Prescription Drugs: Strategic Framework Would Promote		 
Accountability and Enhance Efforts to Enforce the Prohibitions on
Personal Importation (08-SEP-05, GAO-05-372).			 
                                                                 
Consumers can be violating the law and possibly risking their	 
health by purchasing imported prescription drugs over the	 
Internet. U.S. Customs and Border Protection (CBP), in the	 
Department of Homeland Security (DHS), and the Food and Drug	 
Administration (FDA), in the Department of Health and Human	 
Services (HHS), work with other federal agencies at international
mail and express carrier facilities to inspect for and interdict 
prescription drugs illegally imported for personal use. This	 
report addresses (1) available data about the volume and safety  
of personal prescription drug imports, (2) the procedures and	 
practices used to inspect and interdict prescription drugs	 
unapproved for import, (3) factors affecting federal efforts to  
enforce the laws governing prescription drugs imported for	 
personal use, and (4) efforts federal agencies have taken to	 
coordinate enforcement efforts. 				 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-05-372 					        
    ACCNO:   A36018						        
  TITLE:     Prescription Drugs: Strategic Framework Would Promote    
Accountability and Enhance Efforts to Enforce the Prohibitions on
Personal Importation						 
     DATE:   09/08/2005 
  SUBJECT:   Consumer protection				 
	     Controlled substances				 
	     Data collection					 
	     Drugs						 
	     Import regulation					 
	     Import restriction 				 
	     Inspection 					 
	     Interagency relations				 
	     Internet						 
	     Law enforcement					 
	     Pharmaceutical industry				 
	     Safety regulation					 
	     Search and seizure 				 
	     Policies and procedures				 

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GAO-05-372

United States Government Accountability Office

GAO

                       Report to Congressional Requesters

September 2005

PRESCRIPTION DRUGS

Strategic Framework Would Promote Accountability and Enhance Efforts to Enforce
                    the Prohibitions on Personal Importation

GAO-05-372

[IMG]

September 2005

PRESCRIPTION DRUGS

Strategic Framework Would Promote Accountability and Enhance Efforts to Enforce
the Prohibitions on Personal Importation

  What GAO Found

The information currently available on the safety of illegally imported
prescription drugs is very limited, and neither CBP nor FDA systematically
collects data on the volume of these imports. Nevertheless, on the basis
of their own observations and limited information they collected at some
mail and carrier facilities, both CBP and FDA officials said that the
volume of prescription drugs imported into the United States is
substantial and increasing. FDA officials said that they cannot assure the
public of the safety of drugs purchased from foreign sources outside the
U.S. regulatory system.

FDA has issued new procedures to standardize practices for selecting
packages for inspection and making admissibility determinations. While
these procedures may encourage uniform practices across mail facilities,
packages containing prescription drugs continue to be released to the
addressees. CBP has also implemented new procedures to interdict and
destroy certain imported controlled substances, such as Valium. CBP
officials said the new process is designed to improve their ability to
quickly handle packages containing these drugs, but they did not know if
the policy had affected overall volume because packages may not always be
detected.

We identified three factors that have complicated federal enforcement of
laws prohibiting the personal importation of prescription drugs. First,
volume has strained limited federal resources at the mail facilities.
Second, Internet pharmacies can operate outside the U.S. regulatory system
and evade federal law enforcement actions. Third, current law requires FDA
to give addressees of packages containing unapproved imported drugs notice
and the opportunity to provide evidence of admissibility regarding their
imported items. FDA and HHS have testified before Congress that this
process placed a burden on limited resources. In May 2001, FDA proposed to
the HHS Secretary that this legal requirement be eliminated, but according
to FDA and HHS officials, as of July 2005, the Secretary had not responded
with a proposal. FDA officials stated that any legislative change might
require consideration of such issues as whether to forgo an individual's
opportunity to provide evidence of the admissibility of the drug ordered.

Prior federal task forces and working groups had taken steps to deal with
Internet sales of prescription drugs since 1999, but these efforts did not
position federal agencies to successfully address the influx of these
drugs imported from foreign sources. Recently, CBP has organized a task
force to coordinate federal agencies' activities to enforce the laws
prohibiting the personal importation of prescription drugs. The task
force's efforts appear to be steps in the right direction, but they could
be enhanced by establishing a strategic framework to define the scope of
the problem at mail and carrier facilities, determine resource needs,
establish performance measures, and evaluate progress. Absent this
framework, it will be difficult to oversee task force efforts; hold
agencies accountable; and ensure ongoing, focused attention to the
enforcement of the relevant laws.

United States Government Accountability Office

Contents

  Letter

Results in Brief
Background
Volume of Prescription Drug Imports Is Unknown but Believed to

Be Substantial, and the Safety of These Drug Imports Is Not
Assured
Some Targeted Packages Containing Prescription Drugs Are
Interdicted, but Many Others Are Not

Factors beyond Inspection and Interdiction Complicate Efforts to
Enforce the Prohibitions on Personal Importation of
Prescription Drugs

Federal Efforts to Coordinate Law Enforcement Activities Could

Benefit from a Strategic Framework
Conclusions
Recommendations
Agency Comments and Our Evaluation

                                       1

                                      3 8

11

18

27

34 42 43 44

Appendix I Objectives, Scope, and Methodology

Appendix II	General Description of the Controlled Substance
Products I through V

Appendix III	Federal Agencies Work with Credit Card
Organizations to Enforce Prohibitions on
Prescription Drugs

Investigations of Credit Card Purchases of Prescription Drugs
Imported from Internet Pharmacies Can Be Complicated by
Legal and Practical Considerations

Federal Enforcement Agencies and Credit Card Associations Have
Discussed Credit Card Enforcement Issues

                                       53

                                     53 58

Appendix IV	Comments from the Department of Homeland
Security 60

Appendix V	Comments from the Department of Justice, Drug Enforcement
Administration 62

Appendix VI	Comments from the Department of Health and Human Services

Appendix VII	Comments from the Office of National Drug Control Policy

Appendix VIII Comments from the U.S. Postal Service

Appendix IX GAO Contact and Acknowledgments

Table

Table 1: General Description of Controlled Substances, Schedules I-V

Figures

Figure 1: Acts Governing the Personal Importation of Prescription Drugs
into the United States and FDA, DEA, and CBP Roles Implementing Those Acts
10

Figure 2: Results of CBP's Laboratory Analysis of 180 Imported

Drugs 15 Figure 3: Drugs Sent without Labeling 16 Figure 4: Bins
Containing Packages of Suspected Prescription

Drugs Being Held for FDA Review and Possible Inspection 20 Figure 5:
Abandoned Schedule III through V Controlled Substances Awaiting
Destruction 24 Figure 6: Interagency Pharmaceutical Task Force and Working
Group Goals 36

Abbreviations

CBP Customs and Border Protection
DEA Drug Enforcement Administration
DHS Department of Homeland Security
FDA Food and Drug Administration
HHS Health and Human Services
ICE Immigration and Customs Enforcement
ONDCP Office of Drug Control Policy
UPU Universal Postal Union
USPS U.S. Postal Service

This is a work of the U.S. government and is not subject to copyright
protection in the United States. It may be reproduced and distributed in
its entirety without further permission from GAO. However, because this
work may contain copyrighted images or other material, permission from the
copyright holder may be necessary if you wish to reproduce this material
separately.

United States Government Accountability Office Washington, DC 20548

September 8, 2005

The Honorable Norman Coleman
Chairman
Permanent Subcommittee on Investigations
Committee on Homeland Security and Governmental Affairs
United States Senate

The Honorable John D. Dingell
Ranking Minority Member
Committee on Energy and Commerce
House of Representatives

The first Internet pharmacies began online service in early 1999. Since
that
time, American consumers have been increasingly drawn to the
convenience, privacy, and cost advantages that might be accrued by
purchasing prescription drugs over the Internet. Individual consumers can
order over the Internet a range of prescription drugs from controlled
substances,1 such as Valium, to noncontrolled prescription drugs intended
to improve an individual's quality of life by addressing
non-life-threatening
conditions such as baldness, impotence, and obesity. Internet pharmacies,
particularly those pharmacies located in foreign countries, can operate
outside the U.S. regulatory process, which requires a licensed pharmacist
to dispense a prescription drug when presented with a valid prescription
from a licensed health care professional. According to FDA, there are
legitimate Internet pharmacies that comply with applicable federal and
state laws. However, the broad reach and access of the Internet allows the
easy creation of online pharmacies that can anonymously traverse state
and national borders to prescribe, sell, and dispense prescription drugs
without complying with traditional state or federal regulatory safeguards.

1The Controlled Substances Act establishes a classification structure for
certain drugs and chemicals that are designated as controlled substances.
This structure places such substances in one of five schedules, based on
their medicinal value, risk to public health, and potential for abuse and
addiction, among other factors. Schedule I is reserved for the most
dangerous drugs that have no currently accepted medical use, such as
heroin and ecstasy. Controlled substances that may be prescribed by a
physician or used in medical facilities fall in schedules II through V
(e.g., Valium). For certain law enforcement purposes, however, schedule II
drugs are treated more like schedule I drugs. See appendix II for a
general description of the controlled substance schedules I-V.

Under current law, the importation of prescription drugs, both controlled
and noncontrolled, for personal use is illegal, with few exceptions.
However, in recent years, Congress and others have debated whether
Americans should be allowed to purchase drugs from pharmacies located in
foreign countries. Members of Congress have introduced various bills
related to this issue. Proponents argue that American consumers should be
allowed to import prescription drugs because drugs purchased from some
foreign pharmacies are viewed as safe and more affordable. Opponents
contend that drugs from unregulated sources are not proven to be safe and
effective and could be harmful. In addition, some allege that packages of
prescription drugs purchased on the Internet and imported for personal use
could be bundled together and sold to others. Currently, consumers could
be violating federal law, unknowingly or intentionally, by having drugs
shipped, in effect, imported, into the United States through the
international mail and private carriers. Two acts specifically regulate
the importation of prescription drugs into the United States. That is, all
prescription drugs offered for import must meet the requirements of the
Federal Food, Drug, and Cosmetic Act, and those that are controlled
substances also must meet the requirements of the Controlled Substances
Import and Export Act. Prescription drugs imported for personal use
generally do not meet these requirements.

Several federal agencies have responsibility for regulating the
importation of prescription drugs through the international mail and
private carriers. They include the Department of Homeland Security's (DHS)
U.S. Customs and Border Protection (CBP), which can inspect international
mail and packages for potentially illegal drugs entering the United States
through the U.S. Postal Service's (USPS) international mail facilities or
private carriers; the Department of Health and Human Services' (HHS) Food
and Drug Administration (FDA), which is responsible for ensuring the
safety, effectiveness, and quality of domestic and imported drugs; the
Department of Justice's Drug Enforcement Administration (DEA), which
regulates controlled substances; and the Department of Homeland Security's
U.S. Immigration and Customs Enforcement (ICE), which has law enforcement
responsibilities that include investigations of prescription drugs coming
into the United States through the mail and express carriers. Also, the
Office of National Drug Control Policy (ONDCP) formulates the nation's
drug control strategy and addresses policy issues concerning the illegal
distribution of controlled substances, as its authority does not extend
over noncontrolled substances.

You expressed interest in learning how federal agencies are addressing the
importation of prohibited prescription drugs through international mail

and carrier facilities. In this report, we address the following
questions: (1) What do the available data show about the volume and safety
of prescription drugs imported into the United States for personal use
through the international mail and private carriers? (2) What procedures
and practices are used at selected facilities to inspect and interdict
prescription drugs unapproved for import? (3) What factors affect federal
agency efforts to enforce the prohibition on prescription drug importation
for personal use through international mail and carrier facilities? (4)
What efforts have federal agencies undertaken to coordinate the
enforcement of the prohibitions on personal importation of prescription
drugs?

To answer these questions, we reviewed current federal laws, available
studies and reports on the importation of prescription drugs and
controlled substances, CBP and FDA procedures and practices related to
prescription drugs and controlled substance importation, and applicable
importation volume and safety data. We conducted interviews with officials
from CBP, FDA, DEA, USPS, ONDCP, and ICE, as well as representatives of
MasterCard International and Visa U.S.A., Inc.2 We visited five
facilities: three international mail facilities located in California,
Illinois, and New York and two carrier facilities located in Ohio (for the
DHL Corporation) and Tennessee (for the FedEx Corporation). We selected
these facilities to include those with a high volume of processed packages
and wide geographic dispersion. At these locations, we observed inspection
and interdiction practices; met with CBP and FDA management, inspectors,
and investigators; and reviewed relevant documents on inspection and
interdiction procedures. At the international mail facilities, we also met
with officials from USPS regarding mail handling and processing
procedures. The information from our site visits is limited to the 3
international mail facilities and 2 carrier facilities and is not
generalizable to all 14 international mail facilities and 29 carrier
facilities. We conducted our review from April 2004 to August 2005 in
accordance with generally accepted government auditing standards. Appendix
I provides more details about our scope and methodology.

Results in Brief	The information currently available on the safety of
illegally imported prescription drugs is very limited, and neither CBP nor
FDA systematically

2Representatives of these two card credit associations testified at
congressional hearings in July 2004 on matters related to the illegal
importation of prescription drugs. In addition, a DEA official identified
these associations as the organizations used by the majority of Internet
drug sites.

collects data on the volume of these imports. Nevertheless, on the basis
of their own observations and limited information they have collected at
some mail and carrier facilities, both CBP and FDA officials said the
volume of prescription drugs imported into the United States is
substantial. For example, a December 2004 HHS report states that
approximately 10 million packages containing prescription drugs enter the
United States annually from all over the world. However, this estimate was
partially based on extrapolations from limited FDA observations at
international mail branch facilities. Without reliable estimates of the
volume of importation of prescription drugs, federal agencies cannot
determine the full scope of the importation issue, which is of particular
concern because of access to potentially unsafe or risky drugs, including
highly addictive controlled substances. With regard to safety, the FDA
officials told us that they cannot assure the public of the safety and
quality of drugs purchased from foreign sources that are largely outside
the U.S. regulatory system. Consistent with these concerns, in June 2004,
we reported that a sample of drugs purchased from some foreign-based
Internet pharmacies posed safety risks for consumers. 3 Specifically, we
identified several problems associated with the handling, FDA approval
status, and authenticity of 21 prescription drug samples we purchased from
Internet pharmacies located in several foreign countries-Argentina, Costa
Rica, Fiji, Mexico, India, Pakistan, the Philippines, Spain, Thailand, and
Turkey. We found fewer problems among 47 other samples from U.S. and
Canadian Internet pharmacies, although most of the drugs obtained from
Canada were unapproved for the U.S. market.

