Law Law 6842-01  Fall 2009
American Health Care Law
Professor Vernellia R. Randall
The University of Dayton School of Law


Pharmaceutical Dispensing in the "Wild West"
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 Sean P. Haney

Excerpted from: Sean P. Haney, Pharmaceutical Dispensing in the "Wild West": Advancing Health Care and Protecting Consumers Through the Regulation of Online Pharmacies, 42 William and Mary Law Review 575 (December, 2000)

The "explosion" of Internet pharmacies on the World Wide Web has created a wealth of opportunities for improvements in the provision of health care. Unfortunately, the Internet's inherent characteristics that enable these positive developments also provide fertile soil for modern day "snake oil salesmen" and "'unscrupulous marketers."' Problems such as assuring the quality of medical care, guaranteeing the accuracy of exchanged information, fraud, and abuse have rapidly become evident. While pharmaceutical dispensing through traditional pharmacies is highly regulated, guidance concerning the regulation of dispensing on the Internet is lacking. The market's swift emergence, the unique jurisdictional elements of its operation, and the diversity of involved governing bodies have regulators struggling to devise the ideal mechanism to address the challenge.

*576 Historically, pharmaceutical services have been governed predominantly by the states. In this respect, a number of states' attorneys general and state licensing boards have prosecuted online pharmacy offenders under existing state pharmacy, consumer protection, and unprofessional conduct regulations. Alternatively, a few states have passed new laws dealing explicitly with online pharmacies. On the prosecutorial side, the Food and Drug Administration (FDA) has also joined the states in a limited role as provided by the Food, Drug, and Cosmetic (FD&C) Act. In addition, the American Medical Association (AMA) and the National Association of Boards of Pharmacy (NABP) have taken an active role by respectively formulating recommendations and instituting a certification program for online pharmacies. Concomitantly, Congress has requested information and heard testimony concerning online pharmacies. As a result, Congress is currently considering the implementation of the Internet Pharmacy Consumer Protection Act as an amendment to the FD&C Act to provide minimum standards for online pharmacy websites.

This Note explores the regulatory challenges of providing pharmaceutical products via the Internet in the United States. It begins with a review of the existing regulatory scheme for prescription drugs in the United States as well as the development of online pharmacies. It then examines the unique jurisdictional, public safety, and abuse issues associated with Internet dispensing, and reviews the applicable legislative history to provide a grounded understanding of the subject. Following a discussion of the actions of state and federal regulators, legislators, and health care professionals, the Note analyzes their respective approaches. Finally, it recommends a collaborative approach, describing specific steps for each interested party, that attempts to protect the rights of legitimate providers while reducing the risks posed by disreputable operators.

*577 The Regulation of Prescription Drugs In the United States

The Pre-E Era

Traditionally, the states have regulated the dispensing of prescription drugs. In addition to the practical regulations regarding dispensing, state pharmacy and medical boards regulate the licensing and professional standards of health care practitioners. The decision to defer responsibility for pharmacy regulation to the states stems from principles elucidated in the Constitution. In particular, the Tenth Amendment preserves the power of the states to regulate what is not directly regulated by the federal government. The states, however, are not the sole arbiters of pharmaceutical law.

The Commerce Clause of the Constitution enables Congress to regulate commerce among the states. With this in mind, the Federal FD&C Act was enacted in 1938 to control the sale of drugs and authorize only those that are safe and effective. These provisions were devised well before the advent of the Internet, although their purpose was akin to the desires of current *578 regulators: "to protect patients from injuries resulting from unsafe and counterfeit drugs and from illicit practice of medicine and pharmacy." While there may be an inherent assumption, given its name, that the FDA is the sole authority for the enforcement of food and drug issues, at least two other agencies wield significant influence in this arena. The Drug Enforcement Administration (DEA) regulates narcotic substances via the Controlled Substances Act, and the Federal Trade Commission (FTC) governs the advertising of over-the-counter medications. The requirements of this integrated system of regulations and authorities at the state and federal level have provided "an effective safety net to protect the U.S. public from harmful or ineffective drugs, as well as improper prescribing or dispensing of pharmaceuticals." The development of online pharmacies, however, has torn a significant hole in this net.

The Internet & Online Pharmacies

The Internet has evolved into a remarkable tool for acquiring information (including health care information) and conducting business. A recent Harris Poll indicated that of the 97 million people using the Internet, 74% view health information. While such access is a hallmark of the Internet and has the obvious *579 advantage of empowering its users, the lack of quality control standards and the fact that practically anyone can post information renders the quality of this information particularly suspect. As the editors of the Journal of the American Medical Association described, "[t]he problem is not too little information but too much, vast chunks of it incomplete, misleading, or inaccurate." Although the dangers of incomplete, misleading, or inaccurate information are not only applicable to online pharmacies, the impact of such information is increasingly pronounced, given the recent surge of online pharmacies.

According to Carmen Catizone, Executive Director of the NABP, online pharmacies were among the first e-commerce children of the New Year, born in earnest following the performances of online giants such as during the December 1998 holiday season. At that time approximately Moodlety- six online pharmacies were identified. This number skyrocketed to over 400 by August *580 1999. Given the potential financial stakes in this emerging market, one author remarked, "the battle for customers could make the online bookstore competition look like a playground scuffle."

