[House Report 107-546]
[From the U.S. Government Publishing Office]



107th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES
 2d Session                                                     107-546

======================================================================



 
MEDICARE MODERNIZATION AND PRESCRIPTION DRUG ACT OF 2002 (SECTION 911: 
                          INTERNET PHARMACIES)

                                _______
                                

 June 26, 2002.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

 Mr. Tauzin, from the Committee on Energy and Commerce, submitted the 
                               following

                              R E P O R T

                             together with

                            ADDITIONAL VIEWS

                        [To accompany H.R. 4990]

    The Committee on Energy and Commerce, to whom was referred 
the bill (H.R. 4990) to amend the Federal Food, Drug, and 
Cosmetic Act to establish requirements with respect to the sale 
of, or the offer to sell, prescription drugs through the 
Internet, and for other purposes, having considered the same, 
report favorably thereon without amendment and recommend that 
the bill do pass.

                                CONTENTS

                                                                   Page
Purpose and Summary..............................................     2
Background and Need for Legislation..............................     2
Hearings.........................................................     2
Committee Consideration..........................................     2
Committee Votes..................................................     2
Committee Oversight Findings.....................................     3
Statement of General Performance Goals and Objectives............     3
New Budget Authority, Entitlement Authority, and Tax Expenditures     3
Committee Cost Estimate..........................................     3
Congressional Budget Office Estimate.............................     3
Federal Mandates Statement.......................................     3
Advisory Committee Statement.....................................     4
Constitutional Authority Statement...............................     4
Applicability to Legislative Branch..............................     4
Section-by-Section Analysis of the Legislation...................     4
Changes in Existing Law Made by the Bill, as Reported............     5
Additional Views.................................................     8

                          Purpose and Summary

    The purpose of H.R. 4990 is to amend the Federal Food, 
Drug, and Cosmetic Act (FFDCA) to establish requirements with 
respect to the sale of, or the offer to sell, prescription 
drugs through the Internet. The objective is to improve the 
ability of Federal and state oversight officials to eliminate 
``rogue'' Internet websites illegally selling prescription 
drugs and provide integrity and disclosure for those who 
properly sell such drugs on the Internet. The bill provides for 
the disclosure of certain information on websites and to State 
licensing officials.

                  Background and Need for Legislation

    The Internet holds great promise to help improve the 
delivery of health care, including the sale of prescription 
drugs. Proper use of this new tool may increase convenience, 
provide valuable information, reduce consumer costs, and 
provide for more personalized services. However, the Committee 
has found instances of, and potential for, adverse risks to 
consumers from unscrupulous parties selling prescription drugs 
over the Internet. Policing these sales is all the more 
difficult since websites can be created and removed quickly and 
the location of the seller is not always clear to the consumer. 
The problem is most acute with Internet sellers who operate 
across state boundaries. In the 106th Congress, after two 
Committee hearings then Chairman Tom Bliley, and other 
bipartisan cosponsors, introduced H.R. 5476, the Internet 
Prescription Drug Consumer Protection Act of 2000, during the 
106th Congress. H.R. 4990 contains provisions from H.R. 5476.
    The legislation would amend the FFDCA to require interstate 
Internet sellers of prescription drugs to post certain 
disclosure information. Where the interstate Internet seller is 
making referrals or solicitations on behalf of a prescriber, 
the seller would need to post certain information about the 
prescriber as well. Finally, the Internet seller would need to 
make certain disclosures to State licensing boards. Violations 
of these requirements would be enforceable under the FFDCA. The 
bill also provides for a public education program and further 
study.

                                Hearings

    The Committee on Energy and Commerce has not held hearings 
on this legislation.

                        Committee Consideration

    On Friday, June 21, 2002, the Full Committee met in open 
markup session and favorably ordered reported a Committee Print 
on Internet Pharmacies, by voice vote, a quorum being present. 
Chairman Tauzin then introduced H.R. 4990 to reflect the 
Committee's action.