Practices used at the mail and carrier facilities we visited to inspect
packages and interdict prohibited prescription drugs are evolving based in
part on procedures FDA issued in August 2004 to standardize the selection
of packages by CBP and the forwarding of them to FDA for inspection. These
procedures include guidelines for inspecting the packages and making
admissibility determinations. However, under the current procedures,
similar to previous practices, many packages that contain prescription
drugs prohibited for import are released to the addressee. For example,
packages that contain prescription drugs prohibited for import that have
not been processed by FDA inspectors at the end of each workday are
returned by FDA for delivery by USPS to the recipient. Also,

3See GAO, Internet Pharmacies: Some Pose Safety Risks for Consumers,
GAO-04-820 (Washington, D.C.: June 17, 2004) and GAO, Internet Pharmacies:
Some Pose Safety Risks for Consumers and Are Unreliable in Their Business
Practices, GAO-04-888T (Washington, D.C.: June 17, 2004).

if CBP does not select packages containing prescription drugs for
inspection, the packages can bypass FDA review. In our July 2004
testimony, we stated that FDA officials acknowledged that tens of
thousands of packages, containing drug products that may violate current
laws and pose health risks to consumers, have been released.4 CBP has also
implemented a new policy to expedite its handling of schedule III through
V controlled substances imported as prescription drugs. Until recently,
CBP was required to seize and begin forfeiture proceedings on packages of
such controlled substances it detected-a process CBP considered to be
time-consuming given the volume of controlled substances entering some
facilities. In September 2004, CBP determined it could treat schedule III
through V controlled substances as abandoned property, thereby (1)
reducing the amount of information needed to process the drugs and (2)
enabling CBP to destroy the drugs 30 days after notifying the addressee
that the drugs would be treated as abandoned property if not claimed.
According to CBP officials, treating imported prescription drugs that are
controlled substances as abandoned property has enabled them to process
these packages faster. However, they acknowledge that they do not know the
extent to which the policy is having an effect on the volume of these
drugs entering the country because packages can still bypass inspection.

We identified three factors beyond inspection and interdiction issues that
have complicated federal efforts to enforce laws prohibiting the
importation of prescription drugs for personal use. First, the volume of
importation has strained federal resources at the mail and carrier
facilities. According to officials we contacted, agencies have multiple
priorities, which can constrain the resources they are able to allocate to
the inspection and interdiction of prescription drugs and controlled
substances imported through mail and carrier facilities. Second, the
attributes of Internet pharmacies have posed challenges to law enforcement
efforts for multiple reasons. For example, according to DEA officials,
foreign-based operations operate outside the U.S. regulatory system and
may be located in countries where some drugs, including controlled
substances, are legal; thus, U.S. law enforcement agencies have been
challenged in obtaining assistance from their foreign counterparts in
investigations. Internet sites can also be installed, moved, or removed in
a short period of time, making it difficult for law enforcement agencies
to

4See GAO, Prescription Drugs: Preliminary Observations on Efforts to
Enforce the Prohibitions on Personal Importation, GAO-04-839T (Washington,
D.C.: July 22, 2004).

identify, track, monitor, or shut down those sites that operate illegally.
Additionally, legal and practical considerations can limit the nature and
extent to which commercial firms (e.g., Internet providers and credit card
organizations) can assist in federal law enforcement actions. Third, the
notification process in current law requires FDA to hold packages
containing items that appear unapproved for import and give the addressee
the opportunity to provide evidence of admissibility. FDA officials told
us that this notification process is time-consuming-it can take up to 30
days per import-and can hinder their ability to quickly process packages
containing potentially unapproved prescription drugs. FDA and the
Secretary of Health and Human Services have expressed concerns about this
process during testimony before Congress. Also, in a May 2001
correspondence to the Secretary of HHS, FDA proposed, among other things,
that the notification requirement be eliminated. FDA noted that this
change would likely require legislation, but as of July 2005, according to
an HHS official and FDA officials, the Secretary had not responded with a
legislative proposal to change FDA's notification requirement. FDA
officials said that any legislative change might necessitate consideration
of some complicated issues, including whether the government would want to
forgo an individual's opportunity to provide evidence of admissibility for
the drug(s) they ordered, or what imported prescription drugs and other
imported products within FDA's jurisdiction should be covered by the new
law. In addition, USPS indicated that any discussion of options to
expedite the processing and disposition of prescription drugs should
consider international postal obligations.

CBP has organized a task force to coordinate the activities of federal
agencies responsible for enforcing laws prohibiting the personal
importation of prescription drugs. Among other things, the task force has
performed joint operations to gather data on the type and source of
unapproved drugs entering international mail facilities and developed
public service campaigns to inform the public about the risks of buying
prescription drugs from Internet providers in foreign countries. Although
the task force appears to be a step in the right direction, efforts to
address many of the challenges facing these agencies could be further
enhanced if the task force established a strategic framework to promote
accountability and guide resource and policy decisions. Specifically, the
task force may be missing opportunities to further enhance its efforts
because it has not defined the scope of the problem (i.e., it has not
estimated the volume of imported prescription drugs entering specific
international mail and carrier facilities), established milestones and
performance measures to gauge results, and determined necessary resources
and investments while balancing risk reduction with costs and considering
task force members'

other law enforcement priorities. Our past work has shown that a strategic
framework that includes these key elements, among others, is particularly
useful in addressing problems, such as prescription drug importation, that
are national in scope and involve multiple agencies with varying
jurisdictions. Without such a strategic framework, it will be difficult
for agency officials and congressional decision makers to oversee the
overall federal effort, hold agencies accountable for their individual
efforts, adjust to changing conditions, and ensure consistent and focused
attention to the enforcement of prescription drug importation laws.

To help ensure the government maximizes its ability to enforce laws
governing the personal importation of prescription drugs, we recommend
that the CBP Commissioner, in concert with other agencies responsible for
enforcing these laws, develop and implement a strategic framework that, at
a minimum, includes establishing an approach to more reliably estimate the
volume of prohibited prescription drugs imported through international
mail and carrier facilities; determine resource needs and target resources
based on priorities; establish performance measures and milestones; and
evaluate progress, identify barriers to achieving goals, and suggest
modifications. Also, in view of the FDA's continuing concern about the
statutory notification requirement and its impact on enforcement, we also
recommend that the Secretary of HHS assess the ramifications of removing
or modifying the requirement, report on the results of this assessment,
and, if appropriate, recommend changes to Congress.

DEA and ONDCP generally agreed with our recommendation that the CBP task
force develop a strategic framework. DEA agreed that such a framework
needs to be flexible to allow for changing conditions and said DEA will,
in concert with other task force agencies, support the CBP Commissioner's
strategic framework for the interagency task force. DHS generally agreed
with the contents of our report and said that CBP is convening a task
force meeting to discuss our recommendation.

While generally concurring with our recommendation for a strategic
framework, HHS questioned the need to include an approach for estimating
the volume of unapproved drugs entering the country, because it believed
its current estimates are valid. HHS also said our statement that the task
force agencies could develop statistically valid volume estimates and
realistic risk-based estimates of the number of staff needed to interdict
parcels at mail facilities did not recognize FDA's current level of effort
at these facilities relative to its competing priorities. We believe that
developing more systematic and reliable volume estimates might position

Background

agencies to better define the scope of the problem so that decision makers
can make informed choices about resources, especially in light of
competing priorities. Regarding our recommendation to assess the
ramifications of removing or modifying FDA's statutorily required
notification process, HHS generally agreed and stated that it intended to
pursue an updated assessment.

USPS did not state whether it concurred with our recommendations, but it
noted that discussions of options to expedite the processing and
disposition of prescription drugs must consider international postal
obligations.

All international mail and packages entering the United States through the
U.S. Postal Service and private carriers are subject to potential CBP
inspection at the 14 USPS international mail facilities and 29 express
consignment carrier facilities operated by private carriers located around
the country. CBP inspectors can target certain packages for inspection or
randomly select packages for inspection. CBP inspects for, among other
things, illegally imported controlled substances, contraband, and items-
like personal shipments of noncontrolled prescription drugs-that may be
inadmissible. CBP inspections can include examining the outer envelope of
the package, using X-ray detectors, or opening the package to physically
inspect the contents. Each year the international mail and carrier
facilities process hundreds of millions of pieces of mail and packages.
Among these items are prescription drugs ordered by consumers over the
Internet, the importation of which is prohibited under current law, with
few exceptions.

Two acts-the Federal Food, Drug, and Cosmetic Act and the Controlled
Substances Import and Export Act-specifically regulate the importation of
prescription drugs into the United States. Under the Federal Food, Drug,
and Cosmetic Act, as amended, FDA is responsible for ensuring the safety,
effectiveness, and quality of domestic and imported drugs and may refuse
to admit into the United States any drug that appears to be adulterated,
misbranded, or unapproved for the U.S. market as defined in the act.5
Under the act and implementing regulations, this includes foreign versions
of FDA-approved drugs if, for example, neither the foreign

5An unapproved drug includes one that has not been demonstrated to be safe
and effective and for which the manufacturing facility, methods, and
controls have not been shown to meet FDA standards. Failure to meet other
statutory and regulatory standards relating to labeling, handling, and
packaging may result in a drug being considered adulterated or misbranded.
See 21 U.S.C. S:S: 351, 352, 355.

manufacturing facility nor the manufacturing methods and controls were
reviewed by FDA for compliance with U.S. statutory and regulatory
standards. The act also prohibits reimportation of a prescription drug
manufactured in the United States by anyone other than the original
manufacturer of that drug. According to FDA, prescription drugs imported
by individual consumers typically fall into one of these prohibited
categories. However, FDA has established a policy that allows local FDA
officials to use their discretion to not interdict personal prescription
drug imports that do not contain controlled substances under specified
circumstances, such as importing a small quantity for treatment of a
serious condition, generally not more than a 90-day supply of a drug not
available domestically.6 The importation of prohibited foreign versions of
prescription drugs like Viagra (an erectile dysfunction drug) or Propecia
(a hair loss drug), for example, would not qualify under the personal
importation policy because approved versions are readily available in the
United States.

In addition, the Controlled Substances Import and Export Act, among other
things, generally prohibits personal importation of those prescription
drugs that are controlled substances, such as Valium. (See app. II for a
general description of controlled substances.) Under the act, shipment of
controlled substances to a purchaser in the United States from another
country is only permitted if the purchaser is registered with DEA as an
importer and is in compliance with the Controlled Substances Import and
Export Act and DEA requirements. As outlined in the act, it would be
difficult, if not impossible, for an individual consumer seeking to import
a controlled substance for personal use to meet the standards for
registration and related requirements.7 Figure 1 illustrates the two acts
that

6According to the policy, other conditions should be met as well, such as
(1) provision of the name and address of the doctor licensed in the United
States responsible for the importer's treatment with the product or
evidence that the product is for continuation of treatment begun in a
foreign country and (2) the absence of any known commercialization or
promotion to persons residing in the United States by those involved in
the distribution of the product at issue. Alternatively, in the case of a
drug that is not for a serious condition, the policy also permits FDA
officials to use their discretion to allow importation of that drug if the
intended use is identified and the product is not known to represent a
significant health risk. A complete description of FDA's personal
importation policy can be found in chapter 9 of FDA's Regulatory
Procedures Manual, which is available on the agency's Web site.

7The act and implementing regulations permit an individual traveler under
certain circumstances to carry a personal use quantity of a controlled
substance (except a substance in schedule I) across the U.S. border, but
they do not make a similar exception for importation by mail or private
carrier.

specifically govern the importation of prescription drugs into the United
States. It also presents the roles of FDA, DEA, and CBP in implementing
those acts.

Figure 1: Acts Governing the Personal Importation of Prescription Drugs
into the United States and FDA, DEA, and CBP Roles Implementing Those Acts

Source: GAO analysis of 19 U.S.C. S: 1595a(c); 21 U.S.C. S:S: 381, 956,
957; U.S. Food and Drug Administration, Regulatory Procedures Manual,
chapter 9, subchapter: Coverage of Personal Importations.

CBP is to seize illegally imported controlled substances it detects on
behalf of DEA.8 CBP may take steps to destroy the seized and forfeited
substance or turn the seized substance over to other federal law
enforcement agencies for further investigation.9 CBP is to turn over
packages suspected of containing prescription drugs that are not
controlled substances to FDA.10 FDA investigators may inspect such

8See 19 U.S.C. S: 1595a(c)(1)(B); 19 C.F.R. S:S: 162.23, 145.59, 145.58,
12.36. Controlled substances in schedules I and II are subject to summary
forfeiture without notice, but those in schedule III through V are not.
(See app. II for general description of controlled substances schedules I
through V.)

9See 19 C.F.R. S:S: 162.31, 162.32, 162.45, 162.45a, 162.46, 162.47,
162.63.

10See 21 U.S.C. S: 381(a); 19 C.F.R. S:S: 12.1(a), 145.57; see also
Chapter 9 of FDA's Regulatory Procedures Manual, Subchapter Coverage of
Personal Importations, "Mail Shipments"
http://www.fda.gov/ora/compliance_ref/rpm_new2/ch9pers.html.

packages and hold those that appear to be adulterated, misbranded, or
unapproved, but must notify the addressee and allow that individual the
opportunity to present evidence as to why the drug should be admitted into
the United States.11 If the addressee does not provide evidence that
overcomes the appearance of inadmissibility, then the item is refused
admission and returned to the sender.

Investigations that may arise from CBP and FDA inspections may fall within
the jurisdiction of other federal agencies. DEA, ICE, and FDA
investigators have related law enforcement responsibilities and may engage
in investigations stemming from the discovery of illegally imported
prescription drugs. Although USPS's Inspection Service does not have the
authority, without a federal search warrant, to open packages suspected of
containing illegal drugs, it may collaborate with other federal agencies
in certain investigations. Also, ONDCP is responsible for formulating the
nation's drug control strategy and has general authority for addressing
policy issues concerning the illegal distribution of controlled
substances. ONDCP's authority does not, however, include prescription
drugs that are not controlled substances.

CBP and FDA do not systematically collect data on the volume of
prescription drugs and controlled substances they encounter at the mail
and carrier facilities. On the basis of their own observations and limited
information they obtained at selected mail and carrier facilities, CBP and
FDA officials believe the volume of prescription drug importation into the
United States is substantial and increasing. However, neither agency has
developed reliable estimates of the number of prescription drugs imported
into the country. Further, the available information shows that some
imported prescription drugs can pose safety concerns. We reported in June
2004 that prescription drugs purchased from some foreign-based Internet
pharmacies posed safety risks for consumers. FDA officials said that they
cannot assure the public of the safety and quality of drugs purchased from
foreign sources that are largely outside the U.S. regulatory system. Of
particular concern is the access to highly addictive controlled
substances, which can be imported by consumers of any age sometimes
without a prescription or consultation with a physician.

Volume of Prescription Drug Imports Is Unknown but Believed to Be
Substantial, and the Safety of These Drug Imports Is Not Assured

                   11See 21 U.S.C. S: 381(a); 21 CFR S:1.94.

