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[Congressional Bills 110th Congress]
[From the U.S. Government Publishing Office]
[S. 596 Introduced in Senate (IS)]

110th CONGRESS
  1st Session
                                 S. 596

 To amend the Federal Food, Drug, and Cosmetic Act to provide for the 
                   regulation of Internet pharmacies.

_______________________________________________________________________

                   IN THE SENATE OF THE UNITED STATES

                           February 14, 2007

 Mr. Gregg (for himself and Mr. Smith) introduced the following bill; 
     which was read twice and referred to the Committee on Health, 
                     Education, Labor, and Pensions

_______________________________________________________________________

                                 A BILL

 
 To amend the Federal Food, Drug, and Cosmetic Act to provide for the 
                   regulation of Internet pharmacies.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

    This Act may be cited as the ``Safe Internet Pharmacy Act of 
2007''.

SEC. 2. INTERNET PHARMACIES.

    (a) Internet Pharmacies.--Chapter V of the Federal Food, Drug, and 
Cosmetic Act (21 U.S.C. 351 et seq.) is amended by inserting after 
section 510 the following:

``SEC. 511. INTERNET PHARMACIES.

    ``(a) Definitions.--In this section:
            ``(1) Advertising service provider.--The term `advertising 
        service provider' means an advertising company that contracts 
        with a provider of an interactive computer service (as defined 
        in section 230(f) of the Communications Act of 1934 (47 U.S.C. 
        230(f)) to provide advertising on the Internet.
            ``(2) Designated payment system.--
                    ``(A) In general.--The term `designated payment 
                system' means a system used by a person described in 
                subparagraph (B) to effect a credit transaction, 
                electronic fund transfer, or money transmitting service 
                that the Board determines, by regulation or order, is 
                regularly used in connection with, or to facilitate 
                restricted transactions.
                    ``(B) Persons described.--A person referred to in 
                subparagraph (A) is--
                            ``(i) a creditor;
                            ``(ii) a credit card issuer;
                            ``(iii) a financial institution;
                            ``(iv) an operator of a terminal at which 
                        an electronic fund transfer may be initiated;
                            ``(v) a money transmitting business; or
                            ``(vi) a participant in an international, 
                        national, regional, or local network 
                        constructed primarily to effect a credit 
                        transaction, electronic fund transfer, or money 
                        transmitting service.
            ``(3) Federal functional regulator.--The term `Federal 
        functional regulator' has the meaning given the term in section 
        509 of the Gramm-Leach-Bliley Act (15 U.S.C. 6809).
            ``(4) Internet pharmacy.--The term `Internet pharmacy' 
        means a person that offers to dispense or dispenses in the 
        United States a prescription drug through an Internet website 
        in interstate commerce, regardless of whether the physical 
        location of the principal place of business of the Internet 
        pharmacy is in the United States or in another country.
            ``(5) Prescription drug.--The term `prescription drug' 
        means a drug described in section 503(b) that is approved by 
        the Secretary under section 505.
            ``(6) Restricted transaction.--The term `restricted 
        transaction' means a transaction or transmittal, on behalf of a 
        individual who places an unlawful Internet pharmacy request to 
        any person engaged in the operation of an unlicensed Internet 
        pharmacy, of--
                    ``(A) credit, or the proceeds of credit, extended 
                to or on behalf of the individual for the purpose of 
                the unlawful Internet request (including credit 
                extended through the use of a credit card);
                    ``(B) an electronic fund transfer or funds 
                transmitted by or through a money transmitting 
                business, or the proceeds of an electronic fund 
                transfer or money transmitting service, from or on 
                behalf of the individual for the purpose of the 
                unlawful Internet request;
                    ``(C) a check, draft, or similar instrument which 
                is drawn by or on behalf of the individual for the 
                purpose of the unlawful Internet request and is drawn 
                on or payable at or through any financial institution; 
                or
                    ``(D) the proceeds of any other form of financial 
                transaction (identified by the Board by regulation) 
                that involves a financial institution as a payor or 
                financial intermediary on behalf of or for the benefit 
                of the individual for the purpose of the unlawful 
                Internet request.
