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South Florida Access to Affordable Prescription Drugs: Costs and Benefits of Alternative Solutions

Statement of

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


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

March 10, 2003


Mr. Chairman, Ranking Member Deutsch and other Members of the Subcommittee, I am John M. Taylor, Associate Commissioner for Regulatory Affairs at the U.S. Food and Drug Administration (FDA or the Agency). I appreciate the opportunity to testify at today's hearing on "South Florida Access to Affordable Prescription Drugs: Costs and Benefits of Alternative Solutions" on behalf of FDA. My testimony will focus on FDA’s efforts to assess and respond to the importation of prescription drugs by individuals through the mail or in person and the purchase of drugs from foreign sources over the Internet.

Under the Federal Food, Drug, and Cosmetic (FD&C) Act, it is unlawful to import unapproved, misbranded, and adulterated drugs into the United States. This includes foreign versions of U.S.-approved medications, as well as drugs that are made in the U.S., exported to other countries, and then subsequently reimported to the U.S.

For public health reasons, FDA remains concerned about the importation of prescription drugs into the U.S. 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. The rise of Internet drugs sales presents substantial safety questions about these products. FDA cannot assure the American public that drugs imported from foreign countries are the same as products approved by FDA.

Some of the efforts FDA is undertaking to address the potential safety concerns of illegally imported prescription medicines include: increasing consumer awareness of the potential risks associated with imported drugs, working with the states to crack down on Internet pharmacies selling illegal products, and undertaking further analysis of the quality of drugs coming into the U.S. from foreign sources.

News reports in the last few months have focused on storefront Internet prescription drug operations. These small stores, often located in busy strip malls, advertise that they can obtain cheaper drugs from Canada. Typically, the customer supplies the store operator with a prescription from an American physician and is asked to complete a medical questionnaire. This information is sent electronically to a Canadian wholesaler/supplier/contact that serves as a supplier to the store. A Canadian physician reviews the questionnaire and writes a Canadian prescription that is filled and shipped to the U.S. Usually the prescription drug is shipped directly to the customer's home. The storefront facilitates the transaction and typically does not receive shipments of drugs. The storefront charges a shipping and handling fee. The customer may purchase a product for substantially less than the price they would have paid otherwise.

FDA’s concerns do not apply to all Internet pharmacies, as a general matter. Many online pharmacies operate in keeping with standards of state licensing authorities. FDA acknowledges that the Internet can be a useful source of health information and health care products and services. Internet pharmacies can have various benefits, including reduced prices, increased access (especially in rural areas), and enhanced consumer convenience. Rather, this testimony highlights the growing practice of using mail order and Internet pharmacies to facilitate potentially unlawful and unsafe importation of prescription drugs.

Under the FD&C Act, unapproved, misbranded, and adulterated drugs cannot be imported. The FD&C Act further prohibits the reimportation of FDA-approved drugs that are made in the U.S. and have been exported to other countries. Our specific activities and concerns relating to reimportation of drugs follows:

38 state boards of pharmacy, other state regulatory agencies and consumer groups to discuss the current status of Internet drug sale practices. Some state laws are stronger than others, but we are actively engaged a number of states in jointly pursuing illegal Internet sites.

Canadian Cooperation FDA is actively working with the Health Canada regarding the increasing number of U.S. pharmacies that are

