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Imported, Counterfeit, and Unapproved Drugs

Statement of

William K. Hubbard
Associate Commissioner for Policy and Planning


John M. Taylor, III
Associate Commissioner for Regulatory Affairs
Food and Drug Administration


the Subcommittee on Oversight and Investigations
House Committee on Energy and Commerce

June 24, 2003


Mr. Chairman, Ranking Member Deutsch and Members of the Subcommittee, I am William K. Hubbard, Associate Commissioner for Policy and Planning at the U.S. Food and Drug Administration (FDA or the Agency). With me today is John M. Taylor, Associate Commissioner for Regulatory Affairs at FDA.

We appreciate the opportunity to testify on the continuing problem of unapproved imported prescription drugs. Our testimony will focus on FDA’s efforts to assess and respond to the public health threats posed by the importation of unapproved drugs, as well as the introduction of counterfeit drugs from foreign and domestic sources that also poses a threat to the health and safety of United States consumers. We will discuss FDA’s importation policies and procedures, the enforcement strategies regarding imported, unapproved, and counterfeit pharmaceutical products, and plans to strengthen management oversight at FDA’s Miami Import Office and the Miami International Mail Facility.

As FDA has previously stated to this Subcommittee, the overall quality of drug products that consumers purchase from U.S. pharmacies remains high. The American public can be confident that these medications are safe and effective. FDA cannot, however, offer the same assurance to the public about the safety and quality of drugs purchased from foreign sources.

FDA is working on a number of fronts to address the influx of unapproved and counterfeit prescription drugs coming into the U.S. from foreign sources. These efforts include: 1) educating the public to the significant potential safety issues presented by the purchase of drugs from foreign countries, 2) working with professional groups to disseminate FDA’s message on the potential dangers of Internet drug sales, 3) partnering with state governments and other Federal agencies to develop more effective enforcement strategies, and 4) undertaking monitoring of and enforcement against Internet pharmacy outlets that present the most significant concerns. Recent high-profile regulatory actions send a strong message that FDA is actively working to take strong steps to protect the public from conduct that threatens the U.S. drug supply.


The Federal Food, Drug, and Cosmetic (FD&C) Act prohibits the importation of unapproved, misbranded, or adulterated drugs into the U.S. In general, drugs imported by individuals fall into one of these prohibited categories. This includes foreign versions of U.S.-approved medications. In addition, under provisions enacted as part of the Prescription Drug Marketing Act (PDMA), it is illegal for anyone other than the drug’s original manufacturer to re-import a prescription drug that was manufactured in the U.S.

A large and growing volume of parcels containing prescription drugs ordered by individuals from foreign sources is entering American commerce through U.S. Postal Service international mail facilities. Members of this Subcommittee have witnessed these large volumes at locations such as the Dulles, Virginia, mail facility. Evidence strongly suggests that the volume of these foreign drug importations is increasing steadily. The volume presents a substantial challenge for the Agency to adequately assess and process these parcels, resulting in an increased workload for Agency field personnel at ports-of-entry, mail facilities, and international courier hubs.

FDA remains concerned about the public health implications of personally imported prescription drugs and the introduction of counterfeit drugs into the stream of commerce. In our experience, many drugs obtained from foreign sources that either purport to be or appear to be the same as U.S.-approved prescription drugs are, in fact, of unknown quality. FDA cannot assure the American public that drugs imported from foreign countries are the same as products approved by FDA.

FDA has long taken the position that consumers are exposed to a number of potential risks when they purchase drugs from foreign sources or from sources that are not operated by pharmacies properly licensed under state pharmacy laws. These outlets may dispense expired, subpotent, contaminated or counterfeit product, the wrong or a contraindicated product, an incorrect dose, or medication unaccompanied by adequate directions for use. The labeling of the drug may not be in English and therefore important information regarding dosage and side effects may not be available to the consumer. The drugs may not have been packaged and stored under appropriate conditions to prevent against degradation, and there is no assurance that these products were manufactured under current good manufacturing practice (cGMP) standards. When consumers take such medications, they face risks of dangerous drug interactions and/or of suffering adverse events, some of which can be life threatening. These risks could include potential side effects from inappropriately prescribed medications or side effects due to drug contamination.

Patients also potentially are at greater risk because there is no certainty about what they are getting when they purchase some of these drugs. Although some purchasers of drugs from foreign sources may receive genuine product, others may unknowingly buy counterfeit copies that contain only inert ingredients, legitimate drugs that are outdated and have been diverted to unscrupulous resellers, or dangerous sub-potent or super-potent products that were improperly manufactured. Moreover, consumers who are desperately seeking a cure for a serious medical problem may be more willing to accept a product of unknown origin.

Furthermore, in the case of foreign-based sources, if a consumer has an adverse drug reaction or any other problem, the consumer may have little or no recourse either because the physical location of the manufacturer or because the operator of the pharmacy often is not known or the seller is beyond the consumer’s reach. In addition, as a condition of doing business, many of these foreign operators require the U.S. consumer to sign a document releasing the operator from all potential liability. FDA has only limited ability to take action against these foreign operators.

Due to the huge volume of drug parcels entering the U.S. through the international mail and courier services, the requirements for notice and hearing, and our limited resources, it is difficult for FDA to detain and refuse mail imports for personal use. The advent of the Internet has significantly compounded this problem. As a consequence, tens of thousands of parcels that FDA is unable to review as a result of the Agency’s limited resources and multiple competing enforcement priorities are released by the Bureau of Customs and Border Protection (BCBP), even though the products contained in these parcels may violate the FD&C Act and may pose a health risk to consumers. We acknowledge that this is not an optimal public health outcome and are working on strategies to better utilize our available resources to minimize potential public health risks.

The Agency has responded to this challenge by employing a risk-based enforcement strategy to deploy our existing enforcement resources in the face of multiple priorities, including homeland security, food safety and counterfeit drugs. As an example, the Agency utilizes Import Alerts to identify particular shipments that may pose significant potential risk to public health. In the case of the increased volume of unapproved sildenafil (generic Viagra), arriving at the Miami facility, the Agency has issued an Import Alert to instruct field personnel to work with the BCBP to detain all such shipments from specific manufacturers, distributors and countries of origin.


Public outreach is an important tool that the Agency uses to inform consumers about potentially dangerous or ineffective drugs. FDA is expanding its public outreach to further educate consumers about potentially dangerous practices associated with some Internet drug sales. We also are conducting outreach to explain the nature of compliance and enforcement actions we already have taken. This effort includes FDA Talk Papers, articles in FDA Consumer magazine, and information on FDA’s website to help educate consumers about safely purchasing drugs online. FDA’s website also provides consumers with an opportunity to submit information to the Agency about sites that may violate the FD&C Act.

FDA is committed to developing more effective education strategies. With this goal in mind, FDA has created public education brochures and posters entitled, “Things you should know about purchasing medications outside the United States” to alert consumers to the health risks of buying medications outside the U.S. Cross-border travelers at certain land border stations are provided with another brochure entitled, “Looks Can be Deceiving,” which describes the dangers of purchasing drugs directly at cross-border pharmacies. This also is available on FDA’s website.

