I 

108TH CONGRESS 

2D SESSION H. R. 4612 

To amend the Federal Food, Drug, and Cosmetic Act to create a uniform 

certification standard for Internet pharmacies and to prohibit Internet 

pharmacies from engaging in certain advertising activities, to prohibit 

the use of certain bank instruments for purchases associated with illegal 

Internet pharmacies, and for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

JUNE 18, 2004 

Mr. WALDEN of Oregon (for himself and Mr. DAVIS of Florida) introduced 

the following bill; which was referred to the Committee on Energy and 

Commerce, and in addition to the Committee on Financial Services, for 

a period to be subsequently determined by the Speaker, in each case for 

consideration of such provisions as fall within the jurisdiction of the committee concerned 

A BILL 

To amend the Federal Food, Drug, and Cosmetic Act to 

create a uniform certification standard for Internet pharmacies and to prohibit Internet pharmacies from engaging in certain advertising activities, to prohibit the use 

of certain bank instruments for purchases associated 

with illegal Internet pharmacies, and for other purposes. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 
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1 SECTION 1. SHORT TITLE. 

2 This Act may be cited as the ‘‘Safe Online Drug Act 

3 of 2004’’. 

4 SEC. 2. INTERNET SALES OF PRESCRIPTION DRUGS. 

5 (a) IN GENERAL.—Chapter 5 of the Federal Food, 

6 Drug, and Cosmetic Act (21 U.S.C. 351 et seq.) is amend7 ed by inserting after section 503A the following: 

8 ‘‘SEC. 503B. INTERNET SALES OF PRESCRIPTION DRUGS. 

9 ‘‘(a) UNIFORM CERTIFICATION STANDARD FOR

10 INTERNET PHARMACIES.— 

11 ‘‘(1) IN GENERAL.— 

12 ‘‘(A) PROHIBITIONS.—Subject to subpara13 graph (B), it is a violation of this section— 

14 ‘‘(i) for any person to sell or offer for 

15 sale a prescription drug or a restricted de16 vice through an Internet site— 

17 ‘‘(I) if the Internet site fails to 

18 meet the standards established under 

19 paragraph (2); or 

20 ‘‘(II) if the Internet site fails to 

21 comply with all State and Federal 

22 regulations for operating as an Inter23 net pharmacy; and 

24 ‘‘(ii) for any person to own or operate 

25 an illegal Internet pharmacy. 
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1 ‘‘(B) EXCEPTION.—Any person who sells 

2 or offers to sell a prescription drug or restricted 

3 device through an Internet site, or who owns or 

4 operates an Internet pharmacy, is deemed to 

5 meet the requirements of this section for pur6 poses of such sale, ownership, or operation if 

7 the Internet site or Internet pharmacy meets 

8 the certification standards adopted by the Sec9 retary under paragraph (2). 

10 ‘‘(2) ESTABLISHMENT OF UNIFORM STANDARD

11 FOR INTERNET PHARMACY CERTIFICATION.— 

12 ‘‘(A) IN GENERAL.—The Secretary, acting 

13 through the Commissioner of the Food and 

14 Drug Administration, shall establish a program 

15 under which all Internet pharmacies operating 

16 in the United States are certified by the Sec17 retary as meeting the requirements of this sec18 tion for certification. 

19 ‘‘(B) CONDITIONS FOR CERTIFICATION.— 

20 As a condition of certifying an Internet phar21 macy under subparagraph (A), the Secretary 

22 shall require the following with respect to such 

23 pharmacy: 

24 ‘‘(i) Verification that, in each State in 

25 which the pharmacy engages in pharma-
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1 ceutical activities, the pharmacy, and all 

2 the employees and agents of the pharmacy, 

3 are in compliance with applicable laws re4 garding— 

5 ‘‘(I) the practice of pharmacy, in6 cluding licensing laws and inspection 

7 requirements; and 

8 ‘‘(II) the manufacturing and dis9 tribution of controlled substances, in10 cluding with respect to mailing or 

11 shipping such substances to con12 sumers. 

13 ‘‘(ii) Verification of controls to ensure 

14 that a prescription drug or restricted de15 vice is dispensed by the pharmacy only 

16 pursuant to a valid prescription, including 

17 circumstance in which the drug is shipped 

18 or mailed from a country under whose laws 

19 the drug is not a prescription drug. 

