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Printed Hearing The Committee on Energy and Commerce W.J. "Billy" Tauzin, Chairman A System Overwhelmed: The Avalanche of Imported, Counterfeit, and Unapproved Drugs into the U.S. <DOC>
[108th Congress House Hearings]
[From the U.S. Government Printing Office via GPO Access]
[DOCID: f:88425.wais]
A SYSTEM OVERWHELMED: THE AVALANCHE OF IMPORTED, COUNTERFEIT, AND
UNAPPROVED DRUGS INTO THE U.S.
=======================================================================
HEARING
before the
SUBCOMMITTEE ON
OVERSIGHT AND INVESTIGATIONS
of the
COMMITTEE ON ENERGY AND COMMERCE
HOUSE OF REPRESENTATIVES
ONE HUNDRED EIGHTH CONGRESS
FIRST SESSION
__________
JUNE 24, 2003
__________
Serial No. 108-29
__________
Printed for the use of the Committee on Energy and Commerce
Available via the World Wide Web: http://www.access.gpo.gov/congress/
house
__________
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____________________________________________________________________________
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COMMITTEE ON ENERGY AND COMMERCE
W.J. ``BILLY'' TAUZIN, Louisiana, Chairman
MICHAEL BILIRAKIS, Florida JOHN D. DINGELL, Michigan
JOE BARTON, Texas Ranking Member
FRED UPTON, Michigan HENRY A. WAXMAN, California
CLIFF STEARNS, Florida EDWARD J. MARKEY, Massachusetts
PAUL E. GILLMOR, Ohio RALPH M. HALL, Texas
JAMES C. GREENWOOD, Pennsylvania RICK BOUCHER, Virginia
CHRISTOPHER COX, California EDOLPHUS TOWNS, New York
NATHAN DEAL, Georgia FRANK PALLONE, Jr., New Jersey
RICHARD BURR, North Carolina SHERROD BROWN, Ohio
Vice Chairman BART GORDON, Tennessee
ED WHITFIELD, Kentucky PETER DEUTSCH, Florida
CHARLIE NORWOOD, Georgia BOBBY L. RUSH, Illinois
BARBARA CUBIN, Wyoming ANNA G. ESHOO, California
JOHN SHIMKUS, Illinois BART STUPAK, Michigan
HEATHER WILSON, New Mexico ELIOT L. ENGEL, New York
JOHN B. SHADEGG, Arizona ALBERT R. WYNN, Maryland
CHARLES W. ``CHIP'' PICKERING, GENE GREEN, Texas
Mississippi KAREN McCARTHY, Missouri
VITO FOSSELLA, New York TED STRICKLAND, Ohio
ROY BLUNT, Missouri DIANA DeGETTE, Colorado
STEVE BUYER, Indiana LOIS CAPPS, California
GEORGE RADANOVICH, California MICHAEL F. DOYLE, Pennsylvania
CHARLES F. BASS, New Hampshire CHRISTOPHER JOHN, Louisiana
JOSEPH R. PITTS, Pennsylvania TOM ALLEN, Maine
MARY BONO, California JIM DAVIS, Florida
GREG WALDEN, Oregon JAN SCHAKOWSKY, Illinois
LEE TERRY, Nebraska HILDA L. SOLIS, California
ERNIE FLETCHER, Kentucky
MIKE FERGUSON, New Jersey
MIKE ROGERS, Michigan
DARRELL E. ISSA, California
C.L. ``BUTCH'' OTTER, Idaho
Dan R. Brouillette, Staff Director
James D. Barnette, General Counsel
Reid P.F. Stuntz, Minority Staff Director and Chief Counsel
______
Subcommittee on Oversight and Investigations
JAMES C. GREENWOOD, Pennsylvania, Chairman
MICHAEL BILIRAKIS, Florida PETER DEUTSCH, Florida
CLIFF STEARNS, Florida Ranking Member
RICHARD BURR, North Carolina DIANA DeGETTE, Colorado
CHARLES F. BASS, New Hampshire JIM DAVIS, Florida
GREG WALDEN, Oregon JAN SCHAKOWSKY, Illinois
Vice Chairman HENRY A. WAXMAN, California
MIKE FERGUSON, New Jersey BOBBY L. RUSH, Illinois
MIKE ROGERS, Michigan JOHN D. DINGELL, Michigan,
W.J. ``BILLY'' TAUZIN, Louisiana (Ex Officio)
(Ex Officio)
(ii)
C O N T E N T S
__________
Page
Testimony of:
Arias, Cesar, Drug Inspector Supervisor, Florida Department
of Health, Bureau of Statewide Pharmaceutical Services,
State of Florida........................................... 84
Durant, Elizabeth G., Director of Trade Programs, Bureau of
Customs and Border Protection.............................. 37
Hubbard, William K., Associate Commissioner for Policy and
Planning, Food and Drug Administration..................... 18
Jones, Gregg, Pharmaceutical Program Manager, Drug, Devices,
and Cosmetic Regulation, Bureau of Statewide Pharmaceutical
Services, State of Florida................................. 77
Penezik, Robert M., Assistant Statewide Prosecutor, Office of
Statewide Prosecution, State of Florida.................... 71
Taylor John M., III, Associate Commissioner of Regulatory
Affairs, Food and Drug Administration...................... 20
Additional material submitted for the record:
Grealy, Mary R., President Healthcare Leadership Council,
prepared statement of...................................... 97
McClelland, Mark B., Commissioner, Food and Drugs, Department
of Health and Human Services, letter dated June 23, 2003,
to Hon. W.J. ``Billy'' Tauzin.............................. 98
(iii)
A SYSTEM OVERWHELMED: THE AVALANCHE OF IMPORTED, COUNTERFEIT, AND
UNAPPROVED DRUGS INTO THE U.S.
----------
TUESDAY, JUNE 24, 2003
House of Representatives,
Committee on Energy and Commerce,
Subcommittee on Oversight and Investigations,
Washington, DC.
The subcommittee met, pursuant to notice, at 10 a.m., in
room 2123, Rayburn House Office Building, James C. Greenwood
(chairman) presiding.
Members present: Representatives Greenwood, Stearns, Bass,
Walden, Ferguson, Rogers, Deutsch, DeGette, Davis, Schakowsky,
Rush, and Dingell (ex officio).
Also present: Representatives Green and Stupak.
Staff present: Alan Slobodin, majority counsel; Ray
Shepherd, majority counsel; Arturo Silva, deputy communications
director; Jill Latham, legislative clerk; David Nelson,
minority counsel; and Chris Knauer, minority investigator.
Mr. Greenwood. The meeting will come to order and welcome
to our quests and our witnesses.
The chairman recognizes himself for 5 minutes for an
opening statement.
More than 2 years ago, on June 7, 2001, I sat in this chair
and heard the heartbreaking testimony from Reverend and Mrs.
Rode of Athens, Georgia who tearfully described how their son
accidentally overdosed on a mixture of drugs he had purchased
over the Internet. The drugs purported to be legitimate, but
their son died as a result of incorrectly mixing a combination
of them.
This terrible tragedy showed that when drugs are purchased
over the Internet, patient care can be compromised where
there's no interaction with a physician nor dispensing
pharmacist aware of the patient's history who can prevent
deadly drug interactions or unnecessary prescriptions.
Over the last 5 years several factors, including the advent
of Internet pharmacy and the globalization of the
pharmaceutical market have led to a dramatic surge in drug
imports, especially personal imports, that overwhelmed the FDA.
These factors have made FDA's system of import controls less
and less tenable.
Two years ago at that same hearing FDA testified that
approximately 2 million packages containing drugs were imported
into the U.S. every year. The agency complained that it simply
did not have enough staff to inspect those packages.
In 2001, FDA could not tell the subcommittee what
percentage of those packages contained legitimate versus
counterfeit product. They could not determine the country of
origin nor describe the conditions under which the drugs were
manufactured. In short, FDA could tell us very little about the
2 million packages of drugs that were being imported. Not much
has changed since our hearing in 2001 other than the volume of
drugs.
And I'd ask the staff to please show slide number 11.
According to a senior supervisory Customs inspector, the
mail facility in Miami, Florida routinely receives about 30,000
pharmaceutical shipments weekly offered from South America and
Central America, Canada, Europe, the Bahamas and Mexico.
Packages containing pharmaceutical products account for nearly
one-third of the total volume of packages.
I'd ask to please show slide 12.
This enormous volume of drug packages on March 7, 2003 at
the Miami International Mail Branch Facility, according to
Customs almost all of these packages contain some form of
pharmaceutical product.
Given these numbers, Miami receives approximately 150,000
packages containing pharmaceuticals weekly, 600,000 monthly and
approximately 7 million packages containing drugs annually.
And please show slide 13.
According to data provided by Customs, every month
approximately 5 million packages enter the commerce of the U.S.
or 60 million packages annually. If the estimate from Miami is
extrapolated nationally, 20 million packages containing
pharmaceutical products are imported into the U.S. every year.
This is an increase of over 1,000 percent in only 2 years.
As this subcommittee has heard ad nauseam, drugs procured
outside the United States regulatory system can be dangerous
for numerous reasons. FDA acknowledges that it cannot monitor
nor guarantee the safety and effectiveness of drugs purchased
outside the closed U.S. distribution system. FDA has warned the
public that drugs purchased from foreign countries could be
counterfeit, cheap foreign imitations of FDA approved drugs
that could be subpotent or superpotent, expired drugs,
contaminated drugs or drugs stored under unsafe conditions.