                            Committee Votes

    Clause 3(b) of rule XIII of the Rules of the House of 
Representatives requires the Committee to list the record votes 
on the motion to report legislation and amendments thereto. 
There were no record votes taken in connection with ordering 
H.R. 4990 reported. A motion by Mr. Tauzin to order H.R. 4990 
reported to the House, without amendment, was agreed to by a 
voice vote.

                      Committee Oversight Findings

    Pursuant to clause 3(c)(1) of rule XIII of the Rules of the 
House of Representatives, the Committee has not held oversight 
or legislative hearings on this legislation.

         Statement of General Performance Goals and Objectives

    The purpose of H.R. 4990 is to amend the Federal Food, 
Drug, and Cosmetic Act to establish requirements with respect 
to the sale of, or the offer to sell, prescription drugs 
through the Internet. The objective is to improve the ability 
of Federal and state oversight officials to eliminate ``rogue'' 
interstate Internet websites illegally selling prescription 
drugs and provide integrity and disclosure for those who 
properly sell such drugs on the Internet.

   New Budget Authority, Entitlement Authority, and Tax Expenditures

    In compliance with clause 3(c)(2) of rule XIII of the Rules 
of the House of Representatives, the Committee finds that H.R. 
4990, to amend the Federal Food, Drug, and Cosmetic Act to 
establish requirements with respect to the sale of, or the 
offer to sell, prescription drugs through the Internet, and for 
other purposes, would result in no new or increased budget 
authority, entitlement authority, or tax expenditures or 
revenues.

                        Committee Cost Estimate

    The Committee adopts as its own the cost estimate prepared 
by the Director of the Congressional Budget Office pursuant to 
section 402 of the Congressional Budget Act of 1974.

                        Committee Cost Estimate

    The Committee adopts as its own the cost estimate prepared 
by the Director of the Congressional Budget Office pursuant to 
section 402 of the Congressional Budget Act of 1974, which is 
included in the report to accompany H.R. 4984.

                  Congressional Budget Office Estimate

    Pursuant to clause 3(c)(3) of rule XIII of the Rules of the 
House of Representatives, the cost estimate provided by the 
Congressional Budget Office pursuant to section 402 of the 
Congressional Budget Act of 1974 is included in the report to 
accompany H.R. 4984.

                       Federal Mandates Statement

    The Committee adopts as its own the estimate of Federal 
mandates prepared by the Director of the Congressional Budget 
Office pursuant to section 423 of the Unfunded Mandates Reform 
Act. The estimate is included in the report to accompany H.R. 
4984.

                      Advisory Committee Statement

    No advisory committees within the meaning of section 5(b) 
of the Federal Advisory Committee Act were created by this 
legislation.

                   Constitutional Authority Statement

    Pursuant to clause 3(d)(1) of rule XIII of the Rules of the 
House of Representatives, the Committee finds that the 
Constitutional authority for this legislation is provided in 
Article I, section 8, clause 3, which grants Congress the power 
to regulate commerce with foreign nations, among the several 
States, and with the Indian tribes.

                  Applicability to Legislative Branch

    The Committee finds that the legislation does not relate to 
the terms and conditions of employment or access to public 
services or accommodations within the meaning of section 
102(b)(3) of the Congressional Accountability Act.

             Section-by-Section Analysis of the Legislation


Section 911. Findings

    Section 911 contains findings concerning both the benefits 
of Internet prescription drug sales and the potential for abuse 
of consumers by unlawful or unscrupulous parties through 
Internet prescription drug sales.

Section 912. Amendments to the Federal Food, Drug, and Cosmetic Act

    Section 912 requires interstate Internet sellers of 
prescription drugs to disclose important information on their 
websites and to State licensing boards to improve the 
reliability of consumer transactions and make it easier for 
State and Federal enforcement officials to patrol for rogue 
sellers. The failure to post information or for knowingly 
making a false statement when posting information is 
prohibited.

Section 913. Public Education

    Section 913 requires the Secretary to engage in activities 
to educate the public about the dangers of purchasing 
medications from Internet prescription drug sellers who fail to 
follow the law. The Secretary is also directed to educate the 
public about effective public and private sector consumer 
protection efforts, as appropriate.