            ``(7) Treating provider.--The term `treating provider' 
        means a health care provider licensed in the United States who 
        is authorized to prescribe medications and who--
                    ``(A)(i) performs a documented patient evaluation 
                (including a patient history and physical examination) 
                of an individual, portions of which may be conducted by 
                other health professionals;
                    ``(ii) discusses with the individual the treatment 
                options of the individual and the risks and benefits of 
                treatment; and
                    ``(iii) maintains contemporaneous medical records 
                concerning the individual; or
                    ``(B) provides care to an individual as part of an 
                on-call or cross-coverage arrangement with a health 
                care provider described in subparagraph (A).
            ``(8) Unlawful internet pharmacy request.--The term 
        `unlawful Internet pharmacy request' means the request, or 
        transmittal of a request, made to an unlicensed Internet 
        pharmacy for a prescription drug by mail (including a private 
        carrier), facsimile, telephone, or electronic mail, or by a 
        means that involves the use, in whole or in part, of the 
        Internet.
            ``(9) Unlicensed internet pharmacy.--The term `unlicensed 
        Internet pharmacy' means an Internet pharmacy that is not 
        licensed under this section.
            ``(10) Other definitions.--
                    ``(A) Board.--The term `Board' means the Board of 
                Governors of the Federal Reserve System.
                    ``(B) Credit; creditor; credit card.--The terms 
                `credit', `creditor', and `credit card' have the 
                meanings given the terms in section 103 of the Truth in 
                Lending Act (15 U.S.C. 1602).
                    ``(C) Electronic fund transfer.--The term 
                `electronic fund transfer'--
                            ``(i) has the meaning given the term in 
                        section 903 of the Electronic Fund Transfer Act 
                        (15 U.S.C. 1693a); and
                            ``(ii) includes any fund transfer covered 
                        under article 4A of the Uniform Commercial 
                        Code, as in effect in any State.
                    ``(D) Financial institution.--The term `financial 
                institution'--
                            ``(i) has the meaning given the term in 
                        section 903 of the Electronic Transfer Fund Act 
                        (15 U.S.C. 1693a); and
                            ``(ii) includes a financial institution (as 
                        defined in section 509 of the Gramm-Leach-
                        Bliley Act (15 U.S.C. 6809)).
                    ``(E) Money transmitting business; money 
                transmitting service.--The terms `money transmitting 
                business' and `money transmitting service' have the 
                meanings given the terms in section 5330(d) of title 
                31, United States Code.
    ``(b) In General.--An Internet pharmacy may only dispense or offer 
to dispense a prescription drug to a person in the United States in 
accordance with this section.
    ``(c) Licensing of Internet Pharmacies.--
            ``(1) In general.--An Internet pharmacy shall be licensed 
        by the Secretary in accordance with this section prior to 
        offering to dispense or dispensing a prescription drug to an 
        individual.