At this subcommittee's June 7, 2001 hearing which
highlighted the public health concerns that these drugs posed
to the American people, the FDA proposed to the Department of
Health and Human Services that it eliminate its personal use
policy for mail imports allowing FDA and Customs to deny entry
of all these illegal drugs into the U.S. and return them to
senders. No action has been taken on this proposal. And this
is, perhaps, understandable given the apparent split in public
and political opinion on personal reimportation policy.
Why are U.S. consumers playing Russian roulette with their
medications by purchasing them over the Internet from unknown
sources? The fact is that the skyrocketing prices of
medications are increasingly out of the reach for too many of
our seniors and nearly all those on fixed incomes.
Some of the seniors who testified at our oversight hearing
in Mr. Deutsch's district in March of this year stated that
they often forego other essentials to purchase their necessary
medications. In a country as wealthy as ours we have to do
better than this.
It is my sincere belief that the Medicare Reform bill that
this committee passed last week will insure full access to and
the affordability of pharmaceuticals. However, the fact remains
that when consumers purchase drugs over the Internet for
whatever reasons, they take a leap of faith with their health
because there is no guarantee that the drugs they are
purchasing are safe or effective.
We're also concerned that FDA may be aggravating a
deteriorating drug import problem with instances of poor
judgment and ineffective policies. On October 21 of last year,
FDA requested that Customs detain at least 1,233 packages of a
knock-off Viagara imported into the U.S. through Miami, Florida
which appeared to be violative of the Food, Drug and Cosmetic
Act. On May 5, 2003 FDA knowingly authorized the release of the
1,233 packages of a unapproved generic Viagara. On May 20 this
year, FDA informed the public that it was ``taking steps to
respond to irregularities related to its handling of a large
shipment of unapproved Viagara.'' The committee is continuing
to investigate that the problems identified in Miami, Florida
represent widespread issues surrounding FDA's approach
nationwide to preventing the dissemination of imported
counterfeit or unapproved pharmaceuticals.
Unfortunately, the problem of counterfeit drugs, drugs with
no active ingredient and drugs stored in unsafe conditions
rendering them useless is no longer restricted to the Internet.
Counterfeit drugs and drugs of unknown origin are appearing
with greater regularity at U.S. pharmacies and the FDA has
shared with me an example of these counterfeit drugs.
This is a container of Serostim. It's a drug, I think, used
for treatment of AIDS and other cancer patients. You cannot
tell these two packages apart. One is the legitimate product
made by the Serono Corporation, the other is a counterfeit. And
there is no way in God's earth you could tell these two
products apart unless you assay them and look at the chemical
contents. And when you do that, you find that the chemical
contents are unreliable, at best.
Counterfeit drugs of unknown origin are appearing with
greater regularity at U.S. pharmacy. Recently we have seen
counterfeit versions of Lipitor, Serostim, Procrit, Epogen and
Combivir.
At our second panel today we will hear that because of
unscrupulous wholesalers, consumers in Florida cannot know if
the pharmaceuticals they purchase are legitimate. However, with
the vigorous law enforcement actions and new criminal penalties
and tough regulations, the State of Florida is at the forefront
of ensuring a safe and effective pharmaceutical supply.
At the end of the day FDA is responsible to ensure that
Americans have safe and effective supplies of drugs. Given the
expediential increase in the volume of drugs being imported
into the U.S., FDA's current approach must be substantially
altered to address this new reality.
First, FDA must procure real data on the type and volume of
drugs being imported into the U.S.
Further, FDA must also discern from where these drugs are
being imported and whether they contain legitimate product or
counterfeits or stored in unsafe conditions, or are subpotent
or superpotent.
FDA must also engage in aggressive enforcement actions
aimed at the importers of bogus and harmful drugs.
And last, FDA must predicate all of its current regulatory
and enforcement action on a risk based assessment of threats to
our drug supply. And I can think of fewer more important or
challenging tasks.
I would like to welcome our witnesses here this morning.
The first panel includes Federal witnesses: Mr. William
Hubbard, Associate Commissioner for Policy and Planning at the
Food and Drug Administration; Mr. John Taylor, Associate
Commissioner of Regulatory Affairs, Food and Drug
Administration, and; Ms. Elizabeth Durant, Director of Trade
Programs at the Bureau of Customs and Border Protection.
Our second panel consists of witnesses from the State of
Florida: Mr. Robert Penezik, Esquire, Assistant Statewide
Prosecutor, State of Florida, Office of Statewide Prosecution
South Florida Bureau; Dr. Greg Jones, Pharmaceutical Program
Manager at the Drug, Devices, and Cosmetic Regulation, Bureau
of Statewide Pharmaceutical Services, and; Dr. Cesar Arias,
Drug Inspector Supervisor, Florida Department of Health, Bureau
of Statewide Pharmaceutical Services.
[The prepared statement of Hon. James C. Greenwood
follows:]
Prepared Statement of Hon. James C. Greenwood, Chairman, Subcommittee
on Oversight and Investigations
On June 7, 2001, I sat in this very chair and heard gut-wrenching
testimony from Reverend and Mrs. Rode of Athens, Georgia, who painfully
described how their son accidentally overdosed on a mixture of drugs he
purchased over the Internet. The drugs purported to be legitimate, but
their son died as a result of incorrectly mixing a combination of those
drugs. This unfortunate tragedy shows that when drugs are purchased
over the Internet, patient care can be compromised easily because there
is no interaction with a physician or dispensing pharmacist who is
aware of the patient's history and can prevent deadly drug interactions
or unnecessary prescriptions.
Over the last five years, several factors, including the advent of
Internet pharmacies and the globalization of the pharmaceutical market,
have led to a dramatic surge in drug imports (especially personal
imports) that have overwhelmed the FDA. These factors have made FDA's
system of import controls, more and more untenable. Two years ago, at
the same hearing with the Rode's, FDA testified that approximately 2
million packages containing drugs were imported into the U.S. every
year. FDA complained that they simply did not have enough staff to
inspect those packages. In 2001, FDA could not tell the Subcommittee
what percentage of those packages contained legitimate vs. counterfeit
product, determine the country of origin or describe the conditions
under which the drugs were manufactured. In short, FDA could tell us
very little about the 2 million packages of drugs that were being
imported. Very little has changed since our hearing in 2001 other than
the volume of drugs.
According to a senior supervisory Customs inspector, the mail
facility in Miami, Florida, routinely receives about 30,000
pharmaceutical shipments daily, often from South and Central America,
Canada, Europe, the Bahamas, and Mexico. Packages containing
pharmaceutical products account for nearly one-third of the total
volume of packages. Given these numbers, Miami receives approximately
150,000 packages containing pharmaceuticals weekly, 600,000 monthly,
and approximately 7 million packages containing drugs annually.
According to data provided by Customs, every month approximately 5
million packages enter the commerce of the U.S. or 60 million packages
annually. If the estimate from Miami is extrapolated nationally, 20
million packages containing pharmaceutical products are imported into
the U.S every year. This is an increase of over 1000% in 2 only years.
As this Subcommittee has heard ad naseum, drugs procured outside
the United States regulatory system can be dangerous for numerous
reasons. FDA acknowledges that it cannot monitor or guarantee the
safety and effectiveness of drugs purchased outside the closed U.S.
distribution system. FDA has warned the public that drugs purchased
from foreign countries could be counterfeit, cheap foreign imitations
of FDA-approved drugs that could be sub-potent or super-potent, expired
drugs, contaminated drugs or drugs stored under unsafe conditions. At
this Subcommittee's June 7, 2001, hearing, which highlighted the public
health concerns that these drugs pose to the American people, FDA
proposed to the Department of Health and Human Services that it
eliminate its personal use policy for mail imports, allowing FDA and
Customs to deny entry of all these illegal drugs into the U.S. and
return them to sender. No action has been taken on the proposal. This
is perhaps understandable given the apparent split in public and
political opinion on personal reimportation policy.
Why are U.S. consumers playing Russian roulette with their
medications by purchasing them over the Internet from unknown sources?
The fact is that the skyrocketing prices of medications are
increasingly out of the reach for too many of our seniors and nearly
all those on fixed incomes. Some of the seniors, who testified at our
Oversight hearing in Mr. Deutsch's District in March, stated that they
often forgo other essentials in order to purchase their necessary
medications. In a country as wealthy as ours, we must do better. It is
my sincere belief that the Medicare reform bill that this Committee
passed last week will ensure full access to and the affordability of
pharmaceuticals. However, the fact remains that when consumers purchase
drugs over the Internet for whatever reason, they are taking a leap of
faith with their health because there is no guarantee that the drugs
they are purchasing are legitimate.
We are also concerned that FDA may be aggravating a deteriorating
drug import problem with some instances of poor judgment and
ineffective policies. On October 21, 2002, FDA requested that Customs
detain at least 1,233 packages of ``knock-off'' Viagra imported into
the U.S. through Miami, Florida, which appeared to be violative of the
Food, Drug, and Cosmetic Act. On May 5, 2003, FDA knowingly authorized
the release of the 1,233 packages of unapproved generic Viagra. On May
20, 2003, FDA informed the public that it was ``taking steps to respond
to irregularities related to its handling of a large shipment of
unapproved Viagra.'' The Committee is continuing to investigate whether
the problems identified in Miami, Florida, represent wide-spread issues
surrounding FDA's approach nation-wide to preventing the dissemination
of imported counterfeit or unapproved pharmaceuticals.
