INTERNET PHARMACIES

Most Rogue Sites Operate 

from Abroad, and Many Sell 

Counterfeit Drugs

Statement of Marcia Crosse 

Director, Health Care

Testimony 

Before the Subcommittee on Oversight 

and Investigations, Committee on 

Energy and Commerce, House of 

Representatives

For Release on Delivery 

Expected at 10:00 a.m. EST

Thursday, February 27, 2014

GAO-14-386T

United States Government Accountability Office
United States Government Accountability Office

Highlights of GAO-14-386T, a testimony 

before the Subcommittee on Oversight and 

Investigations, Committee on Energy and 

Commerce, House of Representatives

February 27, 2014

INTERNET PHARMACIES

Most Rogue Sites Operate from Abroad, and Many 

Sell Counterfeit Drugs

Why GAO Did This Study

While some Internet pharmacies are 

legitimate businesses that offer 

consumers a safe and convenient way 

to purchase their prescription drugs, 

the FDA and NABP have reported that 

thousands are fraudulent enterprises. 

Among other things, these rogue 

Internet pharmacies often sell 

counterfeit or otherwise substandard 

drugs. Consumers have experienced 

health problems as a result of 

purchasing drugs from rogue Internet 

pharmacies, and the proliferation and 

patronage of such entities has 

rendered them a public health threat. A 

number of federal and state agencies 

share responsibility for administering 

and enforcing laws related to Internet 

pharmacies, including FDA, DOJ, CBP, 

and ICE, as well as state boards of 

pharmacy.

This statement is based on GAO’s July 

2013 report, entitled Internet 

Pharmacies: Federal Agencies and 

States Face Challenges Combating 

Rogue Sites, Particularly Those 

Abroad (GAO-13-560). In this report, 

GAO identified (1) how rogue sites 

violate federal and state laws, 

(2) challenges federal agencies face in 

investigating and prosecuting 

operators, (3) efforts to combat rogue 

Internet pharmacies, and (4) efforts to 

educate consumers about the risks of 

purchasing prescription drugs online. 

To conduct this work, GAO interviewed 

officials from federal agencies, 

reviewed federal laws and regulations, 

and examined agency data and 

documents. GAO also interviewed 

officials from stakeholders including 

NABP, drug manufacturers, and 

companies that provide services to 

Internet businesses.

What GAO Found

Although the exact number of rogue Internet pharmacies is unknown, one 

estimate suggests that there were over 36,000 in operation as of February 2014, 

and these rogue sites violate a variety of federal laws. Most operate from abroad, 

and many illegally ship prescription drugs into the United States that have not 

been approved by the Food and Drug Administration (FDA), including drugs that 

are counterfeit or are otherwise substandard. Many also illegally sell prescription 

drugs without a prescription that meets federal and state requirements. Foreign 

rogue Internet pharmacies use sophisticated methods to evade scrutiny by 

customs officials and smuggle drugs into the country. Their operators also often 

violate other laws, including those related to fraud and money laundering.

Rogue Internet pharmacies are often complex, global operations, and federal 

agencies face substantial challenges investigating and prosecuting those 

involved. According to federal agency officials, piecing together rogue Internet 

pharmacy operations can be difficult because they may be composed of 

thousands of related websites, and operators take steps to disguise their 

identities. Officials also face challenges investigating and prosecuting operators 

because they are often located abroad in countries that are unable or unwilling to 

aid U.S. agencies. The Department of Justice (DOJ) may not prosecute such 

cases due to competing priorities, the complexity of these operations, and 

challenges related to bringing charges under some federal laws.

Despite these challenges, federal agencies have conducted investigations that 

have led to convictions, fines, and asset seizures from rogue Internet pharmacies 

as well as from companies that provide services to them. FDA and other federal 

agencies have also collaborated with law enforcement agencies around the world 

to disrupt rogue Internet pharmacy operations. For example, FDA took action 

against 1,677 rogue Internet pharmacy websites in 2013 as part of a worldwide 

enforcement initiative. Other federal agencies such as U.S. Customs and Border 

Protection (CBP) and U.S. Immigration and Customs Enforcement (ICE) have 

also taken actions—for example, by interdicting counterfeit drug shipments from 

rogue Internet pharmacies at the border.