CBP and FDA Do Not Know the Full Scope of Prohibited Prescription Drug
Importation, but Believe It to Be Substantial

CBP and FDA do not systematically collect data on the volume of
prescription drugs and controlled substances they encounter at the mail
and carrier facilities. Without an accurate estimate of the volume of
importation of prescription drugs, federal agencies cannot determine the
full scope of the importation issue. Yet FDA officials have often
testified regarding the large and steadily increasing volume of packages
containing prohibited prescription drugs entering the United States
through the international mail and carrier facilities. CBP and FDA
officials have said that in recent years they have observed increasingly
more packages containing prescription drugs being imported through the
mail facilities. However, neither agency has complete data to estimate
volume of importation. For example, a CBP official recently testified that
the agency did not have data on the total number of packages containing
imported controlled substances. A CBP official at a mail facility told us
that to determine the total volume of prescription drug importation would
require that the CBP personnel inspect each mail item-which they currently
do not do, in part because mail from certain countries bypasses
inspection- and tally those that were suspected of containing prescription
drugs. This official said that he did not have the resources at his
facility for such an undertaking. In addition, neither CBP nor FDA tracked
the number of packages suspected of containing prescription drugs that
were held for FDA review. FDA officials told us that CBP and FDA currently
have no mechanism for keeping an accurate count of the volume of illegally
imported drugs, because of the large volume of packages arriving daily
through the international mail and carriers. Furthermore, FDA officials
told us that FDA did not routinely track items that contained prescription
drugs potentially prohibited for import that they released and returned
for delivery to the recipient. However, they said that FDA had begun
gathering from the field information on the imported packages it handles,
but as of July 2005, this effort was still being refined.

CBP and FDA, in coordination with other federal agencies, have conducted
special operations to gain insight regarding the volume of imported
prescription drugs entering through selected mail facilities. Generally,
these were onetime, targeted efforts to identify and tally the packages
containing prescription drugs imported through a particular facility
during a certain time period and to generate information for possible
investigation. The limited data collected have shown wide variations in
volume. For example, CBP officials at one mail facility estimated that
approximately 3,300 packages containing prescription drugs entered the
facility in 1 week. CBP officials at another mail facility estimated that
4,300 packages containing prescription drugs entered the facility in 1
day. While these data provide some insight regarding the

number of packages containing prescription drugs at a selected mail
facility during a certain time period, the data are not representative of
other time periods or projectable to other facilities.

Debate continues over the estimated volume of prescription drugs entering
the United States through mail and express carrier facilities. During
congressional hearings over the past 4 years, FDA officials, among others,
have presented estimates of the volume of imported prescription drugs
ranging from 2 million to 20 million packages in a given year. Each
estimate has its limitations; for example, some estimates were
extrapolations from data gathered at a single mail facility. More
recently, a December 2004 HHS report stated that approximately 10 million
packages containing prescription drugs enter the United States-nearly 5
million packages from Canada and another 5 million mail packages from
other countries.12 However, these estimates also have limitations, being
partially based on extrapolations from limited FDA observations at
international mail branch facilities. Specifically, FDA officials told us
that FDA developed its estimate for Canadian drugs entering the country
using (1) IMS Health13 estimates that 12 million prescriptions sold from
Canadian pharmacies were imported into the United States in 200314 and (2)
FDA's experience during special operations at various locations from which
it concluded that there appeared to be about 2.5 prescriptions in each
package. According to FDA officials, the estimate for other countries was
an extrapolation using the estimated 5 million packages from Canada in
conjunction with FDA's observations, likewise made during special
operations, that 50 percent of the mail packages enter from countries
other than Canada.

Safety of Prescription Drug FDA officials have said that they cannot
provide assurance to the public

Imports Is Not Assured 	regarding the safety and quality of drugs
purchased from foreign sources, which are largely outside of their
regulatory system. Additionally, FDA officials said that consumers who
purchase prescription drugs from

12HHS Task Force on Drug Importation, Report on Prescription Drug
Importation, Department of Health and Human Services, December 2004.

13IMS Health is a management consulting firm that provides information to
pharmaceutical and health care industries. It operates in more than 100
countries and receives data from data suppliers around the world.

14FDA officials stated that while IMS's survey of pharmacies was not 100
percent comprehensive, the data were adjusted for the pharmacies not
included in its survey.

foreign-based Internet pharmacies are at risk of not fully knowing the
safety or quality of what they are importing. They further said that while
some consumers may purchase genuine products, others may unknowingly
purchase counterfeit products, expired drugs, or drugs that were
improperly manufactured.

CBP and FDA have done limited analysis of the imported prescription drugs
identified during special operations, and the results have raised
questions about the safety of some of the drugs. For example, during a
special operation in 2003 to identify and assess counterfeit and
potentially unsafe imported drugs at four mail facilities, CBP and FDA
inspected 1,153 packages that contained prescription drugs.15 According to
a CBP report, 1,019, or 88 percent, of the imported drug products were in
violation of the Federal Food, Drug, and Cosmetic Act or the Controlled
Substances Import and Export Act. Some of the drugs were foreign versions
of U.S.approved drugs that are unapproved for import, including Lipitor (a
cholesterol-lowering drug), Viagra, and Propecia. Other drugs never had
FDA approval. For example, Taro-warfarin, an apparent unapproved version
of Warfarin, which is used to prevent blood clotting, was imported from
Canada. The drug raised safety concerns because its potency may vary
depending on how it is manufactured, and it requires careful patient
monitoring because it can cause life-threatening bleeding if not properly
administered. A CBP laboratory analyzed 180 of the 1,153 drugs inspected,
which showed that many of the imported drugs could pose safety risks. The
drugs tested included some that were withdrawn from the U.S. market for
safety reasons, animal drugs not approved for human use, and drugs that
carry risks because they require careful dosing or initial screening. In
addition, other drugs tested were found to contain controlled substances
prohibited for import, and some of the drugs contained no active
ingredients. Figure 2 illustrates the results of the CBP laboratory
analysis.

15According to CBP officials, packages shipped through four mail
facilities were examined over a 3-day period. Approximately 100 parcels
(each of which may have contained multiple drug products) per day per
facility were selected based upon their country of origin and CBP's
historical experience.

Figure 2: Results of CBP's Laboratory Analysis of 180 Imported Drugs

Drugs with no active ingredients Drugs that have contained controlled substances
                             prohibited for import

                              Drugs that were not

                                  FDA approved

                    Source: GAO analysis of CBP information.

In a past review we found that prescription drugs ordered from some
foreign-based Internet pharmacies posed safety risks for consumers.
Specifically, in a June 2004 report, we identified several problems
associated with the handling, FDA approval status, and authenticity of 21
prescription drug samples we purchased from Internet pharmacies located in
several foreign countries-Argentina, Costa Rica, Fiji, Mexico, India,
Pakistan, the Philippines, Spain, Thailand, and Turkey.16 Our work showed
that most of the drugs, all of which we received via consignment carrier
shipment or the U.S. mail, were unapproved for the U.S. market because,
for example, the labeling or the foreign manufacturing facility, methods,
and controls were not reviewed by FDA. Of the 21 samples:

o  	None included dispensing pharmacy labels that provided instructions
for use, and only about one-third included warning information.

o  	Thirteen displayed problems associated with the handling of the drug.
For example, three samples that should have been shipped in a
temperaturecontrolled environment arrived in envelopes without insulation,
and five

16GAO-04-820 and GAO-04-888T.

samples contained tablets enclosed in punctured blister packs, potentially
exposing them to damaging light or moisture.

o  Two were found to be counterfeit versions of the products we ordered.

o  	Two had a significantly different chemical composition than that of
the product we had ordered.

We found fewer problems among 47 samples purchased from U.S. and Canadian
Internet pharmacies. Although most of the drugs obtained from Canada were
of the same chemical composition as that of their U.S. counterparts, most
were unapproved for the U.S. market. We said that it was notable that we
identified numerous problems among the samples we received despite the
relatively small number of drugs we purchased, consistent with problems
that had been recently identified by state and federal regulatory
agencies.

Similarly, during our current review, we observed that some prescription
drugs imported through the mail and carrier facilities were not shipped in
protective packages, including some wrapped in foil or in plastic bags. In
addition to being shipped without containers, the drugs also lacked
product identifications, directions for use, or warning labels. For some
drugs, the origin and contents could not be immediately determined by CBP
or FDA inspection. Figure 3 illustrates an example of drugs that were sent
without labeling.

                     Figure 3: Drugs Sent without Labeling

Source: FDA.

Highly Addictive Controlled Substances Widely Available via the Internet

Federal agencies and professional medical and pharmacy associations have
found that consumers, of any age, can obtain highly addictive controlled
substances from Internet pharmacies, sometimes without a prescription or
consultation with a physician. For example, a DEA official recently
testified that Internet pharmacies that offer to sell controlled
substances directly to consumers without a prescription and without
requiring consultation with a physician can increase the possibility of
addiction, access to counterfeit products, and adverse reactions to
medications. According to the Office of National Drug Control Policy,
Internet pharmacies that offer controlled substances bypass traditional
regulations and established safeguards and expose consumers to potentially
counterfeit, adulterated, and contaminated products. Both DEA and ONDCP
have found that the easy availability of controlled substances directly to
consumers over the Internet has significant implications for public
health, given the opportunities for misuse and abuse of these addictive
drugs.

The American Medical Association recently testified that Internet
pharmacies that offer controlled substances without requiring a
prescription or consultation with a physician contribute to the growing
availability and increased use of addictive drugs for nonmedical purposes.
To demonstrate the ease with which controlled substances can be obtained
via the Internet, the National Association of Boards of Pharmacy received
prescription drugs from four different Internet pharmacies.17 From one of
the Internet pharmacies, the association reported it received a shipment
of Valium-a schedule IV controlled substance used to treat muscle spasm or
anxiety-despite providing no prescription and the height and weight
information for a small dog. The association also reported that 2 days
after it received its shipment of 30 tablets of Xanax-a schedule IV
controlled substance used to treat anxiety-the Internet pharmacy sent
daily refill reminders via electronic mail.

17In December 2003 and January 2004, the association ordered eight
different drugs from five Web sites and received drugs from four of the
sites. All of the drugs received were labeled in a foreign language.

Some Targeted Packages Containing Prescription Drugs Are Interdicted, but
Many Others Are Not

In our July 2004 testimony, we reported that while some targeted packages
were inspected and interdicted, many others either were not inspected and
were released to the addressees or were released after being held for
inspection. At the time, FDA officials said that because they were unable
to process the volume of targeted packages, they released tens of
thousands of packages containing drug products that may violate current
prohibitions and could have posed a health risk to consumers. In August
2004, FDA issued standard operating procedures to prioritize package
selection, package examination, and admissibility determinations. While
the new procedures may encourage uniform practices at the mail facilities,
packages that contain potentially prohibited prescription drugs continue
to be released to the addressee. Recently, CBP also issued a new policy
for processing packages with controlled substances without using
timeconsuming seizure and forfeiture procedures. While the policy may
reduce processing time and encourage the interdiction of more controlled
substances, CBP officials do not know whether the new policy has had an
impact on the volume of prohibited prescription drug importation.

New Procedures Should Encourage Uniform Practices, but They Still Allow
Many Packages Containing Prescription Drugs to Be Released

In our July 2004 testimony, we reported that CBP and FDA officials at
selected mail and carrier facilities used different practices and
procedures to inspect and interdict packages that contain prescription
drugs.18 While each of the facilities we visited targeted packages for
inspection, the basis upon which packages were targeted could vary and was
generally based on several factors, such as the inspector's intuition and
experience, whether the packages originated from suspect countries or
companies, or were shipments to individuals. At that time, CBP officials
told us that the factors could also include intelligence gained from prior
seizures, headquarters, or other field locations. Specifically, officials
at one facility we visited targeted packages on the basis of the country
of origin. At this facility, FDA provided CBP with a list of seven
countries to target, the composition of which changed periodically, and
asked that CBP hold the packages they suspected of containing prescription
drugs from those countries. Typically, CBP officials at this facility
released packages to the addressee containing prescription drugs that were
not from one of the targeted countries.

18See GAO, Prescription Drugs: Preliminary Observations on Efforts to
Enforce the Prohibitions on Personal Importation, GAO-04-839T (Washington,
D.C.: July 22, 2004).

Officials at another facility targeted packages based on whether the
packages were suspected of containing a certain quantity of prescription
drugs. At this facility, CBP officials held packages containing
prescription drugs that appeared to exceed a 90-day supply-a violation of
one of the criteria in FDA's personal importation policy.19 If the package
contained prescription drugs, including in some cases controlled
substances, that appeared to be 90 pills or less, it was typically
released. FDA officials at this facility told us that every week CBP
turned over to FDA hundreds of packages that contained quantities of
prescription drugs that appeared to exceed the 90-day supply. However, the
FDA officials said that they were able to process a total of approximately
20 packages per day and, as a result, returned many of the packages for
release to the addressee. FDA officials explained that 20 packages a day
is an approximation because some packages can take longer than others to
inspect, particularly if the packages contain many different types of
drugs that need to be examined.

According to FDA officials and data, in fiscal year 2004, FDA field
personnel physically inspected approximately 20,800 packages containing
prescription drugs entering the United States through the international
mail facilities.20 Of the packages inspected, FDA's data showed that 98
percent were refused entry and marked returned to sender and the
remaining, about 450, were released to the addressee. The FDA data
indicate the number of packages physically inspected by FDA personnel and
the results of that process; they do not specify the number of individual
prescription drugs or smaller packages of drugs within a larger package.
Most important, these data do not indicate the universe of packages of
prescription drugs coming through the mail facilities.

Figure 4 shows bins containing packages of suspected prescription drugs
being held for FDA review and possible inspection at one mail facility.

19For a description of some of the other criteria in FDA's personal
importation policy, see footnote 6.

20These data are collected in FDA's OASIS database. According to FDA,
information in OASIS is collected as an "entry," which for international
mail usually represents a single package. However, within each package,
there may be more than one drug product.

Figure 4: Bins Containing Packages of Suspected Prescription Drugs Being
Held for FDA Review and Possible Inspection

                  Source: GAO with permission of CBP and FDA.

In August 2004, FDA issued standard operating procedures that, according
to FDA officials, have been adopted nationwide. According to FDA, the
purpose of the new procedures was to "provide a standard operating
environment for the prioritized selection, examination and admissibility
determination of FDA-regulated pharmaceuticals imported into the United
States via international mail." Under the procedures, CBP personnel are to
forward to FDA personnel any mail items, from FDA's national list of
targeted countries and based on local criteria,21 that appear to contain
prescription drugs. The procedures outline how FDA personnel are to
prioritize packages for inspection, inspect the packages, and make
admissibility determinations. Deviations from the procedures must be
requested by facility personnel and approved by FDA management. While the
new procedures should encourage processing uniformity across facilities,
many packages that contain prescription drugs are still released.

21Local criteria can include other targeted countries and additional
intelligence.

