[House Hearing, 108 Congress]
[From the U.S. Government Publishing Office]
SOUTH FLORIDA'S ACCESS TO AFFORDABLE PRESCRIPTION DRUGS: COSTS AND
BENEFITS OF ALTERNATIVE SOLUTIONS
=======================================================================
HEARING
before the
SUBCOMMITTEE ON
OVERSIGHT AND INVESTIGATIONS
of the
COMMITTEE ON ENERGY AND COMMERCE
HOUSE OF REPRESENTATIVES
ONE HUNDRED EIGHTH CONGRESS
FIRST SESSION
__________
MARCH 10, 2003
__________
Serial No. 108-9
__________
Printed for the use of the Committee on Energy and Commerce
Available via the World Wide Web: http://www.access.gpo.gov/congress/
house
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__________
COMMITTEE ON ENERGY AND COMMERCE
W.J. ``BILLY'' TAUZIN, Louisiana, Chairman
MICHAEL BILIRAKIS, Florida JOHN D. DINGELL, Michigan
JOE BARTON, Texas Ranking Member
FRED UPTON, Michigan HENRY A. WAXMAN, California
CLIFF STEARNS, Florida EDWARD J. MARKEY, Massachusetts
PAUL E. GILLMOR, Ohio RALPH M. HALL, Texas
JAMES C. GREENWOOD, Pennsylvania RICK BOUCHER, Virginia
CHRISTOPHER COX, California EDOLPHUS TOWNS, New York
NATHAN DEAL, Georgia FRANK PALLONE, Jr., New Jersey
RICHARD BURR, North Carolina SHERROD BROWN, Ohio
Vice Chairman BART GORDON, Tennessee
ED WHITFIELD, Kentucky PETER DEUTSCH, Florida
CHARLIE NORWOOD, Georgia BOBBY L. RUSH, Illinois
BARBARA CUBIN, Wyoming ANNA G. ESHOO, California
JOHN SHIMKUS, Illinois BART STUPAK, Michigan
HEATHER WILSON, New Mexico ELIOT L. ENGEL, New York
JOHN B. SHADEGG, Arizona ALBERT R. WYNN, Maryland
CHARLES W. ``CHIP'' PICKERING, GENE GREEN, Texas
Mississippi KAREN McCARTHY, Missouri
VITO FOSSELLA, New York TED STRICKLAND, Ohio
ROY BLUNT, Missouri DIANA DeGETTE, Colorado
STEVE BUYER, Indiana LOIS CAPPS, California
GEORGE RADANOVICH, California MICHAEL F. DOYLE, Pennsylvania
CHARLES F. BASS, New Hampshire CHRISTOPHER JOHN, Louisiana
JOSEPH R. PITTS, Pennsylvania TOM ALLEN, Maine
MARY BONO, California JIM DAVIS, Florida
GREG WALDEN, Oregon JAN SCHAKOWSKY, Illinois
LEE TERRY, Nebraska HILDA L. SOLIS, California
ERNIE FLETCHER, Kentucky
MIKE FERGUSON, New Jersey
MIKE ROGERS, Michigan
DARRELL E. ISSA, California
C.L. ``BUTCH'' OTTER, Idaho
David V. Marventano, Staff Director
James D. Barnette, General Counsel
Reid P.F. Stuntz, Minority Staff Director and Chief Counsel
______
Subcommittee on Oversight and Investigations
JAMES C. GREENWOOD, Pennsylvania, Chairman
MICHAEL BILIRAKIS, Florida PETER DEUTSCH, Florida
CLIFF STEARNS, Florida Ranking Member
RICHARD BURR, North Carolina DIANA DeGETTE, Colorado
CHARLES F. BASS, New Hampshire JIM DAVIS, Florida
GREG WALDEN, Oregon JAN SCHAKOWSKY, Illinois
Vice Chairman HENRY A. WAXMAN, California
MIKE FERGUSON, New Jersey BOBBY L. RUSH, Illinois
MIKE ROGERS, Michigan JOHN D. DINGELL, Michigan,
W.J. ``BILLY'' TAUZIN, Louisiana (Ex Officio)
(Ex Officio)
(ii)
C O N T E N T S
__________
Page
Testimony of:
Coplan, Resi................................................. 8
Hahn, Elliott, Chairman and President, Andrx Corporation..... 64
Jackson, Michael A., Executive Vice President, Florida
Pharmacy Association....................................... 66
Lipscomb, Bentley, State Director, AARP...................... 4
McEwan, Robert N., CEO, Medbank of Maryland, Inc............. 75
Ruiz, Carlos A., Pharmacy Director, Navarro Discount
Pharmacies................................................. 70
Sweed, Gene.................................................. 12
Taylor, John D., Drug Inspector, Florida Department of
Health, Bureau of Statewide Pharmaceutical Services........ 41
Taylor, John M., Associate Commissioner of Regulatory
Affairs, Food and Drug Administration...................... 29
(iii)
SOUTH FLORIDA'S ACCESS TO AFFORDABLE PRESCRIPTION DRUGS: COSTS AND
BENEFITS OF ALTERNATIVE SOLUTIONS
----------
MONDAY, MARCH 10, 2003
House of Representatives,
Committee on Energy and Commerce,
Subcommittee on Oversight and Investigations,
Aventura, FL.
The subcommittee met, pursuant to notice, at 10 a.m., in
the city of Aventura, Florida's Commission Chambers, Second
floor, 19200 Country Club Drive, Aventura, Florida, Hon. James
C. Greenwood (chairman) presiding.
Members present: Representatives Greenwood and Deutsch.
Also present: Representative Engel.
Staff present: Ray Shepherd, majority counsel; Jill Latham,
legislative clerk; and Chris Knauer, minority investigator.
Mr. Greenwood. This hearing of the U.S. House of
Representatives Committee on Energy and Commerce, the
Subcommittee on Oversight and Investigations hearing will come
to order.
Good morning, we welcome all of you, and thank you for
joining us. Before we begin, I would like to ask that those of
you who have cellular telephones if you would be so kind as to
turn them off or put them on the vibrate setting so we are not
interrupted. I would appreciate that. Thank you.
Also like to thank my friend and colleague, Peter Deutsch,
for inviting the subcommittee to his district to discuss the
important and timely issue of drug prices and the efficacy and
safety of some of the alternative methods by which our
constituents are currently purchasing drugs.
Last August, the Associated Press reported that a man who
rode a U.S. Senate candidate's prescription express, Rx
Express, to Canada to buy prescription drugs became sick after
ingesting some of the medication he bought while in Canada.
Stanley Campa, age 83, of St. Cloud, Minnesota, was rushed to
the hospital and almost died when his heart slowed and he
passed out after taking Cardizem, a blood pressure medication.
According to his doctor, Mr. Campa took the correct drug but in
the wrong formulation. Mr. Campa did not receive the correct
time release capsule that he usually takes in Minnesota and
instead took the pill in tablet form that acts more quickly
than the time release capsule. This inadvertent mix-up almost
caused his heart to stop.
This incident illustrates two problems. First, the
skyrocketing prices of medication and increasingly out of the
reach for too many of our seniors and nearly all those on fixed
incomes. Some of the seniors here with us today will testify
that they often forego other essentials in order to purchase
their necessary medications. In a country as wealthy as ours,
we must do better to ensure full access to and the
affordability of pharmaceuticals.
I look forward not only to hearing their testimony but also
expect that the witnesses on panel three will be able to
provide them with instructive information on how to purchase
some of their medications at greatly reduced prices or even
receive their medications for free.
Second, the incident I referred to illustrates that drugs
procured outside the United States can be dangerous for
numerous reasons. FDA acknowledges that it cannot monitor or
guarantee the safety and effectiveness of drugs purchased
outside the closed U.S. distribution system. FDA has warned the
public that drugs purchased from foreign countries could be
counterfeit. Cheap foreign imitations of FDA-approved drugs
that could be sub-potent or super-potent, expired drugs,
contaminated drugs or drugs stored under unsafe condition.
After this subcommittee's June 2001 hearing that
highlighted the clear and present danger that these drugs posed
to the American people, FDA proposed to the Department of
Health and Human Services that it allow FDA and Customs to deny
entry of all these illegal drugs into the U.S. and return them
to sender. To date, Secretary Thompson has not acted on the
proposal. I look forward to hearing what actions the FDA has
taken to protect our constituents from the dangers of
purchasing drugs over the Internet.
Our third panel will discuss how legitimate drugs purchased
over the Internet and used without the supervision of a doctor
or pharmacist can be just as deadly as counterfeits. In this
subcommittee's June 2001 hearing, we heard testimony from
Reverend and Mrs. Rode of Illinois who painfully described how
their son accidentally overdosed on a mixture of drugs he
purchased over the Internet. The drugs turned out to be
legitimate and prescribed by a doctor, but their son died as a
result of incorrectly mixing a combination of these drugs. This
unfortunate incident shows that when drugs are purchased over
the Internet, patient care can easily be compromised because
there is no interaction with a physician or dispensing
pharmacist who are aware of the patient's history and can
prevent deadly drug interactions.
In addition to discussing potential safety problems
resulting from purchasing cross-border drugs over the Internet,
our third panel will also discuss programs by which individuals
can receive free or low-cost medications. Hopefully, we can
highlight some of these plans and assist the seniors here today
to safely purchase these medications while substantially saving
money.
I would like to welcome our witnesses here this morning. On
panel one, we have private citizens Ms. Resi Coplan. Am I
pronouncing that right?
Ms. Coplan. Resi Coplan.
Mr. Greenwood. Resi. Ms. Resi Coplan. Mr. Gene Sweed and
the State Director of the American Association of Retired
Persons, Mr. Bentley Lipscomb.
On panel two, we will hear from Mr. John Taylor, the
Associate Commissioner of Regulatory Affairs for the Food and
Drug Administration and Mr. John Taylor, drug inspector for the
Bureau of Statewide Pharmaceutical Services of the Florida
Department of Health. Yes, you heard me correctly. By a strange
coincidence, there are two John Taylors with us this morning. I
apologize in advance for the inevitable confusion.
On panel three, we have Dr. Elliott Hahn, chairman and
president of Andrx Corporation, Mr. Michael Jackson, executive
vice president of the Florida Pharmacy Association, Mr. Carlos
A. Ruiz, pharmacy director for Navarro Discount Pharmacy and
Mr. Robert N. McEwan, CEO of MEDBANK of Maryland, Incorporated.
And with that, I would yield to our host, the gentleman
from Florida, the ranking member of this subcommittee, Mr.
Deutsch.
Mr. Deutsch. Thank you, Mr. Chairman, and, again, I thank
you very much for having this hearing in south Florida but also
for the fact of having this hearing. And I just mentioned in
this setting that in terms of any substantive committee or
subcommittee in Congress, I think the two of us have worked as
well as any members, and I think both of us are absolutely
committed to finding a solution to what we acknowledge and I
think what Americans acknowledge is probably as significant a
policy concern as any domestic policy concern that America
faces today, and that is the escalating cost and the high cost
and access of prescription drugs for seniors. And I think today
we will hear testimony that we have heard, in a sense, before
but not in this type of setting with specifics. And, honestly,
one of the things, it almost has not gotten through to all of
our colleagues who might not serve on committees, who might not
be concentrating in terms of senior populations, but as severe
as the problem is on a day-to-day basis for so many people but
also what that has led to.
And I think one of the things we will hear testimony about
today is this phenomenon of purchase through the Internet. As
this committee has investigated, and hopefully we will gain
some insight today, we are trying to get our arms around the
extent of it. When we met with the FDA in Washington, the
estimates that they gave us that there were 10 million
individual purchases of prescription drugs through the Internet
in the last year. But they really have no idea if that is an
accurate number or not. It could be 30 million, it could be 40
million, it could be even more. And the reality is that people
are availing themselves of that I think in many cases because
they have no choice. And that is the only option that they see
for themselves in terms of their own health care on a personal
basis.
And as the chairman pointed out, we have some real concerns
because there is anecdotal information, as he has mentioned,
but there is no FDA direct regulatory authority. So when people
are purchasing, and this is millions of people, there is
clearly a question about what they are purchasing. And in a
sense, people are making a choice but not a real choice in that
activity.
Let me just briefly introduce some of the elected officials
who are here today. I thank the city of Aventura for their
hospitality for both letting us use the chamber but also for
providing my district office as well, the mayor, Jeff Perlow,
the commissioner, Harry Housberg, and the newly elected
commissioner, Zev Auerbach. Mayor Sampson from Sunny Isles
Beach is here and also the vice-mayor, Norman Edecup and the
commissioner from Broward County from the south end of the
county, Sue Gunzberger, is here as well.
I can go through a lot of introduction in terms of just the
status of the Foreign Drug Act and the FDA 90-day supply
policy, but I think I would more anxiously wait for the
testimony of the witnesses and be responsive to some of their
comments and questions. Thank you, Mr. Chairman.
Mr. Greenwood. Thank the gentleman. And that brings us to
our first panel, which I have already introduced. We welcome
you again and thank you for being with us this morning. This is
an investigative hearing of the Oversight and Investigations
Subcommittee, and when we hold our hearings it is our practice
to take testimony under oath. So I would ask if any of you have
any objections to giving your testimony under oath? Okay. You
also have the right to be represented by counsel. Sometimes
people who come before us are in trouble and need counsel. You
probably don't, but do any of you wish to be represented by
counsel? Okay. In that case, I am going to ask if you would
stand and raise your right hand?
Mr. Lipscomb. I can't stand.
Mr. Greenwood. Okay. Well, you can just raise your right
hand. Do you swear that the testimony you are about to give is
the truth, the whole truth and nothing but the truth?
[Witnesses sworn.]
Mr. Greenwood. Okay. You are under oath, and I guess maybe
we will have Mr. Lipscomb go first.
TESTIMONY OF BENTLEY LIPSCOMB, STATE DIRECTOR, AARP; RESI
COPLAN; AND GENE SWEED
Mr. Lipscomb. Thank you, Mr. Chairman, Congressman Deutsch.
I am Bentley Lipscomb, Florida State Director of AARP. I want
to thank you, the committee, for your interest in the issue of
the high cost of prescription drugs and the difficulties that
this poses for older Americans and in particularly older
Floridians. AARP appreciates the opportunity to share our
perspective on the need to create a Medicare prescription drug
benefit for all beneficiaries this year.
For over 30 years, Medicare has provided older and disabled
beneficiaries with dependable, affordable, quality health
insurance. Florida, for example, has one of the largest
beneficiary populations in the Nation. The county where we are
having this hearing today has more aging population in it than
19 States. If you take the county immediately to the north and
the one immediately to the north of it, the three-county strip
from Palm Beach through Dade County, taken together has more
aging population than 38 States. You are, in a word, in the
most elder-rich section of the United States holding your
hearing today.
Throughout my career in the aging community, I have seen
first hand how Medicare has made a difference in the lives of
older Americans. Medicare has been instrumental in improving
the health and life expectancy of beneficiaries in Florida and
across our great Nation. Medicare's promise of affordable
health care must extend beyond the current generation of
retirees. Now, more than ever, Americans of all ages are
looking to Medicare's guaranteed protections as a part of the
foundation of their retirement planning. But there is a serious
gap in that protection--the absence of a reliable prescription
drug coverage.
The practice of medicine has changed dramatically since the
Medicare program was created in the sixties. Drug therapies
that were not available when Medicare began are now commonly
used to prevent and treat virtually every major illness. In
many cases, new drugs substitute for or allow patients to avoid
more expensive therapies such as hospitalization and surgery.
In other cases, drugs facilitate treatment or provide treatment
where none existed before, improving the quality and length of
life for the patient. As a result, prudent reliance on
prescription drugs now goes to the very core of good medical
practice.
Given the prominence of drug therapies in the practice of
medicine, if Medicare were being designed today, rather than in
1965, not including a prescription drug benefit would be as
absurd as not covering doctor visits or hospital stays. That is
why ensuring that all beneficiaries have a meaningful,
affordable prescription drug program is AARP's top legislative
priority. Our members and their families need access to a drug
benefit that is affordable, available, dependable, and they
need it to happen this year.
AARP is particularly pleased that this subcommittee is
examining the issue of the high cost of prescription drugs and
the risk of obtaining those drugs outside the United States.
And that the Congress has begun to develop its own prescription
drug benefit legislation. It is our hope that today's hearing
will help increase the visibility of the need for an affordable
Medicare prescription drug benefit for all beneficiaries.
As new prescription drugs are becoming available to treat
and prevent more and more serious conditions and life-
threatening illnesses, reliance on these drugs has become
especially significant for our older American population.
Ninety percent of Medicare beneficiaries use a prescription
drug every day. While older Americans comprise only 12 percent
of the U.S. population, they account for 40 percent of
prescription drug spending. In fact, after premium payments,
prescription drugs account for the single largest component of
health care out-of-pocket spending for non-institutionalized
Medicare beneficiaries age 65 and older. On average, these
beneficiaries spend more out-of-pocket for prescription drugs
as for physician care, vision services and medical supplies
combined.
The need for a Medicare prescription drug benefit for all
beneficiaries continues to escalate. Older and disabled
Americans continue to face double-digit increases in their
prescription costs. A chronic health problem necessitating new
and expensive prescription drugs can quickly deplete a
retiree's financial resources. Even a beneficiary who has
planned well for his or her retirement may not be prepared for
what they are faced with in prescription bills that exceed
several hundred dollars to $1,000 a month.
Medicare Plus Choice plans continue to scale back their
drug benefits. In Florida, we have seen a major exodus as the
plans leave the Medicare program, and many of those that
continue to participate have made their benefit less generous,
with some covering only generic drugs. The cost of private
Medigap coverage is increasingly unaffordable. While Medigap
drug coverage is quite limited, the premiums on these policies
can exceed $1,000 a year. State prescription drug assistance
programs provide only a limited safety net and are themselves
at risk because of the State's current budget crises.
Despite promises of relief, lack of a drug benefit in
Medicare persists. Beneficiaries continue to struggle to pay
for necessary medications. Some even take desperate and
sometimes dangerous measures, as you indicated already, Mr.
Chairman. In some instances, beneficiaries do not follow the
course of treatment, do not take the prescribed full dosage or
take their prescriptions intermittently.
That is why AARP is calling on Congress to pass legislation
this year, and it should be a true benefit. Our members have
told us that this legislation should ensure all Medicare
beneficiaries have access to affordable, meaningful
prescription drug coverage; provide stable coverage that
beneficiaries can rely on from year to year, and this a
particularly poignant point; protect beneficiaries from
extraordinary out-of-pocket costs and ensure reasonable cost-
sharing; provide lower-income beneficiaries with additional
assistance; and not create incentives for employers to drop
current retirees' coverages.
AARP members are looking to Congress to fulfill the promise
to begin to provide long overdue relief from the devastating
costs of prescription drugs. We believe that a prescription
drug benefit should be integrated into Medicare in a way that
strengthens the program. We do know that a workable
prescription drug benefit will require a sizable commitment of
Federal dollars. AARP has urged a level of funding that will
enable the Congress to design a Medicare drug benefit that will
provide real value to beneficiaries. As we learned from last
year's debate, more than $400 billion will be needed to create
a Medicare prescription drug benefit that our members will find
valuable.
Now, as the chairman indicated previously, many of our
members are going to either Canada or Mexico or using Internet
sites to buy drugs cheaper. We are not supportive of that type
of practice, and we find that it is very risky in many
instances. But we have to remember why this is an issue: Our
members want prescription drugs. In many cases, they have been
told by their physicians that it is a matter of life and death
in terms of whether they take them. So they either have to go
outside the country to get them or they simply can't afford
them. Last month, the St. Petersburg, where my office is,
instituted passenger ship service between the Port of Tampa and
Mexico, and I asked the mayor of St. Petersburg if he was
instituting this service so our older citizens could take their
cars and go to Mexico and load them up with drugs and come
back. Because it has become increasingly prevalent practice to
go outside the country to do it, even though those drugs are
manufactured in the United States, shipped there and then come
back in.
While AARP supported the reimportation amendment that
passed the Senate last year, we urge caution because there is
serious concern about patient safety and whether the savings
are really passed onto consumers. Reimportation, we believe,
will continue to be an issue and one that will need to be
addressed until Congress enacts a Medicare benefit for drugs
and the President signs it into law.
In conclusion, Mr. Chairman, we believe that creating
prescription drug benefit for all beneficiaries is a priority
for Floridians, for AARP and for the Nation itself. We pledge
to work with you and other Members of Congress to ensure that a
Medicare prescription drug bill gains broad bipartisan support
and can be enacted into law this year. Thank you very much.
[The prepared statement of Bentley Lipscomb follows:]
Prepared Statement of Bentley Lipscomb, Florida State Director, AARP
Mr. Chairman and Congressman Deutsch, I am Bentley Lipscomb,
Florida state director of AARP. I want to thank you for your interest
in the issue of the high cost of prescription drugs and the
difficulties older Americans have in paying for needed medications.
AARP appreciates this opportunity to share our perspective on the need
to create a Medicare prescription drug benefit for all beneficiaries
this year.
For over thirty years, Medicare has provided older and disabled
beneficiaries with dependable, affordable, quality health insurance.
Florida, for example, has one of the largest beneficiary populations in
the nation. Throughout my career in the aging community, I have seen
first hand how Medicare has made a difference in the lives of older
Americans. Medicare has been instrumental in improving the health and
life expectancy of beneficiaries in Florida and across the nation. It
has also helped to reduce the number of older persons living in
poverty.
Medicare's promise of affordable health care extends beyond the
current generation of retirees. Now, more than ever, Americans of all
ages are looking to Medicare's guaranteed protections as part of the
foundation of their retirement planning. But there is a serious gap in
Medicare's protection--the absence of reliable prescription drug
coverage.
The practice of medicine has changed dramatically since the
Medicare program was created. We are now living in a time of amazing
breakthroughs in medical research and technology. Among the most
striking are the advances in the area of prescription drugs. Drug
therapies that were not available when Medicare began are now commonly
used to prevent and treat virtually every major illness. In many cases,
new drugs substitute for or allow patients to avoid more expensive
therapies such as hospitalization and surgery. In other cases, drugs
facilitate treatment or provide treatment where none existed before,
improving the quality and length of life for the patient. As a result,
prudent reliance on prescription drugs now goes to the very core of
good medical practice.
Given the prominence of drug therapies in the practice of medicine,
if Medicare were being designed today--rather than in 1965--not
including a prescription drug benefit would be as absurd as not
covering doctor visits or hospital stays. That is why ensuring that all
beneficiaries have meaningful, affordable prescription drug coverage is
AARP's top legislative priority. Our members and their families need
access to a drug benefit that is affordable, available, and dependable,
and, they need this to happen this year.
AARP is pleased that this Subcommittee is examining the issue of
the high cost of prescription drugs and that the Congress has begun to
develop its own prescription drug benefit legislation. It is our hope
that today's hearing will help increase the visibility of the need for
an affordable Medicare prescription drug benefit for all beneficiaries.
As new prescription drugs are becoming available to treat and even
prevent more and more serious conditions and life-threatening
illnesses, reliance on these drugs has become especially significant
for older Americans. Ninety percent of Medicare beneficiaries use a
prescription drug every day. While older Americans comprise only 12
percent of the U.S. population, they account for forty percent of
prescription drug spending. In fact, after premium payments,
prescription drugs account for the single largest component of health
care out-of-pocket spending for non-institutionalized Medicare
beneficiaries age 65 and older. On average, these beneficiaries spend
more out-of-pocket for prescription drugs as for physician care, vision
services, and medical supplies combined.
The need for a Medicare prescription drug benefit for all
beneficiaries continues to escalate:
Older and disabled Americans continue to face double-digit
increases in their prescription costs--a chronic health problem
necessitating new and expensive prescription drugs can quickly
deplete a retiree's financial resources. Even a beneficiary who
has planned well for his or her retirement may not be prepared
for drug bills that exceed several hundred dollars a month.
Employer-based retiree health coverage continues to erode--24%
of employers with 200 or more employees offered health coverage
to their Medicare-age retirees in 2001 compared to 31% in 1997.
Medicare+Choice plans continue to scale back their drug
benefits--In Florida, for example, we have seen many plans
leave the Medicare program and many of those that continue to
participate have made their benefit less generous with some
covering only generic drugs.
The cost of private Medigap coverage is increasingly
unaffordable--while Medigap drug coverage is quite limited, the
premiums on these policies exceed $1000 a year.
State prescription drug assistance programs provide only a
limited safety net, and are themselves at risk because of
current state budget crises--In Florida, for instance, there
are two state pharmaceutical assistance programs. The Sliver
Saver Drug program provides assistance of only $80 per person
per month and seniors must pass a strict asset test to be
eligible.
Despite promises of relief, lack of a drug benefit in Medicare
persists. Beneficiaries continue to struggle to pay for necessary
medications. Some even take desperate--and sometimes dangerous--
measures. For instance, some beneficiaries do not follow a course of
treatment, do not take the prescribed full dosage, or take their
prescriptions intermittently.
That is why AARP has called on Congress to pass legislation this
year.
To be considered a true benefit, our members have told us
legislation must:
Ensure all Medicare beneficiaries have access to affordable,
meaningful prescription drug coverage;
Provide stable coverage that beneficiaries can rely on from
year to year;
Protect beneficiaries from extraordinary out-of-pocket costs
and ensure reasonable cost-sharing;
Provide lower-income beneficiaries with additional assistance;
and
Not create incentives for employers to drop current retiree
coverage.
AARP members are looking to Congress to fulfill the promise to
begin to provide long-overdue relief from the devastating costs of
prescription drugs. We believe that a prescription drug benefit should
be integrated into Medicare in a way that strengthens the program.
We know a workable prescription drug benefit will require a sizable
commitment of federal dollars. AARP has urged a level of funding that
will enable the Congress to design a Medicare drug benefit that will
provide real value to beneficiaries. As we learned from last year's
debate, more than $400 billion will be needed to create a Medicare
prescription drug benefit that our members will find valuable.
In conclusion, we believe that creating prescription drug benefit
for all beneficiaries is a priority for Floridians, AARP, and the
nation. We want to work with you and other Members of Congress to
assure that a Medicare prescription drug bill gains broad bipartisan
support and is enacted into law this year.
Mr. Greenwood. Thank you, sir. And I think you summarized
exactly why Congressman Deutsch asked me to hold this hearing
here, because he has expressed to me repeatedly that he wants
to make sure that his constituents have affordable
prescriptions, and he worries that they don't, but he also has
a worry that they make sure that what they get is safe and felt
that this would help to underline the vital imperative that
Congress move forward quickly to create a prescription drug
benefit.
I am going to turn to you, Ms. Coplan, and ask you to
testify next, please.
TESTIMONY OF RESI COPLAN
Ms. Coplan. Okay. Thank you very much. Good morning. My
name is Resi Coplan, and I am 67 years old. I was working up
until a year ago January when I, unfortunately, had a car
accident which exacerbated a problem in my back, giving me a
very painful right hip and right leg and difficulty walking.
And the doctors had put me on a medication that was way too
strong. It had an anesthetic type of reaction, and I
eventually, in July, fell out of bed, fractured my left foot.
So I had my right hip and my left foot that I was nursing.
I ended up in the hospital from July 7 until August 20,
which is about 6 weeks with time in ICU due to this
complication. When I did go back home I had enormous number of
medications that I was asked to take, and I had to start to
make a plan because there was no way that I was going to be
able to afford all of this.
The treatments that I could have had for this back
condition to try to eliminate some of these drugs--and, by the
way, before the accident I was on one drug just for my heart, I
have a pacemaker, that is one of my conditions--the ways that
they could help me was by surgery or injection, but I am a
hemophiliac and I am also allergic to blood and blood products.
So in order for me to go through any kind of surgical
procedure, it is a month of pre-treatment, then into the
hospital and transfused and then the next day have the surgery
or procedure and transfused and then transfused the next day
also. I have an unusual hemophilia.
All the allergies and medications are listed. I don't
really want to go into all of those unless you want me to. But
I did want to go through some of my physical conditions. I do
have COPD, chronic obstructive pulminary disease. I am O2-
dependent, which I have with me, and I have breathing
treatments that are four times a day, plus I carry the little
buffer with me too so I can breathe. I never know when it is
going to hit, so I am hoping I can get through this without it.
The pacemaker I have is a dual pacer, and I have had it now
since 1997. I have neuropathy of both my hands and feet that
was just recently diagnosed. I have loss of feeling in all
these areas. I am not a diabetic, which is where it usually is
affiliated. I am not sure why this is happening. I also was
just newly diagnosed with osteoporosis, and I am on a very
expensive drug for that; the hemophilia, of course; my painful
right hip, which is very difficult to treat because of my drug
problems. I also have spondylolisthesis. That is in the back
where it is breaking down with the osteoporosis, and I am great
candidate for fractures. I have a very poor activity tolerance
due to the breathing and the difficulty with my walking and so
forth since I have had this accident. Now to compound this
issue, I also had therapy up until mid-October this--I am
sorry, mid-January this year. Sorry about that.
Now, in order to control all these different things that I
am suffering with, I have made a list of my medications. I went
to Costco, I went to Winn Dixie, and I went to Canada Rx, which
is right here in this area. Canada Rx does have some lower
prices on some and higher on others or they don't have them.
Then they added a shipping charge which negates anything that
would be possible. I was told about Costco through Broward
County Elderly Services, and I did go there, and they gave me a
list of my medications and the prices on them. On their
figures, it would be--Costco's figure for a month would be
$303.11. At Winn Dixie, it is $406.14, and that is as of this
week, depending on whether they are going to go up or not.
Okay? My Social Security that I get, less the amount that I
have to pay in, the $58, I get $945. I am on disability right
now through work. There was supposed to be long-term disability
but because of age and because of what is going on with the
Social Security, they will only give it to me for one more year
from that. So I will lose that in 1 year, which means
everything that we are saying now is even more important. So my
total income is $1,882 a month, my fixed outlay is $1,429.40.
That leaves me $452.60, if all these figures are correct, to
live on and buy my medication. Even at $303, to buy food,
clothing, toiletries, paper products, cleaning products,
gasoline to get here, anything, it is impossible. I have to
make decisions. What do I take? How much of it do I use? And
what do I buy first? I have a prescription right here waiting,
there is two of them. There is no way. Last few weeks I have
had a lot of changes in medication. One of them in particular
was this Fosamax. Four pills for 1 month, $63.95 at Costco, and
at Winn Dixie, it was $60.19 with AARP as my supplement. Either
way that is a lot of money. I could not pay all of my rent this
month. Thank goodness they are very kind to me, but kindness
doesn't last forever, and I don't know what tomorrow will
bring.
I hope I have made this point fairly clear that this is an
impossible situation. I have covered myself with insurance. I
do have AARP. It is $189 a month--very expensive but very
necessary in my case. I think this a problem that everybody
needs to hear and know and try to do something about. And
before I leave you, I would like to tell you just one little
story, if you don't mind.