FDA and others have taken steps to educate consumers about the dangers of 

buying prescription drugs from rogue Internet pharmacies. FDA recently 

launched a national campaign to raise public awareness about the risks of 

purchasing drugs online, and the National Association of Boards of Pharmacy 

(NABP) posts information on its website about how to safely purchase drugs 

online. However, rogue Internet pharmacies use sophisticated marketing 

methods to appear legitimate, making it hard for consumers to differentiate 

between legitimate and rogue sites. NABP’s recent analysis shows that 

97 percent of the over 10,000 Internet pharmacies that it reviewed were out of 

compliance with laws or industry standards. Some rogue sites seek to assure 

consumers of the safety of their drugs by purporting to be “Canadian” despite 

being located elsewhere or selling drugs sourced from other countries. 

View GAO-14-386T. For more information, 

contact Marcia Crosse, (202) 512-7114, or 

CrosseM@gao.gov.
 

Page 1 GAO-14-386T

Chairman Murphy, Ranking Member DeGette, and Members of the 

Subcommittee:

I am pleased to be here today as you discuss the danger posed by 

counterfeit drugs.1 One source of counterfeit drugs is Internet 

pharmacies. While some Internet pharmacies are legitimate businesses 

that offer consumers a safe, convenient, and cost-effective way to obtain 

their medications, the Food and Drug Administration (FDA) and the 

National Association of Boards of Pharmacy (NABP) have reported that 

thousands are fraudulent enterprises.2 In addition to counterfeit drugs, 

these “rogue” Internet pharmacies often sell prescription drugs that have 

not been approved for sale in the United States, are substandard and 

have no therapeutic value, or are harmful to consumers.

3 Drugs sold by 

rogue Internet pharmacies have been found to contain too much, too little, 

or no active pharmaceutical ingredient, or the wrong active ingredient. 

They have also been found to contain dangerous contaminants, such as 

toxic yellow highway paint, heavy metals, and rat poison. Consumers who 

have taken prescription drugs purchased from rogue Internet pharmacies 

have experienced health problems, required emergency treatments, and 

died. Despite the risks, buying prescription drugs on the Internet is not 

uncommon. According to a recent survey conducted by FDA, nearly one 

in four adult U.S. Internet consumers surveyed reported purchasing 

prescription drugs online.4

 

1

Counterfeit drugs include those sold under a product name without proper 

authorization—where the drug is mislabeled in a way to mimic an authentic product—as 

well as unauthorized generic versions of drugs approved by the Food and Drug 

Administration that mimic trademarked elements of such drugs. 21 U.S.C. § 321(g)(2).

At the same time, nearly 30 percent said that 

they lacked confidence about how to safely purchase medicine online. 

The proliferation and widespread patronage of rogue Internet pharmacies 

2

We refer to each website that fulfills first-time orders of prescription drugs as an Internet 

pharmacy, regardless of whether the company that operates the website is licensed as a 

pharmacy. 

3

Both counterfeit drugs and substandard drugs may be contaminated or otherwise 

harmful. Counterfeit drugs may contain no active ingredient or may contain the same 

active ingredient as the authentic product they mimic, but at the wrong dose. Substandard 

drugs include those that are adulterated and that differ in strength, quality, or purity from 

approved products, as well as those that are not manufactured in conformity with good 

manufacturing practices.

4

FDA, “BeSafeRx Survey Highlights,” accessed May 7, 2013, 

http://www.fda.gov/Drugs/ResourcesForYou/Consumers/BuyingUsingMedicineSafely/Buyi

ngMedicinesOvertheInternet/BeSafeRxKnowYourOnlinePharmacy/ucm318497.htm. 
 

Page 2 GAO-14-386T

has prompted public officials to identify them as a continuing public health 

threat.

