[House Hearing, 106 Congress]
[From the U.S. Government Publishing Office]
ENFORCING THE LAWS ON INTERNET PHARMACEUTICAL SALES: WHERE ARE THE
FEDS?
=======================================================================
HEARING
before the
SUBCOMMITTEE ON
OVERSIGHT AND INVESTIGATIONS
of the
COMMITTEE ON COMMERCE
HOUSE OF REPRESENTATIVES
ONE HUNDRED SIXTH CONGRESS
SECOND SESSION
__________
MAY 25, 2000
__________
Serial No. 106-112
__________
Printed for the use of the Committee on Commerce
__________
U.S. GOVERNMENT PRINTING OFFICE
69-381 WASHINGTON : 2000
COMMITTEE ON COMMERCE
TOM BLILEY, Virginia, Chairman
W.J. ``BILLY'' TAUZIN, Louisiana JOHN D. DINGELL, Michigan
MICHAEL G. OXLEY, Ohio HENRY A. WAXMAN, California
MICHAEL BILIRAKIS, Florida EDWARD J. MARKEY, Massachusetts
JOE BARTON, Texas RALPH M. HALL, Texas
FRED UPTON, Michigan RICK BOUCHER, Virginia
CLIFF STEARNS, Florida EDOLPHUS TOWNS, New York
PAUL E. GILLMOR, Ohio FRANK PALLONE, Jr., New Jersey
Vice Chairman SHERROD BROWN, Ohio
JAMES C. GREENWOOD, Pennsylvania BART GORDON, Tennessee
CHRISTOPHER COX, California PETER DEUTSCH, Florida
NATHAN DEAL, Georgia BOBBY L. RUSH, Illinois
STEVE LARGENT, Oklahoma ANNA G. ESHOO, California
RICHARD BURR, North Carolina RON KLINK, Pennsylvania
BRIAN P. BILBRAY, California BART STUPAK, Michigan
ED WHITFIELD, Kentucky ELIOT L. ENGEL, New York
GREG GANSKE, Iowa TOM SAWYER, Ohio
CHARLIE NORWOOD, Georgia ALBERT R. WYNN, Maryland
TOM A. COBURN, Oklahoma GENE GREEN, Texas
RICK LAZIO, New York KAREN McCARTHY, Missouri
BARBARA CUBIN, Wyoming TED STRICKLAND, Ohio
JAMES E. ROGAN, California DIANA DeGETTE, Colorado
JOHN SHIMKUS, Illinois THOMAS M. BARRETT, Wisconsin
HEATHER WILSON, New Mexico BILL LUTHER, Minnesota
JOHN B. SHADEGG, Arizona LOIS CAPPS, California
CHARLES W. ``CHIP'' PICKERING,
Mississippi
VITO FOSSELLA, New York
ROY BLUNT, Missouri
ED BRYANT, Tennessee
ROBERT L. EHRLICH, Jr., Maryland
James E. Derderian, Chief of Staff
James D. Barnette, General Counsel
Reid P.F. Stuntz, Minority Staff Director and Chief Counsel
______
Subcommittee on Oversight and Investigations
FRED UPTON, Michigan, Chairman
JOE BARTON, Texas RON KLINK, Pennsylvania
CHRISTOPHER COX, California HENRY A. WAXMAN, California
RICHARD BURR, North Carolina BART STUPAK, Michigan
Vice Chairman GENE GREEN, Texas
BRIAN P. BILBRAY, California KAREN McCARTHY, Missouri
ED WHITFIELD, Kentucky TED STRICKLAND, Ohio
GREG GANSKE, Iowa DIANA DeGETTE, Colorado
ROY BLUNT, Missouri JOHN D. DINGELL, Michigan,
ED BRYANT, Tennessee (Ex Officio)
TOM BLILEY, Virginia,
(Ex Officio)
(ii)
C O N T E N T S
__________
Page
Testimony of:
Durant, Betsy, Director, Office of Trade Programs, U.S.
Customs Service............................................ 29
Hubbard, William K., Senior Associate Commissioner for
Policy, Planning and Legislation, U.S. Food and Drug
Administration............................................. 11
Posner, Ethan M., Deputy Associate Attorney General, U.S.
Department of Justice...................................... 21
Stovall, Hon. Carla J., Attorney General, State of Kansas.... 34
(iii)
ENFORCING THE LAWS ON INTERNET PHARMACEUTICAL SALES: WHERE ARE THE
FEDS?
----------
THURSDAY, MAY 25, 2000
House of Representatives,
Committee on Commerce,
Subcommittee on Oversight and Investigations,
Washington, DC.
The subcommittee met, pursuant to notice at 10 a.m., in
room 2125, Rayburn House Office Building, Hon. Fred Upton
(chairman) presiding.
Members present: Representatives Upton, Burr, Ganske,
Bryant, Bliley (ex officio), Klink, Green, Strickland, and
DeGette.
Staff present: Lori Wall, majority counsel; Amy Davidge,
legislative clerk; and Chris Knauer, minority investigator.
Mr. Upton. Good morning everyone. Here I am a little bit
late. My second-grader is an author, and they had a little
presentation at the school. So I needed to be there. I have a
tape for anyone who wants to watch it.
The asteroid.
Today this subcommittee will hold its second hearing on the
issue of Internet sales of prescription drugs. Since we met
almost 1 year ago, we have continued our review of this
important issue. This review has focused not only on domestic
sales of pharmaceutical drugs over the Internet, but also
international sales of pharmaceutical products.
Domestically, States have taken the lead in enforcement
activities. State Attorneys General met just last week in
Michigan to look at a number of issues related to Internet
sales, including the sale of prescription drugs. The National
Association of Attorneys General has established the Online
Sales of Drugs Working Group to address issues related to
Internet pharmacies and has had success in implementing cost-
effective means to take action.
I have been impressed with the level of coordination and
cooperation between States on this issue. However, as we have
heard from Carla Stovall, Attorney General of the State of
Kansas, at our hearing last July, States are still limited in
their ability to protect consumers. With the borderless nature
of the Internet, States will need additional tools to increase
their effectiveness beyond their State lines.
In the coming weeks, I plan to introduce legislation that
would give States the ability in appropriate circumstances to
go into Federal court to more effectively protect its citizens.
This will allow the good work of a number of States to have an
impact in ensuring consumer safety nationwide.
Unfortunately, the Federal Government has not been as
effective in dealing with this issue. Despite several working
groups charged with studying this issue at the Federal level,
little has changed in the past year.
Despite the fact that the FDA devoted more than 30,000
staff hours in the first quarter of fiscal year 2000 alone to
investigate hundreds of Internet sites, not a single arrest or
conviction has occurred with respect to Web sites offering to
sell prescription drugs. I want the FDA to explain today this
failure to enforce the law.
As I stated earlier, our investigation has also focused on
drugs being shipped into the U.S. from foreign Web sites. As
part of our review, committee staff have visited several U.S.
Customs mail facilities. At these facilities, staff have
witnessed significant quantities of pharmaceutical products
being sent into the United States, many arriving in plastic
ziploc bags with nothing indicating the bags' content, dosage
instructions, warnings of potential side effects or possible
drug interactions.
I was troubled to learn that despite guidance issued by the
FDA defining what pharmaceutical products will be allowed into
the U.S. under the FDA's personal importation policy, in most
instances this Guidance is being applied piecemeal or not at
all.
Clearly, FDA's policy in allowing certain personal
importations of pharmaceutical products into this country is
valid--what is troubling is that this policy is being exploited
by foreign Web sites selling pharmaceutical products in the
U.S. without even requiring a prescription from the person who
purchased the drug.
Evidence of the increase in pharmaceutical products being
seized at our borders is clear. In 1999, almost 2 million pills
mailed from overseas were seized by the Customs Service--more
than 2.5 times the number confiscated in 1998, an increase that
Customs attributes to foreign-based Internet pharmacies. In
addition to prescription drugs, controlled substances and
scheduled drugs such as GHB and Rohypnol, common date rape
drugs, which that is Congress has now banned, are also being
sent into country.
I would encourage FDA and Customs to work together in
stopping the flow of potentially dangerous drugs into this
country. I pledge to continue my review of this issue and
welcome our witnesses here today.
I now yield time to Mr. Klink, ranking member of the
subcommittee.
Mr. Klink. Thank you Mr. Chairman for your vigilance in
this matter and for holding this hearing.
For the past 18 months, this subcommittee has looked into a
range of activities related to online pharmacies, including how
they operate; where they get their drugs from; what potential
benefits and what potential threats they pose, and most
importantly, who's overseeing them.
Indeed, we know that responsible sites operate online, and
offer beneficial services to the public. But that is not what
this hearing is about. Instead, today, we focus on what the
Federal Government is doing to protect consumers from the
``rogue'' sites, or those sites that offer prescription drugs
in violation of both State and Federal law, possibly at the
expense of public health and safety.
During our investigation, we have met with a number of
Federal authorities and repeatedly we have sought detailed
information on what is being done to address these concerns.
Yet, with significant time having elapsed since our last online
pharmacy hearing, and after numerous document requests and
interviews, I believe we still lack a suitable approach for
protecting the public.
Since last July's hearing, the number of sites selling
prescription drugs seems to have increased, not decreased.
Moreover, the list of drugs offered by some sites seems to be
growing. For example, in response to a February 28, letter I
sent to Customs seeking information on the types of drugs they
are finding being sent to the U.S.--many of which they believe
are linked to Internet sites--they're reporting the following:
Diazepam; various painkillers with codeine; Xanax; Codigesic;
Lorazepam; Fenfluramine; and Rohypnol, the date rape drug that
the Chairman mentioned. This agency also reports that they have
experienced a significant increase in the amount of
pharmaceuticals that are being shipped to our shores. Last year
alone, Customs had a more than 400 percent increase over the
previous year. Much of this increase they believe is linked to
online pharmacies. At this pace, we have to wonder what next
year will look like?
These statistics, Mr. Chairman, suggest the problem is
getting worse, not better. Yet today, still no Federal
authority can explain who is coordinating this effort, what
agency or Department is in charge. And I ask, why is that? We
all appreciate the complexity of this problem. But with almost
a year since our last hearing, it is not even clear what the
two main agencies on this front--the Department of Justice and
the Food and Drug Administration--are accomplishing.
Here's an example: On February 1 I wrote to the FDA
Commissioner Henry asking answers to these questions. After
months of delay, I then had to send a second letter demanding
answers to my first letter, I finally got a response on the
March 23. FDA reported that during the 6-month period ending at
the end of January 2000, they had spent more than 39,520 hours
on this matter. That's very impressive. But when I asked if any
prosecutions during that period of time as a result of this
effort, they said: ``FDA is not aware that any Federal
prosecutions or convictions for Internet pharmacy violations
have occurred at this time.'' Again, I'll remind you that March
23, the date of that letter, was only 2 months ago.
I'm confused. This is not a new issue or one we don't know
anything about. We've heard all the stories about people that
have been able to obtain drugs online when posing as cats,
dogs, dead people, young children, or as patients with contra-
indicated conditions. What we don't hear is how the Federal
Government is aggressively attacking this problem.
To their credit, many of the States--with far fewer
resources and limited jurisdiction have attempted to curtail
the activities of some rogue sites. But why aren't we doing the
same at the Federal level? The FDA and DOJ repeatedly tell us,
either ``we're working on it,'' or ``it's an active criminal
investigation, and therefore we can't tell you anything.''
Staff from DOJ said they were ``chomping at the bit'' to
get these cases referred from the FDA whom they call the ``foot
soldier'' on the front. FDA tells us that they have referred
the cases to Justice. But where are the indictments and where
are the prosecutions?
Mr. Chairman, buying drugs online can be the health care
equivalent of trick-or-treating in a bad neighborhood.
Counterfeit or adulterated drugs can find their way into the
U.S. via rogue sites, with potentially devastating results of
potentially catastrophic proportions.
We've seen reports of arrests that were made for smuggling
in fake Viagra. We've seen accounts of arrests being made for
the selling of fake Xenical, made from only starch and a small
amount of an anti-asthmatic drug. We've even seen reports of
fake ampicillin and AZT made from cassava starch and anti-mold
powder. How prevalent are these bogus drugs? We don't know. But
if we don't get some control over the rogue Internet sites, we
may find out the hard way.
Now we've heard talk about self-regulation when it comes to
this Industry. In fact, last July when we had our last hearing
on this matter, the two companies representing legitimate
online pharmacies made commitments to this subcommittee that
they would have online pharmacy summits to discuss how to
address these problem. At that time, and even to this day, many
believe that the National Association of Boards of Pharmacy's
VIPPS program is the most suitable approach for doing this. I
generally applaud the concept and the sincerity of that
program. But, again, after almost a year, only five sites have
bothered to obtain a VIPPS seal. Does this mean that only a
tiny fraction are willing to play by these rules? Should
consumers feel safe shopping online when the vast majority of
sites don't have a VIPPS seal? In what other industry would
such a low compliance rate be tolerated? In other words, is
that system working?
Mr. Chairman, the U.S. has a very strict law on how drugs
can and cannot be dispensed by doctors and pharmacists. It is a
good system that has generally served us well for decades. Yet
many online pharmacies have managed to turn this system on its
head. A patient in State (A) has his prescription written by a
mystery doctor they've never seen they've never met. We don't
even know if they're a doctor. Their drugs are then sent by
somebody--who may not even be a licensed pharmacist--from a
source that may or may not even be located in the U.S. Is that
what we envision as sound public health policy? Is it illegal.
I'm hard pressed--or is it legal rather. I'm hard-pressed to
believe that it is.
In the near future, Mr. Chairman, for some segments of our
population, online pharmacies could significantly affect how
drugs are ultimately sold and purchased. So far, we've seen a
generally narrow range of drugs--mostly lifestyle drugs--sold
through the Internet and mostly at similar prices. But in the
future, there will be price competition. Some citizens already
head to Mexico and Canada to buy their drugs, even though that
practice is not without risk. What makes us think people won't
buy from cheaper Internet sites that don't require a doctor or
pharmacist, once they begin to offer their drugs? What then?
Will the Internet become a global flea-market for those who
can't afford today's high-priced prescriptions, or for those
looking for drugs of abuse? Will we be comfortable with such
system? We need to think about this, because that is what may
be on the horizon.
And, finally, Chairman, we have the question of what role
the drug companies should be playing in this area. For the most
part, they've remained oddly quiet. We have not heard much from
the drug manufacturers. Should they be quiet? Should they be
participating? After all, it is their products that are being
offered by many of these rogue sites. Are they comfortable with
that? What do we as policymakers think they should be doing and
why? Are we prepared to ask them? At the very least, should
these companies post consumer information on their official
promotional sites--such as www.viagra.com, www.propecia.com, or
www.xenical.com--warning patients about the potential risks of
buying online? What about providing a link to FDA's web site
where an in-depth discussion on this matter can already be
found? Because, this could be done almost immediately, it would
cost almost nothing, and I am hereby asking each major drug
company with a promotional site for drugs frequently being sold
over the Internet to do this immediately. Why not? Rather than
using these sites only to promote their drugs, what about using
them also to help consumers make safer decisions about buying
their drugs, their products online? Be responsible.
Mr. Chairman, I conclude again by thanking you for holding
this hearing and being vigilant on this subject. As you clearly
understand, the online pharmacy world is already and will
continue to challenge our public health policies. While these
sites offer many potential benefits, the potential downside and
risks are very real. We must begin to formulate a comprehensive
strategy to this matter before people get hurt or killed. So
far, I don't believe that the Federal Government has lived up
to this task. I once again look forward to hearing from the
people who are here in the hearing room today as to how they
intend to proceed, and I thank you, Mr. Chairman.
Mr. Upton. Thank you, Mr. Klink.
Mr. Bliley.
Chairman Bliley. Thank you, Mr. Chairman.
For more than a year this committee has looked at the issue
of Internet pharmacy sales. Since our investigation began, much
has changed. We have seen a dramatic increase in the number of
Web sites selling pharmaceutical products. Most sites appear to
operate legally and provide convenient, affordable service to
millions of Americans.
However, there are also Web sites that appear to be
violating the law. More troubling is there appears to be an
increase in Web sites outside the United States that are
dispensing medications to consumers in the U.S. even without a
prescription.
Our hearing today will examine what efforts Federal and
State agencies have taken in order to address this issue and
enforce the laws that currently govern pharmacies and doctors
on the Internet.
As this committee has studied this issue over the last 18
months, it has become clear that Federal enforcement and
coordination on this issue have fallen short. At the last
hearing this subcommittee held on the topic of Internet
pharmacies in July 1999, I called on the President to establish
a joint Federal-state Task Force to coordinate current law
enforcement efforts and to assess whether they are adequate to
protect consumers.
Following the hearing, on August 5, 1999, the President
established by Executive Order a Federal Working Group on
unlawful conduct on the Internet, including prescription drugs.
Although I supported the creation of this Working Group and
its underlying principles, I was disappointed the President
chose not to include State regulatory and enforcement groups as
part of this Working Group. Since the practice of medicine and
pharmacy have traditionally been regulated at the State level,
I believed it was imperative that they be included.
To date, States have led the way in enforcing the law
against illegal actions taking place on the Web. State
Attorneys General across the country met just last week to
discuss illegal Internet sales of prescription drugs and more
than 20 States have brought actions against pharmacies and
doctors violating their laws. Because the Internet knows no
boundaries, States have a harder time stopping bad actors.
Because of this, I join Chairman Upton in announcing a
proposal to empower State Attorneys General by granting them
authority in appropriate cases to obtain equitable relief under
Federal law in Federal court. Chairman Upton and I plan to
jointly introduce such legislation in the coming weeks. This
legislation will allow State Attorneys General to continue
their good work in making the Internet safe for all.
Unfortunately the strides made by many States to enforce
the law have not been made at the Federal level. In fact, just
the opposite has occurred. This committee has witnessed not a
single enforcement action by the Federal Government related to
illegal sales of prescription drugs on the Internet.
Today, the FDA has submitted testimony stating there have
been 43 arrests and 22 convictions resulting from FDA
investigations involving products over the Internet. Not a
single one of those arrests or convictions were related to
Internet prescription drugs being sold over the Internet.
Despite no record of stopping illegal prescription drug sales,
the Administration proposes giving the FDA even more authority
in the area of Internet pharmacies.
Moreover, the Administration continues to ignore the
biggest problem we face--foreign Web sites shipping drugs into
the United States.
Today, we will hear from the U.S. Customs Service who have
documented a 450 percent increase in seizures of
pharmaceuticals in only 1 year. While the President has called
for additional regulations to govern domestic Web sites selling
pharmaceuticals, he has all but ignored the problem we are
facing at our borders.
While the President has talked a big game about Internet
pharmacies, not one arrest or conviction related to Internet
prescription drug sales has taken place since this subcommittee
last met on this issue almost 1 year ago.
While States across the country with fewer resources than
the FDA or the DOJ have been proactive, the Federal Government
has been silent in the area of enforcement.
I will continue to be vigilant in looking at this issue and
am devoted to holding additional hearings if need be. I look
forward to hearing from our witnesses today and thank you all
for joining us.
Mr. Upton. Thank you, Mr. Chairman.
Ms. DeGette.
Ms. DeGette. Thank you, Mr. Chairman. I would like to join
with my colleagues in thanking you or holding this hearing on
this important issue.
This is, as you've just heard from the Chairman, this is
the second hearing we've had on this topic; the last one was in
July of last year. And the Chairman is right, much has changed
in the last year but there is something that has not changed,
and the thing that has not changed is we still have not had one
prosecution by the Federal Government for these often illegal
sales. And so I would echo the concerns expressed by my ranking
member and by those on the other side of the aisle about this
issue.
The good news is, the Internet has opened up a whole new
world of convenience. We can research any topic, we can chat
with somebody a half a world away, we can purchase anything.
But, as we know, hazards exist as well. In the last hearing we
had on this issue we talked about the benefits of
pharmaceutical sales on the Internet. And it's true that
convenience of shopping on the Internet for prescriptions is
undeniable for some patients. But there are still some problems
that are dangerous and perhaps even deadly.
As the co-chair of the Congressman Diabetes Caucus, I know,
for example, many individuals with chronic illnesses like
diabetes benefit enormously from being able to buy their
supplies on the Internet. But if we don't have adequate
oversight, there can be improper and even illegal dispensing of
drugs over the Internet and we've got to address this. On some
Internet pharmaceutical sites we've removed both the doctor's
role in prescribing drugs and the pharmacist's role in reducing
adverse effects and providing the patient yet another source of
medical advice.
We've seen these sites. We saw them last year and I've
looked at them since. A few clicks of the mouse on an online
questionnaire must never be a substitute for medical treatment.
I don't think that an Internet pharmacy should be a way to
skirt professional medical practices by allowing individuals to
access inappropriate and perhaps even illegal drugs.
And I will also, by the way, join with the Chairman in my
view that simply that the Federal Government can't simply buck
their responsibility by saying that oversight of the medical
and pharmaceutical professions have traditionally been a State
and local role. The Internet is a national and international
phenomenon and has to be dealt with in a national manner.
I've got a study right here from the Institute of Medicine
called, ``To Err is Human, Building a Safer Health System.'' In
that report it was estimated that between 44,000 and 98,000
people die annually as the result of medical errors. According
to the report, ``A good deal of research has identified
medication error as a substantial source of preventable
error.'' The report continues, ``Because the burden of harm to
patients is great, the cost to society is large, and knowledge
of how to prevent the most common kinds of errors is well
known.'' The committee singles out medication safety as a high
priority area for all health care organizations.
Well, if we have problems with medication error with folks
that are actually under medical care, imagine the medication
error you can get when people are just clicking on a computer
screen before they get their medications.
I can't help but remember the lady who was able to get
Viagra prescribed for both her dead father and her dog. And
this is a real concern, I think, for this committee, and I know
for all of us in the medical and pharmaceutical communities as
well.
One of the recommendations of the report is that patients
should tell physicians about all medications they are taking
and ask for information in terms that they understand before
accepting medications. Clearly that won't happen if people are
ordering their own medications on line through simple
questionnaires or worse.
We are going to hear testimony today, and I know our
ranking member referred to this, that the FDA has devoted over
40,000 staff hours to this important issue, but I'm very
concerned that the FDA can't point to one single prosecution or
conviction for Internet pharmacy violations as late as March of
this year. And I would like to know if any of the witnesses or
anyone on the committee can point to some changes that we make.
I have some ideas of my own of how we can perhaps increase the
commitment both of the Federal agencies and also streamline
some of the rules and legislation to allow these prosecutions
to occur.