In October 2000, FDA’s Center for Drug Evaluation and Research (CDER) launched an education campaign on the subject of buying prescription medicines online entitled, “Shop Smart.” This effort is part of FDA’s “Buying Rx Drugs Online” education program. The centerpiece of this multi-media campaign is FDA’s website: http://www.fda.gov/oc/buyonline/default.htm that includes information for consumers, including tips and warnings, how to spot health fraud, frequently asked questions and how to report suspect pharmacy sites. The website is one of the most frequently visited webpages on FDA’s website.

Another central piece of our campaign is a brochure entitled, “Buying Prescription Medicines Online: A Consumer Safety Guide.” The brochure was produced by the CybeRx-Smart Safety Coalition, a partnership of Internet companies, trade associations, health and consumer organizations and other government agencies. The brochure is available in hard copy from FDA, the Federal Consumer Information Center and the National Council for Patient Information and Education (member of CybeRx-Smart). It also is posted on FDA’s website. The number of consumer inquiries received by FDA has grown steadily with the circulation of the brochure. In addition, a 30-second radio public service announcement was produced and distributed to stations throughout the U.S. The release has been broadcast on 233 radio stations in 46 different states with an audience of almost 6 million. Two print public service announcements (one for medical devices and one for prescription medicines) were produced and sent to over 100 national magazines.

The January/February 2001 issue of the FDA Consumer magazine included an article entitled, “Buying Drugs Online: It’s Convenient and Private, But Beware of ‘Rogue Sites.’” The article is available online and thousands of reprints have been distributed at conferences and exhibits around the country.


FDA continues to meet with organizations representing state regulatory and law enforcement bodies, consumers, health care practitioners and industry. The purpose of these meetings is to discuss and coordinate efforts to address issues relating to online drug sales, including who should regulate and how they should regulate; whether and what policy changes should be considered; and when to develop partnering arrangements. The organizations we regularly meet with 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 Pharmacists Association
  • The National Consumers League
  • AARP (formerly the American Association of Retired Persons)
  • The American Society of Health-Systems Pharmacists
  • The National Association of Chain Drug Stores
  • The National Community Pharmacists Association
  • The Pharmaceutical Research and Manufacturers Association
  • Pharmaceutical Security Institute
  • Healthcare Distribution Management Association


State pharmacy boards have primary responsibility for the licensing of pharmacies and regulating the dispensing of drugs. FDA has been working with the states to address concerns regarding importation of foreign prescription drugs. In February 2003, FDA hosted a nationwide call with 38 state boards of pharmacy, other state regulatory agencies and consumer groups to discuss current Internet drug sale practices. While some state laws are stronger than others, FDA has actively engaged with a number of states in jointly pursuing Internet sites that are engaged in illegal prescription drug sales. FDA is continuing to expand its cooperative activities with states in order to address effectively the many challenges in this area of electronic commerce. FDA also is continuing to work closely with our partners in the states in support of their efforts to curtail illegal and potentially dangerous operations, especially when they involve misleading claims about drug safety.

Discount Prescription Center

A recent example of the effective application of state pharmacy law to a drug importation case is seen in the May 13, 2003, warning letter issued by the West Virginia Pharmacy Board (the Board) to Discount Prescription Center of Fairmont, West Virginia, telling that firm to cease its violation of state law. Discount Prescription Center solicited patients and arranged for a Canadian pharmacy to dispense and ship prescription drugs to the patients. FDA considers the firm’s operations to be illegal and a potential risk to public health. FDA expressed support for the Board’s effort to stop this firm from violating the law in a letter to the Executive Director and General Counsel of the West Virginia Board of Pharmacy. FDA stated in the letter that we believe that operations such as Discount Prescription Center expose the public to the significant potential risks associated with imported prescription medications that are not FDA-approved. In addition, FDA has offered assistance in any future efforts by the Board to stop similar firms.

Rx Depot

On March 21, 2003, FDA issued a warning letter to a storefront operation known as Rx Depot. We commenced this action in conjunction with the Arkansas State Board of Pharmacy. Rx Depot generally obtains unapproved drugs from Canada for U.S. consumers, exposing the public to the significant potential risks associated with unregulated imported prescription medications. Rx Depot and similar companies have often stated incorrectly to consumers that FDA condones their activities and even that their prescription medications are “FDA approved.” This could lead consumers to conclude mistakenly that the prescription drugs sold by the companies have the same assurance of safety as drugs actually regulated by FDA.

FDA believes that operations such as Rx Depot expose the public to significant potential risks associated with unregulated imported prescription medicines. FDA’s warning letter notified the firm that the Agency considers the firm’s operations to be a risk to the public health, and in clear violation of the drug safety laws that protect Americans from unsafe drugs. Although FDA addressed its warning letter to the Rx Depot in Arkansas, FDA also sent a letter to the president of Rx Depot, in Tulsa, Oklahoma. The warning letter applies to all locations of Rx Depot and its affiliates. While Rx Depot responded to FDA’s warning letter, that response was inadequate and FDA is developing an effective response.

We issued our warning letter in conjunction with action by the Arkansas State Board of Pharmacy. The Arkansas State Board of Pharmacy issued its own letter to the firm on the same day as our warning letter instructing the firm to cease violating state law immediately.


FDA’s Office of Regulatory Affairs (ORA), including the Office of Criminal Investigations (OCI), works with state and Federal investigative agencies and prosecutors to uncover violations of the FD&C Act and other laws with respect to unapproved, misbranded, illegally imported, or otherwise unsafe or substandard drug products.

Recent criminal and civil cases provide insight into the seriousness of the risks these products pose to the public health. With respect to Internet drug sales, FDA to date has initiated the following actions:

  • 150 Internet-related drug arrests, 60 involving Internet pharmacies;
  • 102 convictions, 34 convictions involve Internet pharmacy cases;
  • 95 open Internet drug criminal investigations;
  • 90 sites are under active review for possible regulatory or civil action;
  • Nearly 200 cyber warning letters sent to domestic and foreign online sellers;
  • 5 preliminary injunctions;
  • 15 product seizures; and
  • 11 product recalls.


FDA takes very seriously any allegations or information regarding the counterfeiting or adulteration of drug products. As the drug manufacturing and distribution system has become more global in nature, the challenge of protecting against counterfeit, adulterated or substandard drugs has become more difficult. The Agency is concerned about a spate of drug counterfeiting and tampering cases that have occurred in recent months, and is aggressively pursuing these types of enforcement cases.

FDA’s OCI has opened 73 counterfeit drug cases since October 1996. Investigations have so far netted 44 arrests and 27 convictions. Fines and/or restitution have been imposed in excess of $250,000. FDA has seen a gradual, but troubling, increase in the incidence of finished dosage form counterfeit activity. Much of this activity has targeted high volume, high cost drugs where counterfeiters attempt to obtain the highest return possible in a short time period. Many of these drugs are used for treating cancer and AIDS patients. The public perception of a more dramatic increase in counterfeit drug activity stems from the fact that the latest several counterfeits have appeared in the wholesale market and received wider distribution than has been the case historically.

