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The Public Health Implications of Internet Drug Sales

Statement of

William K. Hubbard
Senior Associate Commissioner for Policy, Planning, and Legislation
Food and Drug Administration


the Subcommittee on Oversight and Investigations
House Committee on Commerce

May 25, 2000


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.


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.


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.


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, our contacts 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

  • 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, the 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.


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.


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.