Pharmaceutical dispensing in the 'wild west': advancing health care and protecting consumers through the regulation of online pharmacies.

• Author: Haney, Sean P.

The "explosion"(1) of Internet pharmacies(2) on the World Wide Web has created a wealth of opportunities for improvements in the provision of health care.(3) Unfortunately, the Internet's inherent characteristics that enable these positive developments also provide fertile soil for modern day "snake oil salesmen"(4) and "`unscrupulous marketers.'"(5) Problems such as assuring the quality of medical care, guaranteeing the accuracy of exchanged information, fraud, and abuse have rapidly become evident.(6) While pharmaceutical dispensing through traditional pharmacies is highly regulated, guidance concerning the regulation of dispensing on the Internet is lacking. The market's swift emergence, the unique jurisdictional elements of its operation, and the diversity of involved governing bodies have regulators struggling to devise the ideal mechanism to address the challenge.(7)

Historically, pharmaceutical services have been governed predominantly by the states. In this respect, a number of states' attorneys general and state licensing boards have prosecuted online pharmacy offenders under existing state pharmacy, consumer protection, and unprofessional conduct regulations.(8) Alternatively, a few states have passed new laws dealing explicitly with online pharmacies.(9) On the prosecutorial side, the Food and Drug Administration (FDA) has also joined the states in a limited role as provided by the Food, Drug, and Cosmetic (FD&C) Act.(10) In addition, the American Medical Association (AMA) and the National Association of Boards of Pharmacy (NABP) have taken an active role by respectively formulating recommendations and instituting a certification program for online pharmacies.(11) Concomitantly, Congress has requested information and heard testimony concerning online pharmacies.(12) As a result, Congress is currently considering the implementation of the Internet Pharmacy Consumer Protection Act as an amendment to the FD&C Act to provide minimum standards for online pharmacy websites.(13)

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

THE REGULATION OF PRESCRIPTION DRUGS IN THE UNITED STATES

The Pre-E Era

Traditionally, the states have regulated the dispensing of prescription drugs.(14) In addition to the practical regulations regarding dispensing,(15) state pharmacy and medical boards regulate the licensing(16) and professional standards(17) of health care practitioners. The decision to defer responsibility for pharmacy regulation to the states stems from principles elucidated in the Constitution.(18) In particular, the Tenth Amendment preserves the power of the states to regulate what is not directly regulated by the federal government.(19) The states, however, are not the sole arbiters of pharmaceutical law.

The Commerce Clause of the Constitution enables Congress to regulate commerce among the states.(20) With this in mind, the Federal FD&C Act was enacted in 1938 to control the sale of drugs and authorize only those that are safe and effective.(21) These provisions were devised well before the advent of the Internet, although their purpose was akin to the desires of current regulators: "to protect patients from injuries resulting from unsafe and counterfeit drugs and from illicit practice of medicine and pharmacy."(22) While there may be an inherent assumption, given its name, that the FDA is the sole authority for the enforcement of food and drug issues, at least two other agencies wield significant influence in this arena. The Drug Enforcement Administration (DEA) regulates narcotic substances via the Controlled Substances Act,(23) and the Federal Trade Commission (FTC) governs the advertising of over-the-counter medications.(24) The requirements of this integrated system of regulations and authorities at the state and federal level have provided "an effective safety net to protect the U.S. public from harmful or ineffective drugs, as well as improper prescribing or dispensing of pharmaceuticals."(25) The development of online pharmacies, however, has torn a significant hole in this net.

The Internet & Online Pharmacies

The Internet has evolved into a remarkable tool for acquiring information (including health care information)(26) and conducting business. A recent Harris Poll indicated that of the 97 million people using the Internet, 74% view health information.(27) While such access is a hallmark of the Internet and has the obvious advantage of empowering its users,(28) the lack of quality control standards and the fact that practically anyone can post information renders the quality of this information particularly suspect.(29) As the editors of the Journal of the American Medical Association described, "[t]he problem is not too little information but too much, vast chunks of it incomplete, misleading, or inaccurate."(30) Although the dangers of incomplete, misleading, or inaccurate information are not only applicable to online pharmacies,(31) the impact of such information is increasingly pronounced, given the recent surge of online pharmacies.

According to Carmen Catizone, Executive Director of the NABP, online pharmacies were among the first e-commerce children of the New Year, born in earnest following the performances of online giants such as Amazon.com during the December 1998 holiday season.(32) At that time approximately twenty-six online pharmacies were identified.(33) This number skyrocketed to over 400 by August 1999.(34) Given the potential financial stakes(35) in this emerging market, one author remarked, "the battle for customers could make the online bookstore competition look like a playground scuffle."(36)

While Peter Neupert, the CEO of drugstore.com, doubts that online pharmacies signal the end for traditional drugstores, he predicts that within five years they will capture 20% to 25% of the pharmaceutical market.(37) Many of the traditional "brick and mortar"(38) chain drugstores have launched or invested in existing online pharmaceutical services.(39) While some are unconvinced of the financial rewards of online services,(40) many participants have forged real alliances in the virtual world in an effort to gain access to pharmacy benefit plan members(41) and a broad range of insurance providers.(42) Even with the trepidation of some large chain pharmacies, however, some smaller family-owned pharmacies that have been on the decline in recent years(43) view the online pharmacy as an opportunity to expand and compete more effectively.(44) An improved ability to compete may be crucial in an environment in which perhaps the only thing declining faster than the number of independent pharmacies is the rate of reimbursement offered by third-party payors.(45) Although the experts disagree whether online pharmacies will be a boon for independents, it will likely be beneficial for consumers.(46) The nature of the Internet clearly offers some distinct advantages, including additional opportunities for convenient, discrete, quality, cost-effective pharmaceutical services.(47)

The beneficial potential of online pharmacies is significant. Consider the ability to provide information and products to individuals whose access to conventional pharmacies is restricted because of chronic disease or geography.(48) Similarly, legitimate options include online prescription transmission,(49) electronic refills,(50) and electronic consults within narrowly defined circumstances.(51) Essentially, online pharmacies, when coupled with legitimate practices, "`are just another channel of distribution that some people will find more convenient,'" according to Dr. John L. Colaizzi, Dean of Rutgers College of Pharmacy.(52) Such benefits are not limited to online pharmacies; technology is also arriving that will improve health care delivery between diverse health care providers and information systems.(53)

The potential advantages of online pharmacies, however, do not exist in a vacuum. They are accompanied by a longer, and potentially more detrimental, list of disadvantages, including: concerns about privacy and the transmission of confidential health information;(54) difficulties with insurance coverage;(55) length of time associated with the process;(56) added costs;(57) lack of opportunities for personal uniform contact(58) and counseling;(59) opportunities for fraud and abuse;(60) and the added competition from traditional pharmacies implementing more modern conveniences(61) Additionally, a particular challenge may rest in certain patients themselves. Although older individuals are typically the largest users of prescription drugs in the United States,(62) and consequently account for a substantial pool of potential online pharmacy customers, they also represent a segment of the population less likely to have Internet access.(63) This level of access, however, may already be changing.(64)

In another aspect of the consumer realm, the FDA and pharmaceutical manufacturers are struggling with regulatory(65) and liability(66) concerns surrounding the direct-to-consumer promotion and advertising of pharmaceuticals on the Internet. Even with all of these considerations, a concern that underlies all...