Like brick-and-mortar pharmacies, Internet pharmacies are subject to 

federal and state statutes and regulations that are designed to ensure the 

safety, efficacy, and proper administration of medications. No one federal 

agency is designated as the lead in combating rogue Internet pharmacy 

activity. Instead, a number of federal and state agencies share 

responsibility for regulating prescription drugs that are marketed and sold 

to U.S. consumers, including by Internet pharmacies. The federal 

agencies have separate and distinct roles and often work together. For 

example, FDA is responsible for ensuring the safety and effectiveness of 

prescription drugs, and FDA approval is required prior to marketing 

prescription drugs in the United States. U.S. Customs and Border 

Protection (CBP) is responsible for enforcing laws prohibiting the illegal 

importation of goods, including prescription drugs that have not been

approved for marketing in the United States by FDA. U.S. Immigration 

and Customs Enforcement (ICE) is responsible for, among other things, 

investigating violations of customs and trade laws, including those related 

to trafficking in counterfeit goods. ICE also operates the National 

Intellectual Property Rights Coordination Center, the mission of which is 

to share information across 17 federal government agencies and four 

foreign regulatory agencies, coordinate enforcement actions, and conduct 

investigations related to intellectual property theft—including those that 

occur through rogue Internet pharmacies. The Department of Justice 

(DOJ) may investigate and prosecute an operator of an Internet 

pharmacy that is suspected of violating federal laws. State agencies 

regulate the practice of pharmacy through state boards of pharmacy and, 

similarly, the practice of medicine though state medical boards.

My statement will highlight some of the key findings from our July 2013 

report on Internet pharmacies, and includes selected updates to the 

report.5

 

5

GAO, Internet Pharmacies: Federal Agencies and States Face Challenges Combating 

Rogue Sites, Particularly Those Abroad, 

Among other things, our report identified (1) how rogue Internet 

pharmacies are selling prescription drugs in violation of federal laws, 

(2) challenges associated with federal investigations and prosecutions of 

rogue Internet pharmacies, (3) efforts to combat rogue Internet 

pharmacies, and (4) efforts to educate consumers about the risks of 

GAO-13-560 (Washington, D.C.: July 8, 2013).
 

Page 3 GAO-14-386T

rogue Internet pharmacies and how to recognize legitimate online 

pharmacies.

To identify how rogue Internet pharmacies are selling prescription drugs 

in violation of federal laws, we interviewed officials from federal agencies 

such as FDA, CBP, ICE, and DOJ, reviewed federal laws and regulations, 

and examined agency documents. To obtain additional information, we 

interviewed a variety of knowledgeable stakeholders, including NABP and 

LegitScript, an online pharmacy verification service, both of which 

routinely review Internet pharmacy websites to determine compliance with 

federal and state laws.

To identify challenges involved in investigating and prosecuting rogue 

Internet pharmacies, as well as efforts to combat rogue Internet 

pharmacies, we interviewed officials from federal agencies, including

FDA, CBP, ICE, and DOJ. We obtained data from several federal 

agencies that summarize their efforts to combat Internet pharmacies. We 

discussed these data with agency officials, reviewed them for 

reasonableness and consistency, and determined that they were 

sufficiently reliable for our purposes. We also interviewed officials from 

stakeholders involved in combating rogue Internet pharmacies, drug 

manufacturers, and private companies that provide services to Internetbased companies. Finally, we reviewed published reports on rogue 

Internet pharmacy operations.

To identify efforts to educate consumers about the risks of rogue Internet 

pharmacies and how to recognize legitimate online pharmacies, we 

interviewed officials from federal agencies and stakeholders to discuss 

their consumer education efforts. We also reviewed available educational 

campaign materials.

We conducted the work for the report on which this statement is based 

from October 2012 to June 2013, and made selected updates in February 

2014, in accordance with generally accepted government auditing 

standards. Those standards require that we plan and perform the audit to 

obtain sufficient, appropriate evidence to provide a reasonable basis for 

our findings and conclusions based on our audit objectives. We believe 

that the evidence obtained provides a reasonable basis for our findings 

and conclusions based on our audit objectives.
 

Page 4 GAO-14-386T

Although the exact number of rogue Internet pharmacies is unknown, 

most operate from abroad. According to LegitScript, an online pharmacy 

verification service that applies NABP standards to assess the legitimacy 

of Internet pharmacies, there were over 36,000 active rogue Internet 

pharmacies as of February 2014. Federal officials and other stakeholders 

we interviewed consistently told us that most rogue Internet pharmacies 

operate from abroad, and many have shipped drugs into the United 

States that are not approved by FDA, including counterfeit drugs. In doing 

so, they violate Federal Food, Drug and Cosmetic Act (FDCA) provisions 

that require FDA approval prior to marketing prescription drugs to U.S. 

