[Senate Hearing 107-727]
[From the U.S. Government Publishing Office]



                                                        S. Hrg. 107-727
 
      BUYER BEWARE: PUBLIC HEALTH CONCERNS OF COUNTERFEIT MEDICINE
=======================================================================


                                HEARING

                               before the

                       SPECIAL COMMITTEE ON AGING
                          UNITED STATES SENATE

                      ONE HUNDRED SEVENTH CONGRESS

                             SECOND SESSION

                               __________

                             WASHINGTON, DC

                               __________

                              JULY 9, 2002

                               __________

                           Serial No. 107-29

         Printed for the use of the Special Committee on Aging



                          U.S. GOVERNMENT PRINTING OFFICE
82-326                             WASHINGTON : 2002
_____________________________________________________________________________
For Sale by the Superintendent of Documents, U.S. Government Printing Office
Internet: bookstore.gpo.gov  Phone: toll free (866) 512-1800; (202) 512-1800  
Fax: (202) 512-2250 Mail: Stop SSOP, Washington, DC 20402-0001









                       SPECIAL COMMITTEE ON AGING

                  JOHN B. BREAUX, Louisiana, Chairman
HARRY REID, Nevada                   LARRY CRAIG, Idaho, Ranking Member
HERB KOHL, Wisconsin                 CONRAD BURNS, Montana
JAMES M. JEFFORDS, Vermont           RICHARD SHELBY, Alabama
RUSSELL D. FEINGOLD, Wisconsin       RICK SANTORUM, Pennsylvania
RON WYDEN, Oregon                    SUSAN COLLINS, Maine
BLANCHE L. LINCOLN, Arkansas         MIKE ENZI, Wyoming
EVAN BAYH, Indiana                   TIM HUTCHINSON, Arkansas
THOMAS R. CARPER, Delaware           JOHN ENSIGN, Nevada
DEBBIE STABENOW, Michigan            CHUCK HAGEL, Nebraska
JEAN CARNAHAN, Missouri              GORDON SMITH, Oregon
                    Michelle Easton, Staff Director
               Lupe Wissel, Ranking Member Staff Director

                                  (ii)












                            C O N T E N T S

                              ----------                              
                                                                   Page
Opening Statement of Senator John Breaux.........................     1
Statement of Senator Ron Wyden...................................     2
Statement of Senator Thomas Carper...............................     3

                                Panel I

Rick C. Roberts, San Francisco, CA...............................     4
William K. Hubbard, Senior Associate Commissioner, Policy, 
  Planning and Legislation, Food and Drug Administration, 
  Washington, DC.................................................    10
Elizabeth G. Durant, Executive Director, Trade Programs, U.S. 
  Customs Service, Washington, DC................................    45
John Theriault, Vice President, Corporate Security, Pfizer Inc., 
  Washington, DC.................................................    51

                                APPENDIX

Statement of Ronald J. Streck, President and CEO of the 
  Healthcare Distribution Management Association.................    89
Statement of Mary R. Grealy, President, Healthcare Leadership 
  Council........................................................    93

                                 (iii)













      BUYER BEWARD: PUBLIC HEALTH CONCERNS OF COUNTERFEIT MEDICINE

                              ----------                              


                         TUESDAY, JULY 9, 2002

                                       U.S. Senate,
                                Special Committee on Aging,
                                                    Washington, DC.
    The committee met, pursuant to notice, at 2:35 p.m., in 
room SD-562, Dirksen Senate Office Building, Hon. John Breaux 
(chairman of the committee) presiding.
    Present: Senator Breaux, Wyden, and Carper.

            OPENING STATEMENT OF SENATOR JOHN BREAUX

    The Chairman. The Aging Committee will please be in order.
    I want to welcome all of our witnesses who are with us this 
afternoon and all of our guests and thank them for being with 
us.
    I want to especially welcome Mr. Rick Roberts who has 
traveled all the way from Colorado to share his story with us, 
and we thank him for being with us this afternoon.
    Last September, this committee held a hearing to examine 
the marketing practices of some of our dietary supplement 
companies. What we found at that time was that unscrupulous con 
men were making unsubstantiated health claims about products 
which undergo practically no Food and Drug Administration 
approval process. As unsavory as these characters were, none of 
their products claimed to have FDA approval. They were simply 
gaming the system.
    Today's hearing, ``Buyer Beware: Public Health Concerns of 
Counterfeit Medicine,'' is being called to examine an even 
worse practice; that is, the counterfeiting of FDA-approved 
prescription pharmaceuticals.
    The term ``counterfeit'' will be used today to discuss 
pharmaceutical products which fall under three very broad 
headings. The first consists of products which contain the 
correct active ingredients, but have either incorrect dosages 
or have expired or have been re-labeled. These drugs could 
trigger allergic reactions or simply be ineffectual in treating 
the problems for which they were intended.
    The next group consists of products with no active 
ingredients. These products may sound safe, but, in fact, they 
prevent patients from receiving the proper medical treatment 
and could effectively lead to a patient's untimely death.
    Finally, the third group consists of products containing 
the wrong ingredients. These drugs may actually contain other 
medicines or toxic substances which can lead to immediate 
health care problems.
    It was reported last year that nearly 8 percent of drugs 
imported into the United States are fake. The World Health 
Organization has estimated that about 8 percent of the 
medicines available worldwide are also counterfeit. These 
statistics are, of course, very troubling.
    The United States maintains the most rigorous 
pharmaceutical regulatory system in the world, but high 
prescription drug costs and the growing Internet marketplace 
make the United States an increasingly attractive market for 
these who engage in these unscrupulous activities.
    Additionally, we will hear today that counterfeits are 
entering our country not only through personal importation and 
the Internet, but also on the shelves of trusted retail 
pharmacies.
    The Congress has held dozens of hearings on the rising 
costs of prescription drugs, and we have heard countless 
stories of individuals and families who have been devastated by 
the financial burdens of treating chronic illnesses. Today's 
hearing will illustrate that we cannot look abroad for the 
solution to the prescription drug dilemma. We in the Congress 
must do all that we can to provide a meaningful, affordable 
prescription drug plan for our Nation's seniors, and we must do 
it before more of our vulnerable citizens jeopardize their 
lives looking for a solution.
    I look forward to hearing from our panel members and their 
testimony and also the participation of our colleagues. I would 
first recognize our colleague on the committee who contributes 
so much, Senator Wyden.

                 STATEMENT OF SENATOR RON WYDEN

    Senator Wyden. Thank you, Chairman Breaux, and thank you 
very much for your continued interest in this problem. My sense 
is that this problem has grown in the United States since the 
World Health Organization concluded in 1992 that, in some 
countries, as much as 60 percent of all drugs may be 
counterfeit.
    I will tell you, Chairman Breaux, I think your hearing is 
particularly timely because, at a time when the Congress is 
working to add a prescription drug benefit to Medicare, it is 
absolutely critical that the senior citizens of this country 
get the real thing. Counterfeit medicine is certainly a 
financial ripoff, but I think what we have seen in your 
investigations and others is that it can be life-threatening as 
well.
    I would wrap up with just a couple of points, Mr. Chairman, 
that I am interested in working with you on. First, with 
respect to the Internet sites, it is going to be very important 
to examine them carefully because I think there can be some 
serious questions with respect to documenting the chain of 
custody for drugs that are sold over the Internet, and the 
challenge will be to make sure that there is the adequate 
documentation without creating a whole barrage of new red tape 
and bureaucracy. I am going to be asking our witnesses about 
that issue in particular.
    The other point that I would want to mention, Mr. Chairman, 
is that I think there are some great opportunities 
technologically to root out the fake drugs, the counterfeit 
drugs. As you know, I chair the Commerce Committee's 
Subcommittee on Technology. I work very closely with you on the 
Commerce Committee.
    For example, there are some exciting new handheld devices 
that, in effect, work almost like X-rays. They are almost X-ray 
gadgets that can, I think, be an ideal tool for rooting out the 
counterfeits. I would hope that we could work together both on 
this committee and in our work on the Senate Commerce Committee 
to look at some of the new technologies that can help us root 
out the fakes and counterfeits that threaten the people of our 
country.
    I thank you again for your leadership.
    The Chairman. Thank you, Senator Wyden.
    Senator Carper.