Reporting of Information on Counterfeit Drugs by Manufacturers

On April 22, 2003, the Pharmaceutical Research and Manufacturers of America (PhRMA), which represents the country’s major research-based pharmaceutical and biotechnology companies, announced the adoption of a voluntary program to report suspected instances of drug counterfeiting to FDA. The information provided by PhRMA members under this program will be helpful to the Agency because it will assist FDA in carrying out its responsibilities to protect the safety and integrity of the nation’s drug supply by enhancing the Agency’s ability to detect quickly and remove counterfeit drugs from the marketplace.

Under this program, PhRMA member companies have agreed to notify FDA’s OCI within five working days of determining that there is a reasonable basis to believe that a product has been counterfeited. The program also applies to counterfeits discovered in foreign countries if there is clear evidence that the counterfeits are intended for distribution in the U.S. Drug manufacturers already conduct their own investigations of suspected distribution of counterfeit drugs. This formal collaborative agreement will strengthen FDA’s ability to assure the safety and effectiveness of drugs used by U.S. Consumers. The reporting program went into effect on May 1, 2003. The two most recent cases of counterfeit prescription drugs in which FDA has played a significant role are those involving the drugs Procrit and Lipitor.

On May 21, 2003, the U.S. Attorney’s Office for the Southern District of Florida filed charges against Eddy Gorrin, William Chavez and Duviel Gonzalez for unlawful sale and wholesale distribution of counterfeit versions of Amgen, Inc.’s, prescription drug Procrit, a medication indicated mainly to help cancer, anemia and HIV patients increase their red blood cell count.

Between January and February 2003, Gorrin intentionally engaged in the sale of counterfeit versions of Procrit. During that same time period, Chavez and Gonzalez also were engaged in unlawful wholesale distribution of counterfeit Procrit without a state license. The undercover operation and tests conducted by FDA’s Forensic Chemistry Center revealed that the vials being distributed by all three men labelled as “Procrit” did not contain any active ingredient for Procrit, but instead, contained only bacteria-tainted water. In early June 2003 all three defendants plead guilty to criminal charges in the Southern District of Florida. The defendants face up to 10 years in prison and a $250,000 fine.

Lipitor Investigation
On May 23, 2003, FDA issued an alert on a counterfeit version of Pfizer, Inc.’s, prescription drug, Lipitor. The alert warned health care providers and others that three lots of counterfeit Lipitor represent a potentially significant risk to consumers. One in five people have high cholesterol that may lead to cardiovascular disease, such as heart disease and stroke. According to the American Heart Association (AHA), every 33 seconds, someone in the U.S. dies from cardiovascular disease. (Source: AHA 2002 Heart and Stroke Statistical Update) Lipitor is the number one prescribed cholesterol-lowering medication, and is currently used by more than 18 million people. Lipitor is proven to lower total cholesterol and decrease the risk of developing cardiovascular disease. FDA investigators have aggressively pursued a variety of leads all along the supply and distribution chain in an effort to identify the source of this counterfeit activity.

In conjunction with the manufacturer of this product, FDA published a list of lot numbers to identify the counterfeit product. We urged health care providers and patients alike to check the packaging very carefully before using this product. Patients who have any of the product (labeled as “Repackaged by MED-PRO, Inc.”) with the specified lot numbers were told not to consume it, and to return the product to their pharmacies. On June 3, 2003, FDA announced that its continuing investigation of counterfeit Lipitor identified additional counterfeit quantities of the cholesterol-lowering product. The investigation is ongoing.

FDA’s advice to health care providers and consumers remained the same as when the Agency issued its original alert on counterfeit Lipitor. They should check the packaging very carefully before using Lipitor. Patients who have any of the product with any of the lot numbers we identified should not take it, and they should return the product to their pharmacies. We want to reemphasize this warning today.

As part of the FDA’s ongoing efforts to investigate and respond to unscrupulous counterfeiting activities, FDA’s OCI is investigating this case of counterfeit Lipitor in carrying out its public health mission. FDA regularly conducts investigations and testing to identify and remove from the market products that are counterfeit, have been tampered with, or are otherwise unsuitable.

FDA is working closely with the individual states and with health professionals, particularly pharmacists and pharmacy associations, to alert them to this counterfeit product. Many patients taking Lipitor do not receive it in the 90-tablet bottles, but pharmacists provide it in smaller quantities, which do not contain the identifying lot numbers. Patients who are not sure whether they have the tainted product were instructed to check with their pharmacist.

FDA will continue to work closely with Pfizer, Inc., on this counterfeiting problem. FDA supports the activities of legitimate manufacturers to inform the public about counterfeit products and how to identify them. In addition Pfizer, issued its own press release supporting the vigorous enforcement of the law to protect patient safety. The company continues to work closely with FDA and other regulatory authorities to help prevent the importation of counterfeit medicines.

Other counterfeit prescription drug cases in which FDA has had a central role include:

  • Serostim (somatropin (rDNA origin)) for injection -- In late 2000 and early 2001, FDA became aware of consumer complaints about adverse effects and a recall was initiated at the distributor level for Serostim, a growth hormone often used to treat AIDS wasting. After further investigation by the manufacturer, Serono, Inc., and FDA, Serono issued press releases regarding the apparent counterfeiting of two lots of the product. In May 2002, Serono became aware that counterfeit Serostim displaying a fake lot number again had been distributed. Laboratory analysis by FDA showed that the product contained no active ingredient, and that the product did not originate from Serono.
  • Neupogen (filgrastim) for injection -- In the spring of 2001, based on observations by a distributor about the appearance of Neupogen, a colony stimulating factor used mostly in cancer patients, the manufacturer, Amgen Inc., analyzed a suspect lot and determined that the vials contained only saline solution. Amgen issued Dear Health Care Professional letters nationwide informing patients, physicians, pharmacies and wholesalers about the counterfeiting of Neupogen. The counterfeit product was labeled with fake lot numbers and/or wrong expiration dates.
  • Epogen (epoetin alfa) for injection -- In May 2002, FDA, state regulators and the manufacturer, Amgen Inc., became aware that a potential counterfeit of Epogen was in commerce. The product, Epogen, is used to stimulate red blood cell production in cancer and AIDS patients. Amgen analysis indicated that certain vials of a counterfeit product labeled as Epogen contained active ingredient approximately 20 times lower than expected. Further investigation revealed that a major wholesale distributor was holding approximately 1,600 cartons of counterfeit product. Later that month, Amgen warned health care professionals that two additional counterfeit lots of Epogen had been discovered.
  • Combivir (lamivudine plus zidovudine) tablets -- In the spring of 2002, the manufacturer, GlaxoSmithKline (GSK) received four complaints that bottles containing 60 tablets of Combivir had been replaced with Ziagen tablets. In addition, the firm determined that counterfeit Combivir labels had been placed on authentic bottles of Ziagen tablets, a different GSK product with a label containing a black box warning about the dangers of possible fatal hypersensitive reactions to Ziagen. A black box warning placed at the beginning of an FDA-approved lable is the strongest warning to prescribing physicians, health care professionals and consumers, that severe adverse reactions have been experienced from use of the product. Both Combivir and Ziagen can be used as part of a combination regimen to treat HIV infection. The concern in this case was that if an individual were to take the wrong tablet and is sensitive to Ziagen, a potentially life-threatening hypersensitivity reaction could occur. In May 2002 distributors were advised to initiate a recall to their customers.
  • Zyprexa (olanzapine) tablets -- In the winter and spring of 2002, bottles of Zyprexa, an Eli Lilly and Company product, indicated for the treatment of schizophrenia and acute bipolar mania, had been emptied and replaced with white tablets labeled as aspirin. The tampering situations occurred in two strengths and in three different lots. In May 2002 Lilly issued a press release and Dear Health Care Professional letter concerning the tampering situation.