Finally, I would like to commend our ranking member
representative Klink for his outstanding leadership on this
issue and his continued diligence. I look forward to working on
both sides of the aisle to see how we can begin to resolve this
problem, intercept these drugs, and have some more
prosecutions.
I yield back the balance of my time.
Mr. Upton. Thank you.
Dr. Ganske.
Mr. Ganske. Thank you, Mr. Chairman. I'm going to listen
with interest to the testimony today. Let me just throw another
angle into this issue. I got this letter from a constituent. It
was actually addressed to Senator First and he sent a copy to
me. He said, ``I enjoyed your response to President Clinton's
speech last evening. As a retired hospital administrator and
someone involved in fundraising, I would like to make a
suggestion needing investigation.''
``For senior citizens, the best thing Congress can do is to
help with medicine costs, not to pay medical costs, but to make
the costs fair. Let me give you an example.''
``After completing a University of Iowa Study on Celebrex,
200 milligrams for arthritis I got a prescription from my M.D.
and picked it up at the hospital pharmacy. My cost was $2.43
per pill with, `A volunteer discount.' Later on the Internet I
found the following. I can order through''--and I'll leave out
the company--``in Geneva, Switzerland after paying either of
two American doctors $70 for a phone consultation at a price of
$1.05 per pill, plus handling and shipping.''
``I can order through a Canadian pharmacy if I use a doctor
certified in Canada or my doctor can order it on my behalf
through his office for 96 cents per pill plus shipping.''
``I can send $15 to a Texan and get a phone number at a
Mexican pharmacy who will sell it without a prescription. A
friend now in Texas priced them at $52.50 per 100 pills in
Progresso, Mexico.''
``After the Federal Government gives funds for research and
development and then gives tax breaks to pharmaceutical
companies via write offs and depreciation, why are Americans
raped on pharmaceutical costs?''
Well, I think that we're going to see a lot of senior
citizens like my constituent making purchases through the
Internet, Mr. Chairman, and from overseas because there's a
huge cost differential. And the thing that I hear most about
the pharmaceutical problem is that there is an inequity between
drugs that are sold in Canada and Mexico, for instance and what
their costs are in the United States.
So one of the things we ought to think about on this is,
are we going to have increased enforcement so that senior
citizens who may try to take advantage of these decreased costs
will find that the FDA, for example, is acting as the policemen
preventing them from getting their drugs at a reduced price.
Or, are there problems with verification of the medicines that
they're actually receiving. That's the line of questioning that
I want to take in this hearing. And I yield back. Thank you.
Mr. Upton. Mr. Green.
Mr. Green. Thank you, Mr. Chairman. I would like to ask
unanimous consent for my full statement to be placed in the
record. And following up my Iowa colleague, coming from
Houston, Texas, I can relate to and I know very well where
Progresso, Mexico is, along with every other border crossing.
And the success my constituents have had driving 6 hours to
fill prescriptions at one time. They would fill them for their
neighbors, and because of the effort at the border now, it's
only them and their own prescriptions and a 90-day supply.
My concern though is the quality and the purity of the
pharmaceuticals, whether we get it from Thailand or Mexico or
anywhere else. And, again, I'm concerned about the costs and
hopefully Congress will address that this year. And sooner or
later, although hopefully sooner, but I hope this hearing will
talk about the quality and the purity of those pharmaceuticals
from around the world to see if people are really purchasing
what they think they are.
So with that, Mr. Chairman, I'll just put the remainder of
my statement in the record.
Mr. Upton. Without objection all members will be able to
have the opportunity to put their entire statement into the
record.
[The prepared statement of Hon. Gene Green follows:]
Prepared Statement of Hon. Gene Green, a Representative in Congress
from the State of Texas
Mr. Chairman, I would like to start by thanking you for holding
this important hearing.
While the growth over the past several years in e-commerce has been
a positive experience for both consumers and retailers alike, this
Committee has tried to look at ways to balance the right of open access
to the Internet with responsible safeguards to protect consumers from
online predators and scams.
To ensure this continued growth and prosperity, we need to provide
appropriate safeguards to protect consumers. An emerging area of
concern is the growth of on-line pharmacies who operate without regard
for standard practices of medicine.
While this Congress is attempting to reduce the cost of
prescription drugs for seniors, we have a responsibility to ensure that
the cheaper alternatives are safe and effective.
Currently, the FDA has the authority to protect consumers against
the importation, sale or distribution of illegal, unapproved or
counterfeit drugs, while the FTC has jurisdiction to protect consumers
from unfair or deceptive acts or practices, including the false
advertisement of drugs.
Despite this authority, these agencies have been slow to act
against Web sites selling prescription drugs illegally. This gap has
been filled, to a certain extent, by the states. Action by the FDA and
FTC, however, is still necessary.
Additionally, as the number of Internet sites outside the U. S. has
grown, the role of the Customs Service has expanded as well. The number
of seizures at Customs mail branches has increased dramatically, and
Customs has worked closely with authorities in other countries to
combat illicit Internet pharmacies. However, without assistance from
the FDA, the Customs Service cannot be effective in stemming the flood
of drugs being shipped into this country from abroad.
We need to encourage state and local authorities to continue their
efforts against online pharmacies, encourage the FDA and FTC to join in
those efforts where feasible, and push the, FDA to work more closely
with Customs to stem the tide of drugs flowing in from outside our
borders.
Thank you for the time, Mr. Chairman, and I look forward to the
testimony of the witnesses.
Mr. Upton. Mr. Bryant.
Mr. Bryant. Mr. Chairman, I too thank you for this follow-
up hearing that you're holding today and I think just about
everything that could be said about this issue this semi-
informed panel has been said, and I am going to yield back my
time. I am anxious to hear from the people who are perhaps a
little more knowledgeable on this.
Mr. Upton. Mr. Burr.
Mr. Burr. No opening.
Mr. Upton. Welcome. The panel this morning includes Mr.
William Hubbard, Senior Associate Commissioner for Policy,
Planning and Legislation at the Food and Drug Administration;
Mr. Ethan Posner, Deputy Associate Attorney General from the
Department of Justice; Ms. Betsy Durant, Director, Office of
Trade Programs, U.S. Customs Service; and The Honorable Carla
Stovall, Attorney General, State of Kansas. Welcome back.
As you all know we have had a long tradition in this
subcommittee of taking testimony under oath. Do any of you have
objection to that?
[No response.]
Mr. Upton. If not, we also have, under the committee rules,
you're entitled to counsel. Do any of you desire counsel?
[No response.]
Mr. Upton. If you would all stand and raise your right
hands.
Do you swear to tell the truth, the whole truth, and
nothing but the truth, so help you God?
[Chorus of ayes.]
Mr. Upton. Thank you. You are now under oath. Your
statements in their entirety are part of the record. We have a
little clock up here. We would like to limit your remarks, if
we can, your opening statements to 5 minutes.
Mr. Hubbard, we will begin with you.
TESTIMONY OF WILLIAM K. HUBBARD, SENIOR ASSOCIATE COMMISSIONER
FOR POLICY, PLANNING AND LEGISLATION U.S. FOOD AND DRUG
ADMINISTRATION; ETHAN M. POSNER, DEPUTY ASSOCIATE ATTORNEY
GENERAL, U.S. DEPARTMENT OF JUSTICE; BETSY DURANT, DIRECTOR,
OFFICE OF TRADE PROGRAMS, U.S. CUSTOMS SERVICE; AND HON. CARLA
J. STOVALL, ATTORNEY GENERAL, STATE OF KANSAS
Mr. Hubbard. Thank you, Mr. Chairman. I have a written
statement for the record, but I'll just make a few opening
remarks.
While the Agency has been very aggressive in going after
unapproved drugs on the Internet, we have also, of course, been
looking at the issue of approved drugs being sold through these
online questionnaires, and we've learned a lot since last
year's hearing.
We've learned that most of these web sites actually have
licensed pharmacists and licensed physicians at the other end;
and that most of the drugs are not diverted; they're being
purchased through normal channels. We also know that the States
do not in most cases have laws to adequately address this sort
of problem.
There is a gap between Federal and State law that falls in
there that you suggested that you have some ideas for; and thus
the cases are harder to make and we certainly can talk about it
more today. But we have been very active. We have done many
things. We have set up an education program to tell people that
this is a potentially dangerous practice and to understand how
to order drugs over the Internet, because there are, of course,
good sites. But then there are sites that are not so good.
We have partnered quite a bit with not only the States, but
with other Federal agencies. We've done a lot in enforcement.
We have used search engines and new technology to look at the
sites that are out there. We have developed the case assessment
process to follow the leads that come our way. We have
redeployed personnel in this area. We have given the Congress a
budget request for next year that would increase our efforts
here and would evaluate over 400 web sites.
On the civil side, Mr. Chairman, we have taken action
already on more than 50 web sites and we have 54 more under
investigation. And as part of that we have issued 38 warning
letters, 17 so-called ``cyber letters'' to foreign countries,
five injunctions have been sought, or have been done, 12
seizures of drugs have occurred, 11 recalls have occurred, 18
voluntary destructions of shipments of drugs have occurred, and
17 import alerts have occurred.
On the criminal side, we have 132 investigations underway;
86 are full-blown, open criminal investigations and 46 more
preliminary ones that are moving in that direction. Of those,
49 are the sorts of online pharmacy that use questionnaires and
83 are those that are selling unapproved drugs. And, as you
noted, that results in 43 arrests and 22 convictions, and we've
also referred at least 11 cases to the States who are
independently taking action.
There is a difficulty, though, in winning these cases with
these online questionnaires for the approved drugs; it's
logistically difficult. We have to track down the site, the
domain, the true business owner. In many cases there are
multiple sits being operated by one entity. We have to find
them and their operator. That's a lot of work.
But then beyond that, when we find that the site exist and
is selling a drug through a licensed pharmacy and a licensed
physician, and if the State cannot tell us that that
prescription being written is not valid, we have a great deal
of difficulty making a successful case. I'm sure we will be
talking about that more today, Mr. Chairman.
Thus, we believe legislation is needed in this area. We
prepared a legislative bill that is, I believe, before the
Congress. It requires State licensure of these online
pharmacies that would build upon Mr. Klink's concepts last year
of disclosure which were, I think, universally accepted as a
good idea. That would ask or declare that they are in
compliance. In other words, it gives the consumer some sort of
declaration that this is a site that meets the requirements of
State law, as opposed to one that would not have that.
We would ask that the site notify us when they beginning to
operate to understand if there are some skeptical activities
going on. We have asked for civil money penalties the deter
some of these activities. And most importantly, as you yourself
have acknowledged, we believe there needs to be a State cause
of action. Because, in the end, States are most responsible for
the regulation of pharmacy and medicine and we believe giving
the States the cause of action would greatly enhance their
ability to work, to go into Federal court on these cases.
And, last, I believe, Mr. Chairman, that the noose is
slowly tightening over these domestic sites. The States are
changing their laws, investigations are under way. Progress is
being made even though we're not seeing the convictions you're
asking about. But I believe we can get these domestic sites
under control. The issue will, I think, be, as you're saying
today, these foreign sites; what can we do about them.
And one item that we have that we would like to urge you to
consider is that in our bill we would have a site that's
legitimate, have some sort of declarational seal identifying a
legitimate site so at least a consumer, when he's surfing
through the web, and sees a site that has that declaration,
he'll know there is a legitimate, licensed, pharmacist at the
other end; he can call him on the phone, he can talk to him,
he's a real person there. He's not some guy in a garage in some
third-world country.
So with that, Mr. Chairman, I'll end my testimony.
[The prepared statement of William K. Hubbard follows:]
Prepared Statement of William K. Hubbard, Senior Associate Commissioner
for Policy, Planning and Legislation, Food and Drug Administration
introduction
Mr. Chairman and Members of the Committee, I am William K. Hubbard,
Senior Associate Commissioner for Policy, Planning and Legislation at
the Food and Drug Administration (FDA or the Agency). I am pleased to
come before the Subcommittee to discuss with you the benefits and risks
of pharmaceutical sales over the Internet and what the Agency has been
doing to address these issues since your hearing last year. The sale of
consumer products over the Internet has grown rapidly, including the
sale of drugs. The growth in online drug sales by reputable pharmacies
is a trend that can provide significant benefits to consumers. On the
other hand online drug sales also present risks to purchasers and some
unique challenges to regulators, law enforcement officials and policy
makers. FDA is concerned about the public health implications of
Internet drug sales, and we are responding to these concerns as part of
our overall goal of developing and implementing risk-based strategies
to protect public health and safety.
Although other products regulated by the Agency, such as medical
devices, medical test products, foods, dietary supplements and animal
drugs also are sold online, this testimony will focus on online drug
sales. We will discuss the advantages and risks of online drug sales,
outline FDA's authority and enforcement activities in this area, and
describe new initiatives we are taking to better respond to the
regulatory challenges we face.
In the context of prescription drug sales over the Internet, the
private sector has an important role to play in promoting consumer
education and in providing assurance to consumers about the quality of
products and services. Our challenge is to make sure that the same
safety net that protects the consumer who purchases prescription drugs
at the corner store is just as strong when the click of a mouse is used
to purchase from a venue in cyberspace. Rapid technological
developments have changed the nature of the challenges we face today
and we must be flexible in developing solutions that are appropriate to
meeting these challenges. As electronic commerce embraces global
markets, we should strive for consistent principles across State,
national, and international borders that promote safety and efficacy,
regardless of the jurisdiction in which a particular buyer or seller
resides.
benefits of online drug sales
The use of the Internet by our nation's citizens, from school age
children to seniors, has opened up vast new opportunities for the
exchange of information and for enhancing commerce in all types of
consumer products. Electronic mail and chat groups have dramatically
facilitated communications. Information gathering that once took hours
or days of research, whether for a student's homework assignment or to
look up information on the medical condition of a family member, can
now be accomplished in minutes.
The Internet is rapidly transforming the way we live, work, and
shop in all sectors of the economy. In the health sector, tele-medicine
allows people in remote areas to access the expertise of doctors in the
nation's finest academic health centers. The Internet permits an
increasing number of individuals to obtain a plethora of medical
information that often helps them to understand health issues and
treatment options. In fact, more than 22 million Americans used the
Internet last year to find medical information, either in documentary
resources or through online discussions with health professionals.
According to Investor's Business Daily, 43 percent of web surfers
access health care data online each year. Conducting research regarding
their health concerns is the sixth most common reason that people use
the Internet, and according to the market research firm, Cyber Dialogue
Inc. The number of persons accessing health care data is growing by 70
percent a year.
Prescription drug sales on the Internet can provide tremendous
benefits to consumers. These benefits are many and include: access to
drugs for the disabled or otherwise home-bound, for whom a trip to the
pharmacy can be difficult; the convenience of shopping 24 hours a day;
an almost unlimited number of products for customers; and privacy for
those who don't want to discuss their medical condition in a public
place. Hyperlinks and search programs provide online customers with
written product information and references to other sources of
information much more easily than in the traditional storefront.
Finally, as the use of computer technology to transmit prescriptions
from doctors to pharmacies expands, a reduction in prescription errors
may be possible.
While online pharmaceutical sales will be important for some
customers, it must be noted that the traditional ``brick and mortar''
pharmacy offers benefits or services that are often not available
through the Internet, such as immediate access to prescription drugs
needed for immediate treatment. These pharmacies will undoubtedly
remain an essential component in the delivery of effective health care.
The challenge for government at both the State and Federal level is
to pursue policies that will allow legitimate electronic commerce to
flourish but provide that safety is assured. Consumers will have
confidence in the quality of the medical prescription and in the
medicine delivered because the protection for online consumers is
equivalent to the safeguards of the traditional local pharmacy and the
practice of medicine and pharmacy.
concerns about online sales
As beneficial as this new technology can be, the Internet also
creates a new marketplace for activity that is already illegal, such as
the sale of unapproved new drugs, prescription drugs dispensed without
a valid prescription, or products marketed with fraudulent health
claims. As FDA considers the issues related to online drug sales, we
recognize that there are various types of websites used for drug sales.
Many sites focus on selling prescription drugs and have been referred
to by some as ``Internet pharmacies.'' These sites offer for sale
either FDA-approved prescription drug products, or in some cases,
unapproved, illegal versions of prescription drugs. The sales sites of
legitimate, properly licensed pharmacies provide benefits to consumers,
however, those that are unlicensed or otherwise engaged in the illegal
dispensing of prescription drugs pose a serious threat to the health
and safety of American citizens. Other drug sales sites offer for sale
unapproved drug products, products making fraudulent health claims, or
drugs for recreational use. Examples of these sites are those that sell
products containing gamma hydroxy butyrate (GHB), an unapproved drug
used recreationally, for body building and for incapacitating the
victims of sexual assaults, or sites that offer unproven cancer
therapies. It should be noted that with regard to GHB, early this year
the President signed legislation, which originated in this
subcommittee, placing GHB in Schedule 1 of the Controlled Substances
Act. While the increase in ``Internet pharmacy'' sites engaged in
illegal sales is seen by some as a particularly potent threat, FDA
believes that the non-pharmacy sites are harmful, or in some cases more
so, and we have moved aggressively against those that operate
unlawfully.
The unique qualities of the Internet, including its broad reach,
relative anonymity, and ease of creating new websites or removing old
ones, pose new challenges for the enforcement of existing laws. FDA has
found that most drug sale websites are actually made up of multiple
related sites and links, thereby making investigations much more
complex and resource intensive. The global nature of the Internet
creates particular problems for effective law enforcement. Different
approaches to drug approval and marketing in foreign countries further
complicate law enforcement issues for United States' (U.S.) officials.
FDA and other U.S. government agencies need to work closely with
foreign governments to share information and to develop mechanisms for
cooperative law enforcement.
FDA Authority
As you know, the establishment of FDA as it exists today grew out
of a time early in the century when consumers were victimized by
dishonest purveyors of fraudulent potions and compounds that were
ineffective, dangerous, or both. A system of drug regulation was
established in this country that has served us well. Under this system,
FDA reviews new drugs to assess their safety and efficacy. In addition,
certain types of drugs must be prescribed and dispensed only by
licensed health care professionals. The prescribing requirement is
based on the principle that certain drugs have risks of such
significance associated with them that they should be administered only
under the supervision and recommendation of a ``learned
intermediary''--that is, a licensed practitioner with the education and
training necessary to oversee the administration of potentially harmful
drug products. Similarly, these products may only be dispensed by a
licensed professional that can help to assure proper dosing and
administration and can provide important information on the drug's use
to patients. These requirements are crucial components of the risk
management system for drugs in the U.S.
The types of unlawful conduct involving online drug sales that FDA
has identified are similar to unlawful activities that occur in other
sales contexts. Under the Federal Food, Drug, and Cosmetic (FD&C) Act,
FDA has the legal authority to take action against:
the importation, sale, or distribution of an adulterated or
misbranded drug;
the importation, sale, or distribution of an unapproved new
drug;
illegal promotion of a drug;
the sale or dispensing of a prescription drug without a valid
prescription; and,
counterfeit drugs.
When the Internet is used for an illegal sale, FDA, working with
the Department of Justice (DOJ), must establish the same elements of a
case, develop the same charges, and take the same actions as it would
if another medium, such as a storefront or a magazine, had been used.
FDA has investigated and referred cases for criminal prosecution and
initiated civil enforcement actions against online sellers of drugs and
other FDA-regulated products, particularly sellers of drugs not
approved by the Agency. As will be described later, FDA has
significantly expanded its enforcement activities during this past year
with regard to online drug sales.
State Regulation of Practice of Medicine, Pharmacy and Dispensing of
Drugs
The States have enacted laws regulating the practice of pharmacy
and the practice of medicine in order to protect patients from harm
resulting from the use of unsafe drugs, counterfeit drugs, and the
improper practice of medicine and pharmacy. Under many of these laws,
to receive a prescription drug for the first time, a patient generally
must be physically examined by a licensed health care practitioner who
determines the appropriate treatment and issues a prescription for an
FDA-approved drug. The patient then has the prescription filled by a
registered pharmacist working in a licensed pharmacy that meets state
practice standards.
Use of the Internet to Bypass the Regulatory System
Even with these Federal and State systems in place, there are those
who try to circumvent established safeguards, and the Internet provides
them with new opportunities for doing so. It is fair to say that the
speed and ease of ordering products on the Internet that attracts
consumers can likewise entice unscrupulous sellers to use the Internet
as their new medium of choice. Individuals not licensed to sell
prescription drugs can easily create websites that appear to represent
legitimate pharmacies. The fact that operators can easily change the
location and appearance of their Internet sites makes enforcement all
the more difficult. Unlike most other forms of electronic commerce, the
unauthorized sale of prescription and unapproved drugs poses a
potential threat to the health and safety of consumers.
Patients who buy prescription drugs from an illegitimate site are
at risk of suffering adverse events, some of which can be life
threatening. These risks include potential side effects from
inappropriately prescribed medications, dangerous drug interactions or
contaminated drugs, as well as the possible ill effects of impure or
unknown ingredients found in drugs manufactured under substandard
conditions. Further risk to patients is posed by their inability to
know what they are really getting when they buy some of these drugs.
Although some patients may be purchasing genuine product, some may
unknowingly be buying counterfeit copies that contain inert
ingredients, outdated legitimate drugs that have been diverted to
illegitimate resellers, or dangerous sub-potent or super-potent
versions that were improperly manufactured. Moreover, consumers who are
desperate for a cure to a serious medical problem may be more
susceptible to purchasing an unapproved product.
FDA is concerned about the proliferation of sites that substitute a
simple online questionnaire for a face-to-face examination and patient
supervision by a health care practitioner. According to the American
Medical Association, a health care practitioner who offers a
prescription for a patient they have never seen before, based solely on
an online questionnaire, generally does not meet the appropriate
medical standard of care. Just last month, the Federation of State
Medical Boards received the report of its Special Committee on
Professional Conduct and Ethics, which found that ``Prescribing of
medications by physicians based solely on an electronic medical
questionnaire clearly fails to meet an acceptable standard of care and
is outside the bounds of professional conduct.'' This finding is
especially important in light of the primary responsibility of States
in regulating the practice of medicine. Additionally, FDA is concerned
that the use of such questionnaires may jeopardize the privacy of a
patient's medical records. We will continue to play a role in the
Administration's efforts with the private sector to implement
appropriate protections for patient's medical information. We also will
continue to distinguish legitimate online communications from unlawful
conduct that increases patient risk.
