who want to do things illegally are going

to do things illegally, and customers who know that they’re going

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to a website and not get a prescription know that they’re trying to

do something against the law.

There are many laws that we’re following today. We support the

VIPPS programs, the best industry standard way to communicate

that Good Housekeeping Seal of Approval to customers which I

think is the real issue.

Thank you.

[The prepared statement of Peter M. Neupert follows:]

PREPARED STATEMENT OF PETER M. NEUPERT, PRESIDENT AND CHIEF EXECUTIVE

OFFICER, DRUGSTORE.COM

Good morning Mr. Chairman and Members of the Committee. I am Peter

Neupert, President and Chief Executive Officer of drugstore.com. I thank you for inviting me here today, and I am pleased to have the opportunity to speak with you

about drugstore.com. We are an Internet drugstore dedicated to providing a convenient, private, safe, and informative shopping experience to our customers.

In my testimony, I will explain to you how drugstore.com operates, and our dedication to providing high quality and safe prescription services through our licensed

pharmacy. You will conclude that the drugstore.com pharmacy has many of the attributes of the traditional corner drugstore and the well-established mail service

pharmacy with the added capabilities of the Internet. Like community and mail

service pharmacies, our customers must have a prescription from their doctor—we

do not prescribe medication. What’s new here is not the practice of pharmacy, but

the way we communicate with and inform customers. Our prescription fulfillment

is built on the long-standing procedures and infrastructure of walk-in and mail service pharmacies. The quality control we have established at drugstore.com incorporates the best practices of mail services and community pharmacies.

Our mission is to help consumers manage their well-being using the Web. Our

core value proposition is to educate and inform consumers, while saving them time

and money. I will have more to say about our drug information and prices later in

my testimony.

Full Service Drugstore

Before I describe our pharmacy service, which is the real focus of this hearing,

I want to give you a snapshot of our entire site. When we launched our full-service

online drugstore in February, 1999, we were responding to the growing trend of consumers taking a bigger role in their health care decisions. That increasing trend is

apparent in the number of people seeking health information online. According to

recent estimates, the number of consumers accessing the Internet for health and

medical information has increased from 3.2 million in 1995 to 22.3 million in 1998,

because the Internet provides up-to-date information from a variety of sources along

with person-to-person support groups.

drugstore.com is five stores in one with health, beauty, wellness, personal care,

and prescription drugs. We focus on those products designed to help people live

longer and feel better, including dispensing medications used by consumers on a

chronic basis. What is new is that online pharmacies and drugstores offers an exciting prospect for increasing public health by providing more convenient and informative access to health products and information. Our goal is to empower consumers

by permitting them to make more informed health-related purchases while saving

both time and money.

While we offer the same safety and quality of community drugstores, our online

pharmacy has unique benefits:

Information—Our site provides a ‘‘Solutions’’ area where shoppers can find the information they need to make informed purchase decisions. It includes buying guides,

a wellness guide, a medical reference, and shopping advisors. We provide comprehensive drug information where consumers can learn about their prescription

drugs, including usage, cautions and possible side effects, as well as drug prices.

The Web is the only place customers can conveniently price shop for prescription

drugs. We also post answers to the questions most frequently asked of our licensed

pharmacists. For each product, we display all the information a consumer could

read on the package of product—including all the ingredients, directions, and product warnings in a format that is easy to read.

Convenience—Our site permits consumers to shop from wherever they have Internet access, and at anytime. Consumers can receive their products via direct delivery

to their home or office. We make it easy for consumers to save time doing this chore,

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by saving their personal shopping list and by providing e-mail reminders on prescriptions drugs and other products.

Selection—We offer a broad selection of products so that consumers can obtain

products that best suit their health needs.

Communication—Use of the Internet allows drugstore.com to communicate with

its customers via e-mail. Our ‘‘Ask Your Pharmacist’’ feature, prescription refill reminders, monthly newsletters and online purchase order tracking information, allows continuing patient/pharmacist communication from the comfort of the patient’s

home.

Privacy—Customers can shop at our drugstore in privacy, and thus avoid the potential embarrassment of buying personal items or asking personal questions at

community drugstores. Because consumers can more freely ask personal questions

via e-mail, they will be able to take a more proactive role in managing and promoting their personal health.

Licensed Pharmacy

As I have stated previously, filling prescriptions at drugstore.com works the same

way as a community pharmacy and mail service pharmacy. We focus on dispensing

medications used by consumers on a chronic basis. For acute care needs, we recommend that customers pick up their prescriptions from a local pharmacy. To fill

a prescription at drugstore.com involves the same three steps at any community or

mail service pharmacy.

First we are provided with a valid prescription from our customer’s physician, customer, or our customer’s current pharmacy. The physician calls or faxes in (where

permitted by law) the prescription to us at 1-800-drugstore. At the customer’s request, we will call the physician for the prescription. The customer may also mail

us their original prescription or request a transfer of their prescription from their

current pharmacy. If a customer attempts to purchase a prescription drug without

providing a valid prescription, the customer will be notified promptly via e-mail that

drugstore.com cannot fill the order until we are given a valid prescription. We do

not provide prescription medications without a prescription, nor do we prescribe

medications.

We also contact the prescribing doctor’s office to verify prescription orders for

those controlled substances that we dispense. We do not dispense Schedule II controlled substances due to their high potential for abuse.