It is going to be 8 years now in May that my daughter was
killed the day before Mother's Day by a hit-and-run drunk
driver. She had 3 children, ages 8, 10 and 15 at the time. When
she was killed I had the boys for a short year, and I was
trying to get them into a more normal situation, and about
three or 4 months after her death I took them over to the
beach, because their mother did that all the time; they loved
the beach. And the 8-year-old was just sort of playing with the
seaweed, and the 10-year-old at that time--he is now 18--the
10-year-old asked me, he says, ``Grandma, did my mother really
make a difference in this world,'' and I said, ``Of course she
did. She made me a mother. She was my daughter, and I could
love her, made your uncle to have a sibling, and without her I
wouldn't have the three of you to love and watch grow up.'' And
he says, ``Well, grandma, did you ever stop to think that if I
threw this little pebble in the ocean, that that ocean and any
ocean it touches would never be the same again?'' And I said,
``How astute of you, how smart you are. No, I never did.'' He
says, ``Okay.'' He says, ``My mother did make a difference.'' I
said, ``She certainly did. She brightened everybody's life that
she came near.'' He says, ``Okay,'' and he took it and he
skipped it across the ocean surface. That is for my mother who
made a difference. This little 10-year-old boy made a great
difference in my life, and now I am this bolder and I am going
into the ocean and I want you all to make a change. Thank you.
[The prepared statement of Resi Coplan follows:]
Prepared Statement of Resi Coplan
On January 15, 2002, I was run off the road on 595 east bound by a
car that was coming into my lane making it necessary for me to go onto
the emergency lane and, with the car still coming at me , I then went
into the wall. My car almost turned over as it rocked back and forth
finding it's way to part grassy median and shoulder. My defensive
driving was affective, since I was not hit by the uncontrolled car. Had
I been, it would have turned my car right into two lanes of morning
traffic and I don't like to think of what the results might have been.
This left me with an injury that exacerbated the condition in my
lower back. This forced me to take sick time and vacation pay until it
was depleted. Then I was put on long term disability (which is only
good for a 2 year period do to my age and social security status)
supplied by my place of employment. This disability will end on April
18th, 2004. Since that time, I have not been able to return to work and
my health has been going downhill from there with several other
problems.
During my recovery period, I was told to take Neurontin 300mg. to
control the severe pain I was in. This was much to strong for me and I
asked the doctor to give me a much lower dose which he did (100mg 3 to
4 times a day). One capsule kept me out of commission for 24hours. The
doctor insisted I increase the dosage in order for it to be
therapeutic. I did increase the dose to 300 mg. the evening of July
6th, 2002. I was so anesthatized, I didn't know exactly where I was and
thought I was in the middle of my bed when in fact, I was on the edge
of my bed and thew myself out on my head while my feet did a backward
summersalt and I broke my left foot. Now I have to nurse my right hip
and left fractured foot. I was in the hospital from July 7th, 2002
until August 20th, 2002. On discharge I had to have live-in nursing
care until mid October, 2002. After tht I have been on my own and just
trying to survive through the pain and disability ALONE.
There are treatments available for this back condition, but I am
not a good candidate for any of them due to the following conditions:
1. Factor Eleven Deficiency (a bleeding disorder). 2. I am allergic to
blood products. I would need multiple units of Fresh Frozen Plasma for
any procedure that would cause any trauma to my body and cause bleeding
or the potential of that happening. 3. Pacemaker (dual) since 1997. 4.
COPD and oxygen dependent with breathing treatments four times a day.
5. Very poor activity tolerance due to breathing problem and severe
pain in right hip and lower back that has become much worse since the
accident. 6. I am allergic to a large list of medications or they are
contraindicated due to the bleeding disorder. They are as follows: A.
penicillin; B. amicar; C. sulfa; D. novacaine; E. benadryl; F. cipro;
G. horse serum; H. cat gut; I. Blood products; J. No asiprin or asiprin
like products like antiinflammatory drugs that thin the blood.
My medication bills alone have have been over $3,500 last year.
Then comes the other necessary expenses such as: A. Rent $ 625.00/
mo; B. Electric, 80.00/mo on average for the year; C. Phone, 59.00/mo;
D. AARP, 189.00/mo for medicare supplement in addition to medicare part
A & B; E. Cancer/hospital 86.40 for additional insurance protection; F.
Cable, 58.00/mo (my only entertainment); G. Long term ins.; H. Home
health and Nursing home care 267.00/mo; I. Auto insurance, 68.00/mo.
This amount of routine monthly expense comes to $1432.40 per month
that must go out each and every month. This does not include any
medication expense or over-the-counter drugs that are needed such as
stool softeners when taking medications that cause constipation and can
lead to bleeding which, in my case would be a stay in the hospital if
it was left untreated. I also need tylenol for pain and/or headache due
to some of the side effects from the drugs.
My total income for the next year (till April 18th 2004) is
$1882.00 = social security and disability benefits combined -1432.40 =
bare basic outlay $ 449.60 This is what is left before I can think of
medication, much less food, gas, or any other expense, i.e., soap,
shampoo, cleaning supplies.
I have an oxygen concentrator the takes electricity to run. When I
call FP & L, they told me that it will cost me approx. $50.00/mo to run
as the doctors have ordered. Well, now what do I do. I JUST DON'T USE
IT UNTIL I CAN NO LONGER GET AWAY WITHOUT IT.
As for my medications, I have either stopped taking them or have
cut the dosage down in half and that is only if I MUST TAKE THEM.
IF YOU TAKE $449.60 and multiple that by 12 months you get
$5395.20. Now look at the medications $ 3500.00/yr and divide by 12
months equals $291.66.
$449.60 -291.66 = meds
Total left for the month is $157.94. for all other expenses
including any new Rx that the doctors think a what I need. This leaves
$36.44/wk. to save for emergencies, any co payments . . . just
everything else.
I cannot imagine that one year from now I will only have $945.00/mo
to continue with my life and ``survive?''
I submit these information respectfully,
Mr. Greenwood. Thank you. That was--I can't imagine it
being more beautifully said. And you will make a difference,
and you have already. Thank you.
Mr. Sweed.
TESTIMONY OF GENE SWEED
Mr. Sweed. Congressman Greenwood, Congressman Deutsch, my
name is Gene Sweed. I am 67.5 years old, and this is what
happened to me in only 2.5 years of Medicare.
In the year 2000, upon turning 65, I selected an HMO,
Avmed, as my provider. The first year they allowed me $3,000
per quarter in prescription allowance with an average
deductible of $10 to $20. This was more than enough to take
care of my needs, and I felt we were secure. After my annual
exam, it was determined I had a lot of things wrong with me,
such diabetes, high blood pressure, an irregular heart beat,
prostate cancer and arthritis, among others that are too
numerous to mention.
The HMO allowance still was sufficient for us to live the
lifestyle we chose. Season tickets to hockey, 42 games, the
ability to go to dinner before every game, going to the theater
often and going out with our friends as often as possible. In
years 2001 to 2002, the allowance dropped considerably to
$1,250 a quarter. We felt that by tightening our belts we still
could be close to our budget. So first we gave up the theater,
we changed our Hockey to 13 games and of course the eating out
dropped. And fortunately for us, Walgreen's was able to provide
generics for most of the prescriptions to help keep the cost
down. I also started to skip my medicine occasionally so I
would not go over the allowance. See, the problem is when you
are an HMO you have your allowance, but you don't know what
they are charging the HMO with Walgreen's and them, so you
don't know where you are into your allowance. And it is scary
because you pay everything over that. We learned at one time I
had one prescription that was a new item, and my co-pay was
$80. So I can imagine what the heck they had to charge to the
HMO.
Now, for the year 2003, the allowance was dropped
considerably to $250 a quarter. Two hundred and fifty dollars a
quarter was not going to cut it. This is not acceptable with
me, so I switched to Foundation, which has now become Vista.
The main reason I did that again was to try to stay with the
same doctors. Fortunately, they had the same doctors, so with
$250 a month I am okay, and I have the same doctors again; I
don't have to start all over again.
We are in the process of adjusting again, though. We do not
eat out again like we did before. If we do eat out, we make
sure that we take home a doggy bag. I used to laugh at people
for doing this, but we take home a doggy bag. If somebody is
offering to show their product and is feeding us, we always go,
even when we are not interested. Meals at home have changed to
items that you can make more meals out of, such as soup,
spaghetti, meatloaf, et cetera, and portions are getting
smaller. I also have skipped taking my medication more
frequently. Now, my wife doesn't say anything, but she is
trying to keep me alive, and this is her goal by doing this, by
doing that. She is an excellent budget manager. Now, I have
also started to skip taking my medicine more frequently.
The biggest concern for me is that if my wife should
precede me how I would survive as it does take my wife's money
management skills to make it work. But one thing I don't
understand is if the manufacturers complain about their costs,
why are they running commercials on TV for prescription
medication when it is expensive to produce them and air time is
very costly, especially on the main channels. You only get the
prescription from your doctor. They take their samples in, they
give them to the doctor, if they talk to the doctor, sometimes
they even talk to just the office manager and they don't go
into everything like what the side effects are. And, again,
sometimes the side effects cause you to take another
prescription. They may affect your stomach, they may affect
something else. And that is a problem that we don't understand.
So I thank you very much for your time, and if you have any
questions, I would gladly answer them.
[The prepared statement of Gene Sweed follows:]
Prepared Statement of Gene Sweed
My name is Eugene (Gene) Sweed I'm 67\1/2\ years old and this what
has happened in only 2\1/2\ years on medicare.
In the year 2000 upon turning 65 I selected Avmed as my H.M.O.
provider. The first year they allowed me $3000 per quarter in
prescription allowance with an average deductible of $10.00 to $20.00
this was more tan enough to take care of my needs. After my annual exam
it was determined I had a lot of things wrong with me, such Diabetes,
High blood pressure, an Ireggular Heart beat, Prostate Cancer and
others to numerous to mention.
The H.M.O. allowance was sufficient for us to live the lifestyle we
chose. Season tickets (42 games), The ability to go to dinner before
every game. Going to the theater often,and going out with our friends
quite often.
In years 2001 & 2002 the allowance dropped considerably, to $1,250
per quarter. We felt by tightening our belt we would be close to our
budget. First we gave up the Theater, changed our Hockey to 13 games
and of course our eating out dropped. Fortunately Walgreens was able to
provide generics for most of the prescriptions and keep the cost down.
I also skipped taking my medication occasionally so I would not go over
the allowed amount.
One problem is we do not know what the charges are only the
deductible. For the year 2003 the allowance was to be approximately
$250.00 per quarter. This not being acceptable me I switched Foundation
now Vista at $250.00 per month. We are in the process of adjusting
again. We do not eat out before every game. If we do eat out we are
making sure we have a doggy bag to take home, When a company offers to
show their product and are feeding us we always go even when we are not
interested. meals at home have changed to items that you can many meals
out of such as soup, spaghetti, meat loaf etc. with portions getting
smaller. I also have skipped taking my medication more frequently. The
biggest concern is if my wife should precede me is how I will survive
as it takes my wife's money management skills to make it work. One
thing I don't understand if the manufacturers complain about their
costs why are they running commercials on T.V. when it expensive to
produce them and air time is very costly? We can only get a
prescription from our Dr. so it is his/her choice.
Mr. Greenwood. We thank you, Mr. Sweed. Thank you, all of
the panelists, for coming. And the Chair is going to recognize
himself for about 10 minutes for questions. Since there are--we
don't have the full committee here we can be a little bit
looser with time than we usually are in Washington, which is
nice.
Let me start with you, Ms. Coplan. Could you--I don't know
that I heard in your testimony that--where were you working
before you had your accident? What was your employment? Maybe
you could tell us a little bit about your employment history
over the years.
Ms. Coplan. Certainly. I became a nurse in 1971. I have
been nursing all during that entire period. My general
background was ICU, emergency room, labor/delivery, newborn
nurseries, recovery, the heavy areas.
Mr. Greenwood. Employed by whom during this?
Ms. Coplan. Different hospitals. I had also gone into
California and Washington to get some varied experiences there.
Their medicine is a little different sometimes in certain
areas. And I had family there as well, so it was a dual
purpose. But the last 13 years I worked for Bell Quality as a
instructor for home health students.
Mr. Greenwood. And did Bell Quality provide you with a
prescription drug benefit when you were employed there?
Ms. Coplan. I had--at the time, I had United Health Care,
which you had a co-payment, and at the time that I got it it
was like $5 or $15, depending on----
Mr. Greenwood. Per script.
Ms. Coplan. Depending on whether it was generic or brand.
And then it went up and it continued to go up. And then I
became eligible for Medicare Part A with United Health Care as
backup.
Mr. Greenwood. And United Health Care, was that----
Ms. Coplan. My employer paid that for me.
Mr. Greenwood. Okay.
Ms. Coplan. Okay. So it wasn't a bad deal, and I was
working, and there was money coming in. And when I had the
accident, of course I couldn't afford the United Health Care at
that time.
Mr. Greenwood. And how much was that?
Ms. Coplan. I don't know. I know it would have been a COBRA
payment, and it would be close to $400 a month, I think it was.
And of course that was out of the question, so I went to
Medicare Part B.
Mr. Greenwood. And that was a full health care plan. That
was not----
Ms. Coplan. Yes.
Mr. Greenwood. [continuing] just prescription, that was a
full health care plan.
Ms. Coplan. Yes.
Mr. Greenwood. Okay.
Ms. Coplan. It was not a bad plan. But then I went to
Medicare Part B and in the interim also took AARP because I was
scared. I needed the supplement.
Mr. Greenwood. And what does--what you purchased from AARP
is that what we call a Medigap plan?
Ms. Coplan. Yes. Yes, at $189 a month. And I am waiting--I
have been notified that they are going to go up in premium,
which is going to knock me out.
Mr. Greenwood. Okay. And that would pay your co-pays and
your deductibles.
Ms. Coplan. It has a varying deductible. One drug, one of
the most expensive ones of the four pills, there was a dollar
off on that one with AARP. Okay. It wasn't sufficient enough to
even warrant. And yet there would be another one where they
would pay half. So I don't understand why the drug companies
have this big gap so that AARP can't be more efficient.
Mr. Greenwood. And when you left--because of your injury,
when you left Bell Quality they did not provide you with any
continual--there is no prescription drug benefit unless you buy
the entire United Health Care COBRA policy; is that right?
Ms. Coplan. No. I am still considered an employee there
until April when my disability ends next year, April 18, to be
exact, 2004.
Mr. Greenwood. You are going to really be in the sauce
then, aren't you?
Ms. Coplan. I am going to be under a bridge somewhere with
my oxygen and my breathing treatments and--I will be homeless,
yes.
Mr. Greenwood. Let us hope that doesn't happen. Mr. Sweed--
--
Mr. Sweed. Yes, sir.
Mr. Greenwood. [continuing] tell us a little bit about your
employment past, if you would.
Mr. Sweed. Okay. I had worked for a company that sold
plating metals, had no coverage at all. It was just the owner
and myself. He was in his seventies. I did call around to try
to get some sort of insurance, and they were asking figures
like close to $300 a month just for the premium, so I
couldn't----
Mr. Greenwood. How long had that been your employment?
Mr. Sweed. When I came here to the Miami area in 1996 until
I retired at age 65, which was 2.5 years ago.
Mr. Greenwood. Okay. So you had no health insurance
whatsoever all that time?
Mr. Sweed. No, sir.
Mr. Greenwood. You just paid everything out of pocket.
Mr. Sweed. Right. Well, we weren't sure that of what was
wrong, because I wasn't even going to the doctor. So we had no
concept of what was going on. Now I am at a point that I take
14 pills a day and then 3 on an as-need basis that counteract
some of the things that the other pills do.
Mr. Greenwood. Have either of you, Ms. Coplan and Mr.
Sweed, ever tried to find out whether some of the plans that
are offered by the drug companies themselves, like Together Rx,
would benefit you? Have you ever had any contact with--a number
of the pharmaceutical companies provide discounts or in some
cases even free medications to people who are struggling. You
are nodding your head, Ms. Coplan. What has been your
experience?
Ms. Coplan. Yes, I have checked into it. I have had doctors
give me these pamphlets that they have left, and I have also
been on the Internet looking around. Some are beneficial and
some are not. I would need a secretary to keep track of where I
would send what drug for the best benefit. And it takes some
doing to keep that record. I think it is--there has got to be
something else. There has got to be some way of controlling it.
I want to ask you a--may I ask you a question?
Mr. Greenwood. Absolutely.
Ms. Coplan. Thank you. You know when people were smoking
cigarettes and they raised the taxes to help defray the cost of
the medicines and so forth and the medical care the patients
needed that were addicts. Why can't they do the same thing? I
was at a store the other day waiting for a friend of mine while
they grocery shopped for me, because I don't do that anymore.
And I was sitting in the car, and one out of every four people
came out with one, two, three big packs of beer, wine. Why
can't they just tax them as well to help us seniors. There are
bottles of liquor that cost over $100. Five dollar taxes would
sure help out a senior, and it won't hurt them, but it would
benefit us.
Mr. Greenwood. We will take that into consideration. I am
sure that the State of Florida probably does impose taxes on
its spirits, and the Federal Government has taxes, and I am
sure all of the beer and wine lobbyists will be rushing to help
us get that passed.
Ms. Coplan. It was a thought.
Mr. Greenwood. Let me--you, Mr. Sweed, have you contacted
any of these programs that are offered by the pharmaceutical
companies?
Mr. Sweed. Until very recently I hadn't even been aware of
it, but just hearing what Ms. Coplan said, needing a secretary
would probably discourage my wife because she does most of that
for me, not wanting to run here and there and everything else.
Having the convenience of Walgreen's right out the back door is
a big difference for her.
Mr. Greenwood. Right. Well, you might want to look into it.
I can't guarantee you that it won't be hassle-free or without
its complications, but I would certainly hope that that would
be a preference before you--things got so dire that you were
actually homeless, as you predicted.
Ms. Coplan. Unless I can go back to work, which I doubt. I
mean you are seeing me at my best today for some reason. I am
not usually like this. I usually have a much more difficult
time breathing.
But getting back to those different plans, if you don't
categorize all these different ones and know what your
medications are, some plans have your medications, some do not.
Some will give you a nice discount, some won't. What I have
become is a beggar. ``Doctor, please, do you have samples. I
can't afford my medicine.'' I have two prescriptions right here
that I am holding onto because I had to go to the drug store
the other day to get over-the-counter medicines that cost me--
sorry, they had to give me a refund because they charged me too
much--$21.98 for the month.
Mr. Greenwood. And what is the prescription for?
Ms. Coplan. It is not--this is not a prescription, this is
just over the counter.
Mr. Greenwood. Oh, I see.
Ms. Coplan. Because the medications they give you are very
constipating, and if I don't do something about that, I will
bleed, and then I end up in the hospital. Costs them a whole
lot more. So this simple little thing is a big cost to me that
nobody takes care of. But the prescriptions that I have,
because I cannot take pain medication, I am not sleeping. It is
very difficult for me to get comfortable. The pain is terribly
exaggerated at night because I guess it is the end of the day.
And I take Zanex. Well, Zanex is not that expensive, but they
put me on a new drug called Ultran which helps and it is very
expensive. So which one would I get?
Mr. Greenwood. Mr. Sweed, I understand that you have made
some attempt to get pharmaceuticals from Canada?
Mr. Sweed. We had talked about it, my wife and I, and the
Internet. In fact, very recently, we have a friend of ours that
her son had gone through the Internet, had mixed medicines and
at 30 some odd years of age passed away, and we backed away
from it real fast when we saw that happen, because we were
concerned. But we had talked about it and had not acted on it
yet.
Mr. Greenwood. Let me ask you both, Ms. Coplan and Mr.
Sweed, a question. If the Congress passed a prescription drug
plan that had roughly qualities such as I am about to describe,
you had a $250 deductible so that the first $250 was right out
of your pocket and you would probably both spend that in the
first month, and then if Congress paid roughly half of the cost
of your prescriptions up to some point, let us say $3,000--
these are rough figures--$3,000, and then you were on your own
for a while, but if it ever got up to around $6,000, that then
everything would be covered by the Federal Government, does
that sound roughly like that would be a significant help to
you? I am looking at your figure of--I think you said that if
you went to Costco, your drugs would cost about $300 a month.
Ms. Coplan. Three hundred and three.
Mr. Greenwood. Right.
Ms. Coplan. That was just the latest figure, and that was
last week.
Mr. Greenwood. Right. So if you used that--if let us say
your deductible was spent in the first month, if a plan could
cover half of your prescriptions----
Ms. Coplan. It would be a big help.
Mr. Greenwood. [continuing] it would be a big help, at
least for a good portion----
Ms. Coplan. I could go buy bread.
Mr. Greenwood. You could go buy bread.
Ms. Coplan. Yes.
Mr. Greenwood. Now, let us not get extravagant here.
Mr. Sweed. I am looking, my wife has made a sheet for me of
what the co-pays have been. Not counting some of the special
ones that I have had, like for the arthritis I had a shot in my
knee that cost me $175 by itself, but that is a rare thing,
overall, I am running about $250 to $260 a month just on
deductibles.
Mr. Greenwood. What is your monthly income? Do you have
anything besides Social Security?
Mr. Sweed. I have my Social Security, that is it.
Mr. Greenwood. And how much is that, if I may ask?
Mr. Sweed. Net after Medicare comes out is about $720, I
think it is.
Mr. Greenwood. Okay. Final question. Mr. Lipscomb, let me
turn to you. Could you describe for us what AARP generally
offers seniors in Florida through the various plans that you
have available?
Mr. Lipscomb. We offer prescription drug coverage. Not
coverage in the sense of insurance but to have the ability for
group buying, so to speak, through one of our providers. AARP
doesn't do any of these things per se itself, but what we do is
we vet providers and make sure that what they are doing is in
no way taking advantage of the people.
Mr. Greenwood. When Ms. Coplan says that she has AARP, I
assume----
Mr. Lipscomb. That is what she is talking about.
Mr. Greenwood. [continuing] she means--well, I am a little
confused now, because I asked her if she meant a Medigap
policy. Is that what she has?
Mr. Lipscomb. She has both, unless I am mistaken, based on
her description.
Mr. Greenwood. I am sorry, she has what?
Mr. Lipscomb. She has both----
Ms. Coplan. Yes, I do.
Mr. Lipscomb. [continuing] types of----
Mr. Greenwood. So she buys a Medigap policy.
Mr. Lipscomb. Right.
Mr. Greenwood. And that costs her $189 a month. That does
or does not provide prescriptions?
Ms. Coplan. The entire package is a discount on my drugs.
Mr. Greenwood. One hundred and eighty-nine dollars.
Ms. Coplan. And the Medigap, if you want to call it that,
where they take up the 20 percent that Medicare doesn't----
Mr. Lipscomb. Right.
Mr. Greenwood. Right. So you get the Medigap plus you get
some prescription drug discount.
Ms. Coplan. Discount we call it, I think.
Mr. Lipscomb. And that is under United Health Care, which
is who she was talking about a while ago. In other words, that
is who our licensed provider is, United Health Care.
Mr. Greenwood. I see. And have you been able to figure out
what that discount is worth to you a month? I know you said it
varies from half in some drugs to a dollar in other drugs.
Mr. Lipscomb. It is going to vary radically, Mr. Chairman,
depending on the particular prescription.
Ms. Coplan. It does. I really does, because when I just got
one of the prescriptions done through AARP at Winn Dixie there
was a dollar discount. But on another drug at Winn Dixie, it
was half that AARP picked up. So there is not consistency,
which is what? And they were both generic.
Mr. Greenwood. Mr. Lipscomb, when you buy these policies,
$189 a month, do you have any rough calculus as to how much of
that would be helping her with the prescription side of the
ledger?
Mr. Lipscomb. I really don't, Mr. Chairman. I can inquire
for you.
Mr. Greenwood. Would you do that?
Mr. Lipscomb. I would be glad to.
Mr. Greenwood. Would you provide that information to the
committee?
Mr. Lipscomb. Yes.
Mr. Greenwood. Thank you.
The Chair recognizes the gentleman from Florida.
Mr. Deutsch. Thank you, Mr. Chairman. Mr. Lipscomb, does
AARP have a position--you mentioned the position about the
Internet pharmacies, but specifically about the walk-in
entities that have shipped drugs to consumers--actually, I
guess Ms. Coplan mentioned she had gone to the Canadian drug
stores phenomenon that have been established in south Florida,
I don't know--throughout the country at this point?
Mr. Lipscomb. Congressman Deutsch, we have not taken a
position saying that these people should be closed down or
anything like that, because we don't have anything to offer
these people in lieu of that option. What we have said to
people is you should be very cautious in terms of making sure
you understand who you are buying from and that these are of
the quality that you anticipate that you are getting. And that
is a very difficult thing to determine for people like our two
witnesses here. I mean it is difficult for the Department of
Health to determine sometimes, much less for a private citizen.
Mr. Deutsch. This is sort of a follow-up to one of the
things the chairman was mentioning, but in the next panel we
will have--several witnesses will talk about a variety of
programs that exist for seniors to access more affordable
medicines. They include the Orange Card by Glaxo, Eli Lilly's
Answer Card Program to the Together Drug Program. Have you
heard of any of these prior to this hearing, either one of you?
Mr. Sweed. The only one that I have heard from is because I
am a diabetic, Accu-Chek stays in constant touch with me. They
have even sent me a free monitor, they have given me a choice,
they will make sure that the strips are free when I go to the
drug store, et cetera. But they are the only one out of anybody
that has made any contact and has done anything with me.
Mr. Deutsch. And, Ms. Coplan?
Ms. Coplan. No, I haven't had that. The only thing that I
would like to comment on right now is the fact that my
breathing treatment takes two different types of medication.
There was one that I was on. It was Zoponex that did not make
my heart race when I used it in a breathing machine.
Mr. Deutsch. Right.
Ms. Coplan. This drug right here, six of these boxes with
four in it, four treatments, one a day, costs $56 every 6 days.
What I had to do was go to the lesser one. This one is longer
acting and has a lot less side effects for me with my heart
condition. But I had to go back to the one that had tremendous
side effects because I could get it for free through Medicare.
Medicare will pay for it. So I have to now use less medication
because of the side effect, because I can't afford this one.
Mr. Deutsch. Ms. Coplan, let me--again, I appreciate you
being so forthright with us, and it really has been really very
helpful, and I think, as you mentioned, your analogy of the
boulder and the ocean I believe is really accurate. But, again,
just to try to really have an understanding on somewhat of a
personal basis what you are going through, have you explored
Medicare Plus Choice options in terms of--have you looked at
that, HMO options for yourself at this point?
Ms. Coplan. Having been a nurse, having dealt with HMOs for
patients, having had four of my friends on HMOs that are
crying, they tell me what is going on, if it wasn't for my two
doctors, I wouldn't be sitting here today, I would have been
dead. They saved me, pulled me through it. They are not HMO
doctors. My friends who have been on HMOs and Foundation, or
whatever you want to call them, are being every few months
different doctors; doctors don't know them. If a doctor walks
in and tries to treat me that has never seen me before, there
is a danger there. Thank goodness I have a medical background.
Otherwise they can do damage.
I had 14 doctors in the hospital when I was there. Those 14
doctors were making prescriptions all over the place--give her
this, do this, do this--and no one was watching the other. I
was the chief, and I made them the Indians. And I took my own
case and I took a PDR and I started going through the
medications, because I was very sick and I said something is
making me ill. And I stopped all my medication and I said,
``You are not going to give me anything more. You speak to this
doctor and me and clear it through them before you order
anything.'' And I had to take that initiative with the help of
my doctor at my side to confer with in order not to be
overdosed or drugged differently. If I go to an HMO and I have
to go see a doctor who doesn't know me, I am facing the same
monster again. And I would rather be without medical treatment.
Mr. Deutsch. Let me go back, and, again, you seem like you
have been a very aggressive consumer. I mean you mentioned
Costco, Winn Dixie, Canada Drug.
Ms. Coplan. And the Internet.
Mr. Deutsch. And the Internet. First off, do you have--and
this, Mr. Sweed as well--I mean do you have personal friends
that are purchasing drugs through the Internet at this point in
time? I mean do you have friends who----
Ms. Coplan. I have had some that have talked to me that
they might do so, and I told them I didn't think it was a wise
decision, because you didn't know what bathtub it was made in.
That was my feeling. I would rather go to somewhere were I
understand the pharmaceutical company by reputation. So before
I was ever even here, and I am glad to hear you confer that
this is not a good idea to go just to anyone----
Mr. Deutsch. Let me be really clear what I said. I think
there is this--the phenomenon is that I think we are trying to
address this issue. It is not a good idea in the sense that
there really is no oversight.
Ms. Coplan. Okay.
Mr. Deutsch. And there have been some anecdotal stories of
problems. I think for some people they are making a personal
choice if they feel there is no choice. I mean given the choice
between if there really is no choice, if there is no government
program--I mean you might, once your disability ends, be
eligible for Medicaid. I mean at $1,800 a month you are
probably not eligible for Medicaid.
Ms. Coplan. No, I am not.
Mr. Deutsch. But at $900 you very well might be with
certain of the issues involved. And that is why I am not
familiar with the--you mentioned you had gone to Broward County
Social Services in terms of medically needy issues, and
basically you found nothing available in any kind of medically
needy programs in terms of county government or State
government at all.
Ms. Coplan. The only thing that they said to me was that
Costco is now allowing anyone, even without a Costco card, to
go into their pharmacy and use it. And it was supposed to be a
huge discount, it was something that had just been introduced
within the last 2 weeks.
Mr. Deutsch. And Broward County----
Ms. Coplan. That is when I went to check--I am sorry.
Mr. Deutsch. So you physically went to Costco or you called
or you----
Ms. Coplan. I went there myself with my list and they gave
me their prices.
Mr. Deutsch. So the next time you purchase to fill
prescriptions you are going to fill them at Costco at this
point? Is that your expectation?
Ms. Coplan. I am not clear on one point yet; I haven't been
able to clear that up. Whether AARP discount would be good at
Costco like it is at Winn Dixie because I may be better off
with some of the drugs going to Winn Dixie or to other one of
the pharmacies that I am allowed to go to for the discount that
I get with AARP on some of the drugs. But, again, here is the
Secretary. And how much gasoline can I afford to buy at $2 a
gallon?
Mr. Deutsch. Right. When you checked on the Internet in
terms of prices, were the Internet pharmacies offering prices
that were less than you had seen at Winn Dixie or Costco--not
the walking pharmacy you mentioned, not the counter drug
pharmacy locally, but the actual Internet pharmacies?
Ms. Coplan. There were some that seemed okay but it wasn't
enough of--I didn't get enough of an interest in doing it that
way and waiting the 2 weeks. I would rather go to Winn Dixie
and have my medication now, because you go to the doctor and
they give you a month's supply. You have got to go back to the
doctor and get another month's supply. So my overlap would not
be there, I would need the drugs on a continuous basis. So my
thought was I will go to Winn Dixie or I will go to Wal-Mart,
wherever it is.
Mr. Deutsch. Mr. Sweed, you were mentioning--I saw you
nodding when I was asking the question about friends who are
using Internet pharmacies at this point?
Mr. Sweed. We have some friends that I am not sure whether
they are using the Internet or not but they are always waiting
in the mail for something to come. And, again, they have a
problem because in the mail they can't control when it gets
there; sometimes it is late or whatever. See, my situation is
different than theirs too, because in my case not every
pharmacy will handle HMOs, so there is a pharmacy in our area
who is a very big discount pharmacy but won't touch an HMO.
They said by the time they get paid and what they allow them to
make and all it is not worth it to them, it is cost
prohibitive. So I am at a little bit of a disadvantage in that
I don't have much of a choice other than what I have here.
Mr. Deutsch. So you had mentioned your prescription drug
co-pays now is about $250, $300 a month that you are paying?
Mr. Sweed. Right. This year with Vista is $250 a month is
what I am allowed. Now, I just started as of the 1st of the
year so I don't know whether I have gone over yet or not. If I
have, then they will send me a bill. Again, like she said, I
try to----
Mr. Deutsch. So you switched to Vista HMO. You left Avmed.