While Peter Neupert, the CEO of, doubts that online pharmacies signal the end for traditional drugstores, he predicts that within five years they will capture 20% to 25% of the pharmaceutical market. Many of the traditional "brick and mortar" chain drugstores have launched or invested in existing *581 online pharmaceutical services. While some are unconvinced of the financial rewards of online services, many participants have forged real alliances in the virtual world in an effort to gain access to pharmacy benefit plan members and a broad range of insurance *582 providers. Even with the trepidation of some large chain pharmacies, however, some smaller family-owned pharmacies that have been on the decline in recent years view the online pharmacy as an opportunity to expand and compete more effectively. An improved ability to compete may be crucial in an environment in which perhaps the only thing declining faster than the number of independent pharmacies is the rate of reimbursement offered by third-party payors. Although the experts disagree whether online pharmacies will be a boon for independents, it will likely be beneficial for consumers. The nature of the Internet clearly offers some distinct advantages, including additional opportunities for convenient, discrete, quality, cost-effective pharmaceutical services.

The beneficial potential of online pharmacies is significant. Consider the ability to provide information and products to individuals whose access to conventional pharmacies is restricted because of chronic disease or geography. Similarly, legitimate *583 options include online prescription transmission, electronic refills, and electronic consults within narrowly defined circumstances. Essentially, online pharmacies, when coupled with legitimate practices, "'are just another channel of distribution that some people will find more convenient,"' according to Dr. John L. Colaizzi, Dean of Rutgers College of Pharmacy. Such benefits are not limited to online pharmacies; technology is also arriving that will improve health care delivery between diverse health care providers and information systems.

*584 The potential advantages of online pharmacies, however, do not exist in a vacuum. They are accompanied by a longer, and potentially more detrimental, list of disadvantages, including: concerns about privacy and the transmission of confidential health information; difficulties with insurance coverage; length of time associated with the process; added costs; lack of opportunities for personal uniform contact and counseling; opportunities for fraud and abuse; and the added competition from traditional pharmacies implementing more modern conveniences. Additionally, a particular challenge may rest in certain patients themselves. Although older individuals are typically the largest users of *585 prescription drugs in the United States, and consequently account for a substantial pool of potential online pharmacy customers, they also represent a segment of the population less likely to have Internet access. This level of access, however, may already be changing.

In another aspect of the consumer realm, the FDA and pharmaceutical manufacturers are struggling with regulatory and liability concerns surrounding the direct-to-consumer promotion and advertising of pharmaceuticals on the Internet. Even with all of these considerations, a concern that underlies all Internet pharmacy transactions, beyond the mere adequacy of information and accuracy of dispensed products, is the reputability of the entities' practices. Reputable behavior, or its more troubling *586 absence, is at the heart of the debate about online pharmacy regulations.

Internet Prescribing and Safety

Functionally speaking, reputable online pharmacies do not operate much differentlyfrom their "brick and mortar" brothers or mail-order sisters. Patients contact the pharmacy via the Internet, and after providing the necessary registration and payment information (e.g., name, address, drug allergies, current medications being used, etc.), the pharmacy dispenses a medication from a prescription provided via mail, e-mail, phone, or fax, depending upon the given state's regulations. Depending upon the online pharmacy's parent, the patient may then pick up the prescription at a locally convenient retail site or have the prescription delivered via standard or overnight delivery. These legitimate sites, while introducing new practical concerns for regulators, are not the predominant problem.

The most dangerous and worrisome sites are those rogue pharmacies that provide patients with prescription medications over the Internet via online doctors' services with essentially no examination or physician contact. Consumer demand for these services is being met by a waiting list of physicians, lured by the *587 prospect of easy money, writing prescriptions for existing sites, or by physicians starting their own online dispensary. Lack of adequate physician-patient interaction is only the first problem.

The process of obtaining a prescription through a domestic rogue online pharmacy illustrates some significant health safety concerns. Perhaps a telling aspect of the motivation behind these sites is often the first question they require online patients to answer: Will that be Visa or American Express? Although profitability is an obvious goal of these sites, consumer safety is the target of regulators. Many sites do not list the credentials of health professionals, if any, who are involved in the process. There is often no way, therefore, to determine the credentials, identity, or even if a pharmacist or physician is involved. Equally disturbing are the health question-naires that such sites often use in lieu of a traditional physician exam. The problems of this pseudo-exam are subsequently aggravated by the inability for follow-up. Overall, these sites do the absolute minimum in a veiled attempt to comply with state *588 examination and dispensing requirements. These operational mechanisms, coupled with FDA approvals in recent years of a number of "lifestyle" drugs like Viagra (R), have provided illegitimate sites with a potentially profitable but flagrantly dangerous niche market. This market often preys on the fears, desires, and wallets of "cyberchondriacs."