Before we will fill a prescription, we require each customer to complete an individual patient profile of drug allergies, current medications, medical conditions, and

preference for generic substitution. We carefully cross-check all of the information

we get from the patient and doctor. We then enter the prescription order into a computer and perform all of the same checks for drug interactions that you expect from

your local pharmacist. Once we have received and verified a new prescription, and

cross-checked that prescription for interactions we will then fill and mail the prescription.

We use state-of-the-art bar coding at each step of the process to ensure patient

safety. We also use automated pharmacy systems to assist with the dispensing of

medications. Our pharmacists then recheck each prescription for accuracy before a

medication is sent to the customer’s home or office. We send drug-specific patient

information with each prescription. The shipping method is based on consumer

choice and the type of drug. Standard shipping via U.S. Postal Service Priority Mail

is provided free of charge to the customer.

Through our partner, RxAmerica, we ship prescription products to every state in

the United States. Our recent partnership with Rite Aid will enable customers to

order refills of their existing Rite Aid prescriptions on our site, and pick them up

at a local Rite Aid store, or receive them through drugstore.com’s mail service. To

purchase a prescription, the customer provides us with a credit card number for the

cash price or copayment and insurance information.

Our prescription drug service saves consumers time. Our vast information on

drugs, including drug prices, enables customers to save money and to make more

informed decisions. We are committed to giving customers real value. We monitor

the prices of products, including prescription drugs, sold at national retail chain

drugstores and our cash prices are on average lower than those of the national drug

chains. We are leveraging the lower cost structure of the Web to lower costs on

drugs.

A hallmark of our pharmacy services is the patient counseling and customer support that we provide to help our customers use medications safely and effectively.

Our popular ‘‘Ask Your Pharmacist’’ feature, which I mentioned earlier, is staffed

by clinical pharmacists. It allows customers to ask questions online and receive personalized responses from our pharmacists. drugstore.com provides patients with a

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toll-free number to access a pharmacist 24 hours a day, 7 days a week. Customers

can also access their secure, individual medication profile, which contains a history

of their prescription purchases at drugstore.com. In addition, customers receive refill

reminders via e-mail, notifying them when they need to place a refill order. This

e-mail reminder service helps to promote drug compliance and improved patient outcomes. The increased convenience of our Internet pharmacy has proven crucial for many

of our customers. We continually receive e-mail messages from customers that highlight the advantages of online shopping, as well as commending and thanking us

for our innovative and personalized service. For example, one message from a

woman housebound with multiple sclerosis told of how she hates asking people for

assistance. Our site has enabled her to have the independence she desires in complying with her medical treatment program. A message from another customer emphasized how the consistency of our site permits her to obtain her medication even

when she moves. These messages highlight the benefits that online pharmacies can

offer consumers.

With respect to patient privacy and the confidentiality of our pharmacy records,

drugstore.com will not release any prescription information in connection with any

patient identification other than to the patient, our partner RxAmerica which fills

the prescriptions, the patient’s authorized representative, or the prescribing or authorized practitioner caring for the patient. In addition, all personal information and

credit card information are encrypted using SSL encryption technology. We are a

licensee of the TRUSTe Privacy Program which is the leading online privacy seal

program. The seal is awarded to sites that adhere to established privacy principles

and comply with ongoing oversight and consumer complaint resolution procedures.

Finally, because drugstore.com is dedicated to providing safe, legal prescription

services to our customers, we have applied for approval into the Verified Internet

Pharmacy Practice Sites (‘‘VIPPS’’) certification program established by the National

Association of Boards of Pharmacy. This program will serve to inform the public

whether online pharmacies are licensed in good standing with the appropriate state

boards of pharmacy and other regulatory agencies, and whether they comply with

quality criteria. Such self-regulation provides a means for sites to inform consumers

about the site’s commitment to compliance with the existing laws and regulations.

Compliance with Existing Laws

drugstore.com complies with all applicable state and federal laws and regulations

governing the provision of drugstore products and information over the Internet. For

example, we comply with federal and state requirements for pharmacy licensing and

registration, and for providing customers with relevant information about their prescription medications. We comply with the laws and regulations governing non-resident pharmacies in every state that has such requirements. We and our distribution

partners comply with laws relating to security, recordkeeping, and reporting for

pharmaceutical sales, as well as medical record confidentiality. In addition, as mentioned above, we participate in industry efforts to self-regulate online pharmacies.

In keeping with its reputation as a leading online drugstore, drugstore.com will

continue to comply with applicable laws and regulations relating to online pharmacies and drugstores. However, we hope that the Subcommittee will consider that

there are already extensive laws and regulations in place that affect online drugstores. It is our belief that the number of illegitimate pharmaceutical web sites do

not exist due to lack of appropriate existing laws and regulations, but rather to the

need for greater enforcement of those laws and regulations.

Legitimate online pharmacies and drugstores are an emerging market which provides an exciting prospect for increasing public health by providing more convenient

and informative access to health products and information. We must be careful to

distinguish between safe, legitimate online pharmacies and profiteers using the

Internet to engage in illegal activities with willing participants. The most practical

approach in differentiating the two is by educating consumers and providing them

the tools and means to identify the safe, legitimate online pharmacies. As I mentioned above, drugstore.com is looking forward to participating in the VIPPS certification program and displaying its emblem on our web site. drugstore.com will commit resources to educating consumers about the VIPPS certification, so that they

will know how to make an informed choice about the sites they utilize.

The reliance on industry self-regulation by legitimate web sites results from the

realization that the Internet does benefit consumers as long as they are provided

with a means of making intelligent choices. Other examples of such industry selfregulation include the Health on the Net Foundation’s code of conduct for medical

and health sites, and the Tufts’ Nutritional Navigation system which rates nutrition

web sites.