            ``(2) Conditions for licensing.--
                    ``(A) Application requirements.--An Internet 
                pharmacy shall submit to the Secretary an application 
                that includes--
                            ``(i)(I) in the case of an Internet 
                        pharmacy located in the United States, 
                        verification that, in each State in which the 
                        Internet pharmacy engages in dispensing or 
                        offering to dispense prescription drugs, the 
                        Internet pharmacy, and all employees and agents 
                        of the Internet pharmacy, is in compliance with 
                        applicable Federal and State laws regarding--
                                    ``(aa) the practice of pharmacy, 
                                including licensing laws and inspection 
                                requirements; and
                                    ``(bb) the manufacturing and 
                                distribution of controlled substances, 
                                including with respect to mailing or 
                                shipping controlled substances to 
                                consumers; or
                            ``(II) in the case of an Internet pharmacy 
                        whose principal place of business is located 
                        outside the United States, verification that--
                                    ``(aa) all employees and agents of 
                                the Internet pharmacy are in compliance 
                                with applicable Federal and State laws 
                                regarding the practice of pharmacy, 
                                including licensing laws and inspection 
                                requirements;
                                    ``(bb) the Internet pharmacy is in 
                                compliance with applicable Federal and 
                                State laws regarding the practice of 
                                pharmacy, including licensing laws and 
                                inspection requirements;
                                    ``(cc) the Internet pharmacy 
                                expressly and affirmatively agrees to 
                                provide and maintain an agent for 
                                service of process in the United 
                                States;
                                    ``(dd) the Internet pharmacy 
                                expressly and affirmatively agrees to 
                                be subject to the jurisdiction of the 
                                United States and any of its States or 
                                territories where it engages in 
                                commerce; and
                                    ``(ee) the Internet pharmacy agrees 
                                to affix to each shipping container of 
                                drugs to be shipped in the United 
                                States such markings as the Secretary 
                                determines to be necessary to identify 
                                that the shipment is from a licensed 
                                Internet pharmacy, which may include 
                                anticounterfeiting or track-and-trace 
                                technologies;
                            ``(ii) verification that the person that 
                        owns the Internet pharmacy has not had a 
                        license for an Internet pharmacy terminated by 
                        the Secretary, and that no other Internet 
                        pharmacy owned by the person has had a license 
                        under this subsection that has been terminated 
                        by the Secretary;
                            ``(iii) verification from the person that 
                        owns the Internet pharmacy that the person will 
                        permit inspection of the facilities and 
                        business practices of the Internet pharmacy by 
                        the Secretary to the extent necessary to 
                        determine whether the Internet pharmacy is in 
                        compliance with this subsection;
                            ``(iv) in the case of an agreement between 
                        a patient and an Internet pharmacy that 
                        releases the Internet pharmacy, and any 
                        employee or agent of the Internet pharmacy, 
                        from liability for damages arising out of the 
                        negligence of the Internet pharmacy, an 
                        assurance that such a limitation of liability 
                        shall be null and void;
                            ``(v) verification that the Internet 
                        pharmacy expressly and affirmatively agrees to 
                        provide the Secretary with the identity of any 
                        providers of interactive computer services that 
                        provide host services or advertising services 
                        for the Internet pharmacy; and
                            ``(vi) assurance that the Internet pharmacy 
                        will comply with the requirements under 
                        subparagraphs (B) and (C).
                    ``(B) Identification requirements.--An Internet 
                pharmacy shall post in a clear and visible manner, on 
                each page of the website of the Internet pharmacy or by 
                a link to a separate page, the following information:
                            ``(i) The street address, city, ZIP Code or 
                        comparable mail code, State (or comparable 
                        entity), country, and telephone number of--
                                    ``(I) each place of business of the 
                                Internet pharmacy; and
                                    ``(II) the name of the supervising 
                                pharmacist of the Internet pharmacy and 
                                each individual who serves as a 
                                pharmacist for purposes of the Internet 
                                pharmacy website.
                            ``(ii) The names of all States in which the 
                        Internet pharmacy and the pharmacists employed 
                        by the Internet pharmacy are licensed or 
                        otherwise authorized to dispense prescription 
                        drugs.
                            ``(iii) If the Internet pharmacy makes 
                        referrals to, or solicits on behalf of, a 
                        health care practitioner or group of 
                        practitioners in the United States for 
                        prescription services--
                                    ``(I) the name, street address, 
                                city, ZIP Code or comparable mail code, 
                                State, and telephone number of the 
                                practitioner or group; and
                                    ``(II) the name of each State in 
                                which each practitioner is licensed or 
                                otherwise authorized to prescribe 
                                drugs.
                            ``(iv) A statement that the Internet 
                        pharmacy will dispense prescription drugs only 
                        after receipt of a valid prescription from a 
                        treating provider.
                            ``(v) A distinctive tamper resistant seal 
                        to identify that the Internet pharmacy is 
                        licensed.
                    ``(C) Professional services requirements.--An 
                Internet pharmacy shall carry out the following:
                            ``(i) Maintain patient medication profiles 
                        and other related data in a readily accessible 
                        format organized to facilitate consultation 
                        with treating providers, caregivers, and 
                        patients.
                            ``(ii) Conduct prospective drug use reviews 
                        before dispensing medications or medical 
                        devices.