As if rogue domestic sites were not dangerous enough, foreign sites present their own unique and dangerous concerns. The problem of patients ordering prescription drugs from foreign countries is not new. According to Bill Hubbard, acting deputy commissioner for policy with the FDA, "'[w]e've always had these catalogues where people could buy from overseas, but it was a very small market. . . . The Internet takes it up a big notch."' Although pharmaceutical companies may not market unapproved drugs in the United States, and U.S. Customs or Postal authorities may seize these products in the mail, individuals may order these drugs as long as they are for their own use. Although Hubbard is correct, "big" is probably an insufficient term to describe the magnitude of the Internet's impact and the plethora of resulting problems. As Representative Ron Klink (D-Pa.) described, "'[i]t is strictly the Wild West of drug dealing via the Internet."' The Internet is often praised for the accessibility it offers to legitimate products and information; however, the same access enables patients to order *589 oxycodone from Spain, or Xenical from the British Channel Islands.

Equally troubling is the anonymity that cyberspace provides and the resulting ability of patients to mistakenly or deliberately falsify information in order to obtain the approved and unapproved products they desire. A number of journalists have spotlighted the dangers in their own purchasing exploits, and at least one news station obtained Viagra for two pets, a deceased person, and a man with cardiac disease. Inherent in this acquisition is the ability of patients to obtain medications "without so much as talking to a doctor." Federal regulations are designed to provide safe and *590 efficacious products manufactured under strict quality control guidelines, but there are no such guarantees with products obtained through rogue foreign online pharmacies. In fact, there is no guarantee that the product ordered is the one the patient actually requested. Additionally, the lack of adequate physical exams and consultations may increase the risk of potentially life-threatening drug interactions or harmful adverse events.

Beyond the problems resulting from online providers, now regulators have to contend with electronic bulletin boards enabling an online "flea market," where patients are offering to sell their leftover drugs to other patients. The significance of the problems with online pharmacies was highlighted by Bloom and Iannacone's recent study. The importance of their results was manifested in the decision of the editor of the Annals of Internal Medicine to post the study on its website months before the article was scheduled for publication. As health professionals and probing journalists expose the intrinsic health related problems of these disreputable sites, the legislators, regulators, and professional organizations are also developing a heightened awareness of the thorny jurisdictional problems inherent in these electronic transactions.

*591 Jurisdiction and Jell-O

The problem facing regulators is that a patient may sit at their home personal computer in one state, deal with an online site in another state, have a prescription issued by a physician in a third, and then have a pharmacy in a fourth state dispense the product. This intricate web of connections has left lawmakers puzzled, wondering where to start. The FDA has the authority to act under the auspices of the FD&C Act. Additionally, other federal agencies, such as the FTC, DEA, U.S. Customs Service, and the Postal Service, have related authority. Furthermore, the states regulate the licensing of pharmacists, pharmacies, and other health professionals. Although the states lacked explicit regulations or laws on e-prescribing at the end of 1998, some states' attorneys general have filed claims using existing state licensing and consumer protection laws. Finally, professional organizations such as the AMA and the NABP provide licensing and professional standards. Although each group is an important member of the enforcement team, their roles and interactions remain inadequately defined. As James Winn, Executive Vice *592 President of the Federation of State Medical Boards (FSMB), stated, the difficulties inherent in this regulatory scheme are like "'trying to nail Jell-O to the wall."'

The process of bringing an online site or provider to justice is complicated from the first step, identifying them. Many of the disreputable sites do not maintain information about their location or providers, often requiring law enforcement personnel to "'sort through multiple shell corporations, addresses that turn[] out to be mail drops, and overlapping physical and Internet addresses shared by different entities."' Once identified, the enormity of the Web allows providers to close up shop and re- appear at another site a short time later. The FDA has made efforts both alone and with the help of Internet Service Providers (ISPs) to act against these sites, but it is a formidable task, requiring additional resources.

Although the domestic jurisdictional issues are particularly daunting, the problem of bringing action against a foreign site is even more frustrating because jurisdiction is limited. According to Carmen Catizone, Executive Director of the NABP, "[t]he foreign-based sites are going to be almost impossible to monitor." Given this difficulty, the FDA is working with the World Health Organization (WHO) and cooperating with other nations in an *593 attempt to address the problem, but a formalized international approach does not yet exist. One reason may be the various standards for prescription medications throughout the world. In the meantime, the WHO has stressed cooperation among member nations to enforce particular national standards and prohibit illegal international sales. An increasing awareness of the problems found in a global electronic pharmaceutical market led lawmakers abroad and at home to call for action.

Viagra E-mail and Legislative Impetus

The legislative process officially began in March 1999, when Democratic members of the House asked the Comptroller General to conduct a formal review of the "exploding trend of online phar-macies." Ironically, only a few days later, Dennis P. Fitzgibbons, minority deputy staff director for the House Commerce Committee, received e-mail messages promoting a website where consumers could purchase Viagra without a physician's visit. In their letter, the House members expressed concern that these pharmacies "may be outpacing formal state and federal controls," and requested an *594 analysis of five primary issues. Shortly after submitting this letter to the Comptroller, the members also requested the input of Dr. Jane Henney, Commissioner of the FDA. In their letter to Dr. Henney, the members requested the FDA's opinion or knowledge on six primary issues. In response, the FDA addressed the members' concerns first in written form, and later in testimony before the Subcommittee on Oversight and Investigations.