  • Education About Safety: Consumers take genuine risks when they purchase drugs from Internet sites that dispense foreign drugs or are not operated by pharmacies licensed and operated under state pharmacy law. These outlets may dispense expired, subpotent, contaminated or counterfeit product, the wrong or a contraindicated product, an incorrect dose, or medication without adequate directions for use. Unsafe or inappropriate drugs put consumers at risk for dangerous drug interactions and serious health consequences.
  • Working With States: Last month, we hosted a nationwide call with advertising and promoting sales of prescription drugs from Canada. We have asked the Minister of Health to investigate a list of 45 Canadian websites that are selling drugs to U.S. citizens. We agreed to designate respective Agency contacts on this issue and continue our discussions about Internet sales.
  • Enforcement: Recent criminal and civil cases are evidence of the seriousness of the risks to public health that regulators uncover when responding to Internet drug sales. These cases show that we are making progress in combating this problem. Examples include our actions against the Norfolk Men's Clinic, Medications Express in California, Pillbox Pharmacy and successful prosecutions against the operators of these and other Internet sites. To date, FDA has initiated:
  • 372 Internet drug investigations resulting in 150 Internet-related drug arrests and 92 convictions.
  • 100 open Internet drug investigations. Also, 90 sites are under active review for possible regulatory or civil action.
  • Nearly 200 cyber letters to domestic and foreign online sellers.
  • 5 preliminary injunctions.
  • 15 product seizures.
  • 11 product recalls, and the voluntary destruction of 18 illegal products.
  • Detention Without Physical Examination for the products of 45 foreign shippers.


It is estimated that Americans spend about $192 billion a year on prescription drugs, about twice as much as what they spent a decade ago. As new drugs are developed, Americans also are taking more drugs. Based on IMS Health and Department of Commerce data, the National Association of Chain Drug Stores (NACDS) states sales of retail prescription drugs grew by about 15 percent in 2002, 13 percent in 2001 and 16 percent in 2000. Mail order sales rose six-fold in the ten years from 1992 to 2001 and are positioned to pass independent pharmacies as the second largest provider of retail prescriptions by the end of 2003. Many consumers, including millions of senior citizens, are faced with steadily rising health care and prescription medication costs. It is estimated that about 80 percent of seniors take at least one prescription drug.

FDA is aware that developing and manufacturing medicines is expensive. Drug development is also time consuming and it may take as many as 10 years or more for a drug to transition from test tube to FDA approval. Drug companies estimate that it costs an average of $800 million to develop a new drug.


The Internet is a major avenue of commerce and the volume of Internet sales, including prescription drugs, is growing dramatically. Consumers, including America’s seniors, are buying more and more of their prescription medications online rather than from their local pharmacies. This practice is growing at an exponential rate and will likely continue.

Seniors who do not have access to a computer may nonetheless purchase drugs on line. In some areas of the country they simply visit a fee-for-service “storefront” location that will facilitate their Internet purchase and have their prescription medication mailed directly to their home.

Many of the drugs purchased over the Internet are being ordered from Canada. Drugs are cheaper in Canada; they often sell for as little as half of U.S. price of a given drug. In Canada drug prices are fixed, allowing the government to offer them to Canadian citizens at much lower rates than what U.S. citizens pay at pharmacies. Americans are taking advantage of the lower priced drugs available in Canada without having to travel there to get their prescriptions


Patients Face Genuine Risks
Based on a survey conducted in early 2000 by FDA’s Office of Criminal Investigations (OCI) and a subsequent study by the General Accounting Office, there appears to be roughly 300 to 400 Internet sites selling prescription drugs to consumers, with approximately half located domestically and half located outside the U.S. FDA has long taken the position that consumers are exposed to a number of risks when they purchase drugs from Internet sites that dispense foreign drugs or are not operated by pharmacies licensed under state pharmacy law. 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. FDA cannot provide consumers with any assurance that these products were manufactured under current good manufacturing practice (cGMP) standards. Taking such unsafe or inappropriate medications put consumers at risk for dangerous drug interactions and other serious health consequences.

Another potential problem involves Internet sites that provide prescription drugs by having consumers fill out a questionnaire rather than seeing a doctor. In some cases, a questionnaire generally may not provide sufficient information for a health care professional to determine if that drug is appropriate or safe to use, if another treatment is more appropriate, or if the consumer has an underlying medical condition where using that drug may be harmful. Finally, in the case of foreign-based websites, if a consumer has an adverse drug reaction or any other problem, they have little or no recourse because the physical location or operator of the pharmacy often is not known or the seller is beyond the consumer’s reach. FDA has little or no ability to take effective action against these foreign operators on behalf of U.S. citizens.