20 ‘‘(iii) An agreement by the pharmacy 

21 that, upon certification under subpara22 graph (A), the facilities and business prac23 tices of the pharmacy will be subject to in24 spection by the Secretary to the extent ap25 propriate to determine whether the phar-
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1 macy is in compliance with conditions 

2 under this subsection. 

3 ‘‘(iv) The prominent display of contact 

4 information for the pharmacy, including a 

5 telephone number, an electronic mail ad6 dress, a mailing address, and (if different 

7 from the mailing address) the address for 

8 the physical location of the principal place 

9 of business of the pharmacy. 

10 ‘‘(v) The prominent display of com11 plete and accurate information concerning 

12 the ownership and management of the 

13 pharmacy, including addresses and contact 

14 information. 

15 ‘‘(vi) The prominent display of the 

16 seal provided for under subparagraph (C). 

17 ‘‘(vii) The prominent display of a 

18 statement that the Internet pharmacy will 

19 dispense prescription drugs only upon a 

20 showing of a prescription. 

21 ‘‘(viii) A certification from the person 

22 who owns or manages the pharmacy that a 

23 certification under subparagraph (A) for 

24 the pharmacy has not previously been ter25 minated by the Secretary, and that no 
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1 other Internet pharmacy owned or man2 aged by such person has received a certifi3 cation under subparagraph (A) that has 

4 been terminated by the Secretary. 

5 ‘‘(ix) Meaningful and accessible oppor6 tunities for a consumer to consult with a 

7 licensed pharmacist regarding a drug prior 

8 to the time at which the pharmacy dis9 penses the drug to the consumer. 

10 ‘‘(x) Controls to ensure that the Inter11 net pharmacy provides for authentication 

12 and security of prescription orders. 

13 ‘‘(xi) Effective, accessible systems for 

14 communication with consumers, including 

15 systems for consumer reporting of adverse 

16 drug reactions and errors, systems by 

17 which consumers can effectively track and 

18 report problems with unfulfilled orders, 

19 systems for the investigation and redress 

20 of consumer complaints, and systems facili21 tating effective communication between the 

22 pharmacy and consumers concerning drug 

23 recalls. 

24 ‘‘(xii) Controls to ensure the protec25 tion of patient privacy and confidentiality, 
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1 including but not limited to the prevention 

2 of unauthorized internal and external use 

3 of personally-identifiable patient informa4 tion. 

5 ‘‘(xiii) Adherence to a quality assur6 ance policy meeting standards established 

7 by the Secretary. 

8 ‘‘(xiv) An agreement by the pharmacy 

9 that the pharmacy will notify the Secretary 

10 within 10 days concerning any change in 

11 information submitted under this sub12 section as a condition of certification under 

13 subparagraph (A). 

14 ‘‘(xv) Such additional criteria as the 

15 Secretary determines, after notice and op16 portunity for comment, to be appropriate 

17 for the sound operation of certified phar18 macies or the protection of consumers. 

19 ‘‘(C) SEAL.—The Secretary shall provide 

20 for a seal that Internet pharmacies certified 

21 under subparagraph (A) are required to display 

22 for purposes of indicating to the public the fact 

23 of such certification. 

24 ‘‘(D) ANNUAL APPLICATION; DURATION OF

25 CERTIFICATION.— 
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1 ‘‘(i) IN GENERAL.—The Secretary 

2 may certify an Internet pharmacy under 

3 subparagraph (A) only if the pharmacy 

4 submits to the Secretary an application for 

5 such certification that demonstrates com6 pliance with the conditions under subpara7 graph (B) and is in such form, and is 

8 made in such manner, as the Secretary 

9 may require. The Secretary shall establish 

10 an application form for purposes of the 

11 preceding sentence, including an electronic 

12 application form. 

13 ‘‘(ii) DURATION OF CERTIFICATION; 

14 RENEWAL.— 

15 ‘‘(I) IN GENERAL.—A certifi16 cation under subparagraph (A) is ef17 fective for the two-year period begin18 ning on the date on which the applica19 tion under clause (i) for such certifi20 cation is approved by the Secretary. 

21 The Secretary may renew the certifi22 cation, pursuant to the submission of 

23 an additional application under clause 

24 (i), and the number of renewals of the 

25 certification is not limited. The Sec-
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1 retary may establish an abbreviated 

2 process for such renewal applications. 