                            ``(iii) Ensure patient confidentiality and 
                        the protection of patient identity and patient-
                        specific information, in accordance with the 
                        regulations promulgated under section 264(c) of 
                        the Health Insurance Portability and 
                        Accountability Act of 1996.
                            ``(iv) Offer interactive and meaningful 
                        consultation by a licensed pharmacist to the 
                        caregiver or patient before and after the time 
                        at which the Internet pharmacy dispenses the 
                        drug.
                            ``(v)(I) Establish a mechanism for patients 
                        to report errors and suspected adverse drug 
                        reactions.
                            ``(II) Document in the reporting mechanism 
                        the response of the Internet pharmacy to those 
                        reports.
                            ``(III) Submit those reports within 3 days 
                        of receipt and the response of the Internet 
                        pharmacy to the Food and Drug Administration in 
                        a manner determined appropriate by the 
                        Secretary.
                            ``(vi) Develop a system to inform 
                        caregivers and patients about drug recalls.
                            ``(vii) Educate caregivers and patients 
                        about the appropriate means of disposing of 
                        expired, damaged, or unusable medications.
                            ``(viii) Assure that the sale of a 
                        prescription drug is in accordance with a valid 
                        prescription from the treating provider of the 
                        individual.
                            ``(ix)(I) Verify the validity of the 
                        prescription of an individual by using 1 of the 
                        following methods:
                                    ``(aa) If the prescription for any 
                                drug other than a controlled substance 
                                (as defined in section 102 of the 
                                Controlled Substances Act (21 U.S.C. 
                                802)) is received from an individual or 
                                the treating provider of the individual 
                                by mail (including a private carrier), 
                                or from the treating provider of the 
                                individual by electronic mail, the 
                                validity of the prescription shall be 
                                confirmed in accordance with all 
                                applicable Federal and State laws.
                                    ``(bb) If the prescription is for a 
                                controlled substance (as defined in 
                                section 102 of the Controlled 
                                Substances Act), the validity of the 
                                prescription shall be confirmed with 
                                the treating provider as described in 
                                subclause (II).
                            ``(II) When seeking verification of a 
                        prescription of an individual under subclause 
                        (I)(bb), an Internet pharmacy shall provide to 
                        the treating provider the following 
                        information:
                                    ``(aa) The full name and address of 
                                the individual.
                                    ``(bb) Identification of the 
                                prescription drug.
                                    ``(cc) The quantity of the 
                                prescription drug to be dispensed.
                                    ``(dd) The date on which the 
                                individual presented the prescription 
                                to the Internet pharmacy.
                                    ``(ee) The date and time of the 
                                verification request.
                                    ``(ff) The name of a contact person 
                                at the Internet pharmacy, including a 
                                voice telephone number, electronic mail 
                                address, and facsimile telephone 
                                number.
                            ``(III) A prescription is verified under 
                        subclause (I)(bb) only if 1 of the following 
                        occurs:
                                    ``(aa) The treating provider 
                                confirms, by direct communication with 
                                the Internet pharmacy, that the 
                                prescription is accurate.
                                    ``(bb) The treating provider 
                                informs the Internet pharmacy that the 
                                prescription is inaccurate and provides 
                                the accurate prescription.
                            ``(IV) An Internet pharmacy shall not fill 
                        a prescription if--
                                    ``(aa) a treating provider informs 
                                the Internet pharmacy within 72 hours 
                                after receipt of a communication under 
                                subclause (I)(bb) that the prescription 
                                is inaccurate or expired; or
                                    ``(bb) the treating provider does 
                                not respond within that time.
                            ``(x) Maintain, for such period of time as 
                        the Secretary shall prescribe by regulation, a 
                        record of all direct communications with a 
                        treating provider regarding the dispensing of a 
                        prescription drug, including verification of 
                        the prescription.