Unfortunately, the problem of counterfeit drugs, drugs with no
active ingredient, or drugs stored in unsafe conditions rendering them
useless, is no longer restricted to the Internet. Counterfeit drugs and
drug of unknown origin are appearing with greater regularity at U.S.
drug stores. Recently, we have seen counterfeit versions of Lipitor,
Serostim, Procrit, Epogen, and Combivir. On our second panel today, you
will hear that because of unscrupulous wholesalers, consumers in
Florida cannot know if the pharmaceuticals they purchase are
legitimate. However, with vigorous law enforcement actions and new
criminal penalties and tough regulations, the State of Florida is at
the forefront of ensuring a safe and effective pharmaceutical supply.
At the end of the day, FDA is responsible, to the greatest extent
possible, for ensuring that Americans have a safe and effective supply
of drugs. Given the exponential increase in the volume of drugs being
imported into the U.S., FDA's current approach must be substantially
altered to address this new reality. First, FDA must procure real data
on the type and volume of drugs being imported into the U.S. Further,
FDA must also discern from where these drugs are being imported and
whether they contain legitimate product, are counterfeits, are stored
in unsafe conditions or are sub-potent or super-potent. FDA must also
engage in aggressive enforcement actions aimed at the importers of
bogus and harmful drugs. Lastly, FDA must predicate all of its current
regulatory and enforcement action on a risk-based assessment of threats
to our drug supply. I can think of fewer more important or challenging
tasks.
I would like to welcome our witnesses here this morning. The first
panel includes Federal witnesses: 1) Mr. William K. Hubbard, Associate
Commissioner for Policy and Planning, Food and Drug Administration; 2)
Mr. John Taylor, Associate Commissioner of Regulatory Affairs, Food and
Drug Administration; and 3) Ms. Elizabeth Durant, Director of Trade
Programs, Bureau of Customs and Border Protection.
The second panel consists of witnesses from the State of Florida:
1) Mr. Robert Penezic, Esq., Assistant Statewide Prosecutor, State of
Florida, Office of Statewide Prosecution, South Florida Bureau; 2) Dr.
Gregg Jones, R.Ph., Pharmaceutical Program Manager, Drugs, Device, and
Cosmetic Regulation, Bureau of Statewide Pharmaceutical Services; and
3) Cesar Arias, Drug Inspector Supervisor, Florida Department of
Health, Bureau of Statewide Pharmaceutical Services
I now recognize the ranking member of the full committee,
Mr. Dingell for his opening statement.
Mr. Dingell. Mr. Chairman, I thank you for your courtesy
and I thank you for holding this hearing on the threat of
safety to our population from our prescription drug supply.
From my count, this is the third hearing this subcommittee
has held on this subject in the past 3 years. Other hearings
date back to 1996. I commend you for your continuing interest
and attention in this, which is a serious and worsening
problem.
I chaired 8 hearings on this issue in the 1980's. After
these hearings we passed the Prescription Drug Marketing Act to
deal with the threat to the drug supply at that time. But the
Food and Drug Administration, FDA's unwillingness to enforce
the clear language of the law, the tremendous expansion of
direct marketing capability of the Internet, the outrageous
prices that seniors and other Americans pay for prescription
have all combined to undermine that statute and leave us with a
far more serious threat to the safety of our population from
prescription pharmaceuticals today.
In 1985 when we began the inquiry into the problems of drug
diversion one of the first issues that the subcommittee
uncovered was a rather curious situation involving the Orlando
District of the FDA. It seems that the Director of Compliance
was uncommonly cooperative with those seeking to enter
violative drugs into this country. According to testimony, the
State of Florida's Department of Health was attempting to seize
violative goods and the Orlando District Office of FDA decided
instead to allow reexport to Canada and then into Boston.
Seventeen years later we're back again looking at the
Orlando Office of the FDA again. And I'm compelled to recall
the great statement that this is deja vu all over again. And,
again, it is because senior officials in that office have acted
with disregard for the needs of the public and they have, in
effect, facilitated illegal imports of prescription drugs. We
know some 30,000 packages of drugs per day pass through the
international mail facility in Miami, largely from the
developing world. And FDA has told Customs not to open
virtually any of them. Some lower level FDA employees did
detain shipments that were subsequentially released on orders
from their superiors. They found bold counterfeits, drugs
clearly not manufactured in the U.S. or Canada and unapproved
drugs tested as subpotent by the terms of their labels. These
conscientious civil servants found exactly what this agency,
which we had thought of as the gold standard, that public
health internationally expected of them. Orders went from
Orlando with the concurrence of FDA headquarters, release the
products and tell Customs never to bother us with the likes of
them again.
While very troublesome by itself, this is much a part of
the broader problem. FDA has ignored the clear language of the
statute and has invited massive import of counterfeit,
adulterated and misbranded drugs by means of a so-called
enforcement discretion policy, a policy by the way which kills,
maims or hurts American citizens. Moreover, FDA's
interpretation of the wholesale provision of the Act has
undermined PDMA's goal of making the buying and selling of
pharmaceutical products transparent. We have, I think here
then, something of a scandal at FDA.
Legitimate manufactures must go through tough hurdles to
get a drug approved. They spend millions to ensure that
manufacturing facilities comply with good manufacturing
practices. But at the same time FDA allows any fly by-night
Internet con man to send whatever placebos, poisons, over-aged
drugs or pharmacueticals which are contaminated and adulterated
or unsafe he or she chooses through the mail, through UPS,
through FedEx, through area contract carriers or to be walked
across our southern border without so much as a warning to the
consumer.
Further, those drugs can be commingled with domestic
counterfeits, stolen goods, watered-down products, other
adulterated and misbranded drugs. These can all wind up behind
the pharmacy counter leaving the poor consumer to believe that
the drugs are supposed to be safe and effective as labeled
because their local pharmacist and the FDA appear to say so.
Other consumers buy the unsubstantiated claims found in the
Internet or at their walk-in mail order storefront that the
drugs are FDA approved. Again, a falsehood in which FDA appears
to cooperate quite actively, or at least by its total disregard
to fail to protect the American public.
This state of affairs is a health crises waiting to happen.
Indeed, I think it has in it the seeds of a splendid scandal,
and I anticipate that that will follow shortly.
It is not acceptable to this committee. It is not
acceptable to the American people. The FDA needs to enforce the
law, and if they can't do so, they should tell us why they
can't or why they won't. And that is why this hearing is
valuable.
This Administration needs to tell the Congress as it
promised to do 2 years ago what the added authority that it
needs happens to be and how it should and can, and will protect
the American public from a situation which I think we will find
on review to be intolerable.
Thank you, Mr. Chairman.
Mr. Greenwood. The Chair thanks the gentleman and
recognizes the gentleman from New Hampshire, Mr. Bass for an
opening statement.
Mr. Bass. Thank you very much, Mr. Chairman. I want to
commend you for holding this interesting and timely hearing.
And I also appreciate your opening statement, which I listened
to quite carefully. And most of it I agree with heartily.
I guess what I would like to do in opening is to make two
points, vis-a-vis this issue. First, the issue of counterfeit
drug importation, generic knock-offs and so on, the slide we
saw by baskets of drugs from Florida are not going to be solved
by adding 5,000 or 15,000 or 50,000 FDA policemen inspecting
every package. The reason why these orders are made is because
the prices of drugs elsewhere in the world are lower than they
are in the United States. Whether you agree or disagree with
that, that is what is creating the demand. And as long as there
is a disparate or a difference between what one drug costs in
the United States and what it costs abroad and there is a
mechanism to make the sale, i.e., direct mail or the Internet,
it is going to happen. And my humble opinion, there are not
going to be Internet police, the FDA's not going to be like the
Transportation Security Administration, and we are not going to
be able to afford to do that.
The issue, frankly, is what do we do over the long term
about equalizing prices of drugs so that the demand doesn't
exist for people who are low and middle income, for the most
part, bearing the bulk of the responsibility for high priced
drugs. Because poor people get essentially free drugs and
seniors, hopefully when we pass this Medicare Prescription
Plan, will get the same type of benefit. And, obviously,
wealthy people under the age of 65 are not going to worry about
going to the Internet and so forth. What it really is a
relatively small group of low and middle income working
Americans who are financially against the ropes and looking for
any way they can possibly can to deal with a chronic illness or
an expensive prescription.
I buy the argument that foreign countries artificially
depress drug prices. But we have a carve out, I believe, in
NAFTA for pharmaceuticals so that we don't have a free trading
agreement with Canada.
Now, I represent a district of about 630,000 people. I have
a border with Canada and a good road up there. And every day of
the week there are bus load after bus load of people, mostly
seniors, going up there to buy prescription drugs. I cannot
imagine that the FDA is going to station people at the border
to slap senior citizens up against the buses and try to throw
them in jail and fine them. What we need to have is as a
Congress and as an agency is a plan to solve the problem
through the free market system. And that may not involve the
lowering of prices in the United States necessarily or the
raising of prices in foreign countries, but the plan has to
result in an environment where there is no demand for these
foreign drugs by people who are desperate for prescriptions.
Now last, I would suggest that it is just as easy to
manufacture a counterfeit drug domestically as it is for a
foreign country. In fact, it is easier. Why bother. If you are
going to break the law, you can make it in my district as
easily as you could in Mexico or Canada. And there is, indeed,
an issue on the sale of counterfeit drugs domestically in
drugstores. We had a hearing on that issue. So it may be an
import/export problem, but it is just as likely to be a
domestic problem.
I am also interested to note that I have not heard from
Canadian sources that there is a more severe problem of
domestically manufactured drugs in Canada that are counterfeit
than in the United States.