Over the last twelve to eighteen months, FDA identified a proliferation of websites that sell drugs purportedly from Canada directly to U.S. consumers. A number of these websites claim that drug sales from Canadian pharmacies to U.S. consumers are legal. This is false. Some websites are actually ordering services that take orders from consumers that are then filled by other pharmacies. In some cases, American consumers cannot be certain that the drugs they receive are being dispensed by the person from whom they are received.

A number of Canadian drug websites and U.S. ordering services indicate that the Canadian drugs are dispensed pursuant to existing prescriptions that are rewritten by a Canadian doctor in order to comply with Canadian law. However, the dispensing of medication on a prescription written by a physician who has not seen the patient or conducted a physical exam is contrary to state medical practice standards. In addition, Dr. Henry Haddad of the Canadian Medical Association has said that under the Canadian Code of Ethics, physicians have a responsibility to do a patient history, conduct a physical exam and discuss the risks and benefits of the medication with the patient.

In general, FDA has no information to establish where these drugs were actually manufactured and whether cGMP requirements were followed. 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. There is no assurance that the drugs are not counterfeit, contaminated or misbranded. There is also no assurance that the drugs were packaged and stored under appropriate conditions to avoid degradation or contamination.

Serious Legal Issues

In a February 12, 2003, letter to The Kullman Firm, New Orleans, Louisiana, FDA clearly stated the Agency’s safety and legal concerns about the importation of prescription drugs from Canada, stating that many of these drugs are of unknown quality. From a legal standpoint, businesses and individuals involved in shipping prescription drugs from Canada or other foreign countries to consumers must take many steps to ensure compliance with the FD&C Act. In most cases, it is unlikely that these legal requirements have been met.

The FD&C Act establishes a legal framework applicable to imports of prescription drugs from Canada. As a result, virtually all drugs imported from Canada by or for individual U.S. consumers violate U.S. law. Such drugs are unapproved (21 U.S. C. § 355), misbranded, labeled incorrectly (21 U.S.C. § 353(b)(2)), and /or dispensed without a valid prescription (21 U.S.C. § 353 (b)(1)). Thus, their shipment into the U.S. from Canada violates the FD&C Act See e.g. 21 U.S.C. 331(a), (d), (t). In addition, it is a violation of the FD&C Act for anyone other than the U.S. manufacturer of a drug to import into the U. S. (21 U.S.C. § 381 (d)(1)), even if the drug was approved and manufactured in the U.S.

Canadian or other foreign versions of U.S.–approved drugs are generally considered unapproved in the U.S. because FDA approvals are manufacturer-specific, product-specific and include many requirements relating to the product, such as the location of the manufacturing site, formulation, source, specifications of the active ingredients, processing methods, manufacturing controls, container/closure system, and appearance. Title 21, Code of Federal Regulations (21 CFR) § 314.50. Drugs sold outside of the U.S. are frequently not manufactured by a firm that has received FDA approval for that particular drug. In addition, even if the manufacturer has FDA approval for a drug, the version produced for foreign markets usually does not meet all the requirements for U.S. approval, and FDA considers it to be unapproved. 21 U.S.C. § 355.

In order to ensure compliance with the Act when shipping prescription drugs to consumers in the U.S., businesses and individuals must ensure, among other things, that they only sell FDA-approved drugs that are made outside of the U.S. and that comply with the FDA approval in all respects including manufacturing location, formulation, source and specifications of active ingredients, processing methods, manufacturing controls, container/closure system, and appearance. 21 CFR §314.50. They must ensure that each drug meets all U.S. labeling requirements, including that it bears the FDA-approved labeling.
21 CFR § 201.100 (c)(2). The drug must also be dispensed by a pharmacist pursuant to a valid prescription. 21 U.S.C. § 353(b)(1).


FDA cannot assure U.S. citizens that the prescription medications they are buying over the Internet from foreign countries such as Canada are safe. 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. The rise of Internet drugs sales presents substantial safety questions about these products.

