    [House Hearing, 108 Congress]
    [From the U.S. Government Publishing Office]

        POINT, CLICK, SELF-MEDICATE: A REVIEW OF CONSUMER SAFEGUARDS ON
                            INTERNET PHARMACY SITES
    =======================================================================

                                    HEARING

                                   before the

                                  COMMITTEE ON
                               GOVERNMENT REFORM

                            HOUSE OF REPRESENTATIVES

                          ONE HUNDRED EIGHTH CONGRESS

                                 FIRST SESSION

                                   __________

                                 MARCH 27, 2003

                                   __________

                                Serial No. 108-5

                                   __________

           Printed for the use of the Committee on Government Reform

      Available via the World Wide Web: http://www.gpo.gov/congress/house
                          http://www.house.gov/reform

                           U. S. GOVERNMENT PRINTING OFFICE
    86-611                          WASHINGTON : 2003
    ____________________________________________________________________________
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                         COMMITTEE ON GOVERNMENT REFORM

                         TOM DAVIS, Virginia, Chairman
    DAN BURTON, Indiana                  HENRY A. WAXMAN, California
    CHRISTOPHER SHAYS, Connecticut       TOM LANTOS, California
    ILEANA ROS-LEHTINEN, Florida         MAJOR R. OWENS, New York
    JOHN M. McHUGH, New York             EDOLPHUS TOWNS, New York
    JOHN L. MICA, Florida                PAUL E. KANJORSKI, Pennsylvania
    MARK E. SOUDER, Indiana              CAROLYN B. MALONEY, New York
    STEVEN C. LaTOURETTE, Ohio           ELIJAH E. CUMMINGS, Maryland
    DOUG OSE, California                 DENNIS J. KUCINICH, Ohio
    RON LEWIS, Kentucky                  DANNY K. DAVIS, Illinois
    JO ANN DAVIS, Virginia               JOHN F. TIERNEY, Massachusetts
    TODD RUSSELL PLATTS, Pennsylvania    WM. LACY CLAY, Missouri
    CHRIS CANNON, Utah                   DIANE E. WATSON, California
    ADAM H. PUTNAM, Florida              STEPHEN F. LYNCH, Massachusetts
    EDWARD L. SCHROCK, Virginia          CHRIS VAN HOLLEN, Maryland
    JOHN J. DUNCAN, Jr., Tennessee       LINDA T. SANCHEZ, California
    JOHN SULLIVAN, Oklahoma              C.A. ``DUTCH'' RUPPERSBERGER,
    NATHAN DEAL, Georgia                     Maryland
    CANDICE S. MILLER, Michigan          ELEANOR HOLMES NORTON, District of
    TIM MURPHY, Pennsylvania                 Columbia
    MICHAEL R. TURNER, Ohio              JIM COOPER, Tennessee
    JOHN R. CARTER, Texas                CHRIS BELL, Texas
    WILLIAM J. JANKLOW, South Dakota                 ------
    MARSHA BLACKBURN, Tennessee          BERNARD SANDERS, Vermont
                                             (Independent)

                           Peter Sirh, Staff Director
                     Melissa Wojciak, Deputy Staff Director
                  Randy Kaplan, Senior Counsel/Parliamentarian
                           Teresa Austin, Chief Clerk
                  Philip M. Schiliro, Minority Staff Director

                                C O N T E N T S

                                  ----------
                                                                       Page
    Hearing held on March 27, 2003...................................     1
    Statement of:
        Beales, J. Howard, Director of the Bureau of Consumer
          Protection, Federal Trade Commission; and William Hubbard,
          Senior Associate Commissioner for Policy Planning and
          Legislation, Food and Drug Administration..................    25
        Thompson, Dr. James, M.D., executive vice president, chief
          executive officer, Federation of State Medical Boards;
          Carmen Catizone, executive director, National Association
          of Boards of Pharmacy; and Richard Blumenthal, attorney
          general, State of Connecticut, on behalf of the National
          Association of Attorneys General...........................   100
    Letters, statements, etc., submitted for the record by:
        Beales, J. Howard, Director of the Bureau of Consumer
          Protection, Federal Trade Commission, prepared statement of    27
        Bell, Hon. Chris, a Representative in Congress from the State
          of Texas, prepared statement of............................    19
        Blumenthal, Richard, attorney general, State of Connecticut,
          on behalf of the National Association of Attorneys General,
          prepared statement of......................................   141
        Burton, Hon. Dan, a Representative in Congress from the State
          of Indiana, prepared statement of..........................    11
        Catizone, Carmen, executive director, National Association of
          Boards of Pharmacy, prepared statement of..................   116
        Davis, Chairman Tom, a Representative in Congress from the
          State of Virginia, prepared statement of...................     3
        Hubbard, William, Senior Associate Commissioner for Policy
          Planning and Legislation, Food and Drug Administration,
          prepared statement of......................................    44
        Ruppersberger, Hon. C.A. Dutch, a Representative in Congress
          from the State of Maryland, prepared statement of..........    21
        Thompson, Dr. James, M.D., executive vice president, chief
          executive officer, Federation of State Medical Boards,
          prepared statement of......................................   103
        Tierney, Hon. John F., a Representative in Congress from the
          State of Massachusetts, prepared statement of..............    24
        Waxman, Hon. Henry A., a Representative in Congress from the
          State of California, prepared statement of.................     6

        POINT, CLICK, SELF-MEDICATE: A REVIEW OF CONSUMER SAFEGUARDS ON
                            INTERNET PHARMACY SITES

                                  ----------

                            THURSDAY, MARCH 27, 2003

                              House of Representatives,
                                Committee on Government Reform,
                                                        Washington, DC.
        The committee met, pursuant to notice, at 10:26 a.m., in
    room 2154, Rayburn House Office Building, Hon. Tom Davis of
    Virginia (chairman of the committee) presiding.
        Present: Representatives Davis of Virginia, Burton, Platts,
    Putnam, Duncan, Miller, Murphy, Turner, Janklow, Waxman, Towns,
    Sanders, Maloney, Cummings, Kucinich, Tierney, Watson, Lynch,
    Van Hollen, Ruppersberger, and Bell.
        Staff present: Peter Sirh, staff director; Melissa Wojciak,
    deputy staff director; Ellen Brown, legislative director and
    senior policy counsel; Scott Kopple, deputy director of
    communications; Teresa Austin, chief clerk; Joshua E.
    Gillespie, deputy clerk; Susie Schulte, legislative assistant;
    Corinne Zaccagnini, chief information officer; Anne Marie
    Turner, counsel; Phil Barnett, minority chief counsel; Josh
    Sharfstein, minority professional staff member; Earley Green,
    minority chief clerk; Jean Gosa, minority assistant clerk; and
    Cecelia Morton, minority office manager.
        Chairman Tom Davis. Good morning. The committee will come
    to order.
        I want to welcome everybody to today's oversight hearing on
    the domestic sale of drugs on Internet pharmacy sites.
        The sale of consumer products over the Internet has grown
    exponentially over the last 10 years. Clearly, access to
    prescription drugs via online pharmacies can provide benefits
    to consumers, including convenience and reduced cost. But,
    while many online pharmacies operate in the same manner as
    traditional brick-and-mortar drug stores and comply with the
    standards of State licensing authorities, not all pharmacies
    practicing over the Internet are legitimate sites.
        The Internet creates an easy environment for illegitimate
    sites to bypass traditional regulations and established
    safeguards for the sale of prescription drugs. Public health
    and consumer safety issues arise when the sale of prescription
    drugs occurs without a valid prescription or adequate physician
    supervision. It is now very simple to obtain virtually any
    medication online without ever seeking or speaking with a
    physician. All a consumer has to do is type the name of the
    drug into a search engine, quickly identify a site selling the
    medication, and then click to purchase. Although some sites
    require the consumer to fill out a health questionnaire to be
    reviewed by a physician prior to the prescription, consumers
    can easily manipulate their medical history on some
    questionnaires to be approved for the drug they desire. On
    other sites, no questionnaire is even required.
        I think all of us here today have opened our in-boxes only
    to find dozens of e-mails advertising medications at low cost
    with no prescription required. The most popular of those drugs
    sold online are so-called ``lifestyle'' drugs, including Viagra
    and Propecia. After September 11th there was a sharp rise in
    the sale of Cipro over the Internet without a prescription. The
    risks of this kind of self-medicating can include adverse
    reactions from inappropriately prescribed medications,
    dangerous drug interactions, and use of counterfeit or tainted
    products.
        I think it is important to note that several of these
    illegitimate sites fail to provide information about
    contraindications, potential adverse effects, and efficacy.
        Regulating these Internet pharmacies can be a challenge for
    Federal and State enforcement capabilities. Authorities have
    trouble tracking down Internet sites that fail to comply with
    State licensing requirements and standards. Many don't disclose
    identifying information, change their names and appearances
    often, and sometimes disappear without a trace. Accountability
    is impossible when the violators cannot be identified and
    located.
        Another regulatory challenge is the application of State
    regulations across multiple jurisdictions by multiple State and
    Federal authorities. Historically, States have been the primary
    enforcement authority with respect to the practice of medicine
    and dispensing of prescription drugs; however, the Food and
    Drug administration and the Federal Trade Commission also have
    a role to play.
        We will hear the testimony from several witnesses to
    discuss the regulatory challenges created by the domestic sale
    of prescription drugs over the Internet. I want to thank all of
    our witnesses for appearing here with us today.
        I would now like to yield to Mr. Waxman for an opening
    statement.
        [The prepared statement of Chairman Tom Davis follows:]
        [GRAPHIC] [TIFF OMITTED] 86641.001

        [GRAPHIC] [TIFF OMITTED] 86641.002

        Mr. Waxman. I would like to thank Chairman Davis for
    holding this hearing today on the proliferation of domestic Web
    sites that sell medications without a valid prescription. These
    Web sites occupy a dark and dangerous corner of the U.S. health
    care system. With the simple click of a mouse, consumers can
    purchase virtually any prescription medication without knowing
    who is hosting the Web site, who is writing the prescription,
    or who is dispensing the drug. On these sites, no prescription
    from your doctor is required. On the basis of a cursory medical
    questionnaire or no questionnaire at all, an anonymous
    physician prescribes medication that can be lethal.
        This practice has been rejected as substandard care by the
    State medical boards, and for good reason. Without a real visit
    with a physician that explores the risks and benefits of a
    prescription drug, a consumer can wind up suffering severe and
    unnecessary side effects. Children can order drugs online
    without their parents' or their doctor's knowledge.
        There is also concern among experts that easy access to
    antibiotics like Cipro through Internet pharmacies fosters drug
    resistance and therefore threatens us all.
        One reason for the persistence of Web sites selling drugs
    without valid prescriptions is a gap in consumer safeguards and
    Government enforcement. On one side of this gap are Federal
    agencies that are charged with protecting consumers. Federal
    law prohibits false and misleading advertising and requires
    certain drugs only be dispensed with a prescription. However,
    while Federal agencies have taken action against Web sites when
    there is a clear consumer fraud, the Federal Government has
    generally deferred to States on the central question of what is
    a valid prescription.
        On the other side of the gap are State agencies, including
    boards of medicine and pharmacy, and the attorneys general.
    Many States would like to shut these sites down, but often lack
    the legal authority to do so. For example, if one attorney
    general gets an injunction against one Web site, that
    injunction applies only in one State. It should not be
    necessary to require 50 separate lawsuits to shut down every
    dangerous Internet site.
        Today we will hear from the key agencies and organizations
    on both sides of this gap. I look forward to hearing about
    existing efforts to protect consumers and to discussing
    possible solutions to this ongoing problem.
        I want to thank all the witnesses for appearing today.
        Thank you, Mr. Chairman.
        [The prepared statement of Hon. Henry A. Waxman follows:]
        [GRAPHIC] [TIFF OMITTED] 86641.003

        [GRAPHIC] [TIFF OMITTED] 86641.004

        [GRAPHIC] [TIFF OMITTED] 86641.005

        Chairman Tom Davis. Thank you very much.
        Any additional statements? Mr. Burton.
        Mr. Burton. Mr. Chairman, thank you very much. I agree with
    what Representative Waxman and you just said. Those who are
    selling drugs without prescriptions over the Internet should be
    prosecuted to the full extent of the law; however, 10 years ago
    very few people owned a personal computer and the Internet was
    only used by the military and scientific communities. Ten years
    ago the Internet was available to most Government agencies and
    the corporate world, and today every desk in every office of
    the country has a computer hooked up to the Internet, and a
    majority of American homes have at least one computer and
    Internet access.
        Americans can read the Congressional Record the day it is
    printed. We as a population buy books, music, video games,
    furniture, flowers, clothing, and airline tickets online. At
    the same time, Americans' dependence on prescription drugs has
    risen dramatically: 75 percent of Americans between the ages of
    50 and 64 are on at least one prescription drug; 14 percent of
    women age 65 are on five prescription drugs in any given weeks.
    And I have friends who spend $600 or more a month on
    prescription drugs. Anyone with a chronic health condition
    likely is in the same situation.
        The price of prescription drugs in the United States is the
    highest of any country on Earth--highest of any country on
    Earth. In fact, in these troubled economic times the
    pharmaceutical industry is thriving. Several companies had 10
    to 15 percent growth just last year and their bottom line is
    unbelievable, the profits they are making. Many Americans--in
    particular, our senior citizens--are looking for legitimate
    ways to buy their needed prescriptions at lower prices. Other
    Americans prefer the convenience of having their prescriptions
    delivered directly to their home.
        The technology highway, once a rough dirt road, has become
    a multi-lane superhighway intersecting with Americans' avenue
    of need for lower-priced prescription drugs.
        As Federal officials looking at this emerging field of
    Internet pharmacies, we must move forward cautiously in
    determining what type of traffic controls, if any, we place on
    the intersection between consumers and the lawful Internet
    pharmacy. The roads and intersection already exist. Americans
    should have the right to lawfully purchase prescription drugs
    through licensed Internet pharmacies both in the United States
    and Canada, as long as those prescriptions are valid and given
    to the pharmaceutical Internet businesses.
        Those who violate the law by operating illegal pharmacies
    should be prosecuted. Those wholesalers who provide drugs to
    non-licensed pharmacies should also be prosecuted. The
    jurisdiction of parts of these roads is not that of the Federal
    Government. The regulation of pharmacies and the practice of
    medicine both are managed by State governments. I am a firm
    believer in States' rights and do not wish for the Federal
    Government to co-opt State regulatory authority.
        I'm also a strong proponent of the free enterprise system
    that is the underpinning of our democracy; therefore, I believe
    that anything we decide to do at the Federal level must respect
    rights of the State governments, the rights of lawful
    businesses to operate, and the rights of Americans to use the
    Internet to buy prescription drugs for which they have a
    legitimate prescription at the best price available.
        I look forward to hearing from our witnesses today. Today's
    hearing is focused on domestic Internet pharmacies. We have
    another problem relating to Internet pharmacies that we will be
    addressing in a subcommittee hearing next Thursday, and that is
    the ability for Americans to maintain access to lower-priced
    prescription drugs through Canadian online pharmacies.
        I have cosponsored legislation with Congressman Sanders and
    50 other legislators at this time--and I fully believe we will
    have maybe over 100 very shortly--that will institute monetary
    fines on pharmaceutical companies that reduce access of
    Americans to lower-cost drugs online from Canadian pharmacies.
        Thank you, Mr. Chairman.
        [The prepared statement of Hon. Dan Burton follows:]
        [GRAPHIC] [TIFF OMITTED] 86641.006