consumers, as well as customs laws that prohibit the unlawful importation 

of goods, including unapproved drugs.6 Many rogue Internet pharmacies 

sell counterfeit, misbranded, and adulterated drugs, in violation of FDCA 

provisions.7 Counterfeiting and trafficking or selling counterfeit drugs also 

violate laws that protect intellectual property rights.8 Many also illegally 

sell certain medications without a prescription that meets federal and 

state requirements.9 Indeed, nearly 10 years ago, we made sample 

purchases from a variety of rogue sites without a prescription and we 

subsequently received several drugs that were counterfeit or otherwise 

not comparable to the product we ordered.10

 

6

See, e.g., 21 U.S.C. § 355(a); 18 U.S.C. § 545.

7

Misbranded drugs include those that are sold without a prescription that meets applicable 

requirements, as well as those whose labeling or container is misleading or does not 

include required information, such as the name of the drug, adequate directions for use, 

and cautionary statements. 21 U.S.C. §§ 331(a), (b), 352, 353(b). Adulterated drugs 

include those that differ in strength, quality, or purity from approved products, as well as 

those that are not manufactured in conformity with good manufacturing practices. 

21 U.S.C. §§ 331(a), (b), 351.

8

Intellectual property is any innovation, commercial or artistic, or any unique name, 

symbol, logo, or design used commercially. Intellectual property rights protect the 

economic interests of the creators of these works by giving them property rights over their 

creations. Generally, individual countries grant and enforce these rights.

9

The FDCA requires that certain drugs be dispensed pursuant to a prescription that is 

issued by a licensed practitioner. See 21 U.S.C. § 353(b). The FDCA, however, does not 

define how this requirement is to be met. Instead, each state’s pharmacy and medical 

practice laws and regulations define what constitutes a valid prescription in that state.

10GAO, Internet Pharmacies: Some Pose Safety Risks for Consumers, GAO-04-820

(Washington, D.C.: June 17, 2004).

Most Rogue Internet 

Pharmacies Operate 

From Abroad and 

Many Violate a 

Variety of Federal 

Laws, Including by 

Selling Counterfeit 

Drugs
 

Page 5 GAO-14-386T

To sell drugs to their U.S. customers, foreign rogue Internet pharmacies 

use sophisticated methods to evade scrutiny by customs officials and 

smuggle their drugs into the country. For example, rogue Internet 

pharmacies have misdeclared the contents of packages, in violation of 

customs laws.11 Rogue Internet pharmacies have disguised or hidden 

their drugs in various types of packaging; for example, CBP has found 

drugs in bottles of lotion and in tubes of toothpaste. Some of the drugs we 

obtained when conducting work for our 2004 report were shipped in 

unconventional packaging, including in a plastic compact disc case and in 

a sealed aluminum can that was mislabeled as dye and stain remover 

wax.

12 In addition, rogue Internet pharmacies also often violate other 

federal laws, including those related to fraud and money laundering.

Rogue Internet pharmacies are often complex, global operations, and 

federal agencies face substantial challenges investigating and 

prosecuting those involved. According to federal agency officials, piecing 

together rogue Internet pharmacy operations can be difficult because they 

may be composed of thousands of related websites, and operators take 

steps to disguise their identities. The ease with which operators can set 

up and take down websites also makes it difficult for agencies to identify, 

track, and monitor rogue websites and their activities, as websites can be 

created, modified, and deleted in a matter of minutes. Officials also face 

challenges investigating and prosecuting operators because they are 

often located abroad, with components of the operations scattered in 

several countries. For example, as displayed in figure 1, one rogue 

Internet pharmacy registered its domain name in Russia, used website 

servers located in China and Brazil, processed payments through a bank 

in Azerbaijan, and shipped its prescription drugs from India.

 

11See, e.g., 18 U.S.C. §§ 542, 545.

12See GAO-04-820. 