FDA is taking a number of steps to protect the public health of U.S. citizens including:
(1) educating the public to the possible safety issues of drugs purchased from foreign countries, (2) working in conjunction with our Canadian government counterparts to address the issue of the flood of prescription medicines coming into the U.S. from their country,
(3) increasing enforcement and policing of rogue Internet sites, and (4) partnering with the individual U.S. states to develop enforcement strategies, share cases and discuss important policy issues.

Consumer Education

FDA remains committed to developing more effective education and enforcement strategies. With this goal in mind, FDA has created 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. Outreach to consumers and the press continues and new public material will be added to FDA’s website.

In December 2000 FDA created the “Buying Medicines Online” webpage. The webpage provides tips, warnings and other information for consumers about purchasing over the Internet. In addition, it provides an opportunity for consumers to report unlawful sales of medical products on the Internet. Since its inception, the number of complaints received has grown steadily. FDA receives over 300 reports a day through this webpage that are evaluated by members of an FDA Internet enforcement work group.

A voluntary certification program administered by the National Association of Boards of Pharmacy called the Verified Internet Pharmacy Practice Sites (VIPPS) program provides a basis for identifying online pharmacies that are appropriately licensed and prepared to practice pharmacy via the Internet. Today 13 Internet sites representing over 10,000 pharmacies carry the VIPPS seal, and NABP has many pending applications.

Canadian Cooperation

On February 21, 2003, FDA representatives participated in a Forum on International Sale of Prescription Drugs from Canada in Ottawa, Canada. The forum was sponsored by the National Association of Pharmacy Regulatory Authorities (NAPRA), the voluntary umbrella association of Canada’s provincial and territorial pharmacy licensing bodies.

FDA’s purpose in attending was to present our view on the sale of Canadian prescription drugs in the U.S. Some of the topics that related to FDA enforcement included: the need for clarification of legal status of international practice in the U.S., the legality of the sale of Canadian drugs to U.S. citizens, risks of the activity for U.S. and Canadian citizens, the legal recourse for any harm caused, the legal issues within the U.S. (at the Federal and state level) and the need to investigate and shut down non-pharmacy operations selling prescription drugs.

In February 2003, FDA Commissioner McClellan participated in a call with Health Canada to discuss his concerns regarding the increasing number of U.S. pharmacies that are advertising and promoting prescription drugs from Canada. FDA shared a list of 45 active websites based in Canada that are selling drugs to U.S. citizens for additional investigation.

FDA Work With States

The states have primary jurisdiction over the practice of pharmacy. FDA is partnering with the states in pursuing cases. State pharmacy laws vary in all 50 states. FDA notes that some state laws are stronger than others and some states have been more willing to pursue these cases than others.

In February 2003 the ORA Division of Federal State Relations hosted a nationwide call with state boards of pharmacy, other state regulatory agencies and consumer groups to discuss the current status of information on Internet drug sale practices. Representatives from 38 states participated in the discussion. FDA was interested in hearing about state policy issues and regulatory actions. In addition, FDA had the opportunity to share information with the states on current regulatory policy and consumer education efforts on this issue.

Increased Federal and International Enforcement Activities

FDA remains concerned about the potential for introduction of substandard drug products into the U.S. through foreign Internet purchases. As such, FDA has been participating in quarterly strategy meetings with other Federal counterparts including Federal Trade Commission (FTC), Department of Justice (DOJ), National Association of Attorneys General (NAAG) and Drug Enforcement Administration (DEA). In these meetings FDA discusses policy matters, public information issues and Agency priorities. This quarterly monthly meeting dates back to 1998. FDA and FTC continue to work together on false and deceptive claims about treating or curing a wide variety of diseases. FDA and other Federal and state agencies have investigated many illegal pharmaceutical websites and have attempted to use existing laws and available technologies to bring action against rogue Internet pharmacies.