Specifically, according to the procedures, all packages forwarded by CBP
but not processed by FDA inspectors at the end of each workday are to be
returned for delivery by USPS to the recipient. However, according to the
procedures, packages considered to represent a significant and immediate
health hazard may be held over to the next day for processing.

CBP and FDA officials at two facilities told us that the new procedures
resulted in an increase in the number of packages CBP personnel refer to
FDA. Officials at one facility estimated that CBP referrals have increased
from approximately 500 to an average of 2,000 packages per day. The FDA
officials noted that the procedures did not resolve the heavy volume of
prescription drug importation or FDA's ability to deal with the volume,
nor were they designed to do so. While the packages that are not targeted
are released without inspection, so are many packages that are targeted
and referred to FDA personnel. At one facility, FDA officials estimated
that each week they return without inspection 9,000 to 10,000 of the
packages referred to them by CBP. They said these packages were given to
USPS officials for delivery to the addressee. If this facility were to
maintain that level of release, about half a million packages per year
would be delivered to addressees.

New Controlled Substances Policy May Improve Interdiction Efforts, but
Impact on Importation Is Unclear

In our July 2004 testimony, we reported that CBP officials were to seize
the illegally imported controlled substances they detected. However, at
that time, some illegally imported controlled substances were not seized
by CBP. For example, CBP officials at one mail facility told us that they
experienced an increased volume of controlled substances and, in several
months, had accumulated a backlog of over 40,700 packages containing
schedule IV substances. To keep the drugs from entering U.S. commerce and
to clear the backlog, a CPB official at the facility said that CBP's
headquarters office granted them permission to send most of the drugs back
to the sender.22 CBP officials at another facility told us that certain
controlled substances were a priority and seized when detected; priority
substances included anabolic steroids (a category of schedule III drugs
that promote muscle growth and potentially boost athletic performance),
and gamma hydroxybutyrate (a schedule I drug that acts as a central
nervous system depressant). At this facility, other controlled substances

22According to a CBP official, most of the drugs returned were schedule IV
controlled substances. They said that a small number of the packages
contained nonscheduled prescription drugs that were referred to FDA. Also,
CBP seized a small number of items that did not have a return address.

encountered that were not a priority and that were shipped in small
amounts, less than a 90-day supply, could be released to the addressee.
CBP officials at another facility we visited turned over packages they
suspected of containing controlled substances in small amounts to FDA for
processing. Neither returning an illegally imported controlled substance
to the sender nor releasing it to the addressee is in accordance with
federal law.

CBP field personnel said they did not have the resources to seize all the
controlled substances they detected. Officials said that the seizure
process can be time-consuming, taking approximately 1 hour for each
package containing controlled substances. According to CBP officials, when
an item is seized, the inspector records the contents of each package-
including the type of drugs and the number of pills or vials in each
package. If the substance is a schedule I or II controlled substance, it
is to be summarily forfeited without notice, after seizure. However, if it
is a schedule III through V controlled substance, CBP officials are to
notify the addressee that the package was seized23 and give the addressee
an opportunity to contest the forfeiture by providing evidence of the
package's admissibility and trying to claim the package at a forfeiture
hearing.24

To address the seizure backlog and give CBP staff more flexibility in
handling controlled substances, in September 2004, CBP implemented a
national policy for processing controlled substances, schedule III through
V, imported through the mail and carrier facilities. According to the
policy, packages containing controlled substances should no longer be
transferred to FDA for disposition, released to the addressee, or returned
to the sender. CBP field personnel are to hold the packages containing
controlled substances in schedules III through V as unclaimed or abandoned
property as an alternative to a seizure.25 According to a CBP headquarters
official, processing a controlled substance as abandoned property is a
less arduous process because it requires less information be

23The seized package could also be submitted to ICE for possible
investigation of the addressee and the sender.

24Since schedule I and schedule II controlled substances are subject to
summary forfeiture without notice, there is no opportunity to contest the
forfeiture of these drugs.

25Under the policy, unless accompanied by a valid DEA Import Permit or DEA
Declaration, schedules I and II controlled substances are to be seized
pursuant to 19 U.S.C S: 1595a(c)(1)(B) and processed in accordance with
established seized asset procedures.

entered into a database than if the same property were to be seized. Once
CBP deems the controlled substance to be unclaimed property, the addressee
is notified that he or she has the option to voluntarily abandon the
package or have the package seized. If the addressee voluntarily abandons
the package or does not respond to the notification letter within 30 days,
the package will be eligible for immediate destruction. If the addressee
chooses to have the package seized, there would be an opportunity to
contest the forfeiture and claim the package, as described above. CBP also
instituted an on-site data collection system at international mail and
express carrier facilities to record schedule III through V controlled
substances interdicted using this new process.26 From September 2004 to
the end of June 2005, CBP reported that a total of approximately 61,700
packages of these substances were interdicted, about 61,500 at
international mail facilities and 200 at express carrier facilities.

Generally, CBP officials we interviewed told us that the recent policy
improved their ability to quickly process the volume of schedule III
through V controlled substances they detected. A CBP official at one
facility said that the abandonment process is faster than the seizure
process, as it requires much less paperwork. A CBP headquarters official
told us that the abandonment process takes an inspector at a mail facility
about 1 minute to process a package. He added that the new policy was
intended to eliminate the backlog of schedule III through V controlled
substances at the facilities. Figure 5 shows schedule III through V
controlled substances that were abandoned during a 1-month period at one
mail facility and awaiting destruction.

26CBP officials emphasized that these data only include schedule III
through V controlled substances interdicted through its new process and do
not include those schedule III through V controlled substances seized.
According to a CBP headquarters official, the number of interdictions made
using the controlled substance policy implemented September 1, 2004,
refers to single packages, because these detentions are almost all
personal use quantities. In contrast CBP seizure data for schedules III,
IV, and V controlled substances are most likely commercial shipments and,
therefore, could include multiple packages.

Figure 5: Abandoned Schedule III through V Controlled Substances Awaiting
Destruction

While the recent policy may have expedited processing, CBP officials in
the field and in headquarters said that they do not know whether the new
policy has had any impact on the volume of controlled substances illegally
entering the country that reach the intended recipient. Generally, CBP
officials do not know the extent of packages that contain controlled
substances that are undetected and released. For example, CBP officials at
one facility told us that they used historical data to determine the
countries that are likely sources for controlled substances and target the
mail from those countries. They do not know the volume of controlled
substances contained in the mail from the nontargeted countries. A CBP
official at another facility said that he believed the volume of
controlled substances imported through the facility had begun to decrease
but had no

data to support this claim. One CBP official at a carrier facility told us
that because the express carrier environment is constantly changing with
new routes, service areas, and increasing freight volume and because
smuggling trends shift in response to past enforcement efforts, he could
not ascertain the quantities of packages containing controlled substances
that are undetected by CBP.

Packages Containing Prescription Drugs Can Bypass FDA Review at the
Carrier Facilities

Packages containing prescription drugs can also bypass FDA inspection at
carrier facilities because of inaccurate information about the contents of
the package. Unlike packages at mail facilities, packages arriving at
carrier facilities we visited are preceded by manifests, which provide
information from the shipper, including a description of the packages'
contents. While the shipments are en route, CBP and FDA officials are to
review this information electronically and select packages they would like
to inspect when the shipment arrives.27 FDA officials at two carrier
facilities we visited told us they review the information for packages
described as prescription drugs or with a related term, such as
pharmaceuticals or medicine. CBP and FDA officials told us that there are
no assurances that the shipper's description of the contents is accurate.
The FDA officials at the carrier facilities we visited told us that if a
package contains a prescription drug but is inaccurately described, it
would not likely be inspected by FDA personnel.

27According to FDA officials, express carrier facility personnel
electronically enter information into a CBP database that automatically
transfers relevant data to FDA's OASIS database. For carrier facilities,
FDA said that a data entry is an accounting vehicle that represents all
products within a shipment. However, importers have the option to report a
single shipment as more than one entry. For fiscal year 2004,
approximately 45,000 shipments containing prescription drugs entering the
United States were reported by express carrier facilities and recorded in
OASIS. FDA officials said that FDA field personnel primarily reviewed this
information electronically but physically inspected some packages, with
the number physically inspected varying by facility. Approximately 2,000
were refused entry by FDA after physical inspection and marked return to
sender. Almost 43,000 were released to the addressee, usually after
electronic review. However, FDA officials noted that the information on
prescription drugs entered into OASIS at express carrier facilities could
vary by carrier, site for the same carrier, CBP local criteria at a site,
or local arrangements between FDA and CBP. Accordingly, it is difficult to
determine from these data the proportion imported for personal use. Most
important, these data do not indicate the universe of shipments of
prescription drugs coming through the express carrier facilities.

According to FDA officials, FDA field personnel are not continually
on-site at the two carrier facilities we visited. At the FDA field office
that has responsibility for inspecting packages at one carrier facility,
we observed FDA field personnel reviewing electronic information regarding
packages that were en route to the carrier facility. The official said
that the field office has electronic information regarding an average of
400 packages per day available for review. If the shipper does not provide
enough information about its package, FDA field personnel can request that
the carrier detain the package until more information is provided
electronically or until the FDA personnel can visit the facility to
conduct a physical inspection of the package. The number of physical
inspections at the facilities we visited varied depending on the number of
packages electronically reviewed. FDA field personnel, responsible for
inspection at the other carrier facility, reported that in September 2004
they electronically requested that an average of 20 packages per day be
held at the facility for a physical inspection. However, on occasion when
the FDA personnel went to the facility to conduct the inspection, the
packages were unavailable because they could not be found, had been
delivered to the recipient by the carrier, or had been returned to the
shipper. According to FDA headquarters officials, since our visit, FDA
field personnel may now be visiting the carrier facility on a more routine
basis.

In contrast, CBP inspectors are located on-site at the carrier facilities
we visited. As a result, CBP personnel are able to inspect packages upon
arrival of the shipment. In addition, according to CBP officials at the
facility, CBP's on-site presence allows the inspectors to conduct random
inspections, on a routine basis, of packages as they are processed at the
facility. Instead of relying solely on the information provided by the
shipper, CBP personnel said they conduct random inspections, on a daily
basis, as another means to identify items that may be unapproved for
import. CBP officials told us that they conduct these inspections because
the shipper's information can be inaccurate. During our visit we observed
the CBP personnel randomly inspect several hundred packages selected.
During these random inspections, CBP inspectors told us that they often
come across packages containing noncontrolled prescription drugs, which
they will set aside for FDA inspectors. For example, during a random
inspection, CBP officials found and held for FDA 13 packages containing a
human growth hormone-prohibited from import-that were inaccurately
described as glassware. In contrast, according to FDA field personnel with
inspection responsibility at the two carrier facilities we visited, few
random inspections of packages were performed and when they occurred they
were typically part of a special operation. For example, an FDA field

official told us that FDA personnel planned to perform one random
inspection effort per year.

CBP officials told us that they would like to have FDA personnel on-site
to improve coordination efforts. One CBP Port Director said that he would
like to have FDA personnel on-site to share data, perform analysis to
identify trends from CBP's referrals, and be available to immediately
review prescription drugs. A CBP headquarters official also said that it
would be helpful if FDA personnel were on-site to enable CBP officials to
confer with them to identify controlled substances that are not clearly
labeled. FDA officials told us that because FDA personnel review
information regarding the packages electronically, there was no advantage
to being physically on-site. Further, they said the responsible district
can supply personnel to physically work at a given carrier facility for
field examinations on an as-needed basis. FDA officials also noted that
FDA is not reimbursed by the carriers to maintain staff on-site. By
contrast, private express carriers reimburse the federal government for
the personnel and equipment costs of the CBP staff located on-site. FDA
officials said that there is not a provision under current law that would
enable carriers to reimburse FDA so that it could maintain an on-site
presence.

We identified three factors beyond inspection and interdiction that have
complicated federal efforts to enforce the prohibitions on prescription
drugs imported for personal use: (1) the volume of importation has
strained limited federal resources; (2) Internet pharmacies, particularly
foreign-based sites, can operate outside of the U.S. regulatory system for
noncontrolled and controlled prescription drugs and can evade federal law
enforcement actions; and (3) current law requires that FDA notify
addressees that their packages have been detained because they appear
unapproved for import and give them the opportunity to provide
admissibility evidence regarding their imported items.

Factors beyond Inspection and Interdiction Complicate Efforts to Enforce
the Prohibitions on Personal Importation of Prescription Drugs

Volume of Imports Can The current volume of prescription drug imports,
coupled with competing

Strain Federal Resources 	agency priorities, has strained federal
inspection and interdiction resources allocated to the mail facilities.
CBP and FDA officials told us that the increased incidence of American
consumers ordering drugs over the Internet in recent years has
significantly contributed to the increase in imports through the
international mail. CBP officials said that they are able to inspect only
a fraction of the large number of mail and packages

shipped internationally. In 2004, FDA testified that each day thousands of
individual packages containing prescription drugs are imported illegally
into the United States. FDA officials have said that the large volume of
imports has overwhelmed the resources they have allocated to the mail
facilities. Officials add that they have little assurance that the
available field personnel are able to inspect all the packages containing
prescription drugs illegally imported for personal use through the mail.

Agencies have multiple priorities, which can affect the resources they are
able to allocate to the mail and carrier facilities. For example, FDA has
multiple areas of responsibility, which include, among other things,
regulating new drug product approvals, the labeling and manufacturing
standards for existing drug products, and the safety of a majority of food
commodities and cosmetics, which, according to FDA officials, all go to
FDA's mission of protecting the public health while facilitating the flow
of legitimate trade. CBP's primary mission is preventing terrorists and
terrorist weapons from entering the United States while also facilitating
the flow of legitimate trade and travel. FDA and CBP personnel operate in
multiple venues, such as land border crossings and seaports. DEA's
multiple priorities include interdicting illicit drugs such as heroin or
cocaine, investigating doctors and prescription forgers, and pursuing
hijackings of drug shipments. DEA officials told us that they have limited
resources and often have to balance efforts to address prescription drug
importation with their other priorities.

The Medicare Prescription Drug, Improvement, and Modernization Act of 2003
required the HHS Secretary to conduct a study on the importation of drugs
that included a review of the adequacy of federal agency resources to
inspect and interdict drugs unapproved for import.28 The report, issued in
2004, states that substantial resources are needed to prevent the
increasing volume of packages containing small quantities of drugs from
entering the country. The Secretary found that despite agency efforts,
including those with CBP, FDA currently does not have sufficient resources
to ensure adequate inspection of the current volume of personal shipments
of prescription drugs entering the United States.

28The Medicare Prescription Drug, Improvement, and Modernization Act of
2003 directed the Secretary of Health and Human Services, in consultation
with appropriate government agencies, to conduct a study of the
importation of drugs into the United States and submit a report to
Congress. Pub. L. No. 108-173, S: 1122, 117 Stat. 2066, 2469 (2003).

