Internet Pharmacies: Regulation of a Growing Industry

Amy J. Oliver, "Internet Pharmacies: Regulation of a Growing Industry"
Journal of Law, Medicine & Ethics, 28, no. 1(2000): Pp. 98101.

Industry analysts estimate that Internet pharmacies will generate $1.4 billion in prescription drug sales by 2001 and over $15 billion by 2004. The recent rush by traditional brick and mortar pharmacies either to partner with existing Internet pharmacies or to create their own web counterparts illustrates the increasing importance of business on the Internet. Last summer, retail pharmacy giant CVS acquired the Internet pharmacy soma.com and changed its name to reflect the new ownership. Early this year, in another key industry move, Walgreen's launched an upgraded, full-service Internet pharmacy in order to compete more successfully in the pharmacy industry. It is estimated that there are currently over 400 businesses operating on the Internet that dispense prescription drugs.

As the number of Internet pharmacies has increased, so has the concern regarding the safety of prescription drugs dispensed over the Internet. Many of these web sites prescribe prescription drugs without a valid prescription, dispense drugs of questionable quality and fail to inform patients of possible side effects and interactions. Additionally, customers have difficulty knowing whether an Internet pharmacy is a legitimate operation.

How pharmacies operate on the Internet

Despite the large number of Internet pharmacies, they fall primarily into four categories: online pharmacies that are partners with traditional brick and mortar pharmacies (such as drugstore.com and Rite Aid); online pharmacies that are themselves brick and mortar pharmacies (such as cvs.com); online pharmacies that operate solely on the Internet (such as planetrx.com); and web sites, usually based outside of the United States, where consumers can order prescription drugs without a prescription (such as viagra-global.com).

Each of these types of pharmacies operates differently with regard to how a patient seeks to have a prescription filled. All require the patient to set up a personal account by choosing a user name and password. This account contains basic personal information such as name, address and phone number, primarily for the purpose of billing and shipping. Only a few of the Internet pharmacies require patients to complete any type of health questionnaire detailing such relevant specifics as allergies, diagnosed illnesses and medical history.

Internet pharmacies offer the consumer several different options in filling their prescriptions. Initially, consumers can mail their prescription to an address given on the web site. This works the same way as mail order pharmacies that have existed for many years. Some pharmacies require consumers to mail in their prescription, as is the case with prescriptions for Schedule II narcotics filled on cvs.com. Second, patients can have their physician phone, fax or mail the prescription to the Internet pharmacy, just as they would with their traditional neighborhood pharmacy. Third, patients can enter their prescription information directly into the web site themselves. Depending on the particular Internet pharmacy, the web site may contact the physician to verify the prescription in every case or only on an as-determined basis. Fourth, patients can transfer existing prescriptions to Internet pharmacies by directing their current pharmacy to do so or by providing the relevant information to the web site, which will then contact the pharmacy. Fifth, each Internet pharmacy allows consumers to obtain refills of prescriptions they have had previously filled on the web. This requires the consumer to log in to their personal account and complete a simple form. Finally, in the case of most internationally-based web sites, the consumer simply completes an order form and selects the desired drug and quantity.

After the consumer transmits his or her prescription to the Internet pharmacy using one of these methods, the web site then ships the prescription directly to the patient. Consumers who use an Internet pharmacy with a brick and mortar counterpart, such as drugstore.com or cvs.com, can opt to pick up their prescription at their neighborhood pharmacy instead of having it shipped. It usually takes one to five business days to receive a prescription, depending on the shipping option selected by the consumer. In the case of internationally-based Internet pharmacies, it can take up to three weeks for delivery.

Obviously the quality and effectiveness of the pharmacy varies quite substantially from web site to web site. Serious concern exists about the quality of the drugs dispensed over the Internet. Consumers face possible adverse side effects, potentially dangerous interactions, as well as harm from contaminated, counterfeit or expired drugs. This has resulted in the call from consumer groups, the government and others for regulation of the burgeoning industry.

Regulation of Internet pharmacies

The states have traditionally regulated pharmacies and the dispensing of prescription drugs. State boards of pharmacy license both pharmacies and pharmacists to practice in their state. The Food and Drug Administration (FDA) has traditionally regulated only the drugs themselves, approving them for use to treat various illnesses or conditions and ensuring their safety. Increasing growth of the Internet pharmacy industry as well as growing concern about the safety of drugs dispensed over the Internet has prompted the pharmacy industry, the federal government and several states to take action.