Mr. Sweed. Right, because Avmed only wanted to give me $250
a quarter.
Mr. Deutsch. Two-fifty a quarter. Okay.
Mr. Sweed. Right.
Mr. Deutsch. And the physicians that you go to were members
of both Avmed and Vista?
Mr. Sweed. Right. That is exactly why I stayed with Vista--
went with Vista, I am sorry.
Mr. Deutsch. Okay. So Vista, at this point, is $250 a month
of coverage.
Mr. Sweed. Right.
Mr. Deutsch. And you are only into, what, your second month
of Vista at this point?
Mr. Sweed. Yes, sir. As of the 1st of the year.
Mr. Deutsch. So you really don't know----
Mr. Sweed. Right.
Mr. Deutsch. [continuing] this sort of black box thing, if
you are going to get a bill at the end of month or end of the
quarter for additional coverage.
Mr. Sweed. And the problem you run into, like Ms. Coplan
said, is side effects with things that help the arthritis. The
arthritis is the biggest problem. Okay? That is why I am in a
chair, the legs can't handle anything.
Mr. Deutsch. Right.
Mr. Sweed. And Celebrex is one of the few things that
really works, but Celebrex can hurt your live, can hurt your
kidneys. So, therefore, I can't take it all the time. I am
taking over the counter, we will say, not Exedrin, Tylenol or
something like that. So you are playing a game that way to try
to kill the pain. I mean I have had pain most of my life
because I played football, this came early and it has been
getting progressively worse. I have lived in pain, that doesn't
bother me, but as it gets worse it gets tougher. Like she said,
going to sleep at night, if I don't take something, I don't
sleep. I must take something that is going to put me under or
relax my system so much and help kill the pain.
Mr. Deutsch. Mr. Lipscomb, did you want to sort of
elaborate on anything?
Mr. Lipscomb. I was going to say, Congressman Deutsch, that
2 years ago we went to the Florida legislature and got them to
pass legislation which would allow anybody on Medicare to buy
prescription drugs at 9 percent above the average wholesale
cost. We have never been able to put that program into
operation because we can't establish what the average wholesale
cost is. So when you are asking the two witnesses about numbers
in terms of drug costs, it is a moving target, as I am sure
both of them can tell you, because they are going to the
pharmacy 1 day and it cost one thing, and then with no apparent
reason it changes, and that is why it is very difficult for Mr.
Sweed to know where he is in terms of this, because the prices
fluctuate up and down and nobody tells them what is going on.
So disclosure would even help in some cases so that people know
what they are dealing with in terms of HMOs or in terms of
insurance programs or what have you.
Mr. Deutsch. Mr. Sweed, if you can just elaborate just so I
understand this. The $250, because, again, especially from Mr.
Lipscomb's follow-up, you literally have no idea where you are
in the month in terms of the----
Mr. Sweed. I have no idea.
Mr. Deutsch. And there is no way to figure it out.
Mr. Sweed. All they do is when I get my prescription it
comes on there whether it was a $10, a $20----
Mr. Deutsch. Just the deductible.
Mr. Sweed. [continuing] deductible, my co-pay. That is all
I know.
Mr. Deutsch. You don't know the price.
Mr. Sweed. I have no idea.
Mr. Deutsch. If you ask them, would they tell you?
Mr. Sweed. I would guess if they knew; yes, possibly. It
depends on, again, whether it is the clerk or the pharmacist.
They may know.
Mr. Lipscomb. Many times the technician or the pharmacist
will say, ``Until we run this through the computer and see
which programs we are dealing with, we don't have any idea what
it cost.''
Mr. Deutsch. I mean the reality is it could not even be a
large discount. I mean it could be a way that they are just
manipulating that the $250 is really not $250.
Mr. Lipscomb. Exactly.
Mr. Deutsch. It could be $100, it could be--I mean it is
just an adjustment, it is just----
Mr. Lipscomb. One of the things that AARP has tried to do
with our members, because our members are very responsible
people, so we suggested to them, as these two witnesses have
said to you, to ask your physician to prescribe generic drugs
when it is possible, because it costs Medicare less, it costs
the health care system less. Then we sat down and had a
graduate student call pharmacies to check on the cost of
generic drugs. The difference between the average wholesale
cost on some generics goes into the thousands of percent
markup, and it is just all over the map. And so even though
these folks are trying their best to do it as economically as
possible----
Mr. Deutsch. Yes. Let me just mention, I mean I am sitting
here thinking to myself these are two 67-year-olds. This is
not--the reality is this is not typical seniors. You are much
more able to do this than the 77-year-old, the 87-year-old, for
that matter, the 97-year-old, because the reality is the 97-
year-old who doesn't have someone to help them or the 87-year-
old in south Florida is not doing what either one of you did.
Mr. Lipscomb. But even the----
Mr. Deutsch. No, but you know what I am saying? So I think
we are seeing in terms of--I mean we are seeing young Medicare
beneficiaries, very capable Medicare beneficiaries who are just
totally stymied. I mean the two of you--and, again, I am just
saying this from my perception--you are about as competent
Medicare beneficiaries, and he is shaking his head, and this is
probably the expert in Florida of seniors, so he knows what I
am talking about, that you two are about the epitome of well-
informed, aggressive, good consumers, and you are basically
stymied. I mean so, you know, the 87-year-old is not going on
the Internet, most likely is not going on the Internet and is
not doing the kind of aggressive shopping and price comparison
that you folks are doing. Go ahead, I am sorry.
Ms. Coplan. May I ask you something? I happen to have
brought my Winn Dixie pharmacy slips with me, and with AARP, on
one drug, I saved $20.01; on the other drug I saved $1. It
tells me that the one I saved $1 on was $62.95, so add the
dollar it was $63. But the other one I paid $10.08 for, and I
saved $20.01. Big gap, big difference.
Mr. Deutsch. Thank you all very, very much, and I
appreciate it. I am sure we will do some follow-up as well.
Thank you, Mr. Chairman.
Mr. Greenwood. The Chair thanks the gentleman from Florida.
We have been joined by a colleague of ours from New York,
Congressman Eliot Engel, who I will tell you has an ulterior
for coming down to this hearing. His mother lives in
Congressman Deustch's district, and he came down and got to
visit his mother and do the hearing, and lobby his mother to
vote for Congressman Deutsch all at the same time. The
gentleman from New York is recognized for 10 minutes.
Mr. Engel. Thank you. I thank the chairman, and it is good
to be here, and I questioned my good friend, Congressman
Deutsch, when my mother told me she got the notice in the mail
about this hearing I serve on this committee, so I wanted to
know why I didn't know anything about it. But we all--and I
appreciate being here with my two colleagues who I want to tell
you have really been at the forefront of fighting for
affordable prescription drugs. One of the things that we try--
and I am not on the Oversight Subcommittee of the Commerce
Committee, but I am on the Health Care Subcommittee, and we
have, like everyone else, been grappling with the whole issue
of affordable drugs.
You know, when I was first elected to Congress 14, almost
15 years ago, and my mother has been a resident of south
Florida for 25 years, I said to her, ``What is the thing that
we can do, and this is back in 1988, most to help senior
citizens?'' And she said to me back in 1988, I will never
forget it, ``To get us some help with prescription drugs.'' She
is a Medicare--obviously a person on Medicare and tells me all
these stories about seniors who cannot afford to buy food and
have medication and have to compromise, and that is not
something that should be.
Mr. Lipscomb, I am wondering if--because I am interested in
AARP's position on some of these core issues. The whole quality
of care issues are created by the walk-in pharmacies that we
have or by ordering drugs on the Internet. They obviously can
potentially increase the risk for drug interactions. Tell me a
little bit, and if you have done it already, I apologize, what
the AARP believes that these practices do to Doctor/patient
relationships or pharmacist/patient relationships. I mean one
of the things that I think is disgraceful is that we in
Washington haven't really gotten hold of this whole issue.
There is something so terribly wrong when seniors have to go to
the Internet or have to find other ways of getting drugs that
they can afford, because the drugs that they are talking about
cannot afford. So I am just wondering if you could just
enlighten us about AARP's position because of the potentiality
of drug interactions.
Mr. Lipscomb. Thank you, Congressman Engel. Clearly, we do
feel that it is detrimental to the doctor/patient relationship.
You heard Mr. Sweed and Ms. Coplan both describe how crucial it
was that their doctor have an understanding of the interaction
of the particular pharmaceuticals that they were taking. And in
Ms. Coplan's case, she said she felt like she would be at risk
if they prescribe the wrong drugs. So if she is going to a
computer to get her drugs, then that piece is going to be
missing. So we are--we seriously caution our members in terms
of taking that kind of action.
On the other hand, I think we have to remember what causes
the problem. They cannot afford to buy the prescription drugs
that they are being given by the physicians or their health
care people, and so they are forced into taking this particular
action.
What is the answer? Again, I feel like the answer is an
affordable, accessible prescription drugs program under
Medicare which would help both of these witnesses that we have
heard from this morning.
Mr. Engel. Would any of the other witnesses--Ms. Coplan,
would you like to comment on that at all?
Ms. Coplan. Definitely there is a need. I feel that, and I
know all my friends that are still with us feel it also. I do
have this AARP, and with AARP I have to send away for the
drugs, and then they tack on a shipping charge. So if you start
to add up and figure out, I can't use my AARP pharmacy, I have
to go elsewhere. I would like to put that into a question for
you as to how we could change that, because it becomes more
expensive again. And you could control the drugs.
Mr. Lipscomb. In that particular instance, I want to make
clear for the record she is not sending outside the United
States to get the drug. That is done in here, in the U.S., and
we do centralized buying to run the price down. Ideally, it
would seem to us that a program like Medicare that bought for
35 million people would be able to leverage more economy in
terms of drug prices than AARP even would, so maybe that is
something that we could look at in terms of programs.
Mr. Engel. Another thing that I get from seniors in my
district, I also hear it from my mother here in south Florida
is the disparity when you go to different pharmacies. I mean
how much different? You would think it would all be within a
few dollars, but you can pay as much as $10 or $15 or even $20
more from one pharmacy to the next. Ms. Coplan?
Ms. Coplan. Yes, sir. The other day there was a program on
television--I watch rarely but I watch this one--and if you go
into a poor neighborhood, the drug prices go down. If you are
in a more affluent neighborhood, the prices go up. There is no
conformity there either.
Mr. Greenwood. If the gentleman would yield for a moment.
And that is the global phenomena as well.
Ms. Coplan. Yes.
Mr. Greenwood. In other words, the reason that drugs are
less expensive in Mexico is because they are priced based on
what the market will bear. And that is obviously different than
it is in southern Florida. And then of course the difference in
Canada, this phenomena in Canada, is different entirely,
because there the government controls the prices, and that is
why you have this disparity. And I yield back to the gentleman
and thank him for yielding to me.
Mr. Engel. No. I thank the chairman. What about if we on a
Federal level are not--this is for Mr. Lipscomb--are not doing
what people think we should be doing, what can the States do?
Can the State attempt to certify that these walk-in entities
are complying with certain standards? What do you think the
State can be doing or the FDA, for that matter, to prevent
consumers from being sold dangerous drugs or by just being
ripped off by unscrupulous people?
Mr. Lipscomb. Thank you, Mr. Engel. I contacted Washington
a couple weeks back inquiring about whose responsibility it was
to assure the quality of the drugs, for instance, coming in
from Canada. And, essentially, the answer I got was that they
thought it was probably a State responsibility. And I pointed
out that the last time I checked Florida did not have any
offices either in New York State or Minnesota or any of the--
going all the way across to Washington State.
Mr. Engel. Yes. I was going to say, not to cut you off, but
it is obviously different. My home State of New York obviously
has a border with Canada----
Mr. Lipscomb. Right.
Mr. Engel. [continuing] and there are a lot of drugs coming
down through that border. But, obviously, Florida would be a
different situation.
Mr. Lipscomb. Governor Patacki I am sure would probably
hasten to clarify that he doesn't have any agents checking the
quality of those drugs either. I mean I think that in the U.S.
we rely on the Food and Drug Administration in these kinds of
instances, and if they can't do it, then I guess my expectation
would be that they would be coming to you gentlemen and saying,
``We need legislation in order to protect the public.'' I
haven't seen that taking place yet.
Mr. Engel. Well, how would we know that the drugs are even
coming in from Canada? How do we know that they are not from
China or some other place? I mean I think that seniors probably
psychologically have some confidence in Canada, but when you
are talking about drugs coming from the other side of the
world, I think there is less confidence there. How do we even
know the drugs are coming in from Canada?
Mr. Lipscomb. Well, I think that these two witnesses could
probably answer that, because they are facing making those kind
of decisions on a daily basis. But I think that Congressman
Deutsch said a while ago, people get desperate. They have to do
something, and so therefore they take chances that you and I
might not take when we are not faced with those same kinds of
decisions.
Mr. Engel. Well, unless anyone has any other comments, I
will go back. I want to just thank my colleagues for their
leadership in this role and hope that we can all put our heads
together and sort it out in Washington.
Mr. Greenwood. The Chair thanks the gentleman. Ms. Coplan,
you look like you want to show something.
Ms. Coplan. I am sorry. Someone just handed me a paper. It
says, ``Cheap Drug Myths.'' Would you like to read it. I
haven't read it.
Mr. Greenwood. Well, what we will do is we will----
Ms. Coplan. Somebody just handed it to me.
Mr. Greenwood. [continuing] without objection, we will make
it a part of the official record, and we will have one of our
clerks collect that from you.
Ms. Coplan. Okay.
[The information referred to follows:]
The Cheap Drugs Myth
CANADA IS OFFERED UP AS PROOF THAT PRICE CONTROLS WOULD DRAMATICALLY
CUT THE COST OF MEDICINE. THE PROOF HAS SOME HOLES.
By Ira Carnahan
In Canada a Three-month prescription for Merck's cholesterol
reducer Zocor goes for $172. In the U.S., patients who pay retail fork
over $328 for the same pills. The media are full of such shocking
comparisons aimed at demonstrating that Canadians, thanks to price
controls, pay far less for medicine than do Americans. Just one
problem: It isn't so. While some high-profile brand name drugs are much
cheaper in Canada, other lesser-known drugs and generics are not. In
fact, 21 of 27 top-selling generics cost more in Canada than in the
US., reports a study of lowest available prices by Palmer D'Angelo
Consulting, an Ottawa firm that works for branded drugmakers. For all
27 combined, the average Canadian premium is 37%. Why? Just two
companies dominate the Canadian generics market, says study coauthor
Neil Palmer.
That lack of competition is, ironically, partly a side effect of
Canadian drug-price controls. Generic makers find countries with
controls on patented drugs less attractive. So fewer jump in when a
branded drug goes off patent. The end result: In the U.S., generic
drugs cost an average of 74% less than equivalent brand name drugs; in
Canada, generics average just 38% less.
Canada's rules can also discourage branded drugmakers from
discounting older drugs to compete. John R. Graham of the Fraser
Institute in Vancouver explains why: Canada's Patented Medicine Prices
Review Board typically sets the maximum price for a new drug by
comparing it with similar drugs already on the market. So if companies
lowered prices on old drugs, that could cut into profits on new ones,
too.
How did the myth of cheap Canadian drugs gain such wide acceptance?
It began with a 1992 study by Congress' General Accounting Office and
was reinforced by a 1998 report from the Democratic staff of the House
Committee on Government Reform. Both studies were flawed. They compared
only top-selling brand-name drugs, ignoring lower-priced generics that
now make up half of US. prescriptions. Furthermore, prices in the
studies weren't properly weighted to reflect market share or volume
discounts, argues Wharton School health economist Patricia Danzon.
Correcting for such flaws, Danzon and Li-Wei Chao, also of Wharton,
found that if Americans had paid Canadian prices for the drugs they
bought in 1992, they would have saved, at most, 13%.
Yes, the Wharton economists have received research funding from the
drug industry, and yes, the price break Canadians enjoy is has likely
widened since 1992. But it's doubtful that Canada's price controls on
patented drugs, as opposed to economics, are the main cause of lower
prices there.
The truth is, notes the Fraser Institute's Graham, all kinds of
goods cost more in the U.S. than Canada. A turbo Chrysler PT Cruiser
retails for $23,100 in the U.S. and the equivalent of $17,800 up north.
Yet there's no Canadian Retro Car Prices Review Board. Even bigger
price differences are common for goods with high fixed costs but lower
variable costs, everything from music CDs to online service. Prices are
lower in Canada because incomes there are a fifth smaller and the
Canadian dollar is weaker. Producers logically try to recoup most of
their high fixed costs from wealthier consumers and charge those who
can't pay as much a price closer to marginal cost.
There's another reason for lower drug prices in Canada: lower
liability costs. In Canada, judges--not juries--typically set damages,
and awards for pain and suffering are capped at $185,000 U.S. Such
differences account for a third to a half of the gap, a 1997 study in
the Journal of Law and Economics concluded. Yet the politicians and do-
gooders who complain most about U.S. drug prices are often the least
likely to favor reining in legal costs.
Mr. Greenwood. Mr. Deutsch's staff spent some time
yesterday at the Miami Airport looking at pharmaceutical
products coming in, and it is a--and I have done this, Mr.
Deutsch and I have done this at Dulles Airport in Washington.
It bends the mind when you see the volume of drugs that come
into this country through the airports from all over the world,
and we see illegal substances, we see counterfeit substances,
we see boxes of pills just loose. It is phenomenal and it is
scary because we certainly know a couple of things. We know
that in places like India and Thailand and China and elsewhere,
the ability to create counterfeits that you cannot distinguish
the container, the label, the pill itself are indistinguishable
from the real product without any guarantee that what is in
that pill is something other than chalk, for that matter. So it
is a--there is a corruption out there that is being fed by
this--being fueled by this huge unsolved problem that we have
in the United States.
And so it will be our objective to--I think probably the
most significant thing that we can do is provide the
prescription drug benefit, make it a realistic one that the
taxpayers can afford but make it one that really goes a long
way to meeting the unmet needs. The problem with the FDA, as
you referred to, is that they are just overwhelmed. I mean the
FDA and the Customs people are so overwhelmed by the volume
here, that it would be almost a shame to take resources that we
should be using to provide prescription drugs and using them to
try to stem this illegal tide. You had something else you
wanted to say, Ms. Coplan?
Ms. Coplan. No.
Mr. Greenwood. Okay. Well, in that case, I am going to
thank the witnesses for coming. I would suggest that, Ms.
Coplan and Mr. Sweed, if you want to, if you are able to, I
think in the third panel we are going to have a witness who has
taken a look at your specific prescriptions that you are
needing now and your specific income situation and has done
some calculations and looked at some of the programs to see how
that would apply to you and hopeful that that will be helpful.
So we are going to take about a less than 1 minute break now
while we swap over panels.
Mr. Sweed. Thanks, Mr. Chairman.
Mr. Lipscomb. Thank you very much.
Mr. Greenwood. And thank you for being with us.
[Brief recess.]
Mr. Greenwood. Okay. We welcome our second panel. We are
pleased to have with us Mr. John Taylor who is the Associate
Commissioner of Regulatory Affairs at FDA, and we have Mr. John
Taylor also who is a drug inspector with the Florida Department
of Health, Bureau of Statewide Pharmaceutical Services. We
thank both of you gentlemen for being with us.
You probably heard me say to the first panel that this is
an investigative hearing, and it is our custom and practice to
take testimony under oath. Do either of you have any objections
to giving your testimony under oath? Okay. Then I should also
advise you that pursuant to the rules of this committee and to
the House of Representatives that you are entitled to be
represented by counsel. Do either of you wish to be represented
by counsel? Okay. In that case, if you would stand and raise
your right hands.
[Witnesses sworn.]
Mr. Greenwood. Okay. We thank you. You are under oath, and,
Mr. Taylor of the FDA, we will begin with you, and if you would
summarize your testimony in about 5 minutes, we won't be strict
with that, we would appreciate it. Thank you.
TESTIMONY OF JOHN M. TAYLOR, ASSOCIATE COMMISSIONER OF
REGULATORY AFFAIRS, FOOD AND DRUG ADMINISTRATION; AND JOHN D.
TAYLOR, DRUG INSPECTOR, FLORIDA DEPARTMENT OF HEALTH, BUREAU OF
STATEWIDE PHARMACEUTICAL SERVICES
Mr. John M. Taylor. Thank you very much. Thank you, Mr.
Chairman, Congressman Deutsch, Congressman Engel. I am John M.
Taylor, Associate----
Mr. Greenwood. Can you folks in the back of the room hear
him? Okay. Just pull that microphone up nice and close. I think
it is on, you just need to pull it up.
Mr. John M. Taylor. Is that better?
Mr. Greenwood. Yes. It is very directional.
Mr. John M. Taylor. Thank you. I am John M. Taylor,
Associate Commissioner for Regulatory Affairs at the United
States Food and Drug Administration. I appreciate the
opportunity to discuss our mutual concerns related to the
importation of drugs into the United States. This discussion
will focus on the importation by individuals of prescription
drugs through the mail or in person with a specific focus on
the purchase of drugs from foreign sources over the Internet.
Under the Federal Food, Drug, and Cosmetic Act, unapproved,
misbranded and adulterated drugs cannot be imported into the
United States. This includes foreign versions of United States-
approved medications, as well as drugs that are made in the
United States, exported to other countries and then
subsequently reimported int the United States. For public
health reasons, the FDA remains concerned about the importation
of prescription drugs into the United States. In our
experience, many drugs obtained from foreign sources that
either purport to be or appear to be the same as U.S.-approved
prescription drugs are, in fact, of unknown quality.
The use of the Internet by our Nation's citizens has opened
up vast new opportunities for the exchange of information. The
Internet permits an increasing number of individuals to obtain
a plethora of medical information. It also allows consumers to
purchase drugs anonymously and for consumers who live in remote
areas or have limited mobility, the Internet facilitates the
purchase of products with relative ease. In some cases, the
Internet also allows consumers to purchase drugs at cheaper
prices. The fact that the Internet allows consumers to purchase
drugs at cheaper prices is a trap to many consumers, including
millions of seniors that are faced with steadily rising health
care and prescription medication costs.
Accordingly, consumers, including America's seniors, are
buying more and more of their prescription medications online
rather than from their local pharmacies. However, as beneficial
as this technology can be, it also creates a new marketplace
for activity that is already illegal. Furthermore, because the
Internet is a worldwide communications system, U.S. citizens
are now susceptible to illegal conduct from sources outside the
United States as well as domestically. Therefore, FDA cannot
assure the American public that the drugs imported from foreign
countries are the same as products approved by the Food and
Drug Administration.
FDA has long taken the position that consumers are exposed
to a number of risks when they purchase drugs from Internet
sites that dispense foreign drugs or are not operated by
pharmacies licensed and operated under State pharmacy law.
These outlets may dispense expired, some potent, contaminated
or counterfeit products. It could dispense the wrong or a
contraindicated product, an incorrect dose or medication
unaccompanied by adequate directions for use. In addition, FDA
cannot provide consumers with any assurance that these products
are manufactured under current good manufacturing standards or
stored properly. Taking such unsafe or inappropriate
medications puts consumers at a risk for dangerous drug
interactions and other serious health consequences.
Another potential problem involves Internet sites that
provide prescription drugs without a prescription or by having
consumers fill out a questionnaire rather than seeing a doctor,
a point that I think was underscored by the members of the
first panel. A questionnaire generally does not provide
sufficient information for a health care professional to
determine if that drug is appropriate or safe to use, if
another treatment is more appropriate or if the consumer has an
underlying medical condition where using that drug may be
harmful. Over the last 12 to 18 months, there has been a
dramatic increase in the number of foreign web sites.
In addition, there has been a proliferation of storefront
Internet prescription drug operations. These small stores,
often located in busy strip malls, advertise that they can
obtain cheaper drugs from Canada. Some Canadian web sites
report to offer U.S.-approved drugs. However, it is highly
unlikely that the drugs are in fact approved by FDA. Some web
sites are actually ordering services that take orders from
consumers that are then fulfilled by supposed Canadian
pharmacies. Storefront pharmacies require a prescription from a
doctor in the U.S. and then the prescription is sent to a
Canadian pharmacy. In either case, American consumers cannot be
certain that the drugs they receive are Canadian or United
States approved, and, furthermore, under State law, these
ordering services are likely participating in the practice of
pharmacy without a license to do so.
A number of these web sites and storefront operations claim
that drug sales from Canadian pharmacies to U.S. consumers for
their personal use are legal. This is not true. The current
personal importation policy permits the exercise of enforcement
discretion to allow the entry of an unapproved prescription
drug only if the product meets certain requirements. However,
this does not mean that the importation of drugs for personal
use is legal. Due to the huge volume of drug parcels entering
the United States through the international mail and courier
services, the requirements for notice and hearing and our
limited resources, it is difficult for FDA to detain and refuse
mail imports for personal use. As a consequence, tens of
thousands of parcels that FDA does not review are eventually
released by Customs and sent on to their addressees, even
though the products contained in these parcels may violate the
act and impose a health risk to consumers. We do not believe
this is an acceptable public health outcome.
FDA is taking a number of steps to address the potential
safety concerns of illegally imported prescription medicines so
that the public health of U.S. citizens is protected. These
include educating the public to the possible safety issues of
drugs purchased from foreign countries, working in conjunction
with our Canadian government counterparts to address the issue
of the flood of prescription medicines coming into the U.S.
from their country and referring U.S. web sites to the Canadian
government for investigation, increasing our enforcement and
policing of rogue Internet sites and partnering with the
individual U.S. States, including the State of Florida, to
develop enforcement strategies, share cases and discuss
important policy issues.
Moreover, we are reevaluating, refining and improving the
programs and procedures that we are using to ensure the
availability of safe and effective drugs to U.S. consumers. In
addition, we are supportive of the National Association of
Board of Pharmacy's Verified Internet Pharmacy Site Program and
the State of Florida's efforts to publish a revised proposed
rule that holds pharmacists accountable for ensuring that
prescriptions that they receive have been written only after a
patient evaluation, including a physical examination. Under
Florida's proposed rule, those who fill prescriptions without a
proof of a patient/physician relationship are subject to State
sanctions.
Some recent civil and criminal as well as a number of
administrative actions and enforcement correspondence
illustrate the steps that FDA is taking to respond to Internet
drug sales. A number of cases as well as a description of some
of our cases is described in more detail in my written
testimony. Needless to say, FDA, in conjunction with the
Department of Justice, the Federal Trade Commission, Customs,
Drug Enforcement Agency and other Federal, State, including the
State of Florida, and international partners, have taken
numerous civil and criminal actions against legal products and
individuals who have used the Internet to engage illegal
conduct.
In closing, Mr. Chairman, FDA remains concerned about any
possibility that unsafe drugs may find their way into the
American drug supply. We will remain vigilant as we refine and
improve the programs and procedures that we use to ensure the
availability of safe medications for consumers. We appreciate
the subcommittee's interest in assuring that the American
public has access to safe and affordable medicines, and we look
forward to working with you in furtherance of this goal. Thank
you again for the opportunity to participate in today's
hearing, and I will be happy to answer any questions.
[The prepared statement of John M. Taylor follows:]
Prepared Statement of John M. Taylor, Associate Commissioner for
Regulatory Affairs, Food and Drug Administration
INTRODUCTION
Mr. Chairman, Ranking Member Deutsch and other Members of the
Subcommittee, I am John M. Taylor, Associate Commissioner for
Regulatory Affairs at the U.S. Food and Drug Administration (FDA or the
Agency). I appreciate the opportunity to testify at today's hearing on
``South Florida Access to Affordable Prescription Drugs: Costs and
Benefits of Alternative Solutions'' on behalf of FDA. My testimony will
focus on FDA's efforts to assess and respond to the importation of
prescription drugs by individuals through the mail or in person and the
purchase of drugs from foreign sources over the Internet.
Under the Federal Food, Drug, and Cosmetic (FD&C) Act, it is
unlawful to import unapproved, misbranded, and adulterated drugs into
the United States. This includes foreign versions of U.S.-approved
medications, as well as drugs that are made in the U.S., exported to
other countries, and then subsequently reimported to the U.S.
For public health reasons, FDA remains concerned about the
importation of prescription drugs into the U.S. In our experience, many
drugs obtained from foreign sources that either purport to be or appear
to be the same as U.S.-approved prescription drugs are, in fact, of
unknown quality. The rise of Internet drugs sales presents substantial
safety questions about these products. FDA cannot assure the American
public that drugs imported from foreign countries are the same as
products approved by FDA.
Some of the efforts FDA is undertaking to address the potential
safety concerns of illegally imported prescription medicines include:
increasing consumer awareness of the potential risks associated with
imported drugs, working with the states to crack down on Internet
pharmacies selling illegal products, and undertaking further analysis
of the quality of drugs coming into the U.S. from foreign sources.
News reports in the last few months have focused on storefront
Internet prescription drug operations. These small stores, often
located in busy strip malls, advertise that they can obtain cheaper
drugs from Canada. Typically, the customer supplies the store operator
with a prescription from an American physician and is asked to complete
a medical questionnaire. This information is sent electronically to a
Canadian wholesaler/supplier/contact that serves as a supplier to the
store. A Canadian physician reviews the questionnaire and writes a
Canadian prescription that is filled and shipped to the U.S. Usually
the prescription drug is shipped directly to the customer's home. The
storefront facilitates the transaction and typically does not receive
shipments of drugs. The storefront charges a shipping and handling fee.
The customer may purchase a product for substantially less than the
price they would have paid otherwise.
FDA's concerns do not apply to all Internet pharmacies, as a
general matter. Many online pharmacies operate in keeping with
standards of state licensing authorities. FDA acknowledges that the
Internet can be a useful source of health information and health care
products and services. Internet pharmacies can have various benefits,
including reduced prices, increased access (especially in rural areas),
and enhanced consumer convenience. Rather, this testimony highlights
the growing practice of using mail order and Internet pharmacies to
facilitate potentially unlawful and unsafe importation of prescription
drugs.
Under the FD&C Act, unapproved, misbranded, and adulterated drugs
cannot be imported. The FD&C Act further prohibits the reimportation of
FDA-approved drugs that are made in the U.S. and have been exported to
other countries. Our specific activities and concerns relating to
reimportation of drugs follows:
EDUCATION ABOUT SAFETY: Consumers take genuine risks when they
purchase drugs from Internet sites that dispense foreign drugs
or are not operated by pharmacies licensed and operated under
state pharmacy law. These outlets may dispense expired,
subpotent, contaminated or counterfeit product, the wrong or a
contraindicated product, an incorrect dose, or medication
without adequate directions for use. Unsafe or inappropriate
drugs put consumers at risk for dangerous drug interactions and
serious health consequences.
WORKING WITH STATES: Last month, we hosted a nationwide call
with 38 state boards of pharmacy, other state regulatory
agencies and consumer groups to discuss the current status of
Internet drug sale practices. Some state laws are stronger than
others, but we are actively engaged a number of states in
jointly pursuing illegal Internet sites.
CANADIAN COOPERATION: FDA is actively working with the Health
Canada regarding the increasing number of U.S. pharmacies that
are advertising and promoting sales of prescription drugs from
Canada. We have asked the Minister of Health to investigate a
list of 45 Canadian websites that are selling drugs to U.S.
citizens. We agreed to designate respective Agency contacts on
this issue and continue our discussions about Internet sales.