        [GRAPHIC] [TIFF OMITTED] 86641.007

        [GRAPHIC] [TIFF OMITTED] 86641.008

        [GRAPHIC] [TIFF OMITTED] 86641.009

        Chairman Tom Davis. Thank you very much.
        Any other opening statements? Mr. Towns.
        Mr. Towns. Thank you very much, Mr. Chairman, for holding
    this oversight hearing on safeguards on Internet pharmacy. I
    would like to commend you and Ranking Member Waxman for
    shedding light on this issue.
        Today's Internet technology has revolutionized the purchase
    and delivery of goods and services, so it should come as no
    surprise that many people are utilizing this technology to
    purchase prescription drugs, as well. However, what is
    surprising and often frightening is the ease of which it can be
    done.
        The purchase of prescription drugs through the Internet
    raises some very troubling safety concerns. For starters, there
    is a legitimate question of whether a doctor or other medical
    professionals are actually involved in the prescription drug
    transaction. Even if there is a doctor, the consumer has no
    assurances of the medical professional's credentials or how
    thoroughly he or she reviews the medical information supplied.
    A brief online questionnaire may miss essential information on
    whether a specific drug is safe for a patient.
        Additionally, children may try to use the Internet to get
    potentially dangerous prescription drugs. Although the FDA has
    the authority to take action against the sale of prescription
    drugs without a valid prescription, the agency has left it up
    to States to determine what is a valid prescription.
        Since a person in New York can buy a prescription drug
    through an Internet site based in Texas, it seems to me that
    the regulatory scheme is inadequate.
        I'm not in favor of shutting down all Internet pharmacy
    sites; however, it appears that better oversight and control is
    definitely needed. Purchasing drugs through the Internet can
    offer consumers incredible benefits. It offers improved access
    for home-bound patients and increases privacy for a person who
    has a disease that may carry a social stigma, but we must make
    sure that a licensed medical practitioner is involved in all
    prescription drug transactions.
        I look forward, Mr. Chairman, to hearing from the
    witnesses. This is a very important hearing.
        On that note I yield back.
        Chairman Tom Davis. Thank you very much.
        Any other opening statements over on this side? Mr.
    Janklow.
        Mr. Janklow. Mr. Chairman, I am going to be brief. Thank
    you very much for conducting this hearing. It is obvious one of
    the major problems we have in this country is people just
    cannot get prescription drugs at a price that they can afford
    to pay for them, and, given the utility value of the Internet,
    they are able to very quickly lower the cost. It is not always
    just a case of people trying to circumvent the system as much
    as it is a lot of people trying to find adequate drugs.
        We talk about the Canadian situation. The fact of the
    matter is this Congress passed statutes that were signed into
    law by the President of the United States, and the last two
    Secretaries of Health and Human Services have both refused to
    do the necessary documentation that the law required to deal
    with the importation of drugs into the United States. For some
    reason, they've chosen just not to comply with the law.
        We talk about using the courts for civil actions to close
    people down. The fact of the matter is a contested civil case
    in America takes longer from start to finish than World War II
    did. There isn't any way that we have an efficient adjudicatory
    process in this country. Someone can get an injunction on the
    front end, but by the time it is finished on the back end it is
    several years later. And there are hundreds of these cases that
    could be brought.
        This is one of those rare times when, under the U.S.
    Constitution, where it was envisioned that Congress would
    regulate commerce between the States. This is something that's
    within the unique framework of the national Government to deal
    with.
        Mr. Chairman, I think you have shown great insight in
    moving forward on this particular issue, and I really look
    forward to the testimony as to what people think we can do, as
    opposed to all the brilliant things they are doing.
        Thank you.
        Chairman Tom Davis. Thank you very much.
        Mr. Sanders.
        Mr. Sanders. I apologize for jumping ahead of my colleague
    here.
        Chairman Tom Davis. You can yield at the end of your 5
    minutes and we can get more in. That's fine. You are recognized
    for 5 minutes.
        Mr. Sanders. Thank you, Mr. Chairman. Mr. Chairman, thank
    you for holding this important hearing. The issue of
    prescription drugs is something that I have been heavily
    involved in not only in my 12 years in Congress but in years
    before that, as well. As my friend, Mr. Janklow indicated, the
    reason for my concern is that the American people pay by far
    the highest prices in the world for prescription drugs. There
    are millions of senior citizens in this country who are unable
    to afford prescription drugs and suffer--and in some cases
    die--as a result of that reality.
        Year after year the pharmaceutical industry leads every
    other industry in the profits that they make while millions of
    Americans are unable to afford prescription drugs. Many of
    these companies pay their CEOs extravagant compensation
    packages. And let us be honest and bring the real world into
    this room: the pharmaceutical industry is the most powerful
    lobby in the United States. In the last several years, Mr.
    Chairman, the pharmaceutical industry has spent hundreds and
    hundreds of millions of dollars in campaign contributions to
    the vast majority of the Members of Congress, to both political
    parties, especially the Republican party. The pharmaceutical
    industry has spent huge sums of money on lobbying. There are
    over 600 paid lobbyists from the pharmaceutical industry who
    descend on this institution any time that any Member comes up
    with an idea to lower the cost of prescription drugs.
        Now, the reality of what is going on in America today--and
    I know, Mr. Chairman, this is a little bit divergent from your
    discussion, important issues that you are raising today--but
    the reality is that approximately 1 million Americans are now
    going to Canada in order to buy prescription drugs because the
    same exact medicine sold in Canada is sold for a fraction of
    the price that it's sold in the United States.
        Mr. Chairman, several years ago I became the first Member
    of Congress to take a group of citizens from the State of
    Vermont over the Canadian border. Let me tell you one story.
    Mr. Chairman, I know that you are aware of the very serious
    problem of breast cancer in this country and how many women are
    struggling for their lives. Timoxaphin is one of the most
    widely prescribed breast cancer drugs in this country. The
    women who went with me over the border were able to purchase
    timoxaphin--the same, exact product, not a generic, Mr.
    Chairman--for one-tenth the price, 10 percent of the price that
    they're paying here in the United States.
        Now, what is going on is that in the last several years--
    and I'm proud to have been an active player in that process--
    about 1 million Americans are either going over the border to
    purchase prescription drugs in Canada or else they are
    increasingly using the Internet.
        Obviously, the pharmaceutical industry, which contributes
    so much money in the political process, is putting a great deal
    of pressure on the FDA and on Members here to say, ``No, let
    the old people suffer. Let them die, because we have to protect
    our profits. Don't let them go to Canada,'' although there has
    not been one indication that the regulatory system in Canada is
    any inferior to what we have here, not one indication, to the
    best of my knowledge, that one medicine, one prescription
    coming over the border has caused anybody any problems.
        So, Mr. Chairman, let me go on record right now as saying
    to the FDA and to Mr. Hubbard and those other people here that
    we are going to fight you and we are going to try everything
    that we can to prevent you from forcing people in this country
    to suffer and die so that the pharmaceutical industry can
    continue to rake up huge profits and provide campaign
    contributions to Members of the Congress.
        Thank you very much, Mr. Chairman.
        Chairman Tom Davis. Any other statements? Mr. Bell.
        Mr. Bell. Thank you, Mr. Chairman. I want to thank you and
    the ranking member for focusing attention on what I think is a
    very important issue, and I look forward to hearing the
    testimony here today.
        As the number of people accessing Internet pharmacy sites
    has increased from 45 million in 1999 to an estimated 320
    million by the year 2005, it is imperative that the Federal
    Government lead the way to ensure that these sites are safe for
    consumer use. While I don't completely disagree with my
    colleague, Mr. Sanders, that I do think that consumers should
    have access to affordable prescription drugs, we need to make
    sure that it is safe.
        Although law-abiding Internet pharmacies benefit modern
    health care in numerous ways, some Internet pharmacies conduct
    illegal and unsafe prescribing and dispensing practices that
    can endanger the health of their patients. Because many online
    pharmacies offer a variety of drugs, including controlled
    substances, and do not adhere to ethical guidelines to protect
    patients, the potential for harm to consumers is massive. These
    pharmacies present a significant danger to health care
    consumers and pose a regulatory nightmare that I'm sure we'll
    hear more about today.
        Mr. Chairman, I'm concerned that the Federal Government is
    merely playing catch-up and stands to lose this race if we
    don't take immediate action.
        I thank you again for calling this hearing and I look
    forward to working with the committee to find a plausible
    solution.
        Thank you, Mr. Chairman.
        [The prepared statement of Hon. Chris Bell follows:]
        [GRAPHIC] [TIFF OMITTED] 86641.010

        Chairman Tom Davis. Thank you.
        Mr. Ruppersberger.
        Mr. Ruppersberger. Yes. Today we are going to discuss
    online pharmacies. The cost of prescription drugs are on the
    rise and everyone is looking to save money, and my concern
    today though is for the consumer. I think there are certain
    issues and questions that we need to discuss, and hopefully you
    will discuss them in your testimony.
        Are these sites secure? Are these sites protecting the
    privacy of individuals who choose to purchase their
    prescription drugs online? Are there verification systems in
    place to make sure a prescription is legitimate and real? Are
    the prescriptions that are sold valid, safe, and healthy?
        I'm also concerned about these Web sites because I'm
    concerned that the proper precautions and safeguards are not in
    place to protect consumers.
        While the growth of the Internet has allowed many Americans
    to save money and experience real convenience, we have to
    question the safety of these Web sites.
        Thank you, Mr. Chairman.
        [The prepared statement of Hon. C.A. Dutch Ruppersberger
    follows:]
    [GRAPHIC] [TIFF OMITTED] 86641.011

    [GRAPHIC] [TIFF OMITTED] 86641.012

        Chairman Tom Davis. Thank you very much.
        Any other opening statements? Mr. Tierney.
        Mr. Tierney. Thank you, Mr. Chairman.
        I'd just ask for unanimous consent to enter my remarks in
    the record and essentially adopt much of what Mr. Sanders said.
    As much as we need to make sure that we have good regulatory
    practices in place, we ought to be very careful to make sure
    that we're not at the same time taking away from consumers and
    people that need affordable prescription drugs and
    alternatives. I would rather see us use this hearing as an
    effort to make the system work so that they can, in fact, get
    affordable prescription drugs, as opposed to one that's
    shutting the door on them in that regard.
        [The prepared statement of Hon. John F. Tierney follows:]
        [GRAPHIC] [TIFF OMITTED] 86641.013

        Chairman Tom Davis. Thank you.
        Any other comments?
        [No response.]
        Chairman Tom Davis. If not, we're going to move to our
    first panel of witnesses. We have Mr. William Hubbard here from
    the FDA. Mr. Howard Beales will be testifying on behalf of the
    Federal Trade Commission.
        Mr. Taylor, you are accompanying him; is that correct?
        Mr. Taylor. Yes.
        Chairman Tom Davis. So you may be testifying. Why don't we
    all rise? It is the policy of the committee to swear in
    witnesses.
        [Witnesses sworn.]
        Chairman Tom Davis. Thank you very much.
        We have a timer in front of you. When it is green, you keep
    going. When it is orange, you have a minute to sum up. When it
    turns red, we would appreciate your summing up, because your
    total statements will be in the record.
        Let's start, Mr. Beales, with you, and then Mr. Hubbard. We
    thank you very much for being with us. As you can see, there's
    a lot of interest among Members on this subject.

