Statement of Ivan Fong Deputy Associate Attorney General Before the Subcommittee on Oversight and Investigations Committee on Commerce United States House of Representatives Concerning Sale of Prescription Drugs over the Internet Presented on July 30, 1999
Mr. Chairman and Members of the Subcommittee:
Good morning. My name is Ivan Fong. I am a Deputy Associate Attorney General at the Department of Justice. The Office of the Associate Attorney General is responsible for the management and oversight of, among other areas, the Department's civil litigating components, which include the Antitrust, Civil, Civil Rights, Environment and Natural Resources, and Tax Divisions. My particular responsibilities include civil litigation and technology policy issues, which include Internet and electronic commerce issues, as well as the enforcement of certain consumer statutes. This morning, at your invitation, I will address the Department's views regarding the sale of prescription drugs over the Internet. We are not at this time advocating any particular legislative action with respect to the sale of these drugs over the Internet. Rather, we hope to inform you about our efforts to respond to the many complex legal and policy issues raised by this new development.
A. Addressing Unlawful Conduct that Involves the Use of the Internet
Before I outline what the Department is doing in the area of Internet prescription drug sales, it is important to underscore, by way of background, a simple, and by now almost trite, point: The Internet has revolutionized and will continue to revolutionize the way in which we communicate, transact business, and indeed interact with one another.
The growth in Internet prescription drug sales, for example, undoubtedly has the potential to provide significant societal benefits. Individuals who might otherwise have difficulty going to a pharmacy to obtain needed medications - such as shut-ins, the elderly, and those in rural communities - will surely benefit from the convenience of being able to order and obtain their prescription drugs online. Online sales are also likely to foster price competition for prescription drugs among licensed sellers.
Recognizing these benefits is consistent with the Administration's general policy concerning the Internet and electronic commerce. That policy includes support for industry self-regulation where possible, technology-neutral laws and regulations, and an appreciation of the Internet as an important medium both domestically and internationally for commerce. In the area of online sale of prescription drugs, this means that any enforcement initiatives that we undertake should be carefully designed to deter criminal and illegal pharmacy practices on the Internet to accomplish important public health goals without stifling the growth of the Internet generally or chilling its use as a communication medium, including its use for lawful commercial purposes.
In the context of law enforcement, we think the Administration's's overall policy can be translated into the following general principles.
First, the government should treat physical activity and cyber activity in the same way. If an activity is prohibited in the physical world, but not on the Internet, then the Internet becomes a safe haven for that criminal activity. Similarly, conduct that is not a federal crime in the physical world should not be subject to federal criminal sanction simply because it is committed in cyberspace.
Second, laws and policies relating to enforcement must account for technological change, but should endeavor to be technology-neutral. Laws and policies tied to particular technologies may quickly become obsolete and require further change or may unintentionally provide an advantage to one type of technology over another.
Third, the Internet is different from prior modes of communication in that it is a multi-faceted communications medium that allows not only point-to-point transmission between two parties (like the telephone), but also the widespread dissemination of information to a vast audience (like a newspaper).
These general principles form the starting point for our analysis of the legal and policy issues relating to the sale of prescription drugs over the Internet. They suggest that, as a matter of policy, the same laws and regulations that currently apply to the corner pharmacy ought to apply to online pharmacies. The Internet, of course, magnifies the problem of unscrupulous activity or unlawful conduct in an unprecedented way. For example, searching Internet sites for the prescription drug "Viagra" and the word "buy" results in an overwhelming number of sites where Viagra can be purchased on line. Nevertheless, from a legal standpoint, we believe that sales over the Internet ought not be treated differently from, for instance, sales from your local pharmacy or sales that involve the use of the telephone.
B. The Role of the Department of Justice in Internet Prescription Drug Sales
The Department of Justice is affirmatively responding in several ways to the recent growth in online pharmacies and prescription medical device distributors. We have begun to analyze the legal bases for possible enforcement against illegal practices of online pharmacies. We are continuing to investigate and prosecute conduct that has long been illegal, but that is only recently reappearing on the Internet. And we are working with other federal agencies, states, and relevant professional associations to develop coordinated public education as well as civil and criminal enforcement efforts.