The Agency is equally concerned that in some Internet transactions,
there is an apparent absence of any health professional/patient
relationship. This is a particular concern where the prescription
involves a first-time use by a patient or where the patient may be
taking other medications. FDA is concerned that the selection of
prescription drug products or treatment regimens for a particular
patient should be made with the advice of a licensed health care
practitioner familiar with the patient's current health status and past
medical history. In situations where a customary physician-patient
relationship does not exist, the patient may be essentially practicing
self-diagnosis. Consequently, the risk of negative outcomes such as
harmful drug interactions, contraindications, allergic reactions or
improper dosing is greatly magnified.
Jurisdictional Issues
In addition to magnifying existing problems by reaching potentially
millions of consumers worldwide, online drug sales create unique issues
for regulatory and law enforcement bodies at the State, Federal and
international level. Internet technology can obscure the source of the
product as well as provide some degree of anonymity to persons
responsible for making and shipping the product. The participants in a
transaction can be widely dispersed geographically (in different States
or countries) and they may never meet. Thus, the regulatory issues
cross traditional regulatory boundaries as well as Federal and State
jurisdictional lines. If one or more participants in the transaction
are located outside of the U.S., the task of regulating the activity is
further complicated.
The sale of drugs to U.S. residents via foreign websites is an
extremely challenging area. Some medications sold on the Internet may
be legal in foreign countries but not approved for use in the U.S., and
some products may include addictive and dangerous substances. Products
not approved for sale in the U.S. often do not conform to the good
manufacturing practice and quality assurance procedures required by
U.S. laws and regulations, and it is illegal for a foreign pharmacy to
ship such drugs into the U.S. Foreign sales pose the most difficult
challenge for U.S. law enforcement because the seller is not within
U.S. boundaries. Although FDA has jurisdiction over a resident in a
foreign country who sells to a U.S. resident in violation of the FD&C
Act, from a practical standpoint, the Agency is hard pressed to enforce
the law against foreign sellers. FDA confronts the same obstacles
facing other U.S. regulatory and law enforcement agencies seeking to
hold foreign actors accountable for violations of Federal law. FDA
efforts are mostly limited to requesting the foreign government to take
action against the seller of the product, or asking the U.S. Customs
Service (USCS or Customs) to stop the imported drug at a U.S. port-of-
entry.
Foreign governments are also struggling with how to address the
problem of illegal drug sales over the Internet. For instance,
pharmaceutical industry officials in Italy are recommending that the
issue be addressed by the European Community as a whole.
The New Zealand Health Ministry has begun to look at options to
prevent pharmaceuticals from being dispensed from New Zealand to
overseas consumers without a prescription, after a court decision
revealed a loophole that prevents regulators from preventing the
practice.
fda's internet drug sales action plan
Over the past several years, FDA has sharpened its focus on the
issue of Internet promotion and sale of drugs as online activity has
expanded. In the fall of 1996, FDA held a public meeting on the use of
the Internet to promote drug products at which we heard from consumers
and health professionals on this emerging issue. In February 1999, the
Agency hosted a meeting with representatives of health professional
organizations to look at the prescribing and dispensing of drugs on the
Internet.
In July 1999, FDA adopted, and has since been implementing, an
Internet Drug Sales Action Plan to expand and improve the activities of
the Agency in addressing the unlawful sale of drugs over the Internet.
This plan is based on internal deliberations, meetings with Federal and
State regulatory and law enforcement bodies, as well as organizations
representing consumers, health care practitioners, and the
pharmaceutical and pharmacy industries. Details of the action plan's
elements and FDA's activities in implementing them are as follows.
Engage in Public Outreach
At a minimum, every drug sale involves at least a purchaser and a
seller. Consumers buy drugs on the Internet for different reasons, and
some may be targets of unscrupulous business practices, such as the
selling of unsafe, unapproved, expired, counterfeit or otherwise
illegal drugs. Public outreach offers one mechanism by which the Agency
can help protect consumers from dangerous or inappropriate drugs. FDA
is expanding its public outreach to inform the public about dangerous
practices involving Internet purchases and to explain what compliance
and enforcement actions we already have taken. This outreach effort
includes FDA Talk Papers; articles in the FDA Consumer Magazine; and
information on FDA's website to help educate consumers about safely
purchasing drugs online and provide consumers with an opportunity to
submit to the Agency information on sites that may be violative.
This year, FDA has launched a new media campaign about safe ways to
purchase pharmaceutical products over the Internet. The campaign
includes placing advertisements on health related websites; taping
public service announcements for distribution to television and radio
stations nationwide; and developing a ``safety checklist'' to be posted
online and distributed through health care providers and consumer
advocacy organizations.
The Agency will keep working with consumer groups, health care
practitioner organizations, and industry to encourage these parties to
keep their constituents and the public informed about safe practices
for purchasing drugs online.
Engage in Professional Outreach and Partnering
At the February 1999 meeting with health professional
organizations, FDA, the Federation of State Medical Boards of the
United States, the National Association of Boards of Pharmacy (NABP),
the American Medical Association and the Association of Food and Drug
Officials discussed the roles that each organization plays in
regulating prescribing and dispensing on the Internet and how the
various roles could better compliment each other. At that meeting, the
NABP announced its program to verify the legitimacy of Internet sites
dispensing prescription drugs. The program, known as the Verified
Internet Pharmacy Practice Sites, or VIPPS, provides a NABP ``seal of
approval'' to sites meeting State licensure requirements and NABP's
standards. Over time, this seal of approval may help to assure
consumers that the designated sites are offering FDA approved
pharmaceuticals. The VIPPS program is voluntary.
FDA continues to meet with organizations representing State
regulatory and law enforcement bodies, consumers, health care
practitioners and industry. The purpose of these meetings are to gather
information on: 1) how issues relating to online drug sales should be
addressed, 2) who should regulate and how they should regulate; 3)
whether and what changes to the current law should be enacted; and 4)
when to develop partnering arrangements. These organizations include:
the National Association of Boards of Pharmacy,
the Federation of State Medical Boards,
the National Association of Attorneys General,
the American Medical Association,
the American Pharmaceutical Association,
the American Association of Retired Persons,
the National Consumers League,
the American Society of Health-Systems Pharmacists,
the National Association of Chain Drug Stores,
the National Community Pharmacists Association, and,
the Pharmaceutical Research and Manufacturers Association.
Coordinate Activities with other State and Federal Agencies
Several Federal agencies, as well as the States, have the authority
to regulate and/or enforce U.S. laws related to the sale of drug
products online. Due to the growth of potential cases involving the
Internet, there are instances when working with another agency or State
could result in a more effective enforcement action. Working closely
with the States is essential to effectively regulate the domestic sale
of both approved and unapproved drugs, as well as the sale of
prescription drugs without a valid prescription over the Internet. FDA
has established partnership agreements with several State bodies,
including the National Association of Boards of Pharmacies and the
Federation of State Medical Boards, to coordinate Federal and State
activities aimed at questionable practices associated with the selling
and prescribing of prescription drugs. Additionally, we are talking
with the National Association of Attorneys General about a possible
agreement.
FDA has increased its coordination of efforts with other
governmental bodies and has met several times over the past year with
Federal agencies and State officials to share information, discuss the
roles and responsibilities of the parties regarding online drug sales
and identify opportunities for partnering in enforcement actions. FDA
has established cooperative working relationships with the Department
of Justice (DOJ), including the Drug Enforcement Administration (DEA)
and Federal Bureau of Investigation (FBI), the U.S. Postal Inspection
Service, USCS and other appropriate Federal and State law enforcement
and regulatory agencies. FDA believes an important area where
cooperation among federal agencies is critical is the sale of drugs to
U.S. residents by foreign sellers. The USCS, the U.S. Postal Service,
FDA, and the DEA all play important roles in taking action against the
illegal importation of drugs.
Generally, determinations of when and with whom FDA would engage in
joint enforcement is based on the kinds and severity of violative
conduct identified through Internet monitoring. Although FDA is
expanding its own Internet monitoring capabilities, the Agency also is
developing partnerships in this area with other agencies. In addition,
FDA was a participant in the Administration's Working Group on Unlawful
Conduct on the Internet, which issued its report to the President this
past March. In its analysis of the problems associated with online drug
sales, the report calls for legislation requiring online pharmacies to
disclose certain information to consumers and for a system of assurance
that they comply with appropriate Federal and State requirements.
Cooperate Internationally
Because FDA and the other Federal agencies possess limited
investigatory jurisdiction over sellers in foreign countries, we must
work with foreign governments to bring action against such individuals.
Internet crime and the practice of online pharmacy are a growing
concern throughout the international law enforcement community. FDA's
Office of Criminal Investigations (OCI), maintains ongoing liaison with
numerous government agencies in Canada, the United Kingdom, Spain,
Germany, Belgium, the Netherlands, Ireland, Brazil, Singapore and
others.
An example of this cooperation involved OCI contact with
authorities in a Pacific Rim country where a website operator alleged
that he used the services of two legitimate doctors to review his
online questionnaire. Through our foreign counterparts, we were able to
have the doctors interviewed. Both denied any involvement in the
scheme, thus exposing the operator to possible mail and wire fraud or
other charges.
In another case, OCI made an undercover purchase of drugs from a
site operating out of a European country. The site made no pretense of
a medical review. OCI was looking for a domestic connection for charges
in the U.S. While none was found, ourcontacts with the health
authorities in that country resulted in their initiation of an criminal
investigation. Finally, OCI is involved in two cases with USCS overseas
offices regarding foreign websites selling prescription and controlled
pharmaceuticals. Enforcement activity by Customs resulted in numerous
arrests and the seizure of over 1.5 million pills and several
computers.
Customize and Expand Enforcement Activity
FDA's emerging role in regulating online drug sales is consistent
with its traditional regulatory role. Existing approaches to
enforcement, including close cooperation with State agencies, are being
adapted to focus more effectively on the problems posed by online drug
sales. An effective Internet enforcement process requires establishing
priorities, identifying and monitoring potentially violative websites
and making appropriate referrals for criminal prosecution and/or civil
enforcement actions. FDA is enhancing its enforcement efforts by
undertaking the following actions:
Establishing Priorities--FDA has initially focused its online drug
sales-related enforcement activities to the following areas,
particularly where there is a significant public health risk:
1
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\1\ A significant public health risk exists when a consumer is at
risk for harm (1) from the use of the product, (2) as the result of not
taking approved drugs for a specific disease or condition, or (3) by
delaying medical treatment recognized as safe and effective for a
specific disease or condition.
Unapproved new drugs,
Health fraud, and
Prescription drugs sold without a valid prescription.
Improving Data Acquisition--FDA has increased its capability to
monitor the Internet and identify potentially violative sites through
the use of various search tools and by upgrading its data handling
capabilities. This is helping the Agency to better understand the kind
and extent of unlawful conduct on the Internet and to more accurately
assess whether its enforcement efforts have had an impact on illegal
Internet behavior.
In an attempt to better comprehend the universe of websites selling
drugs, OCI reviewed thousands of websites early this year and
identified approximately 326 websites involved in the sale of drug
products. This review was based on a search of websites performed by
Internet search software, which was followed by a manual review of
sites that appeared to involve the sale of drug products. Because new
websites are put up everyday and old ones are taken down, the total
number of these sites is subject to change and will not be consistent
over time. Additionally, because OCI's technology and methodology
probably differs from those used in studies by other organizations, the
results of this study are not directly comparable to other studies.
Coordinating Case Assessment--In June 1999, FDA established a case
assessment, or ``triage'' team with representatives from the Office of
Enforcement and OCI within the Office of Regulatory Affairs (ORA), the
Center for Drug Evaluation and Research (CDER), the Office of the Chief
Counsel (OCC) and the Office of Policy. Under the triage process, FDA
obtains leads on potentially violative sites from internal Internet
monitoring activity, State, other Federal or foreign law enforcement
agencies, consumers, Congress, and the press. The triage team evaluates
the leads and decides whether they should initially be pursued through
a civil or criminal investigation. Priority is given to cases involving
unapproved new drugs, health fraud, prescription drugs sold without a
valid prescription and products with the potential for causing serious
or life-threatening reactions. The triage team makes referrals, when
appropriate, to FDA's civil and criminal enforcement units for follow-
up.
The triage process results in a better coordination of criminal and
civil enforcement actions at the appropriate Agency components and
reduces overlapping effort. This process better ensures that decisions
are made in a timely way, with an appropriate balance in terms of
achieving a maximum deterrent effect while taking action, if needed, to
remove harmful products from the market. The team will continue to
oversee Internet-related enforcement activities while they are being
investigated and will ensure that they are brought to appropriate
completion. In addition, the scope of this group is being broadened to
include all FDA-regulated products.
Enhancing Enforcement Resources--In general, FDA's investigative
and enforcement activity regarding Internet drug sales has been
accomplished by re-deploying FDA personnel, which necessarily results
in a reduction of investigation and enforcement activity in other
areas. The Agency has drawn from existing resources to increase its
current enforcement efforts because we believe that illegal online drug
sales pose a significant public health risk. As explained in more
detail later, the President has requested $10 million in additional
funding for Internet enforcement activities in the Fiscal Year (FY)
2001 budget.
Results to Date--Using information generated by Internet searches,
as well as leads from all parts of the Agency, other State and Federal
law enforcement units, and the public, FDA has performed at least
cursory reviews of thousands of websites related to drug sales. FDA
(the offices of ORA, CDER Compliance, OCC and OCI) has evaluated well
over 400 websites for possible regulatory or criminal action and has
taken enforcement action on many of those sites, as follows: Currently,
FDA has 54 sites under active review for possible regulatory or civil
action. Regulatory action has been taken on more than 50 sites as
follows. Thirty-eight (38) warning letters have been sent by the Office
of Compliance to domestic online sellers. A warning letter is a written
communication from FDA notifying an individual or firm that the Agency
considers one or more products, practices, processes, or other
activities to be in violation of the FD&C Act, or other relevant
statutes, and that failure of the responsible party to take appropriate
and prompt action to correct and prevent any future repeat of the
violation may result in administrative and/or regulatory enforcement
action without further notice.
Additionally, OCC has sent seventeen (17) ``cyber letters'' to
operators of foreign-based Internet sites offering to sell online
prescription drugs. These sites may be engaged in illegal activity such
as offering to sell prescription drugs to U.S. citizens without valid
(or in some cases without any) prescriptions. Cyber letters, which are
sent over the Internet to the suspect websites, warn these operators
that they may be engaged in illegal activities, and informs them of the
laws that govern prescription drug sales in the U.S. FDA has received
seven responses from ``cyber'' letter recipients and FDA is continuing
to monitor these sites.
Other civil and regulatory actions include the following. In
cooperation with DOJ, two preliminary injunctions have been imposed on
the sale of a illegal products--one marketed as a weight-loss aid that
contains a potent thyroid hormone, which could cause heart attacks or
strokes, and the other an unapproved cancer therapy. FDA and DOJ are
pursuing an additional injunction against the sale of another
unapproved cancer therapy over the Internet. Additionally, twelve (12)
product seizures, eleven (11) product recalls, and the voluntary
destruction of eighteen (18) violative products have been achieved,
generally pertaining to unapproved new drug products including GHB,
gamma butyrolactone (GBL), Triax, 1,4 butanediol, and laetrile.
Seventeen (17) import alerts have been issued targeting products
offered by foreign online drug sellers.
OCI, working with OCC, is responsible for investigations of
pharmacy sites and other Internet drug sites whose operations involve
potential criminal activity. The information collected by OCI
headquarters is analyzed by the Investigative Analysis Branch. After
the suspect sites are researched they are sent to the OCI field offices
for investigative work, which often includes undercover buys. Further
investigation determines the bona fides of the pharmacy and doctor(s),
and looks at the relationship between the patient and doctor and the
doctor and pharmacy. OCI has ongoing cooperative relationships with the
USCS, DEA, FBI, the Postal Inspection Service and appropriate State law
enforcement and regulatory agencies, and this has enhanced their
investigative capabilities with regard to Internet drug sales.
Currently, OCI has 132 Internet related investigations underway,
including 86 open criminal investigations and 46 preliminary
investigations. Of these 132 investigations, 49 cases are
investigations of sites selling prescription drugs, while 83 cases are
related to various types of health fraud, or unapproved drug products
such as GHB or other illegal drug sales. Forty-three (43) arrests and
twenty-two (22) convictions have resulted from OCI investigations
involving products being sold over the Internet.
the administration's fiscal year 2001 budget request and proposed
initiative
On December 28, 1999, the Administration announced a new initiative
to protect consumers from the illegal sale of pharmaceuticals over the
Internet. The initiative includes a $10 million request in the
President's FY 2001 budget to enhance FDA's enforcement capabilities,
and called for legislation to help ensure that Internet pharmacies
comply with State and Federal laws.
Budget Request
The Administration's FY 2001 budget request contains a new $10
million investment to take action against those who engage in illegal
drug sales over the Internet. The funding would be used to identify,
investigate, and prosecute operators of websites selling prescription
drugs without a valid prescription, unapproved new drugs, counterfeit
drugs, and expired or illegally diverted pharmaceuticals. This funding
initiative will also help crack down on the marketing of products based
on fraudulent health claims.
The $10 million appropriation would be used primarily to sustain
the number of investigative and enforcement personnel we are currently
investing in this area. FDA will continue to employ Internet hardware
and software to identify suspect websites, and will use the additional
personnel resources to investigate and take enforcement action against
the operators of these sites. To date, FDA's enforcement activity on
Internet drug sales has been accomplished by re-deployment of existing
personnel resources, which necessarily results in a reduction of
investigations in other areas.
Enactment of the $10 million request would allow FDA to re-direct
its currently re-deployed resources back to other enforcement
priorities and establish a significant, permanent presence on Internet
pharmacy enforcement. In addition, the requested funding would help FDA
step up efforts to educate consumers about the risks involved online
and what types of sites or practices they should avoid.
Drugs marketed and sold illegally over the Internet present real
risks for the American consumer. Enforcement activities targeting these
sites have been made a budget priority for FY 2001.
legislative proposal
On May 2, 2000, Secretary Shalala sent to Congress the
Administration's proposed legislation, the ``Internet Prescription Drug
Sales Act of 2000''. The Administration's objective in developing this
legislation is to protect the health of consumers by providing them
with a level of protection equivalent to that enjoyed by customers of
traditional ``brick and mortar'' pharmacies without hindering the
enormous potential benefit of the Internet. We see this proposal as a
first step in the process of developing appropriate protections for
online consumers of drugs, and we look forward to working with the
members of this subcommittee and others in the Congress on this
important matter.
The bill is also designed to enhance the effectiveness of the
Federal-State partnership in regulating prescription drugs and
recognize the importance of the States' traditional role in regulating
the practice of medicine and pharmacy. Accordingly, the bill would
support and strengthen the States' authority to enforce applicable laws
within their borders, while providing enhanced Federal authority to
monitor the multi-state and interstate aspects of Internet prescription
drug sales. By filling gaps in Federal and State authority, the bill
seeks to curb illegal sales of prescription drugs and to ensure that
consumers are receiving safe and effective drugs prescribed by licensed
health care professionals, and dispensed by pharmacies that are
properly licensed, and in compliance with, all applicable State and
Federal laws.
Specifically, the bill would require online pharmacies to be
licensed in each State in which they operate or to which they deliver
prescription drugs. They would have to comply with all applicable
Federal and State laws governing the practice of pharmacy which
include, among others, requirements for proper storage and handling of
prescription drugs, record keeping, and other consumer protections
including safeguards on patient privacy and confidentiality of medical
records.
The online pharmacy would be required to provide to the Secretary
and relevant State boards of pharmacy, prior to launching an online
site, a notification containing the information required to be posted
on the site and assurances of compliance with the requirements of the
bill. The online pharmacy also would be required to post on its website
a declaration that this notification has been made and to post
information about the business, including the name of the pharmacy as
it appears on its State license(s), the street address of its principal
place of business, the name and licensing information of the pharmacist
in charge, and a phone number where consumers can contact a pharmacist
with questions or concerns.
If the online pharmacy failed to comply with any requirement, the
Secretary, after providing notice and an opportunity for a hearing,
could prohibit the pharmacy from displaying the declaration. Violators
would be subject to substantial civil money penalties. Finally, States
would be authorized to bring civil actions against online pharmacies
for violations of these requirements.
This bill would fill gaps in current consumer protection and
enforcement authority. The compliance and disclosure requirements for
online pharmacies would afford substantial public health benefits and
provide enhanced tools for law enforcement. Legitimate online
pharmacies could be much more easily distinguished from illegal online
pharmacies. Consequently, enactment of this bill would enhance consumer
safety and confidence in the Internet, and level the playing field for
legitimate online pharmacies by reducing illegal competition.
conclusion
Mr. Chairman, online shopping for pharmaceutical products clearly
provides many benefits for consumers, however, it also has a number of
significant risks. Additionally, the nature of Internet technology
presents law enforcement and policy makers with unique challenges. FDA
is grappling with the challenges posed by online drug sales and with
our need to carefully balance consumer access to information and
products with protecting the public health. We are adapting our
compliance and enforcement techniques to the new electronic marketplace
and we will continue to evaluate what changes in our procedures,
regulations, or the law might be appropriate. We want to ensure, as
much as possible, that the protections afforded to consumers who
purchase drugs from their corner drugstore are extended to consumers in
the electronic marketplace.
We look forward to working further with Congress on this important
issue, and I would be happy to answer any questions you may have.
Mr. Upton. Thank you.
Mr. Posner.
TESTIMONY OF ETHAN M. POSNER
Mr. Posner. Mr. Chairman and members of the subcommittee,
good morning. On behalf of the Department of Justice, I
appreciate the invitation to appear today and address the
important issue of online drug sales.
In approaching this issue and in enforcing the law in this
area, the Department has tried to strike a balance between
protecting the public from the dangers of online drug sales
without undermining the benefit the Internet provides to
consumers.
In my opening statement I will briefly highlight some of
the Department's accomplishments in this area over the past 12
months.
Mr. Chairman, first, we have, just in the last 12 months,
filed at least ten cases involving online drug sales, seven
criminal and three civil. Two of these criminal cases very
recently resulted in convictions. Both involved the sale of
prescription drugs online.
In the first case, prosecuted by our United States
Attorneys Office in Tampa, a jury just yesterday convicted two
individuals of distributing and conspiring to distribute
Depranol without a prescription and with the intent to defraud
or mislead. This prescription drug was sold on web sites and by
mail in the United States and abroad. The jury found multiple
violations of the Federal Food, Drug, and Cosmetics Act and
other Federal laws.
