[Congressional Bills 108th Congress]
[From the U.S. Government Publishing Office]
[H.R. 4612 Introduced in House (IH)]






108th CONGRESS
  2d Session
                                H. R. 4612

 To amend the Federal Food, Drug, and Cosmetic Act to create a uniform 
certification standard for Internet pharmacies and to prohibit Internet 
pharmacies from engaging in certain advertising activities, to prohibit 
   the use of certain bank instruments for purchases associated with 
          illegal Internet pharmacies, and for other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             June 18, 2004

Mr. Walden of Oregon (for himself and Mr. Davis of Florida) introduced 
 the following bill; which was referred to the Committee on Energy and 
Commerce, and in addition to the Committee on Financial Services, for a 
 period to be subsequently determined by the Speaker, in each case for 
consideration of such provisions as fall within the jurisdiction of the 
                          committee concerned

_______________________________________________________________________

                                 A BILL


 
 To amend the Federal Food, Drug, and Cosmetic Act to create a uniform 
certification standard for Internet pharmacies and to prohibit Internet 
pharmacies from engaging in certain advertising activities, to prohibit 
   the use of certain bank instruments for purchases associated with 
          illegal Internet pharmacies, and for other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Safe Online Drug Act of 2004''.

SEC. 2. INTERNET SALES OF PRESCRIPTION DRUGS.

    (a) In General.--Chapter 5 of the Federal Food, Drug, and Cosmetic 
Act (21 U.S.C. 351 et seq.) is amended by inserting after section 503A 
the following:

``SEC. 503B. INTERNET SALES OF PRESCRIPTION DRUGS.