Industry self-regulation

The primary industry response to Internet pharmacy growth has come from two sources, the National Association of Boards of Pharmacy (NABP) and a newly formed broad-based coalition. The NABP was established in 1904 to "assist state licensing boards in developing, implementing, and enforcing uniform standards to protect the Public Health." In the spring of 1999, the NABP established the Verified Internet Pharmacy Practice Sites (VIPPS) program in response to increasing public concern about the safety of Internet pharmacies.

The VIPPS program establishes a "Good Housekeeping" type seal of approval that Internet pharmacies can display on their home pages. The seal provides a direct link to the NABP. In order to receive the seal "a pharmacy must comply with the licensing and inspection requirements of their state and each state to which they dispense pharmaceuticals. In addition, pharmacies displaying the VIPPS seal have demonstrated to NABP compliance with VIPPS criteria including patient rights to privacy, authentication and security of prescription orders, adherence to a recognized quality assurance policy, and provision of meaningful consultation between patients and pharmacists."

To date, the NABP has certified four Internet pharmacies: cvs.com, drugstore.com, merck-medco.com and planetrx.com. As many as thirty additional Internet pharmacies have applied for VIPPS certification. It remains to be seen what effect this will have on the overall safety of drugs prescribed over the Internet.

A new pharmacy industry coalition formed in 1999 in response to the chaos created by the rapid growth of pharmacies on the Internet. The coalition resulted from an Internet pharmacy summit held in Washington, D.C. on November 9, 1999. The National Association of Boards of Pharmacy organized the summit after Bill Razzouk, CEO of planetrx.com, made a request for one during his testimony before the House Commerce Subcommittee on Oversight and Investigations on July 30, 1999. Members of the coalition come from federal and state governments, consumer organizations, medical groups and Internet pharmacies.

The coalition has formulated four primary goals: first, to form a task force on technology to develop legislative and enforcement initiatives; second, to develop an aggressive consumer education plan; third, to create Operation Safe Net in order to organize the industry and serve as an agency to receive consumer complaints; and fourth, to establish the proper relationships for patients and pharmacists at Internet pharmacies. It is currently unclear how the coalition's goals will interact with recent actions taken by state and federal governments.

Federal government regulation

The first action by the federal government came in July, 1999, when the FDA added information to its web site (fda.gov) in order to assist consumers in safely purchasing drugs over the Internet. The web site answers consumer questions such as: "Is it safe to buy prescription or over-the-counter drugs online? How can you tell if a Website that sells medical products is legitimate? What should you do before you buy medical products online?" According to FDA Commissioner Jane Henney, "[t]he development of the Internet has opened up many new options for consumers to purchase products more conveniently" but has also "provided unscrupulous individuals with immense new opportunities to promote and sell prescription drugs unlawfully to unsuspecting patients."

In order to deal with the growth of internationally-based Internet pharmacies illegally selling prescription drugs, the FDA has begun to issue "cyber" warning letters transmitted electronically to web sites the FDA has identified as selling prescriptions that may be illegal. The letters inform the web site owners that they may be in violation of U.S. laws that govern the sales of prescription drugs and further warn that United States Customs officials may detain and refuse entry to future shipments from the web site. So far, one such web site has voluntarily agreed to cease its illegal activities.

On December 28, 1999, President Clinton escalated the response of the federal government and announced a program to protect patients who purchase prescription drugs over the Internet. The plan, accompanied by $10 million in new funds, would give the FDA authority to investigate, identify and prosecute web sites selling unapproved new drugs, counterfeit drugs, or prescription drugs without a valid prescription or those which fraudulently market drugs. The plan would also certify all Internet pharmacies that meet state and federal requirements, much as the NABP's VIPPS program already does. It also creates new civil monetary penalties and gives the FDA subpoena authority to build cases against offenders, a power it now lacks. This proposal met with generally favorable but mixed reaction.

While some Internet pharmacies, including drugstore.com, familymeds.com and healthcentral.com, welcome the proposal as a way to deal with "rogue" web sites, the National Association of Chain Drug Stores favors a more voluntary approach to regulation. Some question also exists regarding the appropriateness of the FDA as the regulator of Internet pharmacies. Pharmacy regulation has traditionally been the prerogative of state boards of pharmacy and the FDA has no previous experience regulating in this area.