In June 1999, FDA established a case assessment, or “triage” team with representatives from the Office of Enforcement and the Office of Criminal Investigation (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 a variety of sources including Internet monitoring activity, state, other Federal or foreign law enforcement agencies, consumers, 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.

FDA receives over 300 messages per day in its Reporting Unlawful Sales of Medical Products on the Internet system. In 2002, FDA linked to the FTC Consumer Sentinel database to help cope with the large number of complaints it receives. The Consumer Sentinel database, maintained by FTC, contains more than one million consumer fraud complaints that have been filed with Federal, state, and local law enforcement agencies and private organizations. Through this law enforcement data base system, FDA is able to mine the data in this system and obtain useful information on Internet pharmacy sites of particular interest.

FDA Office of Criminal Investigations Activities

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 OCI maintains ongoing liaison with numerous government agencies in Canada, the United Kingdom, Spain, Australia, Germany, Belgium, the Netherlands, Ireland, Brazil, Singapore and others. OCI recently assigned a Special Agent to Interpol in Washington, D.C.

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.

OCI routinely works on joint investigations with numerous law enforcement agencies throughout the Federal community including: the Federal Bureau of Investigations, U.S. Customs, DEA, U.S. Postal Service, Internal Revenue Service, Health and Human Service-OIG, EPA and the U.S. Army. In addition, OCI has worked on joint cases involving Internet pharmacies with several state entities including state health departments, state pharmacy boards, and state medical boards. OCI has established collegial working relationships with state entities nationwide.

Some recent cases indicate the seriousness of the risks to public health that regulators uncover when responding to Internet drug sales. They also illustrate the progress that is beginning to be made in combating this problem.

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 the 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. Additional covert purchases were made. Based on these purchases and 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 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 originated in New Zealand.

Dr. Mario Alvarez-Valentin

On January 11, 2002, Dr. Mario Alvarez-Valentin was sentenced to 26 months imprisonment after pleading guilty to wire fraud in connection with the unlawful sale of Viagra over the Internet. Alvarez was a physician contracted with Internet websites for the purpose of authorizing prescriptions for Viagra to persons throughout the U.S. From April 2000 to January 2001, Alvarez, who was only licensed to practice in Puerto Rico, prescribed and caused to be prescribed more than 4,000 prescriptions for Viagra. In doing so, he violated the licensing laws of at least 20 states. United States v. Alvarez-Valentin, D.P.R.


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, however, that for the overwhelming majority of applications, no medical reviews, consultations, or physical examinations by a physician took place before drugs were shipped to customers. The indictment also alleges that defendants repackaged drugs obtained from a drug wholesaler, even though defendants were not a registered manufacturer or a licensed pharmacy, and that there was never a licensed pharmacist in any way involved. The indictment also alleges that 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.

United States v. Carl David Roberts, (E.D. Tenn.).

On January 15, 2003, Roberts was sentenced to a prison term of 57 months. Roberts was chief administrator of an Internet business that used sophisticated technology to sell prescription drugs, including Schedule II narcotics, without any medical supervision. He had directed an organization that sold drugs from within the U.S., and from abroad. His organization included drug suppliers from Mexico, the Netherlands, and Ecuador. In September 2002, he pled guilty to distribution of controlled substances and conspiracy to violate the FD&C Act.

United States v. Kimball, (11th Circuit).

On May 14, 2002, the Eleventh Circuit affirmed the district court’s sentence. Kimball received a 13-year sentence for violating the FD&C Act. Kimball was found guilty after trial of putting prescription drugs into commerce without a prescription. His marketing efforts included use of the Internet.

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 twenty-four months in prison. The case was initiated on information received from Customs concerning an Internet website called Medications Express. Bevins sold Mexican prescription pharmaceuticals from this website and claimed that no doctor’s prescription was 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.

Canadian Drug Store, Inc.