ENFORCEMENT: Recent criminal and civil cases are evidence of
the seriousness of the risks to public health that regulators
uncover when responding to Internet drug sales. These cases
show that we are making progress in combating this problem.
Examples include our actions against the Norfolk Men's Clinic,
Medications Express in California, Pillbox Pharmacy and
successful prosecutions against the operators of these and
other Internet sites. To date, FDA has initiated:
372 Internet drug investigations resulting in 150
Internet-related drug arrests and 92 convictions.
100 open Internet drug investigations. Also, 90 sites are
under active review for possible regulatory or civil
action.
Nearly 200 cyber letters to domestic and foreign online
sellers.
5 preliminary injunctions.
15 product seizures.
11 product recalls, and the voluntary destruction of 18
illegal products.
Detention Without Physical Examination for the products of
45 foreign shippers.
HIGH COST OF PRESCRIPTION MEDICATIONS
It is estimated that Americans spend about $192 billion a year on
prescription drugs, about twice as much as what they spent a decade
ago. As new drugs are developed, Americans also are taking more drugs.
Based on IMS Health and Department of Commerce data, the National
Association of Chain Drug Stores (NACDS) states sales of retail
prescription drugs grew by about 15 percent in 2002, 13 percent in 2001
and 16 percent in 2000. Mail order sales rose six-fold in the ten years
from 1992 to 2001 and are positioned to pass independent pharmacies as
the second largest provider of retail prescriptions by the end of 2003.
Many consumers, including millions of senior citizens, are faced with
steadily rising health care and prescription medication costs. It is
estimated that about 80 percent of seniors take at least one
prescription drug.
FDA is aware that developing and manufacturing medicines is
expensive. Drug development is also time consuming and it may take as
many as 10 years or more for a drug to transition from test tube to FDA
approval. Drug companies estimate that it costs an average of $800
million to develop a new drug.
NEW WAYS TO BUY CHEAPER PRESCRIPTION DRUGS
The Internet is a major avenue of commerce and the volume of
Internet sales, including prescription drugs, is growing dramatically.
Consumers, including America's seniors, are buying more and more of
their prescription medications online rather than from their local
pharmacies. This practice is growing at an exponential rate and will
likely continue.
Seniors who do not have access to a computer may nonetheless
purchase drugs on line. In some areas of the country they simply visit
a fee-for-service ``storefront'' location that will facilitate their
Internet purchase and have their prescription medication mailed
directly to their home.
Many of the drugs purchased over the Internet are being ordered
from Canada. Drugs are cheaper in Canada; they often sell for as little
as half of U.S. price of a given drug. In Canada drug prices are fixed,
allowing the government to offer them to Canadian citizens at much
lower rates than what U.S. citizens pay at pharmacies. Americans are
taking advantage of the lower priced drugs available in Canada without
having to travel there to get their prescriptions
LEGAL AND SAFETY ISSUES
Patients Face Genuine Risks
Based on a survey conducted in early 2000 by FDA's Office of
Criminal Investigations (OCI) and a subsequent study by the General
Accounting Office, there appears to be roughly 300 to 400 Internet
sites selling prescription drugs to consumers, with approximately half
located domestically and half located outside the U.S. FDA has long
taken the position that consumers are exposed to a number of risks when
they purchase drugs from Internet sites that dispense foreign drugs or
are not operated by pharmacies licensed under state pharmacy law. These
outlets may dispense expired, subpotent, contaminated or counterfeit
product, the wrong or a contraindicated product, an incorrect dose, or
medication unaccompanied by adequate directions for use. FDA cannot
provide consumers with any assurance that these products were
manufactured under current good manufacturing practice (cGMP)
standards. Taking such unsafe or inappropriate medications put
consumers at risk for dangerous drug interactions and other serious
health consequences.
Another potential problem involves Internet sites that provide
prescription drugs by having consumers fill out a questionnaire rather
than seeing a doctor. In some cases, a questionnaire generally may not
provide sufficient information for a health care professional to
determine if that drug is appropriate or safe to use, if another
treatment is more appropriate, or if the consumer has an underlying
medical condition where using that drug may be harmful. Finally, in the
case of foreign-based websites, if a consumer has an adverse drug
reaction or any other problem, they have little or no recourse because
the physical location or operator of the pharmacy often is not known or
the seller is beyond the consumer's reach. FDA has little or no ability
to take effective action against these foreign operators on behalf of
U.S. citizens.
Over the last twelve to eighteen months, FDA identified a
proliferation of websites that sell drugs purportedly from Canada
directly to U.S. consumers. A number of these websites claim that drug
sales from Canadian pharmacies to U.S. consumers are legal. This is
false. Some websites are actually ordering services that take orders
from consumers that are then filled by other pharmacies. In some cases,
American consumers cannot be certain that the drugs they receive are
being dispensed by the person from whom they are received.
A number of Canadian drug websites and U.S. ordering services
indicate that the Canadian drugs are dispensed pursuant to existing
prescriptions that are rewritten by a Canadian doctor in order to
comply with Canadian law. However, the dispensing of medication on a
prescription written by a physician who has not seen the patient or
conducted a physical exam is contrary to state medical practice
standards. In addition, Dr. Henry Haddad of the Canadian Medical
Association has said that under the Canadian Code of Ethics, physicians
have a responsibility to do a patient history, conduct a physical exam
and discuss the risks and benefits of the medication with the patient.
In general, FDA has no information to establish where these drugs
were actually manufactured and whether cGMP requirements were followed.
The labeling of the drug may not be in English and therefore important
information regarding dosage and side effects may not be available to
the consumer. There is no assurance that the drugs are not counterfeit,
contaminated or misbranded. There is also no assurance that the drugs
were packaged and stored under appropriate conditions to avoid
degradation or contamination.
Serious legal issues
In a February 12, 2003, letter to The Kullman Firm, New Orleans,
Louisiana, FDA clearly stated the Agency's safety and legal concerns
about the importation of prescription drugs from Canada, stating that
many of these drugs are of unknown quality. From a legal standpoint,
businesses and individuals involved in shipping prescription drugs from
Canada or other foreign countries to consumers must take many steps to
ensure compliance with the FD&C Act. In most cases, it is unlikely that
these legal requirements have been met.
The FD&C Act establishes a legal framework applicable to imports of
prescription drugs from Canada. As a result, virtually all drugs
imported from Canada by or for individual U.S. consumers violate U.S.
law. Such drugs are unapproved (21 U.S. C. Sec. 355), misbranded,
labeled incorrectly (21 U.S.C. Sec. 353(b)(2)), and /or dispensed
without a valid prescription (21 U.S.C. Sec. 353 (b)(1)). Thus, their
shipment into the U.S. from Canada violates the FD&C Act See e.g. 21
U.S.C. 331(a), (d), (t). In addition, it is a violation of the FD&C Act
for anyone other than the U.S. manufacturer of a drug to import into
the U. S. (21 U.S.C. Sec. 381 (d)(1)), even if the drug was approved
and manufactured in the U.S.
Canadian or other foreign versions of U.S.-approved drugs are
generally considered unapproved in the U.S. because FDA approvals are
manufacturer-specific, product-specific and include many requirements
relating to the product, such as the location of the manufacturing
site, formulation, source, specifications of the active ingredients,
processing methods, manufacturing controls, container/closure system,
and appearance. Title 21, Code of Federal Regulations (21 CFR)
Sec. 314.50. Drugs sold outside of the U.S. are frequently not
manufactured by a firm that has received FDA approval for that
particular drug. In addition, even if the manufacturer has FDA approval
for a drug, the version produced for foreign markets usually does not
meet all the requirements for U.S. approval, and FDA considers it to be
unapproved. 21 U.S.C. Sec. 355.
In order to ensure compliance with the Act when shipping
prescription drugs to consumers in the U.S., businesses and individuals
must ensure, among other things, that they only sell FDA-approved drugs
that are made outside of the U.S. and that comply with the FDA approval
in all respects including manufacturing location, formulation, source
and specifications of active ingredients, processing methods,
manufacturing controls, container/closure system, and appearance. 21
CFR 314.50. They must ensure that each drug meets all U.S.
labeling requirements, including that it bears the FDA-approved
labeling. 21 CFR Sec. 201.100 (c)(2). The drug must also be dispensed
by a pharmacist pursuant to a valid prescription. 21 U.S.C.
Sec. 353(b)(1).
STEPS FDA IS TAKING TO PROTECT PUBLIC HEALTH
FDA cannot assure U.S. citizens that the prescription medications
they are buying over the Internet from foreign countries such as Canada
are safe. Many drugs obtained from foreign sources that either purport
to be or appear to be the same as U.S. approved prescription drugs are,
in fact, of unknown quality. The rise of Internet drugs sales presents
substantial safety questions about these products.
FDA is taking a number of steps to protect the public health of
U.S. citizens including: (1) educating the public to the possible
safety issues of drugs purchased from foreign countries, (2) working in
conjunction with our Canadian government counterparts to address the
issue of the flood of prescription medicines coming into the U.S. from
their country, (3) increasing enforcement and policing of rogue
Internet sites, and (4) partnering with the individual U.S. states to
develop enforcement strategies, share cases and discuss important
policy issues.
Consumer education
FDA remains committed to developing more effective education and
enforcement strategies. With this goal in mind, FDA has created
brochures and posters entitled: Things you should know about purchasing
medications outside the United States to alert consumers to the health
risks of buying medications outside the U.S. Outreach to consumers and
the press continues and new public material will be added to FDA's
website.
In December 2000 FDA created the ``Buying Medicines Online''
webpage; http://www.fda.gov/oc/buyonline/default.htm. The webpage
provides tips, warnings and other information for consumers about
purchasing over the Internet. In addition, it provides an opportunity
for consumers to report unlawful sales of medical products on the
Internet. Since its inception, the number of complaints received has
grown steadily. FDA receives over 300 reports a day through this
webpage that are evaluated by members of an FDA Internet enforcement
work group.
A voluntary certification program administered by the National
Association of Boards of Pharmacy called the Verified Internet Pharmacy
Practice Sites (VIPPS) program provides a basis for identifying online
pharmacies that are appropriately licensed and prepared to practice
pharmacy via the Internet. Today 13 Internet sites representing over
10,000 pharmacies carry the VIPPS seal, and NABP has many pending
applications.
Canadian cooperation
On February 21, 2003, FDA representatives participated in a Forum
on International Sale of Prescription Drugs from Canada in Ottawa,
Canada. The forum was sponsored by the National Association of Pharmacy
Regulatory Authorities (NAPRA), the voluntary umbrella association of
Canada's provincial and territorial pharmacy licensing bodies.
FDA's purpose in attending was to present our view on the sale of
Canadian prescription drugs in the U.S. Some of the topics that related
to FDA enforcement included: the need for clarification of legal status
of international practice in the U.S., the legality of the sale of
Canadian drugs to U.S. citizens, risks of the activity for U.S. and
Canadian citizens, the legal recourse for any harm caused, the legal
issues within the U.S. (at the Federal and state level) and the need to
investigate and shut down non-pharmacy operations selling prescription
drugs.
In February 2003, FDA Commissioner McClellan participated in a call
with Health Canada to discuss his concerns regarding the increasing
number of U.S. pharmacies that are advertising and promoting
prescription drugs from Canada. FDA shared a list of 45 active websites
based in Canada that are selling drugs to U.S. citizens for additional
investigation.
FDA work with states
The states have primary jurisdiction over the practice of pharmacy.
FDA is partnering with the states in pursuing cases. State pharmacy
laws vary in all 50 states. FDA notes that some state laws are stronger
than others and some states have been more willing to pursue these
cases than others.
In February 2003 the ORA Division of Federal State Relations hosted
a nationwide call with state boards of pharmacy, other state regulatory
agencies and consumer groups to discuss the current status of
information on Internet drug sale practices. Representatives from 38
states participated in the discussion. FDA was interested in hearing
about state policy issues and regulatory actions. In addition, FDA had
the opportunity to share information with the states on current
regulatory policy and consumer education efforts on this issue.
Increased Federal and International enforcement activities
FDA remains concerned about the potential for introduction of
substandard drug products into the U.S. through foreign Internet
purchases. As such, FDA has been participating in quarterly strategy
meetings with other Federal counterparts including Federal Trade
Commission (FTC), Department of Justice (DOJ), National Association of
Attorneys General (NAAG) and Drug Enforcement Administration (DEA). In
these meetings FDA discusses policy matters, public information issues
and Agency priorities. This quarterly monthly meeting dates back to
1998. FDA and FTC continue to work together on false and deceptive
claims about treating or curing a wide variety of diseases. FDA and
other Federal and state agencies have investigated many illegal
pharmaceutical websites and have attempted to use existing laws and
available technologies to bring action against rogue Internet
pharmacies.
In June 1999, FDA established a case assessment, or ``triage'' team
with representatives from the Office of Enforcement and the Office of
Criminal Investigation (OCI) within the Office of Regulatory Affairs
(ORA), the Center for Drug Evaluation and Research (CDER), the Office
of the Chief Counsel (OCC) and the Office of Policy. Under the
``triage'' process, FDA obtains leads on potentially violative sites
from a variety of sources including Internet monitoring activity,
state, other Federal or foreign law enforcement agencies, consumers,
and the press. The ``triage'' team evaluates the leads and decides
whether they should initially be pursued through a civil or criminal
investigation. Priority is given to cases involving unapproved new
drugs, health fraud, prescription drugs sold without a valid
prescription and products with the potential for causing serious or
life-threatening reactions. The ``triage'' team makes referrals, when
appropriate, to FDA's civil and criminal enforcement units for follow-
up.
FDA receives over 300 messages per day in its Reporting Unlawful
Sales of Medical Products on the Internet system. In 2002, FDA linked
to the FTC Consumer Sentinel database to help cope with the large
number of complaints it receives. The Consumer Sentinel database,
maintained by FTC, contains more than one million consumer fraud
complaints that have been filed with Federal, state, and local law
enforcement agencies and private organizations. Through this law
enforcement data base system, FDA is able to mine the data in this
system and obtain useful information on Internet pharmacy sites of
particular interest.
FDA Office of Criminal Investigations activities
Because FDA and the other Federal agencies possess limited
investigatory jurisdiction over sellers in foreign countries, we must
work with foreign governments to bring action against such individuals.
Internet crime and the practice of online pharmacy are a growing
concern throughout the international law enforcement community. FDA's
OCI maintains ongoing liaison with numerous government agencies in
Canada, the United Kingdom, Spain, Australia, Germany, Belgium, the
Netherlands, Ireland, Brazil, Singapore and others. OCI recently
assigned a Special Agent to Interpol in Washington, D.C.
An example of this cooperation involved OCI contact with
authorities in a Pacific Rim country where a website operator alleged
that he used the services of two legitimate doctors to review his
online questionnaire. Through our foreign counterparts, we were able to
have the doctors interviewed. Both denied any involvement in the
scheme, thus exposing the operator to possible mail and wire fraud or
other charges.
OCI routinely works on joint investigations with numerous law
enforcement agencies throughout the Federal community including: the
Federal Bureau of Investigations, U.S. Customs, DEA, U.S. Postal
Service, Internal Revenue Service, Health and Human Service-OIG, EPA
and the U.S. Army. In addition, OCI has worked on joint cases involving
Internet pharmacies with several state entities including state health
departments, state pharmacy boards, and state medical boards. OCI has
established collegial working relationships with state entities
nationwide.
Some recent cases indicate the seriousness of the risks to public
health that regulators uncover when responding to Internet drug sales.
They also illustrate the progress that is beginning to be made in
combating this problem.
Norfolk Men's Clinic
On February 16, 2002, a Federal jury in Alabama convicted Anton
Pusztai and Anita Yates of charges arising out of the operation of the
online pharmacy that illegally sold prescription drugs over the
Internet to consumers. On June 18, Pusztai and Yates were sentenced
respectively to more than 15 and 6.5 years. Pusztai, an Australian
citizen, and Yates, a resident of Clanton, Alabama, were convicted of
conspiracy to commit violations of the FD&C Act, conspiracy to commit
money laundering, mail fraud, dispensing misbranded drugs, and
operating a drug repackaging facility not registered with FDA. From
fall 1998 to the summer of 2000, the defendants operated a website
called Viagra.au.com, also known as Norfolk Men's Clinic, and related
sites, that sold a variety of prescription medications.
In September 1999, OCI received information regarding the Norfolk
Men's Clinic and the website. Based on this information, several covert
purchases were made via the Internet. Search warrants were executed in
October 1999 that resulted in the seizure of prescription drugs and
business records. Additional covert purchases were made. Based on these
purchases and numerous interviews, several individuals were indicted.
In addition to defendants Pusztai and Yates, the president of a
prescription drug wholesaler located in Miami, Florida, and the company
itself, pled guilty to distributing misbranded drugs. The company plead
guilty to obstruction of justice. In conjunction with the indictment, a
second search warrant was executed in Clanton, Alabama, along with two
search warrants in West Virginia. While most of the drugs sold in this
operation were domestic product, some appeared to have originated in
New Zealand.
Dr. Mario Alvarez-Valentin
On January 11, 2002, Dr. Mario Alvarez-Valentin was sentenced to 26
months imprisonment after pleading guilty to wire fraud in connection
with the unlawful sale of Viagra over the Internet. Alvarez was a
physician contracted with Internet websites for the purpose of
authorizing prescriptions for Viagra to persons throughout the U.S.
From April 2000 to January 2001, Alvarez, who was only licensed to
practice in Puerto Rico, prescribed and caused to be prescribed more
than 4,000 prescriptions for Viagra. In doing so, he violated the
licensing laws of at least 20 states. United States v. Alvarez-
Valentin, D.P.R.
Kwikmed
On October 1, 2002, a Federal Grand Jury in Arizona returned a 198
count indictment against Kwikmed, Inc., Cymedic Health Group, Inc.,
four owners of these corporations, and two physicians associated with
the corporations. The indictment alleges that defendants operated
Internet websites, two of which include kwikmed.com and cymedic.com,
through which they sold prescription drugs, including Viagra, Celebrex,
Xenial, and Propecia. The websites did not require a consumer to have a
prescription before receiving the drugs, instead the customers were
required to complete a questionnaire, which the website told customers
would be reviewed by a physician. Customers were charged a fee for this
purported medical consultation. The indictment alleges, however, that
for the overwhelming majority of applications, no medical reviews,
consultations, or physical examinations by a physician took place
before drugs were shipped to customers. The indictment also alleges
that defendants repackaged drugs obtained from a drug wholesaler, even
though defendants were not a registered manufacturer or a licensed
pharmacy, and that there was never a licensed pharmacist in any way
involved. The indictment also alleges that the drugs dispensed were
adulterated because of the defendants' failure to follow cGMP in
packaging, holding, and labeling of the drugs. The indictment alleges
that during the course of the conspiracy the defendants and others
generated sales in excess of $28 million, which was billed to consumers
as charges for prescription drugs, doctor consultations, and shipping.
These sales resulted from the defendants' distribution of at least
48,816 new orders for prescription drugs and 41,817 refills of those
orders. The indictment charges defendants with several violations of
the FD&C Act, as well as conspiracy, mail fraud, and money laundering.
The charges were the result of an investigation by FDA and the U.S.
Postal Inspection Service.
United States v. Carl David Roberts, (E.D. Tenn.).
On January 15, 2003, Roberts was sentenced to a prison term of 57
months. Roberts was chief administrator of an Internet business that
used sophisticated technology to sell prescription drugs, including
Schedule II narcotics, without any medical supervision. He had directed
an organization that sold drugs from within the U.S., and from abroad.
His organization included drug suppliers from Mexico, the Netherlands,
and Ecuador. In September 2002, he pled guilty to distribution of
controlled substances and conspiracy to violate the FD&C Act.
United States v. Kimball, (11th Circuit).
On May 14, 2002, the Eleventh Circuit affirmed the district court's
sentence. Kimball received a 13-year sentence for violating the FD&C
Act. Kimball was found guilty after trial of putting prescription drugs
into commerce without a prescription. His marketing efforts included
use of the Internet.
Medications Express
On June 7, 2001, Gerald Bevins was convicted in U.S. District Court
for the Southern District of California of conspiracy to defraud the
U.S. and commit offenses against the U.S. by introducing misbranded
drugs into interstate commerce and smuggling. On September 4, 2001,
Bevins was sentenced to serve twenty-four months in prison. The case
was initiated on information received from Customs concerning an
Internet website called Medications Express. Bevins sold Mexican
prescription pharmaceuticals from this website and claimed that no
doctor's prescription was necessary. He continued to sell Mexican
prescription pharmaceuticals through the mail from Sun City,
California, even after discontinuing the Medications Express website.
Bevins, his wife and daughter would receive orders via mail, travel to
Tijuana, Mexico, to purchase the pharmaceuticals, and smuggle them back
into the U.S. The three packaged the pharmaceuticals into commercial
courier boxes and shipped them to customers around the U.S. The drugs
supplied by Bevins were labeled in Spanish.
Canadian Drug Store, Inc.
On May 14, 2002, the Ontario College of Pharmacists, a Canadian
government agency, filed charges under Ontario law against The Canadian
Drug Store, Inc., for unlawfully operating an unlicensed pharmacy and
using an un-registered pharmacist in filling prescriptions for U.S.
residents. The College also filed charges against a licensed
pharmacist, pharmacy, and physician in Ontario for helping to
facilitate the delivery of prescription and non-prescription drugs to
U.S. residents. A drug wholesaler was charged with supplying
medications to a non-licensed pharmacy.
According to a statement released by the College, there are many
websites selling prescription and non-prescription medicines that have
not been accredited as legitimate pharmacies by pharmacy regulators in
either Canada or the U.S. Some websites presenting themselves as online
``pharmacies'' or ``drugstores'' may be operating without a pharmacy
license and dispensing prescriptions without the oversight of a
licensed pharmacist.
Total Remedy/Prescription Center II
According to news accounts, a Los Angeles pharmacy and two
pharmacists were assessed penalties of almost $90 million in a
California Board of Pharmacy proceeding in May 2002 for filling more
than 3,500 illegal prescriptions over the Internet. The case was
brought under a state law that creates a requirement to fill a
prescription pursuant to a good-faith medical examination. The Internet
site concentrated on filling prescriptions for lifestyle drugs such as
Viagra and Propecia (Associated Press, 5/29/02).
Pillbox Pharmacy
In March, 2002, a Texas pharmacist, three doctors, two corporations
and an individual were charged in a Federal indictment alleging that
they conspired to illegally dispense drugs in connection with an
Internet pharmacy operation. The indictment charged one pharmacist,
three physicians and two corporations, the S&H Script Shop and the
Pillbox Medical Center, with conspiring to illegally dispense
controlled substances and commit money laundering. According to the
indictment, between January 1, 2000, and June 12, 2001, the defendants
grossed more than $7.7 million from the Internet sales of just two
drugs alone. The indictment alleges the doctors would issue
prescriptions without establishing a patient history, performing a
mental or physical exam, using appropriate diagnostic or laboratory
testing, or providing any means to monitor medication response. The
charges were the result of an 18-month investigation by FDA, DEA and
IRS, working with the U.S. Attorney's office. In April, the pharmacist
and two corporations pled guilty to illegally dispensing controlled
substances, and agreed to forfeit $1 million.
Other OCI Enforcement Activity
To date, OCI has initiated 372 Internet drug investigations with
each case involving a variable number of websites from one to 25 or
more. These cases originated from multiple sources including
interception at mail facilities, web-based research, consumer
complaints, and a variety of other sources. OCI has affected 150
Internet-related drug arrests and obtained 92 convictions. Sixty of the
Internet drug arrests and 26 of the convictions are Internet pharmacy
related.
Currently, FDA has 90 sites under active review for possible
regulatory or civil action. Warning letters have been sent to 55
domestic online sellers. Additionally, FDA has sent 137 cyber letters
to operators of Internet sites in many countries, including Canada,
that offer to sell on-line prescription drugs or unapproved drugs.
These sites may be engaged in illegal activity such as offering to sell
prescription drugs to U.S. citizens without valid (or in some cases
without any) prescriptions. Cyber letters are sent over the Internet to
the suspect websites to warn the operators that they may be engaged in
illegal activities, and inform them of the laws that govern
prescription drug sales in the U.S. FDA also sends copies of its cyber
letters to the home governments of targeted websites when the locations
can be identified. However, follow-up depends on the ability and
willingness of the foreign regulatory bodies to investigate and take
actions against website operators who are illegally shipping drugs to
other countries.
In cooperation with DOJ, FDA has obtained five preliminary
injunctions against the sale of illegal products, including one product
marketed as a weight-loss aid containing a potent thyroid hormone that
could cause heart attacks or strokes, and an unapproved cancer therapy.
Also, 15 product seizures, 11 product recalls, and the voluntary
destruction of 18 illegal products have been achieved, generally
pertaining to unapproved new drug products. Forty-five foreign shippers
have been placed on Detention Without Physical Examination and added to
an FDA Import Alert for targeting sales of unapproved new drug products
to the U.S.
FDA's personal importation policy
FDA's personal importation policy is often misunderstood. Under
FDA's personal importation policy, FDA inspectors may exercise
enforcement discretion in limited circumstances to permit the
importation of certain unapproved prescription medication for personal
use.
First adopted in 1954, the policy was last modified in 1988 in
response to concerns that certain potentially effective treatments for
AIDS patients were not available in the U.S. but were available in
other countries. The Agency expanded the guidance for humanitarian
purposes to allow individuals suffering from serious medical conditions
to acquire medical treatments legally available in foreign countries
but not approved in the U.S.
The policy is not a license for individuals to import unapproved,
and therefore illegal, drugs for personal use into the U.S. Because the
policy does not apply to medications that are already available in the
U.S. (even if sold under the same name), only a very few drug products
available from Canada and Mexico and other foreign sources meet the
personal importation criteria.
The current personal importation policy permits the exercise of
enforcement discretion to allow entry of an unapproved prescription
drug only if the product meets the following requirements: the intended
use is for a serious condition for which effective treatment may not be
available domestically; the product is considered not to represent an
unreasonable risk; the product is for personal use; there is no known
commercialization or promotion to U.S. residents by those involved in
the distribution of the product; and the individual seeking to import
the product affirms in writing that it is for the patient's own use and
provides the name and address of the U.S.-licensed doctor responsible
for his or her treatment with the product or provides evidence that the
product is for the continuation of a treatment begun in a foreign
country.
FDA's personal importation policy, as written, is difficult to
implement with respect to mail shipments of drugs. This is due, at
least in part, to the difficulty faced by Customs or FDA inspectors, or
even health care practitioners, in identifying a medicine simply by its
appearance or its labeling, which may falsely identify a product. From
a practical standpoint, FDA inspectors cannot visually examine drug
products contained in a mailed parcel and accurately determine their
identity or the degree of risk posed to the individual who will receive
these drugs.
Carson mail study
In early 2001, FDA and Customs conducted a survey of imported drug
products entering the U.S. through the Carson City, California mail
facility (the Carson pilot). The purpose of the Carson pilot was to
examine incoming mail shipments of pharmaceutical products over a
specified time frame to identify both the volume and the types of drug
products entering the U.S. We also wanted to better assess the level of
effort and human resources required to handle drug importations at a
mail facility, and to better understand the public health implications
these importations may have for U.S. consumers.
The Carson pilot ran for a five-week period, with FDA inspectors
present for 40 hours per week, a much higher staffing level than is
normally possible. Although Customs took a baseline sample which
indicated they could have set aside for FDA review an estimated total
of 16,500 international packages (650 packages per day), FDA was able
to examine only 1,908 packages during the five-week pilot, or an
average of 381 packages per week. Unexamined packages were sent on to
the addressees. Of the 1,908 packages examined by FDA, 721 parcels (38
percent of the total) originating in 19 countries were detained and the
addressees notified that the products appeared to be unapproved for use
in the U.S., misbranded and/or a drug requiring a doctor's
prescription.
Analysis of the Carson Pilot Drug Parcels
FDA's Center for Drug Evaluation and Research (CDER) reviewed
listings of the products detained during the Carson pilot to define
better the nature of the risk to public health from the types of
products coming into the U.S. through personal importation. CDER's
review demonstrates that there are serious public health risks
associated with many of the 721 drug shipments (composed of 197
different drugs) detained at Carson. There are primarily two types of
risks that consumers of these drugs would face. The first risk arises
when consumers take drugs of unknown origin or quality. Second is the
very significant risk associated with taking many of these drugs
without first obtaining a physician's prescription and without the
continued oversight of the physician.
In general, FDA has no information to establish where these drugs
were actually manufactured and whether current GMP requirements were
followed. There is also no assurance that the drugs were packaged and
stored under appropriate conditions to avoid degradation or
contamination. Approximately eight percent of the shipments contained
drugs that could not be identified because they contained no labeling;
some of these contain only foreign language labeling. Most of these
drug shipments were contained in plastic bags; one shipment contained
drugs taped between magazine pages.
Several drugs do not appear to correspond with any FDA-approved
drugs and therefore the risks associated with the products are
difficult to assess. One drug had been reviewed for FDA approval but
was rejected because its efficacy could not be demonstrated. Several
shipments contained three drugs that were once approved by FDA but have
been withdrawn from the market.
The vast majority of the shipments were identified as containing
prescription drugs. A number of controlled substances were also
identified. Importation of these drugs containing controlled substances
violates criminal provisions of the Controlled Substances Import and
Export Act, including 21 U.S.C. 960 (unregistered importer/declared
importation). These drugs have the potential for abuse, addiction or
risk of life-threatening overdose. A physician's prescription and
oversight are essential for managing these risks. Additionally, drugs
to treat diseases including diabetes, hypertension and serious
infection were included in the Carson shipments, as were many drugs
with serious contraindications and/or possible drug or food
interactions.
Many of the drugs identified in the Carson pilot are intended to
treat conditions that only physicians can properly diagnose. Consumers
who bypass physician diagnosis and prescribing may be exposing
themselves to risks and toxicities that cannot be justified by
offsetting benefits. For example, almost ten percent of the shipments
were for antibiotics, despite the fact that consumers are generally not
able to diagnose whether their symptoms are caused by bacterial or
viral infections.
Enforcement at the border
Within the last two years, FDA has conducted three surveys at U.S.
borders to gather data on drug products carried by individuals entering
the U.S. While these border surveys involve land traffic rather than
mail importation, the results show some similarities to the findings
from the Carson mail pilot, but also some significant differences.
Southwest Border Survey (August 2000)
A survey of prescription drugs being brought by pedestrians into
the U.S. at eight ports-of-entry along the 2,000-mile border with
Mexico was conducted by FDA's Southwest Import District (SWID) with the
assistance of other agencies. The survey looked at activity during four
hours on a Saturday (August 12, 2000) at eight border ports in
California, Arizona, and Texas. The purpose of the survey was to
determine what specific types of products are being imported, and who
is importing these products. The data collected from over 600
interviews indicated that the most common importers were bringing back
primarily antibiotics or pain relievers. Prescriptions were held by 63
percent of the persons interviewed (59 percent U.S. prescriptions while
41 percent were Mexican). While many of these products are already
available as FDA-approved drugs in the U.S., some are unapproved for
sale in this country.
Canadian Border Survey
On January 6, 2001, in cooperation with Customs, FDA conducted a
survey to obtain a snapshot of prescription drug products being brought
into the U.S. from Canada via passenger vehicles. During the eight-hour
survey at three ports-of-entry in New York, Michigan and Washington, a
total of 10,374 passenger vehicles and 58 buses crossed into the U.S.