CBP is also in the early stages of assessing the resources it needs at the
mail facilities to address the volume of controlled substance imports.
However, CBP officials admit that an assessment of resource needs is
difficult because they do not know the scope of the problem and the impact
of the new procedures. A CBP official told us that CBP has a statistician
working on developing estimates on the volume of drugs entering mail
facilities; however, he was uncertain whether this effort would be
successful or useful for allocating resources. Likewise, in March 2005,
FDA officials told us that they had begun to gather from the field
information on the imported packages it handles, such as the number of
packages held, reviewed, and forwarded for further investigation. However,
as of July 2005, they could not provide any data because, according to the
officials, this effort was new and still being refined.

Internet Pharmacies Challenge Law Enforcement Efforts

Internet pharmacies, particularly foreign-based sites, which operate
outside the U.S. regulatory system, pose a challenge for regulators and
law enforcement agencies. In our 2004 report, we described how
traditionally, in the United States, the practice of pharmacy is regulated
by state boards of pharmacy, which license pharmacists and pharmacies and
establish and enforce standards. To legally dispense a prescription drug,
a licensed pharmacist working in a licensed pharmacy must be presented a
valid prescription from a licensed health care professional. The
requirement that drugs be prescribed and dispensed by licensed
professionals helps ensure patients receive the proper dose, take the
medication correctly, and are informed about warnings, side effects, and
other important information about the drug. However, the Internet allows
online pharmacies and physicians to anonymously reach across state and
national borders to prescribe, sell, and dispense prescription drugs
without complying with state requirements or federal regulations regarding
imports. Recently, FDA officials have testified that inadequately
regulated foreign Internet sites have become portals for unsafe and
illegal prescription drugs. FDA officials state that if a consumer has an
adverse drug reaction or other problem, he or she may have little to no
recourse because the operator of the pharmacy is often not known and FDA
has limited authority to take action against foreign operators.

The nature of the Internet has challenged U.S. law enforcement agencies
investigating Internet pharmacies, particularly foreign-based sites.
Internet sites can easily be installed, moved, or removed in a short
period of time. FDA officials said that one Internet site can be composed
of multiple related sites and links, thereby making their investigations
complex and resource intensive. This fluidity makes it difficult for law
enforcement

agencies to identify, track, monitor, or shut down those sites that
operate illegally. Further, FDA officials said that some Internet
pharmacies do not disclose enough information on their Web sites to allow
consumers to determine if the drugs they purchased were approved in the
United States and dispensed according to state and federal laws. Some
Internet pharmacies also do not disclose enough or accurate information
regarding the source of the drugs they offer. An Internet pharmacy can
claim that the drugs they offer originate in one country, but the drugs
may actually be manufactured in another country. Similarly, the anonymous
nature of the Internet allows consumers of any age to obtain drugs without
a legitimate medical need.

According to FDA, when the Internet is used for an illegal sale of
prescription drugs, to conduct an investigation they may need to work with
the Department of Justice to establish grounds for a case, develop
charges, and take action as they would if another sales medium, such as a
store or magazine, had been used. Investigations can be more difficult
when they involve foreign-based Internet sites, whose operators are
outside of U.S. boundaries and may be in countries that have different
drug approval and marketing approaches than the United States has. For
example, according to DEA officials, drug laws and regulations regarding
controlled substances vary widely by country. DEA officials told us their
enforcement efforts with regard to imported controlled substances are
hampered by the different drug laws in foreign countries. Internet
pharmacy sites can be based in countries where the marketing and
distribution of certain controlled substances are legal. Steroids, for
example, sold over the Internet may be legal in the foreign country in
which the online pharmacy is located.

Federal agencies can face challenges when working with foreign governments
to share information or develop mechanisms for cooperative law
enforcement. For example, FDA officials have testified that they possess
limited investigatory jurisdiction over sellers in foreign countries and
have had difficulty enforcing the law prohibiting prescription drug
importation when foreign sellers are involved. A DEA official told us that
the agency introduced a resolution at the March 2004 International
Narcotics Control Board conference in Vienna, Austria, to encourage member
states to work cooperatively on Internet pharmacy issues. However, the DEA
official told us that it was difficult to convince some foreign
governments that the illegal sales of prescription drugs over the Internet
is a global problem and not restricted to the United States.

FDA and DEA officials told us that they work with commercial firms,
including express carriers, credit card organizations, Internet providers,
and online businesses to obtain information to investigate foreign
pharmacies, but these investigations are complicated by legal and
practical considerations. FDA and DEA officials said that the companies
have been willing to work with government agencies to stop transactions
involving prescription drugs prohibited from import, and some have alerted
federal officials when suspicious activity is detected. However, officials
also identified current legal and practical considerations that
complicated obtaining information from organizations, such as credit card
organizations. These considerations included privacy laws; federal law
enforcement agencies' respective subpoena authority, priorities, and
jurisdictions; and the ease with which merchants engaged in illegal
activity can enter into a new contract with a different bank to use the
same payment system.

For example, privacy laws sometimes limit the extent to which companies
(e.g., credit card organizations) will provide information to federal
agencies about parties to a transaction. According to FDA, DEA, and ICE
officials, credit card organizations29 and banks and other financial
institutions30 that issue credit cards will not provide to the agencies

information about the parties involved in the transaction without a
subpoena. Representatives from the credit card companies we contacted
explained that these issues generally are resolved if the agency issues a
properly authorized subpoena for the desired information.31 (See app. III
for information on federal enforcement agencies' work with credit card
organizations to enforce prohibitions on prescription drug importation.)

29Two types of credit card organizations handle the four major U.S. credit
cards. Credit card associations, such as Visa and MasterCard, license
their member banks to issue bank cards, authorize merchants to accept
those cards, or both. In contrast, full-service credit card companies,
such as American Express and Discover, issue their own brands of cards
directly to customers and authorize merchants to accept those cards. See
also GAO, Money Laundering: Extent of Money Laundering through Credit
Cards Is Unknown, GAO-02-670 (Washington, D.C.: July 22, 2002), and
Internet Gambling: An Overview of the Issues, GAO-03-89 (Washington, D.C.:
December 2, 2002).

30When banks and financial institutions, rather than the credit card
company, have the direct relationship with the merchants and credit
cardholders, the former are the primary source of transactional
information needed for law enforcement purposes.

31According to a DEA official, the majority of Internet drug sites used
the payment systems of the two associations we contacted.

Notification Process Challenges Enforcement Efforts

FDA headquarters officials said that packages that contain prescription
drugs for personal use that appear to be prohibited from import pose a
challenge to their enforcement efforts because these packages cannot be
automatically refused. Before any imported item is refused, the current
law requires FDA to notify the owner or consignee that the item has been
held because it appears to be prohibited and give the product's owner or
consignee an opportunity to submit evidence of admissibility. If the
recipient does not respond or does not present enough evidence to overcome
the appearance of inadmissibility, then the item can be returned to the
sender, or in some cases destroyed.

FDA officials told us that this requirement applies to all drug imports
that are held under section 801(a) of the Federal Food, Drug, and Cosmetic
Act. Nonetheless, they said that they believe this notification process is
time consuming because each package must be itemized and entered into a
database; a letter must be written to each addressee; and the product must
be stored. The process can take up to 30 days per import-and can hinder
their ability to quickly process packages containing prescription drugs
prohibited from import. According to FDA investigators, in most instances,
the addressee does not present evidence to support the drugs'
admissibility, and the drugs are ultimately provided to CBP or the U.S.
Postal Service for return to sender. FDA headquarters officials told us
that the Standard Operating Procedures, introduced in August 2004 and
discussed earlier in this report, were an attempt to help FDA address the
burden associated with the notification process because it was designed to
focus resources on packages containing drugs considered to be among the
highest risk.

FDA concerns about the notification process are not new. In testimony
before Congress, FDA and the Secretary of HHS raised concerns about the
notification process, noting that it is time-consuming and resource
intensive. However, FDA's testimony did not propose any legislative
changes to address the concerns it identified. In May 2001, FDA's Acting
Principal Deputy Commissioner wrote a memorandum to the Secretary of HHS
expressing concern about the growing number of drugs imported for personal
use and the dangers they posed to public health. The memorandum explained
that because of the notice and opportunity to respond requirements,
detaining and refusing entry of mail parcels was resource intensive. The
Acting Principal Deputy Commissioner proposed, among other things, the
removal of the requirement that FDA issue a notice before it could refuse
and return personal use quantities of FDAregulated products that appear
violative of the Food, Drug, and Cosmetic Act. He noted that removal of
the notification requirement would likely

require legislation, but without this change, FDA could not effectively
prohibit mail importation for personal use.

As of July 2005, according to FDA officials and an HHS official, the
Secretary had not responded with a specific legislative proposal to change
FDA's notification requirement. FDA officials said that there are some
complicating issues associated with eliminating the notification
requirement. For example, they said that one of the arguments against
eliminating the notification requirement is the importance of providing
due process, which basically gives individuals the opportunity to present
their case as to why they should be entitled to receive the property, in
this case prescription drugs that they ordered from a foreign source.
Another is to what extent the law should be changed to cover all imported
prescription drugs and other products. In addition, USPS indicated that
any discussion of options to expedite the processing and disposition of
prescription drugs must consider international postal obligations,
specifically the requirements of the Universal Postal Union (UPU).32 FDA
officials said that currently, the notification requirement also applies
to large commercial quantities of prescription drugs and other
nonpharmaceutical products for which the requirement is not a problem.
They said it has become a burden only because FDA and CBP are overwhelmed
with a large volume of small packages.

FDA officials said that they have considered other options for dealing
with this issue, such as summarily returning each package to the sender
without going through the process. However, they said that the law would
likely need to be changed to allow this, and, as with the current process,
packages that are returned to the sender could, in turn, be sent back by
the original sender to go through the process again. They said that
another option might be destruction, but they were uncertain whether they
had the authority to destroy drugs FDA intercepts; they indicated that the
authority might more likely lie with CBP. Regardless, FDA officials said
that whatever approach was adopted, FDA might continue to encounter a
resource issue because field personnel would still need to open and

32UPU is a specialized agency of the United Nations governing
international postal services. According to the USPS, the Universal Postal
Convention establishes a general rule that undeliverable items are to be
returned to sender. UPU regulations provide that where an item can neither
be delivered to the addressee nor returned to the sender, the Postal
Service must notify the postal administration of origin of how the item
was dealt with, including indicating the prohibition under which the item
falls. USPS noted that this is particularly important with respect to
registered or insured mail for which the Postal Service can be held
financially responsible if it is not delivered or returned.

Federal Efforts to Coordinate Law Enforcement Activities Could Benefit
from a Strategic Framework

examine packages to ascertain whether they contained unapproved
prescription drugs.

Federal agencies have been taking steps to address Internet sales of
prescription drugs since 1999, but these efforts have not positioned them
to successfully prevent the influx of prescription drugs that are being
imported through foreign pharmacies. CBP has recently organized a task
force to coordinate federal efforts related to prescription drugs imported
for personal use. This task force appears to be a step in the right
direction. However, its efforts could be further enhanced if the task
force established a strategic framework to promote accountability and
guide resource and policy decisions. In January 2004, CBP organized an
interagency task force to address various issues associated with
unapproved prescription drugs entering the United States from foreign
countries. Although CBP, FDA, ONDCP, DEA, and ICE appear to be working
together to address these very complex issues, their efforts could be
enhanced by a strategic framework that guides resource and policy
decisions and promotes accountability. Such a framework that establishes
measurable, quantifiable goals and strategies for achieving these goals,
including a determination of resources needed to achieve the goals, would
enhance the ability of agency officials and congressional decision makers
to ensure accountability and consistent and focused attention to enforcing
the prohibitions on personal importation.

Congress enacted the Government Performance and Results Act of 1993 to
have agencies focus on the performance and results of programs, rather
than on program resources and activities. The principles of the act
include (1) establishing measurable goals and related measures, (2)
developing strategies for achieving results, and (3) identifying the
resources that will be required to achieve the goals. The act does not
require agencies to use these principles for individual programs, but our
work related to the act and the experience of leading organizations have
shown that a strategic approach or framework is a starting point and basic
underpinning for performance-based management-a means to strengthen
program performance. A strategic framework can serve as a basis for
guiding operations and help policy makers, including congressional
decision makers and agency officials, make decisions about programs and
activities.

Our work has also shown that a strategic framework can be useful in
providing accountability and guiding resource and policy decisions,
particularly in relation to issues that are national in scope and cross

agency jurisdictions, such as prescription drug importation.33 When
multiple agencies are working to address aspects of the same problem,
there is a risk that overlap and fragmentation among programs can waste
scarce funds, confuse and frustrate program customers, and limit overall
program effectiveness.34 Use of a strategic framework may help mitigate
this risk.

Federal Agencies Have Recently Begun to Coordinate Efforts to Focus on
Prescription Drugs Imported for Personal Use

Since 1999, federal law enforcement and regulatory agencies have organized
various task forces and working groups to address issues associated with
purchasing prescription drugs over the Internet; however, recent efforts
have begun to focus particular attention on imported prescription drugs.
For example, according to an FDA official, many of FDA's efforts, started
in 1999, focused on Internet pharmaceutical sales by illicit domestic
pharmacies and the risks associated with purchasing those drugs, rather
than drugs that are being imported from foreign countries. This official
said that although FDA had established working groups and advanced media
campaigns to address problems associated with drugs purchased over the
Internet from domestic sources, imported drugs have added a new dimension
that was only incidentally recognized during efforts begun in 1999. He
said that the plans developed by FDA in 1999 are still viable as far as
domestic sales are concerned, but they have not been refocused to reflect
concerns about imported prescriptions and did not position federal law
enforcement agencies to anticipate the increased volume of drugs that are
imported by individuals.

More recent efforts have focused on prescription drugs entering
international mail and express carrier facilities. In January 2004, the
CBP Commissioner initiated an interagency task force on pharmaceuticals,
composed of representatives from CBP, FDA, DEA, ICE, and ONDCP as well as
legal counsel from the Department of Justice. According to the
Commissioner, the proposal to create the task force was prompted by
"intense public debate and congressional scrutiny, which has resulted in
increasing pressure being applied to regulatory and law enforcement
agencies to develop consistent, fair policies" to address illegal

33GAO, Combating Terrorism: Evaluation of Selected Characteristics in
National Strategies Related to Terrorism, GAO-04-408T (Washington, D.C.:
February 2004).

34GAO, Agencies Annual Performance Plans under the Results Act: An
Assessment Guide to Facilitate Congressional Decisionmaking,
GAO/GGD/AIMD-10.1.18 (Washington D.C.: February 1998).

pharmaceuticals entering the United States. The Commissioner proposed that
the task force achieve five specific goals, and according to a CBP
official, five working groups were established to achieve these goals.
Figure 6 shows the task force goals, the five working groups, and the
goals of each working group.

    Figure 6: Interagency Pharmaceutical Task Force and Working Group Goals

Source: GAO analysis of CBP documents.