In its letter, the FDA specifically responded to the members' six points in the following ways. First, although the FDA was aware of the authority of various federal regulatory agencies and states regarding online pharmacies, it was unaware of any single agency that functioned as the "primary regulator." Second, while the states traditionally regulate dispensing, the FDA's Center for Drug Evaluation and Research (CDER) reviews and acts against "violative" sites. Additionally, the FDA's limited authority (especially regarding foreign sites) and resources necessitate the surveillance and assistance of multiple federal agencies, state *595 boards, and professional organizations. To this end, the FDA was developing draft guidance and assessing its human resources. Third, the FDA's internal working group was planning to meet to address the adequacy of existing regulations and regulatory design. Fourth, the FDA expressed concern over the "geographic diffusion and other unique characteristics of the Internet," and stated that new regulations must deftly balance the concerns of legitimate e-commerce with the need to protect public health. Fifth, the FDA was unable to assess potential problems with privacy and the potential for adverse events. Furthermore, the FDA had no evidence at the moment to indicate that online pharmacies were more susceptible to fraud than other pharmacies that lack direct patient contact. Finally, the FDA asserted that quality standards apply "to all drugs sold in commerce in the United States, regardless of whether the order is placed in person, online or by the mail."

In contrast to this initial correspondence, the FDA's subsequent legislative testimony was not designed to answer provided questions. Instead, the agency focused on the benefits and risks associated with online pharmacies, framing its initiatives as a governmental hands-off approach consistent with the Administration's Framework for Global Electronic Commerce. Additionally, this initial testimony, and the subsequent hearing *596 held roughly one year later, informed the Subcommittee about the FDA's continuing progress in cyberspace.

The FDA was joined by professional organizations such as the AMA in this democratic process. AMA physician Herman I. Abromowitz's testimony focused on the physician's professional perspective toward online prescribing. In particular, Dr. Abromowitz highlighted the AMA's opinion on the minimum standards for proper medical care, the AMA's desire to work collaboratively with other organizations to facilitate acceptable electronic prescribing practices, and the opportunities for legitimate online prescribing.

Initial Responses to the Online Pharmacy Phenomenon

Federal Enforcement


The FDA, through its Office of Regulatory Affairs and Center for Drug Evaluation and Compliance, has actively confronted the problem of illegal online pharmaceutical sales. It initially identified over sixty cases potentially linked to such illegal sales. Dr. Woodcock, Director of the FDA's CDER, identified some prime examples in her testimony before Congress. These included: (1) *597 the first FDA conviction for wire fraud based on the online sale of an unapproved HIV home test kit; (2) the identification of a Canadian website that provided GHB prep kits to an Illinois man who was later convicted of possession of a controlled substance; (3) the seizure by the FDA's Office of Criminal Investigations (OCI) of multiple steroid shipments from foreign manufacturers to the operator of a U.S. website that purported to function as a "buyers club"; and (4) multiple efforts against a South American lab, marketing via its company website, abortion kits containing drugs unapproved in the United States. Since these initial actions, the FDA implemented an Internet Drug Sales Action Plan and continues to engage in civil and criminal enforcement activities. Spurred by the testimony of Dr. Woodcock and others, the Democratic members of the House, led by Representative Ron Klink (D-Pa.), introduced legislation to assist in this fight.

*598 Elevators, Escalators, and Hair Stylists

The Internet Pharmacy Consumer Protection Act (Act) was introduced as an amendment to section 503 of the FD&C Act. The Act proposes Web-based notification requirements for online providers in an attempt to protect public health and safety, and was prompted in part by Congressman Klink's observation that current laws required "elevators, escalators and hair stylists . . . to display more licensing information than websites selling potentially lethal drugs." Essentially the Act has two components. The first explains minimum identification requirements for online pharmacy websites, and the second addresses enforcement authority. Regarding identification, the Act requires the site to list the name and state of licensure of every professional working with the site (e.g., dispensing physicians, consulting physicians, and pharmacists), as well as the licenses held by practitioners that conduct patient consultations designed to provide a prescription. Regarding enforcement, the Act leaves the authority with the state if the state has provisions no less stringent than those proposed in the Act. Currently, the Act remains in committee in the House.

U.S. Customs Service

The essentially exponential growth of online pharmacies in 1999 was reflected in a 450% increase in the quantity of pharmaceuticals seized by the United States Customs Service from 1998 to 1999. *599 Although this growth presents an increasing burden upon the Customs Service's limited resources, the Service continues to work separately and in cooperation with other federal agencies to limit the influx of illegal foreign pharmaceuticals. Additionally, in testimony before Congress, the Service emphasized the need for an approach employing cooperation, communication, and additional resources as well the specific need for the U.S. Postal Service to implement an automated manifest information system. The Customs Service's recommendations and actions have not been confined, however, to domestic tactics. For example, in 1999 Customs officials worked with authorities in Thailand, a prime source of illegal foreign drugs, to seize 2.5 million pharmaceutical dosage units, arrest Moodlety-two Thai citizens, and demonstrate the Customs Service's continued commitment to protect America's borders from illegal activities, both electronic and tangible.