                STATEMENT OF SENATOR TOM CARPER

    Senator Carper. Thank you, Mr. Chairman.
    To our witnesses, we welcome you. We are delighted that you 
are here and look forward to your testimony.
    I am scheduled to preside at 3. So, if I get up and walk 
out during the middle of somebody's testimony, I have gone to 
do my day job, and I ask for your forgiveness.
    During this past week, we have been in recess. I live only 
in Delaware. I go home virtually every night, but recess for me 
is just a chance to not only reconnect with my family a little 
bit, but also to reconnect big time with my State.
    We held a series of housing summits throughout the State on 
affordable housing, home ownership, and I held a number of 
meetings, almost like focus groups, with senior citizens. The 
issue, not surprisingly, was prescription medicines under 
Medicare.
    I don't know if your ears were burning, Mr. Chairman, but 
your name was invoked kindly in the number of stops, Bob Graham 
for his legislation. The House Republican bill was discussed at 
some length, and we talked about the different proposals, what 
the copays were, what the deductibles were, what the monthly 
premiums were, what the caps were of which Medicare picked up 
the entire tab. There was a fair amount of discussion on that, 
but in every one of those meetings, we also talked about the 
issue of medicines that can be obtained across the border, 
maybe across the border in Canada or in Mexico or in other 
places around the world.
    I wish that those people who were good enough to 
participate in those focus groups back in Delaware with me over 
the last week were able to be here today to hear this 
testimony, and my hope is that some of them are watching on 
television. This is a good hearing, and it is a timely hearing.
    I just want to say to you for all the time and effort that 
you have put into the issue of how do we make prescription 
drugs available to senior citizens, to our Medicare population, 
and doing so in a way that is consistent with a balanced budget 
and that harnesses market force, my special thanks.
    The Chairman. I thank both of my colleagues for their 
generous comments, and we are very pleased to have our panel.
    First would be Mr. Rick Roberts. He is a professor in the 
Department of Communications Studies at the University of San 
Francisco, spends his summers working with at-risk high school 
students at the Eagle Rock School in Colorado, and will tell us 
about his firsthand experience about using a prescription drug 
that turned out to be counterfeit.
    Mr. Roberts, we welcome you to the committee.

        STATEMENT OF RICK C. ROBERTS, SAN FRANCISCO, CA

    Mr. Roberts. Thank you. I appreciate this opportunity to 
share my story.
    The Chairman. Pull the mike up a little bit closer, Mr. 
Roberts. Thank you.
    Mr. Roberts. Thank you for this opportunity to share my 
story.
    Yes. I teach at the University of San Francisco and work 
with at-risk youth. I am on the board of the Andrew Ziegler 
Foundation committed to HIV care and standard of care and 
access to that care, but today I am really here to talk to you 
as an individual, not from those perspectives, but as someone 
who has experienced counterfeit medicine.
    I think my story is important because it is truly, in the 
end, the individual who suffers from this crime either by way 
of not receiving medication required or potentially getting 
something dangerous and the anxiety that is associated with 
taking a counterfeit medication.
    My story starts in the early 1980's. I was a student in 
college and was infected with HIV before we even knew about 
HIV. In 1988, I became ill and was diagnosed with AIDS-related 
complex, I immediately began taking AZT, which was the only 
anti-retroviral approved by the FDA at that point, and that 
began my journey of doctors and procedures and pharmacies and 
insurance companies and medications and side effects. I think 
it has been quite a journey.
    Twelve years later, in the year 2000, I was facing HIV 
Wasting Syndrome. I was on a number of medications to help 
prevent that. They were failing, and so what I needed was 
Serostim, which is human growth hormone produced by Serono. I 
was fortunate enough that my insurance company approved a 12-
month supply of Serostim, and I began taking it. I injected it 
every day and with very positive results.
    But, about halfway through this process of Serostim, I 
noticed burning at the injection sites and what I think were 
some subtle differences in packaging.
    January 2001, I asked my pharmacist. He was at the counter 
and I said, ``Do you know why this is burning?'' He said it 
shouldn't, but that I should go home because maybe I had some 
fake Serostim. I asked him what he meant by that. He said he 
didn't know much more except that he knew that there was some 
fake Serostim.
    So I went home and looked very closely at what I had, the 
empty vials and boxes with the remaining doses I had, plus what 
I had just received from the pharmacy, and noticed that there 
were three groups, the group that matched exactly what I had 
just picked up, and then two other groups, one with some subtle 
differences and one which it turned out to be big differences 
in their packaging and quality of drugs.
    At that point, it was pretty clear that for at least for a 
month, I had injected daily something other than growth 
hormone. The question that immediately came to my mind was, 
``what had I injected?''
    I went online, went to the Serono website where they did 
have a warning and a lot number listed. I checked. I had that 
lot, but I was sure that I had something in addition to that 
lot, and they said they were cooperating with the FDA's 
criminal investigation.
    I went to the FDA site and read their warning that this 
counterfeit had been found in seven States and that they had a 
criminal investigation that was ongoing.
    I contacted both of those groups, and it would be 3 months 
of sleepless nights and doctor appointments and anxiety attacks 
before I found out what I had injected. At the end of those 3 
months of waiting, I was told that there would be no long-term 
consequences for what I had injected. It would be another 3 
months before I found out what was in the second batch, and 
that it was still true that I would be OK in the long run. 
Luckily, I was stable enough that I hadn't suffered from not 
getting the medication I needed during that month. So I feel 
like I was pretty lucky.
    I still have a number of questions. I am looking forward to 
the conclusion of the FDA investigation for some answers.
    I think, most importantly to me, that I feel fortunate that 
I found out about it and that I was stable, but I only knew 
about it because I happened to ask my pharmacist and he told 
me. There was never an attempt to inform me or warn me of the 
dangers of counterfeit Serostim, even though I was one of just 
6,000 people in the country on the drug at the time.
    These were really high-quality counterfeits. You can see 
here some, just subtle, differences between them.
    The Chairman. Go ahead and show them what you have.
    Mr. Roberts. These two here are the real thing. This box is 
the real thing.
    These are both counterfeits and came with these boxes here.
    Obviously, they were counterfeited well enough to fool the 
pharmacist. As I said, I noticed small changes, a rubber 
stopper in one bottle that wasn't in the other, the tabs on the 
top were slightly different colors.
    These are counterfeit. These are real. Counterfeit. Real.
    I think I know these in detail now. I am very careful. 
Every time I get a prescription, I examine everything very 
carefully. After this experience, I became very, very aware of 
the fact that I needed to be diligent about checking the 
prescriptions I was receiving.
    These are not run-of-the-mill drugs. Most HIV medication 
and related medications are very, very expensive, especially 
growth hormone.
    So, in the end, after I found out I was safe, I became 
frustrated and angry that no one had tried to contact me. I 
wasn't aware of the danger, and just as I began, I think this 
story is important because, in the end, it is the individual 
who really does suffer from this crime.
    Thank you.
    [The prepared statement of Mr. Roberts follows:]
    [GRAPHIC] [TIFF OMITTED] 82326.001
    
    [GRAPHIC] [TIFF OMITTED] 82326.002
    
    [GRAPHIC] [TIFF OMITTED] 82326.003
    
    [GRAPHIC] [TIFF OMITTED] 82326.004
    
    The Chairman. Thank you, Mr. Roberts. We have a number of 
questions we want to get into, but we will hear from our other 
witnesses.
    Next, we have, please, Mr. Bill Hubbard, who is Senior 
Associate Commissioner for Policy, Planning and Legislation at 
the Food and Drug Administration.
    Mr. Hubbard, we welcome your testimony.