       STATEMENTS OF J. HOWARD BEALES, DIRECTOR OF THE BUREAU OF
      CONSUMER PROTECTION, FEDERAL TRADE COMMISSION; AND WILLIAM
    HUBBARD, SENIOR ASSOCIATE COMMISSIONER FOR POLICY PLANNING AND
               LEGISLATION, FOOD AND DRUG ADMINISTRATION

        Mr. Beales. Thank you, Mr. Chairman and members of the
    committee. I am Howard Beales, the Director of the Federal
    Trade Commission's Bureau of Consumer Protection. I'm pleased
    to be here today to present the FTC's testimony and to work
    with the committee on these important issues.
        For many years the Commission has actively attacked false
    and misleading health care advertising, no matter the medium.
    In the last 5 years, alone, the Commission has brought 105
    health and safety cases. In most of those cases, some part of
    the marketing occurred online.
        We have been particularly concerned about fraudulent claims
    on the Internet. The Commission's ``Operation Cure All''
    targets Web sites that deceptively promote products or services
    that purportedly treat or cure serious and life-threatening
    diseases. Since June 1999, the FTC has filed 18 ``Operation
    Cure All'' cases and sent warning letters to hundreds of Web
    sites.
        Of course, success would not be possible without the
    efforts of our many law enforcement partners, including the FDA
    and several State attorneys general.
        The sale of prescription drugs on the Internet raises
    special law enforcement challenges. Prescription drugs
    available online offer consumers convenience and value. Many
    online pharmacies appear to operate the same way traditional
    pharmacies do; however, as this committee well knows, the
    practices of some online pharmacies that file prescriptions
    without adequately reviewing a consumer's medical history or
    dispense unapproved drugs from overseas have significant
    potential to injure consumers.
        Historically, the States have regulated the practice of
    medicine and pharmacy. In the last few years, a number of
    States have brought actions against online companies that
    dispense prescription drugs without a valid prescription or
    have initiated professional disciplinary actions.
        On the Federal level, the FDA is the principal agency with
    both scientific expertise and statutory authority to oversee
    online prescription sales, including the authority to take
    action against the dispensing of a prescription drug without a
    valid prescription.
        The Commission can assist these agencies by bringing cases
    against Web sites that engage in false and deceptive practices.
    For example, in one case the Commission charged an online
    pharmacy with falsely representing that consumers received care
    by a clinic with physicians and an onsite pharmacy. There were
    no physicians, no onsite pharmacy.
        Following the anthrax outbreak in 2001, the Commission
    investigated the possible sale of counterfeit Cipro on the Web.
    Working with FDA, our staff ordered product samples from both
    foreign and domestic Web sites and had them tested. No
    counterfeit Cipro was discovered and no actions were filed. We
    provided information about the foreign Web sites to the FDA.
        Prescribing and dispensing drugs online may be illegal, but
    unless it is deceptive or unfair it falls outside of the FTC's
    authority and expertise.
        We will continue to work closely with the FDA and other
    Federal and State agencies and assist them when we can. We will
    also continue to monitor the Internet for deceptive and
    misleading product claims and to bring cases when appropriate
    under our jurisdiction.
        Thank you for this opportunity to present the Commission's
    views. I look forward to responding to your questions.
        Chairman Tom Davis. Thank you very much.
        [The prepared statement of Mr. Beales follows:]
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        Chairman Tom Davis. Mr. Hubbard, thank you for being with
    us.
        Mr. Hubbard. Thank you, Mr. Chairman.
        As you said earlier, I am accompanied by John Taylor, our
    Chief Enforcement Official at FDA. We have a written testimony.
    I'll make just a few remarks, if I may.
        One of the best things Congress ever did for consumers in
    our view, Mr. Chairman, is to create a modern drug approval
    system. Drugs are tested for safety and efficacy and
    manufactured to exacting specifications overseen by the FDA.
    American patients can be almost totally certain when they go to
    a licensed pharmacy that they are getting a safe and effective
    drug.
        The emergence of these illegal Internet sites poses a
    fundamental threat to that safety/assurance system. We note, of
    course, that there are legitimate Internet sites that are
    licensed by the States and can properly dispense drugs and, in
    fact, provide a public service, but let me show you a site. I
    believe the committee may have a printout of a site that we are
    looking at. I've taken off the name of this site to perhaps
    protect the guilty. But this site, as you can see from the
    information--it's also on the poster over here--a consumer can
    go on and fairly easily buy some relatively serious drugs. Some
    of these drugs have serious side effects and need to be taken
    under the guidance of a physician, and some are, in fact,
    controlled substances. We believe this is a very fundamental
    threat.
        Now, the patient that buys these drugs on the Internet site
    has no way of knowing what they are getting. This offers
    particular drugs. If I order any of these drugs, I have no idea
    that I'm going to get that drug or it is going to be the real
    drug or it is going to be a safe and effective drug. In fact,
    there are cases in which people have ordered drug A and gotten
    drug B.
        I'll last say that this site that I have given you we have
    begun to look at. This site looks like an American doctor and
    nurse or doctors or whatever. It looks very normal. When we
    checked, this site is actually in Thailand, and the drugs that
    are coming from this site are from some place we don't know,
    but I doubt they are from the United States. These sites have
    sprung up continuously in recent years and they challenge the
    ability of State and Federal authorities to combat them.
        Now, FDA and other agencies in the States have taken a
    number of steps to fight these rogue sites. We have been
    educating consumers. We have many brochures and information on
    our Web site and other things to warn people about these. We
    have partnership agreements with the State medical and pharmacy
    regulators to jointly attack these sites in many cases. We and
    the FTC, as Mr. Beales has said, have been working on a number
    of cases. FDA has enforced dramatically in this area. We've had
    over 300 cases of Internet sites since 2000, 150 arrests. We
    have 100 current investigations. And just today, this morning
    the State of Oklahoma is going to court to seek an injunction
    against an Internet site with the support of the FDA. That
    action is one that we are trying to do in concert with the
    States, and we believe that together the Feds and the State can
    have an impact here.
        So with those brief remarks, Mr. Chairman, I will say thank
    you and take questions.
        Chairman Tom Davis. Thank you very much.
        [The prepared statement of Mr. Hubbard follows:]
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        Chairman Tom Davis. I'm going to start the questioning with
    Mrs. Miller. The gentlelady from Michigan is recognized.
        Mrs. Miller. Thank you, Mr. Chairman.
        I'm particularly interested in this issue, as we are
    talking about these various Internet sites and the kinds of
    problems that we are having. I live in Michigan, obviously a
    border State to Canada, and our seniors--I'm not sure if they
    are on the Internet. They just get on the bus and go across the
    Bluewater Bridge or the Ambassador Bridge and they're
    purchasing their drugs in Canada. You can't hardly blame them,
    certainly.
        It has been interesting for me to listen to your testimony
    here today. I notice that you said that you send out initial
    warning letters to some of the sites that are illegitimate or
    what have you. It is my understanding that what is happening
    with many of the seniors, whether they are purchasing these
    drugs over the Internet or whether or not they're just
    traveling there personally, they do have to have a script from
    a Canadian doctor. My understanding is that they'll go there
    with a script from an American doctor and then have to have it
    re-scripted by Canadian doctors.
        How are you interacting not only with the States but with
    the Canadian Government? Are you having any success in writing
    these letters? You just mentioned that you only had one lawsuit
    and you had another this morning with Oklahoma. Are you having
    good cooperation with the local law enforcement from the
    States, as well as the Canadian Government, on weeding out some
    of these illegalities that are happening?
        Mr. Hubbard. I will take that as my question. I certainly
    think we are having good success. As I said, we have agreements
    with the States in which we are attempting to coordinate our
    actions. In terms of Canada, we have been in regular contact
    with Canadian regulatory officials and they recognize that
    these sites are illegal and are working at their end of the
    border on them.
        As far as patients coming across from Canada, the American
    citizens, we try to warn them and tell them that they're taking
    risks in buying these drugs.
        We do not, of course, prosecute or otherwise take action
    against individual consumers who go to Canada to purchase
    drugs.
        Mrs. Miller. I mean, it is a huge cottage industry
    immediately across the various bridges that I have talked about
    in our State, and I'm not sure if these Canadian doctors are
    licensed or what is happening, but that's what my seniors are
    telling me--that they just take these scripts and they are re-
    scripted over by the Canadian doctors and they come back with
    their drugs.
        Mr. Hubbard. Well, the Canadian officials tell us that the
    Canadian regulatory officials who oversee the practice of
    medicine in Canada are very concerned about Canadian physicians
    co-signing these prescriptions, and they are trying to make
    that point to their physicians that they should not be doing
    that. They do not consider it a good practice of medicine.
        Mrs. Miller. Thank you.
        Chairman Tom Davis. Thank you very much.
        The gentleman from Texas.
        Mr. Bell. Thank you, Mr. Chairman.
        Mr. Hubbard, I want to talk to you for a moment about the
    definition of a valid prescription. The FDA allows States to
    determine the definition for valid prescription, correct?
        Mr. Hubbard. That's correct. The Federal law says that a
    prescription drug must be dispensed pursuant to a valid
    prescription, but it does not define that, so FDA relies on the
    State definition of valid prescription.
        Mr. Bell. Is that part of the problem?
        Mr. Hubbard. It certainly has been said by many that is a
    problem; that if the individual State does not have a
    definition of valid prescription that covers these Internet
    sites, then that is viewed as a weakness.
        Let me ask Mr. Taylor to say more about that.
        Mr. Taylor. Sure. I can expand upon that.
        It poses two challenges, one in the context of our own
    statute, which basically says that if a product is dispensed
    and there isn't a valid prescription, the drug product is
    misbranded. So if there isn't a clear definition on the State
    level as to what constitutes a valid prescription in the
    context of the Internet, it is difficult for us to make a
    misbranding charge.
        In the criminal context, the challenge comes because in
    order to show intent to establish a criminal violation, it is
    difficult to establish intent if, again, the standard as to
    what constitutes a valid prescription is not clear.
        So, to the extent we have had success in building criminal
    cases, it is often in those States where there, indeed, is a
    clear definition as to what constitutes a valid prescription in
    the context of the Internet.
        Mr. Bell. From a regulatory standpoint, isn't it somewhat
    of a nightmare, because you could be looking at 50 different
    definitions for valid prescription, couldn't you?
        Mr. Taylor. Indeed. And when we started working on the
    Internet in 1999, both on the State level and the Federal
    level, our statutes really never contemplated the use of the
    Internet, quite frankly, as a means of conveying drug products,
    and so I think both on the State level and the Federal level we
    have tried to apply our laws in a way that allows us to address
    this problem.
        But you are right: in the context of the States, you have
    50 different definitions, and therefore when we are putting
    together cases or when we are investigating sites we have to
    factor that in as a part of our strategy, and so that does pose
    a great challenge to us.
        Mr. Bell. Would it be your recommendation to try to come up
    with one definition?
        Mr. Taylor. Well, I don't think the administration has a
    position on that; however, as I said, it has been a
    longstanding concern to us because our inability to build the
    cases we would like in certain circumstances.
        Mr. Bell. And, just so we'll have a better understanding of
    what is going on out there, I assume there are some folks that
    are operating in a legitimate fashion?
        Mr. Taylor. Absolutely. Absolutely. And I think one of the
    programs that we think is very positive is NABP's Verified
    Internet Practice Pharmacy Site program [VIPPS]. We also think
    that is an excellent program because it allows consumers to
    look at the seal and realize that they are getting a drug that
    is pursuant to a valid prescription under State law, and also
    that they are getting a drug that is FDA approved. So yes,
    there are definitely legitimate sites. The Internet definitely
    provides great benefits, including anonymity, convenience to
    those who are homebound, as well as cheaper prices in some
    cases, but that's not the case across the board.
        Mr. Bell. Thank you, Mr. Chairman.
        Chairman Tom Davis. Thank you very much.
        Mr. Duncan.
        Mr. Duncan. Thank you, Mr. Chairman, and thank you for
    calling a hearing on this very important topic.
        Mr. Hubbard, as Congresswoman Miller said, you can't blame
    these people for trying to get lower prescription drug costs
    almost any way that they can--going to other countries or over
    the Internet or something. But I've read several times in the
    Wall Street Journal over the last few years that it costs they
    estimate an average of $650 million to $800 million and 10 to
    12 years to get a drug approved by the FDA. And then I remember
    reading also in the Wall Street Journal a few years ago about a
    small company in Illinois that had a breast cancer detection
    pad that they had sold many, many thousands in other countries
    and they had gotten approved in every industrialized nation
    within weeks or months, but they had been, I think, at that
    point 9 years dealing with the FDA. They had several doctors
    quoted in that article saying thousands of women have died
    because the FDA had been so slow and bureaucratic.
        What I'm wondering about is why does it take so much longer
    to get drugs approved here than in any other industrialized
    nation in the world, and what are you doing now or have you
    done some things to try to bring down those costs and those
    time constraints to help, because that would do more than
    anything to bring down the prices of prescription drugs in this
    country.
        Mr. Hubbard. Mr. Duncan, in fact, in the 1970's and 1980's
    drugs did occasionally reach the U.S. patients last in some
    cases because of--allegedly because of FDA requirements.
    However, I would say that Congress stepped in on this issue
    about a decade ago----
        Mr. Duncan. Right.
        Mr. Hubbard [continuing]. And created new legislation that
    has resulted in drugs now being approved as fast or faster in
    the United States than anywhere in the world, so our patients
    do get the drugs faster than anywhere else.
        It's very expensive to----
        Mr. Duncan. I was here when we passed that legislation and
    I remember that, and we did try to step in. But I still read
    these articles in the Wall Street Journal and other places that
    says FDA still--that the big drug giants can get things
    approved real quickly, but some of these small companies don't
    have a chance.
        Mr. Hubbard. Well, when Congress passed that legislation it
    gave us very strict review times, and we'd be glad to share the
    data with you. We, in fact, meet those review times as directed
    by Congress.
        Mr. Duncan. So you are saying that we are now faster than
