News & Events

Drug Importation

Statement of

John M. Taylor, III
Associate Commissioner for Regulatory Affairs
Food and Drug Administration

before

the Senate Committee on Commerce, Science and Transportation

November 20, 2003

INTRODUCTION

Mr. Chairman and Members of the Committee, I am John M. Taylor, Associate Commissioner for Regulatory Affairs at the U.S. Food and Drug Administration (FDA or the Agency).

I appreciate the opportunity to testify regarding the importation of prescription drugs into the United States. Let me begin by saying that the overall quality of drug products that consumers purchase from U.S. pharmacies remains high. The American public can be confident that these medications are safe and effective. FDA cannot, however, offer the same assurance to the public about the safety and quality of drugs purchased from foreign sources that are outside the regulatory system.

My testimony will focus on FDA’s efforts to assess and respond to the public health threats posed by the importation of unapproved, adulterated and misbranded drugs, as well as counterfeit drugs from foreign and domestic sources that pose a threat to the health and safety of U.S. consumers. I will also discuss the law governing drug imports, and the enforcement strategies used to prevent potentially unsafe drugs from reaching the American consumer.

SUMMARY

The Food and Drug Administration (FDA) shares with Congress its great concern for senior citizens and other patients who have difficulty paying for prescription drugs. That is why the Administration has been working so closely with Congress to enact landmark legislation to provide millions of America’s seniors with coverage for prescription drugs under Medicare. As part of that legislation, the Administration supports provisions that build on FDA action earlier this year to expand access to more affordable generic drugs. FDA has also taken a number of other significant steps to provide greater access to affordable prescription medications without compromising safety, including unprecedented steps to lower drug costs by helping to speed the development and approval of low-cost generic drugs after legitimate patents have expired on branded drugs. This includes the biggest expansion in history of our generic drug program, and a series of regulatory changes to make it easier for generic manufacturers to compete.

The Agency has also taken steps to help improve the development process to help lower the high cost of developing new drugs. And the Agency has taken steps to improve the process by which drugs are manufactured. FDA is also working to prevent adverse events through new rules that would require bar coding for drugs and better ways to track adverse events automatically - with the goal of preventing billions of dollars in unnecessary health care costs each year. In addition, FDA is striving to promote electronic prescribing, to improve quality and reduce prescription costs as well. And the Agency is taking additional steps to provide better information to health care professionals and patients alike, including new and better electronic product labels and Internet-based information, about the risks and benefits of medication choices available to treat a particular health problem.

However, FDA continues to have serious public health concerns regarding legislation that would allow the importation of drugs from outside the current safety system established by Congress under the Federal Food Drug and Cosmetic Act. When it comes to buying drugs internationally, outside our existing regulatory protections, FDA has consistently concluded that the Agency is unable to endorse a “buyer beware” approach.

All imported drugs are required to meet the same standards as domestic drugs, and thus must not be unapproved, misbranded, or adulterated. Drugs imported by individuals that are unapproved, misbranded, or adulterated, are prohibited by law. This includes drugs that are foreign versions of FDA-approved medications, and drugs that are dispensed without a prescription, because there is no assurance of their safety and effectiveness. FDA is doing its best to stop the increasing flow of violative drugs into this country but the task is daunting. Each day thousands of packages containing prescription drugs are imported illegally into the United States. Our Office of Regulatory Affairs has inspectors who work in the field who perform investigational work pertaining to imported prescription drugs, a job that is not limited to inspections at ports of entry. But while the volume of imported drugs has increased enormously, FDA has not received additional resources or authorities to address these shipments, in contrast to the case for food security at the border.

Under the FD&C Act, a drug is subject to refusal of admission into the United States if it appears that it: 1) has been manufactured, processed or packed under unsanitary conditions, 2) is forbidden or restricted for sale in the country in which it was produced or from which it was exported, or 3) is adulterated, misbranded or in violation of section 505 of the FD&C Act, which relates to new drugs. To determine whether a product is in compliance, FDA may collect an analytical or documentary sample from the shipment for evaluation, and the shipment is held until the results of the examination are known. In some instances, a product may be detained as soon as it is offered for entry into the U.S. This procedure -- detaining a product without physical examination -- is based on past history and/or other information indicating the product may violate the FD&C Act. At mail facilities, Bureau of Customs and Border Patrol (BCBP) officials identify parcels that should be brought to FDA's attention. BCBP places these packages in a secure location that they maintain for FDA and other agencies. As with all imports, if it appears that the product may be subject to refusal, FDA will issue a notice to detain the product and provide the owner or consignee an opportunity to respond.

Due to the huge volume of drug parcels entering the U.S. through the international mail and courier services, the requirements for notice and hearing, and our limited resources, it is difficult for FDA to detain and refuse mail imports for personal use. In addition, considerable storage space is needed to hold the large number of detained parcels while a notice, opportunity to respond, and Agency decision are pending.

The recent rise Internet purchasing of drugs has significantly compounded this problem. During a recent drug importation survey at several mail facilities in the United States, FDA found that the vast majority of parcels (88%) contained unapproved drugs that could pose significant safety problems. These packages included drugs that have been withdrawn from the U.S. market for safety reasons; animal drugs sold illegally for human use; drugs improperly packaged in sandwich bags or tissue paper; drugs without English labeling or proper instructions for use; and drugs requiring precise dosing and monitoring by a physician.

The Agency has responded to the challenge of importation by employing a risk-based enforcement strategy to target our existing enforcement resources effectively in the face of multiple priorities, including homeland security, food safety and counterfeit drugs. As an example, the Agency utilizes Import Alerts to identify particular shipments that may pose significant potential risk to public health, e.g., drugs that require careful risk management and products from shippers known to present significant safety problems. However, this system is already overwhelmed by the number of incoming mail packages that must be evaluated and this state of affairs presents a significant ongoing challenge for the Agency.

Sixty-five years ago, Congress responded to widespread fears of unsafe and ineffective domestic drugs by directing FDA to create a system for assuring that Americans have a drug supply they can trust. Fifteen years ago, Congress responded to serious safety problems created by imported drugs that were not tightly regulated by passing the Prescription Drug Marketing Act. Congress limited access to these foreign drugs because of safety concerns it identified with the importation of significant volumes of adulterated and counterfeit drugs.

Unfortunately, the drug supply is under unprecedented attack from a variety of increasingly sophisticated threats. This is evident in the recent significant increase in efforts to introduce counterfeit drugs into the U.S. market. FDA has seen its number of counterfeit drug investigations increase four-fold since the late 1990s. Although counterfeiting was once a rare event, we are increasingly seeing large supplies of counterfeit versions of finished drugs being manufactured and distributed by well-funded and elaborately organized networks. At the same time, inadequately regulated foreign Internet sites have also become portals for unsafe and illegal drugs. Evidence strongly suggests that the volume of these foreign drug importations is increasing steadily and presents a substantial challenge for the Agency to adequately assess and process these parcels, resulting in an increased workload for Agency field personnel at ports-of-entry, mail facilities, and international courier hubs.

FDA remains concerned about the public health implications of personally imported prescription drugs and the introduction of counterfeit drugs into the stream of commerce. In our experience, many drugs obtained from foreign sources that either purport to be or appear to be the same as U.S.-approved prescription drugs are, in fact, of unknown quality. FDA cannot assure the American public that drugs imported from foreign countries are the same as products approved by FDA. The Agency has long taken the position that consumers are exposed to a number of potential risks when they purchase drugs from foreign sources or from sources that are not operated by pharmacies properly licensed under state pharmacy laws. These outlets may dispense expired, subpotent, contaminated or counterfeit product, the wrong or a contraindicated product, an incorrect dose, or medication unaccompanied by adequate directions for use. The labeling of the drug may not be in English and therefore important information regarding dosage and side effects may not be available to the consumer. The drugs may not have been packaged and stored under appropriate conditions to prevent against degradation, and there is no assurance that these products were manufactured under current good manufacturing practice standards. When consumers take such medications, they face risks of dangerous drug interactions and/or of suffering adverse events, some of which can be life threatening.

Patients potentially are at greater risk because there is no certainty about what they are getting when they purchase some of these drugs. Although some purchasers of drugs from foreign sources may receive genuine product, others may unknowingly buy counterfeit copies that contain only inert ingredients, legitimate drugs that are outdated and have been diverted to unscrupulous resellers, or dangerous sub-potent or super-potent products that were improperly manufactured. Furthermore, in the case of foreign-based sources, if a consumer has an adverse drug reaction or any other problem, the consumer may have little or no recourse either because the physical location of the manufacturer or because the operator of the pharmacy often is not known or the seller is beyond the consumer’s reach. FDA has only limited ability to take action against these foreign operators.

In recent weeks, several governors and mayors around the country have proposed to create systems whereby their employees and/or constituents could be directed to Canadian pharmacies for purchasing Canadian drugs. FDA has spoken with a number of such officials about our legal and safety concerns, and many have declined to proceed and, at this time, no state has put in place such an approach. In general, it is premature for FDA to predict any potential enforcement actions against cities and states. However, it is foreseeable that some jurisdictions may decide to implement such a program, despite the Agency’s concerns. FDA has not threatened legal action against specific jurisdictions, but has signaled its safety concern about these proposals and about their potential illegality. FDA laid out these views in a letter to the Attorney General of the State of California in the summer. Under current law, it is fairly clear that states or cities would be encouraging the importation of unapproved (and thus illegal) prescription drugs if they created such programs.