    ``(a) Uniform Certification Standard for Internet Pharmacies.--
            ``(1) In general.--
                    ``(A) Prohibitions.--Subject to subparagraph (B), 
                it is a violation of this section--
                            ``(i) for any person to sell or offer for 
                        sale a prescription drug or a restricted device 
                        through an Internet site--
                                    ``(I) if the Internet site fails to 
                                meet the standards established under 
                                paragraph (2); or
                                    ``(II) if the Internet site fails 
                                to comply with all State and Federal 
                                regulations for operating as an 
                                Internet pharmacy; and
                            ``(ii) for any person to own or operate an 
                        illegal Internet pharmacy.
                    ``(B) Exception.--Any person who sells or offers to 
                sell a prescription drug or restricted device through 
                an Internet site, or who owns or operates an Internet 
                pharmacy, is deemed to meet the requirements of this 
                section for purposes of such sale, ownership, or 
                operation if the Internet site or Internet pharmacy 
                meets the certification standards adopted by the 
                Secretary under paragraph (2).
            ``(2) Establishment of uniform standard for internet 
        pharmacy certification.--
                    ``(A) In general.--The Secretary, acting through 
                the Commissioner of the Food and Drug Administration, 
                shall establish a program under which all Internet 
                pharmacies operating in the United States are certified 
                by the Secretary as meeting the requirements of this 
                section for certification.
                    ``(B) Conditions for certification.--As a condition 
                of certifying an Internet pharmacy under subparagraph 
                (A), the Secretary shall require the following with 
                respect to such pharmacy:
                            ``(i) Verification that, in each State in 
                        which the pharmacy engages in pharmaceutical 
                        activities, the pharmacy, and all the employees 
                        and agents of the pharmacy, are in compliance 
                        with applicable laws regarding--
                                    ``(I) the practice of pharmacy, 
                                including licensing laws and inspection 
                                requirements; and
                                    ``(II) the manufacturing and 
                                distribution of controlled substances, 
                                including with respect to mailing or 
                                shipping such substances to consumers.
                            ``(ii) Verification of controls to ensure 
                        that a prescription drug or restricted device 
                        is dispensed by the pharmacy only pursuant to a 
                        valid prescription, including circumstance in 
                        which the drug is shipped or mailed from a 
                        country under whose laws the drug is not a 
                        prescription drug.
                            ``(iii) An agreement by the pharmacy that, 
                        upon certification under subparagraph (A), the 
                        facilities and business practices of the 
                        pharmacy will be subject to inspection by the 
                        Secretary to the extent appropriate to 
                        determine whether the pharmacy is in compliance 
                        with conditions under this subsection.
                            ``(iv) The prominent display of contact 
                        information for the pharmacy, including a 
                        telephone number, an electronic mail address, a 
                        mailing address, and (if different from the 
                        mailing address) the address for the physical 
                        location of the principal place of business of 
                        the pharmacy.
                            ``(v) The prominent display of complete and 
                        accurate information concerning the ownership 
                        and management of the pharmacy, including 
                        addresses and contact information.
                            ``(vi) The prominent display of the seal 
                        provided for under subparagraph (C).
                            ``(vii) The prominent display of a 
                        statement that the Internet pharmacy will 
                        dispense prescription drugs only upon a showing 
                        of a prescription.
                            ``(viii) A certification from the person 
                        who owns or manages the pharmacy that a 
                        certification under subparagraph (A) for the 
                        pharmacy has not previously been terminated by 
                        the Secretary, and that no other Internet 
                        pharmacy owned or managed by such person has 
                        received a certification under subparagraph (A) 
                        that has been terminated by the Secretary.
                            ``(ix) Meaningful and accessible 