    most other industrialized nations?
        Mr. Hubbard. Than all other industrialized nations.
        Mr. Duncan. All right.
        Mr. Beales, how many people are buying drugs over the
    Internet, as best as you can tell? And has the FTC--have you
    received complaints about these drugs being fake in some way,
    or can you tell us, do you know of anybody that has been hurt
    by any of these drugs? I'm wondering about the scope of the
    problem here.
        Mr. Beales. We don't have a specific estimate of how many
    people purchase drugs over the Internet. I mean, there are an
    enormous number of people who make various health-related
    purchases over the Internet, but I can't narrow that down to
    pharmaceutical products.
        We do get complaints about products that are ineffective.
    They are--those don't tend to be complaints about prescription
    drugs, but what most of the complaints we get from online
    pharmacies--that concern online pharmacies are non-delivery
    kinds of complaints and those kinds of issues.
        We don't know of particular instances of cases where
    somebody has tried to buy a drug that turned out not to work or
    to be the wrong thing. That is what we were concerned about in
    looking at Cipro, and we have in the past brought cases against
    home test kids for AIDS that were sold online and, in fact, did
    not work. So we know that problem is out there, but we don't
    know of specific instances in prescription drugs.
        Mr. Duncan. All right. Thank you very much.
        Chairman Tom Davis. Thank you very much.
        Mr. Waxman.
        Mr. Waxman. Thank you, Mr. Chairman.
        Mr. Beales, one possible model of addressing the Internet
    pharmacy issue could involve shared response authority, shared
    authority between FDA and the States. Shared enforcement
    already exists within FTC law in the Telemarketing Act. Can you
    explain how the Federal Government and States share enforcement
    of the Telemarketing Act? And does this work in the case of
    telemarketing?
        Mr. Beales. Certainly. The way the Telemarketing Sales Act
    is set up is the FTC writes rules that govern telemarketing to
    define deceptive and abusive practices and specify
    requirements, and then the FTC can enforce those rules, but
    States also have the ability to go into Federal court to
    enforce the Federal rule. There is a right of first refusal, if
    you will. States have to tell us to go to Federal court, and if
    we want to take over the case we can.
        What that structure does is to preserve a uniform Federal
    set of rules and Federal authority over what the rules will be
    and remain, but it allows for individual States to go into
    Federal court to obtain a national injunction to stop a
    particular practice.
        By and large, that scheme has worked well. We find that
    mostly States prefer still to go into State court under their
    own State laws, but there have been about 50 or so cases where
    States have gone to Federal court in order to stop particular
    telemarketing practices.
        Mr. Waxman. Thank you. You testified that FTC has noticed a
    large number of false or misleading claims made about dietary
    supplements. After the death of Oriole's pitcher Steve Bechler
    several weeks ago, a great deal of attention is focused on
    ephedra products. Can you give us examples of statements made
    by Web sites about ephedra that FTC considers false or
    misleading? And let me also ask: if a company asserts that an
    ephedra product is safe, is that considered misleading by the
    FTC?
        Mr. Beales. We have, in four cases so far, going back to
    1997, challenged claims that ephedra was safe or had no side
    effects as unsubstantiated. We don't think there is sufficient
    scientific evidence to establish safety or to establish the
    lack of side effects. And we have been successful in those four
    cases that we have brought. We have other investigations
    involving ephedra products, and there will be more cases that
    are in the pipeline.
        Mr. Waxman. Well, if a company asserts that an ephedra
    product is safe, is that considered misleading by the FTC?
        Mr. Beales. Yes, it is. We think that a claim is misleading
    if it is false or it is misleading if there is not sufficient
    scientific evidence to substantiate the claim, and in either
    case we can and do go to Federal court in order to stop it.
        Mr. Waxman. Mr. Taylor, some have suggested that there
    should be a single Federal standard for what is valid
    prescribing over the Internet. With a clear Federal standard,
    would enforcement be easier?
        Mr. Taylor. Indeed, it would, simply because, instead of
    dealing with the standards of 50 States in terms of looking at
    whether to bring a civil or criminal case, we would be dealing
    with one unified standard for what constituted a valid
    prescription.
        Mr. Waxman. Thank you.
        Thank you, Mr. Chairman. I yield back.
        Chairman Tom Davis. Thank you very much.
        Mr. Janklow.
        Mr. Janklow. Thank you very much, Mr. Chairman.
        Mr. Taylor, if I could ask you, give us an example of two
    States that have different laws that define a prescription.
        Mr. Taylor. You mean specific States or specific fact
    patterns?
        Mr. Janklow. Either one, because I just need an example of
    two States that have a definition of ``prescription'' that's
    different.
        Mr. Taylor. Sure. There are some States that specifically
    address, for example--if you notice up on the easel there is
    essentially what is called an ``online questionnaire.'' There
    are some States that specifically state that an online
    questionnaire, filling out that online questionnaire does not
    fall within the standard for the practice of medicine and does
    not fall under the standard of what constitutes a practice of
    pharmacy and therefore a valid prescription. There are other
    States, however, that don't address the question of whether or
    not an online questionnaire falls inside or outside the proper
    standard of medical care or inside or outside the standard for
    the practice of pharmacy or what constitutes a valid
    prescription. That's two concrete examples of how an online
    questionnaire is dealt with different in two different States.
        Mr. Janklow. But, sir, your second example that you gave,
    you said they don't say one way or the other, so I don't know
    how that is a different example. One State may say that an
    online fill-out is not a prescription, the other State is
    silent. That doesn't mean it is.
        Mr. Taylor. Well, actually, here's the difference. The
    difference, in the context of a criminal case, is that if you
    are going to bring a criminal case and you are going to go to a
    U.S. Attorney's office, and as part of a statute in a criminal
    case you need to establish intent, you're able to go to the
    U.S. Attorney and say definitively that this type of conduct
    falls outside what constituted a valid prescription, and by
    this kind of conduct, the filling out of a questionnaire falls
    clearly outside of what constituted a valid prescription within
    that State, and therefore it is easier to establish that
    someone has intentionally violated State and thereby Federal
    law.
        In the context of a State where it is unclear whether it
    does or does not constitute a valid prescription, it is
    difficult to show that someone, you know, willfully intended to
    violate the law because they may not know, themselves, that----
        Mr. Janklow. But, sir, as a practical matter, you can file
    charges against somebody that should be determined. I mean,
    what we're doing is making subjective judgments on cases that
    we don't file, as opposed to filing an action where we believe
    there is a violation and letting it be determined by judges
    through the appellate chain.
        Mr. Taylor. Well, in some cases where there is ambiguity
    we've gone to the States to get an advisory opinion as to
    whether or not the online questionnaire falls under a valid
    prescription of medicine, but we have not, quite frankly----
        Mr. Janklow. Let me ask you, if I can, this, sir.
        Mr. Taylor. OK.
        Mr. Janklow. Do you know of any State that says an online
    questionnaire fulfills a prescription requirement?
        Mr. Taylor. Not off the top of my head, but that doesn't
    mean----
        Mr. Janklow. OK. Mr. Hubbard, if I can ask you, you talked
    about this case in Arizona [sic] that is being filed today. How
    long has that case been being worked?
        Mr. Hubbard. I don't know how long Oklahoma--it's Oklahoma.
    I don't know how long Oklahoma has been working it, but we
    spent a few, the last few weeks on it.
        Mr. Janklow. Pardon?
        Mr. Hubbard. We've spent the last few weeks on it. We are
    reacting to the claims they are making to their Web site and to
    the actual sales that they are making.
        Mr. Janklow. And are there thousands of these sites out
    there?
        Mr. Hubbard. There are certainly hundreds. We have learned
    that in many cases a given Web site is part of a larger
    business that runs several Web sites, so it could be if you see
    Web site A, there is also B, C, D, E all run by the same
    company with different looks on the Internet.
        Mr. Janklow. Do you have any estimate as to the number of
    cases globally that have been filed in America, what percent
    are civil, what percent are criminal?
        Mr. Hubbard. As I said in my testimony, we have done over
    300 at FDA. The States have done some number more, but I do not
    have that number. Perhaps the next panel will know more.
        Mr. Janklow. Are you aware of many instances where someone
    has been shut down civilly where they have reopened under
    another name or another operation?
        Mr. Hubbard. Absolutely.
        Mr. Janklow. So the civil law really doesn't work very
    well, does it?
        Mr. Hubbard. Well, I think that could also be true of the
    criminal. If you don't catch the criminal and he has moved on
    to another State or another country, just because you have
    targeted them doesn't mean you have successfully put them out--
    --
        Mr. Janklow. I understand that, but, I mean, as a practical
    matter there is less likelihood someone will be dealing with
    the criminal law violations as a matter of choice than civil
    law violations.
        Mr. Hubbard. Let me ask John to answer that.
        Mr. Taylor. Not in all cases.
        Mr. Janklow. I said as a practical matter. I didn't say in
    all cases.
        Mr. Taylor. Not even in--I can't even say it is a practical
    matter, because there might be some instances where a Web site
    is disseminating a product that is so dangerous that it is,
    quite frankly, more advantageous to try and move with the civil
    case--for example, an injunction or seizure--that removes the
    product from the marketplace quickly. Some of our criminal
    cases are so complex that, quite frankly, it takes a certain
    amount of time to put them together, and during that time in
    some cases products could still be--the pharmacy could still be
    dispensing products to consumers. So it really is a fact-based
    analysis.
        If you may, I just want to expound upon what Oklahoma is
    doing today. One of the unique facets of the Oklahoma action is
    this involves a storefront pharmacy which is accepting
    prescriptions, sending the prescriptions to Canada, and then
    obviously products are then distributed to consumers.
        The reason why this particular storefront was of interest
    both to the State of Arkansas and the State of Oklahoma is
    because, as Mr. Hubbard said, the company was making misleading
    claims about the FDA-approved status of their products, which
    raises safety concerns that are troubling to us.
        Part of, I think, the driving force for trying to address
    this problem is to ensure that the American public has products
    that, indeed, are FDA approved and that, indeed, are safe and
    effective, and that's one of the reasons why the State of
    Oklahoma moved the case.
        Mr. Janklow. My time is expired. Thank you.
        Chairman Tom Davis. Thank you very much.
        Mr. Ruppersberger, and then Ms. Watson.
        Mr. Ruppersberger. First, after listening to a lot of the
    testimony and questions, it seems to me that clearly the
    problem isn't getting any better and there's a lot of ambiguity
    within different States and that we really do need to establish
    some Federal standard. Would you agree with that premise?
        Mr. Hubbard. Well, certainly we're getting that advice from
    several points. Understand that there are significant policy
    decisions around doing that because FDA does not regulate the
    practice of pharmacy or the practice of medicine.
        Mr. Ruppersberger. What policy decisions? If you were
    sitting here, what would you suggest that we do to resolve and
    try to help this situation?
        Mr. Hubbard. Obviously, the advice you will get is that
    there be a national Federal standard for a valid prescription,
    but, as I was saying, there is a certain States rights issue
    and federalism issue around whether you want to empower the
    Federal Government to define what States traditionally have
    done. Obviously, that's Congress' choice to make, not FDA's.
        Mr. Ruppersberger. But isn't it true that State boards of
    medicine, State boards of pharmacy, States Attorneys General
    are all asking for this type of legislation?
        Mr. Hubbard. And from their points of view it is a very
    legitimate request.
        Mr. Ruppersberger. And, you know, the issue is a Federal
    issue. I mean, it's Internet, it's not within State.
        Let me ask you this. I think, Mr. Taylor, you referred to
    VIPPS. It is my understanding that VIPPS is a voluntary program
    that certifies Web sites; is that correct?
        Mr. Taylor. That's correct.
        Mr. Ruppersberger. Well, it seems to me that's a very
    simple issue, a very simple program. What would you think of
    making VIPPS mandatory? What would be the down side of making
    VIPPS mandatory?
        Mr. Taylor. The administration does not have a position;
    however----
        Mr. Ruppersberger. Do you have a position?
        Mr. Taylor. I don't have a position, either.
        Mr. Ruppersberger. As an enforcer.
        Mr. Taylor. However, obviously I think one of the reasons
    why VIPPS is so good and one of the reasons why the agency
    embraces it and tries to spread the word is because it does
    provide consumers with good advice about the products that they
    are seeking and it allows consumers to discern whether or not
    they should be choosing from a site with the VIPPS seal versus
    all the other sites that are proliferating out there on the
    Internet.
        Mr. Ruppersberger. Do we really think that by answering a
    few questions a physician is in a position to prescribe
    medicine?
        Mr. Taylor. Well, I think the American Medical Association
    has said that it is important to have a real doctor/patient
    interaction, and that merely asking and having a few questions
    answered does not fall within what they believe to be the
    proper standard.
        Mr. Ruppersberger. And what kind of actions do we have that
    we can take against medical professionals that blindly
    prescribe drugs?
        Mr. Taylor. Well, on the State level there have been
    instances where we have worked with medical boards who have
    taken actions to disqualify a doctor based on their
    interactions with a patient. We have, quite frankly--we had one
    criminal case that we brought against a doctor who was not only
    prescribing but also owned an Internet site and was
    disseminating prescription--excuse me, disseminating drugs
    without a valid prescription. So there are some actions that
    can be taken on both the State and Federal level. But the
    practice of medicine, as Mr. Hubbard said, does rest primarily
    with the States.
        Mr. Ruppersberger. Well, from sitting here and listening to
    the testimony, it seems to me that a very practical solution
    might be to encourage that VIPPs be changed to some type of
    mandatory certification. That might be the first step for
    getting the camel's nose under the tent. So I would hope that
    you would take that back to your policymakers in the
    administration.
        Mr. Taylor. Fair enough.
        Chairman Tom Davis. Thank you very much.
        Mr. Turner, any questions?
        Mr. Turner. Thank you, Mr. Chairman.
        Mr. Taylor, I was fascinated by one comment you made. You
    said that if they violated State law they thereby violated
    Federal law with respect to the issuance of a prescription. In
    your discussions from the whole panel on the issues of foreign
    Web sites where people are logging on and buying prescriptions
    and may not even know where they are buying them from, is there
    any State that doesn't require that a valid prescription be
    issued by a U.S.A. or State-licensed doctor?
        Mr. Taylor. Yes. All the States require a valid