A CBP official told us that the task force is designed to foster
cooperation among the agencies responsible for enforcing the laws
governing prescription drugs imported for personal use. The task force was
created to go beyond interdiction at the mail and carrier facilities. The
official also said that the task force was fashioned to deal with supply
and demand issues, thereby reducing the volume of drugs entering these
facilities. For example, on the demand side, the public awareness working
group is responsible for conveying information about the health and safety
risks of imported prescription drugs, and on the supply side, the working
cooperatively with industry group is responsible for, among other things,

ways of identifying rogue Internet sites. CBP officials and other members
of the task force provided examples of activities being carried out or
planned by task force working groups that are discussed below.

o  	The working group on mail and express consignment operator facilities
procedures has carried out special operations at five international mail
and three express carrier facilities to examine parcels suspected of
containing prohibited prescription drugs over specific periods of time,
such as 2 or 3 days. While similar operations have occurred since 2000, a
CBP official told us that those conducted under the task force are
multiagency efforts. Among other things, task force members gather data
about the source, type, and recipients of the drugs and test the contents
of the parcels to determine whether they are counterfeit or otherwise
prohibited. These operations are expected to continue during the remainder
of 2005 at all of the remaining mail facilities and some of the carrier
facilities.

o  	The working group on targeting/data research is using the results of
special operations to analyze data retrieved during the special operations
and determine how these data can be used to guide future operations and
enforcement efforts. Also, ICE was working with CBP and the government of
an Asian country to identify and track controlled substances destined for
the United States. ICE plans to use this approach to identify and take
possible law enforcement action against illegal enterprises.

o  	The working group on increasing public awareness has been developing
and disseminating public service announcements on the risks associated
with purchasing drugs over the Internet. The working group has placed
public service announcements on the FDA and CBP Web sites and is
coordinating with FDA on its efforts, ongoing since 1999, to disseminate
similar material in magazines, online, and in pharmacies. Also, the
working group has entered into an agreement with a major Internet service
provider and others to have a public service announcement link on screen
when someone tries to access online pharmacy sites.

o  	The working group on working cooperatively with industry has met with
Internet businesses, such Internet service providers and companies that
operate search engines, to discuss how task force members can work with
Internet businesses to stem the flow of imported drugs coming into the
country, including discussing standards for identifying legitimate Web
sites. It has also met with representatives of express carriers and plans
to meet with representatives of credit card organizations in late summer
2005.

In addition, task force members are working with ONDCP to address the
importation of controlled substances through international mail and
carrier facilities. In October 2004, ONDCP issued a plan for addressing
demand and trafficking issues associated with certain man-made controlled
substances-such as pain relievers, tranquilizers, and sedatives.35 Among
other things, ONDCP recommended that DEA, CBP, ICE, State Department,
National Drug Intelligence Center, and FDA work with USPS and private
express mail delivery services to target illegal mail order sales of
chemical precursors, synthetic drugs, and pharmaceuticals, both
domestically and internationally. ONDCP officials said that a multiagency
working group is meeting to discuss what can be done to confiscate these
controlled substances before they enter the country. An ONDCP official
said that participants at these meetings included officials from CBP,
USPS, and DEA.

Finally, USPS is exploring what additional steps it can take to further
help the task force. Although USPS has participated in task force
activities, USPS officials said USPS is concerned about a conflict between
its mission to keep the mail moving and whether it is positioned to
determine the admissibility of mail. USPS officials said that they
proposed, during a July 2004 hearing, the possibility of cross-designating
U.S. Postal Inspectors with Customs' authority so that Postal Inspectors
can conduct warrant-less searches, at the border, of incoming parcels or
letters suspected of containing illegal drugs. According to USPS
officials, such authority would facilitate interagency investigations.
They said that their proposal has yet to be finalized with CBP. In
addition, internationally, USPS has drafted proposed changes to the U.S.
listing in the Universal Postal Union List of Prohibited Articles.36 A
U.S. Postal Service official told us that USPS is awaiting a response to a
letter it sent to FDA last year requesting FDA's views on the proposed
changes. The official said that, without FDA input, USPS does not have the
expertise to determine

35ONDCP, National Synthetic Drugs Action Plan: The Federal Government
Response to the Production, Trafficking, and Abuse of Synthetic Drugs and
Diverted Pharmaceutical Products (Washington D.C.; October 2004).
According to ONDCP, the Action Plan is to provide a blueprint for action
under the President's National Drug Control Strategy and "focuses
primarily on illicitly manufactured synthetic drugs which are not of
primarily organic origin" and "selected pharmaceutical products which are
sometimes diverted from legitimate commerce."

36The Universal Postal Union List of Prohibited Articles is a listing of
articles prohibited for importation into the United States, as well as
other member countries of the UPU. The listing is shared with foreign
postal administrations to enable them to educate their customers on
country prohibitions for international mail.

whether the proposed changes are accurate. In August 2005, FDA officials
said that after receiving the letter last year, they met with USPS
officials regarding drug importation, including this proposal. However,
according to FDA officials, USPS had not subsequently engaged FDA on this
particular issue, and FDA did not believe USPS was awaiting a formal
written response. FDA officials stated that if USPS would like to discuss
this matter further, they would be happy to work with USPS.

Strategic Framework Would Further Enhance Task Force Efforts

Although the task force has taken positive steps toward addressing issues
associated with enforcing the laws on personal imports, it has not fully
developed a strategic framework that would allow the task force to address
many of the challenges we identify in this report. Carrying out
enforcement efforts that involve multiple agencies with varying
jurisdictions is not an easy task, especially since agencies have limited
resources and often conflicting priorities. The challenges identified in
this report could be more effectively addressed by using a strategic
framework that more clearly defines the scope of the problem by estimating
the volume of drugs entering international mail and carrier facilities,
establishes milestones and performance measures, determines resources and
investments needed to address the flow of imported drugs entering the
facilities and where those resources and investments should be targeted,
and evaluates progress.

Our review showed that the task force has already begun to establish some
elements of a strategic framework, but not others. For example:

o  	In light of the Commissioner's January 2004 memo discussed earlier,
the task force has a clear picture about its purpose and why it was
created. However, it has not defined the scope of the problem it is trying
to address because, as discussed earlier, CBP and FDA have yet to develop
a way to estimate the volume of imported prescription drugs entering
specific international mail and carrier facilities. Without doing so, it
is difficult to assess what resources are necessary to effectively inspect
parcels and interdict those that contain unapproved drugs.

o  	Whereas the task force and individual working groups have goals that
state what they are trying to achieve, the task force has not established
milestones and performance measures to gauge results. A CBP official said
that the goals are intended to be guidelines rather than goals to be
measured; he would expect progress or results to be measured within the
context of strategic plans prepared by individual agencies. However,
without task force-specific milestones and performance measures, it is
difficult to measure improvement over time and ensure accountability,

particularly if the goals and measures of individual task force members do
not directly address, or are not in harmony with, the goals of the task
force.

o  	The task force has not addressed the issue of what its efforts will
cost so that it can target resources and investments, balancing risk
reduction with costs and considering task force members' other law
enforcement priorities. Instead, according to a CBP official, working
group projects are done on an ad hoc basis wherein resources are
designated for specific operations. Nonetheless, the absence of cost and
resource assessments makes effective implementation harder to achieve
because over time, alternative agency priorities and resource constraints
may hinder the ability of the task force to meet its goals.

We acknowledge that such a strategic framework needs to be flexible to
allow for changing conditions, but it could be helpful to organize it in a
logical flow, from conception to implementation. Specifically, the
strategy's purpose leads to definition of the problems and risks it
intends to address, which in turn leads to specific actions for tackling
those problems and risks, allocating and managing appropriate resources,
identifying different organizations' roles and responsibilities, and
finally integrating action among all the relevant parties and implementing
the strategy.

Advancing a strategic framework could establish a mechanism for
accountability and oversight and set the stage for defining specific
activities needed to achieve results and specific performance measures for
monitoring and reporting on progress. In so doing, task force officials
could measure progress over time, identify new and emerging barriers or
obstacles to carrying out goals and objectives, develop strategies to
overcome them, and inform decision makers about the implications of taking
or not taking specific actions. For example, CBP, FDA, and the other
agencies could work jointly to develop statistically valid estimates of
the number of parcels suspected of containing imported prescription drugs
entering particular facilities and begin to develop realistic risk-based
estimates of the number of CBP and FDA staff needed to interdict parcels
at mail facilities.

Task force members could also take steps to explore how they can work more
collaboratively and strategically with private organizations, such as
credit card organizations and express carriers. In doing so, task force
members and representatives of these organizations could examine what can
be done within the context of current law and establish strategies and

goals for overcoming any practical considerations that act as barriers to
enforcing the prohibition on imported pharmaceuticals, including
controlled substances. They could also identify any legislative barriers
they face in aggressively enforcing the prohibition and work together to
develop legislative proposals aimed at stemming the flow of imported
prescription drugs into the country.

In addition, agencies could work collaboratively among themselves to
examine the resources and investments needed to address particular
strategies. Any effort to implement task force objectives would require
sustained high-level leadership and commitment to ensure that resources
are available to carry out task force goals, commensurate with the goals
and priorities of the individual agencies involved with the task force.
According to a CBP official involved in the task force, agencies have made
a high-level commitment to supporting the task force. Nonetheless, in the
absence of a strategic framework and, in particular, measurable goals and
milestones, there is little assurance that this commitment will continue
as the goals and priorities of individual agencies change.

A strategic framework could also enable the task force to adjust to
changing conditions. As mentioned earlier, FDA had developed plans and
initiated steps in 1999 to deal with Internet sales of prescription drugs,
but most of those efforts focused on domestic sales. However, plans to
address Internet sales had not been refocused to reflect prescriptions
imported from foreign countries for personal use, partly because FDA and
other agencies did not anticipate that the volume of imported drugs would
overwhelm available resources. A strategic framework, with ongoing problem
definition and risk assessment, might help task force members, including
FDA and others to identify the impact of this emerging threat and give the
task force members the opportunity to adjust their enforcement strategies
to address the threat on a proactive, rather than a reactive, basis. It
also might help them consider interrelationships between the enforcement
strategies and priorities of the task force and their own strategies and
priorities.

Furthermore, a strategic framework could help agencies adjust to potential
changes in the law governing the importation of prescription drugs for
personal use. During recent sessions of Congress, members introduced a
number of bills that could have changed how personal prescription drug
imports were treated under the law. Some proposals would have allowed
importation of selected prescription drugs under certain conditions, for
example, allowing importation from certain countries, such as Canada.
Another proposal would have maintained the

Conclusions

current prohibitions, but would have allowed for expedited disposal of
illegally imported prescription drugs, such as controlled substances
available by prescription. Those bills that would have allowed some
personal importation also included provisions for expediting the process
of disposing of those drugs that still may not be imported for personal
use. Although none of these changes were adopted, continued congressional
interest could prompt changes in the future. If that occurred, a strategic
framework could better position agencies to adjust to any changes;
identify any new threats or vulnerabilities; and redefine strategies,
roles, and responsibilities.

Enforcing the laws governing prescription drug imports for personal use is
a complex undertaking that involves multiple agencies with various
jurisdictions and differing priorities. We acknowledge these complexities,
but current inspection and interdiction efforts at the international mail
branches and express carrier facilities have not prevented the reported
substantial and growing volume of prescription drugs from being illegally
imported from foreign Internet pharmacies into the United States. CBP and
other agencies have taken a step in the right direction by establishing a
task force designed to address many of the challenges discussed in this
report. Although agencies responsible for enforcing these laws have a
mechanism in place to jointly address the threat posed by prohibited and
sometimes addictive drugs entering the country via the international mail
and express carriers, many packages that may contain these drugs enter the
United States daily. Furthermore, according to officials, resources are
strained as the volume of prescription drugs entering the country is large
and increasing.

Our past work has shown how a strategic framework can be useful in
promoting accountability and guiding policy and resource decisions. In the
case of the task force, a strategic framework that facilitates
comprehensive enforcement of prescription drug importation laws and
measures results would provide it an opportunity to better focus agency
efforts to stem the flow of prohibited prescription drugs entering the
United States. The task force could become more effective as it becomes
more accountable. An assessment of the scope of the problem would help the
task force prioritize activities and help ensure that resources are
focused on the areas of greatest need. With milestones and performance
measures, it could be able to better monitor progress and assess efforts
to enforce the laws. An analysis of resources and investments is critical
because of current resource constraints, a point highlighted by the
Secretary of Health and Human Services' report under the Medicare

Modernization Act. Moreover, without these elements culminating in
concrete plans for implementation, it will be difficult for the task force
to maximize effectiveness in reducing the flow of prohibited imported
prescription drugs into the United States.

In addition to the broader issues being addressed by the task force, FDA
has said it faces a significant challenge handling the substantial volume
of prescription drugs imported for personal use entering international
mail facilities. Specifically, in recent years, FDA has expressed
continuing concern to Congress that it encounters serious resource
constraints enforcing the law at mail facilities because packages
containing personal drug imports cannot automatically be refused. Instead,
under current law, FDA is to notify recipients that they are holding
packages containing drugs that appear to be prohibited from import and
give them the opportunity to provide evidence of admissibility. FDA has
stated that it cannot effectively enforce the law unless the requirement
to notify recipients is changed. FDA has suggested that the HHS Secretary
consider proposing changes to this requirement, but the HHS Secretary has
not yet responded with a legislative proposal. Although there may be
complex issues associated with changing the requirement to notify,
including an individual's due process right to provide evidence of
admissibility and consideration of Universal Postal Union requirements,
assessing the ramifications of such a proposal would help decision makers
as they consider how best to address FDA's resource constraints and
responsibility to enforce the law and protect the health and safety of the
American public.

To help ensure that the government maximizes its ability to enforce laws
governing the personal importation of prescription drugs, we recommend
that the CBP Commissioner, in concert with ICE, FDA, DEA, ONDCP, and USPS,
develop and implement a strategic framework for the task force that would
promote accountability and guide resource and policy decisions. At a
minimum, this strategic framework should include

o  	establishment of an approach for estimating the scope of the problem,
such as the volume of drugs entering the country through mail and carrier
facilities;

o  	establishment of objectives, milestones, and performance measures and
a methodology to gauge results;

o  	determination of the resources and investments needed to address the
flow of prescription drugs illegally imported for personal use and where
resources and investments should be targeted; and

Recommendations

o

Agency Comments
and Our Evaluation

an evaluation component to assess progress, identify barriers to achieving
goals, and suggest modifications.

In view of the FDA's continuing concern about the statutory notification
requirement and its impact on enforcement, we also recommend that the
Secretary of HHS assess the ramifications of removing or modifying the
requirement, report on the results of this assessment, and, if
appropriate, recommend changes to Congress.

We requested comments on a draft of this report from the Secretary of
Homeland Security, Attorney General, Director of the Office of National
Drug Control Policy, Secretary of Health and Human Services, and
Postmaster General. DHS, DEA, ONDCP, HHS, and USPS provided written
comments, which are summarized below and included in their entirety in
appendixes IV through VIII.