Section 914. Study Regarding Coordination of Regulatory Activities

    Section 914 requires that within 180 days of enactment, and 
after consultation with the Attorney General, the Secretary is 
required to submit to Congress a report providing 
recommendations for coordinating (1) the activities of federal 
agencies regarding interstate Internet sellers that operate 
from foreign countries, and (2) the activities of the Federal 
government with the activities of government of foreign 
countries regarding such interstate Internet sellers.

Section 915. Effective Date

    Section 915 states that the sections in this subtitle shall 
take effect 1 year after enactment, except that the authority 
of the Secretary to commence rulemaking is effective on the 
date of enactment.

         Changes in Existing Law Made by the Bill, as Reported

  In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (new matter is 
printed in italic and existing law in which no change is 
proposed is shown in roman):

                 FEDERAL FOOD, DRUG, AND COSMETIC ACT

           *       *       *       *       *       *       *



               CHAPTER III--PROHIBITED ACTS AND PENALTIES


                            PROHIBITED ACTS

  Sec. 301. The following acts and the causing thereof are 
hereby prohibited:
  (a) * * *

           *       *       *       *       *       *       *

  (bb) The failure to post information required under section 
503B(b)(2) or for knowingly making a materially false statement 
when posting such information as required under such section or 
violating section 503B(b)(4).

           *       *       *       *       *       *       *


                      CHAPTER V--DRUGS AND DEVICES


                    Subchapter A--Drugs and Devices

           *       *       *       *       *       *       *



SEC. 503B. INTERNET PRESCRIPTION DRUG SALES.

