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. Many rogue Internet pharmacies sell counterfeit, misbranded, and adulterated drugs, in violation of FDCA provisions. Counterfeiting and trafficking or selling counterfeit drugs also violate laws that protect intellectual property rights. Many also illegally sell certain medications without a prescription that meets federal and state requirements. 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. 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. 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 In addition, rogue Internet pharmacies also often violate other wax.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. 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 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. 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. 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. 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. 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 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. 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. 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. 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-and- mortar 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. 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. 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. This is a work of the U.S. government and is not subject to copyright protection in the United States. 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Summary: 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. 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.