FDA Import Regulations

Pursuant to the FD&C Act, FDA is responsible for the safety and effectiveness of domestic and imported pharmaceuticals. Section 801 of the FD&C Act gives FDA, in conjunction with BCBP, authority for regulating the importation of drugs and certain other products. This includes the authority to refuse admission of any article that appears to be in violation of the FD&C Act.

Under Section 801(a) of the FD&C Act, a drug is subject to refusal of admission into the U.S. if it appears that it: 1) has been manufactured, processed or packed under unsanitary conditions, 2) is forbidden or restricted for sale in the country in which it was produced or from which it was exported, or 3) is adulterated, misbranded or in violation of section 505 of the FD&C Act, which relates to new drugs. To determine whether a product is in compliance, FDA may collect an analytical or documentary sample from the shipment for evaluation, and the shipment is held until the results of the examination are known. If it appears that the article may be subject to refusal, FDA gives the importer a written notice and an opportunity to present testimony, either verbally or in writing, to overcome the appearance of the violation. Alternately, the importer may request permission to bring the article into compliance. If FDA denies the request to recondition the article and the article is refused admission, it must either be re-exported or destroyed.

Import Alerts

FDA’s ORA, Division of Import Operations issues import alerts to inform staff about problems, such as with specific commodities or shippers. Because they are disseminated Agency-wide and are shared with other agencies, import alerts help ensure that FDA’s regulation of imports is uniform and effective. As with all regulatory guidance, they are subject to the Agency’s good guidance practices regulation and must have management concurrence before they are implemented.

Detention Without Physical Examination

In some instances, a product may be detained as soon as it is offered for entry into the U.S. This procedure is the administrative act of detaining a product without physical examination and is based on past history and/or other information indicating the product may violate the FD&C Act. A product may be subject to an import alert recommending detention without physical examination until FDA has new information indicating such action is no longer warranted.

Guidance to ORA Field Staff

FDA’s ORA provides guidance to FDA field personnel giving them detailed policies and procedures for processing imported products, including imported prescription drugs. In addition to import alerts, the principal guidance documents are the Investigations Operations Manual, Chapter 6, and the FDA Regulatory Procedures Manual (RPM), Chapter 9.

Because the volume and types of imported products varies by FDA district--one district may receive a large percentage of drugs, while another may receive mostly food products--many districts also have standard operation procedures tailored to their unique workload. All of FDA’s import organizations, however, are required to handle and process all FDA-regulated products offered for import. The Agency's field work, therefore, is quite varied and does not focus solely on drugs.

Importation of Prescription Drugs

All imported drugs are required to meet the same standards as domestic drugs, and thus must not be unapproved, misbranded, or adulterated. All imported drugs are required to meet the same standards as domestic drugs. Drugs imported by individuals that are unapproved, misbranded, or adulterated, are prohibited. This includes drugs that are foreign versions of FDA-approved medications, and drugs that are dispensed without a prescription. As stated previously, under the FD&C Act, FDA-approved drugs that are manufactured in the U.S. and exported may not be imported by anyone other than the manufacturer.

At mail facilities, BCBP officials identify parcels that should be brought to FDA’s attention. BCBP places these packages in a secure location that they maintain for FDA and other agencies. As with all imports, if it appears that the product may be subject to refusal, FDA will issue a notice to detain the product and provide the owner or consignee an opportunity to respond. Due to these requirements and the volume of regulated products imported by mail, the detention and further processing of mail parcels consumes large amounts of FDA resources. In addition, considerable storage space is needed to hold the large number of detained parcels while a notice, opportunity to respond, and Agency decision are pending.

FDA Personal Importation Policy

Under FDA’s personal importation policy, as described in guidance to the Agency’s field personnel, FDA staff may exercise enforcement discretion in limited circumstances to permit the importation of certain unapproved prescription medication for personal use.

First adopted in 1954, the policy was last modified in 1988 in response to concerns that certain potentially effective treatments for AIDS patients were not available in the U.S., but were available in other countries. The Agency expanded the guidance for humanitarian purposes to allow individuals suffering from serious medical conditions to acquire medical treatments legally available in foreign countries but not approved in the U.S. The policy is articulated in guidance to FDA field personnel and is not a license for individuals to import unapproved, and therefore illegal, drugs for personal use into
the U.S.

  • The current personal importation policy permits the exercise of FDA’s enforcement discretion to allow entry of an unapproved prescription drug if:
  • The intended use is for a serious condition for which effective treatment may not be available domestically.
  • The product is considered not to represent an unreasonable risk to the patient.
  • The product is for personal use.
  • There is no known commercialization or promotion to U.S. residents by those involved in the distribution of the product.
  • The individual seeking to import the product affirms in writing that it is for the patient’s own use and provides the name and address of the U.S.-licensed doctor responsible for his or her treatment with the product or provides evidence that the product is for the continuation of a treatment begun in a foreign country.

FDA’s personal importation policy, as written, is difficult to implement with respect to mail shipments of drugs. This is due, at least in part, to the difficulty faced by BCBP and FDA inspectors, and even health care practitioners, in identifying a medicine simply by its appearance or its labeling, which may nonetheless falsely identify a product. From a practical standpoint, FDA inspectors cannot always visually examine drug products contained in a mailed parcel and accurately determine their content, identity or the degree of risk posed to the individual who will receive these drugs. Also, largely because of the advent of Internet sites selling prescription drugs from all points around the globe, the volume of parcels containing prescription drugs has increased dramatically. This increase in volume presents a significant challenge for BCBP and FDA. However, in order to respond to this growing concern, utilizing a risk-based approach, the Agency has deployed its limited enforcement resources across competing priorities, across field offices, and across regulatory product categories to protect the public health from unapproved products that pose the most significant potential public health concern. These enforcement activities are described in more detail below.


FDA has conducted numerous investigations and enforcement activities of imported products. The Agency has taken action when it believes imported products, including prescription drugs, pose a significant public health risk. FDA takes regulatory action in the import arena, which covers a wide range of products including foods, drugs, medical devices, human and animal drugs and biological products. If a situation appears to involve criminal activity, FDA’s ORA has the option of referring the information to the Agency’s OCI.