  (a) Definitions.--For purposes of this section:
          (1) Consumer.--The term ``consumer'' means a person 
        (other than an entity licensed or otherwise authorized 
        under Federal or State law as a pharmacy or to dispense 
        or distribute prescription drugs) that purchases or 
        seeks to purchase prescription drugs through the 
        Internet.
          (2) Home page.--The term ``home page'' means the 
        entry point or main web page for an Internet site.
          (3) Internet.--The term ``Internet'' means 
        collectively the myriad of computer and 
        telecommunications facilities, including equipment and 
        operating software, which comprise the interconnected 
        worldwide network of networks that employ the 
        Transmission Control Protocol/Internet Protocol, or any 
        predecessor or successor protocols to such protocol, to 
        communicate information of all kinds by wire or radio, 
        including electronic mail.
          (4) Interstate internet seller.--
                  (A) In general.--The term ``interstate 
                Internet seller'' means a person whether in the 
                United States or abroad, that engages in, 
                offers to engage in, or causes the delivery or 
                sale of a prescription drug through the 
                Internet and has such drug delivered directly 
                to the consumer via the Postal Service, or any 
                private or commercial interstate carrier to a 
                consumer in the United States who is residing 
                in a State other than the State in which the 
                seller's place of business is located. This 
                definition excludes a person who only delivers 
                a prescription drug to a consumer, such as an 
                interstate carrier service.
                  (B) Exemption.--With respect to the consumer 
                involved, the term ``interstate Internet 
                seller'' does not include a person described in 
                subparagraph (A) whose place of business is 
                located within 75 miles of the consumer.
          (5) Link.--The term ``link'' means either a textual 
        or graphical marker on a web page that, when clicked 
        on, takes the consumer to another part of the Internet, 
        such as to another web page or a different area on the 
        same web page, or from an electronic message to a web 
        page.
          (6) Pharmacy.--The term ``pharmacy'' means any place 
        licensed or otherwise authorized as a pharmacy under 
        State law.
          (7) Prescriber.--The term ``prescriber'' means an 
        individual, licensed or otherwise authorized under 
        applicable Federal and State law to issue prescriptions 
        for prescription drugs.
          (8) Prescription drug.--The term ``prescription 
        drug'' means a drug under section 503(b)(1).
          (9) Valid prescription.--The term ``valid 
        prescription'' means a prescription that meets the 
        requirements of section 503(b)(1) and other applicable 
        Federal and State law.
          (10) Web site; site.--The terms ``web site'' and 
        ``site'' mean a specific location on the Internet that 
        is determined by Internet protocol numbers or by a 
        domain name.
  (b) Requirements for Interstate Internet Sellers.--
          (1) In general.--Each interstate Internet seller 
        shall comply with the requirements of this subsection 
        with respect to the sale of, or the offer to sell, 
        prescription drugs through the Internet and shall at 
        all times display on its web site information in 
        accordance with paragraph (2).
          (2) Web site disclosure information.--An interstate 
        Internet seller shall post in a visible and clear 
        manner (as determined by regulation) on the home page 
        of its web site, or on a page directly linked to such 
        home page--
                  (A) the street address of the interstate 
                Internet seller's place of business, and the 
                telephone number of such place of business;
                  (B) each State in which the interstate 
                Internet seller is licensed or otherwise 
                authorized as a pharmacy, or if the interstate 
                Internet seller is not licensed or otherwise 
                authorized by a State as a pharmacy, each State 
                in which the interstate Internet seller is 
                licensed or otherwise authorized to dispense 
                prescription drugs, and the type of State 
                license or authorization;
                  (C) in the case of an interstate Internet 
                seller that makes referrals to or solicits on 
                behalf of a prescriber, the name of each 
                prescriber, the street address of each such 
                prescriber's place of business, the telephone 
                number of such place of business, each State in 
                which each such prescriber is licensed or 
                otherwise authorized to prescribe prescription 
                drugs, and the type of such license or 
                authorization; and
                  (D) a statement that the interstate Internet 
                seller will dispense prescription drugs only 
                upon a valid prescription.
          (3) Date of posting.--Information required to be 
        posted under paragraph (2) shall be posted by an 
        interstate Internet seller--
                  (A) not later than 90 days after the 
                effective date of this section if the web site 
                of such seller is in operation as of such date; 
                or
                  (B) on the date of the first day of operation 
                of such seller's web site if such site goes 
                into operation after such date.
          (4) Qualifying statements.--An interstate Internet 
        seller shall not indicate in any manner that posting 
        disclosure information on its web site signifies that 
        the Federal Government has made any determination on 
        the legitimacy of the interstate Internet seller or its 
        business.
          (5) Disclosure to state licensing boards.--An 
        interstate Internet seller licensed or otherwise 
        authorized to dispense prescription drugs in accordance 
        with applicable State law shall notify each State 
        entity that granted such licensure or authorization 
        that it is an interstate Internet seller, the name of 
        its business, the Internet address of its business, the 
        street address of its place of business, and the 
        telephone number of such place of business.
          (6) Regulations.--The Secretary is authorized to 
        promulgate such regulations as are necessary to carry 
        out the provisions of this subsection. In issuing such 
        regulations, the Secretary--
                  (A) shall take into consideration disclosure 
                formats used by existing interstate Internet 
                seller certification programs; and
                  (B) shall in defining the term ``place of 
                business'' include provisions providing that 
                such place is a single location at which 
                employees of the business perform job 
                functions, and not a post office box or similar 
                locale.

           *       *       *       *       *       *       *


                            ADDITIONAL VIEWS

    The major focus of this bill is to require that internet 
pharmacists and doctors make certain disclosures on their 
websites. The bill does not make irresponsible internet 
prescribing illegal, which is what state boards of medicine and 
pharmacy have requested in correspondence with the Secretary of 
Health and Human Services. The bill also does not provide for 
national injunctive authority for states, which Kansas Attorney 
General Carla Stovall has called ``the most important tool the 
Federal government can give the States'' on internet 
pharmacies.
    An amendment was offered that would have solved both of 
these problems. It would have prevented web site operators 
(whether pharmacists, doctors or others) from arranging for an 
internet doctor to prescribe medication for a patient unless 
the doctor actually sees the patient. It would have had 
negligible impact on the regular practice of medicine, as 
doctors would only be subject to the law if they accept a 
payment from a pharmacy in exchange for a prescription or if 
they run an illicit internet pharmacy themselves. The amendment 
would also have provided for state enforcement power, including 
the opportunity to obtain a nationwide injunction.

                                   Henry A. Waxman.
                                   John D. Dingell.

                                  