STATEMENT OF WILLIAM K. HUBBARD, SENIOR ASSOCIATE COMMISSIONER, 
POLICY, PLANNING AND LEGISLATION, FOOD AND DRUG ADMINISTRATION, 
                         WASHINGTON, DC

    Mr. Hubbard. Thank you, Mr. Chairman.
    We are all familiar with counterfeiting. We hear about it 
in handbags and watches and clothing and other sorts of things, 
and it is a problem throughout the country and, in fact, 
throughout the world. But pharmaceuticals, we believe, 
represent a special problem in that consumers not only can have 
their pocketbook placed at risk, but their life as well, and 
consumers cannot discern for a pharmaceutical what they have.
    This is a counterfeit watch from the streets of Washington. 
It cost $9, but I could take this to a jeweler who would 
readily know that it is counterfeit. Even a consumer can see 
from the second hand that it is probably not a fine Swiss 
timepiece.
    This is a counterfeit drug made by the same company that 
Mr. Roberts was talking about, that is indistinguishable from 
the real thing, and if I showed this to a patient, he couldn't 
tell the difference. If I showed it to a pharmacist, he 
couldn't tell the difference. If I showed it to a doctor, he 
couldn't tell the difference. As a matter of fact, if I took it 
to the company, they would likely be unable to show initially 
the difference until they spent some time looking at that. So 
this is a real problem, and the sophistication of the 
counterfeiters, we believe, is a problem. So it is very timely 
that you are having this discussion with us.
    Counterfeiting has been a very limited problem in the past, 
but we are concerned that it is getting to be more of a 
problem. Since 1998, we have had about 55 counterfeit drug 
cases that have resulted in 26 arrests and convictions, If you 
look at the pyramid of those cases, they are increasing.
    In 1999, we had six cases opened. In 2000, we had 10 cases 
opened. In 2001, the FDA opened 23 cases, and so far this year, 
we have opened 16 counterfeit cases, which would mean we are 
going on a rate for the year of 30 or more.
    We are also seeing something we haven't seen before that my 
colleagues at Customs are very used to, and that is the concept 
of smuggling. We all hear about smuggling of narcotic drugs, 
which is a very old story, but now we are seeing smuggling of 
prescription drugs.
    This is a toy from China that came in, and in the back was 
a pocket that contained Viagra. There has been a case on that.
    We have a little toy car that has a little metal motor in 
it to make it go around, but they took the motor out put a drug 
called Tramadol in there, and that has been a problem.
    American consumers are seeking out these products more 
because, as you pointed out, the high cost of drugs drives 
people to look for cheaper medications.
    We have also seen an increase in the use of the mail and 
the Internet to purchase drugs, as you know, and that is also a 
challenge because neither we nor the Customs Service can deal 
with these thousands and thousands of packages that come in.
    As a matter of fact, we and Customs did a sample look a 
couple of years ago at international mail facilities, and if 
you extrapolate from what we saw just in a few days, there may 
be 1- to 2 million of these little individual packages coming 
in that people order over the Internet. The system really can't 
deal with trying to assess the quality of each one of these and 
try to assure the public that they are safe.
    Our criminal investigators are also seeing counterfeit or 
otherwise suspect drugs from just any possible country. We have 
an example from Spain, England, China, France, Germany, 
Bahamas, Mexico. It is everywhere, as you pointed out in your 
opening remarks, Mr. Chairman. So it is clearly an issue that 
we are very concerned about.
    Also, there is this emergence of what we see as an illicit 
wholesale drug system out there that, because of the tiered 
pricing in the industry. There are profits to be made. If you 
can find a way to get drugs at a discount over here more than 
you need, you can sell them over there, and then that gives the 
counterfeiters a potential entree.
    The system in this country has traditionally been closed. 
It is hard to get into the drug distribution system in this 
country unless you are a manufacturer or established 
wholesaler. The counterfeiters want a way to get in, and we are 
concerned that some of these things that are going on open that 
up.
    The latest we see is Canada. That is the trend of the day. 
The Canadian drugs are clearly cheaper. The numbers are there, 
and we see ads in newspapers, particularly in areas with large 
numbers of senior citizens. Come on down or buy our drugs from 
this site, 86-percent savings, Congress says this is legal, 
this is a good thing, and just fill out the form and send in 
your check and your drugs will be on the way.
    So that tendency of the promotion of these products as well 
as the consumers looking for the cheaper drugs----
    The Chairman. Excuse me, Mr. Hubbard. Is that ad a mail 
order ad for mail order?
    Mr. Hubbard. This particular ad is a newspaper ad, but then 
it says you can fill out this form and order the drugs or you 
can go on their website and order the drugs. It says that they 
are Canadian drugs that would offer 86-percent savings. Our 
data shows the savings from Canada is probably more like 40 to 
60 percent, somewhere in that range, but there probably are 
some that go as high as 86 percent because, in fact, there is a 
range of price savings if you go to Canada.
    The Chairman. OK.
    Mr. Hubbard. Of course, these ads imply that it is legal, 
it is acceptable, and the drugs are safe.
    So thank you for this hearing, and we stand ready to 
provide whatever assistance we can to the committee.
    [The prepared statement of Mr. Hubbard follows:]
    [GRAPHIC] [TIFF OMITTED] 82326.005
    
    [GRAPHIC] [TIFF OMITTED] 82326.006
    
    [GRAPHIC] [TIFF OMITTED] 82326.007
    
    [GRAPHIC] [TIFF OMITTED] 82326.008
    
    [GRAPHIC] [TIFF OMITTED] 82326.009
    
    [GRAPHIC] [TIFF OMITTED] 82326.010
    
    [GRAPHIC] [TIFF OMITTED] 82326.011
    
    [GRAPHIC] [TIFF OMITTED] 82326.012
    
    [GRAPHIC] [TIFF OMITTED] 82326.013
    
    [GRAPHIC] [TIFF OMITTED] 82326.014
    
    [GRAPHIC] [TIFF OMITTED] 82326.015
    
    [GRAPHIC] [TIFF OMITTED] 82326.016
    
    [GRAPHIC] [TIFF OMITTED] 82326.017
    
    [GRAPHIC] [TIFF OMITTED] 82326.018
    
    [GRAPHIC] [TIFF OMITTED] 82326.019
    
    [GRAPHIC] [TIFF OMITTED] 82326.020
    
    [GRAPHIC] [TIFF OMITTED] 82326.021
    
    [GRAPHIC] [TIFF OMITTED] 82326.022
    
    [GRAPHIC] [TIFF OMITTED] 82326.023
    
    [GRAPHIC] [TIFF OMITTED] 82326.024
    
    [GRAPHIC] [TIFF OMITTED] 82326.025
    
    [GRAPHIC] [TIFF OMITTED] 82326.026
    
    [GRAPHIC] [TIFF OMITTED] 82326.027
    
    [GRAPHIC] [TIFF OMITTED] 82326.028
    
    [GRAPHIC] [TIFF OMITTED] 82326.029
    
    [GRAPHIC] [TIFF OMITTED] 82326.030
    
    [GRAPHIC] [TIFF OMITTED] 82326.031
    
    [GRAPHIC] [TIFF OMITTED] 82326.032
    
    [GRAPHIC] [TIFF OMITTED] 82326.033
    
    [GRAPHIC] [TIFF OMITTED] 82326.034
    
    [GRAPHIC] [TIFF OMITTED] 82326.035
    
    [GRAPHIC] [TIFF OMITTED] 82326.036
    
    The Chairman. Thank you very much. We have some questions, 
I know, for you as well.
    We are delighted to have Elizabeth Durant, who is Executive 
Director of Trade Programs at the U.S. Customs Service.
    Ms. Durant, welcome to the committee.