Department of Justice

The Department of Justice (DOJ) has also become increasingly involved with Internet dispensing by: (1) outlining avenues that exist for prosecuting online pharmacies through existing laws *600 regulated by the FDA, the DEA, and the FTC; (2) enforcing these laws; (3) engaging in training and education of law enforcement personnel; (4) cooperating with domestic and foreign enforcement agencies; and (5) supporting the Internet Prescription Drug Sales Act of 2000, with the proposal that the bill be amended to provide a mechanism for injunctive relief.

*601 Presidential Proposal

The President also joined the political chorus of concern in the final days of the last millennium by submitting a proposal to address online pharmacies as part of the 2001 budget. The Clinton proposal requires online pharmacies to obtain federal certification through the FDA, and creates civil penalties of up to $500,000 for each incident of dispensing prescription drugs without a valid prescription. Additionally, the proposal grants the FDA administrative subpoena power designed to compel cyberphar-macies to provide records to federal officials. The President, moreover, hopes to improve the FDA's ability to examine online pharmacies by providing an additional $10 million to increase staffing by 100 and upgrade the FDA's computer capabilities.

In an effort to achieve these goals, the Administration, via Secretary of Health and Human Services Donna Shalala, intro-duced the Internet Prescription Drug Sales Act of 2000 to Congress on May 2, 2000. The bill would require online pharmacies to be licensed in each state where they practice and in each state to which they deliver prescription drugs. It would also mandate that all online pharmacies meet federal laws concerning the practice of pharmacy (i.e., storage, handling, and record-keeping requirements) and the completion of a pre-launch notice to all applicable state pharmacy boards, as well as the Secretary of Health and Human *602 Services. Finally, the bill would provide both federal and state mechanisms for enforcement, including monetary civil penalties. The proposal, in general, and the bill, in particular, represent a reversal of the Administration's views on online pharmacy regulation. While the Administration may believe that Congress is willing to progress in this area, given its introduction of the Internet Pharmacy Consumer Protection Act, such optimism may be misplaced.

The presidential proposal has drawn limited, essentially courteous, approval from pharmacy professionals, who compli-mented the President for recognizing the benefits of online pharmacies as well as the need for strong penalties for rogue operators. Professional organizations, however, have voiced opposition to a proposal that expands FDA authority over online pharmacies. The reputable pharmaceutical players in this market prefer that the regulatory power remain where it has always existed, with the states. Meanwhile, as the President and Congress prepared to battle illegitimate online pharmacy services *603 with the pen and the purse, states' Attorneys General began combating these practices with laws already on the books.

Consumer Protection through Existing State Laws

Although states lacked any explicit laws relating to online prescribing, they challenged pharmacies and providers with existing licensing and consumer protection regulations. Missouri Attorney General Jay Nixon provides a classic example. He obtained a temporary restraining order (TRO) followed by a permanent injunction against S&H Drug Mart, which uses the website, and William Stallknecht, its phar-macist-owner. Both were featured in a New York Times special report. The basis for the claim was that the San Antonio pharmacy was providing medications to Missouri citizens without a Missouri pharmacy license. The final order required that: (1) Stallknecht pay restitution to Missouri residents who made online *604 purchases from January 1 to June 30, 1999; (2) Stallknecht "pay $15,000 in penalties and costs to the state of Missouri;" (3) the website post a notice that prescription sales were not available to Missouri residents; and (4) violations of the injunction would result in a maximum penalty of $5,000. The claim was brought after two prescriptions were filled without verification during an investigation by the Attorney General's office. Although William Stallknecht, the pharmacist-owner of, indicated that he keeps detailed records and dispenses only prescriptions of Texas physicians to reduce potential suspicion in other states, he admitted his daily expectation that investigators will arrive at his store. In conjunction with the TRO, Nixon obtained an agreement with the Texas physician who wrote the unverified prescription that he would no longer treat Missourians or provide prescriptions for them using Internet services. Under similar circumstances, Nixon obtained a TRO against a Houston clinic, pharmacy, and physician.

Meanwhile, in Kansas, State Attorney General Carla Stovall filed a similar claim for offering medications without adequate patient evaluation and deceptive advertising, as well as five consumer protection suits against numerous companies, pharmacies, physicians, and other individuals. Stovall's claims arose initially *605 from a suit filed by her office in November of 1998, on behalf of the Kansas Board of Pharmacy, against Dr. Leandro Pasos for violations of the Kansas Healing Arts Act. Foreshadowing potential future problems for regulators, the Washington Medical Quality Assurance Commission cited Dr. Pasos for unprofessional conduct as a result of his online prescribing roughly six months after the Kansas Board named him in a suit.

In an effort to reduce such duplicative efforts, conserve resources, and promote effective law enforcement, the National Association of Attorneys General (NAAG) created an Online Pharmacy Working Group. Although this collaborative effort has already demon-strated its utility, State Attorneys General recognize that a successful approach will require federal cooperation. To that end, the NAAG adopted a resolution endorsing "cooperative federalism in addressing Internet issues." More importantly, the NAAG set forth two concrete requests: First, that the states remain the "primary enforcers of laws relating to the health of their citizens;" and second, that the federal government provide "nationwide injunctive relief." In doing so, the states actively defined their preferred role in this arena and offered a tangible example of how to reach this objective. Such suggestions, however, are not exhaustive. For example, as existing state laws have provided some recourse for authorities, a few states have begun a more targeted approach.