            ``(3) Licensure procedure.--
                    ``(A) Action by secretary.--On receipt of a 
                complete licensing application from an Internet 
                pharmacy under paragraph (2), the Secretary shall--
                            ``(i) assign an identification number to 
                        the Internet pharmacy;
                            ``(ii) notify the applicant of the receipt 
                        of the licensing application; and
                            ``(iii) if the Internet pharmacy is in 
                        compliance with the conditions under paragraph 
                        (2), issue a license not later than 60 days 
                        after receipt of a licensing application from 
                        the Internet pharmacy.
                    ``(B) Electronic filing.--
                            ``(i) In general.--For the purpose of 
                        reducing paperwork and reporting burdens, the 
                        Secretary shall require the use of electronic 
                        methods of submitting to the Secretary a 
                        licensing application required under this 
                        section and provide for electronic methods of 
                        receiving the applications.
                            ``(ii) Authentication.--In providing for 
                        the electronic submission of such licensing 
                        applications under this section, the Secretary 
                        shall ensure that adequate authentication 
                        protocols are used to allow identification of 
                        the Internet pharmacy and validation of the 
                        data as appropriate.
            ``(4) Database.--
                    ``(A) In general.--The Secretary shall compile, 
                maintain, and periodically update a database of the 
                Internet pharmacies licensed under this section.
                    ``(B) Availability.--The Secretary shall make the 
                database described under subparagraph (A) and 
                information submitted by the licensee under paragraph 
                (2)(B) available to the public on an Internet website 
                and through a toll-free telephone number.
            ``(5) Fees.--
                    ``(A) In general.--
                            ``(i) Licensing application fee.--The 
                        Secretary shall establish a licensing 
                        application fee to be paid by all applicants.
                            ``(ii) Renewal fee.--The Secretary shall 
                        establish a yearly renewal fee to be paid by 
                        all Internet pharmacies licensed under this 
                        section.
                    ``(B) Collection.--
                            ``(i) Collection of licensing application 
                        fee.--A licensing application fee payable for 
                        the fiscal year in which the Internet pharmacy 
                        submits a licensing application, as established 
                        under subparagraph (C), shall be payable upon 
                        the submission to the Secretary of such 
                        licensing application.
                            ``(ii) Collection of renewal fees.--After 
                        the licensing application fee is paid for the 
                        first fiscal year of licensure, the yearly 
                        renewal fee, as established under subparagraph 
                        (C), shall be payable on or before October 1 of 
                        each subsequent fiscal year.
                            ``(iii) One fee per internet pharmacy.--The 
                        licensing application fee and yearly renewal 
                        fee shall be paid only once for each Internet 
                        pharmacy for a fiscal year in which the fee is 
                        payable.
                    ``(C) Fee amount.--The amount of the licensing 
                application fee and the yearly renewal fee for an 
                Internet pharmacy shall be determined each year by the 
                Secretary based on the anticipated costs to the 
                Secretary of enforcing the requirements of this section 
                in the subsequent fiscal year.
                    ``(D) Annual fee determination.--
                            ``(i) In general.--Not later than 60 days 
                        before the beginning of each fiscal year 
                        beginning after September 30, 2007, the 
                        Secretary shall determine the amount of the 
                        licensing application fee and the yearly 
                        renewal fee for that fiscal year.
                            ``(ii) Publication of fee amount.--Not 
                        later than 60 days before each fiscal year, the 
                        Secretary shall publish the amount of the 
                        licensing application fee and the yearly 
                        renewal fee under this section for that fiscal 
                        year and provide for a period of 30 days for 
                        the public to provide written comments on the 
                        fees.
                    ``(E) Use of fees.--The fees collected under this 
                section shall be used, without further appropriation, 
                to carry out this section.
                    ``(F) Failure to pay fee.--
                            ``(i) Due date.--A fee payable under this 
                        section shall be paid by the date that is 30 
                        days after the date on which the fee is due.
                            ``(ii) Failure to pay.--If an Internet 
                        pharmacy subject to a fee under this section 
                        fails to pay the fee by the date specified 
                        under clause (i), the Secretary shall not 
                        permit the Internet pharmacy to engage in the 
                        dispensing of drugs as described under this 
                        section until all such fees owed by the 
                        Internet pharmacy are paid.
