[Senate Report 115-285]
[From the U.S. Government Publishing Office]


 						  Calendar No. 490

115th Congress}                                            { Report
                                 SENATE
  2d Session  }                                            { 115-285

======================================================================
        OPIOID ADDICTION RECOVERY FRAUD PREVENTION ACT OF 2018

                               __________

                              R E P O R T

                                 of the

           COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION

                                   on

                                S. 2842

[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]


                 June 27, 2018.--Ordered to be printed
                 
                 
                 
                                 __________
		                                   
		 
                   U.S. GOVERNMENT PUBLISHING OFFICE                    
                          WASHINGTON : 2018     
                 
      
      
      
      SENATE COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION
                     
                     one hundred fifteenth congress
                             second session

                   JOHN THUNE, South Dakota, Chairman
ROGER F. WICKER, Mississippi         BILL NELSON, Florida
ROY BLUNT, Missouri                  MARIA CANTWELL, Washington
TED CRUZ, Texas                      AMY KLOBUCHAR, Minnesota
DEB FISCHER, Nebraska                RICHARD BLUMENTHAL, Connecticut
JERRY MORAN, Kansas                  BRIAN SCHATZ, Hawaii
DAN SULLIVAN, Alaska                 EDWARD J. MARKEY, Massachusetts
DEAN HELLER, Nevada                  TOM UDALL, New Mexico
JAMES M. INHOFE, Oklahoma            GARY C. PETERS, Michigan
MIKE LEE, Utah                       TAMMY BALDWIN, Wisconsin
RON JOHNSON, Wisconsin               TAMMY DUCKWORTH, Illinois
SHELLEY MOORE CAPITO, West Virginia  MARGARETWOODHASSAN,NewHampshire
CORY GARDNER, Colorado               CATHERINE CORTEZ MASTO, Nevada
TODD C. YOUNG, Indiana               JON TESTER, Montana
                       Nick Rossi, Staff Director
                 Adrian Arnakis, Deputy Staff Director
                    Jason Van Beek, General Counsel
                 Kim Lipsky, Democratic Staff Director
           Christopher Day, Democratic Deputy Staff Director


                                                       Calendar No. 490

115th Congress                                                   Report
                                 SENATE
 2d Session                                                     115-285

======================================================================
 
         OPIOID ADDICTION RECOVERY FRAUD PREVENTION ACT OF 2018

                                _______
                                

                 June 27, 2018.--Ordered to be printed

                                _______
                                

Mr. Thune, from the Committee on Commerce, Science, and Transportation, 
                        submitted the following

                              R E P O R T

                         [To accompany S. 2842]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Commerce, Science, and Transportation, to 
which was referred the bill (S. 2842) to prohibit the marketing 
of bogus opioid treatment programs or products, having 
considered the same, reports favorably thereon with an 
amendment (in the nature of a substitute) and recommends that 
the bill (as amended) do pass.

                          Purpose of the Bill

    The purpose of S. 2842, the Opioid Addiction Recovery Fraud 
Prevention Act of 2018, is to explicitly prohibit the deceptive 
marketing of opioid treatment programs and products. Section 5 
of the Federal Trade Commission Act (FTC Act; 15 U.S.C. 41 et 
seq.) already prohibits such deceptive practices. The bill also 
would provide additional tools to the Federal Trade Commission 
(FTC) and States to enforce against these practices. 
Specifically, the bill would empower the FTC to seek the 
remedies currently available under the FTC Act for violations 
of a trade regulation rule, and empower States to seek 
appropriate relief in Federal court. By providing the FTC and 
States with these tools, the bill will facilitate enforcement 
and thereby better protect consumers from the deceptive 
marketing of opioid treatment programs and products.