On May 14, 2002, the Ontario College of Pharmacists, a Canadian government agency, filed charges under Ontario law against The Canadian Drug Store, Inc., for unlawfully operating an unlicensed pharmacy and using an un-registered pharmacist in filling prescriptions for U.S. residents. The College also filed charges against a licensed pharmacist, pharmacy, and physician in Ontario for helping to facilitate the delivery of prescription and non-prescription drugs to U.S. residents. A drug wholesaler was charged with supplying medications to a non-licensed pharmacy.

According to a statement released by the College, there are many websites selling prescription and non-prescription medicines that have not been accredited as legitimate pharmacies by pharmacy regulators in either Canada or the U.S. Some websites presenting themselves as online “pharmacies” or “drugstores” may be operating without a pharmacy license and dispensing prescriptions without the oversight of a licensed pharmacist.

Total Remedy/Prescription Center II

According to news accounts, a Los Angeles pharmacy and two pharmacists were assessed penalties of almost $90 million in a California Board of Pharmacy proceeding in May 2002 for filling more than 3,500 illegal prescriptions over the Internet. The case was brought under a state law that creates a requirement to fill a prescription pursuant to a good-faith medical examination. The Internet site concentrated on filling prescriptions for lifestyle drugs such as Viagra and Propecia (Associated Press, 5/29/02).

Pillbox Pharmacy

In March, 2002, a Texas pharmacist, three doctors, two corporations and an individual were charged in a Federal indictment alleging that they conspired to illegally dispense drugs in connection with an Internet pharmacy operation. The indictment charged one pharmacist, three physicians and two corporations, the S&H Script Shop and the Pillbox Medical Center, with conspiring to illegally dispense controlled substances and commit money laundering. According to the indictment, between January 1, 2000, and June 12, 2001, the defendants grossed more than $7.7 million from the Internet sales of just two drugs alone. The indictment alleges the doctors would issue prescriptions without establishing a patient history, performing a mental or physical exam, using appropriate diagnostic or laboratory testing, or providing any means to monitor medication response. The charges were the result of an 18-month investigation by FDA, DEA and IRS, working with the U.S. Attorney’s office. In April, the pharmacist and two corporations pled guilty to illegally dispensing controlled substances, and agreed to forfeit $1 million.

Other OCI Enforcement Activity

To date, OCI has initiated 372 Internet drug investigations with each case involving a variable number of websites from one to 25 or more. These cases originated from multiple sources including interception at mail facilities, web-based research, consumer complaints, and a variety of other sources. OCI has affected 150 Internet-related drug arrests and obtained 92 convictions. Sixty of the Internet drug arrests and 26 of the convictions are Internet pharmacy related.

Currently, FDA has 90 sites under active review for possible regulatory or civil action. Warning letters have been sent to 55 domestic online sellers. Additionally, FDA has sent 137 cyber letters to operators of Internet sites in many countries, including Canada, that offer to sell on-line prescription drugs or unapproved 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 are sent over the Internet to the suspect websites to warn the operators that they may be engaged in illegal activities, and inform them of the laws that govern prescription drug sales in the U.S. FDA also sends copies of its cyber letters to the home governments of targeted websites when the locations can be identified. However, follow-up depends on the ability and willingness of the foreign regulatory bodies to investigate and take actions against website operators who are illegally shipping drugs to other countries.

In cooperation with DOJ, FDA has obtained five preliminary injunctions against the sale of illegal products, including one product marketed as a weight-loss aid containing a potent thyroid hormone that could cause heart attacks or strokes, and an unapproved cancer therapy. Also, 15 product seizures, 11 product recalls, and the voluntary destruction of 18 illegal products have been achieved, generally pertaining to unapproved new drug products. Forty-five foreign shippers have been placed on Detention Without Physical Examination and added to an FDA Import Alert for targeting sales of unapproved new drug products to the U.S.

FDA’s personal importation policy

FDA’s personal importation policy is often misunderstood. Under FDA’s personal importation policy, FDA inspectors 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 not a license for individuals to import unapproved, and therefore illegal, drugs for personal use into the U.S. Because the policy does not apply to medications that are already available in the U.S. (even if sold under the same name), only a very few drug products available from Canada and Mexico and other foreign sources meet the personal importation criteria.