Creating New State Laws

In an effort to address some of the jurisdictional complications of online dispensing, one of the first of a new breed of laws addressing *606 nonresident Internet pharmacies was passed in Indiana. Indiana's Internet pharmacy law requires providers to adhere to Indiana's generic drug laws as well as the law of their domicile. Similarly, Arkansas modified and expanded its existing nonresident pharmacy statute to address the growing concerns of Internet pharmacies. The law requires the out- of-state pharmacy to be licensed in Arkansas, to have a licensed Arkansas pharmacist, and to designate an Arkansas resident as an agent. In addition, if the pharmacy comes under scrutiny, it must appear before the Arkansas Board of Pharmacy.

In a related effort, Illinois legislators have required nonresident pharmacies to meet special registration requirements. Finally, a number of other states are reviewing potential legislative options to address the complexities of online dispensing. While states have begun enforcing existing laws and developing new laws, State Medical and Pharmacy Licensing Boards have been active partners in the enforcement of acceptable professional practice standards.

Licensing Boards

With the primary objective of upholding the standards of professional practice, and perhaps the secondary motive of instilling in offenders the fear of prosecution, suspended licenses, and the inability to practice, state licensors have stepped in. For example, the Illinois Professional Regulation Department suspended the license of Dr. Robert Filice for writing Viagra prescriptions founded *607 only on the information contained in a single page patient questionnaire and payment of an $85 consulting fee. His license was later reinstated with restrictions following a hearing. Similarly, eleven other state medical boards have acted against physicians for writing online prescriptions. A Nevada physician was warned that he could no longer continue online prescribing with Viagra . In Wisconsin, the board "summarily suspended" a physician, only to later reconsider the decision. In Colorado, the board chided a physician and warned of the future potential for disciplinary action. These actions have been welcomed by national professional organizations that possess the ability to make and recommend standards, as well as guide practitioners, but are limited in their authority to reprimand.

Professional Organizations

The AMA has expressed its almost sacred consideration for the physician- patient relationship and its concern at the potential for significant erosion of that relationship through improper, unregulated online prescribing. The organization has made it clear that the requirements a physician must satisfy to establish a physician-patient relationship in a traditional setting should apply equally to the Internet. As such, prescriptions offered "solely on the basis of a questionnaire would not suffice," and *608 "fall[] well below a minimum standard of medical care." The AMA, however, has indicated its concern for the simultaneous protection and development of legitimate electronic prescribing opportunities. Promoting the optimal use of this developing technology while inhibiting its abuse is a delicate balance. To that end, the AMA Board of Trustees has recommended a six-point plan concerning its professional role in guiding the use of online prescribing and its cooperation with other organizations in cyberspace.

The AMA's first three recommendations express its opposition to online prescribing without adequate protections, its desire that state licensing boards act against improperly operating sites as well as practitioners, and its proposal that the AMA develop guidelines on the physician-patient relationship given the advancements in technology. The remaining three of the AMA's six recom-mendations deal with its cooperation with other organizations, the first being the FSMB. In this cooperative effort the AMA hopes to develop model laws on Internet prescribing at the state level.

The second collaborative partner identified by the AMA is the NABP. In particular, the AMA indicated its support of the NABP's Verified Internet Pharmacy Practice Sites (VIPPS) program. The NABP developed the program to address growing public concern about Internet pharmacy services, and the AMA supports the program because it provides a mechanism whereby "physicians and patients can easily identify legitimate Internet *609 pharmacy practice sites." The program requires VIPPS certified pharmacies to adhere to the "licensing and inspection requirements of their state and each state to which they dispense." The first certified pharmacies,, Merck-Medco Managed Care L.L.C., and, bear the VIPPS certification hyperlink signifying that they meet the Moodlety-point pharmacy practice criteria. Finally, the AMA also proposed working with the FDA and other regulatory agencies to eliminate illegally operating online pharmacies.

Whose Job Is It Anyway?

FDA Authority


The FDA has deftly pursued violators and should be commended for its efforts. The FDA's initial intention to follow the Framework for Global Electronic Commerce, proposing that the private sector should lead along with the states is especially commendable. President Clinton's proposal to expand FDA authority, however, is troubling. The proposed federal certification will yield limited efficacy. Although federal certification may provide the FDA with a master list of online operators and consumers with additional information about their online provider, it seems likely that the predominant registrants will be reputable operators. Some rogue sites may shy away from the arena if the proposed stiff penalty for lack of certification is enforced, but many will likely continue to operate illicitly, moving from state to state until the states *610 themselves have adopted sufficient, effective regulatory and enforcement mechanisms.

