Clinton Cracks Down on Net Pharmacies

The Clinton administration has announced plans to send a bill to the U.S. Congress that would require online drug retailers to be licensed in the state in which they reside and post basic operational information on their Web sites.

The plan has the support of the Food and Drug Administration (FDA), which will expand its current efforts to track down companies that sell prescription drugs to people without the proper documentation. While testifying before the Senate Committee on Health, Education, Labor and Pensions, FDA Commissioner Dr. Jane Henney said the administration’s licensing plan for online drug sellers is based on “the same regulatory system that Congress and the States have put in place for traditional “brick and mortar” pharmacies.”

Under the plan, Web retailers would be required to post information about the site’s ownership, state licensure, the name of the pharmacist in charge and a phone number where consumers can contact the pharmacist. Online pharmacies that operate without an appropriate license would be subject to both state and federal penalties, just as “brick and mortar” drugstores are.

With a nod toward the current debate over whether the federal government should have jurisdiction over online pharmacies, Henney noted that the White House proposal would maintain “the traditional role of the States in regulating the practice of medicine and pharmacy.”

“The plan would establish only minimal new federal requirements that would not appreciably impact the day-to-day operations of legitimate pharmacies doing business online,” she added.

States Seek to Retain Control

Online pharmacy advocates generally support the notion of requiring Web retailers to be licensed, but they are unified and vocal in their insistence that states retain the right to control such regulation. According to Bruce Levy, executive director of the Texas State Board of Medical Examiners, the states are already moving to tighten controls on Internet sales.

At least a dozen states have taken action against physicians for prescription violations, and nine have adopted rules or statements clarifying their standards for online prescription and distribution of medications, Levy told the committee. In addition, five states are now considering bills that would establish practice standards for prescribing medications over the Internet, he said.

Kansas is one such state, according to Kansas Attorney General Carla Stovall. Though the state has no quarrels with companies that legitimately prescribe medications and fill prescriptions over the Internet, she said, “Unfortunately, the vast majority of the companies operating online pharmacies are not following the law. In fact, the ratio is about 400 to 6.”

The Federation of State Medical Boards of the United States, which Levy represents, and the National Association of Attorneys General, of which Stovall is a member, are pushing more states to join in these efforts.

Industry Offers Weak Support

Drugstore.com (Nasdaq: DSCM), one of the Internet’s largest non-chain drug retailers, supports the licensing of online stores. CEO Peter Neupert told the committee that he does not believe “that the FDA should supplant or duplicate the regulatory role of the states,” and that he “would be opposed to any new regulation that imposed additional burdens on legitimate sites.”

Neupert added that regulation would not “preclude consideration of any proposal narrowly drafted to target only the rogue sites.” According to Neupert, “Those sites are not ‘pharmacies’ anyway and should not be labeled as such for the convenience of defining a regulatory approach.”

Properly licensed online pharmacies can inform, empower and protect consumers, Neupert said, offering Drugstore.com as a model for how online drug retailers can operate safe, legal businesses. Drugstore.com tries to make adhering to the law convenient, he noted. Doctors can phone in a prescription on a toll-free line, mail it in or fax it, he said, but added, “We will never provide prescription medication without a prescription.”

Neupert cautioned Congress and the regulatory agencies to take a light approach in their oversight of Internet pharmacies, lest they squelch a budding industry. He noted research that predicts the online pharmacy business could grow to $15 billion (US$) by 2004.

Calvin Anthony, executive vice president of the National Community Pharmacists Association, also urged the federal government to tread carefully. The NCPA supports state regulation of Internet drugstores on the same basis that the states license brick-and-mortar stores, he said.

“Whatever additional steps are adopted, it is essential that patient care provided by properly licensed pharmacies and pharmacists engaged in lawful conduct not be the targets of unnecessary investigations or regulations,” Anthony added.

International Cooperation Also Needed

Henney called upon Congress to support a consistent stance on online drug sales around the world, to reduce the threat of illegal imports sold over the Internet. The Senate Committee hearing coincided with Monday’s news from the U.S. Customs Office, reported by the Associated Press in Thailand, that U.S. and Thai officials arrested 22 people for allegedly exporting drugs from Thailand that require a prescription in the United States.

The drugs were reportedly sold over the Internet and shipped to U.S. consumers.

This kind of activity, Henney said, is particularly hard to track and stop without cooperation beyond international boundaries. “As electronic commerce embraces global markets, we should strive for consistent principles across state, national, and international borders that lead to safe and predictable results, regardless of the jurisdiction in which a particular buyer or seller resides,” she argued.