The current personal importation policy permits the exercise of enforcement discretion to allow entry of an unapproved prescription drug only if the product meets the following requirements: 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; 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; and 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 Customs or FDA inspectors, or even health care practitioners, in identifying a medicine simply by its appearance or its labeling, which may falsely identify a product. From a practical standpoint, FDA inspectors cannot visually examine drug products contained in a mailed parcel and accurately determine their identity or the degree of risk posed to the individual who will receive these drugs.

Carson Mail Study

In early 2001, FDA and Customs conducted a survey of imported drug products entering the U.S. through the Carson City, California mail facility (the Carson pilot). The purpose of the Carson pilot was to examine incoming mail shipments of pharmaceutical products over a specified time frame to identify both the volume and the types of drug products entering the U.S. We also wanted to better assess the level of effort and human resources required to handle drug importations at a mail facility, and to better understand the public health implications these importations may have for U.S. consumers.

The Carson pilot ran for a five-week period, with FDA inspectors present for 40 hours per week, a much higher staffing level than is normally possible. Although Customs took a baseline sample which indicated they could have set aside for FDA review an estimated total of 16,500 international packages (650 packages per day), FDA was able to examine only 1,908 packages during the five-week pilot, or an average of 381 packages per week. Unexamined packages were sent on to the addressees. Of the 1,908 packages examined by FDA, 721 parcels (38 percent of the total) originating in 19 countries were detained and the addressees notified that the products appeared to be unapproved for use in the U.S., misbranded and/or a drug requiring a doctor’s prescription.

Analysis of the Carson Pilot Drug Parcels

FDA’s Center for Drug Evaluation and Research (CDER) reviewed listings of the products detained during the Carson pilot to define better the nature of the risk to public health from the types of products coming into the U.S. through personal importation. CDER’s review demonstrates that there are serious public health risks associated with many of the 721 drug shipments (composed of 197 different drugs) detained at Carson. There are primarily two types of risks that consumers of these drugs would face. The first risk arises when consumers take drugs of unknown origin or quality. Second is the very significant risk associated with taking many of these drugs without first obtaining a physician’s prescription and without the continued oversight of the physician.

In general, FDA has no information to establish where these drugs were actually manufactured and whether current GMP requirements were followed. There is also no assurance that the drugs were packaged and stored under appropriate conditions to avoid degradation or contamination. Approximately eight percent of the shipments contained drugs that could not be identified because they contained no labeling; some of these contain only foreign language labeling. Most of these drug shipments were contained in plastic bags; one shipment contained drugs taped between magazine pages.

Several drugs do not appear to correspond with any FDA-approved drugs and therefore the risks associated with the products are difficult to assess. One drug had been reviewed for FDA approval but was rejected because its efficacy could not be demonstrated. Several shipments contained three drugs that were once approved by FDA but have been withdrawn from the market.

The vast majority of the shipments were identified as containing prescription drugs. A number of controlled substances were also identified. Importation of these drugs containing controlled substances violates criminal provisions of the Controlled Substances Import and Export Act, including 21 U.S.C. 960 (unregistered importer/declared importation). These drugs have the potential for abuse, addiction or risk of life-threatening overdose. A physician’s prescription and oversight are essential for managing these risks. Additionally, drugs to treat diseases including diabetes, hypertension and serious infection were included in the Carson shipments, as were many drugs with serious contraindications and/or possible drug or food interactions.

Many of the drugs identified in the Carson pilot are intended to treat conditions that only physicians can properly diagnose. Consumers who bypass physician diagnosis and prescribing may be exposing themselves to risks and toxicities that cannot be justified by offsetting benefits. For example, almost ten percent of the shipments were for antibiotics, despite the fact that consumers are generally not able to diagnose whether their symptoms are caused by bacterial or viral infections.