                    ``(G) Reports.--Beginning with fiscal year 2008, 
                not later than 60 days after the end of each fiscal 
                year during which licensing application fees are 
                collected under this section, the Secretary shall 
                submit to the Committee on Health, Education, Labor, 
                and Pensions of the Senate and the Committee on Energy 
                and Commerce of the House of Representatives a report 
                that describes--
                            ``(i) implementation of the licensing fee 
                        authority during the fiscal year; and
                            ``(ii) the use by the Secretary of the 
                        licensing fees collected during the fiscal year 
                        for which the report is made.
            ``(6) Suspension.--
                    ``(A) In general.--If the Secretary determines that 
                an Internet pharmacy is engaged in a pattern of 
                violations of any of the requirements of this Act, the 
                Secretary may immediately order the suspension of the 
                license of the Internet pharmacy.
                    ``(B) Appeal of suspension order.--An Internet 
                pharmacy subject to a suspension order under 
                subparagraph (A) may appeal the suspension order to the 
                Secretary. Not later than 30 days after an appeal is 
                filed, the Secretary, after providing opportunity for 
                an informal hearing, shall affirm or terminate the 
                order.
                    ``(C) Failure to act.--If, during the 30-day period 
                specified in subparagraph (B), the Secretary fails to 
                provide an opportunity for a hearing or to affirm or 
                terminate the order, the order shall be deemed to be 
                terminated.
                    ``(D) No judicial review.--An order under this 
                paragraph shall not be subject to judicial review.
            ``(7) Termination of license.--The Secretary may terminate 
        a license issued under this subsection, after notice to the 
        Internet pharmacy and an opportunity for a hearing, and if the 
        Secretary determines that the Internet pharmacy--
                    ``(A) has demonstrated a pattern of noncompliance 
                with this section;
                    ``(B) has made an untrue statement of material fact 
                in its licensing application; or
                    ``(C) is in violation of any applicable Federal or 
                State law relating to the dispensing of a prescription 
                drug.
            ``(8) Renewal evaluation.--
                    ``(A) In general.--Before renewing a license of an 
                Internet pharmacy under this subsection, the Secretary 
                shall conduct an evaluation to determine whether the 
                Internet pharmacy is in compliance with this section.
                    ``(B) Evaluation of internet pharmacies.--At the 
                discretion of the Secretary and as applicable, an 
                evaluation under subparagraph (A) may include testing 
                of the Internet pharmacy website or other systems 
                through which the Internet pharmacy communicates with 
                consumers, and a physical inspection of the records and 
                premises of the pharmacy.
            ``(9) Contract for operation of program.--
                    ``(A) In general.--The Secretary may award a 
                contract under this subsection for the operation of the 
                licensing program.
                    ``(B) Term.--The duration of a contract under 
                subparagraph (A) shall not exceed 5 years and may be 
                renewable.
                    ``(C) Performance review.--The Secretary shall 
                annually review performance under a contract under 
                subparagraph (A).
    ``(d) Providers of Interactive Computer Services or Advertising 
Services.--No provider of interactive computer services (as defined in 
section 230(f) of the Communications Act of 1934 (47 U.S.C. 230(f)) or 
an advertising service provider shall be liable under this section on 
account of another person's selling or dispensing of a prescription 
drug, so long as the provider of the interactive computer service or 
the advertising service provider does not own or exercise corporate 
control over such person.
    ``(e) Policies and Procedures Required To Prevent Payments for 
Unlawful Internet Pharmacy Requests.--
            ``(1) Regulations.--Not later than 180 days after 
        designating a system under subsection (a)(2), the Board shall 
        promulgate regulations that require--
                    ``(A) an operator of a credit card system that is a 
                designated payment system, an operator of an 
                international, national, or local network used to 
                effect a credit transaction, electronic fund transfer, 
                or money transmitting service that is a designated 
                payment system, and an operator of any other designated 
                payment system specified by the Board that is centrally 
                managed and is primarily engaged in the transmission 
                and settlement of credit transactions, electronic 
                transfers, or money transmitting services where at 
                least 1 party to the transaction or transfer is an 
                individual; and
                    ``(B) in the case of a designated payment system, 
                other than a designated payment system described in 
                subparagraph (A), a person described in subsection 
                (a)(2)(B);
        to establish policies and procedures that are reasonably 
        designed to prevent the introduction of restricted transactions 
        into a designated payment system or the completion of 
        restricted transactions using a designated payment system.
