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Legal Issues Associated With Online Pharmacies: Part 1

Legal Issues Associated With Online Pharmacies: Part 1

April 12, 2004
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" States' attorneys generals have been enforcing the regulation of online pharmacies at the state level by filing lawsuits based on undercover investigations of them distributing drugs between states. The states’ attorneys general actions against online pharmacies all have been based on similar legal theories concerning violating state licensing laws and laws requiring doctors to prescribe only medications pursuant to bona fide physician-patient relationships. Through those actions, many online pharmacies are being shut down all around the country. "

As adult webmasters continue to search for new ways to generate revenue and stay competitive, opportunities arise to participate in unique affiliate programs; each filling a perceived consumer need. The latest such craze relates to the online distribution of prescription drugs. Any webmaster considering such an affiliate program should carefully consider the legal and political issues relating to this business model.

Long before the days of the Internet, prescription drug distributors ran tiny advertisements in local newspapers for individuals to order medications directly from the distributors – both with and without a prescription. Now, with just a click of the mouse individuals can order prescription drugs such as diet pills, sleep aids, Viagra, and heart medicine to be dropped off at their front door. This new method of obtaining prescription drugs raises many novel legal issues for drug distributors, affiliates, advertisers and consumers. Given the substantial penalties associated with the illegal distribution of controlled substances, thorough investigation into these issues is warranted before signing up as an affiliate.

Legality of Selling Drugs Online
The Federal Food, Drug and Cosmetic Act (“FFDCA”) limits the kinds of drugs that are legal to import into the United States. Most drugs that are imported into the United States violate the FFDCA for reasons including the failure to obtain required approvals, incorrect labeling, and/or the lack of a valid prescription. The FFDCA was enacted by Congress in an effort to create a “closed drug distribution system,” which would ensure an effective and safe supply of drugs in the United States. Congress is currently reviewing legislation in an effort to further restrict prescription drug importation as discussed infra. The FFDCA contains provisions for civil and criminal liability under 21 U.S.C. §§ 332 and 333. Aiding and abetting or conspiring to violate the FFDCA is also a criminal violation under 18 U.S.C. §§ 2 and 371. The United States Customs Service, the Food and Drug Administration (“FDA”), and the Drug Enforcement Administration (“DEA”) are primarily responsible for overseeing and controlling the importation of prescription drugs.

According to the FDA’s guidance entitled “Coverage of Personal Importations,” the FDA will allow consumers to buy otherwise illegal prescription drugs over the Internet from other countries if: (1) the drug is purchased for personal use; (2) the pharmacy fulfills a maximum of a ninety (90) day drug supply; (3) the product’s intended use is identified; (4) the patient submits in writing that it is for his/her personal use; (5) the patient supplies the name and address of the doctor responsible for treatment; and (6) the product is not a listed controlled or illegal substance. In Opinion Letter No. 03-601 from the FDA, the FDA’s Associate Commissioner for Policy and Planning stated the Personal Importation Policy describes the FDA’s “enforcement priority,” but it in no way alters or modifies the FFDCA.

Some states have made attempts to stop importation of prescription drugs, especially drugs ordered online or through unlicensed pharmacies. Other states have attempted to implement programs which would help enable the importation of prescription medications from Canada for its citizens, which are less expensive due to price controls. However, the FDA’s Opinion Letter No. 03-601 states very clearly that individuals and entities in the United States may not import prescription medications from Canada in contravention of the FFDCA. The Opinion Letter also notes that the FFDCA preempts all states from enacting laws that conflict with federal restrictions.

Problems Associated With Online Pharmacies
Many problems and risks are associated with purchasing prescription medications from online pharmacies, such as health risks from faulty or counterfeit medications, customer allergies unknown to the pharmacist filling the prescription, interaction with other medications the consumer is taking, and drug formulations in foreign pharmacies that may be different from what the patient’s prescription requires. A doctor can advise regarding side effects; however online pharmacies usually provide little advice regarding prescription drugs purchased from the Internet. Customers of online sites are warned to consult a doctor regarding prescriptions, purchase from licensed online pharmacies, make sure the pharmacy has valid contact information, check the expiration date of the medications ordered, understand the side effects of the prescription, and know what the medication looks like.

The FDA presented its position on online pharmacies in the Summer of 1999, “expressing its concern that the Internet may enable products to be marketed with false health claims and may enable sales of unapproved new drugs, corrupted drugs, or prescription drugs without a valid prescription.” According to FDA reports, nearly ninety percent of mail- or Internet-ordered prescription drugs that are stopped at United States borders are dangerous and possibly counterfeit. Warnings regarding ordering counterfeit drugs through the Internet were issued as early as 1998 from the American Council on Science and Health (“ACSH”) and continue to be issued today.