At the outset, it is important to note that we are only beginning to appreciate the complex and highly diverse operations involved in sales and distribution of pharmaceutical products over the Internet. We have learned, for example, that online pharmacies can generally be classified into three basic categories:
The more traditional online pharmacies require consumers to obtain a prescription from a licensed physician before ordering the drug. A valid prescription is then submitted to the pharmacy before the drug is dispensed.
A second category of online pharmacies offers services to "diagnose" a patient online, "prescribe" the medication, and distribute it without a physician ever physically seeing the patient. These pharmacies typically use an online medical questionnaire, which asks for the patient's health profile, current medication, and medical history. Based on this questionnaire, a doctor who may be affiliated with the web site "diagnosis" the patient's ills and prescribes medication, which the web site's pharmacy then distributes.
A third category of online pharmacies allows consumers to purchase prescription drugs without any pretense of a prescription. Cutting across these categories are different concerns that may be raised by online pharmacies. One area of concern arises from situations in which consumers are able to purchase drugs from physicians without the traditional protections built into the doctor-patient relationship, such as an office visit that allows for a physical examination and for the doctor to ask the patient critical questions designed to limit the harm caused by drug allergies and interactions. A second area of concern are situations in which consumers purchase drugs that are mislabeled or counterfeit. Finally, there are concerns that certain web sites are nothing more than scams, collecting credit cards and cash, but providing no products. Each of these situations raises different legal issues and policy concerns and implicates the jurisdiction of different government and agencies.
1. Overview of Legal Issues
The Department of Justice - through its Civil and Criminal Divisions, local United States Attorney's Offices, the Federal Bureau of Investigation, and other components - enforces numerous consumer protection statutes for which the primary regulatory authorities are administrative agencies such as the Food and Drug Administration (FDA), the Drug Enforcement Administration (DEA), and the Federal Trade Commission (FTC).
(a) Enforcement under the Food, Drug and Cosmetic Act
The federal Food, Drug and Cosmetic Act (FDCA) generally prohibits the manufacture and distribution of misbranded and adulterated drugs, thus requiring drugs to be labeled accurately and handled in ways that prevent them from becoming contaminated or misused. In 1951, to protect the public from abuses arising from the sale of potent prescription drugs, and to relieve retail pharmacists from burdensome and unnecessary restrictions on the dispensing of over-the-counter drugs, Congress established the system that currently governs the sale of prescription drugs. See, 21 U.S.C. § 353(b)(1). Under that system, Congress relied on two health professionals - the patient's physician and a pharmacist - to protect patients from the knowing or accidental misuse of medicines that are toxic or that have the potential for causing harm.
Accordingly, drugs that are considered prescription drugs under the FDCA may be distributed only with a valid prescription under the professional supervision of a physician. See, 21 U.S.C. § 353. A prescription drug is considered "misbranded" if it is not dispensed pursuant to a valid prescription in accordance with 21 U.S.C. § 353(b). Introduction or distribution of misbranded drugs into interstate commerce violates the FDCA. See, 21 U.S.C. §331(a). An online pharmacy that provides prescription drugs without a prescription - the third category of online pharmacies noted above - would therefore be in violation of this requirement.
Legal action to curtail such conduct - including the drugs distributed without a valid prescription - may be brought criminally or civilly. For a felony conviction, the government must establish that the defendant acted with an intent to defraud or mislead either the consumer or the government, or that the defendant is a repeat offender. Civil cases and misdemeanor prosecutions do not require proof of an intent to defraud or mislead.For online pharmacies that offer online diagnosis, prescription, and distribution of medication - the second category of online pharmacies noted above - the issue is whether the online pharmacy may be found to be distributing "misbranded" medication in violation of the FDCA. In analogous situations, the Department has successfully prosecuted doctors and veterinarians for dispensing drugs without a valid prescription. For example, in several recent cases, we found that certain doctors were prescribing and distributing anabolic steroids to athletes and entertainers. The evidence showed that they distributed steroids not to treat medical conditions, but for purely cosmetic purposes, and that they did not examine the patients before dispensing the steroids. In those cases, we successfully argued that under section 353(b), one may distribute prescription drugs only if (1) there is a bonafide doctor-patient relationship, and (2) the distribution is pursuant to a course of individualized treatment for a legitimate medical purpose.