                        opportunities for a consumer to consult with a 
                        licensed pharmacist regarding a drug prior to 
                        the time at which the pharmacy dispenses the 
                        drug to the consumer.
                            ``(x) Controls to ensure that the Internet 
                        pharmacy provides for authentication and 
                        security of prescription orders.
                            ``(xi) Effective, accessible systems for 
                        communication with consumers, including systems 
                        for consumer reporting of adverse drug 
                        reactions and errors, systems by which 
                        consumers can effectively track and report 
                        problems with unfulfilled orders, systems for 
                        the investigation and redress of consumer 
                        complaints, and systems facilitating effective 
                        communication between the pharmacy and 
                        consumers concerning drug recalls.
                            ``(xii) Controls to ensure the protection 
                        of patient privacy and confidentiality, 
                        including but not limited to the prevention of 
                        unauthorized internal and external use of 
                        personally-identifiable patient information.
                            ``(xiii) Adherence to a quality assurance 
                        policy meeting standards established by the 
                        Secretary.
                            ``(xiv) An agreement by the pharmacy that 
                        the pharmacy will notify the Secretary within 
                        10 days concerning any change in information 
                        submitted under this subsection as a condition 
                        of certification under subparagraph (A).
                            ``(xv) Such additional criteria as the 
                        Secretary determines, after notice and 
                        opportunity for comment, to be appropriate for 
                        the sound operation of certified pharmacies or 
                        the protection of consumers.
                    ``(C) Seal.--The Secretary shall provide for a seal 
                that Internet pharmacies certified under subparagraph 
                (A) are required to display for purposes of indicating 
                to the public the fact of such certification.
                    ``(D) Annual application; duration of 
                certification.--
                            ``(i) In general.--The Secretary may 
                        certify an Internet pharmacy under subparagraph 
                        (A) only if the pharmacy submits to the 
                        Secretary an application for such certification 
                        that demonstrates compliance with the 
                        conditions under subparagraph (B) and is in 
                        such form, and is made in such manner, as the 
                        Secretary may require. The Secretary shall 
                        establish an application form for purposes of 
                        the preceding sentence, including an electronic 
                        application form.
                            ``(ii) Duration of certification; 
                        renewal.--
                                    ``(I) In general.--A certification 
                                under subparagraph (A) is effective for 
                                the two-year period beginning on the 
                                date on which the application under 
                                clause (i) for such certification is 
                                approved by the Secretary. The 
                                Secretary may renew the certification, 
                                pursuant to the submission of an 
                                additional application under clause 
                                (i), and the number of renewals of the 
                                certification is not limited. The 
                                Secretary may establish an abbreviated 
                                process for such renewal applications.
                                    ``(II) Renewal evaluation.--Before 
                                renewing a certification under 
                                subparagraph (A), the Secretary shall 
                                conduct an evaluation to determine 
                                whether the pharmacy involved is in 
                                compliance with the conditions under 
                                subparagraph (B). The evaluation, at 
                                the Secretary's discretion and as 
                                applicable, may include testing of the 
                                Internet site of the pharmacy or other 
                                systems through which the pharmacy 
                                communicates with consumers, and may 
                                include physical inspection of the 
                                records and premises of the pharmacy 
                                pursuant to subparagraph (B).
                            ``(iii) Fees.--The Secretary may impose a 
                        fee on the submission of an application under 
                        subparagraph (D). Any such fee is due upon the 
                        submission of the application. To the extent 