The Complex and 

Global Nature of 

Rogue Internet 

Pharmacies Poses 

Substantial 

Challenges for 

Federal Investigators 

and Prosecutors
 

Page 6 GAO-14-386T

Figure 1: Map of a Rogue Internet Pharmacy Operation

Notes: This figure is based on a figure that was published in Kirill Levchenko et al., “Click 

Trajectories: End-to-End Analysis of the Spam Value Chain” (paper presented at the Institute of 

Electrical and Electronics Engineers Symposium on Security and Privacy, Oakland, CA, May 22-25, 

2011), accessed October 1, 2012, http://cseweb.ucsd.edu/~savage/papers/Oakland11.pdf. The study 

was funded in part by grants from the National Science Foundation.

Even when federal agencies are able to identify rogue Internet pharmacy 

operators, agency officials told us that they face jurisdictional challenges 

investigating and prosecuting them. Agencies may need assistance from 

foreign regulators or law enforcement in order to obtain information and 

gather evidence. However, rogue Internet pharmacies often deliberately 

and strategically locate components of their operations in countries that 

are unable or unwilling to aid U.S. agencies. In addition, foreign law 
 

Page 7 GAO-14-386T

enforcement authorities that are willing to aid investigations can be slow 

in responding to requests for help, according to officials from several 

federal agencies.

As a result of competing priorities and the complexity of rogue Internet 

pharmacies, federal prosecutors may not always prosecute these cases. 

Such cases are often resource intensive and often involve the application 

of specialized investigative techniques, such as Internet forensics and 

undercover work. Components of DOJ routinely prioritize cases for 

prosecution by applying minimum thresholds associated with illicit 

activities in order to focus their limited resources on the most serious 

crimes. Accordingly, agencies may not pursue cases if it appears that 

such cases do not meet relevant thresholds.

In addition, basing a prosecution on violations of the FDCA can be 

challenging, which may contribute to prosecutors declining to pursue 

rogue Internet pharmacy cases. Though rogue Internet pharmacy activity 

clearly violates the FDCA, proving violations of the act’s misbranding and 

counterfeiting provisions can be difficult, according to a DOJ official. In 

addition, violations of these provisions of the FDCA are subject to 

relatively light criminal penalties, which may limit prosecutors’ interest. 

When federal prosecutors pursue charges against rogue Internet 

pharmacy operators, they often charge them for violating other laws, such 

as smuggling, mail fraud, wire fraud, or money laundering, since such 

violations can be less onerous to prove and carry stronger penalties.13

 

13See, e.g., 18 U.S.C. §§ 545 (smuggling), 1341 (mail fraud), 1343 (wire fraud), 1956 

(money laundering). These crimes are subject to penalties of up to 20-30 years in jail or 

fines ranging from $500,000 to $1 million, or both. Violations of FDCA misbranding and 

counterfeiting provisions are subject to maximum penalties of 3 years in jail or a fine of 

$10,000, or both, under 21 U.S.C. § 333, and 18 U.S.C. § 3571 provides for a $250,000 

fine or twice the gross gain or loss for individual defendants for all felony violations, 

including FDCA felony violations.
 

Page 8 GAO-14-386T 

Despite these challenges, federal agencies and others have taken actions 

to combat rogue Internet pharmacies. Federal agencies have conducted 

investigations that have led to convictions, fines, and asset seizures from 

rogue Internet pharmacies as well as from companies that provide 

services to them. Agencies have investigated rogue Internet pharmacies 

independently and conducted collaborative investigations with other 

federal agencies through ICE’s National Intellectual Property Rights 

Coordination Center. Since our report was published in July 2013, DOJ 

has continued to pursue those that import and traffic in counterfeit drugs,

as well as those that purchase from them.14

Agencies have also collaborated with law enforcement agencies around 

the world to disrupt rogue Internet pharmacy operations. For example, 

FDA and other federal agencies have participated in Operation Pangea, 

an annual worldwide, week-long initiative in which regulatory and law 

enforcement agencies from around the world work together to combat 

rogue Internet pharmacies. In 2013, FDA took action against 1,677 rogue 

Internet pharmacy websites during Operation Pangea. FDA officials told 

us that the effect of such shutdowns is primarily disruptive since rogue 

Internet pharmacies often reopen after their websites get shut down; 

officials from federal agencies and stakeholders we spoke with likened 

shutting down websites to taking a “whack-a-mole” approach. One 

stakeholder noted that rogue Internet pharmacies own and keep websites 

in reserve so that they can redirect traffic and maintain operations if any 

of their websites get shut down.