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I hope that through our mutual dedication to providing consumers with beneficial

drugstore services, we can work together to enable legitimate online drugstores to

continue providing efficient customer service. Thank you very much for the opportunity to speak with you today. I would be pleased to answer any questions you

have.

Mr. BRYANT. I thank all of you.

I think we have another vote and probably our last series of

votes coming up within the half hour. So most likely if we can

move through this and get everybody’s questions answered, it

would be good I think if we could finish so that we don’t have to

take a half hour break and come back this afternoon and everybody

can get moving.

So I’m going to yield time to the distinguished ranking member,

Mr. Klink.

Mr. KLINK. First of all, I want to thank this panel. I think that

you’ve given some outstanding testimony.

Dr. Abromowitz, that was probably the best bits of testimony I’ve

heard a long time. I think you have to be complimented on that.

The rest of the panel was very good, too.

Mr. ABROMOWITZ. Thank you.

Mr. KLINK. Getting back to the VIPPS—and I will just say from

our two industry spokespeople here, if everyone was doing business

like drugstore.com and PlanetRx., we wouldn’t have to have these

hearings. And we appreciate the fact that you want to work with

us. It doesn’t mean we agree with everything that you said in your

testimony.

One of the things that I would question is that Ms. Culmo, who

is really in the trenches, has said we really need to have a law on

the books that says we identify who we are, we identify whom

we’re licensed by. And you seem to think that the VIPPS program

is fine.

My problem with that, as I said earlier, I don’t know if you were

in the room, is the VIPPS program may be fine but not a law enforcement agency. Can the VIPPS seal, in fact, be counterfeited and

put on another site? What ability does the National Board of Pharmacy have to go out and inspect these sites and do the law enforcement kinds of things?

And so I will just ask, first of all, Ms. Culmo, if you will kind

of give a response to the testimony from the two industry

spokespeople talking about there are enough laws on the books, in

essence, and that they like the VIPPS program and they think that

would be fine. What’s your reaction to that?

And then I will ask you to respond as well.

Ms. CULMO. From our perspective, we obviously would disagree.

We’ve run into a lot of difficulty in locating persons that are associated with Web sites. And from where we sat, we don’t see that the

VIPPS program is going to give us a lot more information than we

have. The, ‘‘rogue pharmacies’’ are not going to have the VIPPS

seal of approval.

The sites so far that would be interested in that are the ones

that appear to be more compliant and operating much more similar

to a mail order pharmacy. So, right now, they’re not our biggest

concern.

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If we had the information on the home page, we would be able

to, one, identify who is associated with that site and the practices

of that site, but we would also have a location.

There was a mention earlier about GBL, gammabutyrolactone.

We’ve got quite a bit of activity with those products in the State

of Texas, and they’re mostly advertised on the Internet. We have

several sites, some of which are supposedly located in Texas, and

it’s been extremely difficult to locate those persons. And one of

them we tracked as far as to a public storage establishment, and

we can’t get the search warrant because we don’t have the specific

unit.

So it gets very difficult. You sort of get yourself in a vicious cycle

with the judicial system and the regulatory perspective.

Mr. KLINK. One thing before I move on and allow the industry

spokespeople to give their response, it is unclear from your testimony, to me, and maybe this is because I am a little dim-witted

at this time in the day, are you suggesting that each doctor who

is issuing a prescription and each pharmacy who is filling a prescription on the Internet be licensed in each State in which that

is done?

Ms. CULMO. In each State, yes. Essentially that’s what it comes

down to.

There is already similar requirements, and if I’m not mistaken,

I believe that drugstore.com has obtained licenses in all 50 States,

and they’re already doing that. So one of the things there they

have those licenses, they can just display those on their home page

already.

Mr. KLINK. As long as it’s displayed on the home page so the consumer is informed who the licensee is and where they’re licensed,

then at least we’re dealing with—we can deal with some information. Then if you have a site which is not displaying it, then we

know it’s an outlaw site?

Ms. CULMO. That’s our assumption, yes. And in Texas, for instance, we have the ability to actually go in on the Internet and

check the status of a physician and—to see if there’s been any

sanctions. If a license was actually posted on the Web site, the consumer could verify that automatically—in Texas, it’s not in all

States.

But if there were a Federal requirement that they must license

in every State, the boards of pharmacy already have those requirements, as do the medical boards for practicing physicians and pharmacists, to license with them. So it would just be an extension of

that license.

Mr. KLINK. Mr. Razzouk.

Mr. RAZZOUK. You know, we agree that the States already require, if you’re going to practice pharmacy, that you have to be licensed in every State; and PlanetRX. Is licensed in all 50 States,

District of Columbia and all U.S. Territories, so we’ve gone through

that rigorous screen, if you will, to become licensed that way.

The VIPPS protocol—in order to be a VIPPS-approved pharmacy,

you have to be a licensed pharmacy and you have to be a licensed

pharmacy in all the States you do business in. So, theoretically, the

VIPPS seal could act just as effectively as people having to post

every license that they’ve got all over their Web site as a screen

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to legitimate sites versus not legitimate sites as we go forward to

try and identify who the bad guys are.

Mr. KLINK. If you yield, though, the VIPPS is voluntary?

Mr. RAZZOUK. The VIPPS is voluntary.

Mr. KLINK. What if we just chose not to volunteer?