3 ‘‘(II) RENEWAL EVALUATION.— 

4 Before renewing a certification under 

5 subparagraph (A), the Secretary shall 

6 conduct an evaluation to determine 

7 whether the pharmacy involved is in 

8 compliance with the conditions under 

9 subparagraph (B). The evaluation, at 

10 the Secretary’s discretion and as ap11 plicable, may include testing of the 

12 Internet site of the pharmacy or other 

13 systems through which the pharmacy 

14 communicates with consumers, and 

15 may include physical inspection of the 

16 records and premises of the pharmacy 

17 pursuant to subparagraph (B). 

18 ‘‘(iii) FEES.—The Secretary may im19 pose a fee on the submission of an applica20 tion under subparagraph (D). Any such fee 

21 is due upon the submission of the applica22 tion. To the extent provided in appropria23 tions Acts, such fees are available to the 

24 Secretary for carrying out this section. 
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1 ‘‘(iv) INFORMATION CAMPAIGN.—The 

2 Secretary shall carry out activities to in3 form the public of the program under sub4 paragraph (A), including information on 

5 the significance of the seal under subpara6 graph (C) when displayed by an Internet 

7 pharmacy, and including information on 

8 the benefits of doing business with a phar9 macy certified under subparagraph (A) as 

10 compared to an illegal Internet pharmacy. 

11 ‘‘(v) TERMINATION OF CERTIFI12 CATION.—The Secretary, upon the own ini13 tiative of the Secretary or a petition by an 

14 interested person, may terminate a certifi15 cation under subparagraph (A), after no16 tice to the Internet pharmacy involved and 

17 an opportunity for a hearing, after a find18 ing by the Secretary that an Internet 

19 Pharmacy is not in compliance with the 

20 provisions of this section, or has made an 

21 untrue statement of material fact in its 

22 certification application; or is in violation 

23 of any applicable federal statute or regula24 tion related to the sale and distribution of 

25 a pharmacy product. 
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1 ‘‘(3) DEEMING AUTHORITY.—The Secretary 

2 may provide that an Internet pharmacy is deemed to 

3 meet the requirements of this section if the Internet 

4 pharmacy is certified by the National Association of 

5 Boards of Pharmacy’s Verified Internet Pharmacy 

6 Practice Sites program. 

7 ‘‘(4) INTERSTATE COMMERCE.—For purposes 

8 of this section, Internet pharmacies are deemed to 

9 operate in interstate commerce. 

10 ‘‘(b) PROHIBITION ON CERTAIN ADVERTISING AC11 TIVITIES BY INTERNET PHARMACIES.— 

12 ‘‘(1) SALES WITHOUT PRESCRIPTION.—It is a 

13 violation of this section for an Internet pharmacy to 

14 represent, by advertisement, sales presentation, di15 rect communication (including telephone, facsimile, 

16 or electronic mail), or otherwise, that prescription 

17 drugs may be obtained from the Internet pharmacy 

18 without a prescription. 

19 ‘‘(2) ADVERTISEMENTS FROM ILLEGAL PHAR20 MACIES.—It is a violation of this section for provider 

21 of an interactive computer service to accept adver22 tisement from or provide links to any illegal Internet 

23 pharmacy. An interactive computer service will be 

24 deemed in compliance with this section if the phar-
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1 macy has obtained a copy of the certification issued 

2 to the Internet pharmacy under this section. 

3 ‘‘(c) DEFINITIONS.—For purposes of this section: 

4 ‘‘(1) The term ‘illegal Internet pharmacy’ 

5 means an Internet pharmacy that fails to comply 

6 with the standards established by this section. 

7 ‘‘(2) The term ‘Internet’ means collectively the 

8 myriad of computer and telecommunications facili9 ties, including equipment and operating software, 

10 which comprise the interconnected world-wide net11 work of networks that employ the transmission con12 trol protocol/internet protocol, or any predecessor or 

13 successor protocols to such protocol, to communicate 

14 information of all kinds by wire or radio. 

15 ‘‘(3) The term ‘Internet pharmacy’ means an 

16 Internet site that is used primarily to sell prescrip17 tion drugs in interstate commerce, regardless of 

18 whether the physical location of the principal place 

19 of business of the Internet pharmacy is the United 

20 States or in another country. 

21 ‘‘(4) The term ‘link,’ with respect to the Inter22 net, means one or more letters, words, numbers, 

23 symbols, or graphic items that appear on a page of 

24 an Internet site for the purpose of serving, when ac-
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1 tivated, as a method for executing an electronic com2 mand— 

3 ‘‘(A) to move from viewing one portion of 

4 a page on such site to another portion of the 

5 page; 

6 ‘‘(B) to move from viewing one page on 

7 such site to another page on such site; or 

8 ‘‘(C) to move from viewing a page on one 

9 Internet site to a page on another Internet site. 

10 ‘‘(5) The term ‘page,’ with respect to the Inter11 net, means a document or other file accessed at an 

12 Internet site. 

13 ‘‘(6) The term ‘prescription drug’ means a drug 

14 that is subject to section 503(b)(1). 