                        provided in appropriations Acts, such fees are 
                        available to the Secretary for carrying out 
                        this section.
                            ``(iv) Information campaign.--The Secretary 
                        shall carry out activities to inform the public 
                        of the program under subparagraph (A), 
                        including information on the significance of 
                        the seal under subparagraph (C) when displayed 
                        by an Internet pharmacy, and including 
                        information on the benefits of doing business 
                        with a pharmacy certified under subparagraph 
                        (A) as compared to an illegal Internet 
                        pharmacy.
                            ``(v) Termination of certification.--The 
                        Secretary, upon the own initiative of the 
                        Secretary or a petition by an interested 
                        person, may terminate a certification under 
                        subparagraph (A), after notice to the Internet 
                        pharmacy involved and an opportunity for a 
                        hearing, after a finding by the Secretary that 
                        an Internet Pharmacy is not in compliance with 
                        the provisions of this section, or has made an 
                        untrue statement of material fact in its 
                        certification application; or is in violation 
                        of any applicable federal statute or regulation 
                        related to the sale and distribution of a 
                        pharmacy product.
            ``(3) Deeming authority.--The Secretary may provide that an 
        Internet pharmacy is deemed to meet the requirements of this 
        section if the Internet pharmacy is certified by the National 
        Association of Boards of Pharmacy's Verified Internet Pharmacy 
        Practice Sites program.
            ``(4) Interstate commerce.--For purposes of this section, 
        Internet pharmacies are deemed to operate in interstate 
        commerce.
    ``(b) Prohibition on Certain Advertising Activities by Internet 
Pharmacies.--
            ``(1) Sales without prescription.--It is a violation of 
        this section for an Internet pharmacy to represent, by 
        advertisement, sales presentation, direct communication 
        (including telephone, facsimile, or electronic mail), or 
        otherwise, that prescription drugs may be obtained from the 
        Internet pharmacy without a prescription.
            ``(2) Advertisements from illegal pharmacies.--It is a 
        violation of this section for provider of an interactive 
        computer service to accept advertisement from or provide links 
        to any illegal Internet pharmacy. An interactive computer 
        service will be deemed in compliance with this section if the 
        pharmacy has obtained a copy of the certification issued to the 
        Internet pharmacy under this section.
    ``(c) Definitions.--For purposes of this section:
            ``(1) The term `illegal Internet pharmacy' means an 
        Internet pharmacy that fails to comply with the standards 
        established by this section.
            ``(2) The term `Internet' means collectively the myriad of 
        computer and telecommunications facilities, including equipment 
        and operating software, which comprise the interconnected 
        world-wide network of networks that employ the transmission 
        control protocol/internet protocol, or any predecessor or 
        successor protocols to such protocol, to communicate 
        information of all kinds by wire or radio.
            ``(3) The term `Internet pharmacy' means an Internet site 
        that is used primarily to sell prescription drugs in interstate 
        commerce, regardless of whether the physical location of the 
        principal place of business of the Internet pharmacy is the 
        United States or in another country.
            ``(4) The term `link,' with respect to the Internet, means 
        one or more letters, words, numbers, symbols, or graphic items 
        that appear on a page of an Internet site for the purpose of 
        serving, when activated, as a method for executing an 
        electronic command--
                    ``(A) to move from viewing one portion of a page on 
                such site to another portion of the page;
                    ``(B) to move from viewing one page on such site to 
                another page on such site; or
                    ``(C) to move from viewing a page on one Internet 
                site to a page on another Internet site.
            ``(5) The term `page,' with respect to the Internet, means 
        a document or other file accessed at an Internet site.
            ``(6) The term `prescription drug' means a drug that is 
        subject to section 503(b)(1).
            ``(7) The terms `site' and `address,' with respect to the 
        Internet, mean a specific location on the Internet that is 
        determined by Internet Protocol numbers, including any 
        successor protocol for determining a specific location on the 
        Internet.''.
    (b) Prohibited Acts.--Section 301 of the Federal Food, Drug, and 
Cosmetic Act (21 U.S.C. 331) is amended by inserting after paragraph 
(k) the following:
    ``(l) The sale or offer for sale of a prescription drug or 
restricted device, or the ownership or operation of an illegal Internet 
pharmacy, in violation of section 503B.''.