Online pharmacies also raise regulatory issues relating to professional standards for pharmacists to dispense and prepare prescriptions. The National Association of Boards of Pharmacy ("NABP"), consisting of state and national pharmacy boards and boards from Canada and Australia, instituted a voluntary certification program called Verified Internet Pharmacy Practice Site ("VIPPS") in 1999 for online pharmacies which uses a verifiable logo indicating that the online pharmacy is certified.

Effect of Spam Legislation
Like many other “gray” online markets, Internet pharmacies rely heavily on bulk email, commonly known as “spam.” After years of trying without success, the United States Congress passed the Controlling the Assault of Non-Solicited Pornography and Marketing (“CAN-SPAM”) Act, the first federal anti-spam legislation, which requires email marketers, amongst other things, to accurately identify themselves and to provide an email opt-out option. Since January 1, 2004, all spam has been required to comply with the CAN-SPAM Act. The CAN-SPAM Act does not completely ban unsolicited email, but imposes a list of requirements. The requirements include, but are not limited to, banning deceptive messages, forged header information, false email sender accounts, and deceptive subject headings. The Act also requires emails to contain a functioning return address that works for 30 days after the email transmission, spammers to stop transmitting unsolicited emails after users opt-out, and spam email to contain the sender’s location along with a physical address. The Act also mandates the creation of a “do not spam” list by the FTC, which likely will doom at least domestic spam. The effects of these new regulations on the industry have yet to be seen, but given the historical reliance on such promotional devices, it could be substantial. This will all likely come down to how aggressive the regulators will be and how effectively they can pursue offshore violators.

Legal Actions
States' attorneys generals have been enforcing the regulation of online pharmacies at the state level by filing lawsuits based on undercover investigations of them distributing drugs between states. The states’ attorneys general actions against online pharmacies all have been based on similar legal theories concerning violating state licensing laws and laws requiring doctors to prescribe only medications pursuant to bona fide physician-patient relationships. Through those actions, many online pharmacies are being shut down all around the country.

For example, a Florida restaurant owner and her son were sentenced to federal prison for operating an unlicensed Internet pharmacy business, which generated approximately $1.3 million in sales – out of their house. Another South Florida-based business, Rx Network, was fined $68,000 for negligent and excessive filling of drugs ordered off the Internet, and its license was suspended by the DEA. The DEA also suspended the licenses of another Florida-based online pharmacy, Lifeline Pharmacy, and its supplier, C & H Wholesale. The DEA claims that filling orders that are solely determined by users completing online questionnaires without a doctor’s physical examination violate federal licensing laws. However, most states do not have laws that say a doctor must physically examine a patient before prescribing a prescription drug.

On the international front, Rx Depot and Rx of Canada, Canadian-based online pharmaceutical companies, were ordered by a federal judge to shut down 85 storefronts due to their violation of federal law and putting the American public’s safety at risk. Rx Depot would fax customer’s orders from its storefronts to a pharmacy in Canada, which would then mail the medication directly to the customers. The court found that Rx Depot pursued misleading promotions to Americans concerning the safety of unapproved drugs that were potentially harmful and were illegally brought into the United States.

Legislative Efforts
The United States government is being heavily lobbied regarding online pharmacies and the importation of drugs to Americans. Congress has held hearings concerning the risks and benefits of online pharmacies from as early as July 1999, and is currently considering pending legislation concerning re-importing prescription drugs from Canada. The bills, S. 1781 and H.R. 2427, are stalled for the moment as the Senate Committee on Health, Education, Labor and Pensions attempts to resolve differences between these bills. The biotechnology industry, pharmaceutical industry, as well as the FDA, strongly opposes this effort due to the fact that re-importing drugs may jeopardize the safety of Americans since drugs shipped from foreign countries are not subject to the same regulations as those purchased in the United States. On the other hand, imported drugs cost the pharmaceutical companies profits, but allow impoverished Americans to obtain drugs that might otherwise be beyond their means.

Stay tuned for a look at the legal issues surrounding advertising online pharmacies.

Lawrence G. Walters, Esquire is a partner with the law firm of Weston, Garrou & DeWitt, with offices in Orlando, Los Angeles and San Diego. Mr. Walters represents clients involved in all facets of Internet marketing and media. The firm handles First Amendment cases nationwide, and has been involved in much of the significant Free Speech litigation before the United States Supreme Court over the last 40 years. All statements made in the above article are matters of opinion only, and should not be considered legal advice. Please consult your own attorney on specific legal matters. You can reach Lawrence Walters at Larry@LawrenceWalters.com, www.PillLaws.com or AOL Screen Name: “Webattorney.”


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