Of these, 33 passenger vehicles (35 individuals) were referred by
Customs to be interviewed. These individuals brought in a total of 47
containers of drug products from Canada. The largest group of products
was pain medicines. The next largest group of products was herbal
products, with the reason for importation being that the products were
not available in the U.S. Some of these drugs are unapproved foreign
versions of FDA-approved drugs, although some approved for sale as
prescription drugs in the U.S. are sold as over-the-counter medications
in Canada.
Southwest Border Survey (April 2001)
On April 11, 2001, FDA, Customs, and other agencies conducted a
survey of prescription drugs being brought into the U.S. at seven
ports-of-entry along the U.S./Mexican border. During the four hour
survey, a total of 586 persons imported in a total of 1,120 drugs.
Approximately 56 percent had a prescription for the medicines (61
percent were U.S. prescriptions, 39 percent were Mexican). As in the
earlier survey, many of these products are already available as FDA-
approved drugs in the U.S., while some are unapproved for sale in this
country.
Newly revised import alert
On December 9, 2002, FDA reissued import alert 66-41 to include
certain drugs approved for restricted use (due to safety concerns) in
the U.S. This import alert allows FDA district field investigators to
automatically detain without examination the listing of drugs. The
Agency has posted this special alert on its home page warning consumers
that certain restricted distribution drugs should not be purchased over
the Internet. FDA has also put these restricted distribution drugs on
Import Alert, informing the Agency's import inspectors that shipments
of these drug are not appropriate for admission into this country under
FDA's personal importation policy. FDA has also specifically informed
Customs about the fact that these dangerous drugs should not be
admitted. Imported drugs subject to this import alert are not
admissible under FDA's personal importation policy.
The FDA field guidance for this Import Alert provides that release
of an unapproved drug for personal use may be appropriate if, among
other considerations, the drug is intended for a serious condition for
which effective treatment may not be available domestically either
through commercial or clinical means, and it is not considered to
represent an unreasonable risk. The guidance is intended to apply only
to: (1) persons who have received treatment in a foreign country with
an unapproved drug that is not available in the U.S., and who, upon
returning to the U.S., have imported the drug for their personal use in
an effort to continue the treatment started abroad; and (2) persons who
have made their own arrangements for obtaining an unapproved drug from
foreign sources, when the drug has not been promoted in the U.S.
CONCLUSION
Mr. Chairman, FDA remains concerned about Americans purchasing
prescription medicines over the Internet and whether this practice
results in products being unlawfully imported into the U.S. We
appreciate the subcommittee's interest in assuring that the American
public has access to safe and affordable medicines and we look forward
to working with you in furtherance of this goal. Thank you again for
the opportunity to participate in today's hearing. I will be happy to
answer any questions.
Mr. Greenwood. We thank you for being here.
Mr. Taylor of the Florida Department of Health.
STATEMENT OF JOHN D. TAYLOR
Mr. John D. Taylor. Thank you, Mr. Chairman, Congressman
Deutsch, Congressman Engel. My name is John D. Taylor. I
recently accepted a position as a drug inspector with the
Florida Department of Health's Bureau of Statewide
Pharmaceutical Services. For the previous 13 years, I was the
executive director of the department's Board of Pharmacy. Thank
you for the opportunity to discuss affordable prescription
drugs. Availability of affordable prescription drugs is a
priority for the department and our State's residents. However,
there are several emergent issues involving Internet
prescription drugs that are causing increasing concern.
The primary mission of the department is to promote and
protect the health and safety of all people in Florida through
the delivery of quality public health services and the
promotion of health care standards. Pursuant to this mission,
the department is concerned about the efficacy and safety of
Internet prescription drugs.
The Division of Medical Quality Assurance is charged with
the investigation of civil complaints involving illicit
storefront activities. Although consumers to date have filed no
complaints, several licensed pharmacies began filing complaints
last year. The Department has begun aggressively pursuing these
allegations of unlicensed pharmacy behavior and alleged illicit
distribution of prescription drugs. Several investigations are
currently underway. Disposition of these cases and possible
referral to law enforcement for criminal complaint
investigation are pending. As these are active investigations,
I am not in a position to provide specific details at this
time.
The Board of Pharmacy is composed of individuals licensed
in the profession, as well as consumer members. The board is
responsible for creating professional standards as well as
determining probable cause in disciplinary actions involving
the misconduct of pharmacy licensees. Currently, the Board of
Pharmacy has proposed administrative rule in the area of
Internet prescriptions. This proposed rule is now in the public
comment period. Previous versions of this proposal have been
delayed by challenges, and the current version addresses issues
raised by an administrative judge. The revised rule may become
effective in the next 2 to 3 months.
I will now focus on the first of two specific areas of
concern: The practice of prescribing and dispensing
prescription drugs via the Internet. As you know, Internet web
sites are available that let consumers select and order
prescription drugs. This international process is complex and
difficult to investigate. First, the consumer submits a brief,
online medical questionnaire, which seeks to determine
suitability of the consumer for the medication. Then, if the
consumer's request has not been disqualified based on their
answers to the questionnaire, a prescription is issued by a
prescriber associated with the web site. The issued
prescription is then transmitted to a pharmacy associated with
either the site or the prescriber.
The concerns with this process are numerous. There is no
guarantee that the consumer has been truthful in completing the
questionnaire. Likewise, there may be no quality oversight for
the prescriber, the pharmacist that completes the prescription,
the pharmacy itself or the product delivered to the consumer.
If these drugs originate from a foreign country, there is a
strong likelihood that the drugs themselves may not have been
approved by the Food and Drug Administration. The department
has investigated pharmacies that received over 300
prescriptions from a sole contracted physician in a single
day--physicians that see regular patients during their workday.
Clearly, this is a serious issue. The position of the
Department and various licensure boards, including the Boards
of Medicine, the Board of Osteopathic Medicine, Dentistry,
Podiatry and Nursing, is that prescribing based solely on an
Internet questionnaire is below the standard of practice. Such
a rule of the Board of Osteopathic Medicine has been challenged
and upheld before a Florida administrative law judge. The
department and the Board of Pharmacy believe that prescriptions
issued in this manner are invalid. Pharmacies and pharmacists
knowingly dispensing prescription drugs prescribed in this
manner should be subject to discipline.
The licensure boards are in the process of promulgating
rules to specifically preclude these activities. In some cases
disciplinary action has been taken based on existing statutes
and rules with varying levels of success. Department Secretary
Dr. John Agwunobi has created a task force of representatives
of the various licensure boards to study areas where there may
be synergies for collective board actions with respect to
Internet prescriptions.
The second issue I would like to discuss is the use of
unlicensed facilities, so-called storefronts, that serve as
middlemen for foreign prescription drug distribution. Foreign
pharmacies are dispensing prescription drugs by mail to Florida
residents. Existing operations usually include Canadian
pharmacies, but recent calls to our office indicate that a site
or facility using Mexican pharmacies may also be involved.
Florida residents are drawn via advertising to locations where
prescriptions issued by licensed Florida prescribers are
solicited and accepted for transmission to these foreign
pharmacies. These storefront locations are not licensed as
pharmacies and do not meet minimum requirements for licensure
under their current method of operation.
A consumer with a licensed prescriber's prescription visits
the storefront and provides the prescription and credit card
information to the storefront operator. The prescription is
then faxed to a Canadian physician who rewrites the original
prescription and then submits the new prescription to a
Canadian pharmacy. The pharmacy prepares the drugs, which are
then dispensed and mailed to the consumer's home in Florida.
Similar to the concerns with Internet prescription dispensing,
there are no guarantees that these drugs are FDA approved and
there is no way to be certain of the drug's origin or history.
The importation of prescription drugs in this manner is a
violation of State and Federal laws.
Additionally, Florida statutes require licensure of non-
resident pharmacies shipping prescription drugs to consumers in
Florida. This Florida law provides for the licensure of non-
resident pharmacies licensed in another State, but does not
reference foreign pharmacies. In addition, Florida
administrative code sections require a pharmacy permit for
locations maintained from, ``from which to solicit, accept or
dispense prescriptions.'' Florida statutes also designate the
unlicensed practice of pharmacy as a misdemeanor of the first
degree. Since unlicensed activity carries the potential for
criminal sanctions, it is outside the jurisdiction of the
department's Board of Pharmacy to investigate or prosecute. In
cases where an investigation shows evidence of unlicensed
activity, referral for criminal prosecution or civil action
will be considered by the department. Closure of existing
storefront operations will depend on the result of those
investigations.
We know that the cost of vital prescription drugs is more
than a significant issue for many of our residents. The
department shares their concerns on this issue. However, many,
if not all, of the products ordered from foreign sources
require a liability waiver prior to delivery. This particular
system, while less expensive for the consumer, bypasses
regulatory safeguards and places them at greater health risks.
Again, this is a complex and evolving problem that crosses
many jurisdictional boundaries with both national and
international implications. The department is committed to
addressing this safety issue and look forward to partnering
with our Federal counterparts to ensure continued safe and
effective prescription drugs for our residents. We are
dedicated to ensuring secure access to prescription drugs and
applaud Federal efforts along these lines. Undertaking an
educational campaign to explain the safety concerns associated
with this practice is a good first step in highlighting this
issue for our residents and to allow for informed
decisionmaking.
Thank you for the opportunity to speak, Mr. Chairman.
[The prepared statement of John D. Taylor follows:]
Prepared Statement of John D. Taylor, Florida Department of Health
Mr. Chairman and Members of the Committee, my name is John D.
Taylor. I recently accepted a position as a Drug Inspector with the
Florida Department of Health's (FDOH) Bureau of Statewide
Pharmaceutical Services. For the previous thirteen years, I was the
Executive Director of FDOH's Board of Pharmacy.
Thank you for the opportunity to discuss affordable prescription
drugs. Availability of affordable prescription drugs is a priority for
FDOH and our state's residents. However, there are several emergent
issues involving internet prescription drugs that are causing
increasing concern.
FLORIDA DEPARTMENT OF HEALTH
The primary mission of FDOH is to promote and protect the health
and safety of all people in Florida through the delivery of quality
public health services and the promotion of health care standards.
Pursuant to this mission, FDOH is concerned about the efficacy and
safety of internet prescription drugs.
Division of Medical Quality Assurance
The Division of Medical Quality Assurance is charged with the
investigation of civil complaints involving illicit storefront
activities. Although consumers to date have filed no complaints,
several licensed pharmacies began filing complaints last year. The
Bureau of Statewide Pharmaceutical Services and the Division of Medical
Quality Assurance (both within FDOH) have aggressively begun pursuing
these allegations of unlicensed pharmacy behavior and alleged illicit
distribution of prescription drugs. Several investigations are
currently underway. Disposition of these cases and possible referral to
law enforcement agencies for criminal complaint investigation are
pending. As these are active investigations, I am not in a position to
provide specific details at this time.
Board of Pharmacy
The Board of Pharmacy is composed of individuals licensed in that
profession, as well as consumer members. The board is responsible for
creating professional standards as well as determining probable cause
in disciplinary actions involving the misconduct of pharmacy licensees.
Currently, the Board of Pharmacy has proposed ``Standards of
Practice for Filling Prescriptions Authorized by Practitioners Licensed
in Jurisdictions Other than Florida or Procured Through the Internet''
(64B16-27.833--attached). These standards are now in the public comment
period. Previous versions of these standards have been delayed by
challenges, and the current version addresses issues raised by an
administrative judge. The revised standards may become effective in two
to three months.
INTERNET PRESCRIBING AND DISPENSING
I will now focus on the first of two specific areas of concern: the
actual practice of prescribing and dispensing prescription drugs via
the Internet. As you know, Internet websites are available that let
consumers select and order prescription drugs. This international
process is complex and difficult to investigate.
First, the consumer submits a brief, online medical questionnaire,
which seeks to determine suitability of the consumer for the
medication. Then, if the consumer's request has not been disqualified
based on their answers to the questionnaire, a prescription is issued
by a prescriber associated with the website. The issued prescription is
then transmitted to a pharmacy associated with either the site and/or
the prescriber. The concerns with this process are numerous.
There is no guarantee that the consumer has been truthful in
completing the questionnaire. Likewise, there may be no quality
oversight for the presciber; the pharmacist that completes the
prescription; the pharmacy itself; or the product delivered to the
consumer. If these drugs originate from a foreign country, there is a
strong likelihood that the drugs themselves may not have been approved
by the Food and Drug Administration (FDA). FDOH has investigated
pharmacies that received over 300 prescriptions from a sole contracted
physician in a single day--physicians that also see regular patients
during the workday. Clearly, this is a serious issue.
FDOH Position
The position of FDOH and various licensure boards, including the
Boards of Medicine, Osteopathic Medicine, Dentistry, Podiatry, and
Nursing, is that prescribing based solely on an Internet questionnaire
is below the standard of practice. Such a rule of the Board of
Osteopathic Medicine has been challenged and upheld before a Florida
administrative law judge. FDOH and the Board of Pharmacy believe that
prescriptions issued in this manner are invalid. Pharmacies and
pharmacists knowingly dispensing prescription drugs prescribed in this
manner should be subject to discipline. Pharmacies or sites dispensing
without a prescription are also in violation of state law.
The licensure boards are in the process of promulgating rules to
specifically preclude these activities. In some cases disciplinary
action has been taken based on existing statutes and rules with varying
levels of success. FDOH Secretary Dr. John Agwunobi has created a Task
Force of representatives of the various licensure boards to study areas
where there may be synergies for collective board actions with respect
to Internet prescriptions.
Dr. Agwunobi's recent letter to the Board of Pharmacy stated:
``The Department of Health has been working on a strategy for
addressing the Internet prescribing and dispensing issue. We
are developing both an investigative team and a litigation team
to deal with the disciplinary actions; and, we are coordinating
our efforts with law enforcement at all levels, and across
state lines. Since the Department also regulates wholesalers
and distributors, we are working together on cases that involve
these areas as well.''
ILLICIT STOREFRONT PRESCRIPTION DRUG SERVICES
The second issue I would like to discuss is the use of unlicensed
facilities--so-called storefronts that serve as middlemen for foreign
prescription drug distribution. Foreign pharmacies are dispensing
prescription drugs by mail to residents of Florida. Existing operations
usually include Canadian pharmacies, but recent calls to our office
indicate that a site or facility using Mexican pharmacies may also be
involved.
Florida residents are drawn via advertising media to locations
where prescriptions issued by licensed Florida prescribers are
solicited and accepted for transmission to these foreign pharmacies.
These ``storefront'' locations are not licensed as pharmacies and do
not meet minimum requirements for licensure under their current method
of operation.
A consumer with a licensed prescriber's prescription visits the
storefront and provides the prescription and credit card information to
the storefront operator. The prescription is then faxed to a Canadian
physician who rewrites the original and then submits the new
prescription to a Canadian pharmacy. The pharmacy prepares the drugs,
which are then dispensed and mailed to the consumer's home in Florida.
Similar to the concerns with Internet prescription filling, there are
no guarantees that these drugs are FDA approved and there is no way to
be certain of the drug's origin or history.
FDOH Position
The importation of prescription drugs in this manner is a violation
of state and federal laws. Additionally, Florida Statutes (Section
465.0156) require licensure of non-resident pharmacies shipping
prescription drugs to consumers in Florida. Florida law provides for
the licensure of non-resident pharmacies licensed in another state, but
does not reference foreign pharmacies. As a result, FDOH and the Board
of Pharmacy have determined that the ``storefronts'' where
prescriptions are solicited and accepted for dispensing by foreign
pharmacies are engaged in the unlicensed practice of pharmacy.
In addition, Florida Administrative Code (Section 64B16-27.104 (2))
requires a pharmacy permit for locations maintained ``from which to
solicit, accept or dispense prescriptions.'' Florida Statutes (Sections
465.015 (3) and (4)) designate the unlicensed practice of pharmacy as a
misdemeanor of the first degree.
Since unlicensed activity carries the potential for criminal
sanctions, it is outside the jurisdiction of the department's Board of
Pharmacy to investigate or prosecute. In cases where an investigation
shows evidence of unlicensed activity, referral for criminal
prosecution or civil action by the department will be considered.
Closure of existing storefront operations will depend upon the results
of those investigations.
We know that the cost of vital prescription drugs is more than a
significant issue for many of our residents. FDOH shares their concerns
with this issue. However, many, if not all, of the products ordered
from foreign sources require a liability waiver prior to delivery. This
particular system, while less expensive for the consumer, bypasses
regulatory safeguards and places them at greater health risks.
Closing Statement
Again, this is a complex and evolving problem that crosses many
jurisdictional boundaries with both national and international
implications. I have addressed Florida's actions to date, but I think
you will find similar safety concerns from my peers throughout the
country.
FDOH is committed to addressing this safety issue and look forward
to partnering with our federal counterparts to ensure continued safe
and effective drugs for our residents. We are dedicated to ensuring
secure access to prescription drugs, and applaud federal efforts along
these lines. Undertaking an education campaign to explain the safety
concerns associated with this practice, is a good first step in
highlighting this issue for our residents, and to allow for informed
decision-making.
We are also working within the state to study the extent of the
problem, alternative solutions, enforcement options and legislative and
regulatory actions, and look forward to sharing those lessons learned
with other states, and the federal government.
Thank you for the opportunity to share Florida's experiences with
you today on these important issues.
Mr. Greenwood. Well, thank you very much. The Chair
recognizes himself for 10 minutes for questions. Let us walk
through a hypothetical situation where a resident of Florida,
first off, walks into a storefront, one of these storefront
Canadian pharmacies that we have described in order to get a
lower price product on a legitimate prescription from a
legitimate local Florida doctor. First question I have is at
what point, if at any point, does the senior citizen break
State or Federal law in handing over a prescription to someone
in that pharmacy and/or in making payment, receiving a drug
knowingly from Canada? Has the senior citizen broken State or
Federal law?
Mr. John M. Taylor. I mean I will go first. Obviously, our
focus isn't really on the senior.
Mr. Greenwood. I understand that.
Mr. John M. Taylor. In that context----
Mr. Greenwood. And I am not suggesting you go and arrest
them. I am just----
Mr. John M. Taylor. Right. But in that context, at least
based on the scenarios that I am familiar with, the senior has
fulfilled--I mean they have met with their health care
practitioner and have received, presumably, a valid
prescription, which then facilitates the rest of the conduct.
So our focus is really on the--so just from a FDA standpoint,
we don't see any liability there. I am not sure what the
State----
Mr. Greenwood. Well, I am not asking you where you focus or
if there is any liability, I am asking you is a law violated by
the senior who takes a legitimate prescription from her
physician, goes into a storefront and says, ``I understand that
if I give you this prescription, you can have--you will arrange
to have this medicine shipped to my home from Canada at a less
price--at a lower price than I can get at Costco,'' if that is
the case. Is that a violation of State or Federal law?
Mr. John M. Taylor. From a Federal standpoint, the answer
is no.
Mr. John D. Taylor. Mr. Chairman, I am not absolutely
certain from a State standpoint. I am not aware of a State law
that would be violated by the citizen, but obviously my
understanding of the law deals with the pharmacists and
pharmacies and so I am not sure.
Mr. Greenwood. Okay. Now, let us take the next actor here
who is the fellow, the person behind the counter at that
storefront, who takes that legitimate prescription and then
faxes it or e-mails it to Canada and basically procures on this
person's behalf a drug that would then be imported back from
Canada. Has he or she broken a State or Federal law?
Mr. John M. Taylor. Yes. Keeping in mind that some of these
scenarios are fact-specific, we do believe that the owner of
the pharmacy or the person who is facilitating the importation
of products from Canada does indeed violate the act because of
their acts to facilitate the illegal importation of these
pharmaceutical products if indeed these products are not in
compliance with the manufacturing, the storage, the labeling
requirements that we deem are important and crucial to ensuring
one's compliance.
Mr. Greenwood. And is that your understanding, sir, as
well?
Mr. John D. Taylor. Yes, sir. The Board of Pharmacy spent a
great deal of time on this issue at a recent meeting, and the
board's counsel, who is an assistant attorney general for the
State of Florida, gave the opinion that this would be a
violation; in fact, it would be the unlicensed practice. As I
mentioned a couple of moments ago, there are three main
elements here that can be a judge of that: Whether you solicit
prescriptions, whether you accept prescriptions, and then
dispensing. And all three of these elements essentially occur
once someone walks into this unlicensed facility.
Mr. Greenwood. Okay. Now, let us walk through again what--
and those are State laws or Federal laws?
Mr. John D. Taylor. State laws.
Mr. Greenwood. State laws, okay. And you, sir, said that it
is also a violation of Federal law.
Mr. John M. Taylor. Correct.
Mr. Greenwood. Okay. Now, have either of your agencies
prosecuted anyone in Florida or anywhere else, in the case of
the FDA, for these violations of law?
Mr. John M. Taylor. In the context of a storefront
pharmacy, the answer is no.
Mr. Greenwood. And why is that?
Mr. John M. Taylor. Well, quite frankly, at the time that
we learned or became aware of the proliferation of these
storefronts specifically here in Florida, we contacted the
State of Florida and we have had negotiations with the very
attorney that Mr. Taylor recognized. The reason we haven't done
anything yet is it is still new to us, we are looking at the
fact pattern. One of the important factors, Mr. Chairman, is
the fact that FDA, for example, one of the charges that we
would use is that this product is misbranded because it is
dispensed, that it is not a valid prescription pursuant to
State law.
During Mr. Taylor's testimony, he noted the fact that the
State of Florida was proposing a rule that may be filed in a
few months that articulates clearly that the use of an online
questionnaire or the use or dispensing of a prescription
without patient/physician interaction is not in accordance with
State law. And if it is not in accordance with State law, then
it automatically makes it a Federal charge that we can utilize.
We are also, quite frankly, focusing on the Internet sites that
many of these storefronts are utilizing across the board. So
the bottom line is we are looking into the situation, but we
have not taken any action as of today.
Mr. Greenwood. Anything to add to that?
Mr. John D. Taylor. Just to say, Mr. Chairman, that
complaints have been received, and they are under
investigation.
Mr. Greenwood. Okay. If you went down to the Miami Airport,
you would see, and I don't know if either of you have ever done
that, but you would see truckloads, airplane cargo loads of
cardboard boxes and other containers coming in with drugs, with
postage stamps from places like the Bahamas, the United
Kingdom, all over the place. And I am keenly aware of the
limited resources, but I wonder to what extent the FDA, working
with Customs, is saying, ``We know that the flow is so
gargantuan that is it's virtually impossible to stop it.'' But
when you see particularly high volumes from a particular place,
for instance, at the Miami Airport, as we sit here, there are
probably a dozen garbage bags full of envelopes, manila
envelopes containing Viagra, probably fake viagra, that has
come in, much of it from one particular location in the
Bahamas. Is the FDA at work with Customs to say, ``We are going
to turn all that stuff around and send it back or we are going
to, it is not that much of a hop from here to the Bahamas, go
in and find this location and shut it down''?
Mr. John M. Taylor. Well, one of the positives that has
occurred in the last year is that FDA strengthened its
relationship with its international counterparts. One of the
difficulties, aside from the resources, but just a logistical
challenge, is working with our foreign counterparts not only to
deal with a products at the point of origin but also obviously
to deal with the product once it enters United States borders.
And we have worked--we have had numerous discussions with the
Canadian government. We are working with a couple States that
are looking at the influx of products from India and Israel,
two countries in particular who seem to be poised to augment
the shortage of products that are--because the math doesn't add
up and there is such proliferation of sites from Canada, it is
obvious that not all these products could be coming from
Canadian pharmacies, from the United States or from Canada
itself. And so there are other countries that seem poised to
fill the gap by providing their product.
So we are working with the States, we are working with a
larger number of foreign governments, we have gone to Geneva 2
years in a row to work with the Canadians--I mean, I am sorry,
to work with our European counterparts and to meet with our
Asian counterparts to do a better job of identifying the
products at the time that they leave the foreign country so
that we are able to more readily identify those products when
they hit our shores.
One of the challenges is that there are so many packages
unless we sort of have a heads up from a foreign country that
these packages contain a specific drug, some of those packages
can still evade our net.
Mr. Greenwood. Well, I understand all that, but what I just
heard you say, in all due respect, is we are talking to these
people, we are talking with those people, we are interacting
with these people. What I haven't heard you say, we kicked down
this door, we kicked down that door, we shut down this
operation, we arrested people over here. Have there been----
Mr. John M. Taylor. Sure. Let me walk you through some of
the tangible cases. I mean we currently have several cases--
actually several sites being investigated right now with
several States, and those are specifically States that have
taken a very tough position regarding what constitutes a valid
prescription. And, obviously, that makes it easier for us to
build a Federal case. But in the written testimony, for
example, there is a case that we took where recognized that the
product was actually coming in from Australia, and so we took
action against the actual distributors here in the United
States. There is another situation, which is really
illustrative, of a case that is in the----
Mr. Greenwood. Can you let me interrupt you for a second?
Mr. John M. Taylor. Sure.
Mr. Greenwood. What are some of the States that have taken
such a hard line?
Mr. John M. Taylor. The State of Arizona in particular has
very strong and explicit language regarding what does not
constitute a valid prescription. So you will notice we have a
criminal case there. The State of Missouri traditionally has
been very tough, the State of Texas, the State of Washington.
So these are States where we have a tendency to build stronger
Internet cases.
One case that is particularly illustrative is a criminal
case that we brought in Nevada, and it involved a Germany
company that essentially owned the German distributor and also
owned the company that received the products from German. The
company--the facility in Las Vegas not only imported the
products but repackaged them and then facilitated the
distribution in the United States. That is a situation where,
again, we worked with our European counterparts to help
understand the German operation, and then in light of the fact
that they also had a United States operation, we criminally
prosecuted them for conspiracy, for repackaging the products.
Mr. Greenwood. So people have gone to jail over this.
Mr. John M. Taylor. Yes. We do have arrests in that case
and several of these cases.
Mr. Greenwood. Okay. After this subcommittee had a hearing
in June of 2001, nearly 2 years ago, the FDA proposed to the
Department of Health and Human Services that it allow FDA and
Customs to deny entry of all these illegal drugs into the U.S.
and return them to the sender.
Mr. John M. Taylor. That is correct.
Mr. Greenwood. What is the status of that proposed
regulation?
Mr. John M. Taylor. The status of the regulation is that
the Secretary and the Commissioner are engaged in discussions
regarding the proposal that we made 2 years ago.
Mr. Greenwood. I am sorry, say that again.
Mr. John M. Taylor. I am sorry. The Secretary and
Commissioner have been meeting regarding the proposal that we
made 2 years ago.
Mr. Greenwood. Okay. What seems to be the holdup?
Mr. John M. Taylor. Quite frankly, I am not sure. I know
that they recognize that there are a complex number of issues
here, but I think there is also recognition or a concern that
using some of these short-term solutions, for example, the
solution we proposed 2 years ago, really will not get to the
crux of the issue, Mr. Chairman. I think the administration's
feeling is that there is a need for a more comprehensive long-
term solution, and they feel that that solution is Medicare
prescription drug coverage. So it is something that is under
active review. But as you know, over the last couple years
there have been many thoughtful approaches, some put forth by
the Hill, some put forth by FDA, and we have been unable to
find one that addresses the safety and integrity concerns for
the product, as well as providing some evidence that the costs
of drugs would actually decrease. The Jeffords bill is an
example where both Secretary Shalala and Secretary Thompson, as
thoughtful as that was, it contained a requirement, a pedigree
requirement that allowed the tracing of the product, a
requirement that would have allowed for analytical testing as
well as some other steps. But even in that context, we just
could not certify that it was going to assure that the American
public was going to be exposed to safe and effective products.
Mr. Greenwood. Well, I guess my own view is that the fact
you can't solve the entire problem in one fell swoop shouldn't
be an impediment to saying if we just took a significant size
group of packages that are coming from another country and just
sent them all back and did that even if it is a drop in the
bucket, it begins to have an impact. People don't get what they
are ordering, the company who is expecting to profit from this
is finding all of this stuff back at its doorstep, and it just
doesn't seem to me a lot of that is happening.
Let me finish with this question. In my opening, I
mentioned Reverend and Mrs. Rode. Their son died of drugs he
purchased over the Internet. The drugs came from South Africa.
This committee knows the company and its location. We have
shared that, I believe, with the FDA, and the question is what
has the FDA done in this specific question for the Rodes and
has OCI done anything at all?
Mr. John M. Taylor. Before I answer that question, could I
answer the question you posed before?
Mr. Greenwood. Sure.
Mr. John M. Taylor. FDA still feels that that proposal is a
good, viable proposal, the one we made in 2001, so I take your
words to heart. We still think despite the fact that there
might be a more comprehensive solution down the road, we still
think that is a good proposal, and we look forward to having--
--
Mr. Greenwood. Well, when the 2-year anniversary occurs and
nothing has happened, you can expect this committee to dance on
the FDA's head.
Mr. John M. Taylor. Fair enough.
Mr. Greenwood. The gentleman from Florida.
Mr. Deutsch. Thank you, Mr. Chairman.
Mr. Greenwood. Oh, I am sorry.
Mr. John M. Taylor. Yes. And let me answer the second one.
I don't have the current status of the case but I remember, and
OCI now reports to me at the time of that hearing they did not,
but at the conclusion of that hearing they were told to go back
and investigate that Internet site. My understanding is that
they have done so. I will certainly get you a progress report.
Mr. Greenwood. Okay. We will expect then from you a full
accounting of that----
Mr. John M. Taylor. Fair enough.
Mr. Greenwood. [continuing] in letter form as soon as you
can. Thank you.
The gentleman from Florida.
Mr. Deutsch. Thank you, Mr. Chairman. And, actually, not to
be outdone of mothers who visit, my mom's actually in the
audience. Mom, why don't you wave.
Mr. Greenwood. And a fine looking woman she is, Mr.
Deutsch.
Mr. Deutsch. Thank you. Mr. Taylor--actually, let me--I
want to take you, actually--this is an ad that appeared
actually in this week's Broward Jewish Journal, and in fact
this week's Broward Jewish Journal actually had seven ads for
seven different locations of seven different Canadian
pharmacies. It is not too hard to find them. And I guess the
question is they are there. I mean tomorrow there are going to
be more there. This one ad lists three different locations, I
guess all of which are in Broward County. People are going,
they are growing. I mean seven ads this week. Are they legal,
are they not legal?
Mr. John M. Taylor. Well, first of all, you are absolutely
right. The number of sites are proliferating, and each week we
see more and more. We think that the conduct--first of all, let
me point out that the FDA approved--there are several things
that strike me about that advertisement. One is, as I said in
my oral testimony, despite the fact that many of these sites
advertise that they are FDA-approved, we find that very hard to
believe. In most cases, the products are not FDA-approved. And
there are two reasons why we think that is the case. One is
because under the Federal Food and Drug Cosmetic Act, the only
party that legally can reimport a drug that is manufactured in
the United States is the actual manufacturer. So for those
products to be FDA approved and legal, they would have to be
manufactured outside the United States in a FDA-approved
facility, imported to Canada and then imported to the United
States, and we just don't see that type of widespread activity.
But going to your more global question, we think that ads
like this facilitate illegal conduct, we think it facilitates
the introduction of misbranded, adulterated and in some cases
products that are dispensed without a valid prescription. So we
do think that these ads facilitate--realizing that each of
these fact patterns might have certain nuances, but we think
that globally most of these fact patterns facilitate
importation of products in violation of the act.
Mr. Deutsch. Do you have any idea how many of these
pharmacies exist presently in the United States of America?