Whether a particular online pharmacy, such as one that provides an online questionnaire for the consumer to complete before the drug is dispensed, can satisfy these standards will depend on the specific facts involved and evidence presented. It may also depend on whether the resulting "prescription" is a valid prescription under relevant state law. The states of Kansas, Maryland, and Washington, for, example, have taken legal action against doctors, web sites, and pharmacies that dispense prescription drugs over the Internet in violation of state law.
(b) Other Enforcement Theories
Apart from enforcement under the FDCA, the Department can also rely on other legal authorities. For instance, the Controlled Substances Act prohibits the dispensing of a controlled substance without a valid prescription. See, 21 U.S.C. § §822, 829, and 841. A regulation issued by DEA defines "prescription" in a way that may exclude "prescriptions" for controlled substances that are obtained through an online questionnaire. As an example of a prosecution in this area under the Controlled Substances Act, a grand jury in Maryland recently returned a 34-count indictment against a physician for dispensing several controlled substances, including phentermine and fenfluramine, without a legitimate medical purpose.
Another potential avenue for enforcement involves the Federal Trade Commission Act (FTC Act), 15 U.S.C.§ 45 et seq., under which we could proceed with a civil enforcement action in conjunction with the FTC. The FTC Act protects consumers from unfair or deceptive acts or practices. Many online pharmacies operate by making important representations to consumers. For example, the FTC has found web sites that advertise that a physician reviews each application to purchase prescription medications. To the extent these representations are false or deceptive, or if a web site operator sells prescription drugs and represents that the drugs are safe and effective without disclosing their possible adverse effects, then such operators may be engaging in unfair or deceptive trade practices.
Indeed, some online pharmacies may suggest that completion and analysis of an online medical questionnaire is the equivalent of a visit to a doctor's office. Yet it seems clear that in almost all circumstances, filling out an online questionnaire is not the same as seeing a doctor. In fact, some prescription drugs, such as Viagra, have package insert labeling that specifies that a physical examination is required for proper prescribing of a product and physician follow-up. Because some of these web sites appear to provide deceptive information, these sites may violate the FTC Act, and thereby subject the web site operator to a civil enforcement action.
The Department could also pursue similar theories under the federal mail and wire fraud statutes whenever an online or other pharmacy defrauds consumers in any way. Whether such a suit would be criminal or civil, under 18 U.S.C. § 1345 or 21 U.S.C. §332, would depend on the precise facts of the case and the evidence of fraudulent intent. Schemes involving the sale of drugs or health products over the Internet may violate other related federal criminal laws. Some web sites offer to bill private or public health care programs or insurers for a "doctor's" advice or for the price of the drug or product itself. If any false representations are made to the insurer to obtain payment, violations of a number of federal criminal laws may occur, and the civil fraud laws may also be implicated.
(c) Prescription Drugs Sales from Foreign Sources
The FDA has found that a fair percentage of online drug distribution is conducted by firms operating outside of the United States. These firms may be in countries where quality standards or manufacturing practices do not approach what the FDA requires for the approval of prescription drugs in the United States. Any effort to prohibit these firms from selling prescription drugs in the United States would be complicated, especially if the activity in question is legal in the country where it is originating.
In addressing the online sale of prescription drugs, the United States must continue to enlist the cooperation of foreign governments in enforcing the laws of the United States relating to such sales. Although international awareness and cooperation on fighting crime has grown, we must continue to resolve philosophical differences between countries on combating the sale of illegal goods online and also to develop practical ways to enforce our laws. For example, our concern with prescription drugs from foreign countries is not necessarily with the Internet aspect of the sale, but with the illegal introduction of those drugs into the United States. Law enforcement agencies in the United States will have to obtain the cooperation of their counterparts in foreign countries with online prescription firms to prevent the shipping of such drugs into the United States. Such cooperation is particularly important because interdiction of relatively small quantities of prescription drugs sent through traditional mailing channels is not feasible. Overall, the Department supports the efforts being made to develop a comprehensive and global response to crimes facilitated by the Internet.