SEC. 3. PROHIBITION ON THE USE OF CERTAIN BANK INSTRUMENTS FOR 
              PURCHASES ASSOCIATED WITH ILLEGAL INTERNET PHARMACIES.

    (a) Regulations.--Before the end of the 6-month period beginning on 
the date of the enactment of this Act, the Federal functional 
regulators shall prescribe regulations requiring any designated payment 
system to establish policies and procedures reasonably designed to 
identify and prevent restricted transactions in any of the following 
ways:
            (1) The establishment of policies and procedures that--
                    (A) allow the payment system and any person 
                involved in the payment system to identify restricted 
                transactions by means of codes in authorization 
                messages or by other means; and
                    (B) block restricted transactions identified as a 
                result of the policies and procedures developed 
                pursuant to subparagraph (A).
            (2) The establishment of policies and procedures that 
        prevent the acceptance of the products or services of the 
        payment system in connection with a restricted transaction.
    (b) Requirements for Policies and Procedures.--In prescribing 
regulations pursuant to subsection (a), the Federal functional 
regulators shall--
            (1) identify types of policies and procedures, including 
        nonexclusive examples, which would be deemed to be ``reasonably 
        designed to identify'' and ``reasonably designed to block'' or 
        to ``prevent the acceptance of the products or services'' with 
        respect to each type of transaction, such as, should credit 
        card transactions be so designated, identifying transactions by 
        a code or codes in the authorization message and denying 
        authorization of a credit card transaction in response to an 
        authorization message;
            (2) to the extent practical, permit any participant in a 
        payment system to choose among alternative means of identifying 
        and blocking, or otherwise preventing the acceptance of the 
        products or services of the payment system or participant in 
        connection with, restricted transactions; and
            (3) consider exempting restricted transactions from any 
        requirement under subsection (a) if the Federal functional 
        regulators find that it is not reasonably practical to identify 
        and block, or otherwise prevent, such transactions.
    (c) Compliance With Payment System Policies and Procedures.--A 
creditor, credit card issuer, financial institution, operator of a 
terminal at which an electronic fund transfer may be initiated, money 
transmitting business, or international, national, regional, or local 
network utilized to effect a credit transaction, electronic fund 
transfer, or money transmitting service, or a participant in such 
network, meets the requirement of subsection (a) if--
            (1) such person relies on and complies with the policies 
        and procedures of a designated payment system of which it is a 
        member or participant to--
                    (A) identify and block restricted transactions; or
                    (B) otherwise prevent the acceptance of the 
                products or services of the payment system, member, or 
                participant in connection with restricted transactions; 
                and
            (2) such policies and procedures of the designated payment 
        system comply with the requirements of regulations prescribed 
        under subsection (a).
    (d) Enforcement.--
            (1) In general.--This section shall be enforced by the 
        Federal functional regulators and the Federal Trade Commission 
        under applicable law in the manner provided in section 505(a) 
        of the Gramm-Leach-Bliley Act.
            (2) Factors to be considered.--In considering any 
        enforcement action under this subsection against any payment 
        system, or any participant in a payment system that is a 
        creditor, credit card issuer, financial institution, operator 
        of a terminal at which an electronic fund transfer may be 
        initiated, money transmitting business, or international, 
        national, regional, or local network utilized to effect a 
        credit transaction, electronic fund transfer, or money 
        transmitting service, or a participant in such network, the 
        Federal functional regulators and the Federal Trade Commission 
        shall consider the following factors:
                    (A) The extent to which such person is extending 
                credit or transmitting funds knowing the transaction is 
                in connection with illegal Internet pharmacies.
                    (B) The history of such person in extending credit 
                or transmitting funds knowing the transaction is in 
                connection with illegal Internet pharmacies.
                    (C) The extent to which such person has established 
                and is maintaining policies and procedures in 
                compliance with regulations prescribed under this 
                paragraph.
                    (D) The feasibility that any specific remedy 
                prescribed can be implemented by such person without 
                substantial deviation from normal business practice.
                    (E) The costs and burdens the specific remedy will 
                have on such person.
    (e) Definitions.--For purposes of this section:
            (1) The terms ``credit,'' ``creditor,'' and ``credit card'' 
        have the meanings given such terms in section 103 of the Truth 
        in Lending Act.
            (2) The term ``designated payment system'' means any system 
        utilized by any creditor, credit card issuer, financial 
        institution, operator of a terminal at which an electronic fund 
        transfer may be initiated, money transmitting business, or 
        international, national, regional, or local network utilized to 
        effect a credit transaction, electronic fund transfer, or money 
        transmitting service, or any participant in such network, that 
        the Federal functional regulators determine, by regulation or 
        order, could be utilized in connection with, or to facilitate, 
        any restricted transaction.
            (3) The term ``electronic fund transfer''--
                    (A) has the meaning given such term in section 903 
                of the Electronic Fund Transfer Act; and
                    (B) includes any fund transfer covered by Article 
                4A of the Uniform Commercial Code, as in effect in any 
                State.
            (4) The term ``Federal functional regulator'' has the same 
        meaning as in section 509(2) of the Gramm-Leach-Bliley Act.
            (5) The term ``financial institution''--
                    (A) has the meaning given such term in section 903 
                of the Electronic Fund Transfer Act; and
                    (B) includes any financial institution, as defined 
                in section 509(3) of the Gramm-Leach-Bliley Act.
            (6) The term ``illegal Internet pharmacy'' means an 
        Internet pharmacy that fails to comply with the standards 
        established by section 503B of the Federal Food, Drug, and 
        Cosmetic Act.
            (7) The terms ``money transmitting business'' and ``money 
        transmitting service'' have the meanings given such terms in 
        section 5330(d) of title 31, United States Code.
            (8) The term ``restricted transaction'' means any 
        transaction or transmittal to any person engaged in the 
        operation of an illegal Internet pharmacy, of--
                    (A) credit, or the proceeds of credit, extended to 
                or on behalf of such other person (including credit 
                extended through the use of a credit card);
                    (B) an electronic fund transfer or funds 
                transmitted by or through a money transmitting 
                business, or the proceeds of an electronic fund 
                transfer or money transmitting service, from or on 
                behalf of the other person;
                    (C) any check, draft, or similar instrument which 
                is drawn by or on behalf of the other person and is 
                drawn on or payable at or through any financial 
                institution; or
                    (D) the proceeds of any other form of financial 
                transaction as the Federal functional regulators may 
                prescribe by regulation which involves a financial 
                institution as a payor or financial intermediary on 
                behalf of or for the benefit of the other person.

SEC. 4. EFFECTIVE DATE.

     This Act and the amendments made by this Act are effective 6 
months after the date of the enactment of this Act.
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