    prescription. The key is--well, there are two keys. One is that
    what constituted a valid prescription is not necessarily
    consistent from State to State.
        Mr. Turner. That's why I ask you is there a State that
    doesn't require that a prescription be written by a licensed
    doctor?
        Mr. Taylor. Not that I know of. No, sir.
        Mr. Turner. So these sites that are foreign or where there
    doesn't appear to be any regulation that's going on, it would
    seem that you would not have to wonder whether or not Federal
    law is being violated and whether or not it satisfies all 50
    States' regulations if you can determine or ascertain that a
    U.S.A.-licensed medical doctor is not participating in the
    transaction.
        Mr. Taylor. That's correct.
        Mr. Hubbard. And can I say, Mr. Turner, that for the
    foreign sites it is almost irrelevant whether it's a valid
    prescription because the drugs, themselves, are unapproved and
    shouldn't be imported into this country.
        Mr. Turner. And to what extent, then are you taking action
    on those that are just foreign?
        Mr. Taylor. Well, in the context, just using Canada as an
    example, we have shared with the Canadian Government recently
    45 Web sites that came to our attention, based on our own
    domestic work, and we have asked for them to evaluate those Web
    sites and to let us know whether or not they can take action on
    their side of the border.
        In the context of the action that Mr. Hubbard just talked
    about, which involves Rx Depot, which is an action that was
    brought not only by the State of Arkansas but also by the State
    of Oklahoma, the Canadian--the province Manitoba has issued a
    statement saying that they were going to take steps to notify
    Rx Depot that the importation of products from Canada were not
    only not in compliance with U.S. law, but was not in compliance
    with the law in the province of Manitoba.
        So, to make a long story short, what we try to do is
    increase our contact with foreign governments and working
    closely with them. Obviously, it poses a number of challenges,
    one being products can appear to come from Canada but in some
    cases they do not. And so one challenge is trying to figure out
    exactly where the products come from.
        The other challenge is, quite frankly, the fact that
    different foreign governments, as well as the United States,
    are becoming acquainted with this problem and we're all at
    different places in terms of coming up with tools that can best
    address what is now a global issue, as opposed to an issue that
    is impacting specific countries.
        Mr. Turner. Turning to domestic sites, then, to what extent
    do you work to verify that a licensed doctor is participating?
    You have the issue in all 50 States to what extent the
    questionnaire is enough or not enough, but are you verifying
    whether or not, as they state, that there is a doctor at all
    involved in the transaction?
        Mr. Taylor. Yes, we do. As a matter of fact, when the
    Internet first--in 1999 and 2000 when the Internet first became
    a very popular medium for the dissemination of these products,
    there was a perception that most of these sites did not have
    any doctor involvement.
        What we found subsequent to that was that there are some
    where there indeed is no physician involved; however, there are
    others that do have physicians involved. And then the question
    becomes whether or not the physicians, based on online
    questionnaire or based on the interaction, are really
    interacting with the patient in a way that again is consistent
    with the standard for medical care and is consistent with what,
    indeed, is a standard for a valid prescription. So yes, we do
    try and determine that as a part of our investigations, because
    that is going to be an important fact in determining not only
    what charges apply but what remedies we want to use in order to
    deal with the conduct if it is violative.
        Mr. Turner. Thank you.
        Chairman Tom Davis. Thank you very much.
        Ms. Watson.
        Ms. Watson. Thank you so very much, Mr. Chairman, for
    holding this hearing.
        I have been following this issue for many, many years. I
    was chair of the California Senate's Health and Human Services
    Committee. There are a couple of things that I want to address,
    I guess to Mr. Hubbard and then to you, Mr. Taylor.
        First, dealing with the foreign Web sites and the
    prescriptive drugs that can be available, I have tremendous
    concerns because the ingredients in a particular product vary
    from country to country, No. 1. So many of these prescriptions
    might be counter-indicative, depending on the ethnic group that
    is using them, and so there is a tremendous danger.
        I'd like you to comment first, Mr. Hubbard, on what you are
    doing to look at the prescriptive drugs that can be ordered
    without a doctor's assistance or without a doctor being in
    relationship with the patient.
        Mr. Taylor, could we have a national standard that says any
    kind of prescriptive drugs that are ordered off the Internet
    dealing with foreign pharmaceutical groups will be prohibited
    if there is not a doctor related? Can we do that as a national
    standard?
        Mr. Hubbard, and then you think about your response.
        Mr. Hubbard. To answer the question to me, you are
    absolutely right that there is a great risk that drugs
    purchased over the Internet from foreign countries could have
    variability in ingredients and content, they can be
    contaminated, they might not even be the drug you think you're
    getting, so that is a very serious issue and we have been
    trying to essentially stop those drugs from coming in by taking
    some enforcement action, by asking foreign governments from
    where those drugs are coming to step in, and by warning our
    consumers who buy those drugs that they are taking great risk.
        I'll let Mr. Taylor answer the other question.
        Ms. Watson. Could we have a Federal standard as it
    addresses the foreign pharmaceuticals?
        Mr. Taylor. Again, the administration doesn't have a
    position on a Federal standard; however, to the extent that
    there were going to be policy discussions on the issue, I think
    it would certainly be wise to try and, with whatever standard,
    whether it be a Federal or State standard, try to come up with
    a standard that addresses the myriad of fact patterns that
    we're seeing in relation to these Internet sites, including the
    one maybe that you just posed as part of your hypothetical.
        Ms. Watson. Well, I understand that FDA has intervened when
    there is no doctor or prescription involved at all, and in
    terms of trying to set a national standard, as has been
    mentioned here before, could we not start there with the
    foreign pharmaceuticals? Would that not make sense?
        I know each State has a board and they set their own
    standards for practice, but this seems to be--since we are
    dealing with the Internet, international, wouldn't it be in the
    best interest of our Federal authority to prohibit the ordering
    of a prescriptive drug if there has been no patient/doctor
    contact?
        Mr. Taylor. In the context of the foreign sites, quite
    frankly, as Mr. Hubbard alluded to earlier, the issue of valid
    prescriptions is just really one piece of the puzzle. I mean,
    in regards to the foreign sites, there certainly are steps that
    the agency could take to not only address the patient/physician
    interaction, but, quite frankly, could take to address the
    actual products, themselves, that are being sold on these
    sites.
        I mean, one of the over-arching concerns that the agency
    has once again is that, you know, we certainly are cognizant
    and sensitive to the fact that people are purchasing products
    from these sites because of their cost, but the over-arching
    concern that we have is that we, quite frankly, don't know a
    lot about the manufacturer of these drugs, we don't know a lot
    about the storage condition of these drugs, we don't know
    whether these drugs are counterfeit. We don't know, quite
    frankly, as to whether or not these drugs are originating in
    Canada or have been trans-shipped from other countries. We have
    had recent evidence that there are Web sites where the product
    reports it came from Canada but, indeed, comes from----
        Ms. Watson. Would you yield, Mr. Taylor?
        Mr. Taylor. Yes. Sure.
        Ms. Watson. To cut to the chase, couldn't we start there?
    Since you have all these questions----
        Mr. Taylor. Sure.
        Ms. Watson [continuing]. And we are looking for a national
    standard, would that not be the place to begin in terms of a
    national, all 50 States?
        Mr. Taylor. It is certainly----
        Ms. Watson. Since we have all these questions.
        Mr. Taylor. It is certainly something I am willing to take
    back.
        Ms. Watson. OK. Thank you.
        Mr. Burton [assuming Chair]. The gentlelady's time has
    expired.
        Mr. Janklow.
        Mr. Janklow. Thank you very much, Mr. Chairman.
        Mr. Taylor, when the gentleman from Maryland asked you the
    question ``what's the down side if we had a, so to speak,
    national registry, if we required them to be registered,'' you
    said the administration didn't have a position and you didn't
    have a position. Do you know of a down side if we had a--I
    don't care about a position. Do you know of a down side if
    there were a national registration requirement?
        Mr. Taylor. Well, I mean, I guess one down side would be
    that on some level it takes away from the States the discretion
    to pick the standard that they feel is best within their State.
        Mr. Janklow. OK. Anything else that you know of for a down
    side?
        Mr. Taylor. Not off the top of my head. I don't know if Mr.
    Hubbard has any----
        Mr. Janklow. Mr. Hubbard, do you know of a down side, sir?
        Mr. Hubbard. I will simply say that the way the Federal/
    State relationships have evolved for 200 years in this country
    is that the practice of medicine and practice of pharmacy are
    inherently State responsibilities, and FDA is not being granted
    the authority to regulate the practice of medicine except in
    one limited area called a mammography program, so it would be,
    to some extent, saying to FDA, ``You now have a more
    substantial role in regulating the practice of medicine.''
        Mr. Janklow. Sir, let's pursue that if we can for a second.
    We have an FDA, don't we, and it is national?
        Mr. Hubbard. Right.
        Mr. Janklow. And the FDA, part of its national
    responsibility is to be concerned about the quality of the
    drug, of prescription drugs?
        Mr. Hubbard. Right.
        Mr. Janklow. And part of it has to be concerned with the
    efficacy of what people may take those drugs for. That's also a
    concern, isn't it?
        Mr. Hubbard. Right, but the decision to give the drug to
    the patient is a physician's decision, so he is really the one
    deciding that this drug will work in this patient.
        Mr. Janklow. But the FDA has a legitimate concern. I assume
    you have a concern and you have exercised it with respect to
    the fact that where a physician isn't in the loop, people
    having access to drugs which you approve?
        Mr. Hubbard. Well, if there is no physician at all, that is
    clearly a violation of our act.
        Mr. Janklow. OK. Well, it appears we have several kinds of
    problems with the Internet, and I think--at least myself, I
    have been mixing them. One, we have a foreign problem with
    importation into this country. Two, we have a problem with
    respect to the ability for myself to order drugs over the
    Internet without going through a physician. And, three, we have
    a problem of me being able to order over the Internet where I
    have--where there is some physician in some other State that is
    approving it. At least the fourth one is I have a valid
    prescription, I feel I can get it cheaper some place other than
    locally, and so I am ordering it over the Internet with a valid
    prescription.
        Can we agree we've got four different scenarios? Do you
    know of any others that we're concerned with?
        Mr. Hubbard. I think those are reasonable, although, as I
    said, if there is no physician at all both the States and the
    FDA can very clearly act in that circumstance.
        Mr. Janklow. No, no. My question is: do you know of any
    other scenarios other than the ones I've put forth? In my
    questions, I'd like to deal with scenarios separately because
    we intermingle them.
        Mr. Hubbard. Sure.
        Mr. Janklow. Do you know of any others?
        Mr. Hubbard. None come to mind, but there may be some more.
    But I think you have summarized well some of the dilemmas.
        Mr. Janklow. OK. Sir, now eliminating the foreign issue and
    eliminating the one where I've got a valid prescription from a
    doctor in my State and I'm shopping for the best price, be it
    in Canada or some other State, and I'm filling out a
    questionnaire that is read by a doctor--that I send it from
    here, this community, and it is read, it is seen by a doctor in
    some other State, and on the basis of that I am sent a
    prescriptive drug, do you know of any place in America where
    that is the legitimate practice of medicine?
        Mr. Hubbard. Certainly the medical practitioners have
    advised us that they believe that is not legitimate practice of
    medicine.
        Mr. Janklow. OK. So you don't know of any place where it
    is.
        Do you, Mr. Taylor, know of any place where that is called
    the legal practice of medicine?
        Mr. Taylor. Sir, I can't think of a place off of the top of
    my head. That doesn't mean that it doesn't--I just can't think
    of a place.
        Mr. Janklow. OK. So, with respect to that issue, that ought
    to be something that the FDA could move forward on now, isn't
    it?
        Mr. Hubbard. Well, again, let's say you've got a patient in
    North Dakota----
        Mr. Janklow. A what, sir?
        Mr. Hubbard. A patient.
        Mr. Janklow. Sir, I'm hard of hearing. I wear a hearing
    aid.
        Mr. Hubbard. Let's say you have a patient in North Dakota
    who goes on a Web site that is located in South Dakota.
        Mr. Janklow. OK.
        Mr. Hubbard. And the physician who writes that prescription
    based on this sort of questionnaire is in South Dakota.
        Mr. Janklow. Yes.
        Mr. Hubbard. And North Dakota comes to FDA and says, ``Will
    you go after this site?'' And we would ask the question of
    North Dakota, ``Is that prescription that physician in South
    Dakota is writing a valid prescription under your law?'' And if
    they say, ``Well, our law doesn't deal with that. We don't have
    an answer for you,'' then FDA is pretty much out of the game.
        Mr. Janklow. Correct. Sir, do you know of any instance
    where a State has ever done that, where they've said that a--
    let's take your example--where a North Dakota, for example, has
    said that a physician who is not licensed in the State of North
    Dakota, has no nexus with the State of North Dakota, who fills
    prescriptions for residents who are ordering them from North
    Dakota based on some Internet document that's filled out, do
    you know of any scenario where a State has ever said that's not
    the practice--that's something that we don't have laws that
    cover, or that it's not the practice--it is the practice of law
    in our State?
        [No response.]
        Mr. Janklow. They don't.
        Chairman Tom Davis [resuming Chair]. The gentleman's time
    is expired, but we'll give him a chance to answer. Any
    response?
        Mr. Taylor. I believe initially in the State of Florida
    there was, quite frankly, a situation similar to that. What the
    State of Florida has done since then is it has actually tried
    to come up with a stronger definition as to what constitutes a
    valid prescription, but we did have some situations with the
    State of Florida where there was some ambiguity as to whether
    or not----
        Mr. Hubbard. I believe the next panel will have more
    information because they are the folks that are much more in
    touch with that particular State issue.
        Chairman Tom Davis. OK. Thank you. Thank you very much.
        Mr. Lynch.
        Mr. Lynch. Thank you, Mr. Chairman. I just want to thank
    the witnesses for appearing here and helping the committee with
    its work. I have a general question, and that is I know from
    past experience in dealing with e-commerce, if you will, with
    the European Union, that they had stricter guidelines with e-
    commerce in Europe, not necessarily dealing with the United
    States but internally. Are there any models out there to deal
    with this problem from the European Community?
        Mr. Taylor. Well, actually, I went to Geneva a couple of
    years ago to meet with many of the European regulators.
    Interestingly enough, there really isn't a good model because