  STATEMENT OF ELIZABETH G. DURANT, EXECUTIVE DIRECTOR, TRADE 
         PROGRAMS, U.S. CUSTOMS SERVICE, WASHINGTON, DC

    Ms. Durant. Thank you, Mr. Chairman.
    I would like to, today, talk to you about U.S. Customs' 
efforts to address this ever-increasing trend of personal and 
bulk importation of pharmaceutical products into the United 
States.
    The main focus of the Customs Service has shifted to 
protecting the United States from terrorist attacks. There is 
no doubt about it, but we have many other missions in Customs 
and we do perform services under the direction of over 40 other 
Federal agencies. One of our closest partners is the Food and 
Drug Administration.
    The Customs Service is concerned with three ways that 
pharmaceuticals are imported, those purchased through the 
Internet and shipped through our international mail and express 
courier facilities, those carried into the United States by 
individuals transiting our land borders, and bulk shipments of 
adulterated or counterfeit pharmaceuticals.
    Millions of packages come through the mail in express 
courier facilities every year. Thousands of packages, 
particularly in the mail, are found to contain illegal and 
unapproved pharmaceuticals. We also estimate that 10 million 
people cross the land border annually carrying the same 
unapproved products.
    A disturbing trend is the increase in bulk shipments 
through the mail indicating that these products could be making 
their way to pharmacy shelves. Detecting prohibited 
pharmaceuticals among the tens of millions of parcels passing 
through our facilities each year presents a massive challenge. 
Our limited resources require a risk management approach with 
which we utilize advanced intelligence, records of past 
seizures, and other factors to locate packages that present the 
most significant threats.
    Customs' laboratories help us find discrepancies in 
shipments of bulk and finished pharmaceuticals, but we do 
require the assistance from the FDA to establish effective 
national standards for the interdiction of pharmaceuticals 
subject to FDA laws.
    Based on an operation nicknamed Operation Safeguard that we 
have carried out over the past couple of years, we have found 
the volume of pharmaceuticals shipped through the international 
mail to be enormous. We have also found that a significant 
number of these do not contain an active pharmaceutical 
ingredient, but merely substances such as starch or sugar. 
Other problems include expired materials, unapproved products, 
improper use instructions, and products made in facilities not 
under proper regulation.
    The vast majority of pharmaceuticals that enter the U.S. 
via the mail do so in a manner that violates present FDA 
requirements.
    Additionally, we have found many parcels contain different 
types of pharmaceuticals that, if taken simultaneously, could 
cause dangerous interactions. Individuals not under the direct 
supervision of a physician could easily purchase these 
products. Thus, we cannot assume that the products would be 
used properly.
    It is important to note that after 3 weeks of one phase of 
Operation Safeguard, the quantity of illegal and defective 
pharmaceutical shipments slowed significantly. So they are 
watching us, and they are watching what we get, and they move 
on or wait a while until we can get back to them.
    During a recent phase of Operation Safeguard that took 
place at two international mail branches, 31 parcels containing 
52 different types of questionable pharmaceuticals underwent 
intensive chemical analysis. The analysis of these products 
showed that eight of the so-called pharmaceuticals, or 15 
percent, contained no identifiable active ingredient, and 18 
contained a substance that is regulated under Federal 
Controlled Substance Act.
    Additionally, during this phase of the operation, it was 
found that large parcels of fake or gray-market pharmaceuticals 
are being split into different mail shipments, but arrive at 
the same address. This is a relatively new trend.
    Accordingly, there is a possibility that stateside 
pharmaceutical distributors are using these products as a 
source of supply. It is clear that this remains an overwhelming 
problem.
    Travelers who attempt to import pharmaceuticals upon their 
return to the United States are also a source of concern. 
Customs is seeking and working with the FDA to more sharply 
define the current broad discretion given to Customs inspectors 
to decide whether or not an importation is for a legitimate 
personal medical use.
    From an overall perspective, the spiraling volume of goods 
at our borders has put immense pressure on our ability to 
enforce the Nation's laws and protect the borders against the 
threat of terrorism. Although we have taken some positive 
steps, successfully identifying and handling imported 
pharmaceuticals presents a daunting task for Customs.
    I want to thank you and members of the committee for 
considering the Customs Service in your review of the 
importation of personal and bulk pharmaceuticals. This is an 
issue that speaks directly to our mission. We will continue to 
make every effort possible to work with the Congress and our 
fellow inspection agencies to address the health and safety 
concerns of the American people.
    [The prepared statement of Ms. Durant follows:]
    [GRAPHIC] [TIFF OMITTED] 82326.037
    
    [GRAPHIC] [TIFF OMITTED] 82326.038
    
    [GRAPHIC] [TIFF OMITTED] 82326.039
    
    [GRAPHIC] [TIFF OMITTED] 82326.040
    
    The Chairman. Thank you, Ms. Durant.
    Next, we will hear from Mr. John Theriault, who is Vice 
President for Corporate Security at Pfizer Corporation.
    Mr. Theriault.