So these are all interesting issues, but the fundamental
problem here is free market and capitalization. And if you have
a price somewhere else that is lower than it is there, they are
going to move toward one another one way or another. It is a
fundamental law of economics and the economic equivalent of
water running downhill, not uphill.
So, that is the way I see the fundamental issue. I
appreciate your holding this hearing today, Mr. Chairman. And I
look forward to hearing from our witnesses.
And yield back.
Mr. Greenwood. The Chair thanks the gentleman and
recognizes the ranking member Mr. Deutsch for an opening
statement.
Mr. Deutsch. Thank you, Mr. Chairman. Thank you for holding
this hearing.
Mr. Chairman, today is really the same hearing we have been
having year after year on foreign drugs entering the U.S. Each
time we do, the problem has not only grown in scale and the
drugs coming from more suspicious countries.
I am particularly concerned about the residents in my
State. We're facing a Hobsons choice. On the one hand drug
prices have increased at an unreasonable rate. Each day I learn
of more and more seniors who are forced to make some serious
decisions as they try and budget for their medications. Some,
not all have turned to the Internet. Others have turned to the
new Canadian walk-in pharmacies throughout South Florida to
find relief. Understandably the lower rates of pharmaceuticals
they are able to obtain from the Canadian storefront operations
make a sizable difference in day-to-day living for many.
However, it concerns me greatly that we are learning of an
overabundance of foreign drugs entering the U.S. from a variety
of potentially dangerous sources, sources whose practice
provide no meaningful protection to consumers.
This need for affordable prescription drug coverage for
many individuals advances many of the problems we will discuss
today. From the Florida witnesses we will hear that a great
deal of counterfeiting and other forms of pharmaceutical
trickery are occurring in my State. This includes Medicaid
drugs being sold and resold and how a broad array of drugs from
abroad are being reimportated, relabeled and somehow slipped
back into the formal distribution chains.
I believe that many of the scams discussed today are
happening directly as a result of the high price of
prescription drugs. Indeed, I was hoping that the Medicare bill
that came before this committee last week might truly provide
some meaningful relief to those being squeezed by the high drug
prices so that the needs to purchase drugs outside regular
channels would lessen. However, I fear that should the bill
marked up last week in this committee pass into law, this
questionable practice will only continue.
That being said, Mr. Chairman, I do want to point out that
the FDA in someways has already made a bad situation in Miami
facility and turned it into complete chaos. Thanks to a
leadership by HHS to devise some meaningful guidance for field
staff, the Miami facility has become a shocking version of FDA
mismanagement.
Over the past several months committee staff have visited
this facility and noticed a staggering amount of drugs entering
the U.S. from all over the world. Actually, the numbers that
staff has told us at this point is 30,000 per day. 30,000
packages per day of drugs entering through just one of 14
facilities throughout the country, most who enter with almost
no meaningful FDA review or scrutiny. We have photos and
description of these drugs, and much of what staff documented
will be contained in the memo that was written by investigators
from both sides of the committee.
In fact during today's hearings we will learn that the
Miami facility has been so overwhelmed with foreign drugs that
they accidentally released huge volumes of fake Viagara to the
public despite knowing through formal testing that the product
was potentially dangerous. We will also learn that entire bins
of other counterfeit drugs such as Ciprofloxin were sent back
to its overseas source when repeatedly we were told by the FDA
that returning to sender was against the law.
We will hear that in addition to the 1,233 shipments of
potentially dangerous fake Viagara that was released, hundreds
of other shipments were shoved out the door with no
authorization from the headquarters. Some of these may have
even been the subject of an FDA import alert, so were not even
allowed to enter into the U.S. in the first place.
Finally, we will hear that Customs Miami was not regularly
provided import alerts from FDA on which dangerous drugs it
should be stopping. Instead Customs was told by FDA staff they
should log into FDA's website to find out when alerts were
posted.
Mr. Chairman, as the House and Senate debate the so-called
merits of the drug bill before us this week, we will hear
debate on the reimportation issue as a way to provide access to
more affordable pharmaceuticals. However, it is already
occurring and on a large scale. The volume of product now
entering this facility is so overwhelming to both Customs and
the FDA, neither agent can effectively do its job. We have
learned that senior FDA officials in Florida now tell Customs
to stop only large shipments entering the Miami facility.
Anything small about the size of a toaster sails right through.
I suppose that criminals smart enough to counterfeit drugs down
to the package hologram have figured out this high tech system.
Indeed, the fact that millions of drugs from all over the
world are entering the U.S. with no meaningful scrutiny by the
FDA is clearly known by FDA Commissioner McClellan and HHS
Secretary Thompson. Yet rather than face this fact, Secretary
Thompson continues to ignore the problem despite his
reassurance and recommendations FDA has made almost 2 years
before, nothing has actually changed. In fact, the problem has
increased and it has only become more unmanageable. Because
this problem has been allowed to develop into a lucrative
business for criminals, it is my opinion that much of what we
are discussing today will only be solved when we
comprehensively address the issue of prices and access. If we
do not, we will only continue to see this problem worsen and
may see the entire U.S. drug supply put in jeopardy. In fact,
one measure for whether we are effectively addressing the price
issue might be to continue measuring the number of individuals
who continue to go outside regulated channels to buy their
medicines. What this says is volumes to these mail facilities
tell us. We are doing a good job, we are solving the price
problem. Look at the volume. In short, Mr. Chairman, I think
that the chickens have come home to roost. As the result of not
addressing meaningful and affordable prescription drug benefits
for our Nation's seniors, we are rapidly putting the integrity
and safety of the U.S. drug supply and turn our own citizens at
grave risk.
With that, Mr. Chairman, I yield back. And thank you for
having this hearing.
Mr. Greenwood. The Chair thanks the gentleman.
The Chair notes that the chairman of the full committee,
Mr. Tauzin, hopes to be with us but is attending a meeting
right now. And without objection, his opening statement will be
a part of the record, as will without objection the staff
report covering the investigation of this matter be made a part
of the official record.
[The prepared statement of Hon. W.J. ``Billy'' Tauzin
follows:]
Prepared Statement of Hon. W.J. ``Billy'' Tauzin, Chairman, Committee
on Energy and Commerce
Thank you Chairman Greenwood. And let me also express my deep
appreciation to Mr. Dingell and Mr. Deutsch, for their strong support
of the Committee's continuing bipartisan investigation of this issue.
This investigative work, with numerous visits to border checkpoints
and international mail facilities, has provided essential information
to help understand the risks and, indeed, has exposed what appears to
be the failure of our regulatory safety net to protect the American
public from counterfeit, dangerous and poor-quality drugs imported into
this country.
With so much attention focused on the personal importation of
drugs--to provide cheaper medicines or alternative therapies--the
information about the safety of imports, the ability of our system to
ensure people get what they think they are getting, is of critical
importance for policy makers.
Mr. Chairman, the facts before us--some of which you just cited--
actually suggest that there really is no safety net at all. The deluge
of imported drugs has blasted holes right through it.
Staff estimates that, based on Customs data, something like 20
million packages containing some kind of pharmaceutical product from
abroad pass through our mail facilities and borders each year, with
only a tiny percentage ever stopped for inspection.
I understand we will hear this morning from Florida officials, who
will describe the impact of this flood of uninspected drugs into that
state, and the public health threats they have had to confront as a
result. I am curious to know how sure they are that the drugs
Floridians order through the mail are safe to use.
Now we must remember that this troubling situation did not just pop
up last week. Almost exactly two years ago, Customs and FDA officials
testified to this subcommittee that they were unable to handle what was
then estimated as 2 million packages a year. Yet in just that short
amount of time, with the increase of Internet sales and other
promotions, the problem has grown enormously.
This hearing should help make clear that we are not talking about
potential risks or hypothetical threats here. We know, from staff and
federal inspections that dangerous substances from shady outfits are
passing through to American consumers. There should be no doubt that
people already have been harmed by this--and more will be as this
deluge continues.
It is also essential to get a grip on this issue because of the on-
going pressures to increase personal drug imports--either for
unapproved foreign medicines or for medicines that might save patients
money. The debate surrounding imports of cheaper drugs from abroad has
been particularly intense because of the current Medicare legislation
we've all been working on.
Yet however appealing it is for us to enable people to find a
personal supply of medicines from the cheapest sources available, we
must not disconnect our desire to help them from the reality of our
current border/mail controls, and the situation of drug preparations
beyond our borders.
Keep in mind, as much as people in this country are attracted to
promises of cheaper drugs from abroad (and over the Internet) the
crooks and scamsters are there to exploit this situation--and doubtless
will increase efforts to meet any growing demand--to the detriment of
public health and safety. And right now, it doesn't look like the
protections Congress has erected are being put to use.
This hearing should help clarify what is happening in the field,
and I hope will also underscore the point that this Committee takes
very seriously its responsibilities to protect the public health and
the agencies of our jurisdiction should do so as well.
Thank you again, Mr. Chairman, I look forward to the testimony and
yield back the remainder of my time.
Mr. Greenwood. The Chair recognizes the vice chairman of
the committee, the gentleman from Oregon, Mr. Walden for an
opening statement.
Mr. Walden. Thank you, Mr. Chairman. I am going to waive
the opening statement in lieu of additional time for Q&A.
Mr. Greenwood. The Chair intends to give everyone the same
amount of time for this hearing. It is an important hearing. So
if the gentleman would like to make an opening statement, he
will get the same amount of time, but The Chair appreciates his
decision.