In the second case, the United States Attorneys Office for
the District of Hawaii obtained a guilty plea from an
individual for selling Viagra, a prescription drug, over the
Internet without a prescription. This guilty plea was obtained
exactly 1 month ago.
In addition to these two convictions, we have at least five
other indicted criminal cases in various stages involving
online drug sales. Some cases have been indicted recently,
another case is in the middle of trial as we speak. These cases
involve the sale of prescription drugs and controlled
substances on the Internet. The drugs involved range from Fen-
Phen to GBL and GHB, the so-called ``sex drug,'' to unapproved
dietary supplements, to marijuana, to nitrous oxide.
In addition to the criminal cases, Mr. Chairman, we have
filed at least three civil cases in the last year involving the
sale of online drugs. In addition to the cases we have filed in
court, we have opened at least 30 criminal investigations
involving the sale of drugs on the Internet; approximately 20
of these cases involve the sale of prescription drugs by online
pharmacies. These 20 cases, which encompass at least 60
different web sites, were all opened in the past 12 months.
In addition to bringing criminal and civil cases, and
supervising active investigations, the Department of Justice
has spent considerable time in the past year analyzing the law
as applied to online drug sales, building the blocks for future
convictions and future prosecutions.
We have held training sessions for our prosecutors and
agents on Internet crimes generally and Internet drug cases in
particular. We have continued to train our agents on how to
investigate computer crimes, including online drug sales,
again, building the blocks for future cases and future
convictions. Also in the past year we have coordinated and
reached out to other Federal and State agencies regarding
online pharmacy cases. We have hosted interagency coordination
meetings on this issue. We have met with State medical pharmacy
boards, we have met with State prosecutors. We have entered
into alliances with State prosecutors. We have worked with
State enforcement authorities to make arrests, execute search
warrants, and seize dangerous and unlawful products that were
being sold on the Internet.
We have sent enforcement alerts on at least two occasions
to the National Association of Attorneys General regarding
online drug sales. We have offered the assistance of the Drug
Enforcement Agency, the Federal Bureau of Investigation and our
own prosecutors to prosecute these cases and we have done all
of that in the past 12 months.
We have also begun to address the difficult issues
associated with drug sales by foreign web sites. We have
increased our efforts to cooperate with authorities abroad
regarding the global problems associated with the use of the
Internet to sell prescription drugs and controlled substances.
And, Mr. Chairman, we have a suggestion we hope to discuss
with Members of the committee on how current law can be amended
to give the Department additional authority to enjoin and stop
the transfer and dissipation of funds to and from those who
operate illegal foreign and domestic online pharmacy sites.
In short, Mr. Chairman, although there is much to be done,
the Department of Justice has made considerable progress on
this issue in the past year. We are bringing cases, we are
obtaining convictions, we are investigating cases, and we look
forward to working with our investigative partners at the
States, at FDA, at DEA, and Customs to bring more cases in the
future.
Thank you for the opportunity to present the views of the
Department on this important topic. We look forward to working
with you on this issue.
[The prepared statement of Ethan M. Posner follows:]
Prepared Statement of Ethan M. Posner, Deputy Associate Attorney
General, U.S. Department of Justice
Mr. Chairman and Members of the Subcommittee, Good Morning. I am
Ethan Posner, Deputy Associate Attorney General at the Department of
Justice. On behalf of the Department, I appreciate the invitation to
appear today and describe the many efforts underway at the Department
to address the sales of pharmaceuticals and other drugs on the
Internet.
Like the Subcommittee and the other agency representatives who
appear before you today, the Department of Justice recognizes that
online drug sales present many important questions for enforcement
authorities. On the one hand, Internet prescription drug sales have the
potential to provide significant societal benefits, particularly to
those such as the elderly and those living in rural communities who
have difficulty going to traditional ``brick and mortar'' pharmacies.
Online sales of prescription medications also may foster price
competition, again to the benefit of consumers. On the other hand, the
risks posed by online drug sales are obvious. First, online pharmacy
sites often circumvent the traditional protections built into the
doctor-patient relationship, such as a diagnosis based on a physical
examination. Second, consumers may not be able to confirm the
legitimacy of online pharmacies, many of which might be located
overseas, increasing the risk that the drugs are mislabeled or
counterfeit. Therefore, the Department of Justice has attempted, in
establishing its enforcement strategy, to set a course that will
protect the public from the dangers of online drug sales without
undermining the benefits the Internet provides to consumers.
a. the role of the department of justice in internet drug sales
The Department of Justice--through its Civil and Criminal
Divisions, local United States Attorney's Offices, the Federal Bureau
of Investigation, and other components--enforces numerous consumer
protection statutes for which the primary regulatory authorities are
administrative agencies such as the Food and Drug Administration (FDA),
the Drug Enforcement Administration (DEA), and the Federal Trade
Commission (FTC). Over the past year, the Department has analyzed
carefully the application of these statutes to online drug sales.
1. Legal Theories: Enforcement under the Food, Drug, and Cosmetic Act
The Food, Drug and Cosmetic Act (FDCA) generally prohibits the
manufacture and distribution of misbranded and adulterated drugs, thus
requiring drugs to be labeled accurately and handled in ways that
prevent them from becoming contaminated or misused. In 1951, to protect
the public from abuses arising from the sale of potent prescription
drugs, and to relieve retail pharmacists from burdensome and
unnecessary restrictions on the dispensing of over-the-counter drugs,
Congress established the system that currently governs the sale of
prescription drugs. See 21 U.S.C. Sec. 353(b)(1). Under that system,
Congress relied on two health professionals--the patient's physician
and pharmacist--to protect patients from the knowing or accidental
misuse of medicines that are toxic or that have the potential for
causing harm.
Accordingly, drugs that are considered prescription drugs under the
FDCA may be distributed only with a valid prescription under the
professional supervision of a licensed practitioner. See 21 U.S.C.
Sec. 353. A prescription drug is considered ``misbranded'' if it is not
dispensed pursuant to a valid prescription in accordance with 21 U.S.C.
Sec. 353(b). Introduction or distribution of misbranded drugs into
interstate commerce violates the FDCA. 21 U.S.C. Sec. 331(a). An online
pharmacy that provides prescription drugs without a prescription would
therefore be in violation of this requirement. Legal action to curtail
such conduct may be brought criminally or civilly. For a felony
conviction, the government must establish that the defendant acted with
an intent to defraud or mislead either the consumer or the government,
or that the defendant is a repeat offender. Civil cases and misdemeanor
prosecutions do not require proof of an intent to defraud or mislead.
For online pharmacies that offer online diagnosis, prescription,
and distribution of medication, the issue is whether the online
interaction results in a valid ``prescription'' under 21 U.S.C.
Sec. 353(b). This is a significant issue for online prescription drug
sales based solely or primarily on an online questionnaire completed by
the consumer. The legality of this practice often will turn on whether
the relevant state law considers such a sale a valid prescription. If
not, the online pharmacy may be found to be distributing ``misbranded''
medication in violation of the FDCA. In this regard, it is significant
that Kansas, Maryland, and Washington have taken legal action against
doctors, websites, and pharmacies that dispense prescription drugs over
the Internet based upon an online questionnaire. We also recognize that
the State Federation of Medical Boards has adopted the position that
the ``[p]rescribing of medication by physicians based solely on an
electronic medical questionnaire clearly fails to meet an acceptable
standard of care and is outside the bounds of professional conduct.''
2. Other Enforcement Theories
Apart from enforcement under the FDCA, the Department can rely on
other legal authorities. For instance, the Controlled Substances Act
prohibits the dispensing of a controlled substance without a valid
prescription. See 21 U.S.C. Sec. Sec. 822, 829, and 841. A regulation
issued by DEA defines ``prescription'' in a way that may exclude
``prescriptions'' for controlled substances that are obtained through
an online questionnaire. Relying on these statutes, a grand jury in
Maryland last year returned a 34-count indictment against a physician
for dispensing several controlled substances, including phentermine and
fenfluramine, without a legitimate medical purpose.
Another potential avenue for enforcement is the Federal Trade
Commission Act (FTC Act), 15 U.S.C. Sec. 45 et seq., under which the
Department is authorized to proceed with a civil enforcement action in
conjunction with the FTC. The FTC Act protects consumers from unfair or
deceptive acts or practices. Many online pharmacies operate by making
important representations to consumers. For example, the FTC has found
websites that advertise that a physician reviews each application to
purchase prescription medications. To the extent these representations
are false or deceptive, or if a website operator sells prescription
drugs and represents that the drugs are safe and effective without
disclosing their possible adverse effects, then such operators may be
engaging in unfair or deceptive trade practices.
Indeed, some online pharmacies may suggest that completion and
analysis of an online medical questionnaire is the equivalent of a
visit to a doctor's office. In our view, in almost all circumstances,
that is not the case. In fact, some prescription drugs, such as Viagra,
have package insert labeling that recommends that a physical
examination be performed before prescribing. Because some of these
websites appear to provide deceptive information, these sites may
violate the FTC Act, and thereby subject the website operator to a
civil enforcement action.
The Department can also pursue similar theories under the federal
mail and wire fraud statutes whenever an online or other pharmacy
defrauds consumers in any way. Whether such a suit would be criminal or
civil, under 18 U.S.C. Sec. Sec. 1341, 1343, or 21 U.S.C. Sec. 332,
would depend on the precise facts of the case and the evidence of
fraudulent intent. Schemes involving the sale of drugs or health
products over the Internet may violate other related federal criminal
laws. Some websites offer to bill private or public health care
programs or insurers for a ``doctor's'' advice or for the price of the
drug or product itself. If any false representations are made to the
insurer to obtain payment, violations of a number of federal criminal
laws may occur, and the civil fraud laws also may be implicated.
3. The Department's Experience In Related Areas
Although the Internet and online prescribing are recent phenomena,
the Department has prosecuted similar conduct perpetrated using
different media. In the 1950's, for example, the Department prosecuted
doctors and pharmacists who sold prescription and other drugs by mail
or to undercover agents without any prior examination or diagnosis. We
have also brought many cases over the years against doctors and
veterinarians for dispensing drugs without a valid prescription. More
recently, the Department prosecuted several cases in which doctors
prescribed and distributed anabolic steroids to athletes and
entertainers. The evidence showed that they distributed steroids not to
treat medical conditions, but for purely cosmetic purposes, and that
they did not examine the patients before dispensing the steroids. In
these cases, we argued successfully that under section 353(b) of the
FDCA, one may distribute prescription drugs only if (1) there is a bona
fide doctor-patient relationship, and (2) the distribution is pursuant
to a course of individualized treatment for a legitimate medical
purpose.
b. current doj enforcement activity, training, and coordination
1. Indictments, Investigations
Just in the past year, the Department of Justice, working with its
investigative partners at DEA, FBI, and FDA, has filed several cases
involving sales of drugs on the Internet. In addition to the cases we
have filed in court, the Department has opened, again in the past year,
approximately 30 cases involving the sale of drugs on the Internet, of
which approximately 20 involve the sale of prescription drugs by online
pharmacies. Those 20 investigations encompass at least 60 different web
sites.Our filed cases include:
In July 1999, the United States Attorney's Office in Maryland
obtained the indictment of former Internet diet doctor Pietr
Hitzig on 34 counts of illegal drug distribution. The
indictment charges that between 1996 and 1998 Hitzig ran a
Baltimore-based Internet practice through which he provided
controlled substances such as phentermine and fenfluramine to
patients worldwide based on their e-mail requests alone.
On September 30, 1999, a grand jury in the Middle District of
Florida returned a thirty-one count indictment against Jose A.
Perez Menchaca, Paul Cabaniss, and Bondtech-Klebrig Corporation
alleging Internet sales of the unapproved drug gamma
butyrolactone (GBL), an ingredient of Gamma hydroxy butyrate
(GHB). A co-conspirator pled guilty to related charges last
December.
GHB is a black-market drug sold illicitly throughout the country
for its alleged ability to cause euphoria, induce sleep,
increase sexual arousal, and increase muscle mass. GHB
consumption has caused serious adverse health effects,
including vomiting, sudden and uncontrollable onset of sleep,
uncontrollable shaking, coma, convulsions, and death. The
indictment charges that Menchaca sold ``GHB kits'' from 1996 to
October 1998. The criminal schemes were allegedly facilitated
by computers through electronic communications and the
Internet: According to the indictment, the defendants used a
website to both advertise and solicit orders from customers
within the United States and from around the world; used
various aliases to pose as a ``satisfied'' customer while
touting their GHB kits on computer ``newsgroups;'' and used
email to communicate with each other and to advise
international customers how to avoid detection of the kits'
contents by foreign Customs.
On December 9, 1999, the United States Attorney's Office in
Hawaii charged Kent Aoki Lee with one count of selling Viagra
over the Internet. The indictment also charged the defendant
with unrelated fraudulent activity. The defendant offered
Viagra for sale through a website in the Japanese language. He
did not require any form of prescription. On April 25, 2000,
the defendant pled guilty to one count of wire fraud and one
count of dispensing a misbranded drug.
On December 10, 1999, the Department filed a civil action to
enjoin a purported dietary supplement manufacturer from
distributing products that are actually promoted for the cure
or treatment of disease. United States v. Lane Labs-USA, Inc.,
and Andrew J. Lane, No. 99-5782 (D.N.J.). The products,
including shark cartilage ``dietary supplement,'' a
glycoalkaloid skin cream, and a rice bran extract ``dietary
supplement,'' are promoted through Internet links and other
sources as being effective in treating or preventing cancers
and HIV infection. The complaint seeks to enjoin the defendants
from engaging in interstate commerce in these products, or any
other products containing the same or similar ingredients,
unless and until they are approved as drugs by the FDA.
On February 11, 2000, the United States Attorney's Office in
the Eastern District of Louisiana obtained an indictment in a
case involving the Internet distribution of marijuana. United
States v. Aronov and Arizona Company Medical. Indictment
followed a DEA investigation into the illegal sale of ``medical
marijuana'' by Michael David Aronov via the Internet. Aronov
and his business, Arizona Company Medical, were indicted on 7
drug distribution counts and 1 count of placing a written
advertisement in a publication, the Internet, for the purpose
of seeking, or offering illegally to receive, or distribute
marijuana.
On March 2, 2000, the Federal District Court for the Eastern
District of Missouri entered a preliminary injunction barring
Syntrax Innovations, Inc., from manufacturing or distributing
any product containing the thyroid hormone tiratricol. Prior to
this order, the company had been marketing over the Internet a
tiratricol-containing product called ``Triax'' as a dietary
supplement for weight loss. The use of tiratricol can cause
hyperthyroidism, which can lead to hypertension, insomnia,
nervousness, cardiac arrhythmia, heart attacks, and strokes.
The preliminary injunction bars Syntrax from selling any
tiratricol products during the pendency of the litigation.
On April 20, 2000, the Department obtained a preliminary
injunction against Christian Bros. Contracting Corp. and its
president, Jason Vale, prohibiting them from making or
distributing amygdalin, Laetrile, ``Vitamin B-17,'' or apricot
seeds during the pendency of the action. We brought suit after
learning that the defendants were defrauding thousands of
vulnerable cancer victims by advertising and selling apricots
seeds and Laetrile products as a cure for cancer through
numerous Web sites and millions of ``spam'' e-mails. On April
24, the Wall Street Journal discussed the impact this ruling
may have on other Internet purveyors of unapproved drugs, in an
article entitled ``Judge Orders Online Laetrile Vendor to Quit
Business, Signaling U.S. Stance.''
On May 17, 2000, the proprietor of an Internet-based
``virtual'' retail business was indicted by a federal grand
jury in Roanoke, Virginia, for the interstate marketing of the
misbranded drug, nitrous oxide, a substance blamed for the
death of a Virginia college student. The grand jury charged the
defendant (of Tempe, Arizona) with selling nitrous oxide to
customers in the Western District of Virginia via the web site
BONGMART.com, which the defendant operates. The web site sold
nitrous oxide and other drug paraphernalia.
Currently, a case involving individuals who solicited
customers to buy unapproved drugs over the Internet is on trial
in Baltimore. This case, which was indicted in June 1999, is
likely to go to the jury soon.
Just yesterday, a jury in the Middle District of Florida
convicted two individuals of distributing prescription drugs in
interstate commerce without a prescription with the intent to
defraud and mislead. One individual was also convicted of
distributing deprenyl, a misbranded prescription drug. The
product ``Liquid Deprenyl Citrate'' was offered for sale on the
Internet as a ``fountain of youth'' drug and for a long list of
other diseases.
2. Training and Education
With the array of new and challenging issues posed by unlawful
conduct on the Internet, it is critical to educate and train our
prosecutors and agents about the applicable legal principles and the
techniques and tools required to investigate unlawful online conduct.
When someone sells drugs on the street corner, law enforcement is
familiar with the steps required to investigate the crime. Similarly,
when someone promises in a newspaper advertisement that he has the cure
for cancer or AIDS, law enforcement typically know how to identify the
responsible individual or entity. But when a web page makes similar
claims, the methods for determining who is making the claim, where that
person might be located, and how to obtain and preserve evidence
present new challenges to law enforcement. For this reason, the
Department of Justice has embarked on an active and wide-ranging
training and education program. As part of our effort, computer crimes
specialists and coordinators have been designated in each United States
Attorney's Office. Other activities include:
In December 1999, the Department's Office of Legal Education
conducted an Internet Fraud Seminar. This seminar, presented
jointly with the National District Attorneys Association,
addressed such topics as investigative approaches to Internet
fraud, obtaining electronic evidence (for example, search
warrants and the Electronic Communications Privacy Act), the
online investigative principles and their application to
Internet fraud investigations, and likely defenses in Internet
fraud prosecutions.
In February 2000, the Department's Office of Legal Education
sponsored a Computer Crimes and Electronic Evidence Seminar.
This seminar, which will be repeated in July, assists attorneys
in the prosecution of information technology crimes. Topics
covered include telephone networks and telephone switching,
investigative approaches to computer crimes, obtaining and
using electronic evidence, Electronic Communications Privacy
Act, data forensics and analysis, and online investigations.
In February 2000, the Department's Office of Legal Education
also sponsored a presentation on Internet Prescription Sales at
the Advanced Health Care Training seminar for experienced
Assistant United States Attorneys. This course instructed
prosecutors on how to investigate an Internet pharmacy case,
how to charge an Internet pharmacy case, how to structure the
agent's investigation, how to analyze the evidence, and what
specific charges could be filed against rogue Internet
pharmacies, web-sites, and prescribing professionals.
On several occasions in the past year, the Department, acting
through the Executive Office for United States Attorneys, has alerted
our 94 United States Attorney's Offices about online drug sales. We
have also provided legal support about online drug sales to these
offices. The Department also educates its attorneys and agents through
the Health Care Fraud Working Group, which consists of experienced
health care fraud specialists from the FBI, United States Customs
Service, State Attorneys General Offices, the Department of Health and
Human Services, and Assistant United States Attorneys from across the
country.
3. Coordination with Other Federal and State Agencies
One of the most significant challenges we face in this area is
coordination of enforcement policies and initiatives among a variety of
federal, state, and other entities. We rely heavily, for example, on
the hard work and dedication of federal and state investigating
agencies such as the FDA. For this reason, just in the past year, we
have hosted meetings of the Online Sales of Drugs and Medical Products
Interagency Working Group, which has convened at least three times in
the past year. That group consists of representatives from DOJ, DEA,
FBI, FDA, the Customs Service, the Postal Inspection Service, the
Department of Health and Human Services, the Department of Defense and
the Defense Criminal Investigation Service, the National Association of
Attorneys General, the Attorney General's offices of Kansas and
Pennsylvania, and the Texas Department of Health. We have also hosted
meetings of a subgroup of that Working Group to more closely coordinate
law enforcement actions.
Finally, the Department coordinates with state law enforcement
agencies and investigators. Just in the past six months, we have
discussed online pharmacy enforcement issues with representatives from
State Boards of Medicine and Pharmacy in Arizona, California, Texas,
Virginia, North Carolina, and Ohio. Last month, we sent an online
pharmacy ``alert'' to the Attorneys General of all 50 states, the
National Association of Attorneys General (NAAG), the National District
Attorney's Association, the National Sheriff's Association, and the
International Association of Chiefs of Police. That alert highlighted
the Department's concerns over online drug sales and offered the
assistance of the Drug Enforcement Administration and the Department of
Justice in investigating and prosecuting such cases. Department lawyers
also participate in the NAAG working group that deals with online
pharmacy issues.
This federal-state coordination recently led to a very successful
crackdown on the ``date rape'' drug GHB, which was added as a ``List I
Chemical'' under the Controlled Substances Act by the Hillory J. Farias
and Samantha Reid Date-Rape Drug Prohibition Act of 1999. In February
2000, the California Department of Justice sought assistance in an
investigation of the sale of GBL, a key GHB ingredient, via the
Internet to persons in California. The Department of Justice, DEA, and
the California Department of Justice combined resources to investigate
an individual in Arizona who allegedly marketed GBL on the Internet
under the name ``Inova Products.'' On March 15, two days after the
federal scheduling of GHB, the subject's premises were searched under a
federal search warrant. The individual was arrested, extradited to
California, and is being held in state custody. Inova allegedly sold
GBL in 55-gallon drums that contained more than 98,000 doses each, with
a street value of $5 per dose, or a value of almost $500,000 per drum.
On March 15 and 16, 2000, California agents made controlled deliveries
of 55-gallon drums of GBL to persons located in Orange County and San
Mateo County, California. Two suspects were arrested and charges are
pending. On March 28, federal agents arrested another Inova customer, a
registered sex offender, after he accepted a controlled delivery of a
55-gallon drum of GBL in Florida. In April 2000, California agents
arrested five additional Inova customers. Thus far, this effort has
resulted in the seizure of more than 400 gallons of GBL and the
identification of six GHB labs in three states.