At a time when FDA faces more challenges than ever in keeping America’s supply of prescription drugs safe and secure, legislation to liberalize drug importation could cause additional drug safety concerns. The volume of importation that could result from enactment of these bills could easily overwhelm our already heavily burdened regulatory system. In general, these bills fail to provide FDA with adequate authority or resources to establish and regulate the distribution system for incoming foreign drugs - manufactured, distributed, labeled, and handled outside of our regulatory system - or even to ensure their safety. Some of these proposals would take away our existing authorities, which are already being stretched. They would create unprecedented prohibitions on FDA’s ability to inspect and test drugs, and FDA’s authority to block the distribution of drugs we think are unsafe. The proposals offer no added resources to handle the flow of imported drugs into the United States; a flow that would likely become far larger than it is today. Perhaps most importantly, in addition to allowing in some drugs that might be safe, these bills create wide and poorly regulated channels through which counterfeit drugs, criminally diverted controlled narcotics, and otherwise unsafe drugs could enter our drug supply. By choosing affordability over safety rather than taking new steps to address both, such legislation is a dangerous solution to the twin challenges of safety and affordability.

Today, FDA drug approvals are manufacturer-specific, product-specific, and include many requirements relating to the product, such as manufacturing location, formulation, source and specifications of active ingredients, processing methods, manufacturing controls, container/closure system, and appearance. Under section 801 of the FD&C Act, only manufacturers may import drugs into the U.S. The drugs must be produced in FDA inspected facilities. These facilities and the drugs produced in them are currently covered by the U.S. regulatory system, and it is legal to import these drugs. But legislation allowing pharmacies or consumers to import drugs directly from foreign sources would bypass the protections provided by FDA’s drug approval process and by state regulation of firms that dispense drugs within their jurisdictions.

Some drug importation legislation would limit imports to only those drugs that are FDA-approved and made in FDA-inspected facilities, simply because the legislation states that it is limited to drugs that comply with sections 501 (adulteration), 502 (misbranding) and 505 (marketing approval) of the FD&C Act. However, this approach fails to provide resources, authorities, or the procedural framework necessary for FDA to assure such compliance. As a practical consequence, the Agency would be forced in many instances to rely on visual examinations of incoming drug packages to determine whether a drug is FDA-approved and in compliance with the FD&C Act. A visual inspection, however, is not nearly sufficient to verify whether these drugs are FDA-approved, manufactured in FDA-inspected facilities or in compliance with the adulteration and misbranding provisions of the FD&C Act. This is no substitute for the existing FDA regulatory process, which tracks prescription from the acquisition of active and inactive ingredients to on-site inspection of manufacturing and distribution facilities, with documentation of appropriate product testing and handling.

Even if a manufacturer has FDA approval for a drug, a version produced for foreign markets usually does not meet all of the requirements of the FDA approval, and is thus considered to be unapproved. Even if a drug bound for a foreign market is produced in the same plant as a similar drug approved for the U.S. market, FDA is not ability to track that drug in foreign commerce before it enters the U.S. Consequently, it is difficult for the Agency to determine that a drug appearing at a U.S. border is in fact the one produced in the FDA-inspected plant, pursuant to FDA approval. Taken together, these practical problems create an unworkable system that may appear to provide consumers with safety protections, but in fact is hollowed by the inadequacy of resources and authorities needed for effective implementation to protect the US drug supply.

FDA firmly believes that we can and should do a much better job of making safe and innovative drugs more affordable in the United States, but to succeed we need to find safe and affordable solutions that, when implemented, do not put consumers at risk. We appreciate and support the commitment to making drugs more affordable for seniors and other consumers and are working hard to achieve this goal. However, the Agency continues to believe that we must focus on solutions that do not put at risk safety in an effort to achieve increased affordability.

REDUCING DRUG COSTS

The Administration believes that Americans should have access to safe, effective and affordable prescription drugs. The Administration is currently engaged in a number of actions to reduce the costs of prescription medications. These initiatives will result in more affordable prescription drugs and will reduce the incentive to look to foreign sources for cheaper medications.

On June 18, 2003, FDA published its final rule to lower prescription drug costs for millions of Americans by improving access to generic drugs. These changes are expected to save Americans over $35 billion in drug costs over the next 10 years. FDA’s final rule provides the generic industry with enhanced predictability and certainty, while avoiding unnecessary and lengthy litigation, preserving intellectual property protections and protecting the process of developing new breakthrough drugs.

Specifically, the proposed rule would allow only one 30-month stay for each generic drug application, clarify that certain patents cannot be listed, and improve the declaration that innovators must make about patents they submit to FDA for listing in the Agency’s Orange Book publication that lists all drug products approved under section 505 of the FD&C Act.

The President’s 2004 budget proposes an unprecedented increase of $13 million in spending for FDA’s generic drug program. This will be the largest infusion of resources into the generic drug program in history, increasing the program’s size by about one-third. The proposed increase in FDA’s generic drug budget will allow FDA to hire 40 experts to review generic drug applications more quickly and initiate targeted research to expand the range of generic drugs available to consumers. The improvements in the efficiency of review procedures are expected to save consumers billions more by generally reducing the time for approving new generic drugs.

FDA is also taking steps to reduce the cost and regulatory uncertainties of developing and manufacturing drugs, especially generic drug alternatives. FDA initiatives in the Commissioner’s Strategic Action Plan address important factors affecting the cost of new drug development and the cost of drug manufacturing.

New drug development presents uncertainties that increase the business risk and costs to the innovator. Higher costs can create barriers to competition for new drugs and new innovators-- those companies that don’t have access to the capital available to more established drug companies. Although some scientific and technical uncertainties are inherent and unavoidable in drug innovation, others can be reduced or eliminated. Such reductions will help speed patient access to new drugs and reduce the cost of drug development. FDA has begun major initiatives to reduce some of those sources of uncertainty.

FDA is continuing to improve the methods by which advice is provided to sponsors regarding what we believe are the best approaches to develop new therapies. These ongoing efforts are designed to provide sponsors with the best possible information, and thus increase the efficiency of the development process. FDA has identified several priority disease areas and new technologies that the Agency believes are good candidates for new work to clarify regulatory pathways and clinical endpoints. The targeted disease areas include cancer, diabetes and obesity. The targeted technologies include cell and gene therapy, pharmacogenomics and novel drug delivery systems.

Another important step the Federal government can take to respond to the need for affordable drugs is beyond FDA’s reach. It requires legislation that the President and Congress on a bipartisan basis are close to achieving. The Administration believes that it is time for Congress to pass Medicare legislation that will make safe and effective drugs more affordable for seniors. The legislation would provide immediate discounts through Medicare-endorsed prescription drug cards. Beginning in 2006, Medicare beneficiaries would have access to a drug benefit, through which they would be able to take advantage of lower prices negotiated by private health plans.

The Medicare legislation also contains two other provisions designed to lower prescription drug costs: generic drug reform and legislation approved by the House or Representatives that would open our borders to non-FDA approved drugs. One holds great promise, the other raises serious safety concerns.

Gregg-Schumer Generic Drug Provisions

The Medicare legislation contains a bipartisan proposal sponsored by Senators Gregg and Schumer that would complement FDA rulemaking by providing greater access to more affordable generic drugs. The Senate bill would codify elements of FDA’s June 18, 2003, final rule and add a provision limiting 180-day exclusivity to accelerate generic competition in the marketplace. These changes will enable consumers to save billions of dollars each year by making it easier for generic drug manufacturers to get safe and effective products on the market. The increased availability of lower-cost generic drugs will benefit all Americans, especially seniors.

Foreign Drug Imports

Efforts in Congress to enact legislation to restructure the current drug import standard are inconsistent with the realities of drug safety. As any of our dedicated field investigators will attest, and as pharmacy regulators and major health professional organizations have warned, just because legislation declares drugs safe doesn’t make them so.

It is difficult for the Agency to reconcile the movement to allow consumers to purchase drugs from foreign sources with widespread understanding that the world has changed, that we now face more security concerns than ever, and that our vigilance over imports entering this country must reflect this reality. Just last year, Congress enacted legislation giving FDA an additional new authority to help protect imported food from deliberate or accidental contamination. As a result of this legislation, FDA has substantially boosted its food safety and security activities at the border, adding hundreds of new inspectors and support staff. For example, for the first time, FDA must be notified of essentially all commercial food shipments before they arrive. This will allow FDA to target our efforts to the riskiest products, before they enter the country. So thanks to Congress, we have new abilities to help us prevent the entry of foods that may be unsafe.

Yet in the area of drugs, some in Congress want to move in the opposite direction. The evidence in my testimony today strongly suggests that it simply is not safe to throw open our borders and declare broad new classes of drugs to be “legal.” Despite well-intentioned efforts to design safeguards for this proposed drug import regime, many unsafe drugs will enter if Congress establishes a new, wide “legal” avenue for imports. This approach would encourage the individuals who are currently trying hard to exploit weaknesses in our drug security system to make the most of any new paths that are opened into America’s drug supply. The problems we are witnessing now will only multiply if current safeguards are weakened. The evidence that this will occur becomes stronger each day.