                          Background and Needs

    The term ``opioid'' includes prescription opioid 
painkillers like hydrocodone and morphine and illegal drugs 
like heroin. In July 2017, the Centers for Disease Control and 
Prevention (CDC) reported that the amount of opioids prescribed 
in 2015 was enough for every American to be medicated around 
the clock for 3 weeks.\1\ According to a CDC report, there were 
63,632 drug overdose deaths in the United States in 2016, and 
42,249 deaths related to opioids overdoses.\2\ The CDC's 2017 
Annual Surveillance Report of Drug-Related Risks and Outcomes 
highlights that opioid overdose death rates are largely a 
result of prescription or illicit opioids, including heroin and 
illicit fentanyl, a synthetic opioid.\3\
---------------------------------------------------------------------------
    \1\CDC, Vital Signs (Jul. 2017). (https://www.cdc.gov/vitalsigns/
opioids/index.html)
    \2\Puja Seth et al., Overdose Deaths Involving Opioids, Cocaine, 
and Psychostimulants--United States, 2015-2016, 67 MMWR 349-358 (Mar. 
30, 2018). (https://www.cdc.gov/mmwr/volumes/67/wr/
mm6712a1.htm?s_cid=mm6712a1_w)
    \3\CDC, Annual Surveillance Report of Drug-Related Risks and 
Outcomes (2017), (https://www.cdc.gov/drugoverdose/pdf/pubs/2017-cdc-
drug-surveillance-report.pdf)
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    Heroin overdoses are closely linked to the opioid crisis. 
In 2015, more than 33,000 people died from an opioid overdose, 
with heroin deaths increasing over 20 percent from 2014 to 
2015.\4\ A 2015 report by the CDC and the Food and Drug 
Administration (FDA) found the strongest risk factor for a 
heroin use disorder is a prescription opioid use disorder.\5\
---------------------------------------------------------------------------
    \4\Rose A. Rudd et al., Increases in Drug and Opioid-Involved 
Overdose Deaths--United States, 2010-2015, 65 MMWR, 1445-1452 (Dec. 30, 
2016). (https://www.cdc.gov/mmwr/volumes/65/wr/
mm655051e1.htm?s_cid=mm655051e1_w#T1_down)
    \5\Press Release, CDC, New research reveals the trends and risk 
factors behind America's growing heroin epidemic (Jul. 7, 2015). 
(https://www.cdc.gov/media/releases/2015/p0707-
heroin-epidemic.html)
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    To prevent overdose and death, the CDC recommends treatment 
for people struggling with opioid use disorder. To treat those 
with opioid use disorder, the CDC specifically recommends 
expanded access to evidence-based treatments, including 
medication-assisted therapy, a comprehensive approach to 
treatment that combines the use of medication (methadone, 
buprenorphine, or naltrexone) with counseling and behavioral 
therapies.\6\
---------------------------------------------------------------------------
    \6\CDC, Treat Opioid Use Disorder (https://www.cdc.gov/
drugoverdose/prevention/
treatment.html) (accessed May 17, 2018).
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    In response to growing demand for treatment services, the 
Substance Abuse and Mental Health Services Administration 
maintains a behavior health treatment services locator which 
lists substance abuse and addiction treatment facilities that 
meet certain eligibility criteria.\7\
---------------------------------------------------------------------------
    \7\Substance Abuse & Mental Health Services Admin., Behavioral 
Health Treatment Services Locator (https://findtreatment.samhsa.gov) 
(accessed May 17, 2018).
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    Given this demand, opioid treatment centers have become big 
business. The President's Council of Economic Advisors 
estimated that prescription opioid misuse increased healthcare 
and substance abuse treatment costs by $29.4 billion in 
2015.\8\ In one Florida county alone, substance abuse treatment 
was estimated to be a $1 billion business and a major economic 
engine, ranking only below tourism, agriculture, and 
construction.\9\
---------------------------------------------------------------------------
    \8\Council of Econ. Advisors, The Underestimated Cost of the Opioid 
Crisis (Nov. 2017). (https://www.whitehouse.gov/sites/whitehouse.gov/
files/images/
The%20Underestimated%20Cost%20of%20the%20Opioid%20Crisis.pdf)
    \9\Pat Beall, County's $1 billion gold rush: Addiction treatment 
draws FBI, Palm Beach Post (Aug. 14, 2015). (https://
www.mypalmbeachpost.com/news/county-billion-gold-rush-addiction-
treatment-draws-fbi/JT3MyQwWckFyEZaSfQnoTN) (hereinafter Beall).
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    While legitimate treatment centers exist, media reports 
have uncovered various scam treatment centers operating in the 
United States and detailed the prevalence of questionable 
industry practices. One report explained how ``[c]rooked'' 
treatment centers partner with ``body brokers'' and sober homes 
to generate patient leads through various tactics, including 
``offer[ing] those trying to get clean free rent and grocery 
store gift cards, cigarettes and manicures in exchange for 
going to a specific treatment center, which pays kickbacks for 
every client.''\10\ The report further explained how these 
treatment centers, in turn, often provide ``questionable 
counseling, costly and potentially unnecessary drug screens, 
and exotic laboratory tests. Some treatment centers not only 
overlook drug use--they encourage it. To Florida's worst 
operators, relapse doesn't mean failure. It means profit.''\11\
---------------------------------------------------------------------------
    \10\Lisa Seville et al., Florida's Billion-Dollar Drug Treatment 
Industry Is Plagued by Overdoses, Fraud, NBC News (Jun. 25, 2017). 
(https://www.nbcnews.com/feature/megyn-kelly/florida-s-billion-dollar-
drug-treatment-industry-plagued-overdoses-fraud-n773376)
    \11\Id.
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    Unscrupulous drug treatment centers have been the target of 
criminal law enforcement across the country. In July 2017, for 
example, State and Federal law enforcement conducted a sweep of 
arrests in South Florida targeting the owners of drug treatment 
centers.\12\
---------------------------------------------------------------------------
    \12\Anna R. Schecter & Lisa Seville, Florida Drug Treatment Center 
Operators Busted in Crackdown, NBC News (Jul. 19, 2017). (https://
www.nbcnews.com/health/health-care/florida-drug-treatment-center-
operators-busted-crackdown-n784326)
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    Opioid recovery scams are perpetrated not only by treatment 
centers, but also by companies promoting recovery treatment 
products with deceptive advertising claims. For example, in 
2015, the FTC filed a lawsuit in Federal court to enjoin a 
dietary supplement marketer from making misleading claims that 
its product can help treat and even cure people who are 
addicted to opiates. In that case, the FTC alleged that a 
Florida-based company deceptively claimed that its dietary 
supplement Elimidrol contained a ``proprietary blend'' of herbs 
and other compounds to alleviate opiate withdrawal symptoms and 
increase a user's likelihood of overcoming opiate 
addiction.\13\ Under the court order settling the FTC's 
charges, the company is barred from making such unsubstantiated 
health and efficacy claims and agreed to pay $235,000 for 
consumer refunds.\14\
---------------------------------------------------------------------------
    \13\FTC v. Sunrise Nutraceuticals, LLC, No. 9:15-CV-81567 (S.D. 
Fla.) (complaint for permanent injunction and other equitable relief 
filed Nov. 16, 2015), (https://www.ftc.gov/system/files/documents/
cases/151117sunrisenutraceuticalscmpt.pdf)
    \14\FTC v. Sunrise Nutraceuticals, LLC, No. 9:15-CV-81567 (S.D. 
Fla.) (stipulated final judgment and order for permanent injunction and 
other equitable relief entered July 8, 2016). (https://www.ftc.gov/
system/files/documents/cases/160706sunrise-stip.pdf)
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                         Summary of Provisions