            ``(2) Requirements for policies and procedures.--In 
        promulgating regulations under paragraph (1), the Board shall--
                    ``(A) identify types of policies and procedures, 
                including nonexclusive examples, that shall be 
                considered to be reasonably designed to identify and 
                reasonably designed to prevent the introduction of a 
                restricted transaction in a designated payment or the 
                completion of restricted transactions using a 
                designated payment system; and
                    ``(B) to the extent practicable, permit any 
                designated payment system, or person described in 
                subsection (a)(2)(B), as applicable, to choose among 
                alternative means of preventing the introduction or 
                completion of restricted transactions.
            ``(3) No liability for blocking or refusing to honor 
        restricted transaction.--
                    ``(A) In general.--A designated payment system, or 
                a person described in subsection (a)(2)(B), that is 
                subject to a regulation or an order issued under this 
                subsection, and any participant in such payment system, 
                that--
                            ``(i) prevents or otherwise refuses to 
                        honor restricted transactions, in an effort to 
                        implement the policies and procedures required 
                        under this subsection or to otherwise comply 
                        with this section, shall not be liable to any 
                        party for such action; and
                            ``(ii) prevents or otherwise refuses to 
                        honor a nonrestricted transaction in an effort 
                        to implement the policies and procedures under 
                        this subsection or to otherwise comply with 
                        this section, shall not be liable to any party 
                        for such action.
                    ``(B) Compliance with this subsection.--A person 
                described in subsection (a)(2)(B) meets the 
                requirements of this subsection, if any, if the person 
                relies on and complies with the policies and procedures 
                of a designated payment system of which the person is a 
                member or in which the person is a participant, and 
                such policies and procedures of the designated payment 
                system comply with the requirements of the regulations 
                under paragraph (1)(B).
            ``(4) Enforcement.--
                    ``(A) In general.--This subsection shall be 
                enforced by the Federal functional regulators and the 
                Federal Trade Commission under applicable law in the 
                manner provided in section 505(a) of the Gramm-Leach-
                Bliley Act (21 U.S.C. 6805(a)).
                    ``(B) Factors to be considered.--In considering any 
                enforcement action under this subsection against a 
                payment system or person described in subsection 
                (a)(2)(B), the Federal functional regulators and the 
                Federal Trade Commission shall consider the following 
                factors:
                            ``(i) The extent to which the payment 
                        system or person knowingly permits restricted 
                        transactions.
                            ``(ii) The history of the payment system or 
                        person in connection with permitting restricted 
                        transactions.
                            ``(iii) The extent to which the payment 
                        system or person has established and is 
                        maintaining policies and procedures in 
                        compliance with regulations prescribed under 
                        this subsection.
                            ``(iv) The feasibility that any specific 
                        remedy prescribed can be implemented by the 
                        payment system or person without substantial 
                        deviation from normal business practice.
                            ``(v) The costs and burdens the specific 
                        remedy will have on the payment system or 
                        person.
    ``(f) Reports Regarding Internet-Related Violations of Federal and 
State Laws on Dispensing of Drugs.--The Secretary shall, pursuant to 
the submission of an application meeting criteria prescribed by the 
Secretary, make an award of a grant or contract to an entity with 
experience in developing and maintaining systems for the purpose of--
            ``(1) identifying Internet pharmacy websites that are not 
        licensed or that appear to be operating in violation of Federal 
        or State laws concerning the dispensing of drugs;
            ``(2) reporting such Internet pharmacy websites to State 
        medical licensing boards and State pharmacy licensing boards, 
        and to the Attorney General and the Secretary, for further 
        investigation; and
            ``(3) submitting, for each fiscal year for which the award 
        under this subsection is made, a report to the Secretary 
        describing investigations undertaken with respect to violations 
        described in paragraph (1).