Mr. RAZZOUK. You can choose not to volunteer and you would pop

on the screen and you would get looked at on a regular basis.

Mr. KLINK. By whom?

Mr. RAZZOUK. I think I made the suggestion today about how we

might be able to proceed to try and put together technology and

people in a way to do that that could help support the agencies

that testified here a little bit earlier today who just finally brought

a Web site——

Mr. KLINK. What authority? That’s the question. How often and

what authority? Unless we have a government regulatory agency

with authority to go in and do the inspection, to what benefit, what

assurance do we have?

Mr. RAZZOUK. I think, based on what I understand, and I may

not have all of it, that we’ve got effective Federal and State laws

on the books today that can do that.

Mr. KLINK. If you’ve already gone to the trouble, and I’m sure to

some trouble, to be licensed in each of the 50 States and the District of Columbia——

Mr. RAZZOUK. Yes, it is.

Mr. KLINK. [continuing] Drugstore.com as well, why don’t you

want all of the people that are competing with you to do the same

thing and to display that information proudly as called for by law?

Mr. RAZZOUK. We definitely want them to have to be licensed.

We definitely do not subscribe to these prescribers on-line, people,

you know, buying prescriptions through consultations, you know,

all the things we talked about here today. We think you have to

be——

You know, we practice—I will point out here, Peter, a legitimate

pharmacy, and you do that by being licensed and having licensed

pharmacists and by not having doctors on staff and not by writing

prescriptions for people, but by filling them. So we have no informal—we fully support the fact that any on-line pharmacy should

have to be a licensed pharmacy, and that’s incorporated in the

VIPPS protocol as well.

Mr. KLINK. Well, I have no problem with the VIPPS protocol,

that it’s voluntary. But why shouldn’t they, if you say there’s no

problem that they should be licensed, you think they should be licensed, then what’s the problem with causing that to be displayed

on the home page so that the consumer knows that that’s done?

Mr. RAZZOUK. Do you want to take it, sir?

Mr. KLINK. Let Peter have a shot so we’re not dwelling on Mr.

Razzouk.

Mr. NEUPERT. I will help him out.

The practice of pharmacies is founded on trust, and for those of

us in the legitimate pharmacy business we would love to have trust

be assured in the marketplace. I don’t know that—I don’t understand how creating yet another regulation will assure that those

people who want to avoid the law will follow a new law. We can—

the VIPPS program says we will put a seal up. They created a data

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base and a security architecture that says, hey, this is a way to be

sure the Good Housekeeping Seal of Approval, that these people

are licensed. If you just put up a license—understanding a web design, it’s going to be supereasy for anybody who wants to create a

copy of a license and to forge a license.

I don’t know that applying or demonstrating—displaying a license on a Web page solves any real problem. The issue is, you’re

going to have to enforce against those people who are breaking the

law, today’s laws or any new laws. And what the industry is proposing, I think, is a reasonable rule or a reasonable way to move

forward to say we will validate that these people are indeed licensed, and if consumers want to only deal with licensed people,

they will be able to do that.

There will still be consumers who, we’ve heard this morning, who

will want to break the law, as there will be proprietors who will

want to break the law. The issue of enforcement remains the same.

Mr. KLINK. My problem with your proposition is simply this, that

I think probably what bothers me most about this is exactly what

you said, Mr. Neupert, that the pharmacists I think in almost

every poll that I’ve ever seen taken of Americans are among the

most trusted people in America. We trust other pharmacists. We

really do and for good reason.

Every pharmacist that I know when I walk in the pharmacy they

have displayed behind them their license. They’re licensed by the

State. All we’re asking is that, as we go into this new E-commerce,

you post your license. And if you post a false license—if it’s in a

bricks and a mortar pharmacy and somebody goes in and finds it

out, Ms. Culmo is going to see that that you are arrested. They will

come down on you. And if you post a false license on the Internet,

then we can come after you right away.

It helps us. It’s an expeditious way of us finding out what’s going

on.

And you’re right. We can counterfeit licenses, driver’s license. We

can counterfeit a lot of things. We can counterfeit the VIPPS seal.

We can counterfeit a lot of things.

But if we just ask from the E-commerce sites the same thing

we’re asking from everybody else, post your license, let the public

know that they can check you out, if the license number is on

there, we can check with the State of Pennsylvania, we will call

Harrisburg, or we will call the other State capitols around the

country. We can check on you.

But if it’s a VIPPS seal, who do we check with and how do we

find out if and when the last time was when they were expected

and what authority the inspectors had? That’s the difficulty that I

think I have with your answer.

I think Mr. Catizone wants to step in.

Mr. CATIZONE. Please.

As part of the VIPPS program, each facility will have to be currently inspected by a State board of pharmacy, so that will be an

official regulatory, mandatory action. And that report becomes

available to the VIPPS program.

Mr. KLINK. How often?

Mr. CATIZONE. At this point, it will be at the point of the first

issuance of the seal and then every year or 2 years thereafter deVerDate 13-MAR-2000 09:18 Mar 20, 2000 Jkt 010199 PO 00000 Frm 00280 Fmt 6633 Sfmt 6602 E:\HEARINGS\58498.TXT pfrm02 PsN: 58498
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pending upon complaints, depending upon the regulatory schedule

of the State and also the renewal cycle for the VIPPS.

Mr. KLINK. I see as many leaks as a sieve in this, but I will jump

over to Ms. Culmo because I think she wants to jump in.

Mr. CATIZONE. Can I finish my response?

Mr. KLINK. Please do, and I will get to the Ms. Culmo.