    STATEMENT OF JOHN THERIAULT, VICE PRESIDENT, CORPORATE 
              SECURITY, PFIZER, INC., NEW YORK, NY

    Mr. Theriault. Thank you, Mr. Chairman, Senator Wyden. It 
is a pleasure for me to appear before you today to discuss the 
critically important issue of counterfeit medicine.
    I am the Vice President of Corporate Security at Pfizer, 
and in that position, I am responsible for implementing 
policies and procedures to protect Pfizer's personnel, its 
products, its facilities, and its intellectual property. That 
responsibility is global in scope.
    Prior to joining Pfizer, I was a special agent of the FBI 
for 25 years and served in a variety of investigative, 
management, and executive positions. I spent seven of those 
years outside of the United States serving as Legal Attache in 
Ottawa, Canada, and in London, England. During the London 
assignment, I was also diplomatically accredited to our 
embassies in Ireland and all of the Scandinavian countries. I 
have substantial experience in international law enforcement, 
and when I retired from the FBI in 1995, I was a member of the 
Bureau's of Senior Executive Service.
    Mr. Chairman, while my testimony today focuses on my own 
experience and that of my company, Pfizer, I want also to 
convey to you the very significant message that the problems of 
counterfeiting, copying, adulterating, and misbranding 
prescription drugs are faced by many companies.
    A significant aspect of my job is to protect the health and 
safety of consumers by identifying counterfeit, diverted, 
adulterated, or unsafe Pfizer products in the marketplace, and 
to ensure that prompt and decisive action is taken to eliminate 
them.
    Pfizer takes this responsibility very seriously and has 
taken some of the most innovative and aggressive steps in the 
industry to deal with an emerging global counterfeiting problem 
that could have disastrous consequences for consumers.
    My testimony and the pictures that accompany it describe 
some of the actions that we have taken in China, Taiwan, and 
Thailand, using well-documented cases involving Viagra.
    Right now, I want to move on to describe two cases in the 
United States to illustrate what I think is a much larger 
problem facing the entire pharmaceutical industry with respect 
to counterfeit medicines.
    First, in September 2001, a self-employed carpet cleaner 
doing business as Mr. Spotless and Dr. Schwab was arrested for 
selling counterfeit Viagra on the basis of information that we 
developed and local authorities in Ohio corroborated.
    During the investigation, authorities intercepted 36,000 
counterfeit Viagra tablets consigned to Mr. Spotless from a 
fictitious toy company in China. As you can see from this 
photograph of the evidence that was seized, the counterfeit 
medicine, pill bottles, foil bottle seals, and labels were all 
concealed in stuffed animals. Information indicated that Mr. 
Spotless had a fairly extensive distribution network. An 
investigation is currently ongoing to determine the extent of 
it.
    Next, on May 17, 2002, seven individuals and five companies 
were indicted by a New York grand jury and charged with 
manufacturing counterfeit Viagra and selling it over the 
Internet. The investigation, which we initiated, covered a 17-
month period during which investigators purchased 28,000 bogus 
Viagra tablets from China and India. The scope of that 
conspiracy is demonstrated in this exhibit that shows the 
linkage between counterfeit wholesalers in Hong Kong and 
resellers in Florida, Nevada, and Colorado. The wholesalers 
were also linked with counterfeit product that was found in 
three cities in China.
    Another aspect of this same case involved an individual 
named Girith Vishwanath of Benzo Chemical Industries in India 
who actually sold undercover operators a tablet-punching 
machine that weighed 1,500 pounds, which you can see in this 
photograph, and offered a constant supply of tablet blend so 
that his customer could manufacture his own Viagra. During the 
investigation, those indicted bragged that they could deliver 
2.5 million counterfeit Viagra tablets to New York each month.
    Mr. Chairman, it is significant to note that in both the 
Ohio and New York cases I have cited, ingenious criminals were 
able to import counterfeit medicine notwithstanding our current 
regulations and border controls. It is my opinion that any 
lessening of those regulations and controls will expose 
American consumers to an unacceptable level of risk.
    Our experience with Viagra has been illuminating. It has 
lifted the curtain and allowed us to see into a world of 
clandestine drug manufacturing that we might not have otherwise 
discovered. It is a world that couldn't care less about 
regulatory and legal standards, good manufacturing practices, 
consumer health and safety, or the affordability of 
prescription drugs. It is a world of sophisticated and some not 
so sophisticated, organized criminal enterprises accountable to 
no one.
    Other drugs are being counterfeited extensively, as some of 
my testimony indicates. What we have learned from Viagra, 
though, should be taken as a warning about what can happen and 
what is happening with other products.
    These stories demonstrate that notwithstanding current 
stringent border controls and importation requirements, 
counterfeit medicines are a constant threat. There is no doubt 
in my mind that as we sit here today and discuss the issue, 
criminals are attempting to figure out ways to get counterfeit 
medicine into the United States.
    This is organized crime in a real sense, and organized 
crime will always seek out the weakest entry point in any 
distribution system. Any public policy measure that eases the 
current border controls simply makes it easier for criminals to 
target and exploit American patients.
    Mr. Chairman, thank you for the opportunity to testify 
before this important committee. I look forward to answering 
any questions.
    [The prepared statement of Mr. Theriault follows:]
    [GRAPHIC] [TIFF OMITTED] 82326.041
    