Enforcement at the border

Within the last two years, FDA has conducted three surveys at U.S. borders to gather data on drug products carried by individuals entering the U.S. While these border surveys involve land traffic rather than mail importation, the results show some similarities to the findings from the Carson mail pilot, but also some significant differences.

Southwest Border Survey (August 2000)

A survey of prescription drugs being brought by pedestrians into the U.S. at eight ports-of-entry along the 2,000-mile border with Mexico was conducted by FDA’s Southwest Import District (SWID) with the assistance of other agencies. The survey looked at activity during four hours on a Saturday (August 12, 2000) at eight border ports in California, Arizona, and Texas. The purpose of the survey was to determine what specific types of products are being imported, and who is importing these products. The data collected from over 600 interviews indicated that the most common importers were bringing back primarily antibiotics or pain relievers. Prescriptions were held by 63 percent of the persons interviewed (59 percent U.S. prescriptions while 41 percent were Mexican). While many of these products are already available as FDA-approved drugs in the U.S., some are unapproved for sale in this country.

Canadian Border Survey

On January 6, 2001, in cooperation with Customs, FDA conducted a survey to obtain a snapshot of prescription drug products being brought into the U.S. from Canada via passenger vehicles. During the eight-hour survey at three ports-of-entry in New York, Michigan and Washington, a total of 10,374 passenger vehicles and 58 buses crossed into the U.S. Of these, 33 passenger vehicles (35 individuals) were referred by Customs to be interviewed. These individuals brought in a total of 47 containers of drug products from Canada. The largest group of products was pain medicines. The next largest group of products was herbal products, with the reason for importation being that the products were not available in the U.S. Some of these drugs are unapproved foreign versions of FDA-approved drugs, although some approved for sale as prescription drugs in the U.S. are sold as over-the-counter medications in Canada.

Southwest Border Survey (April 2001)

On April 11, 2001, FDA, Customs, and other agencies conducted a survey of prescription drugs being brought into the U.S. at seven ports-of-entry along the U.S./Mexican border. During the four hour survey, a total of 586 persons imported in a total of 1,120 drugs. Approximately 56 percent had a prescription for the medicines (61 percent were U.S. prescriptions, 39 percent were Mexican). As in the earlier survey, many of these products are already available as FDA-approved drugs in the U.S., while some are unapproved for sale in this country.

Newly revised import alert

On December 9, 2002, FDA reissued import alert 66-41 to include certain drugs approved for restricted use (due to safety concerns) in the U.S. This import alert allows FDA district field investigators to automatically detain without examination the listing of drugs. The Agency has posted this special alert on its home page warning consumers that certain restricted distribution drugs should not be purchased over the Internet. FDA has also put these restricted distribution drugs on Import Alert, informing the Agency’s import inspectors that shipments of these drug are not appropriate for admission into this country under FDA’s personal importation policy. FDA has also specifically informed Customs about the fact that these dangerous drugs should not be admitted. Imported drugs subject to this import alert are not admissible under FDA’s personal importation policy.

The FDA field guidance for this Import Alert provides that release of an unapproved drug for personal use may be appropriate if, among other considerations, the drug is intended for a serious condition for which effective treatment may not be available domestically either through commercial or clinical means, and it is not considered to represent an unreasonable risk. The guidance is intended to apply only to: (1) persons who have received treatment in a foreign country with an unapproved drug that is not available in the U.S., and who, upon returning to the U.S., have imported the drug for their personal use in an effort to continue the treatment started abroad; and (2) persons who have made their own arrangements for obtaining an unapproved drug from foreign sources, when the drug has not been promoted in the U.S.

Mr. Chairman, FDA remains concerned about Americans purchasing prescription medicines over the Internet and whether this practice results in products being unlawfully imported into the U.S. We appreciate the subcommittee’s interest in assuring that the American public has access to safe and affordable medicines and we look forward to working with you in furtherance of this goal. Thank you again for the opportunity to participate in today’s hearing. I will be happy to answer any questions.