Mr. John M. Taylor. No, we do not.
Mr. Deutsch. Are you aware if they exist anywhere outside
of Florida at this point?
Mr. John M. Taylor. Absolutely.
Mr. Deutsch. They do?
Mr. John M. Taylor. Absolutely.
Mr. Deutsch. In a number of other States?
Mr. John M. Taylor. Yes. Especially in addition to the
State of Florida we are seeing them along the northern border,
and one of the complaints that the northern border States have
been making is that their own pharmacies are being harmed--the
pharmacies along the northern border of the United States
because many of their customers are using these Internet sites.
Mr. Deutsch. Has anyone from the FDA actually visited any
of these locations?
Mr. John M. Taylor. Any of the storefront locations?
Mr. Deutsch. That is correct.
Mr. John M. Taylor. Not in the State of Florida. We have
gone to a couple in the--I guess we went to one possibly in the
State of New Jersey, but traditionally we have left it up to
the States to visit the storefront pharmacy.
Mr. Deutsch. So are you aware--did the FDA visit one
pharmacy of this type in New Jersey?
Mr. John M. Taylor. I think we might have. I will have to
double check on that. We have not been to any of the storefront
sites.
Mr. Deutsch. So do we even know what these storefronts do?
Mr. John M. Taylor. Yes, we do.
Mr. Deutsch. How do we know if we have never visited them?
Mr. John M. Taylor. We know because we contact the States
when we get word of these sites. We had a call at the beginning
of February with 38 State Board of Pharmacies in the context of
the storefront site that I guess in Delray Beach. After we saw
that in the press, we called the State of Florida to learn
generally how the operation was being conducted. We talked to
the States about whether or not the site is operating in
conformance with the practice of pharmacy. And then what the
agency does is we focus on the Internet sites that are being
utilized----
Mr. Deutsch. Let me just switch----
Mr. John M. Taylor. Sure.
Mr. Deutsch. [continuing] to the other Mr. Taylor. I mean
he has said it is your responsibility. Is it your
responsibility?
Mr. John D. Taylor. Well, we have received complaints of
this type of thing, and those complaints are being
investigated. Obviously they are confidential and so I don't
know the details of those investigations, but I do know that
they have been received and that the Secretary has asked the
folks in his office to see what can be done. One of the
problems----
Mr. Deutsch. Can I ask again this simple question: Are they
legal or are they not legal?
Mr. John D. Taylor. In the opinion of counsel for the Board
of Pharmacy, no.
Mr. Deutsch. They are not legal.
Mr. John D. Taylor. That is correct.
Mr. Deutsch. All right. So they are proliferating. This
week there were seven advertisements at different locations;
next week there could be 10. I mean if they are not legal, why
are they existing? Have you visited them? I mean are you
shutting them down? Do you plan to shut them down?
Mr. John D. Taylor. They have been visited. One of the
problems, without giving too much away of the strategy, in
looking at this is one of the things that States that is is
illegal is a Florida administrative code rule which doesn't
have as much strength, obviously, as a statute. And so the
folks that are pursuing this are being very careful that they
do this right as they pursue it, sir.
Mr. Deutsch. Go ahead.
Mr. John M. Taylor. Congressman Deutsch, I just want to
clarify. I am not saying it is the States' responsibility. I am
saying, actually, that the responsibility is complementary. It
is the Federal Government and the States' responsibility. I
noted that Mr. Lipscomb in the first panel said that he called
FDA and FDA said it was the States' responsibility. In our
relationships with the States, the States have the primary
jurisdiction over the pharmacies, we often work sort of along
these lines. The States will deal with the pharmacy issues, we
will deal with the product issues. But it is----
Mr. Deutsch. Let me focus still on these pharmacies for a
second. Why are they dangerous, in your opinion? I mean what is
going on that is dangerous in these--why should we want to shut
them down?
Mr. John M. Taylor. I feel and FDA feels that they are
dangerous because we do not know anything about the products
that are being dispensed from these pharmacies. More
specifically, we don't know how they are manufactured.
Mr. Deutsch. Let me ask you the question now. If you are
ready to shut these down, are you ready to shut down Internet
purchases from Canada, because how is this really different
than the Internet purchases from Canada?
Mr. John M. Taylor. It is indistinguishable.
Mr. Deutsch. So is the position of the FDA that you want to
shut down Internet purchases from Canada?
Mr. John M. Taylor. It is our position that the Internet
sites from Canada are illegal and facilitating illegal conduct.
Mr. Deutsch. That is not the question I asked you. Is it
the position of FDA that you want to shut down those sites?
Mr. John M. Taylor. Yes. To the extent that we----
Mr. Deutsch. Yes.
Mr. John M. Taylor. To the extent that we have researched
this, we think it is important to take action against those
sites.
Mr. Deutsch. Let me just follow-up which is just mind
blowing to me at this point. How many scripts or how many
packages of Internet purchases have been made for Canada in the
last 12 months in the United States of America?
Mr. John M. Taylor. Some of the estimates that we have
received 3 to 4 million packages or more in the last 12 months.
Mr. Deutsch. Okay. In my office last week, who specifically
came to us to present those numbers? The commissioner? Which
commissioner? Commissioner McCullum was in our office last
week. The number he used was 10 million. I mean where is the 3
million--was it 7 million less than last week?
Mr. John M. Taylor. No. I mean the 10 million has been,
quite frankly, one number; 3 or 4 million has been another
number.
Mr. Deutsch. Maybe 100 million is another number, maybe 50
million is another number, maybe 250 million is another number.
Mr. John M. Taylor. No. We cannot actually----
Mr. Deutsch. So the facts are you have no idea.
Mr. John M. Taylor. Right. We cannot accurately quantify
it.
Mr. Deutsch. You have no idea, really no idea.
Mr. John M. Taylor. We cannot accurately quantify the
number of packages that come into the United States.
Mr. Deutsch. You have absolutely no idea.
Mr. John M. Taylor. To the extent we have any information
it is anecdotal about the number.
Mr. Deutsch. And we are talking about millions, tens of
millions.
Mr. John M. Taylor. Absolutely.
Mr. Deutsch. And anecdotal.
Mr. John M. Taylor. And increasing, increasing with each
week.
Mr. Deutsch. I mean tens of million, potentially. Three
million, 10 million. I mean we are not talking about thousands
or hundreds.
Mr. John M. Taylor. No, we are not; we are talking about
millions of packages.
Mr. Deutsch. Millions of packages. And what you have
testified now is that FDA wants to shut that down. I mean is
that--I mean that is what I heard you say.
Mr. John M. Taylor. Yes. FDA would like--absolutely. We
would like to find a way to stem this tide and deal with this
situation. One of the struggles, however, is having the
resources to be able to check each package as it comes in and
pursue the investigations that are necessary to deal with
packages and lots of this size.
Mr. Deutsch. Let me just mention that our staff at the
Miami facility, according to the officials there, said it takes
about a half hour per package? FDA takes 2 hours per package. I
mean, you know, we could basically get rid of the 5.8 percent
unemployment in America tomorrow, we could hire everyone to go
through the packages. They could probably speed it up a little
bit. I mean, obviously, we are not going through 10 million
packages a year. I mean it is just impossible.
Mr. John M. Taylor. Well, correct, Congressman. I mean that
is one of the reasons why we made the proposal 2 years ago is
because it does take a long time to process each package,
because when a package comes into the United States, pursuant
to the act----
Mr. Deutsch. Right.
Mr. John M. Taylor. [continuing] we need to provide notice.
I mean there are due process requirements that we have to
comply with, and so it takes an inordinate amount of time to
process each package. So you are absolutely right.
Mr. Deutsch. Let me ask you a question. Is there any
attempt by FDA, I mean there is an acknowledgement, I think, by
you and the Commissioner that we really don't know what is
going on. I mean there is no question, we have no real idea
what is going on. Is there any systematic program in place at
FDA trying to get our arms somewhat around what is going on?
Mr. John M. Taylor. Congressman, we are actively
discussing--if you note in the written testimony, a couple
years ago we did what was called a Carson study, which is now
dated, but at that time we did that study to get a better
understanding of not only the quantity but more importantly the
type of packages that were coming into the United States.
Because what we learned from that pilot was that a lot of the
products were not--I mean were antibiotics, pain killers,
things that worked as well as other products that if they were
not used properly were affirmatively dangerous.
But we think there is a better way or maybe a better
approach to taking our knowledge base one step further. So we
are actively looking at additional pilots that we think would
help us understand better the problem we are dealing with.
However, as you noted quite well, the scope issue is one that
is readily apparently and hitting us in the face. It would just
be a matter of getting more quantification about the pace and
quite frankly the type of products that are coming here.
Mr. Deutsch. Let me kind of turn back a little. You are
talking about what you are doing now and just brainstorming. I
mean, obviously, our staff has been looking at this extensively
as well, and one of the things I have asked the staff to look
at is maybe think a little bit outside the box and basically
say, okay, we have this phenomenon which is literally in the
millions. Millions of people have availed themselves of this
option. And I think the concern, truthfully, is that it really
a two-tier system. I mean I think anyone who looks at it
objectively understands that there is a certain amount of risk.
We don't know how much that risk is, it is anecdotal at this
point in time, but I don't think it is fair to say that there
is no risk, I mean to go into one of these facilities. I would
absolutely say that. And the FDA itself does an incredibly
effective job in America in terms of the safety and efficacy of
drugs in the United States.
Has anyone looked at, and I have asked from the FDA side, I
have asked our staff to really try to think outside the box a
little and basically say, okay, can we do something to deal
with that risk from the Canadian side in particular? Because it
does seem to, at this point, really be a Canadian phenomenon.
It is not a Mexican phenomenon yet, it is not an Israeli
phenomenon yet, although that is the potential, and we have
seen some indication that that is at the cutting edge, because
I have actually seen ads now that people are now advertising
you can better price through Israeli drugs or Mexican drugs,
Bohemian drugs.
So have we looked at it to really say, okay, let us
interact with our--or interface with our Canadian counterparts
and try to have the efficacy and safety through the Canadian
system that we can give the FDA seal of approval? Again, it is
totally different than every way we are looking at it now, but
maybe that is an approach as opposed to an approach which I
think politically, honestly, you and I both know politically no
one--the Secretary is not ordering the stopping of this
importation at this point in time, I mean it is not happening.
Congress is not legislating that it is going to stop happening.
I mean this is the 800-pound elephant inside the tent, and
maybe if we are not--I mean hopefully, I think all of our hope
is that we are going to have a prescription drug benefit that
we are going to pass in this Congress that is going to address
this issue that tens of millions of people forcing themselves
into effectively a second tier pharmaceutical system in
America. If we can avoid that. I mean are you looking at all at
that option?
Mr. John M. Taylor. Yes. We have been working with the
Canadians closely, and, quite frankly, we have not limited our
options. The Commissioner met with the Deputy Minister of
Health last month. We now have a--we had a meeting where
industry, the Canadian government, the United States government
met a couple weeks ago to look at the problem more globally and
to look for some solutions. We are not--at this juncture,
because of the breadth of the problem, we are not limiting
ourself to any options or choices. We are looking at it all
globally, including the question of whether or not there is
some type of equivalency.
In addition, I am meeting with the Canadian officials next
week to, again, continue discussions regarding this issue. We
have shared with them web sites that are of concern to us, and
we have talked to them about having actual contact points in
the United States that can help them address these regulatory
issues, not only in the context of these individual shipments
but also in the context of looking at how this practice affects
health care for the United States and Canada. So the
equivalency that is something that has been put on the table as
a possible idea.
Mr. Deutsch. Let me just follow up with two final
questions. One is we just talked a little bit about this whole
idea of Canada versus other countries.
Mr. John M. Taylor. Right.
Mr. Deutsch. At the Miami facility, the staff going through
these drugs noticed the drugs coming in from Mexico, the
Bahamas, Central American countries, Europe and elsewhere. When
seniors are ordering Internet drugs through Canada and they are
working through one of these entities and they are sending
faxes or Internet e-mail, what assurance do they have that they
are actually coming from Canada?
Mr. John M. Taylor. None at all, no assurance at all. And,
quite frankly, as we begin to dig deeper, we are obviously
finding tangible evidence that products indeed are not coming
from Canada, they are coming from other countries.
Mr. Deutsch. The final question, which is really, I guess,
related to this, and we have been looking. I mean we have met
with pharmaceutical companies, our staff has been looking. At
this point, we hear, and the chairman and others have
mentioned, some anecdotal information of misuse. The truth is
there is misuse of drugs absolutely correct, prescription drugs
at the local pharmacy in south Florida. And I don't know if it
is more, I don't know if it is less than purchase on the
Internet. I mean there is misuse, there is drug interactions,
people die really anecdotally all the time in terms of this
type of thing.
The question really is what evidence do we have beyond
almost what we have heard--I mean the U.S. Congress Oversight
and Investigation Committee sitting here even though it is
Florida this is the people. We should know. I mean we literally
should know and you should know, and we have been looking. I
mean maybe the problem isn't as bad, and that is really--this
is an investigation here. Maybe the problem isn't as bad. What
evidence do we have sort of what the adverse effects have been?
I mean we can talk anecdotal, we can talk theoretically about
the problems, but do we have any handle at all that maybe this
is a good thing, maybe it is a system that is working, maybe
tens of millions of Americans are living longer because they
can afford the drugs, that they are not self-medicating and
cutting their prescriptions in half and missing prescriptions.
Maybe we should be encouraging, maybe the Federal Government
ought to be offering the web sites.
I mean I am being very serious and sincere in what I am
saying, because we are really--I think we are being open and
honest in our investigation. What evidence do we have of there
actually being a problem that is not anecdotal, that is not
theoretical?
Mr. John M. Taylor. Let me answer it in two parts. In
regards to the adverse events, we get this question a lot. Our
adverse event system does not discern between whether or not an
adverse event is from a product that is purchased pursuant to
an Internet site or not. So you are right, it is difficult to
quantify. And as we know, adverse events occur whether it is
purchased from a brick-and-mortar pharmacy or from an Internet
pharmacy.
Mr. Greenwood. Would the gentleman yield for a second?
Mr. Deutsch. I would be happy to.
Mr. Greenwood. Let me just interrupt you there because that
is a very important point. Why doesn't your system, your
adverse event system, take that into consideration? I mean if
you have a system for reporting adverse events, it would seem
that in this day and age, given what we have been talking about
today, that you would want to add a question to your adverse
event investigation system that says where did it come from.
Mr. John M. Taylor. Well, one of the Commissioner's five
priorities is looking at our whole adverse event system, and it
is one of the issues that is part of that discussion that we
are going to take on. So you are absolutely right, Mr.
Chairman.
Mr. Greenwood. Here is how long it would take me to do
that. Good idea; yes, do it. Done.
Mr. John M. Taylor. I agree. I agree.
Mr. Greenwood. Yield back.
Mr. Deutsch. Okay.
Mr. John M. Taylor. So you are right. But one of the things
we have done is we have talked at our State phone call about
adverse events. We realized that the States through some of
their poison control centers do have some evidence of adverse
events that potentially resulted from products that they
purchase over Internet sites. And we are getting that
information from them and trying to quantify whether or not
there indeed are tangible examples of people who have been
harmed because of products purchased over the Internet.
The other part of my answer, though, is this: We see our
job as trying to ensure that to the extent that adverse events
can be mitigated, that this occurs. And part of that process is
ensuring that products that have, quite frankly, not been
manufactured properly do not make it here. I can give you some
tangible examples of some products that we have noted as part
of our Carson pilot or as part of some other investigations
that we have done, and these are products that have what are
called narrow therapeutic indexes.
I think the--I forgot, maybe, Mr. Chairman, it was you that
raised the example of the Cardizem. Cardizem products that are
used for seizures, products that are used for heart disease
they have such a narrow therapeutic index, which means that if
they are not manufactured exactly right or if the granule size
of the active ingredient is not manufactured exactly right,
then the health care of the person who is taking the product
will be profoundly impacted. And we actually had a criminal
case at FDA regarding a seizure product that was counterfeited
overseas, and what happened is that the particulate--the
granules, the particulate matter, was off just a little bit and
what happened is that the product did not dissolve at the same
rate in the blood and people who had never had--had no had
epileptic seizures for 10 years began to have them. And I was
one of the attorneys prosecuting that case, and that is, I
think, a tangible example of where not knowing----
Mr. Deutsch. If I can just interject.
Mr. John M. Taylor. Sure.
Mr. Deutsch. I mean I think we make a distinction, and this
subcommittee has really spent a lot of time investigating, I
mean there is a difference between the phenomenon of
counterfeit drugs coming in and this phenomenon as well. I mean
counterfeit drugs can still exist outside of Internet
pharmacies, entering the country through wholesalers and that
becomes a criminal enterprise, different than if there is a
criminal enterprise versus this phenomenon. I think they can
interrelate, but I don't think a counterfeit enterprise is
proof of an adverse--I mean that counterfeit enterprise can
still enter the United States without the Internet, and it
probably did, because we have examples and extensive examples
of counterfeited drugs entering the United States before there
was any Internet pharmacies. Do you understand what I am
saying?
Mr. John M. Taylor. That is correct. I understand.
Mr. Deutsch. So counterfeit drugs does not equal Internet
pharmacies.
Mr. John M. Taylor. No, you are absolutely right, but the
reason I use that example is because that example is
illustrative of an actual situation where a product that was
not manufactured in accordance with FDA statute and FDA regs
led to actual harm.
Mr. Deutsch. Right. But let me ask you--again, I mean this
is--wouldn't we see more injuries, I mean if this was an
incredible abuse, 10 million minimum maybe, maybe more? I mean
10 million, wouldn't we see more stuff?
Mr. John M. Taylor. It is difficult to say. I mean one of
the things we have also learned in FDA, and this is in regard
to adverse events, whether it be a drug or food, is that a lot
of people don't even know that they are having an adverse
event. If you are heavily medicated and you are taking
different medications or, for example, in the context of food,
you don't feel well, people often attribute to other factors
other than the product that they took. So it is hard to tell.
Mr. Deutsch. Right. I know it is hard. If it was easy, we
probably wouldn't be here. I mean how do we measure it? I mean
what are we trying to do to measure it? Because one of the
things out there, they are real people. I mean the first panel
were real people who are literally making choices with their
lives. Millions of American seniors are making choices with
their lives today, okay? And I think one of the things we can
do, if nothing else, is be helpful in providing some
information to them about what the factors of that choice are.
And you can do now, and we can do as well--I mean how do you
measure what the problem is?
Mr. John M. Taylor. Well, measuring the problem--aside from
keeping track of the proliferation, measuring the problem is
very difficult. What we have tried to do, and you just
highlighted it a second ago, is we have tried to increase our
consumer outreach and working with AARP and others and
providing brochures that help people understand better, knowing
that for some the choice, in light of the difference in costs,
some are going to make the choice no matter what. But we have
tried to--not only does FDA have a separate web site that
instructs people how to purchase products online safely and
gives some tips for doing so, we have also in the context
specifically of foreign Internet sites put out brochures again
trying to instruct people, trying to get people to interact
with their health care practitioner before they purchase
products over the Internet. And, in addition, the National
Association Board of Pharmacy, their verified Internet practice
sites, it is a seal, and that seal essentially indicates that
the products that are purchased over that Internet site are
manufactured in compliance with FDA and are in compliance with
State law. So we try to encourage consumer awareness as one
means of trying to alleviate the problem.
Mr. Deutsch. Thank you very much.
Mr. Greenwood. The Chair thanks the gentleman from Florida.
The gentleman from New York is recognized for 10 minutes.
Mr. Engel. Thank you, Mr. Chairman. Listening to the
testimony it just again hits me, something I said before and
something we all know is, we are not doing what we should be
doing in Washington. And because these things are happening,
these Internet sites and also the franchises and other things
that are happening, we have to now catch up to them, because it
is a phenomenon that is relatively new.
Mr. Taylor of FDA--first of all, let me say that in
hundreds and hundreds of hearings I have been to I have never
been to one where both gentlemen have the same name. And then I
noticed in the next panel, Mr. Chairman, we have a Michael
Jackson, so I think this is certainly a unique hearing. It was
worth it coming to Florida for this.
Mr. Taylor from the FDA, you alluded in some of your
answers to both Mr. Greenwood and Mr. Deutsch about resources
for the FDA. I am wondering if you can expand on that funding.
Obviously, this is something that is a fairly new phenomenon.
Does the FDA feel that more funds are necessary from Congress
to enable you to do what you have to do? Mr. Deutsch, I think
pointed out, or was it Mr. Greenwood, about how--I think it was
Mr. Greenwood, that there were two per hour, or whatever it is.
Obviously, at that pace, there is no way we are going to be
able to get to it. It was Mr. Deutsch because he talked about
unemployment. But is funding a problem?
Mr. John M. Taylor. Yes. We did receive some funding last
year from Congress to hire additional investigators to work at
our ports as part of the counterterrorism initiative. However,
the proliferation of sites and the number of packages obviously
has far eclipsed our ability to handle that. And the resource
issues comes into play in two ways. One, pursuant to the act,
as I noted before, when a package comes in, we need to provide
notice to the consignee that their package has been seized, and
then they have an opportunity to challenge the seizure. That in
and of itself is time consuming, so that is one aspect of it.
But the other resource aspect of it is that quite frankly we
just do not have enough people at this time to cover all the
ports. And so at some ports we will have people there Monday,
Tuesday and Wednesday, and then the next 2 days of the week
they will go to another port, so our coverage is incomplete.
That is the two ways.
Mr. Engel. Could we really--since this problem is obviously
tremendous and getting deeper or worse by the day, can we ever
really have enough resources? I mean wouldn't it take literally
to be at every port and to cover it the way we need to cover
it, I mean wouldn't you have to put on tens of thousands of
additional employees? So, therefore, since that is obviously
not feasible, what can be done with the resources we have to at
least make a dent in this? Obviously, we are not making a dent
in it now.
Mr. John M. Taylor. Sure. You are absolutely right.
Additional resources would help us stem the flow somewhat, but,
obviously, the number of resources that are required to stop
this I can't even begin to quantify them. I am not sure there
is actually a figure that would allow us to look at every
single package that is coming into the United States. So
instead what we have tried to do is, first of all, we have
tried to emphasize the use of various tools that allow the
public to understand some of the concerns that we have when one
uses one of these sites to purchase their products. We have, as
I said before, drafted several brochures that we have issued
that we have actually given to storefront pharmacies to help
people understand not only the risk but also to help them
understand some of the factors that they should engage in when
they are making a decision whether or not to purchase products
over these sites. We also have worked with the States and, as I
said before, increasing our working relationship with many of
our foreign counterparts to do the best we can to leverage the
limited resources that we have to address this problem.
Mr. Engel. In working with the States, Mr. Taylor of
Florida, have you worked with other States, have you put your
heads together and tried to talk about things that may have
come up or is each State sort of on its own?
Mr. John D. Taylor. Well, the National Association of
Boards of Pharmacy obviously has helped in that regard. And we
were on the 38-State teleconference that Mr. Taylor mentioned
earlier, which was a time for interaction between the States as
well. But it has been fairly limited, I think.
Mr. Engel. Okay. Mr. Taylor of the FDA, I am told that the
committee staff have just visited the Miami International Mail
facility to examine what kind of drugs are coming to the United
States. Have you been to that facility?
Mr. John M. Taylor. No, I have not. I have not been there
since this proliferation of mail. I have been to the Miami
facility about 5 years ago, but obviously the conditions today
are much different than they were then.
Mr. Engel. Well, we are told that FDA and U.S. Customs
staff are virtually swimming in thousands of shipments of
controlled substances and counterfeit drugs and others, and
some might be legitimate and some not. Are you aware that they
are literally swimming in thousands of shipments?
Mr. John M. Taylor. Yes, I am.
Mr. Engel. And while some of these shipments are
legitimate, obviously many are highly suspect?
Mr. John M. Taylor. That is correct.
Mr. Engel. You mentioned about the two inspector hours to
process a single shipment through the Oasis System. Are we
increasing those numbers of inspectors above two?
Mr. John M. Taylor. Quite frankly, I couldn't answer today
as to what our staffing plans are for the Miami facility.
However, as I said earlier, in light of last year's funding
request, we were able to hire additional investigators to work
at the ports, and we have increased our port coverage across
the United States. One of our priorities has been boosting the
level of--or boosting the number of people, for example, in our
UPS hub in Louisville, because, as large as--or as steep as the
increase is in the context of the mail, it is even steeper in
the context of UPS. So we have been focusing on increasing our
staffing at Federal Express and UPS, and to the extent that we
can bring more people into Miami, it is something I am
certainly willing to look into.
Mr. Engel. In order to deal with this, do we really need to
change the laws to deal with this? Is that correct?
Mr. John M. Taylor. Well, in order to finalize the proposal
that the chairman was referring to, the proposal--specifically,
the proposal that would allow us to send the packages back or
to unilaterally destroy them, we would need a statutory change,
because, as I said before, as of right now, we cannot send the
packages back or destroy them; we have to provide some notice
to the recipient that the package has been detained by FDA and
give them an opportunity to respond. So, yes, it would require
a legislative change, specifically to section 801 of the act.
Mr. Engel. Let me ask Mr. Taylor of Florida, is it true
that these walk-in pharmacies--we are told that these walk-in
pharmacies may soon be showing up here in Florida malls, in
kiosk operations. Have they been? Have you heard that they will
be? Is that something that the State of Florida has learned
about?
Mr. John D. Taylor. I have heard about that type of
situation. I think that many of the first facilities often were
insurance company offices and things like that, but I have
heard that there could be plans for offices in malls as well,
sir.
Mr. Engel. Do we know anything about the operators of these
walk-in pharmacies? Are any of them trained in the practice of
pharmacy?
Mr. John D. Taylor. I would expect that they are completely
not. They are certainly not licensed pharmacies or pharmacists
at the facility, sir.
Mr. Engel. The other Mr. Taylor, do we know anything about
the operators?
Mr. John M. Taylor. Of the storefront pharmacies?
Mr. Engel. Yes.
Mr. John M. Taylor. Yes. I mean we feel that we have a good
understanding of how they work based on our discussions with
the State of Florida and the other States who house these
pharmacies.
Mr. Engel. I want to ask Mr. Taylor, Federal, about Glaxo.
They are, as you know, embarking on a policy not to export to
Canadian wholesalers if these Canadian wholesalers send their
drugs to the United States. Does the FDA support that move by
Glaxo, and, if so, why?
Mr. John M. Taylor. Without limiting it to Glaxo, we, quite
frankly, are supportive of any steps to ensure that the act is
being complied with.
Mr. Engel. Doesn't this, though, if Glaxo feels that it has
got to take matters into its own hands, does it show that the
FDA is not doing what it should be doing if Glaxo is trying to
do it this way?
Mr. John M. Taylor. Sir, I don't know. I guess you would
have to ask Glaxo. I mean, obviously, it is indicative of the
fact that there appears to be such a flow of product from
Canada that others are looking at alternatives to the current
system.
Mr. Engel. So what we are saying, in essence, is that these
pharmacies are not regulated at all. I mean there is really--it
is just an impossibility to regulate them.
Mr. John M. Taylor. I guess I would phrase it differently.
I believe that they are subject to both State and Federal law,
or at least some State laws and certainly Federal law. I think
the challenge comes in doing the investigatory work and taking
the law enforcement steps that are necessary to completely shut
off the supply of these products or even stem the supply of
products to a point where we feel comfortable that the American
public can be guaranteed that the products that they receive
once they order from these sites are products that are safe and
effective, in compliance with Federal law and are safe from a
public health standpoint.
Mr. Engel. Thank you. Let me ask the other Mr. Taylor, I
have two final questions. We have here--we have received a copy
of the recent report issued by the Florida Grand Jury on drug
diversion and the State's drug counterfeit problems. This seems
to be an increasingly serious problem here in Florida, probably
in other States as well, but certainly in Florida, obviously
many senior citizens, would you agree?
Mr. John D. Taylor. The grand jury report that dealt with
counterfeit drugs and diversion through wholesaling?
Mr. Engel. Yes.
Mr. John D. Taylor. Okay. Well, I have only been in that
office 2 weeks, but certainly in talking to my colleagues it is
seen as a very serious issue; yes, sir.
Mr. Engel. Well, in this report, it is described that a
number of wholesalers here in Florida are now dealing in
counterfeit drugs, perhaps with their knowledge, without their
knowledge, we really don't know. Are these drugs coming from
Internet operations? If not, where? And what are the theories
that you have about where these drugs might be coming from?
Mr. John D. Taylor. I am not confident to answer that
question today. I certainly could try to get that information
for you, but I haven't been in that office long enough to be
competent in that area, sir.
Mr. Engel. Okay. Thank you both, gentlemen. Mr. Chairman,
thank you.
Mr. Greenwood. The Chair thanks the gentleman and we thank
Messieurs Taylor for being with us very much. Thank you for
your testimony. You are excused, and we will take a brief break
while we bring on the next panel. Thank you, gentlemen.
[Brief recess.]
Mr. Greenwood. Okay. We welcome our third and final panel.
We thank you, gentlemen. We have with us Dr. Elliott Hahn, who
is the chairman and president of Andrx Corporation; Mr. Michael
Jackson, the executive vice president of Florida Pharmacy
Association in Tallahassee; Mr. Carl A. Ruiz, who is the
pharmacy director for Navarro Discount Pharmacies in Miami; and
Mr. Robert N. McEwan, who is the CEO of MEDBANK of Maryland in
Towson, Maryland. Gentlemen, thank you all for being with us.
You probably heard me say to the other witnesses in the
other panels that this is an investigative hearing and it is
our practice to take testimony under oath at these hearings. Do
any of you have objections to giving your testimony under oath?
Okay. Seeing no such objection, I should advise you that you
are entitled to be represented by counsel at this hearing. Do
any of you wish to be represented by counsel? Okay. In that
case, if you would each stand and raise your right hand.
[Witnesses sworn.]
Mr. Greenwood. Okay. You are under oath, and we look
forward to your testimony. We ask you to try to hold your
testimony to about 5 minutes. We have about 45 minutes left for
the entire hearing, and we want to spend as much time as
possible with questions. We are going to start with Dr. Hahn.
TESTIMONY OF ELLIOTT HAHN, CHAIRMAN AND PRESIDENT, ANDRX
CORPORATION; MICHAEL A. JACKSON, EXECUTIVE VICE PRESIDENT,
FLORIDA PHARMACY ASSOCIATION; CARLOS A. RUIZ, PHARMACY
DIRECTOR, NAVARRO DISCOUNT PHARMACIES; AND ROBERT N. McEWAN,
CEO, MEDBANK OF MARYLAND, INC.
Mr. Hahn. Thank you, Mr. Chairman, for the introduction and
especially for the invitation to give testimony today on the
important issue of access to pharmaceuticals that are
affordable and specifically prescription drugs. A key indicator
of the seriousness of this problem is the alarming number of
senior citizens who are purchasing their medications illegally
over the internet.
As a member of the pharmaceutical industry, Andrx strongly
opposes the unauthorized sale or distribution of products
procured via the Internet. Seniors on fixed incomes, as well as
the millions of others that are uninsured or under insured
Americans who purchase their prescription drugs illegally over
the Internet, cannot be certain of the purity of their
medications or the accuracy of the dosage. In addition, they
might be subject to potentially harmful drug-drug interactions
without the intervention of a licensed pharmacist who has a
complete patient history. Furthermore, patients' privacy can be
at risk when purchasing drugs on the web. But the dramatic rise
in Internet importation is not the underlying problem. It is
only a reaction to the real issue of access to affordable
medication for those who lack or have limited prescription drug
coverage.