Mr. CATIZONE. I not disagreeing with posting the license on the

Web sites. That might be a good idea for the consumers. But it

won’t be independently verified. I can provide you with a list of

States in which the consumers would not be able to reach that

agency within 2 to 3 months and obtain a verification of whether

or not that practitioners was licensed simply because they are

under understaffed, don’t answer the phone. They can contact a

Web site. We have people working to answer the phone to verify

that licensure. It’s a problem there for the consumer to have some

sort of independent verification that information on that site is

truly legitimate and real.

Mr. KLINK. First of all, I don’t know what agency you’re talking

about. Because the board of pharmacy, it’s a board, and I imagine

they’re different in each State, and therein would lie a problem,

also.

By the way, Mr. Catizone, I want to thank you. I understand—

I had to leave the room for a second—that you said that you would

help us get information on some of these sites and you can tell us

who were legitimate and who weren’t. I appreciate your offer of

help with that, and I think it’s amazing that you all at the National Association of Boards of Pharmacies are able to do and the

FDA was not able to do that. And I think it shows a great willingness on your behalf to work through this problem.

Ms. Culmo, let me ask you to jump in here. Then I think my

time is expired.

Ms. CULMO. Thank you.

The only thing I was going to point out is that if you counterfeit

a license, be a pharmacist, a pharmacy license or a medical practitioner, which are also required to display their licenses at their

practice sites, you’ve broken the law, and there’s consequences and

penalties for that. If you counterfeit a VIPPS seal, there would be

no consequence for that. It’s a common legal requirement.

Mr. BRYANT. Thank you.

Just very quickly. If you were to go to some type of system that

you’ve talked about, Mr. Catizone, could each State have its own

site with a listing of certified people with their number, and then

if a person wanted to go to pharmacy X, they could go to pharmacy

X, see the seal, see the number, and then go back into another site

and make sure it’s properly licensed in Tennessee or Pennsylvania

and then go back and make the purchase?

Mr. CATIZONE. Part of the security provision of the VIPPS program is that, when a consumer clicks on the VIPPS seal, they are

brought to a Web site that provides all that information about the

site as well as the States where they were licensed and a direct

link to that State’s Web page to verify independently that licensure, as well as additional information for the consumer about

other pharmacies or other States where that may be licensed.

Mr. BRYANT. In that system, where does it break down?

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Mr. CATIZONE. We’re not aware of anyplace where it breaks

down. We’re certain that hackers can duplicate the seal, as they

can anything else, but our security system always focuses on the

consumer getting independently verified information from the direct sources.

Mr. BRYANT. And it seems to be education would be a big factor

here, much as the Good Housekeeping seal. You know, if consumers are taught you need to be—especially in this arena you

need to be looking for that seal, and then if we can get a

verification process in place, you know, it seems to be that would

be logical.

But let me move on to my colleague from Michigan, Mr. Stupak.

Mr. STUPAK. Thank you, Mr. Chairman.

Mr. Abromowitz, you quote in your testimony of June 16 a Chicago Tribune article and it says, no one has a clear grasp of the

scope of the Internet prescribing phenomena, but some experts estimate that about 400 such prescription Web sites exist, about half

based overseas.

It appears that number of sites seems to go larger each month.

Would you agree?

Mr. ABROMOWITZ. Yes, sir, I certainly agree to that; and that’s

been determined by the AMA staff.

Mr. STUPAK. Where are all of these sites getting their drugs

from?

Mr. ABROMOWITZ. I’m sorry?

Mr. STUPAK. Do you have any idea where they’re getting their

drugs from?

Mr. ABROMOWITZ. No, I don’t.

Mr. STUPAK. If we have all of these sites coming up monthly, just

popping up, where do they get the Viagra, all the other stuff that

they’re selling out there, Propecia and all?

Mr. ABROMOWITZ. Mr. Stupak, that’s an excellent question. And,

very frankly, as a practicing physician, you know, it just amazes

me that they can, very frankly, can purchase this, these medications. And I think we have to address that question with the pharmaceutical industry. I personally don’t know where they’re getting

all of these drugs, but it amazes me that these drugs are being able

to be dispensed like that.

I mean it’s—it’s against patient care. It’s—the stories we heard

today, the anecdotes we heard throughout the country. And before

I leave, I want to compliment the Commerce Committee, especially

the subcommittee. The American Medication Association is proud

to participate in this because we think this is a gigantic problem

in American medicine today and for our patients that we all serve.

Mr. STUPAK. Sure.

Does anyone else have any comments on that, where they’re getting these drugs? You have the manufacturer, you have the wholesaler, you have the pharmacist, and you have the person with the

prescription. Those are the four links, and there should be a flow

here that you should be able to track.

Then somehow we get this fifth link, the Internet; and, boom, as

I said earlier, a number of times, we had 26 of them in January,

we’re up to about 400 now, how are they getting access to all of

these drugs?

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Mr. ABROMOWITZ. What I would fear, to answer that personally

is, that many of these drugs that they’re sending out to the doorsteps do not—would not pass inspection, you know, or U.S. Pharmaceutical standards of care. I mean, I don’t know where the drugs

are made, in the back room of some garage someplace or something

else, so I would question the fact where many of these drugs do not

meet the standards for what they’ve been prescribed for.

That would be my question, you know, and I would challenge

that, if I were the person ordering those drugs.

Mr. STUPAK. Mr. Catizone, it looks like you wanted to jump in

there.