    [GRAPHIC] [TIFF OMITTED] 82326.042
    
    [GRAPHIC] [TIFF OMITTED] 82326.043
    
    [GRAPHIC] [TIFF OMITTED] 82326.044
    
    [GRAPHIC] [TIFF OMITTED] 82326.045
    
    [GRAPHIC] [TIFF OMITTED] 82326.046
    
    [GRAPHIC] [TIFF OMITTED] 82326.047
    
    [GRAPHIC] [TIFF OMITTED] 82326.048
    
    [GRAPHIC] [TIFF OMITTED] 82326.049
    
    [GRAPHIC] [TIFF OMITTED] 82326.050
    
    [GRAPHIC] [TIFF OMITTED] 82326.051
    
    [GRAPHIC] [TIFF OMITTED] 82326.052
    
    [GRAPHIC] [TIFF OMITTED] 82326.053
    
    [GRAPHIC] [TIFF OMITTED] 82326.054
    
    [GRAPHIC] [TIFF OMITTED] 82326.055
    
    [GRAPHIC] [TIFF OMITTED] 82326.056
    
    [GRAPHIC] [TIFF OMITTED] 82326.057
    
    [GRAPHIC] [TIFF OMITTED] 82326.058
    
    [GRAPHIC] [TIFF OMITTED] 82326.059
    
    [GRAPHIC] [TIFF OMITTED] 82326.060
    
    [GRAPHIC] [TIFF OMITTED] 82326.061
    
    [GRAPHIC] [TIFF OMITTED] 82326.062
    
    [GRAPHIC] [TIFF OMITTED] 82326.063
    
    [GRAPHIC] [TIFF OMITTED] 82326.064
    
    [GRAPHIC] [TIFF OMITTED] 82326.065
    
    The Chairman. Well, thank you, Mr. Theriault, and let me 
thank all of our witnesses for what I think is very, very 
valuable and very important information for all of us and to 
Congress to have before us as we consider what to do with 
prescription drugs and how do we go about handling this.
    Mr. Theriault, your statement is a very strong indication 
of what is happening out there in the real world. You know, 
taking counterfeit Viagra might embarrass you, but it is not 
going to kill you.
    Mr. Roberts, your situation and taking counterfeit drugs 
instead of the real product could have killed you, and for most 
pharmaceutical products, if you are taking a counterfeit 
product or a product that has ingredients in it that you may be 
allergic to or cause additional health problems could, in fact, 
kill you.
    Where were you getting the medicine? I mean, were you going 
down to your local drug store and getting this? Are you getting 
it over the Internet or mail order, or how?
    Mr. Roberts. I receive quite a few prescriptions. I average 
about 14 to 15 prescriptions a month, and I was going to CVS 
Pro Care Pharmacy in the Castro District of San Francisco.
    The Chairman. So you were going to a regular drug store, a 
retail drug store, and giving your prescription to be filled, 
and what you were getting was not the real thing.
    Mr. Roberts. Right. The Pro Care Pharmacy is a system for 
people taking multiple medications and really need special 
attention. So these are pharmacists who I do think spend a lot 
of time looking at these particular drugs.
    The Chairman. Do you know what happened to that drug store? 
Are they still in business?
    Mr. Roberts. Oh, yes. They are very much in business. It is 
a large pharmacy. There are two main pharmacies, if you are 
getting HIV drugs, that we tend to go to in that area or part 
of town, and that is one of them.
    I went back and asked them, about the counterfeit and they 
said they had received a letter to recall anything they had on 
the shelf. They had sent back the counterfeit that they had on 
the shelf, identified by one lot number, although I do know 
that there were at least two lot numbers of counterfeit.
    The Chairman. Well, your testimony is very helpful. A lot 
of this, my interest, is sort of from a legal standpoint. Was 
the drug store getting it, do you know, from importing it from 
another country, or where were they getting the supplies that 
were not real?
    Mr. Roberts. That is a really good question. I don't know, 
and no one seems to be able to tell me.
    The Chairman. Either Mr. Hubbard or Mr. Theriault, they may 
not know this particular thing, but if a person is going to the 
drug store and he is getting fake, counterfeit medicine from a 
retail outlet, where is it likely to be coming from? I mean, is 
that druggist likely to be making up a batch of counterfeit 
stuff in the back room, or is he buying it, in most cases, 
innocently from a supplier, or is he trying to do it on the 
cheap by importing it? Is there a pattern here?
    Mr. Hubbard. I would say this. There is not in the sense 
that we see all permutations.
    This product was brought in, in bulk from a foreign source, 
and then made in a back room of a pharmacy on Long Island. 
However, there are other cases, I think the Viagra cases or 
others, in which the pills are actually made in the foreign 
country and arrive here either ready to go or unpackaged, but 
ready to be put in a bottle with a label put on it. So we are 
seeing----
    The Chairman. OK. Who is a likely contact or person that 
would be importing the fake stuff? I mean, is there someone or 
a group in the United States that knows that there is a contact 
in China or some other foreign country that can get all of this 
fake stuff and then they actually just buy it and import it?
    Mr. Hubbard. I think, again, our experience has been 
centered that it varies. In some cases, a pharmacy may be the 
so-called bad guy and he is going out and then seeking out this 
stuff, or in other cases, it may be a wholesaler and a 
pharmacist is an innocent victim, as is the patient.
    So I would not want to say there is any strong pattern in 
any of these cases because we see every possible permutation.
    The Chairman. Let me ask, I guess, Mr. Hubbard with regard 
to the current state.
    Congress in 1987 passed a Prescription Drug Marketing Act, 
and that makes it illegal for anyone other than the original 
manufacturer to import a drug back into the United States. It 
is illegal to import unapproved drugs, but FDA has a policy, 
apparently, and I would like you to talk about that, that 
allows people to either go to a foreign country and bring back 
a 90-day supply of prescription drugs for their personal use.
    Now, does the Act allow that, or is that just something 
that someone created to say, ``Look, the Act says it is illegal 
to do this, but we are going to have a policy that allows you 
to do it''?
    Mr. Hubbard. The 90-day issue, Mr. Chairman, goes back many 
years. Imagine that Congress enacted what we think of as 
prescription drugs in the 1950's, Senator Humphrey, and at that 
point, any drug anyone got in a foreign country brought back 
was technically illegal, but think about a couple vacationing 
in France and one of them gets sick and goes to the local 
doctor and gets an antibiotic and he is told to finish the 10-
day supply. He arrives back in New York with 5 days left, and 
he would say ``I've got this drug,'' and, technically, FDA 
should take it away or say you can't bring it in, but, of 
course, the right medical decision is to let the person finish 
the medication. For 40 or 50 years, that was really no problem. 
That is all we ever saw.
    Then, when the AIDS----
    The Chairman. The situation is different today, isn't it?
    Mr. Hubbard. It is very different, Mr. Chairman. It really 
started to happen when the AIDS epidemic happened in the 1980's 
in which there were no approved FDA-approved drugs. So people 
would go to other countries to seek drugs, and the FDA at that 
time attempted to carve out an exception to allow patients to 
bring in a 90-day supply of a drug that is unapproved for which 
there is no therapy in this country.
    Now, again, I emphasize no therapy in this country. So, if 
you had a treatment for a given disease already available here, 
you couldn't bring it in, but if you had a disease like a 
cancer or AIDS that had no treatment, FDA would use its 
discretion to allow that in. It is not in the law. It is just 
enforcement discretion on the agency's part, and that 
compassionate exception has been misinterpreted by many of the 
sellers of these drugs and say, ``Well, FDA will let you bring 
in 90-days worth. So feel free to go do that.'' That is really 
not true.
    The bigger problem we have is so much of this is coming in, 
we have so few people at the borders, that neither we nor 
Customs can deal with them effectively, and so what tends to 
happen is it all just comes in.
    The Chairman. What would your concerns be to what we have 
seen so much in the press where seniors who are desperate to 
get drugs at an affordable price take these bus trips to Canada 
or to Mexico and buy drugs on the street or in stores in these 
countries and then bring them in? What would your concerns be, 
or advice, to these type of bus trips?
    Mr. Hubbard. What we tell people when they ask, and 
sometimes at the border when they declare, is ``You are taking 
great risk here.'' We do not, however, board those busses and 
attempt to take drugs away from patients.
    The Chairman. Why is it a great risk?
    Mr. Hubbard. Because we believe that they are much more 
likely to get a drug in a foreign country that is unapproved, 
unsafe, ineffective, contaminated, subpotent, superpotent, or 
some other way not the real drug.
    The Chairman. Thank you, Mr. Hubbard.
    Ms. Durant, I take it that if I am a senior citizen in this 
country and I want to get drugs from overseas, I mean, there is 
a number of ways. I can take the bus trip to Mexico. I can do a 
mail order, I take it, from one of these advertisements that 
Mr. Hubbard had, I guess, coming from Canada and just send them 
a check or a credit card and they will mail me the drugs.
    I guess the third way, obviously, would be through an 
Internet transaction where I can just order it over the 
Internet.
    Would you discuss maybe the problems associated with 
monitoring each one of those? I mean, is one more prevalent now 
than the others? Where is the biggest concern of the volumes 
coming in of drugs that FDA has not approved coming in from 
overseas? Is it Internet? Is it mail order? Is it bus trip-type 
operations?
    Ms. Durant. It is all of the above. Those are the three 
biggest as opposed to other modes of transportation, sea cargo 
or air shipments, through normal air cargo.
    If I had to venture the most overwhelming vehicle for 
Customs and FDA, it would be the international mail, although 
it is all pretty daunting because there is just so much of it. 
There is a lot of smuggling. There is a lot of misdescription. 
So, regardless of how much advanced information we had, if it 
is smuggled, it would be difficult to find, just because of the 
numbers.
    But in the mail, which would result often from an Internet 
or mail order transaction, we have so many millions of parcels. 
It is so easy to smuggle small dosages, and we have the least 
amount of targeting and automated targeting ability in the 