    Although the bill does not in any way expand the FTC's 
jurisdiction, it does reaffirm the FTC's jurisdiction over 
marketing practices also subject to the FDA's jurisdiction, 
such as the advertising of drugs. The Committee notes that the 
Memorandum of Understanding Between The Federal Trade 
Commission and The Food and Drug Administration (MOU) approved 
and accepted by the two agencies in 1971, addresses how the two 
agencies will proceed where their jurisdictions overlaps.\15\ 
The MOU provides that, with the exception of prescription 
drugs, the FTC has primary responsibility with respect to the 
regulation of the truth or falsity of all advertising (other 
than labeling) of foods, drugs, devices, and cosmetics.\16\ In 
contrast, the FDA has primary responsibility for preventing 
misbranding of foods, drugs, devices, and cosmetics, and with 
respect to the regulation of the truth or falsity of 
prescription drug advertising.\17\ In addition, the MOU 
provides that ``[t]he initiation of proceedings involving the 
same parties by both agencies shall be restricted to those 
highly unusual situations where it is clear that the public 
interest requires two separate proceedings.'' The Committee 
notes that the purpose of the MOU is to prevent unnecessary and 
wasteful duplicative enforcement by the FTC and FDA.
---------------------------------------------------------------------------
    \15\Mem. of Understanding Between The Fed. Trade Comm'n and The 
Food and Drug Admin., MOU 225-71-8003 (1971). (https://www.fda.gov/
AboutFDA/PartnershipsCollaborations/MemorandaofUnderstandingMOUs/
DomesticMOUs/ucm115791.htm)
    \16\Id.
    \17\Id.
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    Section 2 would define the term ``opioid treatment 
product'' to mean a product, including any supplement or 
medication, for use or marketed for the use in the treatment, 
cure, or prevention of an opioid use disorder. It would define 
the term ``opioid treatment program'' to mean a program that 
provides treatment for people diagnosed with, having, or 
purporting to have an opioid use disorder. It would define the 
term ``opioid use disorder'' to mean a cluster of cognitive, 
behavioral, or physiological symptoms in which the individual 
continues the use of opioids despite significant opioid-induced 
problems, such as adverse health effects.
    Section 3 would affirmatively establish that it is unlawful 
to make any deceptive representation with respect to the cost, 
price, efficacy, performance, benefit, risk, or safety of any 
opioid treatment program or opioid treatment product. Any such 
violation would be considered a violation of an FTC trade 
regulation rule, allowing the FTC to seek civil penalties under 
section 5 and the remedies set forth in section 19 of the FTC 
Act, in addition to injunctive relief and other equitable 
remedies. The maximum civil penalty amount the FTC may seek for 
violations of trade regulation rules is $41,484 per violation, 
as currently adjusted for inflation. This section would also 
empower States to bring actions against entities for violations 
of this section and to obtain appropriate relief.