For example, an 81-year-old U.S. consumer recently purchased Neurontin, an FDA-approved anti-seizure medication after watching a TV commercial that claimed consumers could save up to 70 percent on prescriptions by calling a 1-800 number. A brochure that was subsequently sent to the consumer after he called the toll free number led him to believe that any drugs he ordered would be FDA-approved, brand name drugs from Canada. The consumer subsequently purchased the Neurontin, along with two other pharmaceuticals. However, the Neurontin the consumer actually received was made in India and unapproved for any use in the United States. This is just one of many examples where consumers thought that they were getting FDA-approved products from Canada, only to find out that their products were coming from countries in Asia and Africa.

International pharmaceutical peddlers are taking advantage of regulatory gaps to move millions of prescription drugs, including controlled substances, into the United States from Mexico, Canada, and elsewhere. Rogue medical merchants who have dubious or no medical background are selling potentially dangerous drugs to people who never see the prescribing doctor in person or undergo necessary tests. At best, these drugs are of unclear origins and safety. At worst, they are poorly manufactured, improperly repackaged, stored, and labeled, or out-and-out fakes. Weakening import restrictions will only compound these problems.

The resources and authorities to assure drug safety that are available to FDA and our state partners must be commensurate with the scope and volume of the drug products that may legally be imported. It is important to remember why Congress made many drug imports illegal in the first place: FDA did not have the resources or authorities to assure their safety. Moreover, in recent years we have seen many more drugs that require “risk management” programs and regular monitoring to be sure they are used safely and effectively. We have also approved biologic and injectable drugs that have especially complex manufacturing and storage requirements. In both cases, the public health safeguards that FDA has imposed are being undermined by the illegal importation of these products. In addition, regulating controlled substances at our borders is an enduring challenge. These factors strongly argue for maintaining, not loosening, the current standards.

Promising Anti-Counterfeiting Technology

Over time, it may be possible to assure drug safety through a multilayered strategy of modern anti-counterfeiting technologies. Promising developments such as “track and trace” technologies that cannot be faked like a paper drug pedigree, and verification technologies built not only into tamper-resistant drug packaging but also into the drugs themselves will make our job of verifying the legitimacy of drug products much easier. FDA is working to speed the availability of these anti-counterfeiting technologies, but they are months or years away.

In the meantime, FDA needs all of the authorities it has now to assure the safety and effectiveness of legal prescription drugs. This includes the ability to require or conduct tests of product authenticity and potency, the ability to identify and, when necessary, inspect firms involved in the distribution of pharmaceuticals, and the authority to issue regulations and take decisive action to block the distribution of potentially unsafe drugs. Now is not the time to weaken these authorities, or to allow products into this country that circumvent these important public health protections.

DRUG IMPORTS: HEALTH AND SAFETY CONCERNS

Sixty-five years ago, Congress responded to widespread fears of unsafe and ineffective drugs by directing FDA to create a system for assuring that Americans have a drug supply they can trust. FDA responded to this challenge by establishing a system that has become the gold standard that others strive to emulate. The FD&C Act prohibits the importation of unapproved, misbranded, or adulterated drugs into the U.S. Drugs imported by individuals generally fall into one of these prohibited categories. This includes foreign versions of U.S.-approved medications.

More recently, in 1988, Congress enacted the Prescription Drug Marketing Act (PDMA) to establish additional safeguards to prevent substandard, ineffective, or counterfeit drugs from entering the U.S. Under PDMA, it is illegal for anyone other than the drug’s original manufacturer to re-import a prescription drug into the U.S. that was manufactured in the U.S.

At least two high-profile cases prompted the passage of PDMA. In one instance, over
2 million unapproved and potentially unsafe and ineffective Ovulen-21 “birth control” tablets from Panama were distributed throughout the U.S. They were falsely imported as “American goods returned.” In another case, a counterfeit version of Ceclor, a widely used antibiotic at the time, found its way into the U.S. drug distribution from a foreign source. Over the years, our professional staff has employed PDMA and other pre-existing authorities to build a drug safety infrastructure to ensure that Americans enjoy the highest-quality drug supply in the world.

Unfortunately, the drug supply that we work so hard to safeguard is under unprecedented attack from a variety of increasingly sophisticated threats. Today everything from product packaging to labeling and product containers can be readily purchased created or counterfeited and counterfeiters and diverters take advantage of this opportunity. Moreover, the skill and ingenuity demonstrated by counterfeiters and diverters have improved significantly. As a result, more than ever before, well-organized criminals have the ability to exploit our regulatory system and profit at the expense of public health.

A large and growing volume of parcels containing foreign prescription drugs ordered by individuals from foreign sources is entering American commerce through U.S. Postal Service international mail facilities. Evidence strongly suggests that the volume of foreign drug imports is increasing steadily. The volume presents a substantial challenge for the Agency to adequately assess and process these parcels, resulting in an increased workload for Agency field personnel at ports-of-entry, mail facilities, and international courier hubs.

FDA remains concerned about the public health implications of foreign prescription drugs imported by consumers and counterfeit drugs introduced into the stream of commerce. In our experience, many drugs obtained from foreign sources that either purport to be or appear to be the same as U.S.-approved prescription drugs are, in fact, of unknown quality. FDA cannot assure the American public that drugs imported from foreign countries are the same as products approved by FDA.

FDA has long taken the position that consumers are exposed to a number of potential risks when they purchase drugs from foreign sources or from sources that are not operated by pharmacies properly licensed under state pharmacy laws. These outlets may dispense expired, subpotent, contaminated or counterfeit product, the wrong or a contraindicated product, an incorrect dose, or medication unaccompanied by adequate directions for use. The labeling of the drug may not be in English and therefore important information regarding dosage and side effects may not be available to the consumer. The drugs may not have been packaged and stored under appropriate conditions to prevent degradation, and there is no assurance that these products were manufactured under current good manufacturing practice (cGMP) standards. When consumers take such medications, they face risks of dangerous drug interactions and/or of suffering adverse events, some of which can be life threatening. These risks could include potential side effects from inappropriately prescribed medications or side effects due to drug contamination.

Patients also potentially are at greater risk because there is no certainty about what they are getting when they purchase some of these drugs. Although some purchasers of drugs from foreign sources may receive genuine product, others may unknowingly buy counterfeit copies that contain only inert ingredients, legitimate drugs that are expired and have been diverted to unscrupulous resellers, or dangerous sub-potent or super-potent products that were improperly manufactured. Moreover, consumers who are desperately seeking a cure for a serious medical problem may be more willing to accept a product of unknown origin.

Furthermore, in the case of foreign-based sources, if a consumer has an adverse drug reaction or any other problem, the consumer may have little or no recourse either because the physical location of the manufacturer or the operator of the pharmacy is unknown the seller is beyond the consumer’s reach. In addition, as a condition of doing business, many of these foreign operators require the U.S. consumer to sign a document releasing the operator from all potential liability. FDA has only limited ability to take action against these foreign operators since they operate outside if the United States.

Due to the huge volume of drug parcels entering the U.S. through the international mail and courier services and the requirements under current law for notice and hearing if we detain an import, it is difficult for FDA to detain and refuse mail imports for personal use. The advent of the Internet and the proliferation of “storefront pharmacies” has significantly compounded this problem. As a consequence, tens of thousands of parcels that FDA is unable to review given the Agency’s multiple competing enforcement priorities are released by the BCBP even though the products contained in these parcels may violate the FD&C Act and may pose a health risk to consumers. We acknowledge that this is not an optimal public health outcome and are working on strategies to better utilize our available resources to minimize potential public health risks.

The Agency has responded to this challenge by employing a risk-based enforcement strategy to deploy our existing enforcement resources in the face of multiple priorities, including homeland security, food safety and counterfeit drugs. As an example, the Agency utilizes Import Alerts to identify particular shipments that may pose significant potential risk to public health. In the case of the increased volume of certain unapproved drugs arriving at mail facilities throughout the country, the Agency has issued Import Alerts to instruct field personnel to work with BCBP to detain all such shipments from specific manufacturers, distributors and countries of origin.

FDA RESPONSE TO ILLEGAL IMPORTS

FDA is working on a number of fronts to address the influx of unapproved and counterfeit prescription drugs coming into the U.S. from foreign sources. These efforts include: 1) educating the public about the potential safety issues presented by the purchase of drugs from foreign countries, 2) working with professional groups to disseminate FDA’s message on the potential dangers of Internet drug sales, 3) partnering with state governments and other Federal agencies to develop more effective enforcement strategies, and 4) enforcement activity directed at the most significant concerns. Recent high-profile regulatory actions send a strong message that FDA is actively working to take strong steps to protect the public from conduct that threatens the U.S. drug supply.

Public Outreach and Education

Public outreach is an important tool that the Agency uses to inform consumers about potentially dangerous or ineffective drugs. FDA is expanding its public outreach to further educate consumers about potentially dangerous practices associated with some Internet drug sales. We also are conducting outreach to explain the nature of compliance and enforcement actions we already have taken. This effort includes FDA Talk Papers, articles in FDA Consumer magazine, and information on FDA’s website to help educate consumers about safely purchasing drugs online. FDA’s website also provides consumers with an opportunity to submit information to the Agency about sites that may violate the FD&C Act.

FDA has also created public education brochures and posters entitled, “Things you should know about purchasing medications outside the United States” to alert consumers to the health risks of buying medications outside the U.S. Cross-border travelers at certain land border stations are provided with information regarding the potential risks of imported drugs and another brochure entitled, “Looks Can be Deceiving,” which describes the dangers of purchasing drugs directly at cross-border pharmacies. This information is also available on FDA’s website.