The Chair also notes the presence of the gentleman from
Texas, Mr. Green, who is not a member of this subcommittee, but
is joining us because of his interest and his constituents have
in this issue. And he will be entitled to ask questions but
not, pursuant to our rules, to make an opening statement.
So the Chair recognizes the gentleman from New Jersey, Mr.
Ferguson for his opening statement.
Mr. Ferguson. Thank you, Mr. Chairman.
I would like to thank you for the opportunity to
participate in this hearing, and also thank you as well as the
committee staff for your diligence in pursuing this matter
that's really vital to the public health of our Nation and our
people.
Our Nation is facing a crises due to the tidal wave of
counterfeit and improperly dosed drugs that are illegally
imported from all over the world into our country and sold to
unsuspecting consumers. These so-called pharmaceuticals can
range from simply being fakes that contain primarily sugar or
starch to drugs containing deadly doses of controlled
substances. The scary thing is that we have no mechanism in
place to properly test and monitor the safety of these drugs
shipped to our country from all points throughout the world. It
is the FDA's job to protect American consumers from problems
stemming from drugs manufactured in our country. The FDA has
repeatedly said that they cannot guarantee the safety of drugs
shipped to the U.S. from other countries.
Quoting a recent FDA letter, ``Prescription drugs purchased
from foreign countries generally are not FDA approved, do not
meet FDA standards, they are not the same as drugs purchased in
the United States. Drugs from foreign countries do not have the
same assurance of safety as drugs actually regulated by the
FDA. They could be outdated, contaminated, counterfeit or
contain too much or too little of the active ingredient.''
Also today we will hear about how dramatically overburdened
our Customs officials are to the influx of dangerous foreign
drugs. Based on the estimates of senior Customs inspectors in
Miami, the facility there faces approximately 7 million
pharmaceutical shipments annually. This is just one facility,
thereby making the national number of imported pharmaceuticals
absolutely frightening.
The increase in imported unregulated pharmaceuticals has
simply overwhelmed our current system that was designed to
insure the safety and effectiveness of drug products. If our
public health officials cannot guarantee the safety and
efficacy of these drugs, how can we in good conscience let our
children, our seniors and our other consumers of this Nation
gain access to these drugs?
I look forward to hearing the testimony of the panels. I
appreciate this hearing.
And I will just close, because I have a couple of more
minutes, just addressing a point that my friend Mr. Bass was
making in terms of the problems that we face with drug price
disparities around the world. And I would only suggest that,
you know, we do face a problem of high cost of prescription
drugs in our country today, and we are addressing that problem.
We have spent countless hours marking up a bill in this
committee last week. We are going to have that bill on the
floor this week. That bill is going to go a long way toward
helping seniors in our country afford the prescription drug
medication that they need for the quality of their life, for
their very lives in some instances.
We will not solve that problem by imposing price controls
on drugs in this country. We hear a lot about free markets and
free trade and how free markets and free trade will help us
solve the drug pricing problem that many of our seniors face
and others face in our country today. Well, I would suggest
that it is precisely anti-capitalistic, anti-free market, anti-
free trade to suggest that importing other country's price
controls into our country will somehow help us over the long
term to solve this problem. We are taking the right steps with
the bill that we passed out of this committee and that we are
going to pass out of this House this week in using the market
and using the capitalist system by offering choices to seniors.
We are taking the right steps to try and bring prices under
control and to make these products more available to those who
need them.
I would suggest that precisely the wrong approach is to
look at countries like Canada and others which essentially use
a kind of a socialist price control structure to make these
products more affordable to their own people and by importing
these socialist tendencies and price controls and other
mechanisms into our country is precisely the wrong way to go.
I would simply suggest that looking at the way we are doing
it in our bill is the way that we are actually going to be able
in a positive and a proactive way to address the problem of
rising prescription drug costs. And by looking at countries; I
mean look at a country like France or Canada. You do not see
people going to France or Canada to get their health care. Why?
Because they have a system which do not encourage innovation,
it does not encourage the best health care in the world.
Where is the best health in the world? It is in the United
States. We have people all over the world coming to the United
States to get their health care. Why? Because we have the best
system in the world. And why do we have that system? Because we
have the best doctors, the best researchers, the best research
and development anywhere in the world. We need to maintain
that.
We should not be importing these socialist tendencies and
price controls, and socialized medicine of other countries in
the U.S. to try and control our costs. What we should do is
find out ways that we can use the market, use more choices for
seniors to achieve that goal.
I yield back. Thank you.
Mr. Greenwood. The Chair thanks the gentleman and
recognizes the gentle lady from Colorado.
Ms. DeGette. Thank you, Mr. Chairman.
I would ask unanimous consent to submit my full written
statement for the record.
Mr. Greenwood. Without objection.
Ms. DeGette. I am eager to hear the witnesses today. So let
me just make a couple of points in addition to my written
statement.
Like everyone, I am very concerned about high prescription
drug costs for my seniors. And, in fact, just last week I was
stopped in a parking lot in Denver by one of my constituents
who said to me ``I am very concerned about your position on
drug reimportation because I get my drugs from Canada.'' And
she has a legitimate concern.
Her concern is she wants to be able to afford her
prescription drugs every month. But upon last year's hearings,
which I thank the chairman for holding, and all of the research
we have done, it is clear to me that opening the borders to
unlimited importation of drugs from other countries is not only
a poor idea, but it threatens the health of our constituents.
And so I think if we are going to try to think about how to
control the price of drugs, we need to do that without finding
other ways to reimport drugs at lower prices which may, in
fact, be dangerous to our constituents' health.
I remember last year in the hearing seeing the packages of
yellow pills that contained not medical products, but yellow
highway paint. I remember standing on the floor last year with
two packages of what was called Viagara; one was real, one was
not and they looked identical.
So I think that the issues that we are dealing with are
very serious issues. They are not just serious in terms of drug
prices. They are serious in terms of our constituents' health
and well-being. And, frankly, I cannot think of anything that
we are elected to do in the U.S. Congress if it is not to
protect the health and well-being of our constituents.
As I understand it, the problems with drug reimportation
and counterfeit drugs are getting much more serious. And I am
eager to hear the witnesses today talk about this. And I am
also eager to work with my colleagues on both sides of the
aisle so that we can try to find some solutions both to the
drug reimportation issues, but most importantly to the
underlying issue, the issue which will not be mentioned, right?
And that is the issue of how do we give our seniors the same
kinds of low and appropriate prescription drug prices that are
available in many other countries, including Canada.
And with that, Mr. Chairman, I yield back.
Mr. Greenwood. The Chair recognizes the gentleman from
Florida, Mr. Stearns, for his opening statement.
Mr. Stearns. And good morning. And thank you, Mr. Chairman,
again for holding this hearing, the latest I guess in a series
over the past few years on the influx of counterfeit drugs and
unapproved drugs.
I am especially troubled, as my colleague who is the
ranking member, that most of these drugs appear to be coming
from our State down in Miami, Dade County.
And, of course, the ramifications of this problem are far
reaching: huge lucrative criminal profits, danger to public
health, disruption to commerce and the fair profits that the
manufacturers themselves should be earning for all their
research and their efforts.
In 2001 South Florida criminals counterfeited Procrit, a
drug used to boost the immune systems of cancer and HIV
patients by relabeling, hiding drugs in Texas and North
Carolina and then slipping it into the supply so that seriously
ill patients could have, and probably did receive, weakened
dosages. This amounted to about $46 million in criminal
activity.
So what is the solution? There does not seem to be enough
manpower to sift through the packages. And looking at the
photos, that I guess came from the Miami hearing, we just are a
little puzzled what to do. Is it new bar coding or tagging?
At a reception last month one of my staff was given in
identifying consumer goods use of little vials. I have one of
these little vials, Mr. Chairman. You cannot see it, but within
this liquid is 150 nanoblock ICs. It's just barely perceptible,
these tiny flecks that are supposedly the next revolution in
tagging products. But the question is who is going to pay for
these tiny computerized flecks that are going to be used for
labeling? The wholesalers? The manufacturers? No. Ultimately
the consumers.
I look forward to examining these issues at this hearing,
and I especially look forward to the testimony of the three
Florida officials that have come here, Mr. Robert Penezik, Dr.
Gregg Jones and Dr. Cesar Arias, and thank them for their
kindness in coming here.
As we know, through strong and collective leadership
efforts in Florida through the legislature, the Attorney
General and Governor Jeb Bush, the Governor signed a new law
just 2 weeks ago ``The Prescription Drug Protection Act.''
Among other things, it tightens up the wholesale activity and
improves the chain of custody documentation. And, Mr. Chairman,
I just thought that I would just touch on some of the things
that this act incorporates, which I think is very helpful.
The new legislation requires or provides for:
(1) Vastly improved documentation of vital pharmaceuticals
in order to prevent their counterfeiting; (2) Full pedigree
papers on all prescription drugs by July 1, 2006; (3) Due
diligence by those receiving these pedigree papers; (4) Full
authority by the Florida Department of Health to destroy
medication that has been adulterated or improperly stored; (5)
Full authority by the Florida Department of Health to shutdown
licensed wholesalers in violation of State statute until the
deficiencies are corrected; (6) Increased criminal penalties
for pedigree papers as well as other violations involving
adulterated drugs, and; (7) Increase permitting requirements
for drug wholesalers in Florida, including raising bonding
requirements and stricter background checks.
So, Mr. Chairman, I think the State of Florida is to be
commended for this new Prescription Drug Protection Act,
implementation. Between the cup and the lip is the hard
problem. And we just hope it can be done. And perhaps we can
hear some more from the three individuals from Florida.