Certification will devastatingly blur the boundary between the states' and federal government's authority to regulate pharmacy practice. Mandatory federal certification would enable the federal government to regulate electronic pharmacies such as Eckerd online, but the FDA would continue to lack any authority to regulate traditional brick and mortar pharmacies such as a neighborhood Eckerd store. Consider those pharmacies, both large retail chains and local independents, that permit patients to electronically request their prescriptions and then to pick up the prescriptions at their neighborhood pharmacy. Would the electronic transmission of a prescription or refill request convert the tra-ditional pharmacy into an online pharmacy subject to federal oversight? Where will the FDA's authority cease and the states' authority begin? Would such access then compel the need for brick and mortar access? The prospect of federal certification seems to generate more questions than it answers, possibly explaining why online pharmacy providers have expressed concern over the appropriateness and effectiveness of such a system. As a result, certification may unnecessarily restrict the electronic options that pharmacies offer their patients and essentially inhibit a core tenet of the Internet-access. It is likely that such an outcome would most significantly impact independent pharmacies, perhaps driving them out of pharmaceutical e-commerce and eliminating a valuable tool for competing with the mammoth chains.

*611 Penalties

Although the certification system appears problematic, the need for increased penalties associated with violations is obvious. Without severe and enforceable penalties, there will be little incentive for operators to follow the law or officials to enforce the law. Current federal law makes the dispensing of a prescription medication without a valid prescription illegal. Such existing laws, as identified by the DOJ, could be expanded monetarily, and legislative terms could be modified to define online prescribing effectuated via a short questionnaire as failing to meet the definition of a valid prescription. As such, individual prescribers or websites could be held responsible for such actions. Although effective enforcement of such penalties may depend on the assistance of state regulators, the FDA could likely enact such penalties without the kind of drastic expansion of authority inherent in online certification.

Administrative Subpoena Power

The Administration's proposal fails to address the limits of the Administration's new-found subpoena power. In particular, various potential patient privacy concerns arise. Once again, the concept generates a multitude of questions. How would such power be brought to bear in the case of a provider that offers only online services or the potentially more problematic situation in which a consumer uses both online and traditional components of his pharmacy? Will the FDA be sending investigators to the corner drugstore to obtain the files they desire? Will these investigators be privy to confidential patient information? To what extent will the FDA seek to prosecute individuals receiving dangerous or unapproved agents as opposed to the websites offering such products? Health care providers, pharmacists especially, are faced with numerous existing barriers to effective patient communication. *612 Such power may potentially inhibit patients' willingness to address openly their medication concerns and may dangerously inhibit daily provision of effective pharmaceutical care.

Foreign Sites

Regulating the electronic border-crossing of foreign sites into the United States admittedly may be the most problematic aspect of online pharmacies. The absence of any suggestions within the President's proposal, however, represents a lost opportunity to introduce a comprehensive plan. The inherent limits of federal authority to penalize foreign online pharmacies from offering products in the United States significantly limit regulators' options. Given the FDA's national authority to approve pharmaceutical agents for sale in the United States, as well as its international reputation, the FDA is most suitably positioned to address the global market. Consequently, it would provide a unified national voice to foreign online pharmacies, Internet service providers, and governments. The agency's electronic warnings to foreign cyberpharmacies are a valuable first step. Similarly, the formation of a comprehensive Internet Drug Sales Action Plan and a desire to maintain existing relationships with foreign agencies should be applauded.

A laudable goal would be the creation of an international panel coordinated under the auspices of the WHO. The panel could be established to develop uniform mechanisms for nations to inform one another of rogue sites operating within their borders and *613 outline a series of steps for dealing with such providers. As with existing efforts, the FDA could participate in such an effort through its OCI. Similarly, professional organizations with an international membership, such as the NABP, could assist in bridging these regulatory gaps by expanding professional guidelines and commenting upon proposed enforcement or legislative actions.

FDA as a Centralized Resource

The administration's proposal is not entirely flawed. The FDA may serve as an exceptionally useful centralized resource for the states, and the President's proposal to increase funding to assist the FDA in countering rogue online pharmacies is an excellent step in the right direction. Additionally, the measures taken to educate consumers and practitioners through the FDA's new website and the intended "Potentials & Perils" campaign are also meritorious. The FDA should continue to search, investigate, and prosecute online pharmacy offenders, using its OCI as a key player in this process. Similarly, the Administration should be encouraged to retain its active links with other agencies (foreign and domestic), professional organizations, and practitioners to remain abreast of pharmacologic trends and technologic developments within the online pharmacy arena. For instance, the laudable efforts of the U.S. Customs Service and DOJ dovetail nicely with the FDA's approach. Their separate and collaborative efforts should continue to advance. Also, the FDA may be uniquely situated to function as *614 a national clearinghouse of information from the states regarding offenders.

Some states are implementing online lists of health care professionals that have been subject to discipline to provide consumers with greater information regarding the practitioner they select. Similarly, the FDA could receive and publish on its website a master list of those sites that the states have reported as violating state provisions. Alternatively, if the states independently developedsuch sites, the FDA could create a master site with links to each of the state sites.

The FDA should also be encouraged to establish partnerships with private and academic sectors to increase its breadth of available technological resources.