2. The Department's Experience in Related Areas
The Department has successfully prosecuted doctors and pharmacists for prescribing drugs without a valid prescription. In the 1950's, for example, the Department prosecuted doctors and pharmacists who sold amphetamine and Benzedrine to undercover agents without any prior examination or diagnosis. In the 1980's and early 1990's, before steroids became a controlled substance, several doctors received significant sentences for supplying high-profile athletes and entertainers with prescription steroids for illegitimate cosmetic reasons. The DEA has investigated and we have prosecuted many physicians for dispensing controlled substances without a legitimate medical purpose.
As I mentioned, online prescribing of approved drugs can present difficult legal issues. Nevertheless, we believe that the recent surge in online prescribing is ultimately a new version of an old problem. In the 1950's, individuals purchased drugs without valid prescriptions from doctors working out of truck stops. In the 1980's, doctors sold steroids out the back door of their offices. Today, it is the Internet, and not a truck stop or the back door, that can serve as an unscrupulous doctor's means to peddle drugs without prescriptions. When investigators bring those cases to our attention, we stand ready and able to prosecute them.
The Department has already begun to investigate doctors and web sites that dispense drugs based exclusively upon an online diagnosis, which usually consists of a medical questionnaire that the patient either fills out online or prints off her computer and malls or faxes to the web site. For example, as I mentioned above, a grand jury in Maryland recently returned a 34-count indictment against a physician for dispensing controlled substances without a legitimate medical purpose. I should note that this doctor has since turned in his medical license to the state of Maryland. The Department is actively working with state officials, both from attorneys general offices and state medical boards, to identify other doctors and pharmacists who unlawfully prescribe drugs online.
The Department has also taken an active role in prosecuting web site operators; who illegally sell FDA-regulated products, such as unapproved drugs and devices, over the Internet. For example, in February 1999, a seller of bogus HIV self-test kits was sentenced to 63 months for mail fraud, wire fraud, and money laundering. We are also prosecuting cases against the operators of web sites that sell the components necessary to make gamma hydroxy butyrate, commonly known as G.B., a dangerous unapproved drug often used in sexual assaults to incapacitate victims. Although I cannot discuss the details of these cases, I can say that the Department's efforts regarding G.B. have made obtaining this drug over the Internet more difficult than it once was.
3. Coordination of Enforcement Efforts
One of the most significant challenges we face in this area is coordination of enforcement policies and initiatives among a variety of federal, state, and other entities. We rely heavily, for example, on the hard work and dedication of federal and state investigating agencies in all of our cases. Our investigative agencies, with training and resources, will be able to develop cases that we can prosecute against online pharmacies and doctors affiliated with such pharmacies, should they dispense prescription drugs in ways that violate federal law.
We have also engaged in and will continue to engage in substantial efforts to coordinate our work with that of FDA and other federal agencies. We will work closely with FDA as it begins to implement its action plan to address Internet drug sales. We are also endeavoring to coordinate with the FTC, the FDA, and the National Association of Attorneys General on issues such as the fraudulent or misleading marketing of prescription drugs over the Internet.
Of equal importance is the need to train criminal investigators to deal with the special problems that Internet investigations pose. We have found that many web sites that we are investigating disappear as quickly as they appear. If the site has not been "mirrored" or otherwise retained, an opportunity to take enforcement action disappears. It is vital that agents know how to conduct Internet investigations from their inception.
In sum, the Department has taken and will continue to take an active role in coordinating with other federal agencies to respond to the potential risks to public health and safety that may accompany the growth of Internet sales of prescription drugs. We are participating with FDA and other agencies to explore what recourse is available to enforce existing laws that govern Internet prescription drug sales, particularly against foreign drug firms selling to U.S. consumers. As I have noted, foreign-based online pharmacies and their online sale of pharmaceutical drugs present particularly difficult and complex enforcement issues. We recently met with representatives from the FTC, FDA, FBI, the Customs Service, the Postal Service, and the National Association of Attorneys General to discuss this issue. With the other agencies, we will be evaluating existing laws and determining whether to recommend changes to address the problems we have identified.
Thank you for the opportunity to present the views of the Department on this important topic. I would be pleased to answer any questions you might have.