mail. We don't have advanced manifest information from the 
carriers, and it is just overwhelming.
    The Chairman. I appreciate your fact that it is 
overwhelming. I mean, that is an important, important 
statement, and I agree with it.
     I would imagine that once that counterfeit product reaches 
the drug store shelf or the supermarket that sells over-the-
counter drugs that it is almost impossible for Customs or for 
FDA to really determine that that product is a fake, a 
counterfeit, unless someone gets sick, like Mr. Roberts, or 
doesn't get better. I mean, because once it is on the shelf, 
Customs doesn't run around drug stores in America doing random 
testing on the products they sell. I mean, you probably can't 
do that.
    Ms. Durant. We actually don't have that authority after it 
is released.
    The Chairman. So, if you got a bad-actor drug store down 
there on the corner in San Francisco or New Orleans or anywhere 
else, once that person unscrupulously decides to order those 
products from overseas and it hits the shelf and he starts 
selling it, unless someone really gets sick, like Mr. Roberts 
did, it is going to get into commerce.
    Ms. Durant. We have to get it at the border, that is true, 
when it comes in, or it is in the commerce, and I guess with 
the FDA, it is the same situation, except that if you have an 
investigation or some evidence where we would open an 
investigation so that we could----
    The Chairman. Thank you, Ms. Durant.
    We have to get to Mr. Wyden and let him have whatever time 
he needs.
    But we had debate on the floor of the Senate about the 
importation of drugs, and both the previous Secretary of HHS, 
Secretary Shalala, and this Secretary Thompson of HHS--members 
have said, ``Look, we only want to let drugs come in that FDA 
can approve or guarantee are safe like we guarantee drugs in 
this country.''
    But as I understand it, both Secretary Shalala and this 
Secretary Thompson have said that, look, FDA can't do that 
because we can't go into the factories and the plants in 
foreign countries and watch how they manufacture it, what their 
standards are, what the ingredients are, and follow that from 
the time it is put into that capsule through the whole process 
of reaching this country. Is that the reason why you say we 
cannot certify that those drugs coming in from foreign 
countries are not what they are supposed to be?
    Mr. Hubbard. That is correct, Mr. Chairman. Because we 
could not go certify and look in the other countries, the bill 
that they refuse to implement or decline to implement would 
have replaced the normal quality control system with a testing 
process and with a paper or so-called pedigree process that 
attempted to follow the trail of the drugs, but both 
Secretaries found that the paper process could be forwarded by 
faking documents and that you really couldn't adequately test 
these products, either economically or feasibly.
    The Chairman. Well, some of our colleagues say Canada is 
our friends, our neighbors, our colleagues and close 
associates, and we have the highest amount of trade with 
Canada. Is that the same concern with a country like Canada?
    Mr. Hubbard. Well, yes and no. I mean, if I were in Canada 
today and got sick and got a prescription and went to a 
Canadian pharmacy, I would feel fairly comfortable that I was 
getting the real drug, but if you legitimized that and say to 
Americans, ``Go to Canada,'' then the counterfeiters know that 
and they will say that is where the money is.
    We talked to the Canadians just yesterday. I talked to a 
dozen Health Canada officials, and I said if this would have 
happened, would you take responsibility for the safety of these 
drugs coming to America, and they said absolutely not. Why 
would they? They are not going to their citizens.
    In fact, our own law has a provision called ``import for 
export''; that if a drug comes here from another country that 
is unapproved, just to put it in the tablet or the bottle or 
otherwise finish it and then send it to another country, FDA 
doesn't look at that because it is not going to American 
citizens. So the same thing would apply in Canada.
    The Chairman. Ms. Durant, do you agree with that?
    Ms. Durant. Yes, I do.
    The Chairman. Mr. Theriault, my last question is you talked 
about the massive counterfeiting of Viagra, but, I mean, it is 
also not just Viagra. It is also drugs that are very important 
to a person as a cure of major illnesses and major diseases and 
also attempting to be counterfeit as well. Can you give us some 
examples of other type of products that the pharmaceutical 
industry has experienced in the area of trying to be 
counterfeited?
    Mr. Theriault. Yes, sir. In fact, the Viagra example, I 
think, is a good one because it has really opened up some doors 
to let us see what is going on in an illegal industry that we 
didn't have insight into before, and by that, I mean we have 
been able to find Viagra in alternate distribution channels. By 
that, I mean we have found it in black markets, and we have 
been able to test it easily to determine whether it was 
authentic or counterfeit. When we found it in those black-
market areas, we have also found other products packaged and 
ready for distribution in the U.S. system.
    We had a case a couple of months ago in Thailand that 
originated with the purchase of Viagra over the Internet. We 
worked with the Thai police officials, and they ultimately 
seized 80,000 counterfeit Viagra tablets at a factory in 
Thailand, but they also seized over 2 million Valium tablets.
    The police in Taiwan have been very aggressive in raiding 
illegal drug-manufacturing sites, and they found counterfeit 
drugs from a number of companies, ours and Glaxo and Bristol-
Myers, a number of companies.
    To your point a moment ago about the product getting into 
the country and then being indistinguishable to the consumer or 
anybody else, one of these bottles is counterfeit Viagra, the 
other is authentic Viagra, that was involved in the case I 
mentioned involving Hong Kong. You can't tell the difference 
between them. No one can tell the difference.
    We found counterfeit product in Russia recently that our 
laboratory in Groton had to test three times before they could 
distinguish it from authentic product. That is how good these 
people are.
    The point about Viagra is--and to Mr. Roberts' situation--
we see Viagra because it is kind of out there in the open, but 
it is an indicator of how much activity is going on in this 
pharmaceutical counterfeiting world, and it is all a matter of 
money. They will counterfeit Viagra because there is money 
involved. They will counterfeit the anti-AIDS drugs because 
there is big money involved. They will counterfeit anything.
    The Chairman. Thank you. I thank all the members of the 
panel.
    Senator Wyden.
    Senator Wyden. Thank you, Mr. Chairman.
    Mr. Hubbard, what are the penalties for counterfeiting now?
    Mr. Hubbard. We don't actually bring a counterfeiting 
charge when we and the FBI arrest people because there is 
usually a better and more effective fraud charge, but we and 
the Justice Department bring a series of charges against these 
individuals, mail fraud, economic fraud, adulteration, and 
other charges, usually a long list of things because we want to 
make sure we get the goods on them properly.
    Senator Wyden. Are these people back on the streets selling 
again fairly shortly?
    Mr. Hubbard. One of the most recent arrests and 
convictions, I think, put the lady involved in jail for 6\1/2\ 
years and a gentleman for 25. So they won't be back very 
quickly, but it is very resource-intensive, of course, to do 
these cases, and I certainly can't say that we catch every 
case. If, in fact, the counterfeiting is increasing, that could 
be a problem.
    Senator Wyden. Mr. Hubbard, any way for a person to know 
the website that they are ordering from today is a reputable 
one?
    Mr. Hubbard. No, there is not. There is one program----
    Senator Wyden. Would you say that that is a serious 
problem? To me, you have got two problems with the web. First, 
there is clearly some ripoff sites out there, and second, you 
have got this problem with respect to documenting the chain of 
custody that I touched on. Aren't both of those very serious 
concerns with respect to websites?
    Mr. Hubbard. I think that is right, Mr. Wyden.
    I mean, a savvy patient might be able to track back to a 
website to determine its legitimacy, but most consumers would 
not know how to do that.
    Senator Wyden. Well, that's the point.
    Chairman Breaux and I took a look at these, Mr. Hubbard. 
The chairman is one of the most influential people in the 
country now in terms of health policy. I guess I am a humble 
soul, but I also have been specializing in health for years, 
and the two of us can't tell the difference in these kinds of 
bottles. So I think it is fair to say that the typical senior 
is not going to be able to crack a website----
    Mr. Hubbard. That is correct, Mr. Wyden.
    Senator Wyden [continuing]. In terms of rooting out the 
ripoff artists, are they?
    Mr. Hubbard. That is correct.
    The Chairman. I can't even read the words. They are too 
small.
    Senator Wyden. Mr. Hubbard, is there a correlation in your 
view between low prices and counterfeiting? What I am trying to 
drive at is whether if the price is so low, so low, should a 
senior be on the alert that there is a higher possibility of a 
counterfeit.
    Mr. Hubbard. I certainly think if someone offered any of us 
something that we knew the value of for an incredibly low 
price, a car for a thousand dollars, a new car for a thousand 
dollars or something, we would, hopefully, be alert.
    I am not sure with drugs, people are as savvy, and senior 
citizens can be particularly vulnerable.
    Senator Wyden. The chairman and I teamed up on a port 
issues hearing last week, and we were looking--and the Customs 
Office has been very helpful at this--at trying to do more in 
terms of point-of-origin efforts, to try to keep these products 
from coming into the country. Is Customs trying, for example, 
to negotiate some agreements with other countries to keep them 
from allowing these ripoff products to come to our shores, Ms. 
Durant?
    Ms. Durant. Customs doesn't have an active pharmaceutical 
program like that. We take our direction generally from the 
FDA. We can seize counterfeit drugs under our own law, and we 