Mr. CATIZONE. If these pharmacies and distributors are obtaining

these from legitimate manufacturers, there is a paper trail that

must exist to trace those drugs back. By Federal and State requirements, a manufacturer cannot ship prescription drugs to anything

but a licensed wholesaler or a licensed pharmacy; and, therefore,

there has to be a paper trail of both invoices in order to bill for

those drugs and the fact that that is a licensed or a registered site

that can’t accept and receive prescription drugs.

Mr. STUPAK. And I agree with you. I wrote the 1993 Chemical

Diversion Act to get ahold of ephedrine, which is being used to

make methcathinone, cath as we call it. We got that one pretty

much stamped out. And myself and Chairman Upton, we’ve been

working on the GAP problem and, again, we’re putting precursors,

we’re putting the tracers on it, so we have some good idea.

But then could not FDA and the others really look at this paper

trail and try to make some determination from it?

Mr. CATIZONE. Yes.

Mr. STUPAK. Just for the record, we need more than a nodding

of the head, we need a yes or no.

Mr. CATIZONE. I’m afraid to say anything. Representative Klink

is gone. I can speak then. Otherwise, I would say, yes, that paper

trail should exist.

Mr. STUPAK. Ms. Culmo.

Ms. CULMO. Being involved in the manufacture and distribution

of drugs, the paper trail should exist, but it’s probably not the

paper trail that you envision. And what we encounter is the manufacturers—it’s easier, because it’s the start of the process. And—so

it’s easier for them to document where their product goes initially.

Once it leaves their facility, then it’s out of their control again.

It goes to a wholesaler. And from the wholesaler, it can go to a numerous number of entities, some authorized to possess and some

not authorized to possess. And what we encounter a lot of times,

if the wholesaler is not automated, then it’s extremely difficult to

have that paper trail to show where it went to the next location.

The other thing is lot numbers are not tracked. The controls for

prescription drugs are not the same as what’s required for controlled substances. So it would not be difficult for a lot of these

products to go out back doors of overnight storage sites. You have

drop centers when there’s mass quantities being trucked or trained

to different locations. We have diversion problems through physicians’ offices and hospitals. You have huge purchasing groups that

also warehouse their drugs. So it’s not exactly as black and white

as the four entities, and it’s difficult to track.

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Mr. STUPAK. Yeah, right. And in the legislation we’ve always

drafted it was always precursors, which is a little easier to track

than the final product which gets shipped around quite a bit.

Doctor, if I may, in your testimony, you quote a May 11 New

York Times article, and that reads, ‘‘a company based in the Channel Islands of Britain called Direct Response Marketing is selling

Xenical over the Internet to just about anybody who electronically

fills out a medical questionnaire that is reviewed by a company

doctor who then prescribes the drug.’’

You then add the following: If this trend continues, a triple problem exists. First, patients in the United States would easily be able

to obtain drugs that have not been approved by the U.S. FDA. Second, these drugs would not have been tested in rigorous clinical

trials. And, third, patients would be receiving these drugs without

the advice of a physician.

Can you expound on that for us? Can you describe what the

present regulatory system is designed to do and why and elaborate

on how it might be undermined by some of these instant prescription Web sites?

Mr. ABROMOWITZ. Well, the drugs, you know, manufactured and

prescribed here in the U.S. and controlled by the U.S. Standards

have to meet the pharmaceutical industry standards. You know,

the drugs in the foreign market—and I’m no world expert on this,

but to the best of my knowledge probably would not have to meet

those standards. Xenical, you know, is a drug used basically to, you

know,—which blocks fat absorption, weight loss, lowering cholesterol and things of—the various lipids and things of that sort, so

it’s a hot-ticket item.

And the only thing I know—and I personally have refrained from

prescribing this drug until I see what the side effects are, which

is—as a family physician for a number of years, I don’t really prescribe all the new drugs initially until I see what the side effects

are, and Xenical has some very significant ones like diarrhea. But

the fact is—for some patients.

So U.S. Drugs have a certain standard, a very rigid standard to

meet, as my associates here at the table have told you from the

pharmaceutical level. I’m not quite sure whether the foreign companies will meet those standards. And, again, that’s either a legislative or a regulatory situation. I fear that, very frankly, Mr. Stupak, they don’t meet those standards.

Mr. STUPAK. The AMA, they’ve been recently come out pretty

harsh on these instant Web sites, have they not?

Mr. ABROMOWITZ. Absolutely. AMA feels that there must be an

establishment—you take—for example, you’re taking a symptom,

you’re taking a symptom of, I don’t know, obesity and then you’re

putting a prescription drug, you’re missing the interchange between the physician, you’re missing a diagnosis, you’re missing a

treatment, you’re missing a history, you’re missing a physical examination, you’re jumping from one arena to another, and you’re

missing the whole aspect of good medical practice.

Mr. STUPAK. For our other two witnesses—and, again, your Web

sites look like they’re trying to take all the health and concerns

and safety of your consumers in mind, but do any of the consumers

ever call you back up and say, hey, this drug didn’t work right or,

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geez, I want a refund, it isn’t doing what I want, or I have a question? Do you get—your consumers call you back?

Mr. RAZZOUK. We certainly get questions from consumers, and

they get to talk to our pharmacists with their questions. But I don’t

have perfect knowledge of this, but I’m not aware yet of an instance where consumers tried to return a prescription medication

to us, I mean, that was prescribed by the doctors, which are the

only ones that we fulfill. But we certainly answer questions for consumers. Our pharmacists intercede in the fill-in process if they see

a drug-to-drug interaction. They have the patient’s history. They

call the patient and say, did you—you know, to ensure—perhaps

call the patient’s doctor to say there’s going to be interaction here

you’re not aware of. You need to change this prescription.