    in some respects the practice of Internet pharmacies is--their
    practice is lagging behind ours, and so they are wrestling with
    some of the same issues that we are wrestling with. I know that
    there are some countries, particularly Germany, that are taking
    a very aggressive stance, but, like the United States, there is
    sort of a patchwork of approaches based on the fact that this,
    too, is a new arena for them.
        Mr. Lynch. OK. Thank you, Mr. Taylor. Thank you, Mr.
    Chairman. Nothing further.
        Chairman Tom Davis. I thank the gentleman.
        Mr. Burton.
        Mr. Burton. Mr. Hubbard, can a prescription written by a
    U.S. physician be lawfully filled by a Canadian pharmacy?
        Mr. Hubbard. As I understand it, the way Canadian law
    works--and I am not an expert in that--is that there needs to
    be a Canadian physician's signature on that prescription before
    it is filled by a Canadian pharmacy, although I do understand
    that sometimes they are co-signed. It will actually be the same
    piece of paper, and then the Canadian physician will sign his
    name to it, as well.
        Mr. Burton. I think that is the practice. I think that when
    a legitimate prescription from an American doctor goes up
    there, they have it reviewed by a Canadian physician, and he
    either writes a separate prescription that is identical or he
    initials that in some way, so it is double checked.
        How many times has there been drugs from Canada that have
    come across the border and harmed American citizens, other than
    it would harm an American citizen if it was even purchased here
    in the States?
        Mr. Hubbard. We have very little information of harm.
        Mr. Burton. But to your knowledge how many times?
        Mr. Hubbard. From Canada, I know of none.
        Mr. Burton. We don't either, and we have been checking on
    it.
        GlaxoSmithKline has gone to the pharmacists up there who
    sell over the Internet and they've said that if they continue
    to sell into the United States that they're going to stop
    giving them drugs from their company. Many of us believe they
    are the stalking horse for a lot of pharmaceutical companies in
    the United States who charge double, triple sometimes the
    amount for drugs in the United States that they charge in
    Canada. Now, you just talked about the European Union and
    England. Isn't GlaxoSmithKline a European company?
        Mr. Hubbard. Originally the parent company was originally
    English, yes. I think their headquarters now for the domestic
    operation is in North Carolina.
        Mr. Burton. No, but they still are pretty much controlled
    out of England, aren't they?
        Mr. Hubbard. I don't really know their corporate structure
    that well.
        Mr. Burton. Well, we'll check that out when we have our
    subcommittee hearing. But you don't know of any cases where the
    pharmaceuticals coming from Canada have caused any unusual
    problems?
        Mr. Hubbard. Of course, there is no system to recognize
    that. Those are not legal drugs, so therefore the medical
    system doesn't track them.
        Mr. Burton. Well, but an American doctor writes a
    prescription. It's got to be double checked by a Canadian
    doctor. Then they issue a prescription. It sounds like a pretty
    good check and balance. The only difference to me, it sounds
    like, is the cost is maybe double or triple down here.
        Mr. Hubbard. Well, you'd certainly have a check in the
    sense that it sounds like in that scenario you give the patient
    has been adequately diagnosed by a physician and he's written a
    prescription he believes to be appropriate.
        Mr. Burton. Let me ask----
        Mr. Hubbard. But we don't know what the actual drug is that
    is being ordered.
        Mr. Burton. You are inferring that the Canadians don't
    police that and it might be an adulterated pharmaceutical
    product?
        Mr. Hubbard. The Canadians tell us that if the drug is
    intended for the U.S. market they do not regulate that.
        Mr. Burton. They don't regulate that, but they have a
    doctor that double checks the prescription and has--but you
    don't know of any adverse impact of pharmaceuticals from
    Canada?
        Mr. Hubbard. The Canadians inform us that a Canadian
    physician should not be co-signing these prescriptions because
    that physician has not seen the U.S. patient.
        Mr. Burton. Yes. Let me ask you a question. If you take a
    product that is sold here in the United States by
    GlaxoSmithKline or any other pharmaceutical company and it
    costs two to three times what it does in Canada or maybe any
    other country in the world, what do you think about that?
        Mr. Hubbard. I think, first of all, it's not that the drug
    necessarily is priced higher here; it's priced lower in
    countries that have price controls. That's the reason for the
    price difference.
        Mr. Burton. You're indicating then that they don't make a
    profit on the pharmaceuticals they sell in Canada?
        Mr. Hubbard. They may well, but that's not really FDA's
    purview. Our concern is the safety of the drugs.
        Mr. Burton. I know, but the point is that the
    pharmaceutical companies and the FDA seem to be in lock step on
    trying to control the flow of drugs out of Canada, and people
    are saving a ton of money by buying their pharmaceuticals from
    Canada. Over a million people do it right now, and there has
    been no claim that there has been any problem.
        It seems to me unbelievable, especially since we have
    passed NAFTA and we are supposed to have free trade, as long as
    those prescriptions are double checked the Americans ought to
    benefit from the lower cost of those pharmaceuticals just like
    the Canadians do.
        Mr. Hubbard. Well, your argument is certainly one we hear a
    lot, Mr. Burton.
        Mr. Burton. But the pharmaceutical companies, who are
    making a very, very large profit worldwide, are making a profit
    in Canada, they are making a profit in other countries where
    they're selling them at half the price they are here in the
    United States, so what they are doing is they are loading the
    price of U.S. pharmaceuticals so they can make a bigger profit.
    You wouldn't agree with that though, would you?
        Mr. Hubbard. Well, I don't think that's my job to agree or
    disagree with that.
        Mr. Burton. Your job is to make sure that they are of the
    purity and that they are not going to harm American citizens.
        Mr. Hubbard. That's correct.
        Mr. Burton. What about a reciprocity agreement with the
    Canadians? Would you----
        Mr. Hubbard. Well, there are exemptions from the free trade
    statutes, I understand, that allow each country to set its own
    public health standards, and in this case drugs are approved
    for safety and efficacy in the United States and there has not
    been a program in place to approve drugs made in other
    countries unless they are formally shipped in and----
        Mr. Burton. Mr. Chairman, let me just make sure he answers
    this question. Would it be a problem if there was reciprocity
    between the United States and Canada?
        Mr. Hubbard. Certainly there is a concept called
    ``equivalence'' that has been adopted by some agencies to say
    that products from one country can more freely come in. That's
    something we are looking at. But there is not currently a
    reciprocity agreement in place with Canada on drugs.
        Mr. Burton. Thank you.
        Chairman Tom Davis. Thank you. I think the reality is in
    most cases it doesn't take that much to make the pill; it is
    the research and development that goes into it, and you make a
    profit whether you sell it in Mexico, Canada, or the United
    States. You make more, you know, greater areas. That's really
    not your purview, though.
        Mr. Hubbard. That's right.
        Chairman Tom Davis. You are to make sure they are safe, and
    you deal on that basis.
        Mr. Hubbard. That's right.
        Chairman Tom Davis. And you can understand the frustration
    of a lot of Members when it looks like the United States is
    paying more----
        Mr. Hubbard. Yes.
        Chairman Tom Davis [continuing]. Than consumers in other
    places. And so this is all about safety, but I think it shows
    us, as some of the opening statements from some of our other
    Members indicated, the frustration of Americans who are paying
    higher prices and in some cases finding it not affordable.
        We appreciate your input in this.
        We have another panel to get to. Mr. Sanders, I can
    recognize you, but we want to get to the next panel.
        Mr. Sanders. I missed Mr. Burton's comments, but I
    understand that they were similar to some of my original
    comments and I want to go on record in supporting him.
        Mr. Hubbard, in terms of the regulatory system in Canada,
    in your judgment is it inferior in protecting the Canadian
    people than the system in the United States?
        Mr. Hubbard. I certainly don't think that's my judgment to
    make.
        Mr. Sanders. But you told us earlier that you communicate
    with Canadian authorities.
        Mr. Hubbard. Right.
        Mr. Sanders. I presume you communicate with your
    counterparts in Canada.
        Mr. Hubbard. That's correct.
        Mr. Sanders. They have a system similar to the FDA. My
    understanding is that it is as strong or stronger. Do you
    disagree with that?
        Mr. Hubbard. They tell us that they have a similar system
    to ours. In terms of its resources, its people, it is less
    robust than the FDA's system. They only have, for instance, 100
    inspectors for their entire country.
        Mr. Sanders. Yes, but their country is a lot smaller than
    our country. Have you heard of problems in Canada where people
    are becoming ill with adulterated medicine?
        Mr. Hubbard. No. We don't have the evidence----
        Mr. Sanders. This is something that I mentioned earlier
    when I raised some questions, that you warn Americans about the
    potential dangers of buying medicine in Canada. About a million
    Americans, to the best of my knowledge, do buy medicine in
    Canada. You warn them, but have any of them become sick?
        Mr. Hubbard. No. Again, we don't have the evidence, but let
    me point out that a big part of the concern is that even if the
    Canadian drugs today are just fine--and, you know, we don't
    know, but if this practice were legitimized, Canada could
    become strictly a trans-shipment point for Third World
    countries to send drugs to.
        Mr. Sanders. Not if we develop laws, as we did. Mr. Janklow
    made the point that there was reimportation legislation passed
    several years ago in cooperation with the FDA which had very,
    very strong safety elements. In fact, we spent too much money,
    but I supported that. You're not suggesting for a moment that,
    with the resources of the United States of America, we cannot
    develop a safety mechanism with our Customs people, with the
    FDA, to make sure that every medicine that came into this
    country was absolutely safe?
        Mr. Hubbard. Well, you'll recall that when that statute
    passed that there was a provision for the Secretary of Health
    and Human Services to certify that it could be safely
    implemented. Secretary Donna Shalala refused to do that
    certification and Secretary Thompson refused.
        Mr. Sanders. Actually, I do know it because we wrote it. So
    let's be clear about what happened with Secretary Shalala. What
    happened in the process is at the very end in the Senate there
    were loopholes put in. What that provision said is the
    Secretary has got to say, as a result of that legislation, that
    the American people would be paying lower prices and that the
    safety element will be preserved. In fact, because of those
    loopholes the Secretary could not appropriately enough say the
    prices would be lower because what was in those loopholes is
    what Glaxo is doing today. But the bottom line is you're not
    going to suggest that, with the resources of this country, we
    cannot develop a regulatory system to make sure that all
    medicine coming in--we get beef from Canada, we get vegetables
    from Mexico. How would we not be able to make sure that we
    could protect Americans who buy prescription drugs?
        Mr. Hubbard. We certainly could think of provisions that
    would ameliorate the safety risks from foreign imported drugs.
    We do not believe such provisions could be crafted in a way
    that they would not lower the current safety standard, which is
    very high in this country.
        Mr. Sanders. In terms of safety, let me ask you this.
    You're very concerned about safety. How many Americans are
    dying in this country today because they can't afford a
    medicine?
        Mr. Hubbard. I have no idea.
        Mr. Sanders. Do you think that's an important issue to
    pursue?
        Mr. Hubbard. Absolutely. My own 90-year-old mother cannot
    afford her drugs, Mr. Sanders.
        Mr. Sanders. For the record, Mr. Chairman--and I'll end,
    and I thank you for allowing me to ask these questions--they
    talk about safety, but he has just told us that not 1 American
    out of 1 million, we think, has become sick by importing
    medicine from Canada. He will not tell us how many thousands
    may suffer because they cannot afford the medicine that their
    doctors are prescribing. In my State doctors tell us, ``Why
    waste our time writing out a prescription when a person can't
    afford to fill it?''
        I would like to see you do a study and tell us how many
    people are dying in America because they can't afford medicine
    and are getting sick, and that number will be 1,000 times
    higher than anybody from Canada who is becoming ill.
        Thank you very much, Mr. Chairman.
        Chairman Tom Davis. Thank you. I don't think he was
    prepared to answer those questions today, but the gentleman
    wants to initiate a study and try to get that information, I
    would be happy to--thank you all for being with us.
        I'm going to ask just one question. I had one question I
    wanted to ask. Mr. Hubbard, is it true that all enforcement
    authority here today can take the same kind of action against
    these illegal domestic Internet pharmacy sites under existing
    law?
        Mr. Hubbard. Can you repeat the question, sir, just to make
    sure I get it?
        Chairman Tom Davis. Can you take--the enforcement authority
    you have today, can you take action against these illegal
    domestic Internet pharmacy sites under existing law?
        Mr. Taylor. We can take actions under existing law;
    however, as I described earlier, there are challenges, and one
    of the challenges is being able to use our full set of tools in
    those instances where it is difficult to discern whether or
    not--where it is difficult to discern what, indeed, is the
    standard for a valid prescription in each State.
        Chairman Tom Davis. Right. So additional tools would be
    very helpful at this----
        Mr. Taylor. Well, to the extent that, you know, there are
    challenges posed by the fact that there, indeed, is a
    difference in the standard of what constitutes a valid
    prescription. I mean, we have--and let me be clear here. Under
    the act there is a provision that allows us to make a
    misbranding charge if there is--if the product is dispensed
    without a valid prescription, so we have the tool, we have the
    authority. It's just that in order to meet that definition
    under the act we are dealing with standards that vary from
    State to State. So, in terms of statutory tools and statutory
    language, we have the ability to address these situations;
    however, from a practical standpoint it is difficult to do so
    because, indeed, there is a different definition as to what
    constitutes the standard of prescription in each State.
        Chairman Tom Davis. I've got you. All right. Thank you all.
        Let me say to all of you thank you very much.
        Anything else you wanted to add?
        [No response.]
        Chairman Tom Davis. Thank you very much for being with us.
        We have our second panel today. We have Jim Thompson of the
    Federation of State Medical Boards, Carmen Catizone of the
    National Association of Boards of Pharmacy, and Connecticut
    Attorney General Mr. Richard Blumenthal. We appreciate all of
    you bearing with us through the first panel.
        It's the policy of the committee we swear the witnesses in,
    so, if you would, stand up with me and raise your right hand.
    Do you solemnly swear that the testimony you are about to give
    will be the truth, the whole truth, and nothing but the truth?
        Mr. Thompson. I do.
        Mr. Catizone. I do.
        Mr. Blumenthal. I do.
        Chairman Tom Davis. Thank you all very much. You may be
    seated.
        We'll have the timers in front of you--green, yellow with a
    minute to go, and then red. Your entire statements are in the
    record. Your questions will be based on this.
        Dr. Thompson, why don't we start with you and end up with
    General Blumenthal.
        Thank you all for being with us.