In addition, FDA formed a 

Cyber Crimes Investigation Unit in 2013, and in 2014, the agency 

announced its plans to expand its law enforcement presence overseas by 

placing its first permanent agent at Europol—the European Union’s law 

enforcement agency.

Federal agencies responsible for preventing illegal prescription drug 

imports have also interdicted rogue Internet pharmacy shipments. For 

example, from fiscal years 2010 through 2012, CBP reported seizing 

 

14See, for example, Department of Justice, “Two Turkish Nationals Indicted for Smuggling 

Counterfeit Cancer Drug”, accessed February 10, 2014,

http://www.justice.gov/usao/moe/news/2014/january/semizoglu_ozkan.html, Department 

of Justice, “Guilty Plea in Counterfeit Viagra® and Cialis® case”, accessed February 10, 

2014, http://www.justice.gov/usao/txs/1News/Releases/2014%20January/140110%20-

%20Rashid.html, and Department of Justice, “Seven Ohio Oncologists Ordered to Pay 

$2.6 Million”, accessed February 19, 2014, 

http://www.justice.gov/usao/ohn/news/2014/29jancan.html. 

Federal Agencies 

Have Taken a Variety 

of Steps to Combat 

Rogue Internet 

Pharmacies
 

Page 9 GAO-14-386T

more than 14,000 illicit shipments of prescription drugs. However, FDA 

officials noted that the sheer volume of inbound international mail 

shipments makes it difficult to interdict all illicit prescription drug imports.

FDA and others have taken steps to educate consumers about the 

dangers of buying prescription drugs from rogue Internet pharmacies. In 

September 2012, FDA launched a national campaign to raise public 

awareness about the risks of purchasing drugs online. The campaign 

provides information about the dangers of purchasing drugs from rogue 

Internet pharmacies, how to identify the signs of rogue Internet 

pharmacies, as well as how to find safe Internet pharmacies. Other 

federal agencies have also taken steps to educate consumers about the 

dangers of purchasing drugs online; for example, by posting information 

on their websites.

NABP also posts information about its quarterly review of Internet 

pharmacies, which most recently showed that 97 percent of the over 

10,000 Internet pharmacies that it reviewed were out of compliance with 

federal or state laws or industry standards.15

 

15National Association of Boards of Pharmacy, Internet Drug Outlet Identification Program, 

Progress Report for State and Federal Regulators: October 2013 (Mount Prospect, IL: 

Nov. 1, 2013).

NABP also directs 

consumers to purchase medicines from legitimate Internet pharmacies 

that it has accredited. To assist consumers in more readily identifying 

legitimate online pharmacies, NABP is working to launch a new top-level 

domain name called .pharmacy. The association intends to grant this

domain name to appropriately licensed, legitimate Internet pharmacies 

operating in compliance with regulatory standards—including pharmacy 

licensure, drug authenticity, and prescription requirements—in every 

jurisdiction that the pharmacy does business. LegitScript also helps 

consumers to differentiate between legitimate and rogue Internet 

pharmacies. It regularly scans the Internet and, using NABP’s standards, 

classifies Internet pharmacies into one of four categories: (1) legitimate, 

(2) not recommended, (3) rogue, or (4) pending review. When visiting its 

publicly available website, consumers can enter the website address of 

any Internet pharmacy and immediately find LegitScript’s classification. 

As of February 3, 2014, LegitScript had classified 213 Internet 

pharmacies as legitimate and therefore safe for U.S. consumers, on the 

basis of NABP standards.

FDA and Others Have 

Taken Steps to 

Educate Consumers 

about the Risks of 

Purchasing 

Prescription Drugs 

from Internet 

Pharmacies, but 

Challenges Remain
 

Page 10 GAO-14-386T

Despite these actions of agencies and stakeholders, consumer education 

efforts face many challenges. In particular, many rogue Internet 

pharmacies use sophisticated marketing methods to appear professional 

and legitimate, making it challenging for even well-informed consumers 

and health care professionals to differentiate between legitimate and 

rogue sites. For example, some Internet pharmacies may fraudulently 

display an NABP accreditation logo on their website, despite not having 

earned the accreditation, or may fraudulently display Visa, MasterCard, 

PayPal, or other logos on their website despite not holding active 

accounts with these companies or being able to process such payments. 