                          Legislative History

    S. 2842 was introduced on May 15, 2018, by Senator Capito 
(for herself and Senator Cortez Masto) and was referred to the 
Committee on Commerce, Science, and Transportation of the 
Senate. Senators Brown, Sullivan, and Nelson are also 
cosponsors of the bill. On May 22, 2018, the Committee met in 
open Executive Session and, by voice vote, ordered S. 2842 
reported favorably with an amendment (in the nature of a 
substitute).
    During the 115th Congress, the Committee has held hearings 
to examine both the opioid crisis and consumer scams generally. 
On March 21, 2017, the Subcommittee on Consumer Protection, 
Product Safety, Insurance, and Data Security held a hearing 
entitled ``Staying a Step Ahead: Fighting Back Against Scams 
Used to Defraud Americans'' in which the subcommittee heard 
testimony about FTC and State attorneys general efforts to 
combat various consumer scams.
    On May 17, 2017, Chairman Thune convened a full committee 
hearing entitled ``Current Issues in American Sports: 
Protecting the Health and Safety of American Athletes'' in 
which the Committee heard testimony about the opioid crisis and 
its impact on athletes and their families.

                            Estimated Costs

    In accordance with paragraph 11(a) of rule XXVI of the 
Standing Rules of the Senate and section 403 of the 
Congressional Budget Act of 1974, the Committee provides the 
following cost estimate, prepared by the Congressional Budget 
Office:

S. 2842--Opioid Addiction Recovery Fraud Prevention Act of 2018

    S. 2842 would authorize the Federal Trade Commission (FTC) 
to levy civil penalties on opioid treatment programs and 
products that make false or deceptive claims regarding their 
cost, price, efficacy, performance, benefit, risk, or safety. 
Under current law, the FTC already has the authority to 
prohibit such claims but does not have the authority to levy 
civil penalties. The bill also would authorize state attorneys 
general, or other state officials, to bring civil actions for 
violations such deceptive claims.
    Using information from the FTC, CBO estimates that 
implementing S. 2842 would have no significant effect on the 
agency's administrative costs because the bill would not expand 
the scope of the FTC's enforcement authorities.
    S. 2842 would allow the FTC to levy civil penalties (which 
are recorded in the budget as revenues) to enforce the 
prohibition; therefore, pay-as-you-go procedures apply. 
However, CBO estimates that any increase in revenues would not 
be significant because we expect that few entities would be 
affected. Enacting S. 2842 would not affect direct spending.
    CBO estimates that enacting S. 2842 would not increase net 
direct spending or on-budget deficits in any of the four 
consecutive 10-year periods beginning in 2029.
    S. 2842 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act.
    The CBO staff contact for this estimate is Stephen Rabent. 
The estimate was reviewed by H. Samuel Papenfuss, Deputy 
Assistant Director for Budget Analysis.