Legislative Responsibilities and the Internet Pharmacy Consumer Protection Act

The Internet Pharmacy Consumer Protection Act (Act) has been called a "first step" by one of its developers, and it appears to be a good one. By providing minimum standards for identification of Internet pharmacy providers and then leaving the enforcement of the issue to the states, Congress has demonstrated an appropriate balance for the regulation. The Act suffers, however, from some of the same deficiencies found in the Administration's proposal because, with minimum identification standards, like mandatory certification, an assumption is made that providers will comply. Again, the reputable sites likely will comply; given the ability of providers to hide in cyberspace, however, it will be extremely difficult to identify and enforce penalties against those who do not. If sites do not comply, how can they be identified? Unfortunately, neither the President's proposal nor the Act under review addresses this issue.

*615 Congress may fulfill its legislative responsibility by first doing its best to provide additional funding for the FDA, as requested by the President, and for other collaborating agencies in need of additional resources such as the U.S. Customs Service. The legislators may also promote the development of advanced technologies to assist the FDA and the states in their identification and enforcement efforts. This might be accomplished by establishing federally funded research grants targeted at the academic sector, or tax incentives for private companies to develop more advanced Web searching technology. While creating such incentives, legislators must also be mindful of the desire not to inhibit unreasonably online commerce and communication.

The States

The predominant state laws that exist to counter the current situation are clearly inadequate. States' Attorneys General are forced to tackle Moodlety-first-century problems with Moodletieth-century laws designed without adequate consideration for the Internet. These provisions are ineffective deterrents because they lack significant penalties. Additionally, the nature of the Internet makes it relatively easy for offenders to jump from one state to another state where policing may be less rigorous, or where the laws are even less useful to prosecutors. Even with these difficulties, a number of diligent States' Attorneys General pursued commendable and successful claims against rogue operators in 1999. Amidst the morass of inadequate traditional laws, a few state legislatures have been successful in developing new laws in an attempt to deal with this problem. In doing so, they have begun to forge a new legislative path for dealing with these sites.

These new state laws may represent one of the best future tools because of their focused approach and consideration of developing *616 technology. The success of such laws, however, depends on the co-existence of stringent penalties, effective tools for identification, and diligent enforcement. All of these elements must be supported by a foundation of cooperation among the states, between the states and federal government, and between the states and professional organizations. The NAAG's suggestion of nationwide injunctive relief in the exercise of "cooperative federalism" is a sensible example of how this spirit of cooperation may enhance regulatory efforts and should be implemented.

Professional Organizations

To date, professional organizations have adequately fulfilled their advisory duties by providing information and guidance to government regulators. In order to realize their potential, these organizations must fulfill their developing commitments to produce revised practice standards for their practitioners. Organizations such as the AMA and NABP serve a crucial link between government regulators and the professionals they represent, because such organizations generally have a more accurate knowledge of their constituents' concerns and capabilities, making them well suited to tailor narrow but effective revised practice standards. It seems innately more likely that professionals will prefer regulations generated from associations or organizations within which they have a stake than from the federal or state government. Alternatively, it also seems more likely that effective, appropriately tailored state and federal regulations will result from a cooperative effort between the government and professional organizations. Although plans are being made in this regard, such standards have yet to be introduced. Professional organizations also have the ability to make significant contributions in an advisory capacity to the state and federal government concerning proposed legislation. Essential to the effectiveness of these standards will be their association with well- defined and enforced penalties for violations. Additionally, the development and introduction of the VIPPS Certification Program by the NABP is a premier example of *617 the type of forward-thinking, precisely defined tool that will benefit both practitioners and patients. Although the program has been criticized for being voluntary, and as such will likely fail to motivate rogue operators to meet its standards, it is precisely this type of professional leadership that the FDA depended upon when affirming the Framework Global Electronic Commerce. Because a program of this type is voluntary, it will provide added incentive for reputable providers to meet its rigid standards in order to market themselves as a leader in the field.

Finally, for programs such as VIPPS and revised practice guidelines to be effective, an educational campaign must accompany such efforts. The campaign should be two-pronged, targeting both professionals and the public. After updating professionals' knowledge of the field, these newly educated professionals may then help directly educate their own patients. In this manner the professionals may help reinforce the public messages conveyed via professional organizations' websites and traditional advertising. These organizations may seek to enlist student members of their respective bodies to assist in this public outreach.


17: Promoting Quality                                          x
18 Regulation of Professionals                                     x
19 Regulation of Instituions                                      x
21 - Liability - Professionals                                      x
23: Liability - Hospitals                                 x
24 - Liability - Managed Care                              x
26 Confidentiality                                                     x
27 Informed Consent                                          x






Related Pages:
Home ] Up ] [ Pharmaceutical Dispensing in the "Wild West" ] Responsive Regulation ] Regulation of Online Pharmacies ] Safety as an Element of Quality ] Internet Pharmaceutical Communications ]
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Home ] Lesson 18: Regulation of Professionals ] Lesson 19: Regulation - Institutions ] Lesson 20: Regulation of Pharmaceuticals ] Lesson 21: Liability -Professional ] Lesson 22: Liability - Professionals- II ] Lesson 23: Liability - Institutions - Part I ] Lesson 24: Liability - Institutions - Managed Care ] Lesson 25: Reforming the Tort System ] Lesson 26 Contract/ Confidentiality ] Lesson 27: Relationship - Informed Consent ]
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Professor Vernellia R. Randall
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The University of Dayton School of Law
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