FDA has a number of enforcement tools that can be used to regulate imported products. These include: 1) warning letters, 2) recalls, 3) seizures, 4) injunctions, or 5) prosecution. FDA may issue a warning letter in a number of scenarios including when: 1) a party fails to hold its entry intact before FDA releases it, 2) a party consistently imports in violation of the FD&C Act, or 3) an importer presents misleading information, or 4) FDA informs an importer that the Agency has requested that BCBP deny immediate delivery privileges.

FDA also may ask a firm to voluntarily recall an imported product if FDA deems it a potential health hazard or if there is some evidence of distribution of detained or refused merchandise. FDA may opt to seize a product if it: 1) represents a health hazard and has been or is likely to be distributed following detention or refusal, 2) has been previously refused, or 3) has been identified fraudulently in documents submitted to FDA.

Injunction may become the action of choice when FDA sees a pattern of violations with some recognizable danger of reoccurrence. This is a judicial action that may result in quicker corrective action than a prosecution, and, if successful, it legally enjoins the defendants from continuing to violate the law. Prosecution may be used when conventional import enforcement approaches are determined inadequate to correct violations or the violation is sufficiently egregious to warrant punishment. Prosecution may be warranted when there is: 1) continued illegal distribution after receipt of a notification of detention, 2) submission of false or misleading entry documents, 3) repeated entry of previously refused products, or 4) evidence of fraud.

None of the potential actions described above are mutually exclusive. In some cases, FDA may take complementary steps that involve a combination of these actions in order to protect the public health from drugs that violate the FD&C Act. Evidence of this type of mix of regulatory actions can be seen in FDA’s ongoing work on the counterfeit Lipitor matter.

Many imported prescription drugs that are arriving at mail facilities are ordered over the Internet. FDA has increased its capability to monitor the Internet and identify sites that potentially violate the FD&C Act, through the use of various search tools and by upgrading its data handling capabilities. In some cases the Agency will conduct exercises to better understand the products that are coming in through specific ports-of-entry. The Agency is currently conducting such exercises at two FDA import locations. These actions help the Agency to better understand the type and extent of unlawful conduct on the Internet and to more accurately assess whether its enforcement efforts have had an impact on illegal behavior.

Miami Enforcement Successes

FDA has had numerous enforcement successes on prescription drug import cases. One such example that is worth noting is a Miami broker, Eagle Global Logistics that continued to improperly import FDA regulated medical device, pharmaceutical, and radiation emitting products after being advised of reporting errors. The broker had a 22 percent error rate, and working with BCBP, the broker was assessed penalties of $30,000 for failing to exercise responsible supervision and control.

Florida District’s Miami Import Office recommended penalties to be assessed against Catalysis Corporation, an importer and broker that continued to declare over-the-counter drugs as cosmetics despite FDA efforts to counsel the company. BCBP approved a $46,000 penalty against the importer for aiding illegal importation under Title 19, United States Code 1595a(b). Actions seeking additional penalties are pending.

Other ORA Enforcement Successes

On June 20, 2003, officials from FDA’s OCI joined with representatives of the U.S. Attorney’s Office for the District of Delaware, the Department of Health and Human Services (DHHS), and the Defense Criminal Investigative Service (DCIS) to announce that AstraZeneca Pharmaceuticals LP had pleaded guilty to a large-scale health care crime. The firm agreed to pay $355 million to resolve the associated criminal charges and civil liabilities. The massive conspiracy involved illegitimate pricing and marketing of Zoladex, an AstraZeneca drug for the treatment of prostate cancer. The various schemes used by the firm caused multimillion-dollar losses to Federally and state-funded insurance programs and individual patients.

FDA’s OCI began investigating AstraZeneca’s pricing and marketing practices after a private individual filed a civil False Claims Act suit. The broadly-based investigation, which also involved the Office of the Inspector General for the DHHS, the DCIS and the Federal Bureau of Investigation, discovered that AstraZeneca employees were using several illegal methods to stimulate the demand for Zoladex by enabling prescribers to reap illicit profits.

The agreement included the following provisions:

AstraZeneca pleaded guilty to criminal conspiracy to violate the Prescription Drug Marketing Act by causing Medicare, Medicaid and other Federal providers to be overcharged for Zoladex that had been provided as free samples to urologists. As part of the plea agreement, the company agreed to pay a $63,872,156 criminal fine.

  • AstraZeneca also agreed to settle its civil liabilities and to resolve allegations that its fraudulent drug pricing schemes, and sales and marketing misconduct had caused false and fraudulent claims to be filed with Federal and state health care programs.
  • AstraZeneca agreed to payments of $266,127,844 to the U.S. government for claims filed with the Medicare, TriCare, Department of Defense and Railroad Retirement Board Medicare programs, and $24,900,000 to the U.S. and state governments for claims involving state Medicaid programs.

The investigation, which is continuing, also resulted in charges against three physicians for conspiring with AstraZeneca to bill patients and third party payers for free Zoladex samples. Two of the prescribers have pleaded guilty.

As previously stated, on May 21, 2003, the U.S. Attorney’s Office for the Southern District of Florida filed charges against Eddy Gorrin, William Chavez and Duviel Gonzalez for unlawful sale and wholesale distribution of counterfeit versions of the prescription drug Procrit. In early June 2003 all three defendants plead guilty to criminal charges in the Southern District of Florida. The defendants face up to 10 years in prison and a $250,000 fine for these actions.

FDA’s ORA is conducting a significant investigation to respond to unscrupulous counterfeiting activities involving Lipitor. FDA is conducting this activity in close cooperation with health professionals, particularly pharmacists and pharmacy associations and has issued statements to alert the public about this counterfeit product.

On October 1, 2002, a Federal Grand Jury in Arizona returned a 198 count indictment against Kwikmed, Inc., Cymedic Health Group, Inc., four owners of these corporations, and two physicians associated with the corporations. The indictment alleges that defendants operated Internet websites, two of which include kwikmed.com and cymedic.com, through which they sold prescription drugs, including Viagra, Celebrex, Xenial, and Propecia. The websites did not require a consumer to have a prescription before receiving the drugs. Instead, the customers were required to complete a questionnaire, which the website told customers would be reviewed by a physician.

Customers were charged a fee for this purported medical consultation. The indictment alleges that in the overwhelming majority of applications, no medical reviews, consultations, or physical examinations by a physician took place before drugs were shipped to customers. Defendants repackaged drugs obtained from a drug wholesaler, even though defendants were not a registered manufacturer or a licensed pharmacy and there was never a licensed pharmacist involved. The drugs dispensed were adulterated because of the defendants’ failure to follow cGMP in packaging, holding, and labeling of the drugs.