    ``(g) Transactions Permitted.--A designated payment system or 
person subject to a regulation or an order issued under subsection (e) 
may engage in transactions with licensed and unlicensed Internet 
pharmacies in connection with investigating violations or potential 
violations of any rule or requirement adopted by the payment system or 
person in connection with complying with subsection (e). A person 
subject to a regulation or an order issued under subsection (e) and the 
agents and employees of that person shall not be found to be in 
violation of, or liable under, any Federal, State, or other law for 
engaging in any such transaction.
    ``(h) Relation to State Laws.--No requirement, prohibition, or 
liability may be imposed on a designated payment system or person 
subject to a regulation or an order issued under subsection (e) under 
the laws of any State with respect to any payment transaction by an 
individual because the payment transaction involves a payment to an 
Internet pharmacy.
    ``(i) Timing of Requirements.--A designated payment system or a 
person subject to a regulation under subsection (e) shall adopt 
policies and procedures reasonably designed to comply with any 
regulations required under subsection (e) not later than 180 days after 
the date on which such final regulations are issued.''.
    (b) Prohibited Acts.--Section 301 of the Federal Food, Drug, and 
Cosmetic Act (21 U.S.C. 331) is amended by adding at the end the 
following:
    ``(hh)(1) The sale, under section 511, of a drug that is not a 
prescription drug, the sale of such a prescription drug without a valid 
prescription from a treating provider, or the ownership or operation of 
an Internet pharmacy, in violation of section 511.
    ``(2) The representation by advertisement, sales presentation, 
direct communication (including telephone, facsimile, or electronic 
mail), or otherwise by an Internet pharmacy, that a prescription drug 
may be obtained from the Internet pharmacy without a prescription, in 
violation of section 511.
    ``(3) The advertisement related to a prescription drug through any 
media including sales presentation, direct communication (including 
telephone, facsimile, or electronic mail), by an unlicensed Internet 
pharmacy.
    ``(4) The provision of an untrue statement of material fact in the 
licensing application of an Internet pharmacy.
    ``(5) For purposes of this subsection, any term used in this 
subsection that is also used in section 511 shall have the meaning 
given that term in section 511.''.
    (c) Links to Unlicensed Internet Pharmacies.--Section 302 of the 
Federal Food, Drug, and Cosmetic Act (21 U.S.C. 332) is amended by 
adding at the end the following:
    ``(c)(1) In the case of a violation of section 511 relating to an 
unlicensed Internet pharmacy (as defined in such section 511), the 
district courts of the United States and the United States courts of 
the territories shall have jurisdiction to order a provider of an 
interactive computer service to remove, or disable access to, links to 
a website violating that section that resides on a computer server that 
the provider controls or operates.
    ``(2) Relief under paragraph (1)--
            ``(A) shall be available only after provision to the 
        provider of notice and an opportunity to appear;
            ``(B) shall not impose any obligation on the provider to 
        monitor its service or to affirmatively seek facts indicating 
        activity violating section 511;
            ``(C) shall specify the provider to which the relief 
        applies; and
            ``(D) shall specifically identify the location of the 
        website to be removed or to which access is to be disabled.''.
    (d) Regulations.--
            (1) In general.--Not later than 1 year after the date of 
        enactment of this Act, the Secretary of Health and Human 
        Services shall promulgate interim final regulations to carry 
        out the amendments made by this section.
            (2) Effective date.--The requirement of licensure under 
        section 511 of the Federal Food, Drug, and Cosmetic Act (as 
        added by this section) shall take effect on the date determined 
        by the Secretary of Health and Human Services but in no event 
        later than 90 days after the effective date of the interim 
        final regulations under paragraph (1).
    (e) Penalties.--Section 303 of the Federal Food, Drug, and Cosmetic 
Act (21 U.S.C. 333) is amended by adding at the end the following:
    ``(g) Notwithstanding subsection (a), any person who knowingly 
violates paragraph (1), (2), (3), or (4) of section 301(hh) shall be 
imprisoned for not more than 10 years or fined in accordance with title 
18, United States Code, or both.''.
                                 <all>
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