15 ‘‘(7) The terms ‘site’ and ‘address,’ with respect 

16 to the Internet, mean a specific location on the 

17 Internet that is determined by Internet Protocol 

18 numbers, including any successor protocol for deter19 mining a specific location on the Internet.’’. 

20 (b) PROHIBITED ACTS.—Section 301 of the Federal 

21 Food, Drug, and Cosmetic Act (21 U.S.C. 331) is amend22 ed by inserting after paragraph (k) the following: 

23 ‘‘(l) The sale or offer for sale of a prescription drug 

24 or restricted device, or the ownership or operation of an 

25 illegal Internet pharmacy, in violation of section 503B.’’. 
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1 SEC. 3. PROHIBITION ON THE USE OF CERTAIN BANK IN2 STRUMENTS FOR PURCHASES ASSOCIATED 

3 WITH ILLEGAL INTERNET PHARMACIES. 

4 (a) REGULATIONS.—Before the end of the 6-month 

5 period beginning on the date of the enactment of this Act, 

6 the Federal functional regulators shall prescribe regula7 tions requiring any designated payment system to estab8 lish policies and procedures reasonably designed to iden9 tify and prevent restricted transactions in any of the fol10 lowing ways: 

11 (1) The establishment of policies and proce12 dures that— 

13 (A) allow the payment system and any per14 son involved in the payment system to identify 

15 restricted transactions by means of codes in au16 thorization messages or by other means; and 

17 (B) block restricted transactions identified 

18 as a result of the policies and procedures devel19 oped pursuant to subparagraph (A). 

20 (2) The establishment of policies and proce21 dures that prevent the acceptance of the products or 

22 services of the payment system in connection with a 

23 restricted transaction. 

24 (b) REQUIREMENTS FOR POLICIES AND PROCE25 DURES.—In prescribing regulations pursuant to sub26 section (a), the Federal functional regulators shall— 
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1 (1) identify types of policies and procedures, in2 cluding nonexclusive examples, which would be 

3 deemed to be ‘‘reasonably designed to identify’’ and 

4 ‘‘reasonably designed to block’’ or to ‘‘prevent the 

5 acceptance of the products or services’’ with respect 

6 to each type of transaction, such as, should credit 

7 card transactions be so designated, identifying trans8 actions by a code or codes in the authorization mes9 sage and denying authorization of a credit card 

10 transaction in response to an authorization message; 

11 (2) to the extent practical, permit any partici12 pant in a payment system to choose among alter13 native means of identifying and blocking, or other14 wise preventing the acceptance of the products or 

15 services of the payment system or participant in con16 nection with, restricted transactions; and 

17 (3) consider exempting restricted transactions 

18 from any requirement under subsection (a) if the 

19 Federal functional regulators find that it is not rea20 sonably practical to identify and block, or otherwise 

21 prevent, such transactions. 

22 (c) COMPLIANCE WITH PAYMENT SYSTEM POLICIES

23 AND PROCEDURES.—A creditor, credit card issuer, finan24 cial institution, operator of a terminal at which an elec25 tronic fund transfer may be initiated, money transmitting 
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1 business, or international, national, regional, or local net2 work utilized to effect a credit transaction, electronic fund 

3 transfer, or money transmitting service, or a participant 

4 in such network, meets the requirement of subsection (a) 

5 if— 

6 (1) such person relies on and complies with the 

7 policies and procedures of a designated payment sys8 tem of which it is a member or participant to— 

9 (A) identify and block restricted trans10 actions; or 

11 (B) otherwise prevent the acceptance of 

12 the products or services of the payment system, 

13 member, or participant in connection with re14 stricted transactions; and 

15 (2) such policies and procedures of the des16 ignated payment system comply with the require17 ments of regulations prescribed under subsection 

18 (a). 