Another example of federal and state coordination is the alliance
entered into recently by the Kansas Attorney General's Office and the
U.S. Attorney's Office for the District of Kansas. In addition to these
two offices, the alliance includes representatives from the Kansas
Pharmacy Board, Kansas Board of Healing Arts, Consumer Protection
Division, the Medicaid Fraud and Abuse Division, and the Food and Drug
Administration's Office of Criminal Investigations. In this coalition,
state authorities have taken the lead in dealing with online pharmacies
that may not satisfy state regulations but are attempting to offer
legitimate pharmaceutical services. The Kansas authorities have found
that these entities will generally conform their conduct to satisfy
state regulations after notification. For its part, the U.S. Attorney's
Office is assisting the state with the identification of individuals,
including doctors responsible for illegal online pharmacy sites. In
turn, Kansas authorities are taking legal action against doctors,
websites, and pharmacies that dispense prescription drugs over the
Internet in violation of state law on grounds that ``prescriptions''
issued based on online interaction are not valid.
c. the internet prescription drug sales act of 2000
The Department of Justice supports the Internet Prescription Drug
Sales Act of 2000, transmitted by Secretary Shalala to Speaker Hastert
on May 2, 2000. As the FDA explains in its testimony, the Act would do
the following:
require online pharmacies to be licensed in each State in
which they operate or to which they deliver prescription drugs;
require compliance with all applicable Federal and State laws
governing the practice of pharmacy, including those laws that
require proper storage and handling of prescription drugs,
proper record keeping, and other consumer protections;
require online pharmacies to post on their web site a notice
of their physical location, a list of States in which the
online pharmacy is licensed to dispense prescription drugs and
a list of applicable license numbers, the name, degree, and
license of the pharmacist in charge; a telephone number for
contacting a licensed pharmacist associated with the website,
and a statement that the online pharmacy shall dispense
prescription drugs only upon a valid prescription by a licensed
practitioner.
Under the Act, if the online pharmacy fails to comply with these
requirements, the FDA could seek to prohibit the pharmacy from selling
drugs online, after providing notice and opportunity for a hearing.
Also, the Justice Department could seek criminal sanctions, civil money
penalties, or an injunction from a federal court. The Act also provides
the Justice Department with subpoena authority to obtain important
records in connection with investigations into violations of the Act.
Finally, the states are also authorized to bring civil actions against
online pharmacies for violations of the Act.
In addition, the Act would provide consumers with the same level of
protections they enjoy in traditional ``brick and mortar'' pharmacies.
When an offline consumer walks into a traditional pharmacy, for
example, he or she can readily identify the location of the pharmacy
and the name(s) and license(s) of the pharmacist(s), all of which help
to assure the consumer that the pharmacy satisfies the relevant health
and safety requirements. Under the Act, online pharmacies will have to
provide the same information to consumers and investigators.
Like the FDA, the Department of Justice believes that the Act fills
an important gap in current regulatory and enforcement authority. One
of the most significant regulatory and investigative challenges in this
area is the difficulty in identifying the name and location of the
online pharmacy, a telephone number where the operator or pharmacist
can be reached, and the State licensure information of the pharmacist
in charge. The compliance requirements of the Act would require that
online pharmacy sites provide this critical information under threat of
civil or criminal sanction, benefitting both consumers and enforcement
authorities.
d. the challenge of foreign online pharmacy sales
An increasing percentage of online drug distribution is conducted
by firms operating outside of the United States. Some of these off-
shore sites sell prescription drugs approved by the FDA without a
prescription; some sites sell drugs that have not been approved for
sale in the U.S.; and other sites sell drugs that are classified as
Controlled Substances in the United States.
Under U.S. law, it is illegal for a foreign-based online pharmacy
to sell prescription drugs to consumers in the U.S. without a
prescription. Prescription drugs dispensed within the U.S. without a
valid prescription are misbranded under the FDCA. It is also illegal
for a domestic or foreign online pharmacy to sell drugs not yet
approved by the FDA. Likewise, it is illegal for an off-shore web site
to sell controlled substances to consumers in the United States.
Indeed, the foreign sale of pharmaceutical controlled substances to
U.S. consumers via the Internet violates the United Nations Convention
Against Illicit Traffic in Narcotics and Psychotropic Substances.
Similarly, it is illegal under U.S. law for a consumer to order or
obtain a controlled substance from an off-shore pharmacy for delivery
in the U.S. If the operator of an off-shore online pharmacy that
illegally sold controlled substances or unapproved drugs to U.S.
residents enters the United States, he or she could be prosecuted in
the U.S.
The difficulties inherent in any investigation and prosecution of
an online pharmacy are magnified when the web site, the dispensing
pharmacy, and the operator(s) are located overseas. But there are
several actions that government agencies are taking and can take to
address the investigative challenges posed by off-shore sales of drugs
through the Internet.
First, the United States must continue to obtain the cooperation of
foreign governments in reducing the use of the Internet to commit
illegal activity. The United States already is working with other
nations to address this problem. With the support and encouragement of
the United States, the Council of Europe is drafting a Cybercrime
Convention, which will define cybercrime offenses and address such
topics as jurisdiction, international cooperation, and search and
seizure. The Group of Eight (``G-8'') nations are also working to
enhance the abilities of law enforcement to investigate and prosecute
computer and Internet-facilitated crimes; a G-8 working group recently
established a 24-hour/7-day-a-week network of high-tech points of
contact in each of the G-8 nations and in a number of non-G-8 nations.
These and other instances of international cooperation will benefit the
investigation and prosecution of many international cybercrimes,
including those involving off-shore Internet pharmacies.
Next, the Justice Department and other enforcement authorities can
work with American financial institutions to reduce the flow of money
to these foreign web sites and their operators. Like domestic online
pharmacies, off-shore online pharmacies often rely on credit card
transactions processed by U.S. banks and credit card networks. Federal
agencies already work cooperatively on occasion with financial
institutions and credit card companies to investigate transactions that
are made in furtherance of illegal activity. If enforcement agencies
and financial institutions can stop even some of the credit card orders
used for the illicit sale of controlled substances or prescription
drugs, then the operations of some of these ``rogue'' online pharmacies
may be disrupted significantly.
To enhance the Department's ability to act effectively in this
area, it is important for prosecutors to have the option of seeking
injunctive relief from a court. Under 18 U.S.C. Sec. 1345, the
Department has the authority to seek injunctive relief against ``any
person'' who withdraws, transfers, removes, or dissipates any property
(including money) traceable to a violation of a defined list of banking
law and health care fraud offenses. See 18 U.S.C. Sec. 1345(a)(1)-
(a)(2)(B). The Department has relied on section 1345 to enjoin the
dissipation of assets from particular bank accounts or other types of
accounts. We recommend that 18 U.S.C. Sec. 1345 (and the
Administration's online pharmacy bill) be amended so that the
Department can, where appropriate, seek to enjoin certain financial
transactions traceable to unlawful online drug sales. Such an amendment
would provide the Department with an important weapon to combat the
harms posed by off-shore (and domestic) online pharmacies. We would be
happy to work with Members of Congress on drafting such an amendment.
We would also welcome the opportunity to work with Congress to
formulate additional strategies to address the problem of violative
off-shore (and domestic) Internet pharmacies.
Mr. Chairman, thank you for the opportunity to present the views of
the Department of Justice on this important topic. I would be pleased
to answer any questions that you might have.
Mr. Upton. Thank you very much and thank you for that offer
to help as well.
Ms. Durant.
TESTIMONY BETSY DURANT
Ms. Durant. Thank you, Mr. Chairman and members of the
subcommittee. I appreciate the opportunity to present U.S.
Customs' efforts to prevent illegal importation of
pharmaceuticals and other dangerous drugs into the U.S. via the
Internet.
I brought with me today a sample on the table and some
pictures of pharmaceutical seizures made at our international
mail branches. Before I begin to explain what Customs does to
combat the importation of illicit pharmaceuticals, I believe
it's important to relate Customs' core mission activities. The
U.S. Customs Service is the protector of our Nation's borders.
We are vigilant against the ever-present threats of narcotics
smuggling, money laundering, and unwarranted threats against
American industry.
On a typical day, Customs officers process 1.3 million
passengers and nearly 350,000 vehicles at ports and border
crossings around the country. They seize nearly 4,000 pounds of
narcotics and about a million dollars in ill-gotten proceeds.
Customs also protects domestic industries from unfair
competition; keeps tainted and spoiled products from making
their way to consumers; and defends intellectual property
rights and deters the corrosive effects of economic fraud.
To this end, U.S. customs understands the dangers of
unregulated and illicit pharmaceuticals entering our Nation.
Not only is there a potentia danger to those ingesting these
drugs, but there is a clear and economical danger to the
domestic pharmaceutical industry. Many of the pharmaceuticals
that are smuggled into our Nation lack the quality control that
most Americans rely upon.
The numbers of pharmaceuticals seized by U.S. Customs
entering the U.S. are staggering. In 1999, seizures soared from
2,139 in 1998 to nearly 10,000 in 1999, an increase of 450
percent. Fiscal year 2000 seizures are on pace to equal or
surpass 1999 levels.
The Customs Service has recognized the unique challenges of
enforcement that comes with the information age. Customs has
recently transferred ten special agents from the field to the
Customs CyberSmuggling Center in Fairfax, Virginia. The
CyberSmuggling Center was established in 1997 primarily to
combat online child pornography and coordinate computer
forensic examination. However, the Internet is now being used
to facilitate a variety of crimes investigated by Customs
including intellectual property rights, illegal sale of
cultural property, and importation of a variety of prohibited
merchandise including pharmaceuticals.
In July 2000 the CyberSmuggling Center will establish a
Cyber crimes unit to compliment the existing international
child pornography unit and computer forensic unit. The
CyberSmuggling Center, C3, can play a significant role in
addressing this issue. Upon the establishment of it, the C3
will proactively search the Internet to identify foreign-based
targets marketing prohibited drugs to the U.S. Agents will use
a variety of investigative techniques unique to Internet
investigation to identify individuals and businesses utilizing
the Internet web sites or e-mail to sell prohibited drugs.
The U.S. Customs Service staffs 14 international mail
branches at various postal facilities. These international mail
branches are located at various ports or entry with high
volumes of cargo. Customs' 14 facilities process hundreds of
millions of flats and parcels per year. With less than 220
Customs personnel, personnel available at these facilities, we,
as with all shipments, must take a risk management approach.
Resources are such that we must make conscious decisions to
look at some mail, but not all mail. Most often this is done by
choosing to inspect mail from countries that provide a higher
threat for illegal activity.
Customs feel that our current manual targeting is a catch
as catch can approach and provides little assurance that we can
successfully achieve our enforcement mission with respect to
the interdiction of prohibited pharmaceuticals. Customs also
has several ongoing investigations involving U.S. persons
operating foreign pharmaceutical web sites. All of these
investigations are being worked jointly with the Food and Drug
Administration's Office of Criminal Investigation.
The CyberSmuggling Center participates with FDA, DEA, and
the Postal Service in an informal working groups to work
together on these issues.
To make the most of this enforcement loop, it is imperative
that the Federal agencies responsible for stopping the
importation of pharmaceuticals, namely Customs and the Food and
Drug Administration, work closely together at the point of
entry.
For example, often pills being smuggled into the U.S. have
been stripped of all packaging and labeling, to enable them to
be concealed in innocuous items. Upon discovery, it can be
difficult to identify whether or not the pills are prohibited.
The multi-agency effort to identify and determine admissibility
needs to be accomplished with speed, so that if necessary,
further enforcement action such as controlled deliveries can
take place.
Very recently executives and managers from the Food and
Drug Administration and U.S. Customs met to discuss how
together we can streamline our enforcement and interdiction
efforts of illegal pharmaceuticals. In this meeting FDA
promised that they would provide us with uniform guidance that
will assist our field offices in dealing with this difficult
aspect of our mission.
Customs is also working with the Food and Drug
Administration to ensure that as the Internet grows, as a means
for conducting business, the Government will be able to provide
a responsive and effective enforcement Internet driven--
enforcement of Internet driven illicit trade. With the proper
tools interagency cooperation and resources Customs can
facilitate legal international trade and stand poised at
America's frontline, protecting our citizens and Nation's
borders. Thank you, Mr. Chairman.
[The prepared statement of Betsy Durant follows:]
Prepared Statement of betsy Durant, Director, Office of Trade Programs,
United States Customs Service
Good Morning Chairman Upton, Ranking Member Klink and Members of
the Subcommittee. Thank you for the opportunity to present US Customs'
efforts to prevent the illegal importation of pharmaceuticals and other
dangerous drugs into the US via the internet.
Before I begin to explain what Customs does to combat the
importation of illicit pharmaceuticals, I believe it is important to
relay Customs core mission activities. The U.S. Customs Service is the
protector of our Nation's borders. We are vigilant against the ever-
present threats of narcotics smuggling, money laundering, and
unwarranted threats against American industry. On a typical day,
Customs officers process 1.3 million passengers and nearly 350,000
vehicles at ports and border crossings around the country. They seize
nearly 4,000 pounds of narcotics and about a million dollars in ill-
gotten proceeds. Customs also protects domestic industries from unfair
competition; keep tainted and spoiled products from making their way to
consumers; and defend intellectual property rights and deter the
corrosive effects of economic fraud.
To this end, US Customs understands the dangers of unregulated and
illicit pharmaceuticals entering our Nation. Not only is there a
potential danger to those ingesting these drugs but also there is a
clear and economical danger to the domestic pharmaceutical industry.
Many of the pharmaceuticals that are smuggled into our Nation lack the
quality control that most Americans rely upon.
The numbers of pharmaceuticals, both scheduled and non-scheduled
seized by U.S. Customs entering the US are staggering. In 1999,
seizures soared from 2,139 seizures in 1998 to 9,725 in 1999, an
increase of 450%. Most of these seizures involved controlled
substances. Fiscal year 2000 seizures are on pace to equal or surpass
1999 levels.
There is no doubt that the internet is playing a major role in the
increase in illegal pharmaceutical imports. Many web sites offer
assistance on how to order prescription drugs without a doctor's
prescription. Typically these sites, for a fee, provide publications
that list foreign pharmacies in Central & South America, Asia and
Europe that allegedly will ship prescription drugs to the US. In
addition, some overseas individuals advertise in news groups and
conduct their business via Email. A curious consumer who sends an email
will receive an auto-reply price list and information on how to order.
In addition, there are online pharmaceutical web sites that allow for
direct ordering of drugs.
Customs faces many significant interdiction challenges at the point
of entry, primarily in our international mail facilities. The growth of
this challenge is commensurate with the phenomenal growth of the small
package delivery industry. The Express Consignment Industry, comprised
of companies such as FedEX, UPS and DHL, to name a few, has enjoyed
huge growth in their markets since its inception. The Postal Service
also has seen significant increases in the use of its Express Mail
service. Today, the industry sees a continuation for further growth,
not only domestically, but also in the global marketplace. Much of this
growth can be attributed to e-commerce. The consumer is now able to
purchase goods directly from overseas manufacturers or suppliers via
the Internet. As a result, the number of individual shipments sent
through Express Consignment Operators and the U.S. Postal Service will
increase dramatically.
With the shift in this industry, Customs has found itself wrestling
with the way it handles the processing of international mail and
express consignment shipments so that it can provide efficient entry of
legal shipments, while maintaining a strong and effective contraband
interdiction capability.
Customs is under continuing pressure to move shipments quickly, yet
our ability to maintain control of these small parcels is vastly
different between the postal and express consignment environments. The
express industry, with its requirements to provide manifest
information, present outbound shipments for examination, and to
reimburse us for costs of service have enabled us to respond to this
growth while preserving our enforcement mission. However, the lack of
this capability and authority in the Postal setting has hindered
meeting our enforcement goals.
The Customs Service has recognized the unique challenges of
enforcement that comes with the information age. Customs has recently
transferred 10 Special Agents from the field to the Customs
CyberSmuggling Center in Fairfax, Virginia. The CyberSmuggling Center
was established in 1997 primarily to combat online child pornography
and coordinate computer forensic examinations. However, the internet is
now being used to facilitate a variety of crimes investigated by
Customs including Intellectual property rights, illegal sale of
Cultural property and the importation of a variety of prohibited
merchandise including pharmaceuticals. In July 2000, the CyberSmuggling
Center will establish a Cyber Crimes Unit to compliment the existing
International Child Pornography Unit and Computer Forensics Unit.
The CyberSmuggling Center (C3) can play a significant role in
addressing this issue. Upon the establishment of the Cyber Crimes Unit,
the C3 will proactively search the internet to identify foreign based
targets marketing prohibited drugs to the US. Agents will use a variety
of investigative techniques unique to internet investigations to
identify the locations, individuals and businesses utilizing internet
web sites or e-mail to sell prohibited drugs.
In 1999, Thailand emerged as one of the most prolific source
countries for illegal pharmaceutical seizures. Controlled deliveries,
whereby an undercover agent poses as a delivery person, of Thai origin
mail seizures, by the Office of Investigations, often resulted in the
subject admitting to buying the drugs from Thai Web Sites. US Customs
brought this problem to the attention of Thai authorities who upon
looking into the matter discovered that most of the Thai online
pharmacies were violating a variety of Thai laws including, exporting
pharmaceuticals with out an export license and dispensing unauthorized
drugs. In January 2000, Customs agents from the Customs CyberSmuggling
Center and the Customs Attache in Bangkok provided technical assistance
to Thai authorities in the execution of search and arrest warrants
against 7 online pharmacy sites. In all, 22 Thai citizens were arrested
and 2.5 million pharmaceutical dosage units were seized. As a result,
Thai seizures have decreased dramatically.
Despite this, analysis of seizure volumes for the first half of
this fiscal year indicate that the overall 1999 figures were not a
short term variance; the problem is persistent. While the highly
successful Thai operation did result in an initial drop in seizures,
data for the past three months indicates that seizures are again on the
rise, mirroring the FY 1999, pre-Thai rate. This only highlights the
very power and problem, of the Internet. Electronic Commerce is
essentially borderless, and web sites can be closed down and reopened
in very short order and with very little difficulty. Countering this
aspect of Internet crime at the point of entry requires three critical
elements: automation, consistent and uniform interagency action, and
resources.
The U.S. Customs Service staffs 14 International Mail Branches at
various Postal facilities across the United States. These International
Mail Branches are located at ports of entry with high volumes of cargo,
and service more than one mode of transportation. Customs' 14
facilities process hundreds of millions of flats and parcels per year.
With less than 220 Customs personnel at these facilities, we, as with
all shipments, must take a risk management approach to our day to day
operations. Resources are such that we must make conscious decisions to
look at some mail, but not all mail. Most often this is done by
choosing to inspect mail from countries that provide a higher threat
for illegal activity. While the Postal Service is required to present
all the international mail to Customs, the selection or targeting
process for mail is entirely manual.
Customs does not encounter the same enforcement difficulties with
the Express Consignment Operators. In exchange for reimbursed expedited
clearance during non-traditional business hours and at locations where
we would not ordinarily provide service, the couriers agreed to
regulations that require them to integrate sophisticated automation
systems into their daily operations. Furthermore, advance manifest
information is required for all Express Consignment shipments so that
Customs may pre-screen these shipments before arrival. The availability
of advance, automated manifest information allows Customs to both
expedite the automatic release of lower risk shipments, and at the same
time to maximize the effectiveness of our targeting of higher risk
shipments. Specifically, the availability of such data allows Customs
to capitalize on intelligence developed by our Office of Investigations
and other members of the domestic and international law enforcement
community, knowledge of past transgressors, and analyses of smuggling
trends and shipment patterns.
Conversely, over 95 percent of the Postal Service's international
mail parcels are not individually manifested. By law, Express
Consignment Operators are required to maintain extensive records for
each shipment or transaction solely for Customs review, whereas the
Postal Service is under no such obligation to keep these records.
Prevention and point of entry interdiction aspects of the Internet
pharmaceutical issue are inextricably linked. Seizures generate
intelligence used by investigators in their prevention efforts, and
intelligence generated by investigators may be used to assist in
interdiction.
Customs also has several ongoing investigations involving US
persons operating foreign pharmaceutical web sites. All these
investigations are being worked jointly with the Food and Drug
Administration's (FDA) Office of Criminal Investigation. The Customs
Office of Investigations has a great working relationship with FDA
investigators. The CyberSmuggling Center participates with FDA, DEA and
Postal in an informal working group that meets on a monthly basis to
discuss on going investigations and other related topics.
To make the most of this enforcement loop, it is imperative that
the Federal agencies responsible for stopping the importation of
prohibited pharmaceuticals, namely Customs and the FDA, work closely
together at the point of entry. For example, often the pills being
smuggled into the U.S. have been stripped of all packaging and labeling
to enable them to be concealed within innocuous items. Upon discovery,
it can be difficult to identify whether or not the pills are
prohibited. The multi-agency effort to identify and determine
admissibility needs to be accomplished with speed, so that if
necessary, further enforcement action such as controlled deliveries can
take place.
Very recently, executives and managers from the Food and Drug
Administration and U.S. Customs met to discuss how together we could
streamline our enforcement and interdiction efforts of illegal
pharmaceuticals. In this meeting, FDA promised they would provide us
with clearer guidance that will assist our field offices in dealing
with this difficult aspect of our mission. We also discussed additional
education and training efforts. Clear guidance, which can lead to more
consistent application of enforcement policy, is critical to the point
of entry interdiction effort
Lastly, to effectively enforce the laws governing the importation
of pharmaceuticals, it is imperative that the resources needed to
effectively meet these responsibilities are available to Customs. While
the importation of prohibited pharmaceuticals is prevalent in any mode
of transport that focuses on small parcel delivery, it is manifested
primarily in the international mail operating environment. Customs
currently provides clearance of international mail at little or no
expense to the Postal Service. The Postal Service does not reimburse
Customs for expenses incurred to examine inbound international mail.
On the other hand, Express Consignment Operators are required by
statute to fully reimburse Customs for the processing of their
shipments. This includes all expenses associated with the Customs
operations within the Express Consignment facility. By regulation,
Customs office space, personnel and equipment are all paid for by the
Express Consignment operator.
As I stated earlier, with automated, parcel level manifest
information provided to Customs in advance of shipment arrival, Customs
can greatly increase its targeting capabilities and its ability to
capitalize on intelligence information. The Postal Service is working
to develop electronic messaging data sets that would support such a
badly needed automated system. This would be similar to the level of
data that the Express Consignment Operators are currently providing
Customs; Customs desperately needs this information. A cooperative
initiative with the European Community began in April of this year to
develop an international electronic message that will provide uniform
information for mail shipments for the European Community, the United
States, Canada, and possibly Australia. Customs has been invited to
serve as a technical advisor to the European Community on this project.
The successful results of this initiative would greatly increase
Customs capability to interdict prohibited pharmaceuticals in our
International Mail Branches.
In summary, Customs believes that the manual nature in which mail
arrives and is entered into the United States, severely inhibits our
ability to interdict prohibited pharmaceuticals. We believe that we
need to work with the Postal Service to change the standards for
processing Postal Service shipments. Doing so will decrease the
vulnerability our Nation currently faces with respect to pharmaceutical
smuggling, and the smuggling of other forms of contraband.
Customs is also working with the Food and Drug Administration to
ensure that as the Internet grows as a means for conducting business
for a fast paced U.S. economy, the government will be able to provide
responsive, effective enforcement of Internet driven, illicit trade.