So we proactively, you know, get engaged that way. But we don’t,

and I’m sure Peter doesn’t either, we don’t accept—we don’t take

return prescriptions. You can’t do that. That’s illegal.

Mr. NEUPERT. We only buy quality approved drugs, No. 1. We

have a lot of customer contact. We’ve answered over 20,000 askyour-pharmacist questions by E-mail since our launch on February

24. That’s 20,000 customers whose questions otherwise wouldn’t

have gotten answered. That’s just the E-mail questions. We answer

hundreds of questions a day from customers trying to find out—I

want to place my order, this is where I want to go, this is how I’m

going to do it, and we respond.

And absolutely, when we have questions about a customer’s prescription order, we verify with a doctor, just like a traditional

neighborhood or a mail-order pharmacy would. And we have, as I

plastered on our site, 1-800-drugstore to make it superconvenient

for people to make sure that they can get ahold of a pharmacist

24 hours a day if they need to.

Mr. STUPAK. Well, that’s one of the concerns we had when we

went through all of these Web sites. There’s no way to contact

them if you have a question. How do you follow-up? Is there any

follow-up back with the patient? And your two companies and

maybe one or two others at least had a phone number and an address you could at least track to.

Thank you. I have nothing further, Mr. Chairman.

Mr. BRYANT. Thank you.

Let me just kind of wind this thing down little bit. I have a couple of questions.

Mr. Razzouk, this weekend the Wall Street Journal discussed the

issue of pharmacy benefit managers or PBMs. You briefly mentioned this issue of PBMs in your testimony as well. Can you explain more about the issue of PBMs and how it affects your companies and others like you?

Mr. RAZZOUK. It’s a very complicated area in managed care.

PBMs are pharmacy benefit managers, that’s what PBM stands

for, and they are entities that are either hired by health care organizations or provide health care services themselves who put together retail, put together a network of brick and mortar retail

pharmacies that their members can have their prescriptions filled

at and be covered by insurance. And the major pharmacy benefit

management companies also have their own pharmacies that are

mail order pharmacies that they own and that they operate.

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And to date, with very few exceptions, they have been very adamant about not allowing the legitimate on-line pharmacies to act

as a retail pharmacy, as Peter and I have described retail pharmacy and neighborhood pharmacy today, and be part of the bricks

and mortar equivalent of a retail network where a patient could

come and get their prescription filled and be covered by insurance.

And the reason they have decided not to do that is they view us

as a potential competitor somewhere down the road, so they have

all proactively said they’re not going to let any of us into their network. Whereas if I was a neighborhood pharmacy, community

pharmacist, if I was a RiteAid store, if I was a CVS store, if I was

a Walgreens, if I was a Gilespie’s, I would have a heck of a chance

being in that network, because they wouldn’t view me as a competitor, and that’s exactly what is going on today, and it’s wrong.

Mr. BRYANT. Thank you.

Mr. Neupert, in your written statement you indicated that you

would be willing to commit resources to educating consumers about

the VIPPS certification. What do you have in mind on that?

Mr. NEUPERT. Well, as I said before, the practice of pharmacy is

based on trust, and it’s important to our business to separate ourselves from those rogue sites. And we spend significant dollars to

educate consumers about our brand name and about our services

and about the convenience of ordering on-line. And we would certainly be willing to commit to spend some of those resources to promote VIPPS and what it means and that we’re VIPPS certified.

And I think that’s generally how things work when you have a

voluntary, industry-supported seal of approval. It’s in the industry’s best interests to communicate its benefits to customers. Otherwise, that means nothing. And so we would take some of those

marketing funds and communicate to customers in all the vehicles

that we do, whether it’s on our Web site, whether it’s on web advertising or whether it’s in our television advertising, the benefits of

being a VIPPS member. And that’s how they would learn how to

use it and why it’s a good thing.

Mr. BRYANT. I have no additional questions.

And certainly, as someone who has practiced law a long time, I

learned not to do this, but let me, before we close, ask if any of you

have any closing comments. You all came a long way to be here,

and you don’t have to say anything, but if anyone would like to get

in one final word, you’re welcome to do it now or forever hold your

peace.

Thank you very much for all being here, and we appreciate your

very able assistance. This hearing is adjourned.

[Whereupon, at 1:50 p.m., the subcommittee was adjourned.]

[Additional material submitted for the record follows:]

PREPARED STATEMENT OF S. LAWRENCE KOCOT, SENIOR VICE PRESIDENT, GOVERNMENT AFFAIRS AND GENERAL COUNSEL, NATIONAL ASSOCIATION OF CHAIN DRUG

STORES

INTRODUCTION

Mr. Chairman and Members of the Subcommittee, the National Association of

Chain Drug Stores (NACDS) appreciates the opportunity to submit a statement to

the Subcommittee on issues relating to obtaining prescription pharmaceutical products through the internet.

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Founded in 1933 and based in Alexandria, Virginia, the National Association of

Chain Drug Stores membership consists of 136 retail chain community pharmacy

companies. Collectively, chain community pharmacy comprises the largest component of pharmacy practice with over 97,000 pharmacists. The chain community

pharmacy industry is comprised of more than 19,000 traditional chain drug stores,

7,000 supermarket pharmacies and nearly 5,000 mass merchant pharmacies. The

NACDS membership base operates more than 31,000 retail community pharmacies

with annual sales totaling over $158 billion including prescription drugs, over-thecounter (OTC) medications and health and beauty aids (HBA). Chain operated community retail pharmacies fill over 60% of the more than 2.73 billion prescriptions

dispensed annually in the United States. Additionally, NACDS membership includes

nearly 1,400 suppliers of goods and services to chain community pharmacies.