        STATEMENTS OF DR. JAMES THOMPSON, M.D., EXECUTIVE VICE
    PRESIDENT, CHIEF EXECUTIVE OFFICER, FEDERATION OF STATE MEDICAL
         BOARDS; CARMEN CATIZONE, EXECUTIVE DIRECTOR, NATIONAL
      ASSOCIATION OF BOARDS OF PHARMACY; AND RICHARD BLUMENTHAL,
       ATTORNEY GENERAL, STATE OF CONNECTICUT, ON BEHALF OF THE
               NATIONAL ASSOCIATION OF ATTORNEYS GENERAL

        Dr. Thompson. Good morning, Mr. Chairman and members of the
    committee. I am Dr. Jim Thompson. I am executive vice president
    and chief executive officer of the Federation of State Medical
    Boards of the United States. I will refer to us as the
    Federation.
        The Federation is a national nonprofit association
    established in 1912 which serves as a collective voice for 70
    member State medical licensing and disciplinary boards. The
    Federation's primary mission is to improve the quality, safety,
    and integrity of health care by promoting high standards for
    physician licensure and practice, as well as supporting and
    assisting State medical boards in their protection of the
    public.
        The Federation has been recognized as a national leader on
    the issue of telemedicine regulation and has published model
    telemedicine license legislation and guidelines for Internet
    prescribing and medical practice. In our guidelines, the
    Federation recommends that Internet prescribing or practice be
    based on--and I quote from that text--``a documented patient
    evaluation including history and physical evaluation adequate
    to establish diagnosis and identify underlying conditions and/
    or contra-indications to the treatment recommended and
    provided, and must be obtained prior to providing treatment,
    including issuing prescriptions electronically or otherwise.''
        The Federation's key concern with respect to Internet
    pharmacies is that there must be an appropriate relationship
    between the patient and the physician before a prescription is
    written and dispensed. In addition to our guidelines, the
    Federation has aggressively sought to identify Internet
    pharmacies that dispense drugs based on prescriptions that do
    not meet minimal standards.
        In September 2000, the Federation of State Medical Boards
    established the National Clearinghouse on Internet Prescribing.
    This was designed to collect and disseminate information on
    rogue Internet sites offering prescribing and dispensing
    services for prescription drugs to consumers. A major goal of
    the Clearinghouse is to facilitate communications among all
    entities that play a role in regulating Internet pharmacy
    operations and the physicians associated with them.
        Regulatory efforts of State medical boards and other
    agencies have been complicated by a number of factors,
    including: one, the inability to identify the physical location
    of the business or pharmacy; two, anonymous physicians
    approving prescriptions; and, three, the lack of licensing
    information on such physicians and the pharmacies.
        In addition, because online pharmacies operate in multiple
    States, lack of formal lines of communication has resulted in
    the duplication of efforts and missed opportunities for
    cooperation among regulatory jurisdictions.
        The Federation strongly supports State-based regulation of
    the practice of medicine. With regard to Internet prescribing,
    State medical boards have the authority to discipline licensed
    physicians prescribing and dispensing medications
    inappropriately. Many boards have already taken actions against
    licensees, adopted rules and policies, or introduced
    legislation to clarify this authority. These efforts have been
    effective in closing several Internet sites and causing a
    number of physicians to cease their affiliation with
    questionable operations.
        The Federation believes that there are at least three areas
    in which there is a need for Federal legislation to protect
    patients ordering prescriptions over the Internet.
        First, the patient should know with whom they are dealing.
    They should know the name and location of the pharmacy that is
    dispensing the drug, and they should know the name of the
    physician who will be providing a medical consultation that
    will be the basis of that prescription. This information should
    be disclosed on the Internet pharmacy Web site.
        Second, States are currently not able to enforce
    injunctions against Internet pharmacies beyond their State
    jurisdiction. Nationwide injunctive power would greatly enhance
    enforcement capabilities and reduce the tremendous duplication
    of efforts currently taking place.
        Third, I noted in my testimony that State licensing boards
    currently have the authority to discipline physicians who are
    prescribing and dispensing drugs over the Internet
    inappropriately.
        Federal authorities have indicated the need for
    clarification of certain issues, such as what constitutes an
    appropriate physician/patient relationship, in order to
    facilitate Federal enforcement actions. The Federation believes
    that it is possible to define an appropriate physician/patient
    relationship narrowly solely for the purpose of enforcing a
    Federal law regulating Internet pharmacies without affecting
    the autonomy of the State boards to regulate the practice of
    medicine. We would be interested in pursuing this course of
    action with this committee.
        Thank you for the opportunity to testify today. I will be
    glad to answer questions at the appropriate time.
        I have attached to my testimony the Federation's model
    guidelines for the appropriate use of the Internet in medical
    practice.
        Thank you.
        Chairman Tom Davis. Thank you very much.
        [The prepared statement of Dr. Thompson follows:]
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        Chairman Tom Davis. Dr. Catizone.
        Mr. Catizone. Thank you, Mr. Chairman. I'd also like to
    thank the Representative for his earlier comments on the VIPPS
    program.
        I am the executive director of the National Association of
    Boards of Pharmacy [NABP], which was founded in 1904 and
    represents all the pharmacy regulatory and licensing
    jurisdictions in the United States, Puerto Rico, the Virgin
    Islands, eight provinces of Canada, three Australian states,
    New Zealand, and South Africa. Our purpose is to assist the
    States in developing, implementing, and enforcing uniform
    standards for the purpose of protecting the public health.
        Internet pharmacies serving patients in the United States
    provide valuable and innovative services to the patients. It is
    unfortunate that the benefits of these legitimate pharmacies
    are often overshadowed by the activities of rogue sites whose
    concerns do not rest with the best interest of the patient or
    compliance with State and Federal laws.
        Over the past 6 years, NABP has assumed an active role in
    differentiating legitimate pharmacy sites from rogue Internet
    sites that illegally sell or distribute drugs. During that time
    we've worked with the State Boards of Pharmacy and Medicine,
    the FDA, and State legislatures to develop regulatory
    strategies to manage this emerging area and provide consumers
    with information needed to distinguish between legitimate
    pharmacy, Internet sites, and rogue sites. Our efforts have
    helped millions of consumers and resulted in the closing of
    rogue sites and the prosecution of pharmacists and physicians
    involved with those rogue sites.
        In NABP's opinion the FDA has worked with the States not to
    avoid taking action but to construct an effective enforcement
    process that respects States' authority and affords due
    process. Undoubtedly, the issue of importation of medications
    from Canada is a complex issue. It is fueled by price
    differences, but it is an issue that cannot be resolved by
    allowing illegal activities to occur. Oversight on both the
    State and Federal level is needed to bring the system into
    compliance or to enforce the laws that presently exist.
        Our research has found that rogue sites create several Web
    pages around their primary operations. The objective of this
    operation is to capture as many consumers as possible and
    deceive them into believing that the Web pages are independent
    operating sites and can deliver drugs.
        The information posted on these rogue sites is often
    purposefully misleading and in some cases purposely fraudulent
    so as to lure consumers to these sites and engage them in the
    illegal purchase and distribution of drugs.
        The VIPPS program which was mentioned earlier combines
    State regulation and licensure with consumer empowerment. NABP
    conducts an intensive onsite review of all sites in adherence
    to a 19-point criterion that looks at all standard licensure
    requirements, as well as special Internet applications.
        The VIPPS program was implemented with wide consumer
    acceptance and support. Information about the VIPPS program has
    appeared on national local news media and consumer information
    specials. The exposure included programming on CNN, ABC World
    News Tonight, NPR Radio, NBC News, CBS News, Fox News, and
    other local media outlets. Articles, stories, and consumer
    advice recommending the VIPPS programs have also appeared
    throughout the print media in local newspapers across the
    country as well as in Time Magazine, Newsweek, Ladies Home
    Journal, Consumer Reports, USA Today, the Wall Street Journal,
    the New York Times, the Washington Post, and other national
    publications. NABP estimates that more than 10 million
    consumers have heard, watched, or read about the VIPPS program.
        The States have determined that Internet sites offering
    prescription medications are engaged in the practice of
    pharmacy and therefore must abide by the same laws and rules
    that presently apply to traditional brick-and-mortar
    pharmacies. Internet pharmacies, although unique in their
    structure and environment, essentially represent the operations
    of non-resident or mail order pharmacies.
        Any Internet legislation that seeks to address consumer
    need or consumer information should include verified
    information. NABP applauds the objective to separate rogue from
    legitimate pharmacy sites, but believes disclosure without some
    outside, independent assessment or verification will only
    deceive the consumers further. If this has not occurred, then
    rogue sites will engage in illegal activities with a new
    marketing tool--Government-mandated but unverified disclosures.
        It is NABP's position that without this validation of
    information, rogue sites will post fraudulent information to
    mislead and confuse the public without any regard for the
    possible penalties or actions for engaging in such conduct.
        We appreciate the opportunity to be here today, and I will
    be glad to answer any questions.
        Chairman Tom Davis. Thank you very much.
        [The prepared statement of Mr. Catizone follows:]
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        Chairman Tom Davis. General Blumenthal, thanks for being
    with us.
        Mr. Blumenthal. Thank you, Mr. Chairman, and thank you for
    your leadership on this issue in holding a hearing and for the
    very perceptive and insightful questions that have been asked
    about this problem which surely requires Federal intervention
    at this point to strengthen the role of State oversight, as
    well as Federal scrutiny in an area that, unfortunately, is
    rife with abuse, deception and health damage.
        The Internet offers enormous promise, as I've indicated in
    my testimony, for consumers to save very hard-earned dollars
    and scarce dollars that they need to buy prescription drugs.
        In a survey that my office will release just next week,
    probably, we surveyed six Internet pharmacies and compared them
    to bricks-and-mortar stores and found that consumers can
    realize very, very significant savings, not just pennies or
    dollars, but literally hundreds of dollars in using certified--
    that is, VIPPS-approved--Web sites to buy drugs that they
    purchase pursuant to valid prescriptions.
        I think that the abuses here come when the Web sites are
    used with questionnaires, without legitimate prescriptions,
    without any prescriptions at all, without any diagnosis from a
    licensed doctor, and that is where the remedies ought to come.
        If I may outline some of the areas that I think are
    particularly appropriate and important for this committee to
    address, as Dr. Thompson has said, I would recommend that
    Congress require all Internet Web sites to provide information
    about the location of the pharmacy, the legal entity owning it,
    a contact person for consumer complaints, a list of employees
    and State licenses--in short, the kind of information that will
    enable consumers and State enforcers, as well as Federal
    regulators, to pinpoint responsibility and hold them
    accountable.
        I would disagree with the implication that there needs to
    be a national standard for prescriptions. I think each of the
    States now has such standards. I don't object as a matter of
    principle to there being a national standard, but I think it
    may divert energy and attention away from the areas that do
    need fundamental reform.
        For example, I think Congress ought to require all Internet
    pharmacies to dispense pharmaceutical drugs only when the
    prescription meets the standards of the State where the
    resident who is buying the pharmaceutical drug actually lives.
    Requiring them, for example, to meet Connecticut standards
    would mean they need the address of the practitioner who is
    prescribing the drug, the name of the drug, the dosage, the
    strength--basic information that is contained in every
    prescription in every State across the country.
        And then also very importantly I think that Federal law
    ought to require Internet pharmacies to require that
    prescriptions be done by a health care provider who meets the
    State licensing requirements. If I were to go to Indiana or
    Virginia or South Dakota or New York and receive the
    prescription from a licensed doctor, I wouldn't have questions
    about the basic credentials and abilities of that doctor. The
    point is to require a prescription that meets the State
    standards from a practitioner who meets the State standards.
        And let me just say that the issue here very often does
    become one of enforcement, as Mr. Janklow implied. States need
    the ability to go to a Federal court. We need Federal
    jurisdiction for national injunctions, not just in the State
    where we try to shut down one of these rogue Internet sites. In
    Connecticut, for example, we did so against a number of the
    sites and the physicians and we are still in court on issues of
    jurisdiction, procedural kinds of tangents, because we are in
    our State court rather than Federal court, and so we do need
    Federal jurisdiction and the power to seek national
    injunctions.
        And, finally, we need tougher penalties so that the fines
    and the monetary punishments are not just regarded as the cost
    of doing business but offer a real sanction against some of
    these online outlaws.
        I think that these sites can offer real benefits for
    consumers. The VIPPS program has been working very well. I
    commend the NABP for its efforts in that regard. There is a
    real potential here, as long as we avoid the possible abuses.
        I might just close--and I thank you for giving me a couple
    of extra moments--by making a suggestion about the foreign
    jurisdictions. If there is a threat from Internet pharmacies
    based in foreign countries, I might suggest that the Congress
    could ban the use of any financial instruments such as checks,
    money orders, and electronic transfers, in payment for those
    kinds of prescriptions that come from foreign-based Web sites.
    I realize they are tough to reach, even under the Federal
    jurisdiction, but in cutting off the financial air supply, so
    to speak, we can reach those kinds of foreign-based Web sites.
    The analogy would be to Internet gambling, where a similar
    suggestion has been made under Federal law to ban certain kinds
    of Internet gambling from foreign-based Web sites. I think the
    same kinds of remedies would be effective here. Thank you, Mr.
    Chairman.
        Chairman Tom Davis. Thank you very much.
        [The prepared statement of Mr. Blumenthal follows:]
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        Chairman Tom Davis. We'll begin the questioning with Mr.
    Burton.
        Mr. Burton. I think everybody in the Congress and in the
    country wants to make sure that the kinds of pharmaceuticals
    that are being consumed by Americans are safe. We all want
    that. We don't want adulterated pharmaceuticals. But at the
    same time, we have millions of Americans who can't afford to
    pay the prices for some of these pharmaceuticals here in the
    United States, and yet they can afford the pharmaceuticals that
    are the same from Canada. We've already heard that there are no
    known cases of pharmaceuticals damaging Americans from Canada
    where a prescription has been filled up there.
        So my feeling is--and I'd like to ask all of you this
    question--what would be wrong if we had some kind of a
    reciprocity agreement between States and between countries
    where they could check and make sure that these online
    pharmaceutical distributors comply with the laws of, say,
    Canada as well as the United States, or Iowa as well as
    Indiana? It seems to me that we ought to be bending over
    backward not only to make sure things are safe, but to make
    sure that our citizens are not discriminated against by
    pharmaceutical companies.
        I mean, when you have a product that costs one-third more
    in the United States than it does in Canada and you know that
    the pharmaceutical company that is selling that product in
    Canada is making a very good profit up there, then you know
    they're making an absolute killing on that product down here in
    the United States. And you can't say that the Americans should
    bear the brunt of that.
        I have friends of mine that were paying over $1,000 a month
    for very significant kinds of drugs because they had not only
    high blood pressure but diabetes and a whole host of things,
    and in Canada they are getting them for about a third or half