With the proper tools, interagency cooperation, and resources, Customs
can both fairly facilitate legal international trade, and yet enable us
to stand poised as America's frontline, protecting our citizens and
Nation's borders. We are cognizant of the dangers that these
unauthorized drugs pose to our citizens. We stand ready to work with
the Congress and other Executive agencies to fully ensure that these
smuggled items never harm our citizens and the legitimate
pharmaceutical industry.
Mr. Chairman, this concludes my written statement. I will be happy
to answer any questions that you or any other Members may have.
Mr. Upton. Thank you.
Ms. Stovall.
TESTIMONY OF THE HON. CARLA J. STOVALL
Ms. Stovall. Thank you very much, Mr. Chairman, and members
of the committee for the opportunity and the invitation to come
and update you on what States have done since the last time we
were gathered to talk about this topic. We always appreciate
the opportunity to be able to visit about what we've done. We
share the committee's concern about the illegal sites.
Obviously there are some good sites, legitimate sites that are
conducting business appropriately, and we think the convenience
to consumers, to patients, the privacy, the cost savings that
can result from, that is important. And so we always want to be
very clear that there are good sites and we certainly approve
those and would like to facilitate their operation.
It is the roughly 400 web sites, though, that are not
legitimate that give us great concern. The AMA and then
recently the Association of State Medical Boards has voted to
say that prescribing online was out at a prior position paper
relationship is not consistent with the standards of
professional conduct and that is from where Attorneys General
derive the authority, in our opinion, to classify these actions
as violative of the Consumer Protection Acts. That to sell
prescription drugs without valid prescriptions is
unconscionable. And that's where AGs have stepped in and used
their Consumer Protection Act to be the basis for the lawsuits
we have filed.
As many of you know, because you've mentioned in your
comments, States have been very active in this area. Many
States have sued a total of 54 entities and/or individuals have
been sued by States as a result of prescribing unlawfully on
line.
We see, most of the time, when the State of Kansas, for
example, would sue a particular illegitimate pharmacy, we'll
get an injunction against it and so it will then stop
prescribing or stop distributing those drugs within our State.
What our hope always had been is that there could be
national injunctive relief and the proposed legislation that
Chairman Upton and Congressman Bliley talked about. We would
hope we would have something like that in it for us so that
there would be the opportunity to maximize resources, so that
when I sue a company, not only do they stop selling to Kansas
citizens, but they stop selling to citizens around the country
as well. And that would allow the very minimal resources that
State Attorneys General have to be maximized.
In my office we have--I'm quite proud to say that we have
taken the lead on this issue, but we have only one attorney
working on this. And so that's the way it is in many AG offices
around the country. There just are not very many resources. So
if we can maximize by getting injunctive relief, nationally, it
would add a tremendous benefit to the resources that we are
able to devote to it.
NAG, the National Association of Attorneys General, as some
of you have mentioned, have monthly conference calls. We have a
task force set up to deal with this regularly so that we can
try to coordinate activities and coordinate enforcement action
and keep track of one another.
The conference that we had just last week apparently got
lots of recognition by Congress because several of you
mentioned that we are very proud of the attendance and think
that the information provided there really helps train
assistant attorneys general around the country to be able to
continue this work in the most effective way possible.
We welcome the opportunity to continue to work with this
committee, other Members of Congress, as well as the Federal
agencies, to try to get a handle on what is a great public
health concern to citizens of our country. We share your
concern with that as well, and we appreciate the opportunity to
come and be a part of these discussions.
Thank you.
[The prepared statement of Hon. Carla J. Stovall follows:]
Prepared Statement of Carla J. Stovall, Kansas Attorney General
Chairman Upton, Ranking Member Klink, members of the Subcommittee,
thank you for the invitation to testify today on the important issues
the Subcommittee is considering.
Beginning with Kansas' lawsuit in February, 1999, six States have
filed a total of 18 lawsuits, eight administrative actions, and nine
notices of intended action against more than 54 individuals,
pharmacists, pharmacies, doctors, and other entities who participated
in the online prescribing, sale and dispensing of prescription drugs to
our States' citizens. None of them required any in-person examination
or consultation prior to prescribing and dispensing those drugs, using
instead the ``online application'' method.
Ohio has criminally indicted a doctor for drug trafficking as a
result of this practice, and his trial is scheduled for June 12, 2000.
That same doctor is also being pursued civilly by at least three other
States, and he has filed his own civil suit against the State of Ohio.
Approximately fifteen additional States are investigating sites
with a review toward litigation, investigations which are not yet
public.
In most of the Kansas cases, we are in the process of negotiating
settlements, with provisions not to engage in the practice of online
prescribing and to comply with the laws and regulations of our State
before dispensing drugs to our citizens. We have settled with one
defendant, and have filed an action requesting the court enforce the
settlement agreed upon in another case.
Most of the entities sued by the States are in the process of
negotiating settlements, but a few continue to hide from us. It is
worth noting one case where the Defendants are not only not hiding,
they are actively pursuing the State. Attorney General Jennifer
Granholm of Michigan has been sued in the Federal District Court in
Virginia by one of the Defendants in a case that she filed earlier this
year. The Defendants are claiming the Michigan Attorney General has,
among other things, unreasonably burdened interstate commerce by
requiring pharmacies and pharmacists to be licensed in Michigan before
they distribute the drugs in Michigan. That case has not yet been
docketed for hearing.
In general, however, most websites sued or notified by the States
are voluntarily not shipping to consumers in all States that have
brought action against any site. Additionally, the publicity from these
actions has helped boost our consumer education campaigns regarding the
dangers of buying prescription drugs from sites that sell without the
benefit of a valid prescription. There is no way to confirm the number
of sites offering drugs for sale in this manner has changed, however,
we know several of the sites that have been sued have gone out of
business, and many of the doctors have ceased practicing in this
dangerous manner.
I have submitted with my testimony a summary of the cases filed by
the States--and legislation proposed in State legislatures. I ask that
this summary be included in the hearing record.
In each of these cases, it is clear our law enforcement actions are
aimed at stopping the illegal Internet sale of drugs to our citizens--
more appropriately named ``online prescribing.'' We are not interested
in shutting down websites operating in compliance with all licensing
and registration laws and regulations in the State to where they
dispense the medication. We certainly have no problem with the
legitimate pharmacies that utilize the Internet as an effective mode of
communication with their patients.
``Online pharmacies'' should not be treated differently than
traditional, ``brick and mortar'' pharmacies. The standards should be
the same. If a pharmacy wants to transact business in a certain State,
then it should submit to the laws and regulations of that State.
That is the basic theory of our cases: by prescribing drugs to
citizens in our States, the pharmacy, pharmacist, prescribing physician
and website are practicing and operating within our States'
jurisdiction and are subject to our States' laws. If they do not have
the legal authority to dispense these drugs, they are breaking our
laws.
All the Defendants in the lawsuits filed by the States have one
thing in common--they did not require a valid physician-patient
relationship to prescribe and to dispense prescription-only drugs.
These Defendants merely asked their customers to fill out a
questionnaire about their health and claimed that a physician would
review the application and prescribe the drug if appropriate. In all of
our cases, however, it was apparent that if a physician reviewed the
application, it was a feckless review indeed. A 16-year-old boy in
Kansas ordered and received Viagra, a medication for erectile
dysfunction, as well as Meridia and Phentermine, both controlled
substances, even though he entered his true date of birth on the online
order applications. No company asked for parental consent before
sending drugs to that minor. The ease with which these drugs,
especially the controlled substances, were distributed without an exam,
without even a conversation with the recipient, is shocking and should
be terrifying to those invested in public health--and especially as
children's access to these drugs is unfettered.
Additionally, we have found many more problems than just the
licensing issues. These sites use unconscionable tactics to lure
consumers and to mislead them about the drugs they are buying and their
rights in the transaction. For example, many of these sites require the
consumer to accept a waiver before they will ship the medication. These
waivers purport to exonerate the physician who writes the prescription,
the pharmacy that fills it, and the website and its operators who
coordinate the transaction from all liability. The violations of State
consumer protection laws the States have seen are too numerous for me
to list here. Requiring a licensure verification will not erase all the
problems inherent in the ``rogue online pharmacy'' industry.
The National Association of Attorneys General (NAAG) is
coordinating a united effort among the States to combat these problems,
and that has served all of our citizens well. NAAG has established the
Online Pharmacy Working Group to address the issues surrounding
Internet pharmacies, and I am proud to say that Kansas has led the
effort. The group has accomplished a great deal by implementing simple,
cost-effective ideas which allow the most expedient action to be taken.
For example, the members of the group have established a procedure to
notify the State medical board where a defendant doctor is licensed or
the board of pharmacy where a defendant pharmacy is located after a
lawsuit is filed. Each State licensing entity can use the information
to conduct its own investigation, if appropriate, and take any action
it deems necessary, which can result in license suspension.
As a direct result of this interstate cooperation, the State of
Washington summarily suspended one doctor's license to practice
medicine. This Washington doctor prescribed Viagra to a 16-year-old boy
in Kansas, without ever seeing or talking to him. This boy was truthful
about his age in his ``online questionnaire,'' yet that doctor
prescribed and the company dispensed and shipped the drug directly to
his home. My office coordinated with Attorney General Gregoire's
office, and not only were we able to enjoin this company from selling
to Kansans, the State of Washington was able to prevent him from
prescribing to anyone online, pending the outcome of their licensing
action.
A carefully organized and unified campaign of both State and
Federal resources will be the most effective way to attack this
dangerous practice of dispensing potentially dangerous drugs without a
valid prescription. Kansas can't stop this practice alone, nor can
Illinois, Missouri, or Michigan. But all States working together with
the Federal government can make the cost of operating illegal online
pharmacies so high as to price the bad actors out of this business.
Efforts in the direction of State and Federal coordination have
already begun. On its March conference call, the NAAG Online Pharmacy
Working Group included representatives from several Federal agencies,
including the Department of Justice, Food and Drug Administration, and
the Federal Trade Commission. The cooperative relationships that have
developed between the States and between the State and Federal
representatives as a result of this group have been extremely
productive.
At the most recent annual meeting of The National Association of
Attorneys General, my colleagues and I adopted a resolution calling for
cooperative federalism in addressing Internet issues. A copy of that
resolution is attached and I ask that it be incorporated into the
record for this hearing.
As applied to online pharmacies, we have two substantive
recommendations for any federal proposal:
First, respect the States' historical role in setting substantive
requirements for the regulation of doctors and pharmacies that operate
within our borders. States are the primary enforcers of laws relating
to the health of their citizens, and we should continue that tradition
in this important issue.
Second, the most important tool the Federal government can give the
States is nationwide injunctive relief. Several States' Attorneys
General have filed suit against the same companies and the same
doctors. Because each State only has the power to obtain a restraining
order under its own State law, it is only operable in that particular
jurisdiction. To simply prevent those actors from doing business in
their State, each Attorney General has to file an action in his or her
State court. This duplication of effort drains our resources. We
obtained a temporary injunction preventing the Defendants in our cases
from doing business in Kansas, pending the outcome of the litigation.
Five other cases were filed by other States against some of the same
Defendants--essentially duplicating our efforts but because no
nationwide injunctive relief is currently available, this replication
is required to adequately protect all our citizens. Had we been able to
file our cases in Federal court under a statute that allowed an
injunction to apply nationwide, those States' citizens would have been
protected from those entities and their practices, and their Attorneys
General could have used their resources to file actions against
different offenders. Since the States' most important goal in this area
is to prevent these businesses from harming our citizens, this simple
tool would allow each State to help protect all the citizens of this
nation.
The States advocate a regime modeled on the federal telemarketing
statute that would allow State Attorneys General to take action in
Federal court to curb online pharmacies. This arrangement would allow
States to obtain an injunction effective nationwide, and yet not
prohibit any State from filing an action in its State court, based on
State law. Therefore, the first State suing an entity could obtain an
injunction effective in every State and prevent harm to citizens in the
entire nation, yet other States could still seek restitution for their
State's consumers and seek penalties and fees in their own State
courts. In crafting this relief, we ask that any legislation recognize
the unique qualities of the Internet and clearly state both the
nationwide nature of the relief and that the jurisdiction to act is
based upon the location of the consumer at the time that the
transaction takes place.
In addition, I emphasize the need for an effective national
registration or disclosure requirement for entities that sell
prescription medications across State borders. One of the most
difficult challenges in the States' prosecutions has been finding the
companies and people responsible for selling these drugs to consumers
in our States. We all had to sort through multiple shell corporations,
addresses that turned out to be mail drops, overlapping physical and
Internet addresses shared by different entities, and similar evasive
tactics. Companies selling dangerous drugs across State lines should be
required to maintain current, accurate, accessible information about
their principals, their physical addresses, and their identities. We
should not have to struggle to find them. The National Association of
Boards of Pharmacy has established an excellent system for certifying
these online pharmacies. We encourage you to use their program, the
Verified Internet Pharmacy Practice Sites, VIPPS TM, as a
model. We strongly support the VIPPS TM program and believe
mandating it would not only provide the information Attorneys General
want displayed on the websites, but would also obviate the need for a
second and federal disclosure scheme.
What role do the States want the Federal government to take? Most
importantly, the Federal government should continue the effort at
consumer education. The Food and Drug Administration and Federal Trade
Commission have both begun campaigns to inform the public of the
dangers of essentially writing your own prescription over the Internet.
We applaud their programs but respectfully submit that it is not
enough. The States would welcome federal resources to provide
information to our citizens at our local hospitals, doctors' offices,
even our State fairs! We would like to see a nationwide campaign
including Public Service Announcements, brochures at Veterans'
Administration hospitals and federal social service agencies, and model
education campaigns for schoolchildren. Just weeks ago, a preteen
character on the television show ``ER'' ordered growth hormone via the
Internet and suffered significant health effects--hence, the need for
the emergency room! Such an incident is not, unfortunately, limited to
television fiction. Art, in this case, has imitated life. Our children
are much more sophisticated in their use of computers and the Internet
than most of us are, and they need to know about these dangers.
Another important place for federal involvement is in combating the
problem of off-shore sites. A commonly held fear is that the States'
actions will merely force these companies out of the country, where
laws are less stringent and enforcement frequently non-existent. But
because of the borderless Internet, these rogue companies still can get
their products to our consumers--and we have no reasonable method to
stop them. The FDA's recent ``cyber'' letter-writing campaign is an
encouraging step, and we would like to see the Federal government focus
more of its efforts on these type of companies. The Department of
Justice has recently designated contacts within the Drug Enforcement
Administration to work with the States. Both of these steps recognize
the need for the States to look to their Federal law enforcement
partners in addressing the threat from entities in other countries.
Just last week, NAAG hosted a conference in Ann Arbor, Michigan, to
discuss issues arising from State Regulations and e-commerce. Both
State and Federal representatives met to discuss issues such as
investigative techniques, protecting consumers from online fraud, how
to effectively present a case at trial, and interagency cooperation.
Training sessions such as this are absolutely crucial if we as law
enforcement want to stay ahead of the bad actors.
Kansas has led the cooperative effort among the States, with the
continued support of the National Association of Attorneys General. We
welcome a partnership with Federal agencies to solidify our enforcement
of the laws of our States.
Thank you.
______
National Association of Attorneys General
Adopted
spring meeting, march 22-24, 2000, washington, d.c.
RESOLUTION
In Support of Legislation Encouraging Cooperative Federalism to Protect
Consumers on the Internet
WHEREAS, fraud, which continues to victimize consumers across state
lines, has expanded from telephone lines to cyberspace; and
WHEREAS, Congress in the last decade has recognized that it is
neither desirable nor cost-effective for the federal government to
pursue all forms of consumer fraud that cross state lines; and
WHEREAS, State Attorneys General have had an ongoing, longstanding,
and valuable partnership with federal agencies in protecting consumers
nationwide; and
WHEREAS, joint state-federal initiatives, including sweeps and
Internet ``surfs'' targeting false health claims, fraudulent business
opportunities, fraudulent investment opportunities, and fraudulent
online sales are helping to protect the consumers; and
WHEREAS, as a result of Congressionally-enacted legislation, State
Attorneys General have gone into federal court for nationwide equitable
relief using vehicles such as the Telemarketing Sales Rule, and this
has proven highly effective; and
WHEREAS, a joint enforcement approach has been effective because it
complements and enhances, rather than preempts, state consumer
protection enforcement, allowing state officials the option to
determine which law and relief is appropriate, as well as allowing a
consultive process with federal enforcers; and
WHEREAS, authorizing the State Attorneys General to proceed in
federal court would further protect citizens from fraud which ``knows
no boundaries,'' eliminate the need for wasteful duplication of state
and federal resources, and promote closer state-federal relations;
NOW, THEREFORE, BE IT RESOLVED THAT THE NATIONAL ASSOCIATION OF
ATTORNEYS GENERAL:
1. Supports federal legislation that would grant authority to State
Attorneys General to obtain nationwide equitable relief in
federal court to combat unfair and deceptive acts or practices
occurring over the Internet; and
2. Supports federal legislative efforts to ensure that state consumer
protection laws are not preempted; and that states have the
option to enforce both federal and state consumer protection
laws in federal court; and
3. Authorizes the Executive Director and General Counsel to transmit
these views to Congress, the Federal Trade Commission, the
Department of Justice, and other interested parties.
Abstain: Attorney General John Cornyn
Mr. Upton. Thank you very much, all of you.
We are now going to proceed to the stage where I am sure
that we will have a couple of rounds of questions, and because
we have so many members here, I'm going to try to maintain
strict control of the 5-minute rule for us beginning now.
Mr. Hubbard, under the Food, Drug, and Cosmetic Act, the
FDA has the legal authority to take action against the
importation, sale, or distribution of a misbranded drug, the
importation, sale, or distribution of an unapproved new drug,
illegal promotion of a drug, the sale or dispensing of a
prescription drug without a valid prescription, and obviously
counterfeit drugs as well. What enforcement actions has the FDA
taken under any of the above-mentioned legal authorities
related to prescription drugs?
Mr. Hubbard. I think you're talking about approved drugs
from a pharmacy. As I said, we have 132 investigations underway
now and in the criminal area about 50 of which are dealing with
the sorts of online pharmacies that offer drugs to patients via
a questionnaire. Patients just ask a few questions, sometimes
more, sometimes less and then the patient sends the
questionnaire back to the site along with a credit card number
and the site at the other end in most cases apparently has a
physician and a pharmacist. The physician then reads the
questionnaire, determines that patient who wants that drug, and
perhaps the patients ask for that drug, say Viagra, by name,
writes the prescription and the site which may be a pharmacy or
may be associated with a pharmacy will take the prescription
and fill it and then drop the drug into the mail and mail it
back to the patient.
Now, the medical profession had said, I think, uniformly
that is bad medicine. The patient is not seen, there is no
medical history taken, there is no physical examination.
There's no question of things such as, in the case of Viagra,
for instance, does the patient have a pre-existing heart
condition. And in that case the patient should not take Viagra
because it could be a lethal drug in that circumstance.
What FDA has done in those circumstances and in a number of
these sites out there, we go in and we find a site, we trace it
to its ISP source, then we attempt to trace it to the actual
individual or storefront or the business or whatever the
location is, and then we make purchases over the Internet. We
use a dummy credit card; I won't go too much into investigative
procedures, but we do make purchases. And then the drug is
mailed to us. At that point this site is selling a drug and so
we are well on our way.
Mr. Upton. At that point do you alert the Justice
Department?
Mr. Hubbard. No, not usually at that point.
Mr. Upton. You do everything on your own?
Mr. Hubbard. Usually at that point.
Mr. Upton. Okay.
Mr. Hubbard. We try to work the case up, as it were, into a
case with all the pieces of evidence. In a criminal case then
we go to the appropriate U.S. attorney in whatever State or
region it is. Now, a civil case would go to the Office of Civil
Litigation at the Department of Justice here in Washington. So
we now have a case in which we have gotten the evidence we
need, that there is a site offering the drug, selling the drug,
we have made purchase of the drug, and the key piece at that
point is, is it a valid prescription.
And the way it would work is, if we go into court, the
State official there, the State Medical Board would be asked to
come testify and say, whether this is a valid prescription in
your State. If that State individual says yes, we're done. If
he says, no, we have no valid prescription, it's a violation of
the Food, Drug, and Cosmetic Act and we can bring criminal
action. And we could bring civil action. This would all be done
through Justice, of course, but there could be an injunction,
there would be a seizure, there could be a number of
activities.
Mr. Upton. Let me just--I am watching my clock. According
to your budget request for 2001 you indicated that you had
devoted more than 30,000 staff hours to investigate the
Internet illicit sales which I presume is under the scenario
that you just described. So you spend 30,000 hours--time hours
on that--identifying cases, and yet the Justice Department has
had what, two, three convictions? How many? You have a few more
now in the pipeline, but until recently, there were none.
Mr. Hubbard. I believe we referred 33 cases to the Justice
Department.
Mr. Upton. Is that based on 30,000 hours of checking these
out?
Mr. Hubbard. That is actually over only 6 months. We've
actually devoted on the annual basis more like 80,000.
Mr. Upton. It just seems like 80,000 hours coming up with--
--
Mr. Hubbard. Well, first of all, many of those resources
have gone into the unapproved drugs and we have many arrests,
prosecutions, convictions, injunctions, seizures, many, many
different things are done. On the approved drugs, those
investigations have not ripened to the point of a prosecution
yet. Because of the problem that I've explained to you about
the valid prescription, if a State official cannot attest that
that is an invalid prescription in that State, it's not a
violation of the Food, Drug and Cosmetic Act.
Mr. Upton. If I am going to maintain the relevance of this
clock I have to obey it myself. But I am going to come back.
Mr. Klink.
Mr. Klink. I would start, if I can, with Mr. Posner.
I mentioned this in my opening statement. It is my
understanding that in a meeting with the subcommittee staff
that the Department of Justice reported the Justice Department
was chomping at the bit to receive online pharmacy referrals
from the FDA. The Department of Justice was waiting to get some
of these cases to really jump on; is that an accurate
description?
Mr. Posner. Well, the Department is certainly very
interested in prosecuting these cases. We have gotten a couple
dozen referrals from the FDA over the last year. A couple of
them have resulted in convictions.
You know, we remain ready and eager to work these cases,
but Mr. Hubbard quite accurately summarizes the difficulty and
the length involved in investigating these cases. The Chairman
asked a very good question which is, when do you come to the
Justice Department with these cases and Mr. Hubbard answered
quite correctly, well, really at the end. You've got to do a
lot of work first. And even when the first referral is made,
frequently more work needs to be done. Sometimes the FDA will
decide maybe they will take it to the State prosecutor because
the facts and the law in that particular case justify that.