                      Regulatory Impact Statement

    In accordance with paragraph 11(b) of rule XXVI of the 
Standing Rules of the Senate, the Committee provides the 
following evaluation of the regulatory impact of the 
legislation, as reported:

                       number of persons covered

    S. 2842, as reported, would not impose any new regulatory 
requirements on businesses.

                            economic impact

    Enactment of this legislation is not expected to have an 
adverse impact on the Nation's economy.

                                privacy

    S. 2842 does not raise any issues relating to privacy.

                               paperwork

    S. 2842 would not impose any new paperwork requirements, 
other than an obligation on States to notify the FTC in writing 
before they file an action to enforce section 3(a) of this 
legislation.

                   Congressionally Directed Spending

    In compliance with paragraph 4(b) of rule XLIV of the 
Standing Rules of the Senate, the Committee provides that no 
provisions contained in the bill, as reported, meet the 
definition of congressionally directed spending items under the 
rule.

                      Section-by-Section Analysis


Section 1. Short title.

    This section would provide that the bill may be cited as 
the ``Opioid Addiction Recovery Fraud Prevention Act of 2018.''

Section 2. Definitions.

    This section would define the term ``opioid treatment 
product'' to mean a product, including any supplement or 
medication, for use or marketed for the use in the treatment, 
cure, or prevention of an opioid use disorder. It would define 
the term ``opioid treatment program'' to mean a program that 
provides treatment for people diagnosed with, having, or 
purporting to have an opioid use disorder. It would define the 
term ``opioid use disorder'' to mean a cluster of cognitive, 
behavioral, or physiological symptoms in which the individual 
continues the use of opioids despite significant opioid-induced 
problems, such as adverse health effects.

Section 3. False or misleading representations with respect to opioid 
        treatment programs and products.

    Section 3(a) would affirmatively establish that it is 
unlawful to make any deceptive representation with respect to 
the cost, price, efficacy, performance, benefit, risk, or 
safety of any opioid treatment program or opioid treatment 
product.
    Section 3(b) would provide that any such violation would be 
considered a violation of an FTC trade regulation rule, 
allowing the FTC to seek civil penalties under section 5 and 
the remedies set forth in section 19 of the FTC Act, in 
addition to injunctive relief and other equitable remedies that 
it can already obtain under the FTC Act. The maximum civil 
penalty amount the FTC may seek for violations of a trade 
regulation rule is $41,484 per violation, as currently adjusted 
for inflation.\18\ The section 19 remedies for trade regulation 
rule violations include ``rescission or reformation of 
contracts, the refund of money or return of property, the 
payment of damages, and public notification respecting the rule 
violation . . . except that nothing in this subsection is 
intended to authorize the imposition of any exemplary or 
punitive damages.''\19\
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    \18\See 15 U.S.C. Sec.  45(m)(1)(A) and 16 C.F.R. Sec.  1.98.
    \19\See 15 U.S.C. Sec.  57b(b).
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    Section 3(c) would empower States to bring actions in 
Federal court against entities for violations of this section 
and to obtain appropriate relief. It would also require a State 
to notify the FTC in writing before filing a case if possible, 
or if not feasible immediately upon filing the action. The FTC 
would have the authority to intervene in the State action. Once 
the FTC or the Attorney General on the FTC's behalf files an 
action, States may not file during the pendency of the FTC 
action their own actions against a party named in the FTC 
action alleging the same violation. This section also addresses 
venue and service of process issues.

                        Changes in Existing Law

    In compliance with paragraph 12 of rule XXVI of the 
Standing Rules of the Senate, the Committee states that the 
bill as reported would make no change to existing law.

                                  [all]