The importance of this issue is underscored by the number
of Americans having to pay the full freight for expensive
pharmaceuticals. This number is rising rapidly and
dramatically. The uninsured in this country already exceeds 41
million people and is growing. In the coming year, every 2
hours or roughly the length of time that we are sitting in this
room, another 465 Americans will lose their health insurance.
Add to that the millions of Americans who are under insured and
the scope of the problem becomes clear.
Andrx recognizes our responsibility as a member of the
health provider community to provide affordable medications for
uninsured or under insured patients. At Andrx, our mission is
to provide safe and efficacious pharmaceuticals at prices that
everyone can afford, including seniors, the uninsured and the
under insured.
Since its inception, Andrx has been involved with
developing generic versions of difficult to replicate
blockbuster drugs or brand name products. The pharmaceuticals
products that we prepare are those at cost-effective prices.
Recently, we have leveraged our technology base to develop what
we refer to as value-branded products, and the first one is a
cholesterol fighter called Altocor.
Altocor is a highly effective extended-release version of
the first statin, known as lovastatin, which was introduced 16
years ago and has been used safely ever since. Altocor employs
patented technology developed by Andrx to reduce LDL, or the
bad cholesterol, by as much as 41 percent. And what is more,
Altocor is the most affordable option among currently promoted
statins for the millions of Americans who are at risk for
cardiovascular disease.
Altocor's high level of efficacy and safety, combined with
its value pricing, makes it a prime example of industry
innovation. A measure of its success is shown by the fact that
Altocor is already covered by almost all State Medicaid
programs and is on the Medicaid preferred drug list in a number
of States that have implemented managed-care like formularies.
In April, Andrx will implement a new program designed to
meet the needs of those who lack or who have limited
prescription drug coverage. This initiative is called the SAVE
Program. There is no enrollment or paperwork required for the
program; instead patients simply receive a SAVE card and an
Altocor prescription from their doctor and present the card
when they pay for their Altocor prescriptions. Unlike other
pharmacy card programs, access to the SAVE program is not
limited by a patient's age or their income. Andrx is very
excited about the SAVE Program. We believe it will help
thousands of patients who lack or have limited prescription
drug coverage by offering access to a highly effective drug in
one of the most important therapeutic categories.
But that's not all. Andrx is readying a pipeline of other
products that will adopt the same approach. These products will
be designed to treat widespread illnesses effectively, safely
and affordably. That, in fact, will be the hallmark of the
Andrx product line. And, as I said earlier, we can see this as
a new form of innovation that can serve as a model for the
pharmaceutical industry as a whole.
The pharmaceutical industry continues to make great strides
in applying innovative therapeutic technologies to new drug
development, but if it is to rise to the challenges of our
times, the industry must also use its resources to create drugs
that couple efficacy and safety with value. I thank you.
[The prepared statement of Elliott Hahn follows:]
Prepared Statement of Elliot Hahn, Chairman and President, Andrx
Corporation
Thank you, Congressman, for your introduction and especially for
the invitation to give testimony today on the important issue of access
to affordable prescription drugs.
A key indicator of the seriousness of this problem is the alarming
number of senior citizens who are purchasing their medications
illegally over the Internet.
As a member of the pharmaceutical industry, Andrx strongly opposes
the unauthorized sale or distribution of products procured via the
Internet. Seniors on fixed incomes, as well as the millions of other
uninsured and under insured americans who purchase prescription drugs
illegally over the Internet, cannot be certain of the purity of their
medications or the accuracy of the dosage. In addition, they might be
subject to potentially harmful drug-drug interactions without the
intervention of a licensed pharmacist who has a complete patient
history. Furthermore, patients' privacy can be at risk when purchasing
drugs on the web.
But this dramatic rise in internet importation is not the
underlying problem. it is only a reaction to the real issue of access
to affordable medication for those who lack or have limited
prescription drug coverage.
The importance of this issue is underscored by the number of
Americans having to pay the full freight for expensive pharmaceuticals.
This number is rising rapidly and dramatically. The uninsured in this
country already exceeds 41 million people and is growing. In the coming
year, every two hours or roughly the length of time we are sitting in
this room, another 465 Americans will lose their health insurance. Add
to that the millions of Americans who are under insured and the scope
of the problem becomes clear.
Andrx recognizes our responsibility--as a member of the health
provider community--to provide affordable medications for uninsured or
under insured patients. At Andrx, our mission is to provide safe and
efficacious pharmaceuticals at prices that everyone can afford--
including seniors, the uninsured and the under insured.
Since its inception, Andrx has been involved with developing
generic versions of difficult to replicate blockbuster brand name
pharmaceutical products at cost-effective prices. Recently, we have
leveraged our technology base to develop ``value'' branded products.
Our first branded product is a cholesterol-fighter called Altocor
TM.
Altocor is a highly effective extended-release version of the first
statin, lovastatin, which was introduced sixteen years ago and has been
used safely ever since. Altocor employs patented technology to reduce
LDL (bad cholesterol) by as much as 41%.
And what's more, Altocor is the most affordable option among
currently promoted statins for the millions of Americans who are at
risk for cardiovascular disease.
Altocor's high level of efficacy and safety, combined with its
``value'' pricing, makes it a prime example of inDustry innovation. A
measure of its success is shown by the fact that Altocor is already
covered by almost all state medicaid programs and is on the medicaid
preferred drug list in a number of states that have implemented
managed-care like formularies.
In April, Andrx will implement a new program designed to meet the
need of those who lack or have limited prescription drug coverage.
This initiative is called the SAVESM program. There is no
enrollment or paperwork required for the program; instead patients
simply receive a save card and an altocor prescription from their
doctor and present the card when they pay for their Altocor
prescriptions. Unlike other pharmacy card programs, access to the save
program is not limited by a patient's age or income.
Andrx is very excited about the save program. We believe that it
will help thousands of patients who lack or have limited prescription
drug coverage by offering access to a highly effective drug in one of
the most important therapeutic categories.
But that's not all. Andrx is readying a pipeline of other products
that will adopt this same approach. These products will all be designed
to treat widespread illnesses effectively, safely and affordably. That,
in fact, will be the hallmark of the Andrx product line. And, as I said
earlier, we see this as a new form of innovation that can serve as a
model for the pharmaceutical industry as a whole.
The pharmaceutical industry continues to make great strides in
applying innovative therapeutic technologies to new drug development.
But if it is to rise to the challenges of our times, the industry must
also use its resources to create drugs that couple efficacy and safety
with value.
Thank you.
Mr. Greenwood. Thank you.
And let us next turn to Mr. Jackson.
TESTIMONY OF MICHAEL A. JACKSON
Mr. Jackson. Thank you, Mr. Chairman, members of the
committee. I thank you for allowing me the opportunity to
present to you today. I am Michael Jackson, I am executive vice
president of the Florida Pharmacy Association.
A business industry is being developed here in Florida that
has no governmental oversight. This industry is inserting
itself into the professional practice of pharmacy by serving as
a drop-off point for prescriptions. The Florida Pharmacy
Association has learned through its members and in the media
that these storefront centers are opening for business with the
intent on accepting prescriptions written by licensed
prescribers. These prescriptions are then transmitted to a
foreign source for processing and shipping directly to Florida
residents. As a pharmacist, I see this as a significant public
health and safety risk. Patients who seek pharmacy services in
this manner are presenting themselves to untrained, unqualified
and unlicensed individuals.
Not all prescriptions needed by patients are available
through foreign sources. In those cases, we see patients will
have to seek services from their local pharmacy provider. It is
not uncommon for patients to forget to disclose to their health
care provider all of the prescription medications that they are
taking. Knowing that many of these drugs are obtained through
questionable sources there is a tendency to withhold critical
medical information from the pharmacist. The dispensing
pharmacist may be unable to recognize why dispensed medications
are not working or, worse, may be unable to detect a possible
life threatening drug interaction. The consumer could be
subject to increased health risks resulting in illness,
inability to work, impairment or a possible hospital admission.
This business industry is not only unregulated but could be in
violation of State law as evidenced in Florida Statutes
465.003, paren 13 and 465.015.
There is an economic impact of the foreign alternative
solution. Allowing the continued importation of prescription
drugs from foreign countries places Florida pharmacy providers
at an unfair disadvantage. Florida pharmacies are clearly
unable to purchase prescription drugs at the prices listed in
the media ads for foreign outlets. Many of you often receive
mail from constituents asking the simple question, why do my
drugs costs so much? I cannot explain why prescription drugs
are available at such reduced prices from other countries. The
committee needs to know that 80 percent of the cost of the
average domestic retail prescription price represents costs to
the pharmacy over which we have absolutely no control. The
remaining 20 percent of the prescription price represents
operating costs, such as heat, light, rent, salaries,
computers, professional counseling and other overhead expenses.
Florida pharmacies pay in excess of $1.3 billion in taxes
to the State of Florida and perhaps a significant amount to the
Federal Government in taxes and fees. Many of our members are
reporting a flattening of their business that can only be
explained by suggesting a relationship between these unlicensed
business entities serving foreign mail order facilities and a
decline in patient encounters. We are concerned that if this
trend continues then our State's pharmacy providers will have
no choice but to begin limiting services or laying off staff.
Staff reductions is not something that our economy can
withstand during these difficult times. State and Federal
budgets can ill afford to be faced with having to service the
unemployed.
There is evidence that consumers who choose to obtain
medications from foreign sources could be waiving their rights
to seek relief from bad health care providers or ineffective
drugs. Many of the waivers signed by patients are very long and
written in very fine print. Some of the worst, and most common,
terms include requiring patients to agree to waive all damages
for any reason, no liability if the drugs cause patient harm,
no liability if the drugs seized at the border, no returns or
refunds--ever, that the patient is seeking alternative advice
from a physician and is not relying on the importer for health
care consultations, waiving privacy and allowing the company to
use patient health information, relieves the company of any
duty to ask questions about patient's health, including other
drugs being taken or other drug utilization review issues,
gives company open-ended power of attorney to act on patient's
behalf, that any claims against company must be filed only in
the foreign country, and patient waives application of U.S.
law, allow generic substitution at the company's choice, that
drugs will not be delivered in child-protective packages, will
waive all warranties about quality, legality, et cetera.
Consumers, particularly our elderly here in Florida, may be
making choices without understanding that they could be giving
up significant rights in the event that something may go wrong.
They would have nowhere to go and no one to turn to.
There is no system in place that assures that product from
foreign sources are manufactured, stored or shipped properly.
Prescriptions shipped to Florida residents may be subject to
extreme heat or cold. These temperature extremes may result in
an ineffective or unusable product. The Food and Drug
Administration has strict guidelines on the manufacturing of
prescription drugs here in the United States. Pharmacists have
come to rely on the integrity of the product that they
purchase. There is evidence even within our own safety system
of counterfeit or adulterated product finding their way into
the domestic drug distribution system.
Florida plans to implement programs that are designed to
get tighter controls on drug product. Unfortunately, such
programs will do little to slow the flow of possibly tainted
drugs crossing our State line from foreign sources. At risk are
our citizens taking life-maintaining prescription drugs that
may or may not work. Patients taking ineffective prescription
medication may find their conditions worsening and return to
see their physician. Physicians might make a medical decision
to increase a patient's dosage to dangerous levels thinking
that the patient is not responding when it was the product that
was not working. There is something that our society could not
realize that something was wrong until after a catastrophic
medical event were to occur. With so much discussion on
homeland security could there be some risk to our citizens from
prescription medications process through foreign sources and
arriving here in Florida?
In summary, pharmacists across Florida clearly understand
the problems faced when citizens struggle to find ways to
obtain their prescription medication. In a number of cases,
these health care providers can work with patients to help them
to find more cost-effective choices by working with their
physicians. Studies have shown that the services provided by
pharmacists significantly help to lower total health care costs
and reduce hospitalizations. There are a number of suggested
proposals that Congress could consider to assist the uninsured
obtain pharmacy services here in the United States without
having to rely on unlicensed activity.
I would like to thank again the members for allowing me the
opportunity to present today.
[The prepared statement of Michael A. Jackson follows:]
Prepared Statement of Michael A. Jackson, Executive Vice President,
Florida Pharmacy Association
UNEGULATED HEALTH CAE ACTIVITIES COULD COMPROMISE PATIENT SAFETY
A business industry is being developed here in Florida that has no
governmental oversight. This industry is inserting itself into the
professional practice of pharmacy by serving as a drop off point for
prescriptions. The Florida Pharmacy Association has learned through its
members and in the media that storefront centers are opening for
business with the intent on accepting prescriptions written by licensed
prescribers. These prescriptions are then transmitted to a foreign
source for processing and shipping directly to Florida residents.
As a pharmacist, I see this as a significant public, health and
safety risk. Patients who seek pharmacy services in this manner are
presenting themselves to untrained, unqualified and unlicensed
individuals.
Not all prescriptions needed by patients are available through
foreign sources. In those cases patients will have to seek services
from their local pharmacy provider. It is not uncommon for patients to
forget to disclose to their health care provider all of the
prescriptions that they are taking. Knowing that many of these drugs
are obtained through questionable sources there is a tendency to
withhold critical medical information from the pharmacist. The
dispensing pharmacist may be unable to recognize why dispensed
medications are not working or worse may be unable to detect a possible
life threatening drug interaction. The consumer could be subject to
increased health risks resulting in illness, inability to work,
impairment or a possible hospital admission.
This business industry is not only unregulated but could be in
violation of state law as evidenced in Florida Statutes 465.003 (13)
and 465.015.
ECONOMIC IMPACT OF THE FOREIGN ALTERNATIVE SOLUTION
Allowing the continued importation of prescription drugs from
foreign countries places Florida pharmacy providers at an unfair
disadvantage. Florida pharmacies are clearly unable to purchase
prescription drugs at the prices listed in media ads for foreign
outlets. Many of you often receive mail from constituents asking the
simple question: ``Why do my drugs costs so much? I cannot explain why
prescription drugs are available at such a reduced price from other
countries. The committee needs to know that 80 percent of the cost of
the average domestic retail prescription price represents costs to the
pharmacy over which we have absolutely no control. The remaining 20% of
the prescription price represents operating costs, such as heat, light,
rent, salaries, computers, professional counseling and other overhead
expenses.
Florida pharmacies pay in excess of $1.3 billion in taxes to the
state of Florida and perhaps a significant amount to the Federal
government in taxes and fees. Many of our members are reporting a
flattening of their business that can only be explained by suggesting a
relationship between these unlicensed business entities serving foreign
mail order facilities and a decline in patient encounters. We are
concerned that if this trend continues then our state's pharmacy
providers will have no choice but to begin limiting services or laying
off staff. Staff reductions is not something that our economy can
withstand during these difficult times. State and federal budgets can
ill afford to be faced with having to service the unemployed.
CONSUMERS COULD BE SIGNING AWAY THEIR RIGHTS
There is evidence that consumers who choose to obtain medications
from foreign sources could be waiving their rights to seek relief from
bad health care providers or ineffective drugs. Many of the waivers
signed by patients are very long and written in very fine print. Some
of the worst (and most common) terms include requiring patients to
agree to:
Waive all damages for any reason
No liability if the drugs cause patient harm
No liability if the drugs seized at the border
No returns or refunds, ever
That the patient is seeking alternative advice from a
physician and is not relying on the importer for health care
consultations
Waive privacy--allow company to use patient health information
Relieves company of any duty to ask questions about patient's
health (e.g., other drugs being taken or other DUR)
Gives company open-ended power of attorney to act on patient's
behalf
That any claims against company must be filed only in the
foreign country, and patient waives application of US law.
Allow generic substitution at the company's choice
That drugs will not be delivered in child-protective packages
Waive all warranties about quality, legality, etc.
Consumers particularly our elderly here in Florida may be making
choices without understanding that they could be giving up significant
rights in the event that something may go wrong. They would have
nowhere to go and no one to turn to.
COUNTERFEIT PRODUCT COULD FIND THEIR WAY INTO FLORIDA'S HEALTH CARE
SYSTEM
There is no system in place that assures that product from foreign
sources are manufactured, stored or shipped properly. Prescriptions
shipped to Florida residents may be subject to extreme heat or cold.
These temperature extremes may result in an ineffective or unusable
product.
The Food and Drug Administration has strict guidelines on the
manufacturing of prescription drugs here in the United States.
Pharmacists have come to rely on the integrity of the product that they
purchase. There is evidence even within our own safety system of
counterfeit or adulterated product finding their way into the domestic
drug distribution system. Florida plans to implement programs that are
designed to get tighter controls on drug product. Unfortunately such
programs will do little to slow the flow of possibly tainted drugs
crossing our state line from foreign sources. At risk are our citizens
taking life maintaining prescription drugs that may or may not work.
Patients taking ineffective prescription medication may find their
conditions worsening and return to see their physician. Physicians
might make a medical decision to increase a patient's dosage to
dangerous levels thinking that the patient is not responding when it
was the product that was not working. This is something that our
society could not realize that something was wrong until after a
catastrophic medical event was to occur.
With so much discussion on homeland security could there be some
risk to our citizens from prescription medications process through
foreign sources arriving here in Florida?
SUMMARY
Pharmacists across Florida understand the problems faced when
citizens struggle to find ways to afford their prescription medication.
In a number of cases these health care providers can work with patients
to help them to find more cost effect choices by working with their
physicians. Studies have shown that the services provided by
pharmacists significantly help to lower total health care costs and
reduce hospitalizations. There are a number of suggested proposals that
congress could consider to assist the uninsured obtain pharmacy
services here in the United States without having to rely on unlicensed
activity.
Mr. Greenwood. I thank you very much, sir, for your
testimony.
Mr. Ruiz.
TESTIMONY OF CARLOS A. RUIZ
Mr. Ruiz. Mr. Chairman and members of the subcommittee, let
me welcome you to Miami. I am Carlos A. Ruiz, director of
Pharmacy for Navarro Discount Pharmacies based here in Miami.
We operate 16 pharmacies throughout the Miami-Dade and Broward
County areas. Last year, we filled over 1.7 million
prescriptions and employed over 1,300 Floridians. We very much
appreciate you holding this hearing on issues relating to
imported prescription pharmaceuticals. In my statement today, I
want to talk about the importance of patients having access to
the local pharmacy and why reimportation can be dangerous for
consumers. I also want to talk about programs that already
exist in this country that help seniors with their medication
purchases that do not require them to look across the border
for help.
When a patient arrives at their local community pharmacy,
be it a chain pharmacy or an independent, they come into
contact with one of the most accessible and trusted providers
in the entire health care system. It is estimated that 95
percent of Americans live within 5 miles of a retail community
pharmacy. For almost 20 years, surveys show that pharmacists
are among the most trusted health care professionals. Thus, the
vast majority of Americans are never far from a highly trained
health professional who can provide medications or advice on a
wide range of health care issues. Convenient access to
community pharmacies makes us a critical part of society's
health care safety net.
Prescription medications are the most widely used and cost-
effective health care interventions used by patients today.
Modern prescription drugs have extended and improved the lives
of millions of Americans and saved millions of dollars through
shortened length of illnesses, increased productivity and
reductions in hospitalization and medical procedures. Community
pharmacy is proud of the role we have in assuring the safe and
effective use of these therapies.
Every day, our pharmacists see seniors struggling to afford
their prescription medications. We get many questions from
seniors about how they can buy their drugs from Canada and
other countries where prescription drugs might be less
expensive. It is true that the prices for drugs in Canada and
other countries are less expensive than those in the United
States. The comparisons are inevitable. We have also seen a
drop off in business in some of our pharmacies because of the
growing illegal reimportation trade going on, especially in the
State of Florida where there is a large senior population.
However, we discourage seniors from obtaining their drugs
through these methods, because the drugs they receive might be
counterfeit, of impure quality or simply not the drugs that
they are supposed to be.
Moreover, foreign-imported drugs do not have the important
safety and quality checks that are built into the current U.S.
community pharmacy-based distribution system. Seniors also do
not receive face-to-face counseling or medication management
from pharmacists by purchasing drugs from these international
schemes, potentially jeopardizing their life and health.
There are other legitimate ways for seniors to obtain
medications without having to subject themselves to these
potential safety and quality problems, and I am here today to
discuss these approaches. I can offer many anecdotes to the
committee of patients that come into our pharmacies who cannot
afford their medications. Some of these stories are
heartbreaking. What can pharmacies do to help these seniors
obtain their prescription drugs?
First of all, our pharmacists work with patients and their
doctors to try to maximize the use of lower-cost generics when
they are available on the market. The savings from using
generics are unmistakable. At Navarro, the average brand name
prescription is about $65, while the average generic
prescription is $16. That is a difference of close to 400
percent. Obviously, if a generic substitute is not available,
we will try and work with the doctor to see if the patient can,
in fact, take a generic version of another drug or a less
expensive therapeutically equivalent branded drug.
With billions of dollars in brand name drugs coming off
patent over the next few years, we believe that it is critical
that seniors have incentives to use generics. We will also try
to help patients use a less expensive over the counter
medication if they cannot afford their prescription drugs.
These OTC medications may not work as well as the prescription
versions, but the choice for patients sometimes comes down to
taking that--it comes down to taking something that may not
work as well or not taking anything at all.
Second, many of Navarro's pharmacies also offer discounts
to senior citizens on their prescription drug purchases.
Navarro is a deep discount pharmacy. Most pharmacies in general
offer discounts of about 10 percent, but each pharmacy has its
own policy on discounting their prices to seniors. Some
pharmacies have their own arrangements with other groups and
entities to offer prescription discounts. For example, we work
with a group called Liga Contra el Cancer to offer prescription
discounts to cancer patients who cannot afford their
medications. We also work with church organizations, such as
St. Vincent de Paul, to assist them in providing low-income or
indigent patients with needed medications they cannot buy.
Consumers already reap the benefits of the highly
competitive retail pharmacy marketplace. We are a fiercely
competitive industry, as evidenced by our 2 percent net profit
margins. If you do not like the price at one pharmacy, you can
go to another. Many pharmacies will match their competitors'
prices. And, yes, retail pharmacy prices do vary store to
store, reflecting differences in the cost of doing business,
loss leaders, and other factors. The fact is consumers can and
should shop around for the most favorable prices for their
prescriptions. You should know that pharmacies do not have
much, if any, margin on prescription drug business. Yes, costs
of drugs are high, but that is primarily due to the high costs
of buying prescription drug products from the manufacturers.
Third, we can help the poorest seniors access the Patient
Assistance Programs that pharmaceutical manufacturers have
established. Clearly, these programs provide a short-term
benefit to some low-income seniors, but they are not an
adequate solution or appropriate substitute for meaningful,
long-term prescription drug coverage. Almost all pharmaceutical
manufacturers have established assistance programs that provide
free prescription drugs to patients, including senior citizens,
who do not have the resources to obtain their medications.
These programs usually require that the patients'
physicians certify to the manufacturer that the patient does
not have the resources to obtain their prescriptions. Many low-
income seniors forgo their medications because they do not have
the resources to purchase them but remain unaware that such
programs exist. The Pharmaceutical Research and Manufacturers
Association, also known as PhRMA, has a web site describing
these manufacturer-based programs, which can be found at
www.phrma.org. Eligibility standards and benefits vary among
manufacturers. Also, the complex enrollment forms can make
accessing these programs challenging. Several States, however,
recognizing the positive impact that these programs might have
on helping seniors obtain prescriptions, have taken action to
educate them about these programs and simplify the enrollment
process.
A relatively new program, called Together Rx, offers
significant discounts to low-income seniors on the purchase of
their medications. Under this program, manufacturers and
pharmacies have joined forces to offer seniors discounts of up
to 40 percent on almost 150 popular brand name prescription
medications. At Navarro, we have gone a step further and offer
discounts on generic medications as well. These prices are as
good in many cases as the prices that seniors would pay for
drugs from Canadian sources. These discounts are passed along
to seniors at the pharmacy counter at the time of purchase.
Over half a million seniors have enrolled in the Together Rx
program since its inception, saving $3.2 million for seniors
each week, or about $32 million to date.
Other manufacturers have developed programs for low-income
seniors that only require that they pay a flat fee for their
prescription drugs. For example, under the Lilly Answers
program, low-income seniors only pay $15 for a 30-day supply of
most of the Lilly outpatient brand name drugs. Pfizer has a
similar program, charging $12 for a 1-month supply of many of
their outpatient medications. Seniors can find more information
by clicking on www.togetherrx.com. Navarro participates in this
program, and we view this as a model for a potential Medicare
drug benefit for seniors.
Some States have developed programs that help seniors
better access these programs as a partial solution to helping
them obtain their needed medications. Here in Florida we have
the Silver Saver Program, which provides $160 a month in
prescription drug benefits to about 58,000 elderly Floridians
who are Medicare eligible and have family incomes between 88 to
120 percent of the Federal poverty levels. Silver Saver does
not have an enrollment fee, membership fees or any other
monthly fees. There is only a small co-payment system: $2 for
generic drugs, $5 for drugs on the State's preferred drug list
and $15 for those drugs not on the preferred list. The Silver
Saver benefits could cover the cost for up to as many as nine
prescription drugs a month.
In summary, let me once again say that Navarro Discount
Pharmacies and its pharmacists are sympathetic to the plight of
seniors who are trying to afford their medications. We do not
think that obtaining drugs from international sources is safe
or reliable, and we caution our seniors against it. Moreover,
there are already a number of programs available to seniors
that will help them obtain their prescription drugs at more
affordable prices. We again thank you for holding this hearing,
and I look forward to any questions you have.
[The prepared statement of Carlos A. Ruiz follows:]
Prepared Statement of Carlos A. Ruiz, Director of Pharmacy, Navarro
Discount Pharmacies
Mr. Chairman and Members of the Subcommittee. Let me welcome you to
Miami. I am Carlos A. Ruiz, Director of Pharmacy for Navarro Discount
Pharmacies, based here in Miami. We operate 16 pharmacies throughout
the Miami-Dade and Broward county areas. Last year, we filled over 1.7
million prescriptions and we employ over 1,300 Floridians.
We very much appreciate you holding this hearing on issues relating
to imported prescription pharmaceuticals. In my statement today, I want
to talk about the importance of patients having access to the local
pharmacy, and why reimportation can be dangerous for consumers. I also
want to talk about programs that already exist in this country that
help seniors with their medication purchases that do not require them
to look across the border for help.
When a patient arrives at their local community pharmacy, be it a
chain pharmacy or an independent, they come into contact with one of
the most accessible and trusted providers in the entire health care
system. It is estimated that 95 percent of Americans live within five
miles of a retail community pharmacy. For almost 20 years, surveys show
that pharmacists are among the most trusted health care professionals.
Thus, the vast majority of Americans are never far from a highly
trained health professional who can provide medications or advice on a
wide range of health care issues. Convenient access to community
pharmacies makes us a critical part of society's health care safety
net.
Prescription medications are the most widely used and cost-
effective health care interventions used by patients today. Modern
prescription drugs have extended and improved the lives of millions of
Americans and saved millions of dollars through shortened length of
illnesses, increased productivity, and reductions in hospitalization
and medical procedures. Community pharmacy is proud of the role we have
in assuring the safe and effective use of these therapies.
Every day, our pharmacists see seniors struggling to afford their
prescription medications. We get many questions from seniors about how
they can buy their drugs from Canada and other countries where
prescription drugs might be less expensive. It is true that the prices
for drugs in Canada and other countries are less expensive than those
in the United States. These comparisons are inevitable. We have also
seen a drop off in business in some of our pharmacies because of the
growing illegal reimportation trade going on, especially in the state
of Florida where there is a large senior population. However, we
discourage seniors from obtaining their drugs through these methods
because the drugs they receive might be counterfeit, of impure quality,
or simply not the drugs that they are supposed to be.
Moreover, foreign-imported drugs do not have the important safety
and quality checks that are built into the current U.S. community-
pharmacy based distribution system. Seniors also do not receive face to
face counseling or medication management from pharmacists by purchasing
drugs from these international schemes, potentially jeopardizing their
life and health.
There are other legitimate ways for seniors to obtain medications
without having to subject themselves to these potential safety and
quality problems, and I am here today to discuss these approaches. I
can offer many anecdotes to the Committee of patients that come into
our pharmacies who cannot afford their medications. Some of these
stories are heartbreaking. What can pharmacies do to help these seniors
obtain their prescription drugs?
Encourage Generic Use: First, our pharmacists work with patients
and their doctors to try to maximize the use of lower-cost generics
when they are available on the market. The savings from using generics
are unmistakable. At Navarro, the average brand name prescription price
is about $65, while the average generic prescription price is about
$16, a difference of close to 400 percent.
Obviously, if a generic substitute is not available, we will try
and work with the doctor to see if the patient can, in fact, take a
generic version of another drug or a less expensive therapeutically
equivalent branded drug. With billions of dollars in brand name drugs
coming off patent over the next few years, we believe that it is
critical that seniors have incentives to use generics. We will also try
to help patients use a less expensive over the counter medication if
they cannot afford their prescription drugs. These OTCs may not work as
well as the prescription versions, but the choice for patients
sometimes comes down to taking something that may not work as well, or
nothing at all.
Senior Citizen Discounts: Second, many of Navarro's pharmacies also
offer discounts to senior citizens on their prescription drug
purchases. Navarro is a deep discount pharmacy. Most pharmacies in
general offer discounts of about 10 percent, but each pharmacy has its
own policy on discounting their prices for seniors. Some pharmacies
have their own arrangements with other groups and entities to offer
prescription discounts. For example, we work with a group called ``Liga
Contra el Cancer'' to offer prescription discounts to cancer patients
who cannot afford their medications. We also work with church
organizations, such as St. Vincent de Paul, to assist them in providing
low-income or indigent patients with needed medications they cannot
buy.
Consumers already reap the benefits of the highly-competitive
retail pharmacy marketplace. We are a fiercely competitive industry, as
evidenced by our 2 percent net profit margins. If you do not like the
price at one pharmacy, you can go to another. Many pharmacies will
match their competitors' prices. And yes, retail pharmacy prices do
vary store to store, reflecting differences in the cost of doing
business, loss leaders, and other factors. The fact is, consumers can
and should shop around for the most favorable prices for their
prescriptions. You should know that pharmacies do not have much, if
any, margin in the prescription drug business. Yes, the costs of drugs
are high, but that is primarily due to the high costs of buying
prescription drug products from the manufacturers.
Manufacturer Patient Assistance Programs: Third, we can help the
poorest seniors access the patient assistance programs that
pharmaceutical manufacturers have established. Clearly, these programs
provide a short-term benefit to some low-income seniors, but they are
not an adequate solution or appropriate substitute for meaningful,
long-term prescription drug coverage. Almost all pharmaceutical
manufacturers have established assistance programs that provide free
prescription drugs to patients, including senior citizens, who do not
have the resources to obtain their medications.
These programs usually require that the patient's physician certify
to the manufacturer that the patient does not have the resources to
obtain their prescriptions. Many low-income seniors forgo taking their
medications because they do not have the resources to purchase them,
but remain unaware that such programs exist. The Pharmaceutical
Research and Manufacturers Association (PhRMA) has a website,
describing these manufacturer-based programs, which can be found at
www.
phrma.org. Eligibility standards and benefits vary among manufacturers.
Also, the complex enrollment forms can make accessing these programs
challenging. Several states, however, recognizing the positive impact
that these programs might have on helping seniors obtain prescriptions,
have taken action to educate them about these programs and simplify the
enrollment process.