That happens all the time with a range of substantive areas the
Department is involved with.
But, Congressman Klink, we are quite eager to take these
cases. The U.S. Attorneys are quite eager to take these cases,
and our prosecutors in the Office of Consumer Litigation, our
experts in criminal cases under the FDCA, and they are ready to
take cases as well.
Mr. Klink. Of the cases then referred to DOJ by the FDA,
the so-called ``foot soldiers'' in this whole thing, do they
have the necessary elements to go forward? Are these good
cases? What can you tell us about the referrals after these
tens of thousands of hours, whatever it is, of manhours and
womanhours that have been put into this research by FDA. What
happens then when DOJ gets it. What sort of shape are you in on
making these cases?
Mr. Posner. Well, I want to steer a little clear from
actual cases, but I can tell you what we have. I say we have 30
active criminal investigations, 20 involving prescription
drugs. But it is not like we are ready to go to trial at that
point. That means that the investigative agent has done a lot
of work, has prepared a case, but it will depend on the facts
and the law and the judgment of the prosecutor as to whether
the case is ready for indictment, ready for a search warrant,
what have you. Sometimes the cases aren't ready. Prosecutors--I
know we have at least one former U.S. Attorney on the
committee. Prosecutors make decisions every day about whether
something is ready for a search warrant or an indictment or
what have you, sometimes the cases are ready, sometimes they
are not.
All I can say here is we have a number of active grand jury
investigations in online prosecution drug cases.
Mr. Klink. What I cannot understand, let me jump back to
Mr. Hubbard for a second, if I heard your testimony right, you
said that initially when you began this investigation as
determining who is operating the site, where the site is being
operated from, kind of getting some formation out of what is
jello. Why would not the FDA fully be behind the bill that we
offered a year ago on disclosure and force these sites--
wouldn't that be a way--at least if you're a police officer and
a car is driving down the street and it doesn't have a license
plate it lets you know it is something that you ought to check.
At least if we had some kind of disclosure like you display a
license a lot of these questions would be answered for you
right away, or at least if they didn't answer them for you by
having that accurate information, you would know those are the
sites you have to look at.
And, yet, I will tell you, I am very dismayed that this
bill that you mentioned that FDA and the administration has
come forward with, you didn't work with us on it. We want to be
partners in this, we don't want to be advocates. I do not
believe that you work with the majority or the minority in
putting this together, and quite frankly the disclosure in your
bill was much weaker than that that we put forward in our bill
in the beginning. So if this is such a problem why don't you at
least want some strong disclosure laws on this?
Mr. Hubbard. I think we absolutely support your disclosure
provisions, Mr. Klink, and did include them in our bill.
Mr. Klink. Doctors in your bill do not have to do any
disclosure at all. We do not know who is doing the
prescription.
Mr. Hubbard. We had a concern that without any teeth behind
it could lead to people disclosing things that were not
truthful.
Mr. Klink. Should doctors have to disclose who they are and
whether or not they have the authority and the education to be
prescribing these medications; is that something that should be
done to protect the public?
Mr. Hubbard. We saw that bill as the beginning of a process
and we would very much like now to engage the committee on what
the right ideas are. But we are hoping this bill is a point of
departure for discussion.
Mr. Klink. If it is a point of departure for discussion,
why did we not work together on this from a year ago? Why was
there not some coordination between the people at FDA and our
staff? You knew we had an interest in this, yet you kind of
thrust this--well, I got a phone call the day you were
releasing the bill. That's not a way to cooperate with us, to
have a dialog on how we are going to solve this problem, but I
think it is potentially a difficult problem.
Mr. Hubbard. Well, first of all, this bill was not totally
driven by FDA. It was an administration bill and I believe----
Mr. Klink. Whose bill was it?
Mr. Hubbard. Well, I think it was a joint effort with the
Electronic Commerce Working Group at the White House, with the
Department of Justice, with FDA.
Mr. Klink. Everybody but the Members of Congress.
Reclaiming my time for just one moment. I understand I'm
running over.
General Stovall, do you think disclosure is an important
part in this process giving you the tools to know automatically
if we know who this person is, if we know if they have the
authority of the licensure where they're operating from, is
that important to you?
Ms. Stovall. We think that is absolutely, incredibly
important. That was the most difficult task that all the States
face in bringing the litigation was to be able to find out who
it was that we could bring action against. So that was
important.
Mr. Klink. So, then, Chairman, I think what we have gotten
out of this from General Stovall who has really been on the
frontline in this, if we put together a bill that has
disclosure and injunctive relief, we are on our way; is that
right?
Ms. Stovall. Absolutely. Absolutely.
Mr. Klink. Thank you, Mr. Chairman.
Mr. Upton. Thank you. Dr. Ganske.
Mr. Ganske. Thank you, Mr. Chairman.
Let us think about the elderly widow who is existing on her
Social Security as her only source of income. She also has
significant pharmaceutical costs. She is forced to make a
decision between paying her rent and picking which one of her
pharmaceuticals not to purchase for the month. So she has a
friend in AARP who has a computer who can get on the internet
and can order through PharmaWorld in Geneva, Switzerland after
paying either of two American doctors $70 for a phone
consultation and get her medication at one half the cost it
would cost her in her local pharmacy.
I would like a response from each of you as to is this lady
doing something illegal, is it safe, what would you recommend
to her? Let's start with Mr. Hubbard.
Mr. Hubbard. Under the law as currently written, it is
illegal to bring a drug in from another country that's not
approved by the FDA. So in that case if she goes to a foreign
web site and makes such a purchase of the drug whether it be a
completely unapproved drug or a foreign version of an approved
drug, she is violating the law. And FDA is empowered to stop
that drug and not let it in. The practical reality has been
somewhat different because there is an intent to show some
compassion in some circumstances, but this is a very vexing
problem in which more and more seniors are seeing less
expensive drugs in other countries, going to those other
countries, more often in our experience by traveling to those
such as to Canada and Mexico and then bringing them back in.
And that is a very difficult problem because we are not
inclined to board a bus and go through the purses of little old
ladies and take their prescriptions away from them.
However, technically she's doing two things; she has
violated a law and second she is taking risks that she may get
a drug that's a real drug or a counterfeit drug or a subpotent
drug, or a superpotent drug, or anything else. And we cannot
guarantee that she is getting the real drug, but she is
probably saving money in many cases.
Mr. Ganske. Let's say that she goes through a group called
``Canada Prescriptions'' a group of retail pharmacies in
Canada. How big a risk is she taking?
Mr. Hubbard. Well, obviously I don't know anything about
that group, but any time you get outside the system, you're
taking a risk.
Mr. Ganske. Are we talking about a 5 percent risk if she
goes through this group PharmaWorld? While I understand you do
not know the specifics about some of these cases, what can you
tell this elderly person? What is it? Is it a 50 percent risk
that she may not be getting the drugs she's supposed to be
getting? How would she distinguish which of these overseas
places might be reputable and which would not be?
Mr. Hubbard. She is totally incapable of doing that. And I
believe the FDA is totally incapable of doing that.
Mr. Ganske. And so let us say that she orders this and pays
for it by MasterCard and this drug is coming into the United
States. Ms. Durant, are you going to confiscate that medicine?
Ms. Durant. If it does not meet the legal detainment for
the FDA petition. If it does not meet the guidance that we have
from the FDA. Now, if she is coming over the border, we have
guidance from the FDA on the amount of dose, et cetera, and we
generally do not detain those from Canada and Mexico. We do
have guidance from the FDA on this. So in the mail however our
experience has been that that is generally not the kind of
drugs we are finding and seizing.
Mr. Ganske. In other words, you wouldn't be so concerned
about a drug like Celebrex? I mean, you are really looking at
some other types of drugs?
Ms. Durant. Correct. Correct. But we do take our guidance
from the FDA and we have received complaints from members, from
the constituents on some seizures that we have made and, again,
we work closely with the FDA to take this practical approach to
those situations and have guidance----
Mr. Ganske. Do any of the panel members have any idea of
the type of volume that we are talking about for this type of
practice for senior citizens? Do any of you have any ideas?
Mr. Hubbard. Anecdotally we understand that people are
increasingly traveling by car or bus or whatever to Canada and
Mexico to make these purchases. We are not seeing big increases
in the common carriers. There are increasing amounts of some
drugs, I believe, that Customs is seeing, but they tend to be
more of these sorts of products you have here today, the
steroids and the control substances that are regulated by the
Drug Enforcement Administration, not by the FDA.
Mr. Ganske. I wonder if Ms. Stovall would have a comment on
this as it relates to citizens in Kansas who may be struggling
with paying for their drugs and are looking at the Internet and
saying, gee, I can send $15 to a Texan and get a phone number
at a Mexican pharmacy and I can get that pill for one-fourth of
what I have to pay for it in Kansas.
Ms. Stovall. We understand and are empathetic with that.
The safety concern is paramount though. We have a drug approval
system in this country for a reason, and that is to be sure
that consumers get the drug that they think they're getting and
so that would be our great concern with getting drugs from
overseas when they have not been approved. We do not know what
they are----
Mr. Ganske. So is the State of Kansas looking at
intercepting those medications as they're coming into the
State?
Ms. Stovall. We do not have the resources to do that.
Mr. Ganske. Do you think you should?
Ms. Stovall. It absolutely is not a priority frankly. We do
not--in a perfect world, yes, we would be able to protect our
consumers from getting drugs overseas and know what the quality
of them--of those drugs were. But we don't have the resources
to do that. We have just concerns about the convenience of the
Internet and we think that the valid pharmacies operating over
the Internet are wonderful and if we can give some seal of
approval to the pharmacies that are legitimate so that
consumers know the good ones to buy from, the hope is they get
cost savings there as well and don't have to risk their health.
Mr. Ganske. Okay. I guess my time is up. Thank you.
Mr. Upton. Ms. DeGette.
Ms. DeGette. Thank you, Mr. Chairman. I think we are all
struggling with the same issue here today and that issue is,
what is going to be the most effective approach to stop the
online pharmacies from inappropriately and illegally selling
prescription drugs. So let me try to get a little bit better
handle here.
As I understand it, Mr. Hubbard, the FDA, has identified
potentially up to maybe 400 of these online pharmacies that are
inappropriately----
Mr. Hubbard. We evaluated 400 sites, yes.
Ms. DeGette. Yes. And the reason I was confused is I have
this March 23, 2000 letter from the FDA to this committee which
says that the FDA is not aware of any Federal prosecutions or
convictions for Internet pharmacy violations that have occurred
at this time. Mr. Posner has updated us and apparently there
have been a couple since this letter and there is more in the
pipeline. But here is my concern, we have maybe 400 of these
pharmacies and I used to practice law myself, so I know,
particularly for cases like this, it can be very difficult to
collect evidence that will make a criminal prosecution stick.
And I do empathize with that. But here's the thing I'm
struggling with and I would like to hear your comments on it.
First of all, Mr. Hubbard, how many States--you say you
refer a lot of these cases to the State prosecutors, how many
of these cases have actually resulted in convictions at the
State level, if you know?
Mr. Hubbard. I know of at least 11 where the State has not
so much prosecuted criminally, but has issued a cease and
desist order for the pharmacy.
Ms. DeGette. So as far as you know there are no State
criminals?
Mr. Hubbard. No, no, I believe the States are pursuing----
Ms. DeGette. No, no, do you know of any though?
Mr. Hubbard. I believe we do. I can't name them here. I
could certainly get that for you for the record.
Ms. DeGette. Wait a minute.
Mr. Chairman, with unanimous consent, can I ask that they
supplement their response and if you can please let us know,
have your staff let us know how many actual State convictions
there have been.
Mr. Hubbard. There have been--about half the States are
being active in this area.
Ms. DeGette. Okay. What I want to know is criminal
prosecutions and convictions. Because here's the other thing,
what I am wondering is currently these prosecutions as I
understand, Mr. Posner, are misdemeanor prosecutions at the
Federal level; is that right?
Mr. Posner. The jury in Florida yesterday convicted on
felony counts.
Ms. DeGette. They did. What was that felony?
Mr. Posner. I believe it was felony FDCA counts. It might
have been a felony false statement count. It might have been a
felony conspiracy count. There were multiple counts and I think
at least one of the defendants was convicted on multiple felony
counts. The plea last month in Hawaii was to a misdemeanor
charge that the United States brought as a misdemeanor charge--
--
Ms. DeGette. Okay. But are most of these cases brought as
misdemeanor cases and being investigated as misdemeanor cases
or are they being investigated as felonies?
Mr. Posner. I think most of them are filed criminal cases
but charge felony violations. Obviously, in the investigations
underway now, if the prosecutor determines that the facts and
the law support a felony charge, the Department could seek
that. And the Department is looking at an array of very serious
charges. I don't want to get into what we're thinking about in
particular matters, but it would be fair to say that the
Department is considering felony charges in a number of online
prescription----
Ms. DeGette. Okay. So you one of your suggestions would be
we need to look at legislation to give a more serious
designation to some of these crimes? Would that help? Because
practically speaking, I know when you have limited resources
you're going to generally pursue felonies versus misdemeanors.
Mr. Posner. Well, the Department is very interested in
these cases and we will pursue a misdemeanor if that's what the
facts and the law support in this particular case. I think our
view is that the penalties are generally adequate, we are very
supportive of the administration's bill, the disclosures and
all that, but I think that we are certainly satisfied with the
penalties of the FDCA.
Ms. DeGette. All right. Now, you referred in your testimony
today and you talked about it in your written testimony to a
suggestion that you folks have that could help in the civil
arena. Could you talk just briefly about that?
Mr. Posner. I will. Under 18 U.S.C. Section 1345, the
Attorney General can seek civil injunctive relief to stop
disposition of assets that are traceable to a violation of the
banking laws and a defined array of health care fraud offenses.
That's what Section 1345 currently says.
We recommend adding violations of perhaps the FDCA and also
the Administration's Online Pharmacy Bill to that list of
defined----
Ms. DeGette. I see. And do you think that would help you
then in your ability to get civil injunctive relief against
these folks?
Mr. Posner. Yes, certainly, Congresswoman, but I think it
will also help along with the subpoena power the Department has
in the new bill. When you take those two things together, we
believe that we may be able to stop some of the money from
United States consumers flowing to foreign sites. That is, I
think, a creative and potentially quite useful way of
combatting the problem of foreign sites. And obviously you do
that with domestic sites as well.
So the answer to your question is yes.
Ms. DeGette. Thank you.
Mr. Upton. Mr. Burr.
Mr. Burr. Thank you, Mr. Chairman.
Let me, Mr. Hubbard, go back to the lady that Dr. Ganske
was talking about. She fills her prescription via an Internet
pharmacy--online pharmacy. You said that if the drug were not
approved by the FDA or was manufactured out of the country,
that that would be illegal. How about if the drug were
manufactured in this country?
Mr. Hubbard. I think the big issue there would be--you're
talking about a foreign Internet site?
Mr. Burr. Correct.
Mr. Hubbard. This committee led the way to legislation
about 15 years ago that would prohibit the reimportation of
drugs exported from the United States. The problem that the
committee found at the time was that drugs were going offshore,
expiring or otherwise being contaminated or having problems and
then being reimported into the United States and that became
very problematic. So the Congress enacted legislation under
this committee's auspices called the Prescription Drug
Marketing Act that would make that particular practice illegal.
Mr. Burr. So what you're saying to us is that there is no
international online pharmacy that has a product that can
legally be shipped into this country; is that correct?
Mr. Hubbard. There may be some exception, but generally, a
drug brought in from another country that is not subject to a
specific FDA approval would be violative, and, of course, both
those would come in, in commercial shipments to the
manufacturer and then the manufacturer would distribute them to
a wholesaler and then to a pharmacy to dispense them to a
patient.
Mr. Burr. Mr. Posner, is that also the U.S. code that
allows pharmaceutical companies and manufacturers here under
patent protection the ability to refuse for a reimportation?
Mr. Posner. I don't--are we still on the hypothetical with
the----
Mr. Burr. I think we're down to reality now. I mean, Mr.
Hubbard just said----
Mr. Posner. Right.
Mr. Burr. [continuing] under the current rules maybe
there's an exception out there and I grant him that leeway,
there's not an international online pharmacy that it could be
legal to sell products here because they might not be approved
by the FDA, not manufactured in this country and for those that
are manufactured in this country, there is a law that says it's
illegal to reimport them to this country. There is also an
additional U.S. code that allows manufacturers of patented
goods to deny their re-entry into this country after they've
been manufactured here and shipped somewhere else and then
tried to ship back to the U.S.
Mr. Posner. I think I generally agree with the FDA's
position. I am hesitant to offer a definitive legal opinion on
a set of facts.
Mr. Burr. Well, since you quoted U.S. Code, I thought you
might be familiar with that about patent protection.
Mr. Posner. I'm not----
Mr. Burr. So let me go to Ms. Durant, if I can. Does that
mean that the U.S. Customs is in fact stopping every shipment
that comes into the United States from an international online
firm?
Ms. Durant. No, the U.S. Customs Service does not have the
resources.
Mr. Burr. Has the FDA ever shared with you that their
opinion is that anything that is shipped from an international
online pharmacy into this country would be breaking the law?
Ms. Durant. We have some rules from the FDA on
circumstances----
Mr. Burr. Is this the first time you have ever heard
Justice or the FDA say that any product, any pharmaceutical
product shipped internationally back into this country in fact
breaks either FDA regulations or U.S. law?
Ms. Durant. This is the first time that I have personally
heard that.
Mr. Burr. We are making tremendous progress today.
Which I would say for the purposes of everybody's testimony
which I believe without exception they had it in there, this
paragraph on cooperation. I would tell you that we still have
something to strive for as it relates to the communication
between all the entities.
Mr. Posner, let me go to you for two quick questions. In
March of this year the Department of Justice released a report
on the President's Working Group on unlawful conduct and the
Internet. The report of the Department of Justice concluded,
``existing Federal law appears generally adequate to encompass
the unlawful sale of prescription drugs over the Internet.''
However, the Administration recently released their draft
proposal to impose new Federal regulations on the Internet. How
do you explain the inconsistency with the Department of
Justice's conclusion and what the proposal of the
Administration currently was?
Mr. Posner. Well, Congressman, we don't see an
inconsistency. What we testified actually in the committee last
year was that we said that----
Mr. Burr. Let me read you a quote, if I could, one more
time, and you tell me where I've misunderstood it. And I quote,
``Existing Federal law appears generally adequate to encompass
the unlawful sale of prescription drugs over the Internet.''
Mr. Posner. That's right. Existing substantive laws
generally are adequate, although we say in the report that
there were a lot of different investigatory issues. And what we
said last year and what we say in the Administration's report
is that you need to match up the offline world and the online
world. That is, disclosure in the offline world, you walk into
a CVS on Wisconsin Avenue and there is an array of disclosure
for you, pharmacy license with names, addresses, phone numbers,
all of that. That's what you see in the offline world. So it's
critical to match up the disclosures in the online world.
That's why that bill is, in our view, perfectly consistent with
the Administration's report which calls for consistency because
it requires all that disclosure to match offline pharmacies.
Mr. Burr. One of the challenges that we deal with is the
consistency of what you tell us and what it is next month. And
in this particular case in March you made a statement and here
at the first of May we get a bill that basically says
everything that you told us that everything wasn't adequate.
Let me just ask this last question, I know with the
committee's indulgence. Also in the President's Working Group
the report said that the U.S. continues to seek and obtain
cooperation from foreign governments with regard to foreign web
sites illegally importing drugs into the United States. I think
we would all conclude today that is now defined as 100 percent
of the foreign sites that ship into the United States.
What type of cooperation is the U.S. seeking and have we
had meetings with foreign governments on this topic?
Mr. Posner. Congressman, the Department is involved in a
range of negotiations, the Department and other Federal
agencies, Customs, FDA, and others, the State Department,
involved in a range of discussions about cyber crimes committed
internationally. These are very significant issues. They cut
across a lot of substantive areas. There are a number of
international agreements in place, there will be more
international agreements in place.
I mean, Customs can speak to a very successful story about
international cooperation resulting in arrests and seizures in
Thailand. There is more and more of that international
cooperation, particularly involving the Internet which
obviously presents global problems. There is a lot of activity
in that area as to cyber crime generally and as to online
pharmacies specifically and I think we are beginning to see
quite tangible results including convictions and arrests.
Mr. Burr. I thank you for your thoroughness in that answer
and have also been informed that in the proposal that was
recently sent to Congress that the bill also contains the
administrative subpoena power and civil monetary penalties that
do not exist in the offline world. So if we are trying to reach
a point of equity between the online and offline, the pendulum
might have gone too far.
I haven't had an opportunity to sit down and read the
proposal word-for-word, but I assure you that I will and I
think that from Mr. Klink's comments, we're all interested in
playing a part of whatever the solution is. I am amazed to find
out that today is the first day that we've all realized that
international sites based upon any criteria that we choose
would be illegal for a shipment to come to the United States.
And I hope that in fact Ms. Durant carries that back to the
Customs because I don't think she was aware of it based upon
her testimony. I thank the Chair and I thank the members.
Mr. Upton. The gentleman yields back the balance of his
time.
Mr. Hubbard, according to your testimony the FDA has sent
17 cyber letters to operators of foreign-based Internet sites
offering to sell online prescription drugs; what has happened?
Mr. Hubbard. I understand----
Mr. Upton. Did they stop? Did you scare them?
Mr. Hubbard. One of them notified us that they had ceased
immediately. Two others agreed to stop selling Viagra, but were
considering other drugs and I don't believe we heard from the
others. These are not orders, because these are sites in
foreign countries.
Mr. Upton. How long ago did you send them?
Mr. Hubbard. Oh, I think a month ago----
Mr. Upton. Could you keep us posted on the response?
Mr. Hubbard. Sure.
Mr. Klink. Would the Chairman yield for just one follow up?
Mr. Upton. Sure.
Mr. Klink. When you sent those letters did you coordinate
with the Department of Justice or Customs to make sure that
notifying these people they were under investigation didn't
interfere with other actions that other Federal agencies are
taking?
Mr. Hubbard. I understand while we did not do that in
advance, we've obviously shared them at the time we sent them
and I understand that there were no problems there.
Mr. Klink. Do you know that for sure?
Mr. Hubbard. I asked that question specifically and was
told by investigators that that was the case. But I did not
personally talk to Customs.
