[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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