The indictment alleges that during the course of the conspiracy the defendants and others generated sales in excess of $28 million, which was billed to consumers as charges for prescription drugs, doctor consultations, and shipping. These sales resulted from the defendants’ distribution of at least 48,816 new orders for prescription drugs and 41,817 refills of those orders. The indictment charges defendants with several violations of the FD&C Act, as well as conspiracy, mail fraud, and money laundering. The charges were the result of an investigation by FDA and the U.S. Postal Inspection Service.

Norfolk Men’s Clinic
On February 16, 2002, a Federal jury in Alabama convicted Anton Pusztai and Anita Yates of charges arising out of the operation of an online pharmacy that illegally sold prescription drugs over the Internet to consumers. On June 18, Pusztai and Yates were sentenced respectively to more than 15 and 6.5 years. Pusztai, an Australian citizen, and Yates, a resident of Clanton, Alabama, were convicted of conspiracy to commit violations of the FD&C Act, conspiracy to commit money laundering, mail fraud, dispensing misbranded drugs, and operating a drug repackaging facility not registered with FDA. From fall 1998 to the summer of 2000, the defendants operated a website called Viagra.au.com, also known as Norfolk Men’s Clinic, and related sites, that sold a variety of prescription medications.

In September 1999, OCI received information regarding the Norfolk Men’s Clinic and the website. Based on this information, several covert purchases were made via the Internet. Search warrants were executed in October 1999 that resulted in the seizure of prescription drugs and business records. Based on these purchases and information gathered through numerous interviews, several individuals were indicted. In addition to defendants Pusztai and Yates, the president of a prescription drug wholesaler located in Miami, Florida, and the company itself, pled guilty to distributing misbranded drugs. The company also plead guilty to obstruction of justice. In conjunction with the indictment, a second search warrant was executed in Clanton, Alabama, along with two search warrants in West Virginia. While most of the drugs sold in this operation were domestic product, some appeared to have been manufactured in New Zealand for distribution in Australia.

Medications Express
On June 7, 2001, Gerald Bevins was convicted in U.S. District Court for the Southern District of California of conspiracy to defraud the U.S. and commit offenses against the U.S. by introducing misbranded drugs into interstate commerce and smuggling. On September 4, 2001, Bevins was sentenced to serve 2 years in prison. The case was initiated on information received from BCBP concerning an Internet website called Medications Express. Bevins sold Mexican prescription pharmaceuticals from this website and claimed that a doctor’s prescription was not necessary. He continued to sell Mexican prescription pharmaceuticals through the mail from Sun City, California, even after discontinuing the Medications Express website. Bevins, his wife and daughter would receive orders via mail, travel to Tijuana, Mexico, to purchase the pharmaceuticals, and smuggle them back into the U.S. The three packaged the pharmaceuticals into commercial courier boxes and shipped them to customers around the U.S. The drugs supplied by Bevins were labeled in Spanish.

Dagoberto Paz-Tamez Diet Drug Case
This case involved the sale of unlabeled/adulterated diet drugs in Pasadena, Texas by an alleged medical doctor from Mexico. The alleged doctor, Dagoberto Paz-Tamez, is not licensed to practice medicine in the state of Texas or anywhere else within the U.S. This case was assembled in conjunction with the Harris County Precinct 6 Constable’s Office, the Texas Department of Public Safety (DPS), and the U.S. Postal Inspection Service.

Investigation revealed that Paz-Tamez had been selling unlabeled diet pills to patients for several years in the Pasadena, Texas area. A sample of the diet pills was submitted to the Harris County Precinct 6 Constable’s Office by a confidential informant. These samples were later submitted to FDA’s Forensic Chemistry Center and were found to contain amphetamines and other dangerous substances.

On August 22, 2002, Paz-Tamez was arrested in Pasadena, Texas. Diet drugs and U.S. currency were seized consisting of the following: $10,236 in U.S. currency, 4,350 tablets, 30,488 gelatin capsules, and 44.5 pounds total weight of unlabeled diet drugs. The diet pills and tablets seized were found to contain mazindol (an amphetamine discontinued in the U.S.), diethylpropion (an amphetamine), diazepam (generic for Valium), and hydrochlorothiazide (a diuretic).

On March 16, 2002, Paz-Tamez was convicted of Possession of a Controlled Substance and Delivery of a Dangerous Drug. He was later sentenced to ten years of deferred probation.


FDA’s Florida District Office (FLA-DO) import operations are strategically located throughout the district with the largest operation in Miami, Florida. Their work assignments encompass all of FDA’s regulated products and are not limited to pharmaceutical products. Miami is the largest port-of-entry for fresh seafood in the U.S. It is also one of the main ports in the U.S. for fresh produce. Moreover, Miami is the major distribution point for Latin American electronics, device, and drug products.

Consequently, the Miami Import Office is responsible for a very dynamic and busy port that handles a large volume and variety of imported products.

One of the busiest locations for the Miami Import Office is the Miami International Mail Facility. The import activities at the mail facility that focus on imported pharmaceutical products are a top priority for the district office. They do this by examining products at the Miami International Mail Facility including commercial drug shipments, large parcels shipped to individual consignees and parcels that are suspected to contain counterfeit or unapproved drugs. The FLA-DO and the Miami Import Office work in collaboration with the BCBP, and use a team approach to work on commercial entries and the review of import-export documents. This collaboration has a history of regulatory and enforcement success against problematic importers and brokers, and during 2002 this collaboration led to the collection of ten fines, the conducting of ten seizures and the initiation of 268 penalty cases. Most of the seizures were related to medical devices, and drugs.

Organizational Structure of the Florida District’s Miami Import Office

Florida District’s Import Operations oversees all import activities and import personnel throughout the Florida District. An Import Program Manager (IPM) reports to the Director of Investigations in the FLA-DO, who reports to the Florida District Director. The District’s Compliance Branch also provides some assistance to Florida District’s Import Operations. The import operation has 38 field employees, 33 of whom are in Miami. These 38 employees include the IPM, 2 supervisory consumer safety officers, 4 compliance officers, 1 consumer safety technician, 2 students, 2 legal instruments examiners, 9 consumer safety inspectors, and 17 consumer safety officers.

Joint FDA Import Group/BCBP Initiatives

For many years, the FLA-DO has had an excellent working relationship with BCBP. This working relationship has led to many innovations and improvements in how FDA and BCBP handle imported FDA-regulated products.

The Miami Import Office has worked with BCBP to develop a joint FDA/BCBP team called “Team 488.” This team has created a Work Agreement and Standard Operating Procedures for processing joint regulatory and enforcement actions. Its purpose is to increase cooperation and enhance compliance of imported products. As a result of the work of this team, the Agency has achieved increased detection of substituted products and reduced erroneous declarations.

In addition, the Miami Import Office is in the process of implementing a new data system to store and review electronic data from private laboratories for products detained without physical examination and to store information regarding the inspection of private laboratories. Private laboratory analytical package review has customarily been conducted by transmitting hard copy reports and certificates from the private laboratory to FDA import groups responsible for detentions without physical examination. This pilot program is designed to expedite the import process, promote a paperless system, and better protect the public health.