have had some success with our attaches' offices working with 
foreign countries and foreign enforcement agencies, 
particularly in Thailand, to help us in special operations, but 
we do not have a program of negotiating with other countries 
for foreign----
    Senator Wyden. Ms. Durant and Mr. Hubbard, do you think it 
would be a good idea for our trade authorities to go after, in 
a very aggressive way, these agreements with other countries to 
try to do more to control these products at the point of 
origin?
    We are doing that in virtually every other area. What is 
striking is we don't seem to be doing it in the pharmaceutical 
area, and it would seem to me that our trading leaders ought to 
be pushing for that.
    Ms. Durant.
    Ms. Durant. Well, as I--the Customs----
    Senator Wyden. I am talking about from a policy standpoint.
    Ms. Durant. The Customs Service does not make trade policy, 
but I will tell you that we support not----
    Senator Wyden. Right.
    Ms. Durant.--ever letting it get to our borders in the 
first place in every arena, what we can do foreign----
    Senator Wyden. Mr. Hubbard, from----
    Mr. Hubbard. Certainly.
    Senator Wyden.--a policy standpoint?
    Mr. Hubbard. Yeah. I am afraid I am not qualified to really 
answer your question.
    Certainly, we have worked as an agency with governments of 
other countries that deal with these problems and ask them to 
help us, and in many cases, they have, but I can't really ask 
answer your policy question.
    Senator Wyden. Ms. Durant, I was told that the Customs 
Office had to reduce some of the other functions that it had 
been performing since September 11, to deal with what all of us 
regard as the urgent priority with respect to the war on 
terrorism. Have you had to reduce what you all are doing in 
terms of the work on counterfeit drugs since you had to put 
more resources into the war on terrorism?
    Ms. Durant. No. In fact, I think it is safe to say that 
because we are looking at more things, we are finding more 
things in every arena, including our mail divisions and 
couriers. It is the needle-in-the-haystack theory, but we are 
doing more examinations, more X-rays.
    We reduced some of our more discretionary trade functions, 
some potentials in tariff evasion that were not high-risk trade 
issues, some technical violations. We did do some reductions in 
that area to devote our resources to more of the up-front 
examinations, but I would not say that we diverted resources 
from this problem.
    Senator Wyden. I hope not because my concern is, under the 
Homeland Security Proposal, I don't see how Customs is going to 
be able to do all of these other issues that are so important, 
such as addressing counterfeit medicine, with the budget that 
is being proposed. Obviously, you are a very dedicated 
professional, and you have figured out a way to keep this 
effort on track.
    But I will tell you, as I look at the Homeland Security 
Proposal, I don't see how it is going to be possible to devote 
the kind of resources that are needed to this effort and still 
perform all of those other functions.
    The last area I want to get at is the question of some 
technologies that can help us root out these ripoffs, and let 
me ask you, Mr. Hubbard, about this in particular. Clearly, the 
ripoff artists are not technology simpletons. These are very 
savvy people.
    What, if anything, are you all doing in terms of trying to 
find technological breakthroughs? I mentioned some of the 
handheld devices and others that could be cost effective here. 
What are you all doing, and does this avenue show any real 
promise?
    Mr. Hubbard. It certainly does, I think, show promise, Mr. 
Wyden.
    We have, first and foremost, been attempting to upgrade our 
data systems, our computer systems, so that we actually know 
what is coming in and where it is coming from and those sorts 
of things. That is a basic thing.
    We have also been looking at new technology to identify 
things like tag-ins and other things. I can't say any of those 
technologies are ready to go into use, but I do believe there 
is a lot of interest in the agency in trying to look to the 
future for that sort of technology. There will likely be some 
funding issues for that, but I believe you are right that we 
ought to be looking to those sorts of new technologies.
    Senator Wyden. The last question I wanted to ask the FDA is 
you have got a chance now to speak to American consumers, you 
have got a chance to speak to the public. What ought they be 
looking for? What should they know?
    Mr. Hubbard. Well, for those who buy drugs overseas, we 
have been consistently saying you are really taking a great 
risk. You certainly risk your pocketbook, but you may be 
risking your health and you may be even risking your life. So 
we urge people not to buy these drugs or, if they do, to take 
whatever steps they can to consult with a doctor or their 
pharmacist to make sure that they are getting the real thing.
    Senator Wyden. Senator Breaux and I hear constantly from 
our constituents. They will say, ``Look, I went out to pay $20 
in this country from something I got in Mexico for $4 or in 
Canada for $2,'' and we need to know what to tell them because 
these are people who are hurting and these are people who are 
having to make tough choices every single day, people who take 
three pills when they ought to be taking four and then they go 
to two and then they go to one. What should they know when they 
are trying to make these choices?
    Mr. Hubbard. Well, I think, as I said, they have got to 
know about the risk. Clearly, the cost savings are there. The 
cheaper drugs are there.
    We just have no way to say to a given consumer, ``You have 
gotten a good product that will help, will save your life,'' 
and we fear that many people will get a bad product that will 
hurt them.
    Senator Wyden. How do you get that message out to consumers 
now? What is the FDA doing to get that out to the public now?
    Mr. Hubbard. We have significant warnings on our website, 
as Mr. Roberts mentioned. We are preparing brochures to put at 
the border for those who travel to Canada or Mexico, and we do 
public service announcements and other things to try to alert 
people to these problems, but it is a tough sale because the 
lure of cheaper drugs tends to get past the safety message at 
times.
    Senator Wyden. All right. Mr. Chairman, my sense is that 
this is an area that we should be looking at in a comprehensive 
way. Clearly, as we deal with the homeland security question, 
there is going to be a real issue with respect to whether 
enough resources are going to be devoted to this.
    I think that the savvy consumer clearly can use some of the 
tools that were mentioned today, but if you are an elderly 
person who is hurting financially, you don't have the 
technology at home, that person is going to be a magnet for 
these kind of ripoff artists. I just appreciate all of our 
witnesses really playing the role of Paul Revere here and 
trying to make sure that people understand what is ahead.
    I think the problem is going to get worse, given the 
difficulties so many have in terms of affording these 
medicines, and I look forward to working with you to get 
colleagues on both sides of the aisle to support a response 
that deals with the seriousness of the problem.
    The Chairman. I thank you very much, Senator Wyden, for 
your questions and your comments. They are well taken.
    I think the potential for a terrorist to see this as an 
avenue to do grave damage to U.S. citizens, particularly the 
elderly, is certainly very, very real. This is a pipeline to 
American citizens that, if they wanted to use it to do damage, 
this would be an easy way to do it.
    Mr. Roberts, I just have one question. Had you not found 
out that what you were taking for your illness was counterfeit, 
what could have been the consequences had you continued to take 
the counterfeit drug?
    Mr. Roberts. Because of the expense of Serostim, it really 
is a last line of defense against HIV Wasting. So, if I hadn't 
been stable and I started to waste again or continued wasting 
and felt like I had failed in the last drug, there would have 
been few options after that. I probably would have continued to 
waste.
    The Chairman. You could have died.
    Mr. Roberts. Certainly, the HIV wasting is a major cause of 
death in HIV cases.
    The Chairman. Is there a greater awareness now in the 
community of the potential for counterfeiting these type of 
products?
    Mr. Roberts. Some of the stories in San Francisco, they 
have been in the local papers and magazines. The Boston Globe 
has run a good series on counterfeit medicines, but I don't 
think in general the public that I am associated with, the HIV 
community, is even aware of it. Anyone I get a chance to tell 
the story to, I certainly do.
    It is different than when a car part gets recalled. They 
seem to track down the car owner and tell them, and there seem 
to be procedures or policies that allow people to be made aware 
of the recall.
    In my case, there was no warning. There was no attempt to 
contact me. I just happened to ask my pharmacist.
    The Chairman. That is a very good point.
    I just had a product that had a recall that required me to 
bring the vehicle in to do some minor maintenance work, and I 
didn't do it. I got another notice 6 months later saying, ``We 
noticed that you haven't brought the vehicle in to fix this 
relatively minor problem,'' but they kept tracking it because 
they knew there was something wrong. But with a life-saving 
medicine that was counterfeit, you never got that.
    Mr. Roberts. No.
    The Chairman. Well, thank you very much for traveling. You 
have told the story, and I think that it has been very, very 
helpful, hopefully to a lot of people, and I thank our 
Government witnesses and Mr. Theriault for the private sector.
    I think what we have learned today, hopefully, will be 
looked upon by all Members of Congress as to the risk of 
counterfeit drugs in this country, and I thank the witnesses 
for being with us.
    Mr. Hubbard. Thank you, Mr. Chairman.
    [Whereupon, at 3:38 p.m., the committee was adjourned.]






                            A P P E N D I X

                              ----------                              

[GRAPHIC] [TIFF OMITTED] 82326.066

[GRAPHIC] [TIFF OMITTED] 82326.067

[GRAPHIC] [TIFF OMITTED] 82326.068

[GRAPHIC] [TIFF OMITTED] 82326.069

[GRAPHIC] [TIFF OMITTED] 82326.070