Additionally, Congressman Thomas Bliley, Jr. (R-VA), Chairman of the House Commerce Committee, criticized the President's plan to expand FDA authority. His committee would have to approve any legislation expanding the authority of the FDA to include Internet pharmacies. Bliley is reluctant to have the federal government regulate an area traditionally controlled by the states. He is also hesitant to regulate the Internet when politicians in Washington, D.C. do not fully understand its potential.

The United States Customs Service also plays a role in the regulation of Internet pharmacies. An increasingly high number of illegal drugs enter the United States via shipments from internationally-based online drugstores. The U. S. Customs Service seized 4.5 times as many packages of prescription drugs in 1999 as it did the year before. While some of the seized drugs had not received approval for use in the United States, most did not comply with FDA labeling requirements or fell below federal quality standards.

Consumers are purchasing increasing amounts of prescription drugs from these international Internet pharmacies because they offer much lower prices than pharmacies in the United States. For instance, drugquest.com advertises that it offers customers prescription drugs without a prescription at prices of up to 60% less than the prices charged in the United States. The reality of this claim varies greatly depending on the cost to the consumer in the United States as well as the availability and price offered by the foreign pharmacies through drugquest.com. The high cost of prescription drugs in the United States has prompted many individuals, especially those with chronic illnesses who take multiple medications on a daily basis, to seek alternate sources for their medication.

State government regulation

States have also begun to regulate Internet pharmacies. Several state attorneys general, including those in Missouri, Michigan, Kansas and Illinois, have taken legal action to prevent Internet pharmacies from filling prescriptions for citizens of their states. Generally, the states allege that Internet pharmacies have failed to register with the appropriate authorities in order to lawfully conduct business in their state and fill prescriptions authored by physicians not licensed to practice medicine in their state. Some web sites have voluntarily agreed not to sell prescription drugs to residents of certain states after receiving warning letters. Additionally, some state boards of pharmacy have issued reprimands to unlicensed Internet pharmacies.

The Attorney General of Missouri, Jeremiah "Jay" Nixon, successfully obtained a permanent injunction against pillbox.com, a Texas-based Internet pharmacy, preventing the company from selling prescription drugs to Missouri residents. Pillbox.com sold prescription drugs to Missouri customers without a state license. The injunction requires the defendants to pay a fine of $15,000 to the state and reimburse all Missouri residents who purchased drugs on the site. Additionally, pillbox.com must clearly display a notice on their web site indicating that they cannot sell drugs to residents of Missouri. Similar lawsuits have been filed in Illinois by Attorney General Jim Ryan against expressrx.net, expresstoday.com, mdhealthline.com, rxclinic.com and maleclinic.com. These Internet pharmacies face up to a $50,000 penalty for each violation of the state's consumer fraud act.

In Michigan, Attorney General Jennifer Granholm's office conducted an investigation in which law enforcement officials posed as customers and purchased prescriptions drugs, including controlled substances, online without a prescription. In some cases, the officials posed as minors and people with illnesses who would suffer dangerous side effects from the medication they obtained. As a result of the investigation, the State of Michigan initiated legal action against ten online pharmacies. All of them agreed to stop selling prescription drugs to Michigan residents.

Future of Internet pharmacy regulation

With the large number of Internet pharmacies in operation and an increasingly high number that illegally dispense prescription drugs, further action to regulate the industry seems certain. The jurisdictional lines, however, are far from clear. While the states have traditionally regulated pharmacies and the dispensing of prescription drugs, the federal government and the FDA have justified concerns due to the global nature of the Internet and the threats to public health and safety. The pharmacy industry also has concerns about how Internet pharmacies operate. Although the industry has adopted voluntary standards that may work for legitimate businesses, self-regulation will likely prove inadequate to control illegal practices. Because Internet pharmacies are not confined to one particular jurisdiction, cooperation between the states and federal government will be required to effectively regulate the industry and protect consumers. While this cooperation may lead to the successful regulation of Internet pharmacies that operate from within the United States, effective regulation of foreign-based pharmacies seems both difficult and unlikely.

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