In October 2000, FDA’s Center for Drug Evaluation and Research (CDER) launched an education campaign on the subject of buying prescription medicines online entitled, “Shop Smart.” This effort is part of FDA’s “Buying Rx Drugs Online” education program. The centerpiece of this multi-media campaign is FDA’s website: http://www.fda.gov/oc/buyonline/default.htm that has information for consumers, including tips and warnings, how to spot health fraud, frequently asked questions and how to report suspect pharmacy sites. The website is one of the most frequently visited web pages on FDA’s website.

Another central piece of our campaign is a brochure entitled, “Buying Prescription Medicines Online: A Consumer Safety Guide,” a brochure produced by the CybeRx-Smart Safety Coalition, a partnership of Internet companies, trade associations, health and consumer organizations and other government agencies. The brochure is available in hard copy from FDA, the Federal Consumer Information Center and the National Council for Patient Information and Education (member of CybeRx-Smart). It also is posted on FDA’s website. The number of consumer inquiries FDA receives has grown steadily with the circulation of the brochure. In addition, a 30-second radio public service announcement was produced and distributed to stations throughout the U.S. The release has been broadcast on 233 radio stations in 46 different states with an audience of almost 6 million. Two print public service announcements (one for medical devices and one for prescription medicines) were produced and sent to over 100 national magazines.

The January/February 2001 issue of the FDA Consumer magazine included an article entitled, “Buying Drugs Online: It’s Convenient and Private, But Beware of ‘Rogue Sites.’” The article is available online and thousands of reprints have been distributed at conferences and exhibits around the country.

Recall of Asthma Drug Sold in Canada

On November 14, 2003, FDA issued a precautionary press release to alert the public to the recent recall of GlaxoSmithKline “Diskus” medicines sold in Canada to treat asthma and chronic obstructive pulmonary disease (COPD). In cases such as these, our ability to warn U.S. consumers about defective products may be compromised when patients purchase drugs from outlets in foreign countries.

Asthma, COPD and related diseases can be serious and life threatening. The three asthma products – Ventolin Diskus, Flovent Diskus, and Serevent Diskus -- were recalled in Canada on November 12, 2003, because the products’ drug delivery system may not function properly and may deliver too little of the drug, or none at all.

FDA emphasized that FDA-approved Diskus products (Advair and Serevent) sold in the U.S. through legitimate marketing channels are not subject to this recall. But because some Americans are buying prescription drugs from Canada and elsewhere through on-line or storefront operations, U.S. patients may be using these potentially substandard and ineffective products.

FDA urges any patients who bought these Diskus products from a foreign source to review the recall information on the manufacturer’s website and check the lot numbers of Diskus products they have purchased. FDA advised U.S. patients with questions or concerns about these products to call their physician, pharmacist, or other knowledgeable care provider.

Partnering With Professional Organizations

FDA continues to meet with organizations representing state regulatory and law enforcement bodies, consumers, health care practitioners and industry to address our concerns. The purpose of these meetings is to discuss and coordinate efforts to respond to issues relating to online drug sales, including who should regulate and how they should regulate, whether and what policy changes should be considered, and when to develop partnering arrangements. The organizations we regularly meet with include:

The National Association of Boards of Pharmacy
The Federation of State Medical Boards
The National Association of Attorneys General
The American Medical Association
The American Pharmacists Association
The National Consumers League
AARP (formerly the American Association of Retired Persons)
The American Society of Health-Systems Pharmacists
The National Association of Chain Drug Stores
The National Community Pharmacists Association
The Pharmaceutical Research and Manufacturers Association
Pharmaceutical Security Institute
Healthcare Distribution Management Association

In addition, we have Memoranda of Understanding (MOUs) with the National Association of Boards of Pharmacy (NABP) and the Federation of State Medical Boards (FSMB) that enhance our collaborative working relationship. State pharmacy boards have primary responsibility for the licensing of pharmacies and regulating the dispensing of drugs.

FDA has been working with the states to address concerns regarding importation of foreign prescription drugs. In February 2003, FDA hosted a nationwide call with 38 state boards of pharmacy, other state regulatory agencies and consumer groups to discuss current Internet drug sale practices and the growth of storefront pharmacies. While some state laws are stronger than others, FDA has actively engaged with a number of states in jointly pursuing Internet sites that are engaged in illegal prescription drug sales. In some cases, the states have acted unilaterally. FDA is continuing to expand its cooperative activities with states in order to address effectively the many challenges in this area of electronic commerce. FDA also is continuing to work closely with our partners in the states in support of their efforts to curtail illegal and potentially dangerous operations, especially when they involve misleading claims about drug safety.

State-Federal Enforcement: Rx Depot

On March 21, 2003, FDA issued a “warning letter” to a storefront operation known as Rx Depot. We commenced this action in conjunction with the Arkansas State Board of Pharmacy. Rx Depot generally obtained drugs from Canada for U.S. consumers, exposing the public to the significant potential risks associated with imported prescription medications. Rx Depot and similar companies have often incorrectly stated to consumers that FDA condones their activities and even that their prescription medications are “FDA approved.” This could lead consumers to the mistaken conclusion that the prescription drugs sold by the companies have the same assurance of safety as drugs actually regulated by FDA.

While Rx Depot responded to FDA’s “warning letter,” the response was inadequate. Therefore the U.S. Department of Justice and FDA filed an injunction on September 11, 2003, to stop Rx Depot Inc. from importing prescription drugs from Canada in violation of U.S. law. The Agency brought the suit because the storefront chain posed a risk to public health by importing unapproved prescription drugs and drugs that may only be imported by the U.S. manufacturer. These drugs posed a public health risk because they do not have the same assurance of safety and efficacy as drugs regulated by FDA.

On November 6, 2003, U.S. District Judge Claire Eagen granted the government’s motion for a preliminary injunction and ordered Rx Depot to stop importing drugs and stop advertising and promoting any service that causes or facilitates drug imports. Judge Eagen also ruled that the firm had ten days to send a letter to its customers informing them that the company’s business violated the law and that the safety and efficacy of drug products obtained through the firm could not be assured.

FDA, and the District Court Judge, concluded that operations such as Rx Depot expose the public to significant potential risks associated with unregulated imported prescription medicines. FDA’s decision to bring this action and the court’s subsequent ruling sends a clear signal that FDA is committed to protecting the public health and challenging those who put profit before safety. This case also demonstrates FDA’s commitment to protect the American public from illegal drugs that may be unsafe, ineffective, or substandard.

As of November 10, 2003, twenty-two states have taken, or are prepared to take, regulatory actions against storefront pharmacies that facilitate illegal imports of prescription drugs from Canada. .

FEDERAL ENFORCEMENT ACTIONS

Although the Rx Depot case is a recent prominent action, we have also taken action in other similar cases, discussed in more detail below.

CanaRx

On September 16, 2003, FDA issued a “warning letter” to CanaRx notifying the firm of our concerns about supplying prescription drugs from unregulated sources and making unwarranted claims about these products. Specifically, FDA’s “warning letter” stated that CanaRx runs an Internet website and mail operation that illegally causes the shipment of prescription drugs from a Canadian pharmacy into the U.S., thereby subjecting Americans to risky imported drug products. This potential risk is compounded by the fact that CanaRx makes misleading assurances to consumers about the safety of its drugs.

An FDA investigation of this firm showed that CanaRx operates a drug purchasing arrangement that channels drugs through companies that are not licensed pharmacies and does not consistently use shipping practices necessary to ensure its drugs are safe and effective. For example, FDA has evidence demonstrating that CanaRx shipped insulin, a product that should be stored under refrigerated conditions, in a manner that did not satisfy the storage conditions specified in FDA approved labeling. This failure could genuinely compromise the safety and effectiveness of the insulin. CanaRx’s response to the Agency’s “warning letter” was inadequate. Therefore, on November 6, 2003, FDA sent a second letter reiterating our concerns about the potential safety of the product, and the firm’s business practices, which could expose the firm’s customers to unnecessary risk.

Alliance Wholesale Distributors

On September 15, 2003, FDA announced the seizure of all drug products labeled in a foreign language and/or labeled as repacked by Phil and Kathy’s, Inc., dba Alliance Wholesale Distributor and/or Local Repack, Inc. (“Local Repack”) of Richton Park, Ill.

FDA acted to prevent these drug products from entering the U.S. drug distribution system because there is no assurance that they are safe or effective. Many of the products received and repackaged at Local Repack are of unknown origin, and their storage and handling is unverifiable. Local Repack has repeatedly failed to comply with cGMP requirements. In addition, many drugs at Local Repack’s facility are misbranded. These drugs may also pose a serious or even life-threatening risk to patients who use them.

FDA inspections conducted after an August 1999 “warning letter” to Local Repack revealed significant and continuing violations. A series of inspections and other recent evidence revealed numerous deficiencies including the failure to properly handle customer complaints, discrepancies surrounding the signatures of quality control employees, records indicating the review and approval of repackaging operations before the operations were completed, incomplete or missing repackaging records, duplicate and inconsistent repackaging records for the same batch, and unreliable receiving and distribution records for drugs.