NACDS international membership has grown to include 105 members from 26 foreign countries.

Pharmaceutical internet websites allow consumers to order new and refill prescriptions, obtain important information regarding the prescriptions they are taking,

receive medication refill reminders, or access their complete medication profile. Better use of medications, improved health outcomes, reduced health care costs, and

convenience for the consumer can result.

Internet pharmaceutical sites represent another electronic medium for ordering

prescriptions - such as the commonly-used fax or telephone. For example, just like

a patient takes a prescription to a pharmacy, a physician calls in a prescription, or

the patient calls in a refill, internet pharmacy sites are alternative ways to order

prescription medications. After verification by the pharmacist that the prescription

order is legitimate, the pharmacy prepares and delivers the prescription that was

ordered through the site.

Many of these pharmacies are the same ones that prepare prescriptions for consumers that are obtaining prescriptions through traditional sources. These pharmacies and pharmacists are licensed by state boards of pharmacy, and must comply

with a comprehensive set of laws and regulations.

There are, however, certain questionable and unethical pharmaceutical prescribing and dispensing practices occurring through some internet pharmaceutical

sites. For example, some pharmaceutical sites focus solely on the prescribing and

dispensing of certain ‘‘lifestyle’’ drugs. These prescriptions are often provided without the benefit of complete medical information about the patient, and it may be

questionable whether the dispensing pharmacy is licensed.

Moreover, some sites allow pharmaceutical products to be ordered, but the products are actually shipped from sites that are ‘‘off shore.’’ There are potential quality

of care and legal concerns with the pharmaceuticals that are imported into the

United States.

These situations raise legitimate concerns about quality of care and safety issues

regarding the prescribing and dispensing of prescription drugs through certain pharmaceutical internet sites. However, while the use of the internet may have brought

these issues more into public focus, the concerns raised have been successfully handled for many years within current oversight structures to assure the quality and

integrity of the prescribing and dispensing process.

NACDS PERSPECTIVES ON INTERNET-BASED PHARMACEUTICAL SERVICES

• Legitimacy of Internet Pharmaceutical Sites should be Acknowledged:

Policymakers should recognize the consumer and health care benefits of ‘‘legitimate’’ licensed internet pharmaceutical sites. These sites should be contrasted

with sites whose only goal is to promote or sell a certain ‘‘lifestyle’’ pharmaceutical outside the context of a professional-patient relationship, or import

pharmaceuticals from other countries.

• Physician-Patient Relationship should Exist: NACDS believes that prescribing pharmaceutical products through the internet should only occur within

the context of an established physician-patient relationship. That is, a physician

or other health professional licensed to prescribe should be making the judgement concerning the prescribing of a drug based on reliable, complete information required within the scope of practice, including a physical assessment of

the patient and diagnosis of the medical condition.

• Existing Oversight Structures Provide Protections: NACDS believes that

sufficient Federal and state oversight already exists that can continue to adequately protect the consumer from unsafe pharmaceutical prescribing and dispensing practices, including those that occur over the internet:

• State boards of pharmacy are responsible for regulating all pharmacies operating in their state, including internet and mail service pharmacies. Some

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states also require pharmacies that operate outside of their state but ship

products to consumers within their state, to be licensed. The development by

the National Association of Boards of Pharmacy (NABP) of a certification program for those online pharmacies that voluntarily wish to post this seal of

approval on their site lends one additional safeguard to the system. This seal

is known as VIPPS - Verified Internet Pharmacy Practice Site.

• State boards of medicine regulate medical practice within their state. Prescribing privileges are granted by the state. If physicians engage in prescribing for patients with whom they have no valid relationship, the state

medical boards are responsible for taking appropriate disciplinary action.

• Food and Drug Administration (FDA) has authority over pharmaceutical importation. Offshore sources of prescription drugs, whether accessed by the patient via telephone, mail or internet, that ship to U.S. consumers are within

FDA’s jurisdiction. NACDS has worked with the FDA to identify ‘‘off shore’’

pharmacies that are sending pharmaceuticals into the United States. FDA

should enforce, with the assistance of the U. S. Customs Service and possibly

the Drug Enforcement Administration, the prohibition of foreign sources’ ability to ship these drugs into the United States.

• Consumer Education Component Important: As with any health care service,

the consumer needs to be well informed about the benefits and risks of obtaining pharmaceuticals through various methods, including the internet. NACDS

believes that it will be important to fully educate consumers about using the

internet for pharmaceutical services and the types of questions they should ask.

Moreover, consumers need to be educated about the potential hazards of obtaining pharmaceuticals from ‘‘off shore’’ sites, given the potential problems with

the quality and integrity of these products.

CONCLUSION

NACDS does not believe it is necessary to expand the jurisdiction of federal agencies to regulate online sales of prescription drugs. Rather, there are provisions in

current state and federal laws that will adequately protect the consumer from unsafe internet practices.

Mr. Chairman and Members of the Subcommittee, NACDS looks forward to working with you, consumers and other interested parties to assure the quality and integrity of the pharmaceutical distribution system, including for pharmaceuticals obtained through legitimate internet sites.