Mr. Upton. Ms. Durant, is that answer----
Ms. Durant. We were notified. It was after the fact and
there were no problems.
Mr. Upton. Mr. Posner, how are you coordinating with the
State enforcement agencies? And I want to get Ms. Stovall's
response to that as well. I want to hear a little bit about the
conference and how you all are interacting between the States.
Mr. Posner. Well, I know that our prosecutors both in
Washington and in U.S. Attorneys Offices around the country
have been in a number--I mean, we've all had plenty of
interagency meetings on this. The State AG's are quite involved
in this. We sent at least two notifications to NAAG, I think in
the last year about our interest and said here's a contact and
a phone number at DEA, here is a contact and a phone number for
a prosecutor in Washington.
My understanding, it's in my prepared remarks is that we
have a pretty good working relationship, an alliance between
the U.S. Attorney's office in Kansas, and Ms. Stovall's Office.
She can obviously speak to that in more detail as could our
Kansas prosecutor. But we have alliances with State prosecutors
and we have a lot of defined, longstanding, and ongoing
relationships with State prosecutors in a number of the
substantive areas and we use that with this subject matter as
well.
Mr. Upton. Ms. Stovall?
Ms. Stovall. In terms of the cooperation there is a Federal
group that was put together, a Federal/State working group and
it meets about quarterly and AGs have been invited to
participate in that. I'm not aware of specific examples of
times that we have called upon the U.S. Attorney in Kansas
although the U.S. Attorney is an outstanding individual, and I
know would be ready to help if we were to ask. But I'm not
aware of particular examples where we have asked for that to
occur.
Mr. Upton. Ms. Durant, Mr. Posner referenced the working
relationship with Thailand.
Ms. Durant. Yes.
Mr. Upton. What other relationship--that has been fairly
successful by I think everyone's admonition. What other
countries are you trying to build a similar relationship with?
Ms. Durant. We have not proceeded as dramatically as we
have with our Thailand attache's office. We are looking forward
to making that success in Thailand a model when the
CyberSmuggling Center adds these ten agents in July to the
Cyber Crimes Unit that we're forming in Customs.
But the way we do that is through our attache's office.
Customs has attaches overseas and they work with the foreign
governments to provide technical assistance to the foreign
governments which is what happens in Thailand such that they
shut down the Thai Government, seven online sites.
Mr. Upton. This subcommittee's investigative staff has
spent a little time at a couple of different facility sites and
they noted that the customs officials were applying different
standards in determining the pharmaceutical products that would
be allowed into the United States. And I would just note that
there is some cue perhaps in terms of the allowance of drugs
from other countries in we have a guidance sheet here that--
maybe we can make copies of this and share with you now, but
can you explain, Ms. Durant, why a Customs official might apply
a different standard depending on where the mail facility that
a package might go through?
Ms. Durant. We stress uniform application of our guidance
through our field offices.
Mr. Upton. San Diego, right, and San Francisco, and
Oakland, and Los Angeles. Dramatically different procedures as
you identified products that were coming in from whether it
would stored, whether it would be sent back, how long you would
have it, whether it would be sent along to the individual that
it was addressed to. It was remarkable the differences that
were----
Ms. Durant. We do have some differences. Some of those
differences frankly stem from guidance that we get from FDA at
the various FDA locations in the field. We do take our guidance
there. There are some variances we've been working with the FDA
to get a uniform policy and they, I believe, are issuing some
fairly strident instructions to their field offices not to
deviate from the national guidance.
Having said that, we need to work as well with our mail
branches to make sure that they too are following the guidance
and not deviating from that guidance. Part of the problem,
frankly, is just the overwhelming amount of mail and this
manual targeting that we're forced to use. We have only the
country information, X-rays and some dogs in our mail units to
be able to select those articles. We are fairly overwhelmed in
the mail in terms of our ability to cope with what is coming at
us. Be we are working with the FDA and working with our own
mail branch to make sure they follow the guidance that they're
given.
Mr. Upton. Mr. Klink?
Mr. Klink. I want to follow up on that, Mr. Chair. It was a
good line of questioning and it's the direction I wanted to go.
But before I do that, I had mentioned in my opening statement,
we see these promotional web pages, Mr. Hubbard, for some of
the drugs that are most frequently sold on these rogue sites
and I mentioned Propecia, Xenical, Viagra, and I've got copies
of them here. And I will tell you if you will accept my word
for it, there is nothing on these sites that jumps out front as
to where or where not to buy these. It does not really lead you
to the FDA where you could give some warning, and I understand
your site gives some warning as to these drugs. Does it make
good sense to you that these companies should be encouraged to
at least post certain basic consumer information at their
promotional web site talking about where or where not to buy
these drugs and there is safety and risk to associated
purchasing these on line?
Mr. Hubbard. These are by the manufacturer of the drug or
by the----
Mr. Klink. The promotional site done by the manufacturer;
yes.
Mr. Hubbard. Right. That is an issue, Mr. Klink, and I
think it's an important one. We have told companies that their
promotional material on these sites is subject to FDA
regulation. We have sent warning letters on that, we are
monitoring those because there is a real potential for abuse
and you're absolutely correct.
Mr. Klink. So what we're saying, these are promotional
sites that talk about these drugs, obviously very popular drugs
like Propecia, Xenical, and Viagra, and we're simply saying if
a company, and not to pick on any one of them, but they should
have something on that web site that would lead to the FDA or
say, look, obviously they list the risks associated with the
drug, but also there should be something on there that would
say where it's safe to buy this or where not to buy it?
Mr. Hubbard. I think that's good advice, Mr. Klink. I'm not
sure we can require that. We do, however, require that if they
promote the drug that they must have balanced information about
risks and contraindications and other problems with the drug or
what we call ``fair balance''.
Mr. Klink. I don't think that I'm making myself clear.
You've got at the FDA this online pharmacy facts----
Mr. Hubbard. Yes.
Mr. Klink. [continuing] and tips and warnings for
consumers.
Mr. Hubbard. Right.
Mr. Klink. If, for example, and I'll use Propecia, for
example, and this is Merck, if at Merck they had a place to
click here----
Mr. Hubbard. I think that's a good idea, Mr. Klink.
Mr. Klink. [continuing] but not to require them, but to
encourage them to say, why don't you click on FDA and when you
do, you're going to be at least----
Mr. Hubbard. That is a very reasonable suggestion, Mr.
Klink. Let me take that back and see if we can look at that.
Mr. Klink. I would like the FDA to join us in encouraging
these pharmaceutical companies--we have a lot of pharmaceutical
people I've noticed in the room today. I don't know why they
would want to be here, but we would encourage them to take that
message back and act responsibly in that issue.
I want to follow up, if I can on this whole issue of
because I agree with Mr. Burr, and it has been my supposition
that these illegal--that the shipping in of these drugs from
overseas sights is illegal from the very beginning and that is
why we wanted to deal with a disclosure bill. I have a copy of
the FDA's personal use importation guidance and Mr. Hubbard, I
would like you to walk me through it and explain exactly how
FDA intends this policy to be applied by U.S. Customs agents
and inspectors at the mail facilities. We think there is a
great discrepancy in how they are interpreting this. In other
words, how should they determine if a package of pills or
something that looks like pills should be released to the
addressee?
Now, would you say here that the general guidance section
states that FDA should consider not taking enforcement action
against such importation when No. 1, the intended use of the
drug is unapproved for serious conditions for which effective
treatment may not be available domestically either through
commercial or clinical means?
Mr. Hubbard. First of all remember all of these imported
drugs are illegal. This policy was derived with compassion in
mind, that if a person with a serious or life threatening
illness cannot get a therapy in this country because there is
nothing here, and they travel to another country to get
treatment or they order a drug over the Internet or mail to get
treatment, unapproved drugs for a serious condition, we have
adopted an enforcement discretion policy that says if the
patient is aware that they are bringing in unapproved illegal
drugs, if there is a physician here that is going to monitor
their use of it, we will let small amounts of it, personal use
amounts, in.
Mr. Klink. Well, let me jump in because I'm going to run
out of time here. The question here is--and I just want to read
through this real quick--the other two points is there are is
no known commercialization or promotion to a person residing in
the U.S. by those involved in the distribution of the product
at issue, the product is considered not to represent an
unreasonable risk, and the individual seeking to import those
products affirms in writing that it is for the patient's own
use generally not more than 3 months supply and provides the
name and address of the doctor that's licensed in the U.S. for
his or her--is responsible for his or her treatment with the
product or provide evidence that the product is for
continuation of treatment begun in a foreign country.
So the question here is, what criteria should they use?
Because we have visited different sites with the people in
Customs. They are confused, and I think rightfully so. They
don't understand or if they're not confused they are
interpreting this all differently.
So we have to make a determination as to how this gets done
and there really needs to be coordination with FDA. We are
hearing from some Customs people they pull these drugs off to
the side and nobody from FDA ever shows up and then it goes
back to the addressee. So the question I would ask, Ms. Durant
very quickly, what percentage of the mail packages that your
inspectors stop actually meet all or even a majority of the
criteria as outlined by the FDA in the guidance document; do
you have any idea?
Ms. Durant. I don't know.
Mr. Klink. We are told very little.
Ms. Durant. Very little, very little. In fact, in the mail
what we are seeing, we do see these quantities coming over
under this guise, it's more on the border with accompanying
passengers, but not so much in the mail shipments. Most of the
mail shipments and the seizures that we are making and the
detentions we are making are for illegal drugs, but very
little. Most of it and the way the inspectors recognize that it
doesn't meet any of this criteria in terms of labeling,
prescriptions accompany, et cetera.
Mr. Klink. So as a result of the clarification of Mr.
Burr's questioning earlier and this questioning now, we should
eventually be very close to almost drying up entirely the
amount of pharmaceutical products that U.S. Customs finds
coming through unless it clearly meets the majority----
Ms. Durant. The criteria.
Mr. Klink. [continuing] of these criteria; is that correct?
Ms. Durant. Correct. That is correct.
Mr. Klink. So these or whatever drugs are coming through
right now, after this hearing it should be very clear working
with FDA and the Department of Justice, we should not have a
vast amount of drugs or vast quantity of drugs coming through
U.S. Customs either by the mail or being carried by
individuals; would that seem to be correct?
[Simultaneous conversation.]
Mr. Klink. Or to rework the policy with the FDA and
Justice.
Ms. Durant. We are working with the FDA so that we have
very clear policy on what is allowed and what we should be
detaining. I am hesitant to say that we won't have illegal
drugs coming through the mail.
Mr. Klink. Mr. Chairman, I would like to know if we could
as the three agencies that are represented here within a 2-week
period of time to report back to this subcommittee as to the
manner in which they will be developing a clarified policy in
how this will be done, what criteria will be used as far as
personal exemptions. I think your concerns under your line of
questioning were the same. Clearly there needs to be a process
set in place immediately where these three agencies are working
together and I would ask unanimous consent that this
subcommittee make that request of the DOJ, the FDA, and
Customs.
Mr. Upton. Without objection.
Mr. Klink. Thank you.
Mr. Upton. Dr. Ganske?
Mr. Ganske. Well, Mr. Chairman, I want to follow up on this
because I think I'm reading from the same document that Mr.
Klink has, subchapter and coverage of personal implications and
under ``general guidance'' it says, ``FDA's personnel may use
their discretion to allow entry of shipments of violative FDA
regulated products when the quantity and purpose are clearly
for personal use and the product does not represent an
unreasonable risk to the user. Even though all products that
appear to be in violation of statutes administered by FDA are
subject to refusal. FDA personnel may use their discretion to
examine the background risk and the purpose of the product
before making the final decision. Although FDA may use
discretion to allow admission of certain violated items, this
should not be interpreted as a license to individuals to bring
in such shipments.''
Mr. Hubbard, is that correct?
Mr. Hubbard. Yes, that's right.
Mr. Ganske. And that is FDA policy?
Mr. Hubbard. Yes, it is policy. It is a form of enforcement
discretion.
Mr. Ganske. My point would be that I think when Congress
looks at the issue of prescription drug benefits we will want
to examine the inconsistancies in place between countries and
the fact that I think that we are going to see a big increase
in the shipments as our senior citizens start using that
Internet more. And I think we would need more information on
this. We need to know how much is going on. You know you could
get on the Internet and go to a site in the United States and
order a prescription drug and but what you get back might not
necessarily be the drug that you ordered and which was part of
your potential problem in getting it from a foreign source.
I mean, when we go to a pharmacist we are pretty certainly
that the pharmacist has gotten the drug from the pharmaceutical
manufacturer. There aren't too many places where somebody is
going to see a lot and take off the cellophane, substitute a
drug, put it back on--reseal it or something like that. But I
think that there is a potential for more abuse through an
Internet site than not.
I want to finish by just asking this, we are not here
saying that you cannot order drugs over the Internet in the
United States, i.e., we all see advertisements in the
newspapers for Viagra, etc. What is the legal and proper
procedure for a citizen to order a drug like Viagra through the
Internet?
Mr. Hubbard. I will be glad to answer that. It is to go to
your physician and give a history and be examined and be
determined that Viagra is appropriate for your condition and
also that you don't have heart disease or other reasons not to
be given it. The physician would then write the prescription.
You go online to an Internet site, give your name and address
and other necessary information, and then you would probably
mail in the prescription, although a physician could fax it.
Then that online site would mail you your drug and it would
arrive 2 or 3 days later. That is perfectly legitimate and
legal practice and, if anything, we encourage it.
Mr. Ganske. Ms. Stovall, is it legal for somebody to go on
the Internet to a site for Viagra and then interact on the
Internet with a physician that's employed by that Internet
pharmaceutical and get the prescription; is that legal or
illegal?
Ms. Stovall. You maintain that's a violation of the law.
That it is not a valid physician/patient relationship and it is
violative under the Consumer Protection Act.
Mr. Ganske. And Mr. Hubbard, do you agree with that?
Mr. Hubbard. Yes, if there is no valid relationship then
there is no valid prescription. But we have relied upon the
States to tell us within that State whether the valid
prescription exists.
Mr. Ganske. I thank you.
Mr. Upton. Ms. DeGette?
Ms. DeGette. Thank you, Mr. Chairman. I would like to
follow up briefly on my previous questioning. Mr. Posner, in
listening to all of this, it seems to me that the criminal
prosecutions are because of the proof issue very time consuming
to investigate at the FDA level and then once they get to the
prosecutor still more investigation is needed. And I'm sitting
here wondering if maybe you can talk briefly about whether we
should be focusing our efforts more on the civil injunctive
end. For example, passing legislation that Ms. Stovall is
advocating, talking about the legislative improvements you are
talking about. I mean, certainly there is always going to be an
egregious example where you need to use the criminal statute,
but wouldn't we be better off right now really focusing on
injunctive efforts to put these online pharmacies out of
business?
Mr. Posner. Well, the enforcement of criminal laws is
important. I mean, we are----
Ms. DeGette. We all agree with that.
Mr. Posner. [continuing] violation so we obviously need to
continue that. We do have several civil injunctions in cases
that have been filed and that are under investigation.
I would say, though, that it is still time consuming to
work up a civil injunctive case. I mean, these are complex
cases and you have got some different ens rea requirements for
the civil side, that's true, but you still need the identities
and the numbers and we need to understand conduct and we need
to understand State law. We need to understand a lot of things.
It is fairly time consuming to put together a civil----
Ms. DeGette. Right. But if you put together the civil case
then you can get an injunction stopping them from sending this
to anybody, whereas the criminal case is going to be sometimes
a little more attenuated. And also I'm concerned because I know
that Ms. Stovall did a wonderful job and some of the other AGs
too, but when you rely completely on States for either criminal
or civil injunctive relief, you're going to have a spotty
result. And, of course, these pharmaceuticals are coming into
every State.
So you know, in Kansas it may be a great enforcement effort
particularly on the civil end, but in Wyoming it might not be.
Mr. Posner. We are very eager to do civil cases. We have a
unit in Washington, the Office of Consumer Litigation that does
both criminal and civil cases. We would encourage FDA to look
to them for many cases. We are ready and eager to do a lot of
these cases.
Ms. DeGette. And I guess that brings me to kind of the
ultimate question which is, it doesn't seem to me that we have
a lead agency or a point person coordinating what our strategy
is on this to identify both legislative issues and
administrative issues, and I am wondering, Mr. Hubbard and Ms.
Posner, if that wouldn't be a good idea to figure out and then
to pursue aggressively?
Mr. Hubbard. I would note on the legislation I think there
was a very coordinated effort among the----
Ms. DeGette. No, I know, but who is in charge? Do you know
exactly who is in charge?
Mr. Hubbard. Well, I think for the legislation I would say
that the Electronic Commerce Working Group at the White House.
Ms. DeGette. Okay. But what about in terms of enforcement
both criminal and civil? Who is in charge of coordinating that
effort?
Mr. Hubbard. We have a working group----
Ms. DeGette. No, but who is in charge?
Mr. Hubbard. There has not been a designated lead agency on
that.
Ms. DeGette. And do you not think that would be helpful to
figure our strategy, Mr. Posner?
Mr. Posner. You raise a very good question. The States have
a very important role here and they are very active and have
longstanding expertise in a lot of these areas. The Federal
Government also has a role. This comes up in a number of
different subject matters.
Ms. DeGette. Right.
Mr. Posner. Because the State and the Federal Government
and then within the Federal Government there are obviously
multiple agencies that have a role.
Ms. DeGette. Right.
Mr. Posner. And it is frequently difficult to just put
somebody in charge. What you want to do is obviously have
effective cooperation and coordination, but I am not sure at
this point you can just say somebody is in charge when all of
the State and Federal Governments have very important roles to
play.
Ms. DeGette. Exactly. And I would never disagree with that
coming out of the State legislature myself. But, you know, we
have many, many very effective State and Federal working groups
and agreements and it would seem to me you want someone to be
the lead agency in helping coordinate. Because when no one is
in charge, what happens is everybody is running around pursuing
often less effective solutions. So I would really urge you to
look at that.
And one last question which is related to this, we heard
from Ms. Durant about the international side and it seems to me
that there is no interagency cooperation being discussed on the
international side. I don't know if you would agree with that
or not?
Mr. Posner. I think the international--there are a lot of
challenges, challenges to domestic sites are magnified through
international operations. That's been part of the discussions
in all the agencies and State/Federal cooperation, that's
always a part of the discussion. Obviously Customs has the lead
there, the FDA plays a very important role in that and our DEA
obviously is very on top of the controlled substances. So, yes,
that is a part of the interagency cooperation, but there have
been a lot of challenges.
Ms. DeGette. I mean, it would seem to me, and I would ask
you to look at this, it would probably be really useful, the
recently released legislation didn't address this international
site at all and it might be very useful for you folks to figure
out how that fits in and whether we can put some legislative--
on that end as well?
Mr. Posner. The only thing I would say about the
legislation there is that we do have a suggestion on an
amendment as I discussed earlier that may help us on the
foreign sites.
Ms. DeGette. Okay. Thank you.
Thank you, Mr. Chairman.
Mr. Upton. Thank you. I have just a statement, no further
questions on my part. You know, I just want to say this has
been a very instructive hearing and I am encouraged, always
have been encouraged by the amount of bipartisan thought and
commitment we have not only on this panel, but on the committee
as well, and I certainly look forward to working with Mr. Klink
and Ms. DeGette and others on drafting legislation to solve a
problem that really is out there. And I hope this doesn't open
maybe a can of worms, but as I have been listening to your
testimony, and some of your thoughts with regard to guidance--
the policy guidance that you have particularly in personal use,
drugs that perhaps have not been approved by the FDA, and often
life threatening illnesses and our hearts extend to all those
individuals that are those cases that are not so often unique,
but something that you've arrived for some guidance and
flexibility, I guess you could say in where the law actually
is. I'm not sure what gives you--not being a lawyer myself, I'm
not sure what precisely gives you the authority to bend the law
to allow those things to happen.
But as we look at legislation that may move into our
committee and get to the floor, I will be most interested to
see what thoughts, particularly from Justice, and FDA, in terms
of what leeway language we might include that would in your
best judgment allow us to in fact give you that leeway when you
think that it's necessary. And, again, it would be a very
difficult thing for us to take up, but clearly one that is in
practice has been going on for some time and allows us to be
responsive to the needs of those that are suffering life
threatening diseases when in fact they think that those that
particularly drugs may in fact extend their quality of life in
a meaningful way.
So that being said, I just want to appreciate your
testimony this morning. We may have additional questions for
you by all members of this panel and if that happens, if you
would respond quickly to those, that would be appreciated. I
also would ask unanimous consent that letters and other things,
periodicals that were mentioned from us can be inserted into
the record by unanimous consent.
I will yield to Mr. Klink.
Mr. Klink. Yes. Mr. Chairman, I just want to again
compliment you. This was a good hearing. I think by my count we
come out with at least three action items. One is that we do
want to draft a bill which would include this merger and
injunctive relief and we look forward to working--and, again, I
would say to the FDA and to Justice and to Customs and to the
Attorneys General, we want to work together on this and we want
to be a part of the discussion. This disclosure the bill has
been out there for a long time and we could use some support in
that language. If it's wrong, tell us what is wrong with it,
and let's go on with it. Let's get it done.
I think also I agree with the Chairman, in regarding this
whole issue of personal use exemption. I know it is intended to
be humane, but it is like a screen door on a submarine, you are
protecting someone who has got a life threatening illness or
that has got a problem; we are allowing other drugs to come
through that could cause the problem. Because it, again, has
less substance than Jello that hasn't set yet. No one really
has an idea on the front lines, I think, exactly how they are
supposed to deal with it. So we would like to know within 2
weeks how the agencies are going to work together to resolve
this issue, how that is going to be done.
That is extremely important to us and I also would like to
hear from the FDA that we take a manner of encouragement to the
drug companies to see that they post some kind of or that we
encourage them--obviously we can't require them--we would
encourage them to be good corporate citizens and to have
information on their product web sites that would lead to the
FDA warning sites, I think that that is a minimum step that
would begin to solve the problem if indeed they are concerned
about their products are being used in a manner which would be
adverse to public health and would risk potentially human life.
And I am sure that the drug companies are concerned about that
so I know that they will take our suggestion very seriously and
will comply.
And with that, Mr. Chairman, again, thank you for the
courtesy and thanks for the witnesses today.
Mr. Upton. Ms. DeGette, do you have further questions?
Ms. DeGette. No.
Mr. Upton. Mr. Strickland?
Mr. Strickland. No. Thank you, Mr. Chairman.
Mr. Upton. Thank you to everyone.
[Whereupon, at 12:01 p.m., the subcommittee was adjourned.]