This September seizure follows the July 9, 2003, seizure of more than 4,500 bottles of prescription drugs that were being repackaged by Local Repack stemming from an investigation of counterfeit Lipitor. Many of the products seized in July were marked with expiration dates to permit them to be sold after similar U.S.-approved drugs would have expired. For example, Portuguese-labeled product that Local Repack labeled as Lipitor had expiration dates well beyond the two-year limit that is based on stability studies performed under the new drug application (NDA) approved in the U.S. for Lipitor. Furthermore, none of these products were shipped to Local Repack in authentic, original manufacturer’s packaging with appropriate labeling. This case demonstrates the Agency’s continued commitments to protect consumers from potentially dangerous drugs and the litigation is ongoing.

FDA CUSTOMS'/IMPORT BLITZ EXAMS

This past summer, FDA and BCBP conducted a series of blitz examinations on mail shipments of foreign drugs destined for U.S. consumers. This joint operation was carried out to help FDA and BCBP target, identify, and stop counterfeit and potentially unsafe drugs from entering the U.S. from foreign countries via mail and common carriers. It was also designed to help FDA and BCBP assess the extent of this problem posed by imported drugs.

These “blitz” exams were conducted in the Miami and New York (JFK) mail facilities from July 29-31, 2003, and the San Francisco, and Carson, California, mail facilities from August 5-7, 2003, and one of the goals was to obtain a representative picture of drug products entering the United States. In each location, the agencies examined packages shipped by international mail through U.S. Postal Service facilities over a 3-day time span.

Approximately 100 parcels per day, per facility, were selected based upon their country of origin and historical experience. In some cases, packages contained multiple drug products.

Although many drugs obtained from these foreign sources purport, and may even appear to be, the same as FDA-approved medications, these examinations showed that many foreign drug products are of unknown quality or origin; have not been approved in the U.S., and may pose potentially serious safety concerns. For example, potentially hazardous products encountered during the blitz exams included:

Unapproved drugs such as Roaccutane, an unapproved version of Accutane.
The unapproved drug Taro-warfarin, an unapproved version of Warfarin used to prevent blood clotting. This drug requires careful blood monitoring during administration.
Drugs such as Dilantin, Synthroid and Glucophage that require individual titration and very careful dosing in order to avoid serious and potentially life-threatening side effects.
Drugs with missing dosage information and whose labeling was not in English.
Inappropriately packaged drugs that were shipped loose in baggies, tissue paper or envelopes.
Drugs that had been withdrawn from the U.S. market for safety reasons such as Buscapina, which appears to be the drug Dipyrone. This drug was removed from the market in 1977 because of several reports of cases of agranulocytosis, some of which were fatal.
Animal drugs not approved for human use such as Clenbuterol, a drug approved for the treatment of airway disease in horses but which is also known as a substance of abuse in the “body building” community and is banned by the International Olympic Committee.
Drugs that have the potential for clinically significant interactions with other drugs a consumer may be taking.
Drugs such as Lipitor and Pravachol that require initial screening and/or periodic monitoring to assure safety.
Controlled substances that are sedating, associated with respiratory depression, or have abuse potential for abuse.

These drugs arrived from many countries. For example, 15.8 percent (161) entered the U.S. from Canada; 14.3 percent (146) from India; 13.8 percent (141) from Thailand, and 8.0 percent (82) from the Philippines. The remaining entries came from other countries. Overall, of the 1,153 imported drug products examined, the overwhelming majority, 1,019 (88 percent), contained unapproved drugs.

The blitz results will assist the Agency in its efforts to:

Employ its resources more strategically to focus on the foreign sources of illegal, unsafe imported drugs.
Identify shipping patterns so that it can target future shipments and sources of such drugs.
Seek out partnerships with other federal and state agencies to combat this problem. To continue to refine its efforts at identifying and stopping potentially unsafe, imported drugs, FDA will continue to conduct additional blitzes.

IMPORT ENTRY STUDIES

In addition to the import blitz exams described above, FDA conducted an informal study to screen and examine mail-entry drug samples from foreign countries, including Canada, during a six-week period in early summer, 2003. FDA’s Buffalo and Detroit FDA import offices conducted the import entry studies. The study confirmed FDA’s belief that an increasing number of U.S. citizens are choosing to fill their prescriptions through mail-order purchases from pharmacies located in Canada. During the course of this study, FDA reviewed 154 entries from Canada representing 350 drug items. In terms of safety concerns, this study affirmed what FDA has learned to expect from imported pharmaceuticals. For example, it was not possible to verify where, or under what conditions, the drugs were manufactured for any of the pharmaceutical products that were offered for import. For those drugs that were apparently ordered from websites, the need for a valid prescription was not always specified, and if the sites identified a prescription requirement, it did not disqualify prescriptions coming from other countries. Moreover, some websites specifically solicited U.S. business by stating that their drug products’ quality and manufacturing requirements were “equivalent” to those in the U.S.

The following examples of imported drugs, although not specifically restricted to Canada, further illustrate the types of products and situations FDA has encountered since it started examining this issue. For example:

Apo-Metformin, a drug used as a daily treatment for diabetic patients to prevent high glucose levels, arrived with no pharmacy label, no warnings of potential serious and life threatening side effects, no specific directions for use or instructions for proper storage, and no contact information (such as phone number) in the event that the patient needed a pharmacy or physician in the case of an emergency.
Apo-Gabapentin, a drug used as a daily treatment for seizures. 1,200 tablets were mailed to the patient, a dangerously large volume. While the quantity could last for years for a typical patient, the product began expiring within one month of receipt.
Lipitor, a drug used to treat elevated cholesterol, was shipped to a U.S. consumer. The product was manufactured in Germany for export to Ireland, but had been exported to Thailand and forwarded to the consumer.

The results of the July-August blitz and our import entry study concern FDA because the products we encountered move through many channels of commerce in many countries, and fall well outside established safety controls. Consequently, these products are especially vulnerable to abuses such as counterfeiting, diversion and degradation. These conditions represent safety threats to the American consumers who purchase them.

SUMMARY OF FEDERAL ENFORCEMENT ACTIVITY

FDA’s Office of Regulatory Affairs (ORA), including the Office of Criminal Investigations (OCI), works with state and Federal investigative agencies and prosecutors to uncover violations of the FD&C Act and other laws with respect to unapproved, misbranded, illegally imported, or otherwise unsafe or substandard drug products. This includes violations associated with drugs sold over the Internet.

Recent criminal and civil cases involving drugs sold over the Internet provide insight into the seriousness of the risks these products pose to the public health. With respect to Internet drug sales, FDA to date has initiated the following actions:

372 Internet-related drug criminal investigations;
142 Internet-related drug prosecutions resulting to date, in 106 convictions;
90 open Internet-related drug investigations;
Nearly 200 cyber “warning letters” sent to domestic and foreign online sellers;
9 preliminary injunctions;
19 product seizures;
16 product recalls and the voluntary destruction of 19 illegal products; and
1 Contempt Action.

CONTROLLED SUBSTANCES CASES

As a part of its larger efforts to address the illegal sale of pharmaceuticals, the Agency has committed substantial resources to controlled substances cases, including controlled substances sold over the Internet. The Drug Enforcement Administration (DEA) is the lead Federal Agency responsible for regulating controlled substances and enforcing the Controlled Substances Act (CSA). FDA has also worked with the FBI on criminal investigations involving the illegal sale, use, and diversion of controlled substances, including illegal sales over the Internet. FDA’s Office of Criminal Investigations (OCI), however, is responsible for managing and conducting the Agency’s criminal investigations. OCI conducts these investigations with support from other Agency components. In some cases, illegal activity may involve both imported and domestic controlled and non-controlled prescription drugs, and thereby violate the FD&C Act and the CSA. Even though FDA does not initiate investigations where the sole violation is thought to be a CSA offense, OCI works closely with DEA on criminal investigations involving the illegal sale, use, and diversion of controlled substances, including illegal sales over the Internet. This close working relationship with DEA, as well as with local law enforcement agencies, has led to the successful prosecution of many criminal cases involving controlled substances. These cases show the extent to which criminal investigations involving controlled substances can quickly encumber the resources and finances of local and Federal law enforcement agencies in their attempts to combat the growing problem these drugs present.

FDA has investigated drug diversion schemes and hundreds of illicit Internet sites by reassigning its criminal investigative staff from other priority efforts. Our goal is to reduce the illegal promotion, sale, and distribution of unlawful prescription drugs via the Internet and other channels and this can include controlled substances. These efforts have protected consumers from unsafe, ineffective, and fraudulent products that present a danger to the public health. Here are some of our most recent cases involving controlled substances:

In August 2003, a doctor pled guilty and was sentenced to 30 months’ imprisonment for conspiring to dispense Schedule III and IV controlled substances. The conspiracy transpired via a web-based pharmacy with an Internet address of www.thepillbox.com. From 1999 through early June 2001, customers in the U.S. and abroad who accessed Pill Box’s website would be referred to the physician referral website to obtain prescriptions prior to placing their orders. The doctor would prescribe drugs such as hydrocodone and diazepam (Valium) to customers without establishing a patient history or performing a mental/physical exam, and despite the fact that he had no means to monitor the medications’ response. Moreover, whenever a prescription was issued, the doctor and Pill Box would subsequently split a “fee” for the service. Over the course of the conspiracy, the doctor illegally prescribed, and Pill Box dispensed, over 4, 214,945 dosage units of hydrocodone and 537,080 dosage units of diazepam. This enterprise grossed more than $7.7 million from Internet sales of these two drugs alone. This case was the product of an 18-month investigation by the DEA, FDA, IRS and the U.S. Attorney’s Office.