DHS generally agreed with the contents of our report. Since our
recommendation that the CBP-led task force develop and implement a
strategic framework to address prescription drug importation issues
affects other agencies, DHS said that CBP would convene a task force
meeting to discuss our report and recommendation and is to provide us with
additional information after the meeting.

Responding for DOJ, DEA generally agreed with our recommendation that the
CBP task force develop and implement a strategic framework. Specifically,
DEA agreed that a strategic framework can be useful in promoting
accountability and guiding policy and resource decisions, but it said that
the interagency task force is a cooperative initiative and DEA must
balance priorities in accordance with agency mandates. DEA also said that
its strategic plan clearly establishes a framework to articulate agency
priorities and assess its performance. Noting that our report acknowledges
that such a framework needs to be flexible to allow for changing
conditions, DEA stated that, in concert with other task force agencies, it
will support the CBP Commissioner's strategic framework for the
interagency task force.

ONDCP generally concurred with our recommendation that the CBP-led task
force develop and implement a strategic framework. ONDCP also "strongly"
suggested that the ONDCP-led Synthetic Drug Interagency Working Group play
a significant role in integrating prescription drug considerations with
all of the other synthetic drug concerns that potentially inflict harm on
our society. ONDCP noted that our report documented well the problems
associated with effectively policing Internet purchases and identified the
significance played by credit card

use as a facilitator of the problem. In addition, ONDCP stated that it
encouraged law enforcement proposals that may curtail some of these
dangerous practices and concurred with our identification of the
cumbersome nature of currently required enforcement practices dealing with
the use of the mails to transfer illicit narcotics.

HHS generally concurred with both recommendations. With regard to the
strategic framework, HHS said that it would work with its federal partners
to discuss the development of a more formalized approach for addressing
the issues associated with the importation of unapproved drugs. However,
HHS questioned whether the framework should include an approach for
developing more reliable volume estimates, because HHS believes the volume
estimates already provided in HHS's December 2004 report on drug
importation are valid. HHS said that volume may depend on the incentive
for the public to import unapproved drugs, as well as other external
factors, and said that, short of opening and counting each package as it
enters the United States, the reliability of estimates would always be in
question given the fluid nature of unapproved prescription drug imports
and the number of mail and courier facilities involved. HHS also stated
that volume estimates would not alter the resource calculations
articulated in HHS's December 2004 report, which, according to HHS, were
derived from special operations, called blitzes, by CBP and FDA at various
international mail facilities. According to HHS, these calculations were
based on personnel time and salaries needed to process each package. HHS
further noted that our statement that the task force agencies could
develop statistically valid volume estimates and realistic risk-based
estimates of the number of staff needed to interdict parcels at mail
facilities did not recognize that FDA is not always able to process the
current number of packages set aside by CBP. In addition, HHS said that
FDA must always be cognizant of competing priorities regardless of
fluctuations in the volume of illegally imported prescription drugs.

We recognize that any number of factors can influence the volume of
unapproved drugs entering the country at any point in time or location.
However, HHS's current estimates are based on estimates of drugs imported
from Canada during 2003 and, in part, on extrapolations from FDA's limited
observations during special operations at international mail branch
facilities. We believe a more reliable and systematic approach might begin
by using information already being collected by CBP and FDA at the various
field locations, including the number of packages deemed abandoned by CBP
and the number of imported packages FDA handles. With regard to resource
calculations, as more reliable estimates are developed, FDA and other task
force agencies would be better positioned to define the scope of the
problem so that the task force and other

decision makers can make informed choices about resources devoted to this
problem, especially in light of competing priorities.

Regarding our recommendation that the HHS Secretary assess FDA's
statutorily required notification process, HHS said that it intends to
pursue an updated assessment. HHS observed that, given the increased
volume of illegally imported prescription drugs since its initial request
for modification of FDA's notification process, other actions might be
needed, and HHS would work with its federal partners to determine the
actions required. HHS also provided technical comments that have been
included, as appropriate.

USPS did not state whether it agreed or disagreed with our recommendations
but expressed a concern about possible procedural and legislative changes
to the current notification requirements governing the processing and
disposition of imported pharmaceuticals. Specifically, USPS requested that
the report acknowledge the United States's international postal
obligations and stated that any discussion of options to expedite the
processing and disposition of prescription drugs should consider these
obligations. USPS further noted that recognizing these obligations is
particularly important with respect to registered or insured mail for
which the Postal Service can be held financially responsible if it is not
delivered or returned. We acknowledge USPS's concerns and have added
language to the report accordingly.

As arranged with your offices, unless you publicly announce its contents
earlier, we plan no further distribution of this report until 30 days
after its issue date. At that time, we will send copies of this report to
the Secretary of the Department of Homeland Security, the Secretary of
Health and Human Services, and interested congressional committees. We
will also make copies available to others upon request. In addition, the
report will be available at no charge on GAO's Web site at
http://www.gao.gov.

If you or your staff have any questions concerning this report, please
contact me on (202) 512-8777 or [email protected]. Contact points for our
Offices of Congressional Relations and Public Affairs may be found on the
last page of this report. Major contributors to this report are listed in
appendix IX.

Richard M. Stana, Director
Homeland Security and Justice Issues

Appendix I: Objectives, Scope, and Methodology

This report addresses the following questions: (1) What do available data
show about the volume and safety of prescription drugs imported into the
United States for personal use through the international mail and private
carriers? (2) What procedures and practices are used at selected
facilities to inspect and interdict prescription drugs unapproved for
import? (3) What factors affect federal agency efforts to enforce the
prohibition on prescription drug importation for personal use through
international mail and carrier facilities? (4) What efforts have federal
agencies undertaken to coordinate the enforcement of the prohibitions on
personal importation of prescription drugs?

We performed our work at the Department of Homeland Security's U.S.
Customs and Border Protection (CBP) and U.S. Immigration and Customs
Enforcement (ICE), the Department of Health and Human Services' (HHS) Food
and Drug Administration (FDA), the Department of Justice's Drug
Enforcement Administration (DEA), the U.S. Postal Service (USPS), and the
Office of National Drug Control Policy (ONDCP). We also carried out work
at 3 of the 14 international mail facilities-New York, Los Angeles, and
Chicago-and 2 of the 29 carrier facilities-Cincinnati (DHL Corporation)
and Memphis (FedEx Corporation). We selected the New York and Los Angeles
mail facilities because they (1) processed among the highest overall
number of packages,1 representing 27 percent of the total number of
estimated packages going through international mail facilities in 2002 and
(2) also received prescription drugs.2 The Chicago facility was selected
because it received prescription drugs and provided geographic dispersion.
The 2 carrier facilities selected were (1) different companies; (2)
handled the highest overall number of packages, according to data provided
by CBP; and (3) were located near each other. At each of these locations,
we collected and reviewed available relevant importation and interdiction
data from FDA and CBP; observed inspection and interdiction practices; met
with CBP and FDA management, inspectors, and investigators to discuss
issues related to inspection and pharmaceutical importation volume; and
reviewed relevant documents on inspection and interdiction procedures. At
the international mail facilities, we also met with USPS officials to
discuss mail handling and processing procedures. The information from our
site visits is limited to the 3 international mail

1Data on the number of packages process were provided to us by CBP from
the U.S. Postal Service.

2On January 27, 2005, CBP began operations at one additional international
mail facility in San Juan, Puerto Rico. We did not include the San Juan
facility as part of our original selection because it was not in operation
when we began our review.

Appendix I: Objectives, Scope, and Methodology

facilities and 2 carrier facilities and is not generalizable to the
remaining 10 international mail facilities and 27 carrier facilities.

To determine what the available data show about the volume and safety of
imported prescription drugs, we interviewed CBP, FDA, DEA, ICE, and USPS
headquarters officials and CBP and FDA officials at the 3 international
mail facilities and 2 carrier facilities. We obtained and analyzed
available data on the volume and safety of imported prescription drugs (1)
collected from the facilities we visited and (2) gathered through
multiagency special operations at selected mail facilities and provided to
us by CBP headquarters. The available CBP and FDA information on the
volume and safety of prescription drugs imported through the mail and
carrier facilities we visited was primarily based on estimates and limited
to observations at these locations. To obtain additional views on the
overall volume or safety of imported prescription drugs, we reviewed ONDCP
and HHS reports and testimony from the American Medical Association. We
discussed with FDA officials the methodology used to develop the volume
estimates presented in the 2004 HHS report on prescription drug
importation3 and we reviewed the methodology to determine any limitations.
In addition, we interviewed an official and reviewed documents from the
National Association of Boards of Pharmacy to obtain the association's
findings on the safety of prescription drugs imported from foreign-based
Internet pharmacies. We also relied on existing GAO work on the safety of
prescription drugs imported from some foreignbased Internet pharmacies.

To understand procedures and practices, we reviewed current federal law
and CBP and FDA policies, procedures, and guidance regarding or applicable
to prescription drugs and controlled substance importation. We interviewed
officials at CBP, FDA, DEA, ICE, and USPS headquarters. To understand
inspection procedures and practice, at each of 3 international mail
facilities and 2 carrier facilities, we carried out site visits, observing
the inspection process and interviewing CBP and FDA officials. At the
selected international mail facilities, we also interviewed USPS officials
to obtain information about their procedures and practices. In addition,
when FDA and CBP implemented new procedures at the international mail
facilities and carrier facilities, we carried out additional interviews at
FDA and CBP headquarters, pursued telephone interviews with CBP and FDA

3HHS Task Force on Drug Importation, Report on Prescription Drug
Importation, Department of Health and Human Services, December 2004.

Appendix I: Objectives, Scope, and Methodology

officials at the facilities we had visited, and revisited 2 of the mail
facilities to determine how the new procedures were being implemented,
working in practice; and being monitored and evaluated. We also obtained
from FDA fiscal year data on the number of mail packages containing
prescription drugs it processed. From CBP we obtained data on the number
of packages interdicted using its new procedures for processing schedule
III through V controlled substances. Because these data were used for
contextual purposes, we did not assess the reliability of these data.
However, we discussed the scope of the FDA and CBP data with the
respective agency officials and have noted the limitations in the report.

To determine what factors affect federal agency efforts to enforce the
prohibitions on prescription drug importation for personal use through
international mail and carrier facilities, we interviewed CBP, FDA, DEA,
ICE, and USPS officials. We asked these officials to identify any factors
that affected their respective agency's efforts to process or interdict
prescription drugs imported through the mail and carriers. The information
presented in this report is limited to the views expressed by the
officials interviewed. In addition, we met with representatives from
MasterCard International and Visa U.S.A., Inc., the two credit card
associations identified by DEA as the organizations used by the majority
of Internet drug sites. These associations also testified in July 2004 at
congressional hearings on matters related to the illegal importation of
prescription drugs. We discussed with them each association's efforts to
assist federal enforcement of the prohibitions on prescription drug
importation.

To determine what efforts federal agencies have undertaken to coordinate
the enforcement of the prohibitions on personal importation of
prescription drugs, we interviewed CBP, USPS, FDA, DEA, ICE, and ONDCP
headquarters officials. We obtained and reviewed documents describing
these initiatives, their status, and any studies or data describing the
results of the initiatives. These documents included agency guidelines and
memorandums, indicating changes to agency policies and procedures;
congressional hearings; and selected legislative proposals. We obtained
these documents from agency officials; agency Web sites, as directed by
agency officials; and congressional Web sites. We also interviewed CBP and
FDA field officials at the selected international mail facilities and
private carrier facilities to ascertain the status of the implementation
of these initiatives. We analyzed and synthesized the information gathered
from the interviews and documents.

Appendix I: Objectives, Scope, and Methodology

In addition, in appendix III of this report, we used data from FDA on the
number of open and closed investigations it had undertaken related to
Internet drug sales and imported prescription drugs. We also used data
from DEA on the number of arrests related to the illegal diversion of
pharmaceuticals. Because these data were used for contextual purposes, we
did not assess their reliability.

We conducted our review between April 2004 and August 2005 in accordance
with generally accepted government auditing standards.

Appendix II: General Description of the Controlled Substance Schedules I
through V

The drugs and drug products that come under the Controlled Substances Act
are divided into five schedules. A general description and examples of the
substances in each schedule are outlined below.

      Table 1: General Description of Controlled Substances, Schedules I-V

Schedule    Description of substances in the             Examples          
                           schedule                
            Substances that have no accepted         Heroin, lysergic acid    
            medical use in the United                 diethylamide (LSD),     
             States and have a high potential for        marijuana, and gamma 
                            abuse                   hydroxybutyric acid (GHB) 
            Substances that have a high potential  Opium, morphine, codeine,  
            for abuse with severe                        methadone, and       
            psychic or physical dependence            meperidine (Demerol)    
            liability-certain narcotic,            
               stimulant, and depressant drugs     

Substances that have a potential for abuse that is less than those in
schedules I and II and include compounds containing limited quantities of
certain narcotic drugs and non-narcotic drugs Anabolic steroids;
derivatives of babituric acid (except those listed in another schedule);
benzphetamine; and any compound, mixture, preparation or suppository
dosage form containing amobarbital, secobarbital, or pentobarbital

Substances that have a potential for abuse that is less than

                          those listed in schedule III

Barbital, alprazolam (Xanax), Cathine-constituent of the "Khat" plant-and
Diazepam (Valium)

Substances that have a potential for abuse that is less than Pyrovalerone
(Centroton, Thymergix)
those listed in schedule IV and consist primarily of preparations
containing limited quantities of certain narcotic and stimulant
drugs

Source: GAO analysis of Drug Enforcement Administration information

Appendix III: Federal Agencies Work with Credit Card Organizations to
Enforce Prohibitions on Prescription Drugs

During congressional hearings in July 2004, representatives from
MasterCard International and Visa U.S.A., Inc., testified on issues
concerning the use of credit cards to purchase prescription drugs for
importation from Internet pharmacies, including discussions with federal
law enforcement agencies to address these issues.1 Accordingly, we met
with Drug Enforcement Administration (DEA), Food and Drug Administration
(FDA), and Immigration and Customs Enforcement (ICE) officials, as well as
representatives from MasterCard International and Visa U.S.A., Inc.to more
fully understand how these organizations are working together to address
prohibitions on prescription drug importation.2 The agency officials and
credit card association3

representatives described their working relationship as cooperative, but
complicated by legal and practical considerations. The following section
summarizes our discussions.

Investigations of Credit Card Purchases of Prescription Drugs Imported
from Internet Pharmacies Can Be Complicated by Legal and Practical
Considerations

According to FDA, DEA, and ICE officials, their agencies have worked with
credit card organizations to obtain information to investigate the
importation of prescription drugs purchased with a credit card from
Internet pharmacies, but these investigations were complicated by legal
and practical considerations. Such considerations included privacy laws;
federal law enforcement agencies' respective subpoena authority,
priorities, and jurisdictions; and the ease with which merchants engaged
in illegal activity can enter into a new contract with a different bank to
use the same payment system. In addition, according to the two credit card
associations we contacted, their respective associations have also
undertaken searches of the Internet for Web sites that appeared to be
selling problematic materials and accepting their respective payment
cards, but these investigations can also be complicated by legal
considerations.