  • In addition, there has been an increase in FDA/BCBP cooperation regarding:
  • The collection and handling of liquidated damages claims.
  • The detection of substituted products at the time of sampling and at the time of destruction.
  • The collection of civil money penalties for the substitution and destruction of refused goods.
  • The ability to ensure compliance among importers for exporting and destroying refused goods.

This working relationship also has led to many awards for the FLA-DO including the Hammer Award for reinventing government. Despite the strong role that FLA-DO has played and continues to play in protecting the public health, recent events have caused the Agency to conduct an internal review of the Florida District’s Import Operations.

Recent Developments Regarding FDA’s Miami Import Office

As discussed above, the Miami Import Office is responsible for conducting a large percentage of the Florida District’s varied import assignments. Recently, FDA advised the Energy and Commerce Committee and the American public of irregularities related to its handling of a large shipment of unapproved Viagra apparently from Belize. Through a series of procedural irregularities, foreign versions of Viagra were detained and subsequently released by FDA to consumers. FDA is conducting an ongoing internal review of these events and is taking steps to ensure that these mistakes do not occur in the future.

The Circumstances Surrounding the Discovered Irregularities

As we discussed earlier in this testimony, under the FD&C Act, unapproved, misbranded, and adulterated drugs are prohibited from importation into the U.S. and may be subject to detention. If the Agency detains a drug that is in violation of section 801 of the FD&C Act, its implementing regulations require the Agency to issue a notice of detention to the product’s owner or consignee and offer an opportunity for a hearing before it can refuse admission of the product into U.S. commerce. In the case of the 1,233 packages of unapproved “generic Viagra”, the Agency issued a single notice of detention to BCBP, and BCBP was incorrectly designated as the consignee for the products. This was done despite the fact that the products were destined to multiple owners. After detaining the product in this manner, FDA directed BCBP to release the unapproved “generic Viagra.” After the products were released by FDA, the Agency sent a letter to each consumer who received these unapproved foreign versions of Viagra, alerting them to the fact that such products are unapproved drugs under the FD&C Act and that the Agency cannot provide any assurance of quality, safety, or effectiveness for these products. The details regarding this detention and the subsequent release of the unapproved Viagra were provided to the Committee in our response to Chairman Tauzin’s June 5, 2003, letter.

The Agency’s Internal Review

These irregularities in the Agency’s administration of the Act, its regulations and FDA internal procedures led the Agency to initiate an internal review into how Miami’s Import Office handles the detention of pharmaceutical shipments at the Miami International Mail Facility. The internal review is continuing. Nonetheless, the Agency acknowledges that administrative mistakes were made. As of this date, the Agency has taken several actions to rectify the situation and we expect to make additional improvements in the future. We believe that these FDA short-term and mid-term steps will strengthen our Miami Import Office operations.

Next Steps Based on the Agency’s Ongoing Internal Review

In the wake of the discovery of these administrative mistakes, Florida District managers have undertaken several steps to ensure that import detentions are handled properly in the future. First, Florida District (the District) managers held an all-hands meeting with the personnel at the Miami Import Office where they discussed the circumstances surrounding the detention of the unapproved “generic Viagra.” At this all-hands meeting, the District managers also conducted training on section 801 of the FD&C Act and the regulation and procedures that govern the proper handling of an import detention. The managers reemphasized the importance of properly reviewing records and making regulatory decisions in accordance with Agency policy. Second, in addition to reminding compliance personnel that documents must be reviewed carefully before making regulatory decisions, the District implemented new requirements regarding the initialing and dating of mail entry reports so that District personnel can more easily determine what records have been reviewed and whether they have been reviewed properly. Third, the District is drafting new standard operating procedures for the handling of mail entries. Fourth, the District acknowledged its mistake to the BCBP supervisor at the Miami mail facility regarding the improper handling of the detention of the unapproved Viagra shipment. Fifth, the District is going to be conducting bi-weekly meetings with the BCBP Assistant Port Director for Miami or her representative in order to strengthen the Miami Import office’s relationship with its partners. Sixth, the District will meet with the BCBP supervisor at the Miami mail facility on a monthly basis in order to enhance our working relationship with BCBP. Seventh, the District will provide BCBP with hard copies of all of the Import Alerts that the Agency issues. Eighth, the District will review its Import Operations Quality Assurance Audit plan and determine the type of specific changes that are in order. Ninth, the Regional and District management will review several proposals that focus on improving the management structure and the supervisory ratio in the Miami Import office so that there is greater management oversight.
In addition to these measures, Howard Lewis has been assigned, on an indefinite basis, as the Florida District’s IPM. Mr. Lewis is from FDA’s New Orleans District and he has a strong compliance background and a wealth of knowledge on domestic and import compliance issues. These strengths will allow him to identify additional improvements that will strengthen the Miami Import Office’s role in protecting the public health. The steps noted above are designed to ensure that the Miami Import Office is working at an optimal level and that product will be detained properly in the future. In addition to the continuing improvements in Miami, FDA is focused on making improvements to all of its import operations that will enhance the Agency’s management of its import operations and its ability to protect the public despite the increasing volume of imported products.

Strategic Planning

In order to target its limited import resources more efficiently as part of a risk-based import surveillance system, the Agency also is developing Agency-wide strategies and action items that are meant to protect the public health by decreasing the risk that unsafe, ineffective, or violative products will enter U.S. commerce through our borders, ports and other import hubs. To achieve the most cost-effective approach to managing import risks, theses strategies and action items focus on building a foundation that will allow the Agency to engage in a more rigorous analysis of risks and apply this approach to all phases of the full import life cycle.

In the Risk Management Goal contained within the Commissioner’s Strategic Action Plan there are several action items that will help FDA achieve this goal. These action items include:

  • The development of procedures for implementing Center policies to reduce import examination rates for articles imported from foreign facilities where inspections demonstrate substantial compliance with manufacturing, processing, or sanitation quality and safety principles.
  • The development of an information-sharing Memorandum of Understanding with at least one other country concerning product safety, quality and/or security issues.
  • The development of a strategic integrated WorkPlan for field import activities that is uniformly managed, planned, evaluated, and supported/resourced by all of FDA’s Centers.
  • The revision of Compliance Program Guidance Manuals (CPGMs) and the Regulatory Procedures Manual (RPM) to incorporate import policies and guidance to improve efficiency and effectiveness of FDA’s use of Import Alerts and Detention Without Physical Examination.
  • The modification of CPGMs, the RPM, Compliance Policy Guides (CPGs), the Investigations Operations Manual (IOM), and Establishment Inspection Report formats so that during domestic inspections inspectors examine, report, and track counterfeit imported products, returned imported products, rejected imported products, and compliance files concerning imported products.
  • The exploration of the development of Risk Assessment Predictive Approaches that capture and repurpose risk information for use in import entry screening and enhanced targeting of import operations and resources.
  • The creation of a closed docket to gather information on technologies being implemented by industry to ensure proper shipping conditions (time-temperature indicators) and the integrity (anti-counterfeiting and anti-tampering) of human drug products and shipments while in international distribution and shipping routes.