In August, 2003, an individual pled guilty to charges relating to various counts of conspiracy, distribution, and importation of controlled substances as a result of a case initiated by OCI in July 2000 after the individual was identified as the principal for Vinci-online and CFF Pharma Consult. The website domain used by the defendant, Vinci-online.com, was found to be registered to CFF Pharma Consult at an address in Germany. Vinci-online.com offered golf training services and investments, along with pharmaceutical drug products including controlled prescription drugs, antibiotics, anti-allergenics, weight loss medications, steroids, and hormones for sale via its website. Agents made several undercover purchases of prescription drugs from the website without providing prescriptions. Following the e-mail purchase request, an invoice was generated instructing the purchaser to send a money order or cashier’s check to Vinci American Ltd. in Las Vegas, NV. The products received as a result of these on-line purchases were sent from Germany and contained German labeling.

DRUG COUNTERFEITING CASES

FDA takes very seriously any allegations or information regarding the counterfeiting or adulteration of drug products. As the drug manufacturing and distribution system has become more global in nature, the challenge of protecting against counterfeit, adulterated or substandard drugs has become more difficult. The Agency is concerned about a spate of drug counterfeiting and tampering cases that have occurred in recent months, and is aggressively pursuing these types of enforcement cases.

FDA’s OCI has opened 85 counterfeit drug cases since October 1996. Investigations have so far netted 44 arrests and 29 convictions. Fines and/or restitution have been imposed in excess of $250,000.

Over this timeframe, however, FDA has witnessed a gradual, but troubling, increase in the incidence of finished dosage form counterfeit activity. Much of this activity has targeted high volume, high cost drugs where counterfeiters attempt to obtain the highest return possible in a short time period. Many of these drugs are used for treating cancer and AIDS patients. However, Viagra and Lipitor have also been counterfeited. The public perception of a more dramatic increase in counterfeit drug activity stems from the fact that the latest several counterfeits have appeared in the wholesale market and received wider distribution than has been the case historically.

FDA COUNTERFEIT DRUG INITIATIVE

In July 2003, Commissioner McClellan announced a major new initiative to more protect American consumers from drugs that have been counterfeited. The initiative includes creating an internal task force to explore modern technologies and other measures to make it more difficult for counterfeit drugs to be distributed with – or deliberately substituted for – safe and effective drugs.

The task force submitted its initial findings in an interim report presented to the Commissioner in October 2003, and will issue a final report in early 2004, after opportunities to hear from the public. In addition, FDA plans to coordinate more closely with other Federal agencies and state and local governments that share the responsibilities with FDA for ensuring the safety of the U.S. drug supply and distribution system as well as with members of Congress who have worked closely with FDA in the past on these important public health issues.

Counterfeit prescription drugs are not only illegal but also are also inherently unsafe. Many counterfeit drugs are visually indistinguishable from the authentic versions, and thus pose a potentially serious health threat to Americans.

Although FDA believes domestic counterfeiting is not widespread, the Agency has recently seen an increase in counterfeiting activities as well as a more sophisticated ability to introduce finished dosage counterfeits into the otherwise legitimate drug distribution channels. FDA has likewise seen its counterfeit drug investigations increase to over 20 per year since 2000, after averaging only about 5 per year through the late 1990’s.

At the same time, worldwide counterfeiting of drugs is believed to be more commonplace. The World Health Organization has estimated that perhaps seven or eight percent of drugs worldwide are counterfeit, and reports from some countries suggest that as much as one-half of those countries’ drugs are counterfeit.

FDA’s initiative is designed to better identify the risks and threats from counterfeit drugs, to coordinate public and private efforts to fight drug counterfeiting and distribution, and to develop new tools to aid in identifying, deterring and combating counterfeiting. Specifically, the FDA task force will:

Develop a strategic action plan to decrease the risk of counterfeit drugs entering the U.S. marketplace and to protect consumers from potentially harmful effects of using these products.
Continue to strengthen FDA’s collaborative relationships with other Federal agencies, including the Bureau of Immigration and Customs Enforcement (BICE), BCBP, and the U.S. Secret Service in the Department of Homeland Security and entities within the Department of Justice, as well as with health professionals, industry, consumer, and other stakeholders to gather information regarding the best practices for dealing with drug counterfeiting.
Identify mechanisms for strengthening the nation’s protections against counterfeiting, including such possibilities as developing state model practice acts, best practices for those who sell and distribute prescription drugs, and better education for patients, pharmacies, and others about how to identify counterfeit drugs and alert others to their existence.
Assess the extent to which new technologies, e.g., counterfeit-resistant packaging, product identifiers such as chemical taggants, and implanted radio-frequency chips in packaging can help assure the authenticity of drugs. Although some of this technology is not currently mature enough to adequately protect the drug supply, it may have great promise as an added counter-measure against counterfeit pharmaceutical products.

FDA believes the increase and shift in this illicit activity has occurred for a number of reasons. These include:

Better counterfeiting technology, including improved technology to make labeling, packaging and products that appear real.
Better organized, more effective criminal groups attracted by financial opportunities.
The use of the Internet as a sales tool by unlicensed pharmacies and/or foreign websites.
Opportunities for introducing foreign-made counterfeit and unapproved drugs into large and rapidly growing import flows.
Weak spots in the domestic wholesale drug distribution chain, including some wholesalers who acquire most of their inventory from secondary sources, do not maintain effective due diligence efforts on these sources and ignore warning signs indicative of illegal or unethical behavior.

The details of what we have cataloged so far in this initiative were released in an interim report dated October 2, 2003.

REPORTING OF INFORMATION ON COUNTERFEIT DRUGS BY MANUFACTURERS

In another move to respond to the increase in counterfeit drug cases and to strengthen the Agency’s and industry’s collaboration in those situations where counterfeit drugs are suspected, on April 22, 2003, the Pharmaceutical Research and Manufacturers of America (PhRMA), which represents the country’s major research-based pharmaceutical and biotechnology companies, announced the adoption of a voluntary program to report suspected instances of drug counterfeiting to FDA. The information provided by PhRMA members under this program will assist FDA in carrying out its responsibilities to protect the safety and integrity of the nation’s drug supply. It will enhance the Agency’s ability to detect quickly and remove counterfeit drugs from the marketplace.

Under this program, PhRMA member companies have agreed to notify FDA’s OCI within five working days of determining that there is a reasonable basis to believe that a product has been counterfeited. The program also applies to counterfeits discovered in foreign countries if there is clear evidence that the counterfeits are intended for distribution in the U.S. Drug manufacturers already conduct their own investigations of suspected distribution of counterfeit drugs. This formal collaborative agreement will strengthen FDA’s ability to assure the safety and effectiveness of drugs used by U.S. The reporting program went into effect on May 1, 2003 and has already led to some useful tips. The two most recent cases of counterfeit prescription drugs in which FDA has played a significant role are those involving the drugs Procrit and Lipitor.

Procrit

On May 21, 2003, the U.S. Attorney’s Office for the Southern District of Florida filed charges against Eddy Gorrin, William Chavez and Duviel Gonzalez for unlawful sale and wholesale distribution of counterfeit versions of Amgen, Inc.’s, prescription drug Procrit, a medication indicated mainly to help cancer, anemia and HIV patients increase their red blood cell count.

Between January and February 2003, Gorrin intentionally engaged in the sale of counterfeit versions of Procrit. During that same time period, Chavez and Gonzalez also were engaged in unlawful wholesale distribution of counterfeit Procrit without a state license. The undercover operation and tests conducted by FDA’s Forensic Chemistry Center revealed that the vials being distributed by all three men labelled as “Procrit” did not contain any active ingredient for Procrit, but instead, contained only bacteria-tainted water. In early June 2003 all three defendants plead guilty to criminal charges in the Southern District of Florida. Gorrin was sentenced to a 3-year, 1-month Federal prison term; Chavez was sentenced to 3 months in prison, and Gonzalez was sentenced to
6 months house arrest for their respective roles in this counterfeit operation.

Lipitor Investigation

On May 23, 2003, FDA issued an alert on a counterfeit version of Pfizer, Inc.’s, prescription drug, Lipitor. The alert warned health care providers and others that three lots of counterfeit Lipitor represent a potentially significant risk to consumers. One in five people have high cholesterol that may lead to cardiovascular disease, such as heart disease and stroke. According to the American Heart Association (AHA), every 33 seconds, someone in the U.S. dies from cardiovascular disease. (Source: AHA 2002 Heart and Stroke Statistical Update) Lipitor is the number one prescribed cholesterol-lowering medication, and is currently used by more than 18 million people. Lipitor is proven to lower total cholesterol and decrease the risk of developing cardiovascular disease. FDA investigators have aggressively pursued a variety of leads all along the supply and distribution chain in an effort to identify the source of this counterfeit activity and to facilitate the recall of any counterfeit products.

In conjunction with the manufacturer of this product, FDA also issued several press releases warning consumers and pharmacists about the counterfeit Lipitor and providing guidance to identify of any suspect product. For example, FDA published a list of lot numbers to identify the counterfeit product. We also urged health care providers and patients alike to check the packaging very carefully before using this product. Patients who had the product (labeled as “Repackaged by MED-PRO, Inc.”) with the specified lot numbers were told not to consume it, and to return the product to their pharmacies. Because of the breadth of the distribution of counterfeit products, FDA issued several warnings.