So I look forward, again, to this testimony and I commend
you for this hearing.
Thank you.
Mr. Greenwood. The Chair thanks the gentleman and
recognizes the gentleman Mr. Rogers for an opening statement.
Mr. Rogers. Thank you, Mr. Chairman.
I am going to waive in lieu of time for questions. Thank
you.
Mr. Greenwood. I am sorry. I did not notice the reemergence
of the gentleman from Florida, Mr. Davis is recognized for his
opening statement.
Mr. Davis. Thank you, Mr. Chairman.
As another Floridian on the committee, I am keenly
interested in what we are about to hear. And I just wanted to
briefly say that there are 3 issues that I believe we are all
focused on.
One is the increasing desperation of seniors not just in
Florida, but around the country as well as their family and
friends in finding affordable prescription drugs. And the
increasing desperation in the level of risk that people are
willing to undertake to simply have some drug versus nothing at
all.
The market is a cruel thing and until Congress acts to
provide some relief to seniors, I think we are going to
continue to see some of the steps you are about to describe it.
Second, we have an obligation as elected officials to make
sure that seniors are in a position to make informed choices
about quality and about exactly what they think they are
purchasing, and that being accurate. And ultimately to make
sure that they are safe. Because in some cases the mistakes
that are made in terms of what people take are unforgivable or
fatal mistakes.
And finally, the law should be enforced. And I recognize
that what I have just described are competing and perhaps in
some cases irreconcilable forces and everybody, Congress, the
FDA has chosen to avoid some of the painful choices. But one
thing we do owe the public here today is to have a very open
and honest discussion. And if none of us likes the choices we
are forced to confront here, we ought to at least be honest
with the public as to what those choices are and they can
participate with us in making some of the hard decisions about
how we stop this growing problem from getting worse. So I look
forward to your testimony.
And, Mr. Chairman, once again commend you on calling this
hearing and the manner in which I know you will conduct this
hearing.
Mr. Greenwood. The Chair thanks the gentleman.
[Additional statement submitted for the record follows:]
Prepared Statement of Hon. Gene Green, a Representative in Congress
from the State of Texas
Thank you, Mr. Chairman, for allowing me to join you here this
morning to discuss the reimportation of prescription drugs.
Prescription drug costs are increasing at an alarming rate. Drug
spending is currently the fastest growing segment of national health
care spending, increasing by 15.1 percent in 1998, 19.2 percent in
1999, and 17.3 percent in 2000.
Spending on prescription drugs currently accounts for more than 11
percent of total personal health spending, and that number is expected
to increase to more than 17 percent of personal health expenditures by
2011.
Millions of Americans cannot afford to keep up with these ever
escalating drug costs.
In absence of a Medicare prescription drug benefit, seniors
especially are struggling to pay for their medications. They are forced
to ration their prescriptions, cut their pills in half, or go without
them, because they cannot afford these lifesaving medicines.
More troubling, citizens of the United States pay the highest
prices in the world for prescription drugs. Canada, France, Italy,
Germany, Japan, and the United Kingdom all negotiate on behalf of their
citizens to obtain lower prices for brand name drugs.
As a result, purchasers in these countries pay significantly less
for prescription drugs than uninsured senior citizens in the United
States.
Seniors don't mind paying a fair price for their prescription
drugs, but they don't think they should have to pay more than seniors
in these industrialized countries. As a result, many of them are taking
advantage of the internet to buy cheaper reimported drugs.
Like my colleagues, I have many concerns about the safety of
reimported drugs. Affordability cannot come at the cost of safety when
we're talking about potentially life-saving medications.
That is why I support proposals which would subject reimported
drugs to the exact same safety mechanisms already in place for drug
manufacturers.
Dr. David A. Kessler, former FDA Commissioner under Presidents Bush
and Clinton, stated that the importation of these products can be done
without causing a greater health risk to American consumers than
currently exists.
Unfortunately, the FDA seems to have given up on its obligation to
ensure that drugs entering the stream of commerce are safe and
effective.
A staff visit to the Miami International Mail-Branch Facility
revealed that the system for processing imported foreign prescription
drugs and controlled substances in the facility has broken down,
allowing these products to enter the country with little or not review
or testing.
This poses a serious public health problem that could put the lives
of many Americans, especially our seniors, at risk.
The system's failure can certainly be attributed to the fact that
the volume of incoming drugs is simply too great to allow for any real
investigation into their quality.
But the larger problem seems to be FDA's interpretation of the law,
which has turned this into an overly burdensome and resource intensive
process.
This hearing is an excellent opportunity to assess the extent of
this problem, and what we can provide to the FDA, both in terms of
resources and regulatory reform, to help ensure that the drugs entering
the marketplace are safe.
I look forward to hearing from our witnesses on this issue, and
once again thank the Chairman for allowing me to sit in on this
hearing.
Mr. Greenwood. The Chair formally welcomes our first panel:
Mr. William Hubbard, Mr. John Taylor both from the FDA, Ms.
Elizabeth Durant, Director of Trade Programs at the Bureau of
Customs and Border Protection.
Pursuant to the rules of our committee and the House, I
should advise you that you are entitled to be represented by
counsel. Do any of you wish to be represented by counsel. All
right, seeing no such desire, do any of you object to giving
your testimony under oath? In that case, I would ask you to
stand and raise your right hands, please.
[Witnesses sworn.]
Mr. Greenwood. You are under oath, and we'll begin, Mr.
Hubbard, with you and you are recognized for 5 minutes for your
opening statement.
TESTIMONY OF WILLIAM K. HUBBARD, ASSOCIATE COMMISSIONER FOR
POLICY AND PLANNING, FOOD AND DRUG ADMINISTRATION; JOHN M.
TAYLOR III, ASSOCIATE COMMISSIONER OF REGULATORY AFFAIRS, FOOD
AND DRUG ADMINISTRATION; AND ELIZABETH G. DURANT, DIRECTOR OF
TRADE PROGRAMS, BUREAU OF CUSTOMS AND BORDER PROTECTION
Mr. Hubbard. Thank you, Mr. Chairman. As you noted, I'm
accompanied by John Taylor our chief enforcement official at
FDA.
I have a written statement, but I will not read that, but
will make a few brief oral remarks, if I may.
I would like to thank the committee for its longstanding
interest in these issues of counterfeit and imported drugs.
Counterfeiting is much in the news now, and FDA, Mark McClellan
is very concerned that we make sure that this problem doesn't
get worse. And FDA is clearly committed to work on that.
Let me just start with one quick illustration of the recent
Miami case with Procrit. This is some of the actual product
that was seized in the Procrit example. There is a real Procrit
and a counterfeit Procrit. And I would like to have it brought
up to the chairman, if I may, to share with the committee.
This is a drug that is used to deal with anemia and kidney
failure in cancer and AIDS patients. Three suspects have been
arrested in this case and have now pled guilty. But, you know,
this is a dangerous product. It was basically replaced with
Miami tap water. And so that clearly points out the problem we
see with counterfeiting.
With counterfeiting in Miami we are concerned that
consumers are going to the Internet to buy drugs increasingly.
Let me show you a couple of examples, if I may. If we could
show the eDrugnet example.
This is a website that promises to sell FDA approved drugs
to patients. Our investigators have sought out the source of
this site, and it is in Thailand, although it appears to be
domestic and promises FDA approved drugs.
The next site has a Miami Beach address and suggests that
it is an American business purchasing and selling American
drugs. It is in Israel.
The next one says ``It is the most trusted pharmacy in
Canada.'' This site is registered in Barbados, which I believe
is an island off of Venezuela, not in Canada.
So these raise very serious questions about what people are
buying. But let me show you what people are actually getting
when they go to these sites.
Here is a muscle relaxant that raises real concerns about
things that come like this. No labeling, no information about
what it is.
Here is a drug someone thought they bought from Holland.
And, unfortunately, the actual drug that they got has Cyrillic
script, which is unintelligible to me, certainly. We do not
even know the name of it. But being Cyrillic means it either
came from Russia or one of the former Soviet Republics since
Cyrillic only is used in those countries. And, of course, it
has no information to even determine what the drug is.
This is an antibiotic, it is an antibiotic of last resort,
a very serious drug. You only use it when other antibiotics do
not work. The person that purchased it over the Internet
claimed they were going to treat their cryptococcal meningitis.
You should not be treating cryptococcal meningitis with drugs
purchased from the Internet.
Here is Lipitor. Now, this is an interesting example. This
drug was made in Germany, then distributed to Ireland, then
sold to Thailand, then sold to an American. So this drug has
been all around the world and where it has exactly been, who
has held it, what they have done with it, how it could have
been affected.
Here is a controlled substance, a scheduled opiate that
clearly is totally against the law and it should not be
purchased in any way.
Here is one that someone purchased, one would suspect that
they know that they should not have been buying it because it
is a travel book and inside it is carved out and there are
pills. And we see these things all the time.
So these are not carefully selected examples just to show
you horror stories. These are typical of what we are seeing in
the mail facilities everyday. I think some of the committee's
members have been out there to see that.
Now, some say Canadian drugs are different, that this stuff
from the Third World should not be let in, but the Canadian
drugs are okay. So we have been screening Canadian drugs. And
let me show you a few examples of those.
This is a high blood pressure drug. Looks like a perfectly
legitimate product. The problem is it has no information for
the patient. We are all used to going in the drug store and
getting antibiotic. It gives a doctor's name, our pharmacist's
name and whether to take it with food or what time to take it,
or whatever. This has none of that. So it's just a bottle of
pills, as far as the patient is concerned.