Figure 2 displays a screenshot of a rogue Internet pharmacy website that 

may appear to be legitimate to consumers, but whose operators pled 

guilty to multiple federal offenses, including smuggling counterfeit and 

misbranded drugs into the United States.
 

Page 11 GAO-14-386T

Figure 2: Screenshot of a Rogue Internet Pharmacy Website Whose Operators Pled Guilty to Multiple Federal Offenses, 2007

Notes: The image displayed is a screenshot of the www.newpharm.net website at as of June 25, 

2007, as retrieved from http://web.archive.org/web/20070625062436/http://www.newpharm.net/ on 

June 5, 2013. The Food and Drug Administration, Immigration and Customs Enforcement, and the 

United States Postal Inspection Service conducted a joint investigation into this rogue Internet 

pharmacy, and in April 2012, its two operators pled guilty to smuggling counterfeit and misbranded 
 

Page 12 GAO-14-386T

drugs into the United States. We reviewed agency press releases, the indictments, and the court’s 

judgments related to this investigation. The operators were prosecuted after federal agents conducted 

a series of undercover purchases from several of the operators’ Internet pharmacies, including 

www.newpharm.net. Federal agents were able to purchase prescription medications without providing 

a valid prescription. Drugs were typically shipped to the United States from China and India, and 

exterior packaging typically falsely described the contents of the shipments as “gifts” that had “no 

commercial value”. The Internet pharmacy’s website operators were located in Israel, customer 

service was located in the Philippines, and banking and money laundering were conducted in Cyprus 

and the Seychelles. Federal agents collaborated with law enforcement authorities in Hong Kong and 

Israel as part of the investigation. Laboratory results of drug samples purchased by federal agents 

revealed that the drugs were not genuine versions of the approved drugs that they purported to be. 

As part of their sentences, the operators were fined a total of $45,000 and forfeited a total of $65,000 

as well as the domain names of their rogue Internet pharmacy websites. One of the operators was 

sentenced to 10 months of imprisonment, and the other was sentenced to 1 year of probation.

Some rogue Internet pharmacies seek to assure consumers of the safety 

of their drugs by purporting to be “Canadian.” Canadian pharmacies have 

come to be perceived as a safe and economical alternative to pharmacies 

in the United States. Over the last 10 years, several local governments 

and consumer organizations have organized bus trips to Canada so that 

U.S. residents can purchase prescription drugs at Canadian brick-andmortar pharmacies at prices lower than those in the United States. More 

recently, some state and local governments implemented programs that 

provided residents or employees and retirees with access to prescription 

drugs from Canadian Internet pharmacies.16 Despite FDA warnings to 

consumers that the agency could not ensure the safety of drugs not 

approved for sale in the United States that are purchased from other 

countries, the prevalence of such programs may have contributed to a 

perception among U.S. consumers that they can readily save money and 

obtain safe prescription drugs by purchasing them from Canada. Many 

rogue Internet pharmacies seek to take advantage of this perception by 

purporting to be located in Canada, or sell drugs manufactured or 

approved for sale in Canada, when they are actually located elsewhere or 

selling drugs sourced from other countries.17

 

16For example, Maine recently enacted a law that allows licensed retail pharmacies 

located in Canada, the United Kingdom, Australia, and New Zealand to export prescription 

drugs to Maine residents for personal use without obtaining a license from the state. See 

2013 Me. Legis. Serv. Ch. 373 (S.P. 60) (L.D. 171).

17A 2005 FDA study of drugs ordered from so-called “Canadian” Internet pharmacies 

found that 85 percent were from 27 other countries around the globe, and a number of 

these were counterfeit medicines.
 

Page 13 GAO-14-386T

Chairman Murphy, Ranking Member DeGette, and Members of the 

Subcommittee, this completes my prepared statement. I would be 

pleased to respond to any questions that you may have at this time.

If you or your staff have any questions about this testimony, please 

contact me at (202) 512-7114 or crossem@gao.gov. Contact points 

for our Offices of Congressional Relations and Public Affairs may be 

found on the last page of this statement. GAO staff who made key 

contributions to this statement include Geri Redican-Bigott, Assistant 

Director; Michael Erhardt; Patricia Roy; and Lillian Shields.

GAO Contact and 

Staff 

Acknowledgments

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