FDA’s advice to health care providers and consumers remained the same as when the Agency issued its original alert on counterfeit Lipitor. They should check the packaging very carefully before using Lipitor. Patients who have any of the product with any of the lot numbers we identified should not take it, and they should return the product to their pharmacies.

As part of the FDA’s ongoing efforts to investigate and respond to unscrupulous counterfeiting activities, FDA’s OCI is investigating this case of counterfeit Lipitor in carrying out its public health mission. The investigation is ongoing but it appears that some of the counterfeit product originated from overseas.

OTHER COUNTERFEIT CASES

Other counterfeit prescription drug cases in which FDA has had a central role include:

Serostim (somatropin (rDNA origin)) for injection -- In late 2000 and early 2001, FDA became aware of consumer complaints about adverse effects, and a recall was initiated at the distributor level for Serostim, a growth hormone often used to treat AIDS wasting. After further investigation by the manufacturer, Serono, Inc., and FDA, Serono issued press releases regarding the apparent counterfeiting of two lots of the product. In May 2002, Serono became aware that counterfeit Serostim displaying a fake lot number again had been distributed. Laboratory analysis by FDA showed that the product contained no active ingredient, and that the product did not originate from Serono.
Neupogen (filgrastim) for injection -- In the spring of 2001, based on observations by a distributor about the appearance of Neupogen, a colony stimulating factor used mostly in cancer patients, the manufacturer, Amgen Inc., analyzed a suspect lot and determined that the vials contained only saline solution. Amgen issued Dear Health Care Professional letters nationwide informing patients, physicians, pharmacies and wholesalers about the counterfeiting of Neupogen. The counterfeit product was labeled with fake lot numbers and/or wrong expiration dates.
Epogen (epoetin alfa) for injection -- In May 2002, FDA, state regulators and the manufacturer, Amgen Inc., became aware that a potential counterfeit of Epogen was in commerce. Epogen is used to stimulate red blood cell production in cancer and AIDS patients. Amgen analysis indicated that certain vials of a counterfeit product labeled as Epogen contained active ingredient approximately 20 times lower than expected. Further investigation revealed that a major wholesale distributor was holding approximately 1,600 cartons of counterfeit product. Later that month, Amgen warned health care professionals that two additional counterfeit lots of Epogen had been discovered.
Combivir (lamivudine plus zidovudine) tablets -- In the spring of 2002, the manufacturer, GlaxoSmithKline (GSK) received four complaints that bottles containing 60 tablets of Combivir had been replaced with Ziagen tablets. In addition, the firm determined that counterfeit Combivir labels had been placed on authentic bottles of Ziagen tablets, a different GSK product with a label containing a black box warning about the dangers of possible fatal hypersensitive reactions to Ziagen. A black box warning placed at the beginning of an FDA-approved label is the strongest warning to prescribing physicians, health care professionals and consumers, that severe adverse reactions have been experienced from use of the product. Both Combivir and Ziagen can be used as part of a combination regimen to treat HIV infection. The concern in this case was that if an individual were to take the wrong tablet and is sensitive to Ziagen, a potentially life-threatening hypersensitivity reaction could occur. In May 2002 distributors were advised to initiate a recall to their customers.
Zyprexa (olanzapine) tablets -- In the winter and spring of 2002, bottles of Zyprexa, an Eli Lilly and Company product, indicated for the treatment of schizophrenia and acute bipolar mania, had been emptied and replaced with white tablets labeled as aspirin. The tampering situations occurred in two strengths and in three different lots. In May 2002 Lilly issued a press release and Dear Health Care Professional letter concerning the tampering situation.

FDA IMPORT ENFORCEMENT EFFORTS

FDA has conducted numerous investigations and enforcement activities of imported products. The Agency has taken action when it believes imported products, including prescription drugs, pose a significant public health risk. FDA takes regulatory action in the import arena, which covers a wide range of products including foods, drugs, medical devices, human and animal drugs and biological products. If a situation appears to involve criminal activity, FDA’s ORA has the option of referring the information to the Agency’s OCI.

FDA has a number of enforcement tools that can be used to regulate imported products. These include: 1) “warning letters,” 2) recalls, 3) seizures, 4) injunctions, or 5) prosecution. FDA may issue a “warning letter” in a number of scenarios including when: 1) a party fails to hold its entry intact before FDA releases it, 2) a party consistently imports in violation of the FD&C Act, or 3) an importer presents misleading information, or 4) FDA informs an importer that the Agency has requested that BCBP deny immediate delivery privileges.

FDA also may ask a firm to voluntarily recall an imported product if FDA deems it a potential health hazard or if there is some evidence of distribution of detained or refused merchandise. FDA may opt to seize a product if it: 1) represents a health hazard and has been or is likely to be distributed following detention or refusal, 2) has been previously refused, or 3) has been identified fraudulently in documents submitted to FDA.

Injunction may become the action of choice when FDA sees a pattern of violations with some recognizable danger of reoccurrence. This is a judicial action that may result in quicker corrective action than a prosecution, and, if successful, it legally enjoins the defendants from continuing to violate the law. Prosecution may be used when conventional import enforcement approaches are determined inadequate to correct violations or the violation is sufficiently egregious to warrant punishment. Prosecution may be warranted when there is: 1) continued illegal distribution after receipt of a notification of detention, 2) submission of false or misleading entry documents,
3) repeated entry of previously refused products, or 4) evidence of fraud.

None of the potential actions described above are mutually exclusive. In some cases, FDA may take complementary steps that involve a combination of these actions in order to protect the public health from drugs that violate the FD&C Act. Evidence of this type of mix of regulatory actions can be seen in FDA’s ongoing work on counterfeit Lipitor.

Many imported prescription drugs that are arriving at mail facilities are ordered over the Internet. FDA has increased its capability to monitor the Internet and identify sites that potentially violate the FD&C Act, through the use of various search tools and by upgrading its data handling capabilities. In some cases the Agency will conduct exercises to better understand the products that are coming in through specific ports-of-entry. As discussed above, the Agency is conducting import exercises to help the Agency to better understand the type and extent of unlawful conduct on the Internet and to more accurately assess whether its enforcement efforts have had an impact on illegal behavior. However, due to the ever increasing volume of imported drugs and multiple competing enforcement priorities, the Agency is working on focusing its resources more efficiently.

IMPROVEMENTS TO FDA's IMPORT COMPLIANCE PROGRAM

FDA is re-evaluating, refining, and improving the programs and procedures that it is using to ensure the availability of safe and effective drugs to U.S. consumers. As part of our efforts to improve the programs and procedures that are used to ensure the availability of safe and effective drugs to U.S. consumers, FDA is considering several concepts that will improve the Agency’s ability to target resources applied to regulation of imported drug products. As with all of FDA’s activities, priorities are established based on benefit/risk to public health. In terms of prioritizing the Agency’s domestic and import compliance workload, products that present a direct health hazard to the user are FDA’s highest priority. Such products include those that have a reasonable potential for causing direct serious adverse effects, or where there is documentation of injury or death. Examples of such products include counterfeit Procrit and counterfeit Serostim. Products that are not themselves hazardous can still present an indirect health hazard in that the consumer may delay or forgo proven medical treatment and the use of approved therapies. These are also a top priority for the Agency. Examples include unapproved products that are promoted for the treatment of cancer, Alzheimer’s disease, arthritis, heart disease, high cholesterol and high blood pressure.

ORA ENFORCEMENT SUCCESSES

AstraZeneca

On June 20, 2003, officials from FDA’s OCI joined with representatives of the U.S. Attorney’s Office for the District of Delaware, the Department of Health and Human Services (DHHS), and the Defense Criminal Investigative Service (DCIS) to announce that AstraZeneca Pharmaceuticals LP had pleaded guilty to a large-scale health care crime. The firm agreed to pay $355 million to resolve the associated criminal charges and civil liabilities. The massive conspiracy involved illegitimate pricing and marketing of Zoladex, an AstraZeneca drug for the treatment of prostate cancer. The various schemes used by the firm caused multimillion-dollar losses to Federally and state-funded insurance programs and individual patients.

FDA’s OCI began investigating AstraZeneca’s pricing and marketing practices after a private individual filed a civil False Claims Act suit. The broadly-based investigation, which also involved the Office of the Inspector General for the DHHS, the DCIS and the Federal Bureau of Investigation, discovered that AstraZeneca employees were using several illegal methods to stimulate the demand for Zoladex by enabling prescribers to reap illicit profits.

The agreement included the following provisions:

AstraZeneca pleaded guilty to criminal conspiracy to violate the Prescription Drug Marketing Act by causing Medicare, Medicaid and other Federal providers to be overcharged for Zoladex that had been provided as free samples to urologists. As part of the plea agreement, the company agreed to pay a $63,872,156 criminal fine.
AstraZeneca also agreed to settle its civil liabilities and to resolve allegations that its fraudulent drug pricing schemes, and sales and marketing misconduct had caused false and fraudulent claims to be filed with Federal and state health care programs.
AstraZeneca agreed to payments of $266,127,844 to the U.S. government for claims filed with the Medicare, TriCare, Department of Defense and Railroad Retirement Board Medicare programs, and $24,900,000 to the U.S. and state governments for claims involving state Medicaid programs.