19 (d) ENFORCEMENT.— 

20 (1) IN GENERAL.—This section shall be en21 forced by the Federal functional regulators and the 

22 Federal Trade Commission under applicable law in 

23 the manner provided in section 505(a) of the 

24 Gramm-Leach-Bliley Act. 
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1 (2) FACTORS TO BE CONSIDERED.—In consid2 ering any enforcement action under this subsection 

3 against any payment system, or any participant in 

4 a payment system that is a creditor, credit card 

5 issuer, financial institution, operator of a terminal at 

6 which an electronic fund transfer may be initiated, 

7 money transmitting business, or international, na8 tional, regional, or local network utilized to effect a 

9 credit transaction, electronic fund transfer, or money 

10 transmitting service, or a participant in such net11 work, the Federal functional regulators and the Fed12 eral Trade Commission shall consider the following 

13 factors: 

14 (A) The extent to which such person is ex15 tending credit or transmitting funds knowing 

16 the transaction is in connection with illegal 

17 Internet pharmacies. 

18 (B) The history of such person in extend19 ing credit or transmitting funds knowing the 

20 transaction is in connection with illegal Internet 

21 pharmacies. 

22 (C) The extent to which such person has 

23 established and is maintaining policies and pro24 cedures in compliance with regulations pre25 scribed under this paragraph. 
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1 (D) The feasibility that any specific rem2 edy prescribed can be implemented by such per3 son without substantial deviation from normal 

4 business practice. 

5 (E) The costs and burdens the specific 

6 remedy will have on such person. 

7 (e) DEFINITIONS.—For purposes of this section: 

8 (1) The terms ‘‘credit,’’ ‘‘creditor,’’ and ‘‘credit 

9 card’’ have the meanings given such terms in section 

10 103 of the Truth in Lending Act. 

11 (2) The term ‘‘designated payment system’’ 

12 means any system utilized by any creditor, credit 

13 card issuer, financial institution, operator of a ter14 minal at which an electronic fund transfer may be 

15 initiated, money transmitting business, or inter16 national, national, regional, or local network utilized 

17 to effect a credit transaction, electronic fund trans18 fer, or money transmitting service, or any partici19 pant in such network, that the Federal functional 

20 regulators determine, by regulation or order, could 

21 be utilized in connection with, or to facilitate, any 

22 restricted transaction. 

23 (3) The term ‘‘electronic fund transfer’’— 
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1 (A) has the meaning given such term in 

2 section 903 of the Electronic Fund Transfer 

3 Act; and 

4 (B) includes any fund transfer covered by 

5 Article 4A of the Uniform Commercial Code, as 

6 in effect in any State. 

7 (4) The term ‘‘Federal functional regulator’’ 

8 has the same meaning as in section 509(2) of the 

9 Gramm-Leach-Bliley Act. 

10 (5) The term ‘‘financial institution’’— 

11 (A) has the meaning given such term in 

12 section 903 of the Electronic Fund Transfer 

13 Act; and 

14 (B) includes any financial institution, as 

15 defined in section 509(3) of the Gramm-Leach16 Bliley Act. 

17 (6) The term ‘‘illegal Internet pharmacy’’ 

18 means an Internet pharmacy that fails to comply 

19 with the standards established by section 503B of 

20 the Federal Food, Drug, and Cosmetic Act. 

21 (7) The terms ‘‘money transmitting business’’ 

22 and ‘‘money transmitting service’’ have the mean23 ings given such terms in section 5330(d) of title 31, 

24 United States Code. 
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1 (8) The term ‘‘restricted transaction’’ means 

2 any transaction or transmittal to any person en3 gaged in the operation of an illegal Internet phar4 macy, of— 

5 (A) credit, or the proceeds of credit, ex6 tended to or on behalf of such other person (in7 cluding credit extended through the use of a 

8 credit card); 

9 (B) an electronic fund transfer or funds 

10 transmitted by or through a money transmit11 ting business, or the proceeds of an electronic 

12 fund transfer or money transmitting service, 

13 from or on behalf of the other person; 

14 (C) any check, draft, or similar instrument 

15 which is drawn by or on behalf of the other per16 son and is drawn on or payable at or through 

17 any financial institution; or 

18 (D) the proceeds of any other form of fi19 nancial transaction as the Federal functional 

20 regulators may prescribe by regulation which 

21 involves a financial institution as a payor or fi22 nancial intermediary on behalf of or for the 

23 benefit of the other person. 
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1 SEC. 4. EFFECTIVE DATE. 

2 This Act and the amendments made by this Act are 

3 effective 6 months after the date of the enactment of this 

4 Act. 

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