Manufacturer-Pharmacy Discount Programs: A relatively new program,
called Together Rx, offers significant discounts to low-income seniors
on the purchase of their medications. Under this program, manufacturers
and pharmacies have joined forces to offer seniors discounts of up to
40 percent on almost 150 popular brand name prescription medications.
At Navarro, we have gone a step further and offer discounts on generic
medications as well. These prices are as good in many cases as the
prices that seniors would pay for drugs from Canadian sources. These
discounts are passed along to seniors at the pharmacy counter. Over
half million seniors have enrolled in the Together Rx program since its
inception, saving $3.2 million for seniors each week, or about $32
million to date.
Other manufacturers have developed programs for low-income seniors
that only require that they pay a flat fee for their prescription
drugs. For example, under the Lilly Answers program, low-income seniors
only pay $15 for a 30-day supply of most Lilly outpatient brand name
drugs. Pfizer has a similar program, charging $12 for a one-month
supply of many of their outpatient medications. Seniors can find more
information by clicking on www.togetherrx.com. Navarro participates in
this program and we view this as a model for a potential Medicare drug
benefit for seniors.
State-Based Assistance Programs: Some states have developed
programs that help seniors better access these programs as a partial
solution to helping them obtain their needed medications. Here in
Florida we have the ``Silver Saver Program,'' which provides $160 a
month in prescription drug benefits to about 58,000 elderly Floridians
who are Medicare eligible and have family incomes between 88-120
percent of the federal poverty level (between $7,797-$10,632). Silver
Saver does not have an enrollment fee, membership fees or any other
monthly fees. There is only a small co-payment system: $2 for generic
drugs, $5 for drugs on the state's preferred drug list and $15 for
those drugs not on the preferred list. The Silver Saver benefits could
cover the cost for up to as many as nine prescription drugs a month.
CONCLUSION
In summary, let me once again say that Navarro Discount Pharmacies
and its pharmacists are sympathetic to the plight of seniors who are
trying to afford their medications. We do not think that obtaining
drugs from international sources is safe or reliable, and we caution
seniors against it. Moreover, there are already a number of programs
available to seniors that will help them obtain their prescription
drugs at more affordable prices. We again thank you for holding this
hearing, and I look forward to your questions.
Mr. Greenwood. Thank you, Mr. Ruiz.
Mr. McEwan.
TESTIMONY OF ROBERT N. McEWAN
Mr. McEwan. Thank you, Mr. Chairman, and thank you for
inviting me today to speak before your committee. I would step
back from the written testimony that I provided because much of
it has been covered by today's discussions and talk to you
about the programs that are there for the asking provided that
you have someone that is called a patient advocate. I think
that for the examples of the patients that were here today, if
they had had an active patient advocate, all but one of the
drugs in the programs of the ones they described are available
through pharmaceutical Patient Assistance Programs.
Let me step back just a little bit to tell you that from
the beginning I have been working in science and medicine and
health care for my entire career now. And the one thing that
flows through that entire career path is the one thing they
teach in medical school, and that is first do no harm. And I
think that it is always put the patient first, and it is shared
by physicians, it is shared by pharmaceutical industry, it is
shared by pharmacists and it is shared by health care advocates
throughout the country. And the one thing that happens as a
consequence of not being able to get help is just like water
here in Florida can do a lot of damage in a short period of
time, it finds the path of least resistance. And the solutions
for these patients that cannot afford their medications by the
things that you are hearing about today--Internet sales and
black markets and so forth--are all finding the path of least
resistance.
But truly there are solutions out there that are broad in
scope that will cover just about every example of every
patient. And I say that because I started out from the
situation in a transplant center here in the United States that
basically recognized that there was a black market going on
between patients. I mean here we had patients who were changed
from drug A to drug B and they basically had drugs that were
not expired, that were still seemingly active, passed from
patient to patient as a means of trying to help those patients
that couldn't afford their drugs. And I said even though on the
face of it that might have seemed like a safe practice, it
wasn't. Somebody had to take ownership of the situation and
say, ``Enough. We have to do this legally, we need to do this
right.''
I mean when a patient's drugs were passed from patient to
patient, for example, there was never any discussion of whether
they were in the trunk of your car when you drove through the
desert and the heat in your trunk reached 1000 degrees and
inactivated all your drugs, and that is the reason why they
didn't work for you, and that is why your doctor was now
switching you to something else. You may have just passed the
problem off to someone else. So by owning the problem and
becoming an advocate for patients, I have actually left the
transplant center scenario right now and now represent an
entire State who is taking a centralized approach to advocacy
for its patients.
Basically, what you have heard described all day today is a
patchwork quilt, if you will, of the solutions for
pharmaceuticals to patients nationwide, and they all work at
various levels. At the highest level, there is obviously
Medicaid and pharmacy assistance programs that are available in
some States. The need, though, for a more specific and
generalized pharmaceutical assistance support nationally is
clearly what is needed, because if the patients had a choice
between going through the Internet, between going through a
black market or any other mechanism which required paperwork,
which asked questions that were very personal to them, they
would obviously take them through a prescription plan that
offered coverage like a Medicare prescription plan would.
But they don't have that now, and so in its place we create
this matrix. And the matrix starts at the highest level and
says do you qualify here? No, you don't? Okay. Then you come to
this level. Do you qualify here? Well, here, you are only on a
few drugs, so maybe we can get you help for the drugs here best
through just having you get a prescription card, like Together
Rx or Lilly's Answer or something like that. But each step of
the process is carefully triaged by someone called a patient
advocate, and we decide with the patient whether that is going
to be their solution.
Now, if you take our State, for example, we have gone from
having only 2,000 patients helped by our program to over 20,000
in 2 years, and we are enrolling patients at a rate of just
under 1,000 a month. And, basically, these patients when they
come in are getting help going through this triage. We work on
behalf of the physicians, because we want them to get the
medicine to the patients. And in fact after 2 years of
operation, we did a little study on our patients, and we said
of these patients who have received their drugs from the
pharmaceutical Patient Assistance Programs for at least 180
days, what was the effect on their health care, their
subsequent health care? And we found that 52 percent of the
patients had had decreased hospitalizations; 62 percent of the
patients had had decreased emergency room visits. And we then
were able to document improvement in blood pressure,
improvement in blood sugar and a lot of the diagnostic
parameters or clinical parameters that a physician would do to
say, yes, these medications are working.
And exactly what we would have predicted is what we got,
that in fact where we are bringing in $1 million a month to our
program for our patients, which they receive free without any
dispense fee or anything else, the actual translation to our
State is roughly--well, we are bringing in $1 million a month,
it is roughly 6 to 7 times that amount in savings to the health
care system through uncompensated care, through patients that
don't show up with--aren't admitted with unscheduled
hospitalizations. Emergency rooms in urban areas, for example,
are used as primary care centers, and the emergency rooms are
flooded with these patients that basically are in there for
their primary care because they are not properly medicated. We
can keep them out of those emergency rooms, we can keep them
out of those hospitals, all much more expensive options if they
don't get their medications.
So what I would tell you about is the fact that in the
pharmaceutical industry they provide----
Mr. Greenwood. I am going to ask you to sum up in 1 minute,
please, if you would.
Mr. McEwan. Basically, $2.3 billion worth of drugs reached
5.5 million patients, by their own statistics. And the take-
home message is this: That to the people who told me not to
start MEDBANK because the minute you were successful the
pharmaceutical industry would pull the cord on it and do away
with it because they would see it eroding their profits, I
don't see that happening. I see companies staying on board, I
see companies facilitating my success every day at reaching
patients. And I think central to the whole idea of being
successful in the patient environment is having a patient
advocate that can help anybody of any age through any
circumstance triage the system.
[The prepared statement of Robert N. McEwan follows:]
Prepared Statement of Robert N. McEwan, Chief Executive Officer,
MEDBANK of Maryland, Inc.
For eighteen years I worked as a scientist at the bench in labs in
government, in academia, and in the pharmaceutical industry at the
Upjohn Company. The years I spent at Upjohn were in a state-of-the-art
biotechnology research division that did cutting-edge research in
molecular and cellular biology. One of the things that was gratifying
to me as I worked at the bench was knowing that the company, indeed the
whole industry, did its best to make medications available to those who
could not afford them. They did so through what they called Patient
Assistance Programs (PAP). What I did not know back then was that at
some point in the future, I would become very intimately engaged with
these programs.
I left research and went into marketing and sales in Upjohn and it
was there that I saw these Patient Assistance Programs in action,
first-hand. I emphasized to all the community physicians I called upon
that free prescription medicines were available to patients who could
not afford them. I would often see the stock bottles sent by various
pharmaceutical companies including my own, on the physicians' shelves,
just waiting to be given to the patients who needed those medicines.
Today, the pharmaceutical industry's Patient Assistance Programs are
more sophisticated, and continue to be there for patients in need. The
programs are designed for patients without prescription drug coverage
and annual incomes below 200% of the Federal Poverty Level or roughly
$18,000.
As my career in health care continued I found myself at one of our
country's leading hospitals running its transplant center. Again I
learned first hand what it meant for individuals to go without valuable
medicines when I saw patients die. Some of the patients were ashamed
that they couldn't afford the medicines they were prescribed, but today
I am here in Florida to let Florida residents know that help is
available for those in need.
Patient Assistance Programs are running strong. In the last year
alone, the research-based pharmaceutical industry gave out over $2.3
Billion worth of medicines to patients who could not afford them,
helping over 5.5 million patients. This translated to an estimated
223,000 Floridians receiving free medicines in just 2002. By anyone's
standards that is great charity.
So why are the pharmaceutical companies continually attacked when
they are doing so much good for American patients and providing so much
to Americans with little means? Because the crowd of people who need
assistance is growing faster. The need is being driven by the huge
number of ``baby boomers'' that are approaching or are in their 60's
and simply due to the incredible advances new medicines deliver. There
was a time when patients who were sick were relegated to missing time
from work, or being hospitalized, or maybe even worse. Today new
medicines have the ability to keep people of all ages active at work,
at home and out of the hospital. So clearly, demand for medicine has
grown over the last twenty years because many new prescription
medicines have delivered marked improvements to patient health.
For Florida residents in need of medicines, there are 136 Patient
Assistance Programs and over 10 discount drug cards alone sponsored by
the research-based pharmaceutical industry today. And, we are
constantly looking for new and better ways to get medicines to
patients. A Patient Assistance Program sponsored by the generic
companies could provide additional medicines to patients. Currently,
these programs are only available from the brand name companies.
For Florida residents without drug coverage at roughly an annual
income of $18,000 or less, PAP programs are a solution to obtaining the
medicines they need. In fact, there is now a new on-line database that
Florida residents can take advantage of to access user friendly
information about more than 1,400 medicines offered free through
patient assistance programs. The on-line database is sponsored by the
Pharmaceutical Research and Manufacturers of America (PhRMA). Florida
residents who need help in obtaining medicines can log on to
www.helpingpatients.org, fill out an online form and receive a list of
programs for which they may qualify. For those without access to the
Internet, they can call 1-800-762-4636 to obtain a copy of the
directory of patient assistance programs.
Additionally, for Medicare beneficiaries living in Florida of
slightly more means say $30,000 for an individual or $40,000 for a
married couple, a solution can be found once again within the research-
based pharmaceutical industry in the form of Seniors Savings Card
programs like Together Rx. Together Rx is available free of charge with
an easy sign-up process and makes more that 150 medicines available to
an enrollee at discounts from 25 to 40 percent. This program has
already resulted in $36.7 million in savings for cardholders, and now
is providing discounts to over 600,000 beneficiaries across the
country. Similar programs, such as the Pfizer Share Card and the
LillyAnswers Card provide 30-day supplies of medication for a $12 or
$15 fee for individuals with an annual income below $18,000, or $24,000
for a couple.
The options don't end there for those who that cannot afford
medications. A skillful shopper can find within the same city the most
expensive place to buy their medications and the cheapest. In fact, a
study conducted by the Florida Council on Aging found that retail
prescription drug prices vary as much as 683 percent for certain
medicines from pharmacy to pharmacy across the State of Florida. The
difference in shopping around for the best price for a particular
medicine can save consumers real money. Buying medicines isn't really
any different than buying groceries so it is important to remember that
sometimes it helps to shop around a bit.
In Florida specifically, there are helpful statewide programs like
the Florida MEDS-AD program and the Silver Saver program which provide
savings and safety nets directed at the elderly and the disabled in
Florida. Florida's Silver Saver program, named after retiring Senator
Ron Silver of North Miami, serves about 58,000 elderly Floridians who
are Medicare eligible and have family incomes between 88 and 120
percent of the Federal poverty level ($7,797-$10,362 a year). It does
not have an enrollment fee, membership fee, or any other monthly fee
and has only a small co-payment, between $2 and $15 per prescription
and provides $160 a month in prescription drug benefits for those
eligible.
Mr. Chairman, Florida residents are looking for solutions to their
medical problems. Many of those solutions can be found in the programs
established by the research-based pharmaceutical industry. These
solutions are very cost-effective when compared to other options such
as hospitalization or surgery. And, these solutions are also much more
preferable for Florida residents than subjecting themselves to
medicines of questionable origin when looking for the ``quick fix'' on
the Internet or on trips to Canada or Mexico.
All of these programs will help Florida residents; but, the most
significant help will come in the form of a meaningful Medicare
Prescription Drug Benefit passed by Congress. And, one that keeps
investment in research & development robust and protects the hope for
future cures. I understand that the President has pledged 400 billion
dollars to provide this benefit. Now is the time for Congress to act on
this and do right by Florida's seniors.
Florida patients have been very outspoken about the life-saving
value of the Patient Assistance Programs. Patients like Terence Stevens
in Lakeland, or Steve Kersker in Tampa, who are just two of the more
than 232,000 Floridians who are grateful to the pharmaceutical industry
for these programs. But these numbers don't reflect the human side of
these programs. Just the other day, a woman called to tell me that her
husband had been averaging 2-3 trips per month in an ambulance to save
his life because of an untreated heart condition--untreated because
they could not afford his medications. Today that same man has not been
near a hospital in months, and it is all because of the drugs he takes
(not generic by the way) but new, cutting edge medicines given to him
free of charge by the companies that discovered them.
I'll end this testimony by saying that my father, who died at 54,
would have been here today if he had today's advanced medicines. My
mother who died of emphysema would have known relief longer into her
years if she had benefited from today's medications.
I thank Chairman Greenwood and Congressman Deutsch for the
opportunity to speak before the subcommittee.
Mr. Greenwood. Thank you very much. We have precisely 15
minutes left for this hearing, so each of us will take 5
minutes, and we will keep it to a tight schedule here. And I
thank each of you. I thank each of you for your testimony.
Mr. McEwan, let me understand since you departed from your
written testimony, just give us a quick and dirty on what
MEDBANK is, who pays for it and how it came to be.
Mr. McEwan. Right. We started out 3 years ago with a small
grant from the Maryland Health Care Foundation to cover a city
and a county.
Mr. Greenwood. That is a private foundation?
Mr. McEwan. Yes. And MEDBANK of Maryland is a 501(c)(3), as
is our MEDBANK Pharmacy now is a non-profit pharmacy. And,
basically, in its second year of existence we were able to
convince our legislature that we were going to be able to do a
significant good within our State if they wold fund the
infrastructure for these patient advocates Statewide. We have
satellites all over the State of Maryland as well as a
centralized data base that----
Mr. Greenwood. So the State of Maryland is now covering
your costs?
Mr. McEwan. That is right.
Mr. Greenwood. And what are those costs?
Mr. McEwan. The cost of the infrastructure for the entire
State is $2 million a year.
Mr. Greenwood. And what do you figure per client benefit or
for senior benefit or some per capita or per prescription
assistance? How does the cost break out that way?
Mr. McEwan. The cost is somewhere between $75 and $80 per
patient.
Mr. Greenwood. Per patient, okay. And that compares with
how much money that you are saving the patient directly versus
some of the indirect costs you talked about.
Mr. McEwan. Right. The savings to the patient--our average
patient is 60 years old, our average patient is on 7
medications, and our average patient is of an income of $1,300
a month. So you take all these things together and you are
basically saving the patient thousands of dollars per year. And
this is a per year cost.
Mr. Greenwood. Let me describe the current situation of two
south Florida seniors. I would like you to tell me whether
these individuals qualify for any of the plans that the
pharmaceutical companies sponsor and whether they can get their
medications free or at a greatly reduced cost.
The first senior receives under $10,000 a year in Social
Security. He is taking the following medications: Accu-Chek,
Urabid, Glucotrol, Allopurinol, Warfarin, Dytoxin, Toprol,
Glucophage, Zocor, Quinine Sulfate, Oxycodeine and Flonase. And
I assume that that represents Mr. Sweed's circumstances.
The second I believe describes Ms. Coplan's situation. She
has an annual income of approximately $23,000. She is taking
the following medications: Singulair, Fosamax, Verapamil,
Zanax, Atrian and Tramadol. And I believe you have done a bit
of an analysis of how you think they could benefit from a
patient advocate, if you will, and gaining access to these
other programs.
Mr. McEwan. Okay. In my program, if I were looking at the
first patient that you mentioned, essentially that patient
would qualify immediately.
Mr. Greenwood. Make sure you pull your microphone up close
to you and speak directly into it, because there is particular
interest in what you have to say now.
Mr. McEwan. From the first patient you asked about, Accu-
Chek is the monitor that he uses, and the question there is
whether strips are available I think is usually the question.
We haven't found any organization or company yet that provides
these strips free, so the dollar a day for those strips to be
monitored is probably an out-of-pocket cost that we can't get
around. Of all the remaining drugs that that patient, Mr.
Sweed, is taking, the only one that I could not find a program
for was Aloprinol, and I am sure that if I were to get with a
physician, I could probably find a substitute. And this is an
important thing to realize. Through web sites like
helpingpatients.org, the new PhRMA web site, the patient can
put this information in themselves. They can put in their
income, their age and so forth, and it will tell them if there
is a program for them.
The other thing is is that we use--obviously, we use
technology as well, and Volunteers in Health Care has a web
site called Rx Assist that I can go in there and I say, okay,
the patient doesn't have one of these drugs available through a
PAP, so the class of drugs that that drug is in are there any
other programs? So you pull up the class of drugs, and you will
get 5 or 6 alternatives. So now you call this doctor and you
say, ``Would any of these others work, and if so, would you
give the prescription and dosage so that we can continue to get
their medications free?'' This is very important because these
drugs do come and go, and as the go, we need to find
replacements for them. As sometimes they become in short
supply, we need to find replacements for them. So we use
technology, basically, to stay on top of this.
We have within our web site, of our data base that we
market to other States right now, Rx Bridge, a separate link to
something called Brave Pages, which we update. It contains all
the information in this book, for example, that tells you about
every single company, what the requirements are, what the
income limits are and so forth so that as a patient advocate is
working they can get ready access to information. So that would
take care of the first patient. The one drug would be singled
out that would need further investigation.
The second one, at a little bit higher income level, still
qualifies for most PAP programs, I feel confident, although I
have no way of saying that it qualifies for all of them just as
a blanket statement. Every one of these programs' income limits
are kept within that companies' rights, and, essentially, where
it is advertised, we know immediately, where it is not, we
don't. Of the drugs that that patient is taking, the only one
which does not have a program currently is Zanex, and for that
we could substitute, if the physician agrees, valium, which is
available through a PAP with the Roche Laboratories.
So there are choices and opportunities. It takes advocates
that are smart about the whole process and understand the drugs
well enough to be able to make these informed counsels.
Mr. Greenwood. Okay. Thank you. I think you know Ms.
Coplan, she is in the back, and she has been cupping her hand
and listening intently, so if you could chat with her before
you leave, I would appreciate it. And it seems to me that the
service that you provide we in the Congress would do a heck of
a lot of good if we could figure out how to make that kind of
service available to everyone in this country, because no
matter what we do with prescription drugs in terms of a benefit
for Medicare, we are not going to cover first dollar for
everybody, there just isn't that much money in the world.
Patients are still going to need to be able to find assistance
outside of the Medicare program to get the best value for their
dollar.
Mr. McEwan. That is an excellent point because in our
program alone 56 percent of our patients are not Medicare.
Mr. Greenwood. Right.
Mr. McEwan. And they all get benefit.
Mr. Greenwood. The gentleman from Florida for 5 minutes.
Mr. Deutsch. Thank you, Mr. Chairman. And I would actually
just follow up and completely agree with the last point you
made. In a perfect scenario, which obviously most of us know in
the human condition there are very few perfect scenarios, we
will not--the bill we pass hopefully this session won't be
implemented for 2 or 3 years at the absolute earliest; there
will be a phase-in period. So real people are faced with these
real problems today. And I think this panel's purpose really is
to try to attempt to deal with some practical solutions that
people have.
One follow-up question, though, for Mr. McEwan. Could you
mention that web site again and who the sponsor of the web site
was?
Mr. McEwan. There is a PhRMA web site now called
helpingpatients.org., and that new web site allows you to put
in the actual drug you are asking about, it allows you to put
in your patient circumstance, and it will say, yes, there is a
program for you, here is where you get more information.
Mr. Deutsch. And as your experience been based upon your
sort of expertise versus the web site, how good are they
compared to you, the web site?
Mr. McEwan. Their web site just started up, and what we
provide beyond what they provide is that all of the forms for
all of the pharmaceutical industry PAP applications are linked
online on our data base so that they will be printed out with
all the patient information and passed over to the physician
for signature. This is what we recognized was the problem, that
you are not just applying for one or two drugs on behalf of the
patient, you are applying for 7 or 8 and so----
Mr. Deutsch. I am going to move along because actually we
are going to try to keep this 5-minute timeframe, because I
know the chairman actually has a flight he is trying to catch.
Mr. Hahn, in Mr. McEwan's written testimony, he made a
remark, and I am quoting, ``A Patient Assistance Program
sponsored by the generic companies could provide additional
medicines to patients.'' You talked a little bit about it but
if you could elaborate in terms of generic companies, do they
have the resources to build these assistant programs or the
benefits of assistant programs already reflected in generic
drugs' cheaper prices?
Mr. Hahn. Well, I know that at Andrx we have offered drugs
to indigent patients free of charge. With respect to overall
program, I don't think we have a specific program in place, but
it is done as patients contact us in particular for specific
drugs, and cardiovascular drugs would be one I am very familiar
with. With respect to Altocor, I am not sure that we have
implemented it yet, because we have only launched Altocor in
August/September of last year. However, we have been in contact
with an organization that represents, I believe, at least 60
physicians in the New York area where we are talking about
giving them Altocor free of charge to indigent patients.
Mr. Deutsch. The public seems comfortable using generic
drugs as a less expensive alternative to high-price branded
pharmaceuticals. Can you explain how your technology gives the
consumers the added value you mentioned in your testimony?
Mr. Hahn. Yes. Administering a drug once a day, which is
what our technology is designed to do, as opposed to giving a
drug two, three or potentially four or more times a day, allows
for enhanced compliance by the patient. And, obviously,
compliance will lead to the end point you want, that you treat
the disease state or achieve the required therapeutic end
point, especially with the aging in the population where it has
been mentioned by others patients are on multiple drug
therapies. They have to remember do I take my pink in the
morning and evening, my blue pill in the morning and afternoon
or my yellow pill in the afternoon and evening? Once a day
makes that a lot easier for them to do.
Second, we potentially can enhance the efficacy and safety
of the drug with our drug delivery technologies. The benefits
are obvious there. And, third, as a result of our dealing with
known and safe drugs, we can utilize a process within the new
drug applications within the FDA that allows us to develop
these products in a more timely and cost-effective manner, and
therefore we can provide these savings that we achieve in the
cost of developing these drugs and pass them on to the
consumers.
Mr. Deutsch. Let me jump to both people representing the
actual pharmacies in Florida today, and I think you elaborated
very well what you can do for individual patients coming up to
you. If you can give us some--any additional insight in terms
of the proliferation of the foreign pharmacies, for lack of a
better word. I assume you have gone to the State--you heard
testimony by Mr. Taylor earlier. In terms of your interaction
with the State, I mean your position, I think you have stated,
is that they are illegal at the present time. Are you trying to
do something to force enforcement of action that the State
could in fact take at the present time?
Mr. Jackson. Yes, Congressman Deutsch. We have as an
association visited with our State's regulatory board and have
discussed this issue intently. Members of the board are pretty
much in agreement that there is unlicensed, unregulated
activity out there. If you ever had an opportunity to review
and take a look at the regulations affecting the practice of
professional pharmacy----
Mr. Deutsch. Right.
Mr. Jackson. [continuing] you will find that it is fairly
extensive, and these entities are operating really in a void,
in a vacuum.
Mr. Deutsch. But, again, they are operating publicly, they
are advertising publicly, I mean they are extensively
advertising at the present time. I mean why they are existing?
Mr. Jackson. Well, I think they are trying to serve a need.
Mr. Deutsch. No, no. But I mean in terms of the regulatory
side. If you are saying that from the regulatory side they
should be shut down, why have they not been shut down?
Mr. Jackson. Well, Congressman, I really don't know. That
is something our State regulatory initiatives are looking at
right now. And they are communicating with us, letting us know
what it is they are doing.
Mr. Deutsch. Can I just follow up again, I mean both with
you or Mr. Ruiz if you can. Is the sort of market price--
because, obviously, there are some consumers who are
aggressively shopping. They are either calling you and going to
you, going to Costco, looking at cards, really trying to get
the best price, especially if it is a drug they are going to be
taking continuously. I mean is the floor price now the Internet
pharmacy price, the foreign pharmacy or your price? I mean
where is the floor price? I mean is your competition literally
now those entities in terms of the price that you have to
charge or, as you said, in some cases you might be a better
price?
Mr. Ruiz. In all honestly, I don't think that we in retail
pharmacy can provide the floor price. We cannot buy
prescription drugs at the prices that either international site
are selling at or Internet sites. Again, our primary concern is
for our patients. I am going to talk as a pharmacist, I am not
going to talk as an administrator. Patients come in every
single day, 10 prescriptions, they have to take multiple drugs
at different times. Sometimes they can't even afford the co-
payments. I mean we are not talking about actually the paying
the out of pocket, I am talking about being able to pay----
Mr. Deutsch. The $5 co-pay.
Mr. Ruiz. [continuing] 10 drugs, $15, that is a $150 a
month----
Mr. Deutsch. Right.
Mr. Ruiz. [continuing] for somebody who probably lives on a
fixed income. Are we opposed to them getting low-cost
medications? Absolutely not.
Mr. Deutsch. Right.
Mr. Ruiz. I mean what is the point to--and I would prefer
that they get their medications even if it is somewhere instead
of them not taking it at all. And, of course, the main concern
is, well, if you are going to an international site, if you are
going to the Internet, who is looking out for your best
interest in terms of drug interactions----
Mr. Deutsch. Let me try to jump in one last question. Back
to Mr. McEwan. I think all of us are very impressed with the
program that you have set up and I am going to at least check
the site and play around with it a little bit. If that is an
ancillary use, maybe even we will do some further oversight at
your actual agency. Because at a practical level, it seems
people can avail themselves of something today. But even if it
exists, why--I mean is it just people aren't aware of it? I
mean the access point in terms of so many people using Canadian
drug--I mean how would you explain the phenomenon if this is
all available. If the cards are available and the discount
plans are available and all these options are available, why
are--you had 20,000 people, great. We have got 10 million
people doing it another way. I mean just the scale--I mean very
few--I mean relatively very few people are accessing your
system.
Mr. McEwan. None of Florida's patients, for example, are
able to access the Maryland system, because being paid for by
Maryland it has to only have Maryland patients, but every State
could have a MEDBANK, and some States do have MEDBANK
equivalents. There are other States that have centralized
patient advocate organizations that do what we do, and we do it
to the extent of creating field guides for how to set it up, we
have a data base that we market to other States, and we go over
backwards to basically try to teach people how simple it is.
But it does take some infrastructure, it does take some
investment.
Mr. Greenwood. The Chair thanks the gentleman. The
gentleman from New York for 5 minutes.
Mr. Engel. Thank you, Mr. Chairman, and I will be brief
because I know time is of the essence. I just really have one
question to sort of tie this together. Perhaps Mr. Jackson or
Mr Ruiz or both could answer it.
My concern, we have heard the other panels and obviously it
is a very bad choice for consumers, for senior citizens who are
finding it increasingly difficult to pay for skyrocketing
prices of drugs. What about the pharmacies, though, that are
playing by the rules? You know, you are playing by the rules,
you are getting medications that are safe, and in essence you
are being undercut by people buying these drugs from dubious
places around the world. We don't know how safe they are and so
on. What is happening from an economic perspective to
pharmacies? Since you don't buy your drugs from foreign
sources, at some point might there not be a point where you are
not competitive, you may be forced down the line to go out and
buy your drugs from foreign sources? Mr. Jackson, you said that
pharmacists and pharmacies in Florida are being harmed by the
walk-in international pharmacies. Perhaps we can start with
you, and then perhaps Mr. Ruiz can tell us as well.
Mr. Jackson. Okay. Thank you, Congressman Engel. Our
members have reported to us that for some strange reason that
their businesses are starting to flatten out, and they can't
really point a finger as to what could be causing that.
Usually, when a pharmacy loses business or has a flattening of
business, they can get a feel for what is happening, and it
could be a situation where a patient, for whatever reason,
chooses to use another pharmacy provider because they have
changed an insurance plan or it could be because of competitive
pricing they elect to go to a different competitor. But you can
track that because records from the dispensing pharmacy has
transmitted to the new pharmacy, and so you can see where your
business is going when those types of events occur.
But under this type of scenario patients are just exiting
or not coming back to the pharmacy because they have chosen an
alternate provider, and that is difficult for a pharmacy to
track. When a pharmacy begins to lose business in this way,
then just like any business, they have to do things internally
to try to compensate for that, such as reduction in services,
lowering office hour times, cutting out prescription delivery
services to patients that are unable to ambulate and many other
things that they would have to do internally to try to meet
their own operating expenses.
Mr. Engel. Mr. Ruiz, anything to add?
Mr. Ruiz. Yes. One of the things--certainly, any time that
business decreases, and, again, you can track it by checking
whether it is going to your competitors or not, pharmacists are
in short supply. Pharmacists salaries are very competitive. It
is difficult to retain pharmacists and be able to provide these
services to our patients if we are not able to at least
continue to make those minimal margins that we are making. It
makes it pretty difficult to continue to operate. Obviously,
the larger chains and possibly some of the independents that
have been around for quite some time are not going to be
impacted as much immediately, but at least as far as the
independents, they cannot withstand those drops in businesses.
Mr. Engel. You know, if you have an airline, for instance,
that doesn't maintain its planes, of course it would be able to
sell its tickets at a cheaper rate, and obviously that is what
is happening from these walk-in international pharmacies, so it
is certainly a major concern.
In the interest of brevity, Mr. Chairman, I am going to
stop here, and I thank you for giving me the opportunity to
participate.
Mr. Greenwood. The Chair thanks the gentleman. Thank yo to
all of our witnesses. Thank you to all of the witnesses
throughout the hearing. We thank the city of Aventura for its
hospitality, thanks to the stenographer, to the staff on both
sides of the aisle here, to all of you for coming, and thanks
mostly to Congressman Deustch for his leadership in this issue,
as well as in so many others. This hearing is adjourned.
[Whereupon, at 1:40 p.m., the subcommittee was adjourned.]