FDA believes that as each of these strategies and action items is completed, it will have an impact on the Agency’s import operations and they will improve the Agency’s ability to protect the public health by decreasing the risk that unsafe or ineffective FDA-regulated products will enter U.S. commerce through our borders and ports.

Improvements to FDA’s Import Compliance Program

FDA is reevaluating, refining, and improving the programs and procedures that it is using to ensure the availability of safe and effective drugs to U.S. consumers. As part of our efforts to improve the programs and procedures that are used to ensure the availability of safe and effective drugs to U.S. consumers, FDA is considering several concepts that will improve the Agency’s ability to target resources applied to regulation of imported drug products. As with all of FDA’s activities, priorities are established based on benefit/risk to public health. In terms of prioritizing the Agency’s domestic and import compliance workload, products that present a direct health hazard to the user are FDA’s highest priority. Such products include those that have a reasonable potential for causing direct serious adverse effects, or where there is documentation of injury or death. Examples of such products include counterfeit Procrit and counterfeit Serostim. Products that are not themselves hazardous can still present an indirect health hazard in that the consumer may delay or forgo proven medical treatment and the use of approved therapies. These are also a top priority for the Agency. Examples include unapproved products that are promoted for the treatment of cancer, Alzheimer’s disease, arthritis, heart disease, high cholesterol and high blood pressure.


The Administration also currently is engaged in a number of initiatives to reduce the costs of prescription medications. These actions will result in more affordable prescription drugs and will reduce the incentive to look to foreign sources for cheaper medications.

New Medicare Drug Benefit

The President is working with Congress on legislation this year to bring more choices and better benefits to the Medicare system. The President has committed up to $400 billion over the next ten years to pay for modernizing and improving the Medicare system. An essential component of this legislation is a prescription drug benefit, which will make medicines more affordable for senior citizens.

New Rule on Generic Drugs

On June 18, 2003, FDA published its final rule to lower prescription drug costs for millions of Americans by improving access to generic drugs. These changes are expected to save Americans over $35 billion in drug costs over the next 10 years. FDA’s final rule provides the generic industry with enhanced predictability and certainty, while avoiding unnecessary and lengthy litigation, preserving intellectual property protections and protecting the process of developing new breakthrough drugs.
Specifically, the proposed rule would allow only one 30-month stay for each generic drug application, clarify that certain patents cannot be listed, and improve the declaration that innovators must make about patents they submit to FDA for listing in the Agency’s Orange Book publication that lists all drug products approved under section 505 of the FD&C Act.

New Funding

The President’s 2004 budget proposes an unprecedented increase of $13 million in spending for FDA’s generic drug program. This will be the largest infusion of resources into the generic drug program in history, increasing the program’s size by about one-third. The proposed increase in FDA’s generic drug budget will allow FDA to hire 40 experts to review generic drug applications more quickly and initiate targeted research to expand the range of generic drugs available to consumers. The improvements in the efficiency of review procedures are expected to save consumers billions more by generally reducing the time for approving new generic drugs.

New Education Outreach and Scientific Study

FDA will expand its educational programs and partnerships involving generic drugs to help health care practitioners and consumers get accurate information about the availability of generic drugs for their health care needs. Further, FDA will undertake additional scientific studies of certain types of generic drugs to improve the approval process.

Bipartisan Approach on Affordable Prescription Drugs

Last week, the Senate voted in favor of bipartisan legislation sponsored by Senators Gregg and Schumer that would complement FDA’s rule by providing greater access to more affordable generic drugs. The Senate bill would codify elements of FDA’s final rule and adds a provision limiting 180-day exclusivity to accelerate generic competition in the marketplace.

New Drug Development

FDA is taking steps to support market competition as a means of addressing the cost of developing and manufacturing drugs, and the availability of generic drug alternatives. Two new FDA initiatives in the Commissioner’s Strategic Action Plan address important factors affecting the cost of new drug development and the cost of drug manufacturing.

New drug development presents uncertainties that increase the business risk and costs to the innovator. Higher costs can create barriers to competition for new drugs and new innovators-- those companies that don’t have access to the capital available to more established drug companies. Although some scientific and technical uncertainties are inherent and unavoidable in drug innovation, others can be reduced or eliminated. Such reductions will help speed patient access to new drugs and reduce the cost of drug development. FDA has begun major initiatives to reduce some of those sources of uncertainty. For example, sponsors may be uncertain about what specific evidence is required to demonstrate safety and effectiveness for a given disease. As a result, they may continue research with a drug that will not lead to the required evidence.

FDA has identified several priority disease areas and new technologies that the Agency believes are good candidates for new work to clarify regulatory pathways and clinical endpoints. The targeted disease areas include cancer, diabetes and obesity. The targeted technologies include cell and gene therapy, pharmacogenomics and novel drug delivery systems.

A planned formal guidance for industry will help to minimize guesswork and improve the design of clinical trials. This will benefit participating patients and allow more cost-effective use of Research and Development funds. FDA also is taking steps to identify and address the root causes of avoidable delays in new drug review through retrospective analysis, better review management and prospective evaluation of our review process from the perspective of both FDA and drug innovators.


The standards for drug review and approval in the U.S. are the best in the world, and the safety of our drug supply mirrors these high standards. The employees of FDA constantly strive to maintain these high standards. However, a growing number of Americans are obtaining prescription medications from foreign sources. U.S. consumers often seek out Canadian suppliers, sources that purport to be Canadian, or other foreign sources that they believe to be reliable. While some foreign drug manufacturers submit their products to FDA for approval, the imported drugs arriving through the mail, through private express couriers, or by passengers arriving at ports of entry are often unapproved new drugs that may not be subject to any reliable regulatory oversight. FDA cannot assure the safety of drugs purchased from such sources.

The vigilance of FDA and BCBP inspectors is an important tool in detecting imported products that violate the FD&C Act. Given the available resources and competing priorities facing these agencies, however, experience shows that inspectors are unable to visually examine many of the parcels containing prescription drug products that arrive through the mail and private courier services each day. Many of the packages that the Agency is able to examine appear to contain foreign versions of U.S.-approved products. The growing volume of unapproved imported drugs, which often are generated from sales via the Internet, presents a formidable enforcement challenge. As a consequence, the Agency must employ a risk-based enforcement strategy to deploy our existing enforcement resources in the face of multiple priorities, including homeland security, food safety and counterfeit drugs. In sum, at this time the Agency cannot assure the American public that drugs purchased from foreign sources are the same as products approved by FDA, or that they are safe and effective. The Agency acknowledges the concerns raised by the Committee regarding recent problems with enforcement in the Miami field operations and has already undertaken several actions designed to address the specific issues that were cited. The Agency looks forward to continuing to work with the Committee to identify additional solutions to address these pressing concerns. We appreciate and share the Committee’s interest in assuring that the American public has access to safe and affordable medicines and we look forward to working further with Congress and other concerned parties on this important public health goal.

We would be happy to answer any questions you may have.