1Buyer Beware: The Danger of Purchasing Pharmaceuticals over the Internet:
Federal and Private Sector Responses: Hearing Before the Permanent
Subcomm. on Investigations of the Senate Comm. on Government Affairs,
108th Cong. (July 22, 2004).

2According to a DEA official, the majority of Internet drug sites used
these two companies' payment systems.

3Two types of credit card organizations handle the four major U.S. credit
cards. Credit card associations, such as Visa and MasterCard, license
their member banks to issue bank cards, authorize merchants to accept
those cards or both. In contrast, full-service credit card companies, such
as American Express and Discover, issue their own brands of cards directly
to customers and authorize merchants to accept those cards. See also: GAO,
Internet Gambling: An Overview of the Issues, GAO-03-89 (Washington, D.C.:
December 2, 2002)

Appendix III: Federal Agencies Work with Credit Card Organizations to
Enforce Prohibitions on Prescription Drugs

Privacy laws can sometimes limit the extent to which companies, including
credit card organizations, will provide information to federal law
enforcement agencies about parties to a transaction. FDA and DEA officials
told us that credit card organizations and/or banks and other financial
institutions, when they have the direct contractual relationship with the
merchants, have provided to the agencies information regarding
transactions involving prescription drugs prohibited from import, as well
as alerting federal officials when suspicious activity is detected.
However, they said that the companies do not provide information about the
parties involved in the transaction without a subpoena. Representatives
from the two associations with whom we met explained that law enforcement
usually needs to issue a subpoena because of company concerns about
possible legal action by the subject of the investigation (for example, if
the subject asserted that information was provided by the association or
bank to law enforcement in violation of federal privacy laws). They
further noted, however, that their respective associations would provide
law enforcement information without a subpoena, when properly requested
under certain circumstances, including matters of national security or
when a human life was in immediate jeopardy.

DEA, ICE, and FDA officials confirmed that they are able to obtain
information from credit card companies and/or banks and other financial
institutions through subpoenas, although the agencies have different
subpoena authority with regard to entities, such as banks and credit card
companies. DEA and ICE have the authority to subpoena information directly
from such entities, but FDA must ask a U.S. Attorney to obtain a grand
jury subpoena requesting the information.4 DEA and ICE may also use grand
jury subpoenas. For example, DEA officials told us that usually they are
able to obtain needed information using administrative subpoenas; however,
they may use a grand jury subpoena if a company will not provide the
requested information or a U.S. Attorney prefers that approach. DEA, FDA,
and ICE could not readily provide data on the

4FDA has the authority to inspect certain records of those entities
processing drugs under section 704 of the Federal Food, Drug, and Cosmetic
Act, such as, a drug manufacturer, but not the records of third parties,
such as credit card organizations. However, section 704 is an
administrative authority, and it may not be relied upon when the agency is
solely interested in obtaining evidence for a criminal prosecution.
According to FDA, when criminal Internet/importation investigations mature
to the point that a grand jury becomes involved, FDA's Office of Criminal
Investigations (OCI) routinely uses grand jury subpoenas to obtain
information from credit card companies and banks. Use of a grand jury
subpoena to obtain this kind of information is a standard investigatory
practice. FDA stated that when served with grand jury subpoenas, the banks
and credit card companies have consistently been cooperative and have
provided OCI with the information requested.

Appendix III: Federal Agencies Work with Credit Card Organizations to
Enforce Prohibitions on Prescription Drugs

number of subpoenas served because (1) data on DEA and ICE administrative
subpoenas were maintained at the field office requesting the subpoena and
were not organized according to payment method and (2) none of the
agencies could share grand jury information.5

Agencies' priorities also affect their ability to conduct investigations
of credit card purchases of prescription drugs for importation. According
to FDA, DEA, and ICE officials, their investigations, including those
involving imported prescription drugs, focused on commercial quantities,
rather than quantities to be consumed for personal use.6 DEA officials
also said that DEA seeks to dismantle major drug supply and money
laundering organizations; therefore, its investigations of prescription
drug violations focused on the suppliers of Internet pharmacies, not
individual consumers. DEA reported no active cases on individuals who were
illegally importing controlled substance pharmaceuticals over the Internet
for personal consumption.7 FDA, DEA, and ICE officials said that
investigations involving smaller quantities may be handled by state and
local law enforcement.

In addition to the quantity of drugs being imported, federal enforcement
agencies consider jurisdiction when determining whether to pursue an
investigation, including investigations of Internet pharmacies using
credit card payment systems that cross U.S. borders. For a federal
enforcement agency to determine whether it has jurisdiction to investigate
potential illegal activity outside the United States, it generally needs
to consider whether (1) the federal statute or statutes violated apply to
activity outside the country and (2) there is sufficient evidence of an
intent to produce effects in the United States or some other connection to
the United States, such as a U.S. distributor. Pursuit of investigations
of Internet pharmacies using credit card payment systems presents both
jurisdictional and practical limitations, when some or all of the
operations (e.g., pharmacies, Web sites, and bank accounts) are located in
foreign countries and there is

5Rule 6(e) of the Federal Rules of Criminal Procedure codifies the
traditional practice of grand jury secrecy. With certain limited
exceptions, Rule 6(e) generally prohibits disclosure of "matters occurring
before the grand jury."

6FDA officials noted, however, that in matters of public health and
safety, FDA would seek a prosecution no matter what the quantity of
illegal drugs involved.

7According to DEA, as of June 21, 2005, it had made 560 arrests related to
the diversion of pharmaceuticals; those arrested included retailer
dealers, leaders within organizations, and heads of organizations, among
others. However, DEA data do not include information on which of the
arrests involved Internet sales for importation or use of credit card
payment systems.

Appendix III: Federal Agencies Work with Credit Card Organizations to
Enforce Prohibitions on Prescription Drugs

no U.S. distributor. According to FDA officials, in cases that FDA does
not have jurisdiction to pursue, it may ask its foreign counterparts for
assistance.8 ICE officials told us that they focused on transporters of

commercial quantities across U.S. borders from a foreign country into the
United States.

By contrast, DEA enforces a statute that specifically applies to
manufacturers or distributors of certain prescription drugs who are
located in foreign countries. Specifically, DEA has jurisdiction over a
manufacturer or distributor of schedule II controlled substances in a
foreign country who knows or intends that such substances will be
unlawfully imported into the United States.9 However, the relevant statute
does not apply to prescription drugs that are schedules III through V
controlled substances. Therefore, according to a DEA official, to pursue
such investigations, DEA has to devise other ways to reach those operating
outside the United States.

A DEA official said that another practical consideration affecting
investigations of credit card purchases of imported prescription drugs was
the ease with which merchants engaged in illegal activities were able to
open new merchant credit card accounts. Credit card association
representatives confirmed that the reappearance of the same violators
using a different name or bank, or even disguising the illegal activity as
a different and legal activity, can be a problem. They said that unlike
law enforcement, credit card organizations do not have the authority to
arrest the violators, and some of the merchants engaged in such illegal
activities are skilled at moving from bank to bank and masking their
illegal activities.

In addition to investigations by federal law enforcement agencies, each of
the credit card associations we contacted had also undertaken searches of
the Internet for Web sites that appeared to be selling problematic

8According to FDA, as of June 2005, FDA's OCI has closed 24 full-scale
investigations related to Internet drug sales and imported prescription
drugs. These 24 investigations resulted in 7 judicial cases where a
defendant was brought before a court; each of these cases may include one
or more prosecutions. During 5 of the 24 investigations, FDA worked
cooperatively with foreign governments. In addition, FDA reported that as
of June 2005, OCI had 23 pending full-scale investigations related to
Internet drug sales and imported prescription drugs, 5 of which had
matured into pending prosecutions. In 7 of the 23 investigations, OCI was
working cooperatively with foreign governments.

921 U.S.C. S: 959.

Appendix III: Federal Agencies Work with Credit Card Organizations to
Enforce Prohibitions on Prescription Drugs

materials and using its payment cards.10 One association used a vendor to
carry out the searches and then provided the information to its member
banks regarding their merchants who appear to have been involved in
selling controlled substances. The other association's security personnel
conducted the Internet search, identified the sites, and then attempted to
contact the member bank that had contracted with the merchant.
Representatives of the latter association told us that as a result of this
effort, at the association's request, contracts with approximately 500
merchants had been terminated by the member banks that had authorized the
particular merchants to accept the association's credit card.

Representatives from both associations agreed that federal law enforcement
agencies were in the best position to enforce the prohibition on
prescription drug importation, because they have arrest authority and can
remove the violators. However, these representatives had differing
opinions concerning the desirability of their taking any additional
enforcement steps in this area. Representatives of one association told us
they did not want the authority to make purchases to confirm that illegal
transactions were occurring. They said once their investigators identified
a site willing to sell drugs, they contacted the bank that authorized the
merchant's account so that the bank could take appropriate action.
Further, they told us that the association was not set up to make such
purchases safely and its mail room was not structured to take delivery.
Representatives of the other association told us that their association
would like the authority to make such purchases, noting that their
investigations were complicated by the inability of the association's
security personnel to purchase controlled substances. However, these
representatives told us that, if they were allowed to make such
transactions, they would expect to turn over the controlled substances to
federal law enforcement immediately upon receipt.

10The associations' role in the day-to-day management of their operations
includes responsibilities for, among other things, (1) establishing
standards and procedures for the acceptance and settlement of each of
their members' transactions on a global basis; (2) conducting the due
diligence for the financial soundness of potential members and requiring
periodic reporting of members on fraud, chargeback, counterfeit card, and
other matters that may impact the integrity of the association as a whole;
and (3) operating the security and risk systems to minimize risk to the
member banks, including operating fraud controls to allow members to
monitor transactions with their cardholders and establishing specific
design features of the bankcard to enhance security features. See also
GAO,

Money Laundering: Extent of Money Laundering through Credit Cards Is
Unknown,

GAO-02-670 (Washington, D.C.: July 22, 2002).

Appendix III: Federal Agencies Work with Credit Card Organizations to
Enforce Prohibitions on Prescription Drugs

A DEA official told us that currently credit card organizations are not
exempt from the general prohibition against possessing controlled
substances, 11 and therefore it is illegal for them to purchase controlled

substances from an Internet pharmacy to show that the pharmacy is acting

illegally. 12 He also said that even if the law were changed to allow such
transactions, executing them could be unmanageable, because the companies
would have to comply with federal regulations for handling and storing
controlled substances.13 For example, federal regulations require

that controlled substances be stored in a safe, vault, steel cabinet, or
cage. The regulations also specify the methods and materials to be used to
construct the storage facility, as well as the type of security system
(alarms, locks, and anti-radiation devices) required to prevent entry.
Even if a credit card company planned to turn over purchased controlled
substances to federal law enforcement upon receipt, it would need to have
a facility as prescribed by federal regulations to hold and store the
substances until a DEA agent could take possession of them.

Federal Enforcement Agencies and Credit Card Associations Have Discussed
Credit Card Enforcement Issues

Federal enforcement agencies and credit card organizations have had
periodic discussions about credit card enforcement issues involving
purchases of prescription drugs for importation from Internet pharmacies.
In addition, the associations told us that they had provided information
about this issue to banks and other financial institutions.

According to FDA and DEA officials and representatives of the two credit
card associations we contacted, meetings have been held periodically,
between individual agencies (e.g., DEA and FDA) or as part of the Customs
and Border Protection (CBP) Interagency Task Force (discussed earlier in
this report) and with representatives of one or more companies present.
Association representatives told us that they believed that the meetings,
which began in late 2003, have provided an educational opportunity for
both the credit card companies and the federal law enforcement agencies.
For example, the representatives of one association said that during the
meetings they had described how the association's payment system operated,
explaining (1) the relationship among the association, the banks and other
financial institutions, merchants, and

1121 U.S.C. S: 844(a).

12The official emphasized that the current U.S. system for handling
controlled substances is a closed system of distribution. It can account
for every tablet produced from raw product coming into the country to the
final tablet.

1321 C.F.R. S: 1301.72.

Appendix III: Federal Agencies Work with Credit Card Organizations to
Enforce Prohibitions on Prescription Drugs

cardholders, and (2) which entities maintained the transactional
information needed by law enforcement for investigations of Internet
pharmacies. They said that DEA and FDA had explained federal laws related
to the importation of prescription drugs, both controlled and
noncontrolled substances. Representatives of the other association said
that the meetings helped to educate its officials about issues, concerns,
and risks related to the illegal importation of prescription drugs. In
addition, agency officials and association representatives said that they
had discussed the role credit card organizations can play with regard to
illegal importation. No minutes of these meetings are maintained.

According to association representatives, information obtained at these
meetings was disseminated to the banks and other financial institutions
through bulletins. Through association bulletins, both credit card
associations provided to banks and other financial institutions
information concerning the illegal importation of prescription drugs. The
bulletins reminded the recipients of their obligation to ensure that the
credit card system was not to be used for illegal activity, alerted them
to the risk of illegal activity involving transactions for prescription
medications purchased over the Internet, and underscored the need for due
diligence to ensure that merchants were not engaged in illegal activities.
One association also issued a press release that, according to the
association's representatives, was to communicate to the public
information similar to that which had been sent to the banks.

FDA and DEA officials and association representatives said that the
dialogue was continuing and described the relationship between the
agencies and associations as good. A meeting between credit card
organizations and the CBP task force is to be held in late summer 2005.
Moreover, they noted that informal contacts between the agencies and the
credit card organizations occurred, as needed, on specific matters related
to prescription drug importation. However, agency officials confirmed that
they had no plan or written strategy for dealing with credit card
organizations related to the illegal importation of prescription drugs
purchased with a credit card.

                         Appendix IV: Comments from the
                        Department of Homeland Security

Appendix IV: Comments from the Department of Homeland Security

                     Page 62 GAO-05-372 Prescription Drugs

                     Page 63 GAO-05-372 Prescription Drugs

Appendix VI: Comments from the Department of Health and Human Services

Appendix VI: Comments from the Department of Health and Human Services

Appendix VI: Comments from the Department of Health and Human Services

Appendix VI: Comments from the Department of Health and Human Services

Appendix VII: Comments from the Office of National Drug Control Policy

Appendix VIII: Comments from the U.S. Postal Service

Appendix IX: GAO Contact and Acknowledgments

GAO Contact Acknowledgments

(440282)

Richard M. Stana (202) 512-8777

In addition to the above, John F. Mortin, Assistant Director; Leo M.
Barbour; Frances A. Cook; Katherine M. Davis; Michele C. Fejfar; Yelena T.
Harden; James R. Russell; and Barbara A. Stolz made key contributions to
this report.

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