And here are three other examples that patients bought for
osteoporosis, for diabetes and for glaucoma. These drugs need
to be refrigerated. If these drugs are not refrigerated, they
are very complex proteins that breakdown. They become
ineffective, maybe unsafe. These arrived in the mail just like
this. So these are totally useless drugs in terms of
effectiveness. They may, indeed, be dangerous.
Another example is a Canadian drug called Lipivir, which
appears to be some sort of knock off Lipitor, but we do not
really know. And the patient probably thought they were buying
Lipitor.
Yet another example is a drug for depression. This is a
drug that should only be prescribed in 3 month intervals
because it is for a high risk population. This person was given
a 10 month supply of this. So, clearly, it's a danger to that
patient.
Another patient apparently that had seizures ordered a drug
called gabapentin. And this is what he got.
Mr. Greenwood. This looks like one of those cereal
commercials.
Mr. Hubbard. Yes. This patient should have been given 1
month's drugs. This is about 4 years supply. Now, you can say,
well okay, he needs it for a long time. The problem is they
start expiring in August. So in 6 weeks these drugs are going
to be useless. And this patient paid $1500 to a Canadian
pharmacy for those drugs.
Yet another drug, this is a drug for high blood pressure
called Idopamide. It is a generic drug. The interesting thing
about it is that he paid $30 for it. You can get it in the
United States for $20. Because, in fact, generic drugs are
cheaper in the United States than they are in Canada. And many
seniors and other patients can take generic drugs.
And then I will go to one last example from a website that
we'll show to the members, to the committee, please. Now, this
is a site that promises to sell FDA approved drugs to American
citizens from Canada. The businessman that owned this was
living in Arizona, apparently. And we got an example of this
from an 82 year old gentlemen in Michigan who ordered drugs off
of this site for his seizures and his enlarged prostate. And
this is what he got. He got a Tupperware container with some
drugs made in India. These are fake knock offs of Proscar and
Neurontin. We have no idea whether these are real drugs or not.
But he was led to believe that this site would give him good,
cheap Canadian drugs. In my view he wasted his money.
So these are actually what's coming in from Canada. And I
will also mention that the particular individual running this
site, we happened to find, had been arrested in Arizona and
jailed for an unrelated fraud charge.
So in summary, Mr. Chairman, we find that very few if any
of these drugs purchased by our citizens from foreign sources
meet contemporary standards for pharmaceutical prescribing,
dispensing, labeling and handling.
And with that, Mr. Chairman, I will end my remarks.
Mr. Greenwood. The Chair thanks the gentleman.
Mr. Taylor, did you wish to make a statement of your own.
You are recognized for 5 minutes for that purpose.
TESTIMONY OF JOHN M. TAYLOR III
Mr. Taylor. Thank you, Mr. Chairman.
I appreciate the opportunity to discuss our mutual concerns
related to the importation of drugs into the United States. My
testimony will dovetail Mr. Hubbard's, but it will also focus
on the irregularities related to FDA's handling of a large
shipment of unapproved Viagara, apparently from Belize.
For public health reasons, FDA remains concerned about the
importation of prescription drugs into the United States. In
our experience, as Mr. Hubbard has explained, 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 believes that the overall quality of drug products in
this country is very high. And FDA continues to safeguard the
drug supply in this country as evidenced by our recent success
in the counterfeit Procrit criminal case, the AstraZeneca
criminal case and our ongoing investigation regarding
counterfeit Lipitor. FDA, however, cannot offer the same
assurance to the public about the safety and quality of drugs
purchased from foreign sources.
With the available resources and competing priorities
facing the agency, experience shows that we are unable to
visually examine the large volume of parcels containing
prescription drugs that arrive in the mailing services each
day. As a consequence, FDA must employ a risk-based enforcement
strategy to deploy our existing enforcement resources in the
face of multiple priorities including homeland security, food
safety and other tasks.
FDA shares the committee's concern about the volume of
drugs that are entering the United States. And as a result, we
are reevaluating, refining and improving the programs and
procedures that we are employing to ensure that we are
developing priorities for import detentions, employing our
resources to high volume field locations, training employees to
identify high risk products and utilizing import alerts to
target products based on potential risks. So these are the
things that we are going to be working on now and in the future
so that we can better allocate our limited resources.
FDA's import groups have a major role to play in
implementing these strategies, and this turns me to Florida
District's Miami import group. During its history Florida has
prided itself in having an excellent working relationship with
Customs and other Federal, State and local agencies as well as
the import community. This close working relationship with
Customs has led to many innovations and improvements in how we
handle imported products and its lead to many awards for the
Florida District Office, including Vice President Gore's Hammer
Award for reinventing government.
Recently, however, FDA advised the committee and the
American public of irregularities related to its handling of a
large shipment of unapproved Viagara. Through a series of
procedural irregularities foreign versions of Viagara were
detained and subsequently released by FDA to consumers. After
the products were released by FDA, the agency sent a letter to
each consumer who received these unapproved foreign versions of
Viagara alerting them to the fact that such products were
unapproved drugs under the Act and that the agency cannot
provide any assurance of quality, safety or effectiveness for
these products. Because of the discovery of these
irregularities, FDA's conducting an ongoing internal review of
these events thoroughly assessing the matter and taking steps
to ensure that these mistakes do not occur in the future.
In the wake of the discovery of these irregularities, FDA
has undertaken or will undertake several steps to ensure that
import detentions are handled properly in the future, as well
as taking steps to ensure that our risk-based strategies are
applied properly.
First, Florida district managers held an all hands meeting
with the personnel at the Miami import group where they
discussed the detention of the unapproved Viagara and at this
all hands meeting district managers also conducted training on
Section 801 of the Act and the regulation and internal
procedures that govern the proper handling of import
detentions. The managers also reemphasized the importance of
reviewing records carefully and making regulatory decisions in
accordance with agency policy.
Two. The District implemented new requirements regarding
the initialing and dating of mail entry reports so that Miami
import group can more easily determine what records have been
reviewed and whether they have been reviewed property.
Third. The District is drafting new standard operating
procedures for the handling of mail entries.
Fourth. The District apologized to Customs supervisor at
the Miami mail facility for the improper handling of the
detained unapproved Viagara.
Fifth. The District will have biweekly meetings with the
Assistant Port Director of Miami or her representative in order
to strengthen the Miami import group's relationship with its
partners.
Sixth. The District will meet with Customs supervisors at
the Miami facility on a monthly basis in order to enhance our
working relationship with Customs.
Seven. The District will provide Customs with hard copies
of all import alerts that the agency issues.
Eight. The District will review its import operations,
quality assurance audit plan and determine whether it is
sufficient. If it is not sufficient, then that plan will be
amended to ensure that it provides the proper guidance to the
import staff.
And Nine. The regional and District management will review
several proposals that are focused on improving the management
structure and the supervisory ratio in the Miami import group
so that there is greater management oversight within that
operation.
In addition to these steps, today Howard Lewis, an FDA
employee, begins serving on an indefinite basis as Florida's
District Import Program Manager. Mr. Lewis is from FDA's New
Orleans' district and has a strong management and compliance
background and a wealth of knowledge of domestic and import
compliance issues. These strengths will allow him to identify
additional improvements that will strength the Miami import
group's role in protecting the public health.
Once we are satisfied that we have taken steps to ensure
that the above mentioned irregularities will not occur in the
future, we are also prepared to conduct a case study in Miami
that helps us better identify the type of pharmaceutical
products that are being imported through the Miami facility and
the type of health impacts that they might cause.
In closing, Mr. Chairman, FDA remains concerned about any
possibility that unsafe drugs may find their way into the
American drug supply. We'll remain vigilant as we refine and
improve the programs that we use to ensure the availability of
safe medicines for consumers.
We appreciate the committee's interest in this matter and
we look forward to continuing to work with you in furtherance
of this goal.
Thank you again for the opportunity to participate in
today's hearing. I'll be happy to answer any questions.
[The prepared statement of William K. Hubbard and John M.
Taylor III follows.]
Prepared Statement of William K. Hubbard, Associate Commissioner for
Policy and Planning, U.S. Food and Drug Administration
introduction
Mr. Chairman, Ranking Member Deutsch and Members of the
Subcommittee, I am William K. Hubbard, Associate Commissioner for
Policy and Planning at the U.S. Food and Drug Administration (FDA or
the Agency). With me today is John M. Taylor, Associate Commissioner
for Regulatory Affairs at FDA.
We appreciate the opportunity to testify on the continuing problem
of unapproved imported prescription drugs. Our testimony will focus on
FDA's efforts to assess and respond to the public health threats posed
by the importation of unapproved drugs, as well as the introduction of
counterfeit drugs from foreign and domestic sources that also poses a
threat to the health and safety of United States consumers. We will
discuss FDA's importation policies and procedures, the enforcement
strategies regarding imported, unapproved, and counterfeit
pharmaceutical products, and plans to strengthen management oversight
at FDA's Miami Import Office and the Miami International Mail Facility.
As FDA has previously stated to this Subcommittee, 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.
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 to the
significant 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) undertaking
monitoring of and enforcement against Internet pharmacy outlets that
present 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 health and safety concerns
The Federal Food, Drug, and Cosmetic (FD&C) Act prohibits the
importation of unapproved, misbranded, or adulterated drugs into the
U.S. In general, drugs imported by individuals fall into one of these
prohibited categories. This includes foreign versions of U.S.-approved
medications. In addition, under provisions enacted as part of the
Prescription Drug Marketing Act (PDMA), it is illegal for anyone other
than the drugs original manufacturer to re-import a prescription drug
that was manufactured in the U.S.