    of that. Now, why should they have to pay double what they
    would pay in Canada? And if you have an agreement, a
    reciprocity agreement between the countries that the two
    governments could agree on, it seems to me that would be a
    legitimate thing for Americans to expect.
        Do any of you have a comment on that?
        Mr. Catizone. I have a comment on that also. We have one
    documented incident of a patient in the United States being
    injured by a medication from Canada. Action is being filed in
    the State of Oregon. A patient being treated for breast cancer
    received the wrong medication and for 3 months was taking that
    medication, and unfortunately that patient is not doing well
    now. She has hired an attorney. The attorney has filed an
    action and also reported it to the State Board of Pharmacy in
    Oregon----
        Mr. Burton. OK.
        Mr. Catizone [continuing]. As well as with authorities in
    British Columbia.
        Mr. Burton. So there is one case that you know of?
        Mr. Catizone. Right. The position that we have taken,
    Representative----
        Mr. Burton. Well, let me just interrupt. I'm sorry. There
    is one case that you know of?
        Mr. Catizone. Yes, sir.
        Mr. Burton. Are there any other cases that you know of?
        Mr. Catizone. We've just begun tracking that information.
        Mr. Burton. But you only know of the one right now?
        Mr. Catizone. Yes, sir.
        Mr. Burton. How many cases in the United States where
    doctors have prescribed medicine and people were injured from
    the medication that they received here in the States?
        Mr. Catizone. Estimates run anywhere from 1 to 10 percent
    of all patients treated have some----
        Mr. Burton. That's 1 to 10 percent of all patients?
        Mr. Catizone. Yes.
        Mr. Burton. So you're telling me there is one patient in
    Oregon that was damaged by a pharmaceutical product coming out
    of Canada, but you say 1 to 10 percent of the people are
    damaged here in the United States?
        Mr. Catizone. Yes, sir.
        Mr. Burton. So it is really not a big difference. In fact,
    unless you find something else, the percentage is probably
    lower coming in from Canada, unless you find other things.
        Mr. Catizone. We've just begun looking at it. Until we----
        Mr. Burton. I understand, but yes, see the point I'm trying
    to make----
        Mr. Catizone. And the point we'd like to make is our
    position has been very clear. We believe either the laws should
    be enforced that currently exist or, as you have suggested,
    there should be mutual recognition of products approved by
    Health Canada and the FDA----
        Mr. Burton. Well, I don't have any problem with that.
        Mr. Catizone [continuing]. As well as licensing of those
    pharmacies by U.S. State boards of pharmacy.
        Mr. Burton. I don't have any problem with that. What I do
    have a problem with are the pharmaceutical companies making all
    of this money on the backs of American citizens when they are
    selling the same product up there and making a profit out of
    it. I don't believe in price controls. I believe in the free
    enterprise system. But at the same time I don't believe
    Americans should be raped by pharmaceutical companies when they
    are selling the same product in other parts of the world for a
    heck of a lot less money and we have the highest-priced
    pharmaceuticals in the world, so they are levying all of the
    profit or the biggest part of the profit on the backs of the
    American citizens, and it is just not right. We should not be
    discriminated against. And I am for the free enterprise system.
        Thank you, Mr. Chairman.
        Mr. Blumenthal. If I may add----
        Chairman Tom Davis. Sure. Please.
        Mr. Blumenthal [continuing]. Just a sentence or two, I, on
    behalf of myself as the Attorney General of Connecticut, not
    speaking for all of my colleagues across the country, would
    very strongly welcome a more-transparent and free market
    internationally that gives our consumers the benefit of lower
    prices in an international or global market, which now is not
    the case, so long as quality, contamination, adulteration,
    dosage--all of those standard measures of acceptability--were
    the subject of the United States oversight, which I think is
    the purpose of your suggesting some kind of reciprocity
    agreement.
        Mr. Burton. That's right. And I appreciate your saying
    that, General. Thank you.
        Chairman Tom Davis. Thank you, Mr. Burton.
        Mr. Towns.
        Mr. Towns. Thank you very much, Mr. Chairman.
        You know, Dr. Thompson, you mentioned legislation is needed
    in a certain area, and I really didn't get that. Somehow I lost
    that part. Where do we need legislation?
        Dr. Thompson. Actually, we have offered to work with this
    committee to help define the doctor/patient relationship, which
    has been in the past a source of confusion and has led--has
    caused a decrease at times in Federal action because of the
    confusion about the doctor/patient relationship. We would
    welcome an opportunity to help narrowly define that for the
    purposes of Internet practice.
        Mr. Towns. Right. But I thought you made some suggestions.
    I thought you gave some specific suggestions that you felt were
    areas in which we need legislation. I'll come back to you.
        Dr. Thompson. Actually, there were three things. One is
    that we would highly recommend that there be national
    disclosure of the Internet sites and the physicians who are
    prescribing the medications.
        Second, we would strongly encourage some Federal
    legislation to allow for injunctions against these Internet
    pharmacies beyond the State jurisdictions. The States, as you
    know, are restricted, and you heard testimony earlier about the
    restrictions from going after pharmacies and businesses in
    other States. Perhaps Mr. Blumenthal would care to expand on
    that. But certainly we would like injunctive relief that would
    help us go after pharmacies and businesses across State lines.
        Mr. Towns. Thank you. Also, after you comment on that, Mr.
    Blumenthal, at the same time I want to know your views on
    uniformity in terms of the possibility for some guidelines that
    would just cover all States.
        Mr. Blumenthal. I think the need for uniformity is a very
    real concern, and if I might suggest to the committee, there is
    an excellent model, which is the Federal Telemarketing Sales
    Act, as described earlier by Mr. Beales of the FTC. The Federal
    agency there has the option to enforce a case. If the State
    chooses to do so independently, it can go to Federal court, but
    at least the FTC has the ability to enforce a national standard
    in every case because it has what he aptly termed a ``right of
    first refusal.'' And so the kind of framework that I am
    suggesting--and I think it has been suggested widely--is that
    there be the authority on the part of States to enforce a
    standard that the FTC in a sense would supervise and assure
    uniformity, but make it potentially nationwide in every case
    through the Federal courts and give the States the option to
    enforce their cases in Federal court, which would give much
    more teeth to the present system.
        I can't emphasize how important that would be as a
    deterrent to these kinds of rogue pharmacies, because right now
    they feel that they can simply move from one State to another,
    that they can choose States where, for one reason or another,
    enforcement authorities may not be as vigorous as they would be
    in other States. They can avoid State court jurisdiction. They
    can throw up procedural hurdles and technicalities. I think
    many of those obstacles would be removed by this kind of
    Federal system with Federal jurisdiction modeled on the Federal
    Telemarketing Sales Act.
        Mr. Towns. Right, because I'm not even sure what a valid
    prescription is. What is a valid prescription? I'm not sure,
    you know. Do you want to comment on that? That's the reason why
    I think we need some Federal involvement here.
        Dr. Thompson. Well, the State medical boards have been very
    clear about the writing of a prescription, and in all
    circumstances have enforced the notion that there should be an
    adequate doctor/patient relationship, and this is not satisfied
    by a survey over the Internet. It is only satisfied by a face-
    to-face encounter with a physician, including a history and a
    physical examination and some permanent documentation of that
    encounter we know as a medical record. Those are at least the
    minimal standards that the state Boards would require for a
    doctor/patient relationship to be established prior to the
    writing of a prescription.
        Mr. Towns. Thank you. My time has expired, Mr. Chairman.
        Chairman Tom Davis. Thank you very much.
        General Blumenthal, let me ask you, Mr. Catizone has
    already testified that the VIPPS program already requires
    disclosure from its participating Web sites. It is an
    established program. It has seen some very positive results.
    What about States enacting legislation to make this
    certification process mandatory? Is that helpful? Is it
    possible? Is it probable?
        Mr. Blumenthal. I think again, Mr. Chairman--and that
    question is really a very important and key one--the States
    could do so. Connecticut, as a matter of fact, has, at one
    point or another, proposed to do so, but I think we need the
    help of the Federal Government in enforcement.
        Chairman Tom Davis. Absolutely.
        Mr. Blumenthal. And the VIPPS program is excellent. It
    works well. It is done in good faith by the NABP and I think is
    an excellent model. We can expand on it and perhaps enact it
    into law, but doing it State by State may not be the answer,
    simply because of the enforcement difficulties I mentioned
    earlier.
        Chairman Tom Davis. I mean, the problem is you could shut
    down a Web site and find the people. They can come up under
    some other auspices somewhere else. And the fact is, because of
    the price differential, consumers will take the chance and many
    times just do it. It's almost impossible to police. I'm not
    even sure the Federal Government could police it, but we would
    obviously have more jurisdiction. Is that a fair comment?
        Mr. Blumenthal. I think that is a very accurate and fair
    comment, Mr. Chairman.
        Chairman Tom Davis. Yes. Connecticut consumer protection
    laws, in addition to medical and pharmacy laws, have served as
    a vehicle for you to go after the Web sites. When does the
    illegal dispensing of drugs become the issue for the Federal
    level? When do we cross that threshold and it becomes a Federal
    issue as opposed to a State issue?
        Mr. Blumenthal. Well, I think there is overlapping
    jurisdiction. As you've heard from the earlier panel, a
    violation of Federal law could involve the same kinds of unfair
    or deceptive advertising practices that we have prosecuted at
    the State level. It's the reason that we have sued a number of
    the Internet Web site pharmacies, as well as doctors. We sued
    physicians who participated in those kinds of illegal
    practices.
        I think the Federal jurisdiction relates to the quality and
    purity of drugs. We don't have the authority over, for example,
    contamination, counterfeiting, mis-dosage, misbranding of drugs
    in the same way that the Federal Government and specifically
    the FDA does.
        Of course, there are different issues of enforcement. We
    don't have the same kind of powers to enforce Federal law now
    in this area or to go into Federal court.
        Chairman Tom Davis. OK.
        Mr. Catizone, let me ask you, the VIPPS seal that you place
    on--the VIPPS Seal of Approval that consumers ought to be able
    to stand by, have people been stealing this seal illegitimately
    and putting it on a Web site? Has this been a problem?
        Mr. Catizone. No. The security systems we have in place
    with our software people have prevented that from happening. If
    we have detected any site where they have tried to copy it, it
    is immediately known to us and we immediately take action
    against that site also.
        Chairman Tom Davis. OK. All right. Thank you.
        Dr. Thompson, what type of actions can you take against a
    physician who is illegally prescribing to consumers over the
    Internet without first establishing a valid patient/physician
    relationship?
        Dr. Thompson. The disciplinary actions can include anything
    from a hand slap to a revocation of a license. In fact, at
    least four physicians have had their licenses revoked as a
    result of prescribing over the Internet without establishing a
    physician/doctor relationship. It includes anything from fines
    to suspensions to, as I mentioned, revocation.
        Chairman Tom Davis. It is not all black and white, though,
    is it?
        Dr. Thompson. No.
        Chairman Tom Davis. Because even some of these illegitimate
    sites are selling legitimate goods. We don't know that they
    are. We can't prove that they are, but in many cases they
    appear to be. It is giving consumers something they probably
    may not be able to afford otherwise, but it is an unfair
    competitive advantage and there are, as I think we've heard
    from the last panel, risks involved that really have not been
    articulated or measured appropriately--something maybe we need
    to do a better job of before we move on.
        I appreciate your being here. I appreciate your testimony
    adding to this. Mr. Waxman has a bill. I think he might have
    picked up a couple cosponsors on our side today as a result of
    this.
        Mr. Towns. Are we concluding?
        Chairman Tom Davis. I'm going to let you ask more
    questions, Mr. Towns, if you want to.
        Mr. Towns. Thank you. I appreciate that.
        Chairman Tom Davis. I'm just thanking and just saying I
    appreciate for you really adding to our body of knowledge on
    this. It's something a lot of Members aren't aware of. As you
    see, it gets wrapped up in the whole prescription drug
    controversy, legislation we're trying to pass this year but all
    the contradictions that occur in a marketplace that is
    cluttered sometimes with too much regulation and sometimes too
    little regulation.
        Mr. Towns, did you have any additional questions?
        Mr. Towns. I do, Mr. Chairman. I just wanted to ask Dr.
    Catizone a couple of questions. I understand that the National
    Association of Boards of Pharmacy certifies Internet pharmacy
    which meets certain criteria as verified. Internet pharmacy
    practice sites are called VIPPS. Can you tell us about this
    program, including how stringent the safety standards are and
    how many Internet pharmacies you've certified to this date up
    to date?
        Mr. Catizone. The VIPPS program has very robust and
    stringent criterion for approval and for certification. As Mr.
    Blumenthal mentioned, we adhere to all of the various State
    laws as part of that certification program, so a pharmacy that
    operates in Illinois that wants to distribute medications in
    Connecticut must follow all the laws for those patients in
    Connecticut when dispensing those medications. We review the
    licensure. We do an onsite inspection. We check all of their
    State board inspection reports. We check all the disciplinary
    actions against the pharmacy or pharmacist and then post that
    information on the Web site for the patients to observe.
        We have certified to date 13 sites representing 8,000 to
    10,000 pharmacies in the United States.
        Mr. Towns. I guess the next question would be how do you
    determine that an Internet pharmacy site provides the
    information consumers need? I mean, how do you tell, you know?
        Mr. Catizone. There are a couple of different things we do.
    As part of our onsite inspection we look at all of their
    software programs for detecting adverse drug reactions,
    interactions, contraindications. We also check all of their
    procedures on how they adhere to the various State laws, and
    then independently, using covert Web names, we go then and
    search those sites and ask for information back from those Web
    sites, time how long it takes for the information to come, test
    their 1-800 numbers, and test their reaction to patient
    problems with medications the site may have sent to them,
    document that, review all that, and then set standards for
    those sites to meet.
        Mr. Towns. OK. If you find that they're actually violating
    VIPPS program guidelines, you know, what do you do in a case
    like that?
        Mr. Catizone. If they are violating our guidelines they are
    probably violating State laws, so we'll do one of two things.
    One, we'll notify the States in which they are operating that
    the you're probably violating their laws. Second, we'll move to
    withdraw their certification immediately from that site.
        Mr. Towns. All right. Thank you very much.
        Thank you, Mr. Chairman, for allowing me to ask additional
    questions.
        Chairman Tom Davis. Thank you very much.
        Again, I want to thank the panel. Is there anything else
    anyone wants to add?
        Mr. Blumenthal. Mr. Chairman, I might just respond to a
    point that you made which I don't think has been made by anyone
    else on the panel relating to the dangers of some of these Web
    sites going beyond adulteration or inappropriate or mis-dosed
    drugs. There are also very significant dangers of addiction and
    abuse of drugs as a result of these Web sites. The kinds of
    availability of, for example, very powerful pain killers,
    hydrocodones, opiates that are, in effect, given out not only
    affordably but abusively through a number of these Web sites is
    a major problem, and so I think addiction is a major part of
    the problem.
        Chairman Tom Davis. Once you really take the physician out
    of the equation, a lot of bad things can happen on this.
        Mr. Blumenthal. Exactly. Thank you.
        Chairman Tom Davis. Well, thank you very much. I want to
    again thank you for your testimony today. It was an outstanding
    panel. I'd like to thank the committee staff that worked on
    this hearing and thank Mr. Waxman for calling this issue to the
    committee's attention.
        The hearing is now adjourned.
        [Whereupon, at 12:30 p.m., the committee was adjourned, to
    reconvene at the call of the Chair.]

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