The investigation, which is continuing, also resulted in charges against three physicians for conspiring with AstraZeneca to bill patients and third party payers for free Zoladex samples. Two of the prescribers have pleaded guilty.

Procrit

As previously stated, on May 21, 2003, the U.S. Attorney’s Office for the Southern District of Florida filed charges against Eddy Gorrin, William Chavez and Duviel Gonzalez for unlawful sale and wholesale distribution of counterfeit versions of the prescription drug Procrit. In early June 2003, all three defendants plead guilty to criminal charges in the Southern District of Florida. Subsequently, the defendants received sentences of 3 years, 1 month in prison; 3 months in prison; and 6 months’ house arrest, respectively.

Lipitor

As described in detail above, FDA’s ORA is conducting a significant investigation to respond to unscrupulous counterfeiting activities involving Lipitor. FDA is conducting this activity in close cooperation with health professionals, particularly pharmacists and pharmacy associations and has issued statements to alert the public about this counterfeit product.

Kwikmed

On October 1, 2002, a Federal Grand Jury in Arizona returned a 198 count indictment against Kwikmed, Inc., Cymedic Health Group, Inc., four owners of these corporations, and two physicians associated with the corporations. The indictment alleges that defendants operated Internet websites, two of which include kwikmed.com and cymedic.com, through which they sold prescription drugs, including Viagra, Celebrex, Xenial, and Propecia. The websites did not require a consumer to have a prescription before receiving the drugs. Instead, the customers were required to complete a questionnaire, which the website told customers would be reviewed by a physician.

Customers were charged a fee for this purported medical consultation. The indictment alleges that in the overwhelming majority of applications, no medical reviews, consultations, or physical examinations by a physician took place before drugs were shipped to customers. Defendants repackaged drugs obtained from a drug wholesaler, even though defendants were not a registered manufacturer or a licensed pharmacy and there was never a licensed pharmacist involved. The drugs dispensed were adulterated because of the defendants’ failure to follow cGMP in packaging, holding, and labeling of the drugs.

The indictment alleges that during the course of the conspiracy the defendants and others generated sales in excess of $28 million, which was billed to consumers as charges for prescription drugs, doctor consultations, and shipping. These sales resulted from the defendants’ distribution of at least 48,816 new orders for prescription drugs and 41,817 refills of those orders. The indictment charges defendants with several violations of the FD&C Act, as well as conspiracy, mail fraud, and money laundering. The charges were the result of an investigation by FDA and the U.S. Postal Inspection Service. In October 2003, one of the physicians entered a guilty plea. Legal proceedings against the other defendants are ongoing.

Norfolk Men's Clinic

On February 16, 2002, a Federal jury in Alabama convicted Anton Pusztai and
Anita Yates of charges arising out of the operation of an online pharmacy that illegally sold prescription drugs over the Internet to consumers. On June 18, Pusztai and Yates were sentenced respectively to more than 15 and 6.5 years. Pusztai, an Australian citizen, and Yates, a resident of Clanton, Alabama, were convicted of conspiracy to commit violations of the FD&C Act, conspiracy to commit money laundering, mail fraud, dispensing misbranded drugs, and operating a drug repackaging facility not registered with FDA. From fall 1998 to the summer of 2000, the defendants operated a website called Viagra.au.com, also known as Norfolk Men’s Clinic, and related sites, that sold a variety of prescription medications.

In September 1999, OCI received information regarding the Norfolk Men’s Clinic and the website. Based on this information, several covert purchases were made via the Internet. Search warrants were executed in October 1999 that resulted in the seizure of prescription drugs and business records. Based on these purchases and information gathered through numerous interviews, several individuals were indicted. In addition to defendants Pusztai and Yates, the president of a prescription drug wholesaler located in Miami, Florida, plead guilty to five misdemeanor counts of dispensing drugs without a valid prescription (21 USC 331[k]). The company also plead guilty to obstruction of justice. In conjunction with the indictment, a second search warrant was executed in Clanton, Alabama, along with two search warrants in West Virginia. While most of the drugs sold in this operation were domestic product, some appeared to have been manufactured in New Zealand for distribution in Australia.

Medications Express

On June 7, 2001, Gerald Bevins was convicted in U.S. District Court for the Southern District of California of conspiracy to defraud the U.S. and commit offenses against the U.S. by introducing misbranded drugs into interstate commerce and smuggling. On September 4, 2001, Bevins was sentenced to 2 years in prison. The case was initiated on information received from BCBP concerning an Internet website called Medications Express. Bevins sold Mexican prescription pharmaceuticals from this website and claimed that a doctor’s prescription was not necessary. He continued to sell Mexican prescription pharmaceuticals through the mail from Sun City, California, even after discontinuing the Medications Express website. Bevins, his wife and daughter would receive orders via mail, travel to Tijuana, Mexico, to purchase the pharmaceuticals, and smuggle them back into the U.S. The three packaged the pharmaceuticals into commercial courier boxes and shipped them to customers around the U.S. The drugs supplied by Bevins were labeled in Spanish.

Dagoberto Paz-Tamez Diet Drug Case

This case involved the sale of unlabeled/adulterated diet drugs in Pasadena, Texas by an alleged medical doctor from Mexico. The alleged doctor, Dagoberto Paz-Tamez, is not licensed to practice medicine in the state of Texas or anywhere else within the U.S. This case was assembled in conjunction with the Harris County Precinct 6 Constable’s Office, the Texas Department of Public Safety (DPS), and the U.S. Postal Inspection Service.

Investigation revealed that Paz-Tamez had been selling unlabeled diet pills to patients for several years in the Pasadena, Texas area. A sample of the diet pills was submitted to the Harris County Precinct 6 Constable’s Office by a confidential informant. These samples were later submitted to FDA’s Forensic Chemistry Center and were found to contain amphetamines and other dangerous substances.

On August 22, 2002, Paz-Tamez was arrested in Pasadena, Texas. Law enforcement officials seized diet drugs and U.S. currency consisting of the following: $10,236 in U.S. currency, 4,350 tablets, 30,488 gelatin capsules, and 44.5 pounds total weight of unlabeled diet drugs. The diet pills and tablets seized were found to contain mazindol (an amphetamine discontinued in the U.S.), diethylpropion (an amphetamine), diazepam (generic for Valium), and hydrochlorothiazide (a diuretic).

On March 16, 2002, Paz-Tamez was convicted of Possession of a Controlled Substance and Delivery of a Dangerous Drug. He was later sentenced to ten years of deferred probation.

CONCLUSION

The standards for drug review and approval in the U.S. are the best in the world, and the safety of our drug supply mirrors these high standards. The employees of FDA constantly strive to maintain these high standards. However, a growing number of Americans are obtaining prescription medications from foreign sources. U.S. consumers often seek out Canadian suppliers, sources that purport to be Canadian, or other foreign sources that they believe to be reliable. While some foreign drug manufacturers submit their products to FDA for approval, the imported drugs arriving through the mail, through private express couriers, or by passengers arriving at ports of entry are often unapproved new drugs that may not be subject to any reliable regulatory oversight. FDA cannot assure the safety of drugs purchased from such sources.

The vigilance of FDA and BCBP inspectors is an important tool in detecting imported products that violate the FD&C Act. Given the available resources and competing priorities facing these agencies, however, experience shows that inspectors are unable to visually examine many of the parcels containing prescription drug products that arrive through the mail and private courier services each day. Many of the packages that the Agency is able to examine appear to contain foreign versions of U.S.-approved products. The growing volume of unapproved imported drugs, which often are generated from sales via the Internet, presents a formidable enforcement challenge.

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Section Contents Menu

Testimony

Drug Importation

Statement of

before

November 20, 2003 INTRODUCTION

SUMMARY

REDUCING DRUG COSTS

Gregg-Schumer Generic Drug Provisions

Foreign Drug Imports

Promising Anti-Counterfeiting Technology

DRUG IMPORTS: HEALTH AND SAFETY CONCERNS

FDA RESPONSE TO ILLEGAL IMPORTS

Public Outreach and Education

Recall of Asthma Drug Sold in Canada

Partnering With Professional Organizations

State-Federal Enforcement: Rx Depot

FEDERAL ENFORCEMENT ACTIONS

CanaRx

Alliance Wholesale Distributors

FDA CUSTOMS'/IMPORT BLITZ EXAMS

IMPORT ENTRY STUDIES

SUMMARY OF FEDERAL ENFORCEMENT ACTIVITY

CONTROLLED SUBSTANCES CASES

DRUG COUNTERFEITING CASES

FDA COUNTERFEIT DRUG INITIATIVE

REPORTING OF INFORMATION ON COUNTERFEIT DRUGS BY MANUFACTURERS

Procrit

Lipitor Investigation

OTHER COUNTERFEIT CASES

FDA IMPORT ENFORCEMENT EFFORTS

IMPROVEMENTS TO FDA's IMPORT COMPLIANCE PROGRAM

ORA ENFORCEMENT SUCCESSES AstraZeneca

Procrit

Lipitor

Kwikmed

Norfolk Men's Clinic

Medications Express

Dagoberto Paz-Tamez Diet Drug Case

CONCLUSION

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November 20, 2003

INTRODUCTION

ORA ENFORCEMENT SUCCESSES

AstraZeneca