A large and growing volume of parcels containing prescription drugs
ordered by individuals from foreign sources is entering American
commerce through U.S. Postal Service international mail facilities.
Members of this Subcommittee have witnessed these large volumes at
locations such as the Dulles, Virginia, mail facility. Evidence
strongly suggests that the volume of these foreign drug importations 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
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.
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
against 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 outdated
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 because the operator of the pharmacy often is not known
or the seller is beyond the consumers 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.
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. The advent of the
Internet has significantly compounded this problem. As a consequence,
tens of thousands of parcels that FDA is unable to review as a result
of the Agency's limited resources and multiple competing enforcement
priorities are released by the Bureau of Customs and Border Patrol
(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
unapproved sildenafil (generic Viagra), arriving at the Miami facility,
the Agency has issued an Import Alert to instruct field personnel to
work with the BCBP to detain all such shipments from specific
manufacturers, distributors and countries of origin.
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 is committed to developing more effective education strategies.
With this goal in mind, FDA has 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 another brochure entitled,
``Looks Can be Deceiving,'' which describes the dangers of purchasing
drugs directly at cross-border pharmacies. This also is 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 includes 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 webpages on FDA's
website.
Another central piece of our campaign is a brochure entitled,
``Buying Prescription Medicines Online: A Consumer Safety Guide.'' The
brochure was 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 received by FDA 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: Its 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.
partnering with health professional organizations
FDA continues to meet with organizations representing state
regulatory and law enforcement bodies, consumers, health care
practitioners and industry. The purpose of these meetings is to discuss
and coordinate efforts to address 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:
<bullet> The National Association of Boards of Pharmacy
<bullet> The Federation of State Medical Boards
<bullet> The National Association of Attorneys General
<bullet> The American Medical Association
<bullet> The American Pharmacists Association
<bullet> The National Consumers League AARP (formerly the American
Association of Retired Persons)
<bullet> The American Society of Health-Systems Pharmacists
<bullet> The National Association of Chain Drug Stores
<bullet> The National Community Pharmacists Association
<bullet> The Pharmaceutical Research and Manufacturers Association
<bullet> Pharmaceutical Security Institute
<bullet> Healthcare Distribution Management Association
working with state regulators
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.
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. 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.
Discount Prescription Center
A recent example of the effective application of state pharmacy law
to a drug importation case is seen in the May 13, 2003, warning letter
issued by the West Virginia Pharmacy Board (the Board) to Discount
Prescription Center of Fairmont, West Virginia, telling that firm to
cease its violation of state law. Discount Prescription Center
solicited patients and arranged for a Canadian pharmacy to dispense and
ship prescription drugs to the patients. FDA considers the firms
operations to be illegal and a potential risk to public health. FDA
expressed support for the Boards effort to stop this firm from
violating the law in a letter to the Executive Director and General
Counsel of the West Virginia Board of Pharmacy. FDA stated in the
letter that we believe that operations such as Discount Prescription
Center expose the public to the significant potential risks associated
with imported prescription medications that are not FDA-approved. In
addition, FDA has offered assistance in any future efforts by the Board
to stop similar firms.
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 obtains
unapproved drugs from Canada for U.S. consumers, exposing the public to
the significant potential risks associated with unregulated imported
prescription medications. Rx Depot and similar companies have often
stated incorrectly to consumers that FDA condones their activities and
even that their prescription medications are ``FDA approved.'' This
could lead consumers to conclude mistakenly that the prescription drugs
sold by the companies have the same assurance of safety as drugs
actually regulated by FDA.
FDA believes that operations such as Rx Depot expose the public to
significant potential risks associated with unregulated imported
prescription medicines. FDA's warning letter notified the firm that the
Agency considers the firms operations to be a risk to the public
health, and in clear violation of the drug safety laws that protect
Americans from unsafe drugs. Although FDA addressed its warning letter
to the Rx Depot in Arkansas, FDA also sent a letter to the president of
Rx Depot, in Tulsa, Oklahoma. The warning letter applies to all
locations of Rx Depot and its affiliates. While Rx Depot responded to
FDA's warning letter, that response was inadequate and FDA is
developing an effective response.
We issued our warning letter in conjunction with action by the
Arkansas State Board of Pharmacy. The Arkansas State Board of Pharmacy
issued its own letter to the firm on the same day as our warning letter
instructing the firm to cease violating state law immediately.
federal enforcement activityfd
As 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.
Recent criminal and civil cases 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:
<bullet> 150 Internet-related drug arrests, 60 involving Internet
pharmacies;
<bullet> 102 convictions, 34 convictions involve Internet pharmacy
cases;
<bullet> 95 open Internet drug criminal investigations;
<bullet> 90 sites are under active review for possible regulatory or
civil action;
<bullet> Nearly 200 cyber warning letters sent to domestic and foreign
online sellers;
<bullet> 5 preliminary injunctions;
<bullet> 15 product seizures; and
<bullet> 11 product recalls.
drug counterfeiting
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 73 counterfeit drug cases since October 1996.
Investigations have so far netted 44 arrests and 27 convictions. Fines
and/or restitution have been imposed in excess of $250,000. FDA has
seen 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. 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.
Reporting of Information on Counterfeit Drugs by Manufacturers
On April 22, 2003, the Pharmaceutical Research and Manufacturers of
America (PhRMA), which represents the countrys 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 be helpful to the Agency because it will assist FDA in carrying
out its responsibilities to protect the safety and integrity of the
nation's drug supply by enhancing 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. Consumers. The
reporting program went into effect on May 1, 2003. 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. Attorneys 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. The defendants face up to 10 years in
prison and a $250,000 fine.
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.
In conjunction with the manufacturer of this product, FDA published
a list of lot numbers to identify the counterfeit product. We urged
health care providers and patients alike to check the packaging very
carefully before using this product. Patients who have any of 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. On June 3, 2003, FDA announced that its continuing
investigation of counterfeit Lipitor identified additional counterfeit
quantities of the cholesterol-lowering product. The investigation is
ongoing.
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. We want to reemphasize this warning today.
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.
FDA regularly conducts investigations and testing to identify and
remove from the market products that are counterfeit, have been
tampered with, or are otherwise unsuitable.
FDA is working closely with the individual states and with health
professionals, particularly pharmacists and pharmacy associations, to
alert them to this counterfeit product. Many patients taking Lipitor do
not receive it in the 90-tablet bottles, but pharmacists provide it in
smaller quantities, which do not contain the identifying lot numbers.
Patients who are not sure whether they have the tainted product were
instructed to check with their pharmacist.
FDA will continue to work closely with Pfizer, Inc., on this
counterfeiting problem. FDA supports the activities of legitimate
manufacturers to inform the public about counterfeit products and how
to identify them. In addition Pfizer, issued its own press release
supporting the vigorous enforcement of the law to protect patient
safety. The company continues to work closely with FDA and other
regulatory authorities to help prevent the importation of counterfeit
medicines.
Other counterfeit prescription drug cases in which FDA has had a
central role include:
<bullet> 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.
<bullet> 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.
<bullet> 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. The product,
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.
<bullet> 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 lable 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.
<bullet> 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.
overview of fda's import program
FDA Import Regulations
Pursuant to the FD&C Act, FDA is responsible for the safety and
effectiveness of domestic and imported pharmaceuticals. Section 801 of
the FD&C Act gives FDA, in conjunction with BCBP, authority for
regulating the importation of drugs and certain other products. This
includes the authority to refuse admission of any article that appears
to be in violation of the FD&C Act.
Under Section 801(a) of the FD&C Act, a drug is subject to refusal
of admission into the U.S. 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. If it appears that the article may be subject to
refusal, FDA gives the importer a written notice and an opportunity to
present testimony, either verbally or in writing, to overcome the
appearance of the violation. Alternately, the importer may request
permission to bring the article into compliance. If FDA denies the
request to recondition the article and the article is refused
admission, it must either be re-exported or destroyed.
Import Alerts
FDA's ORA, Division of Import Operations issues import alerts to
inform staff about problems, such as with specific commodities or
shippers. Because they are disseminated Agency-wide and are shared with
other agencies, import alerts help ensure that FDA's regulation of
imports is uniform and effective. As with all regulatory guidance, they
are subject to the Agency's good guidance practices regulation and must
have management concurrence before they are implemented.
Detention Without Physical Examination
In some instances, a product may be detained as soon as it is
offered for entry into the U.S. This procedure is the administrative
act of detaining a product without physical examination and is based on
past history and/or other information indicating the product may
violate the FD&C Act. A product may be subject to an import alert
recommending detention without physical examination until FDA has new
information indicating such action is no longer warranted.
Guidance to ORA Field Staff
FDA's ORA provides guidance to FDA field personnel giving them
detailed policies and procedures for processing imported products,
including imported prescription drugs. In addition to import alerts,
the principal guidance documents are the Investigations Operations
Manual, Chapter 6, and the FDA Regulatory Procedures Manual (RPM),
Chapter 9.
Because the volume and types of imported products varies by FDA
district--one district may receive a large percentage of drugs, while
another may receive mostly food products--many districts also have
standard operation procedures tailored to their unique workload. All of
FDA's import organizations, however, are required to handle and process
all FDA-regulated products offered for import. The Agency's field work,
therefore, is quite varied and does not focus solely on drugs.
Importation of Prescription Drugs
All imported drugs are required to meet the same standards as
domestic drugs, and thus must not be unapproved, misbranded, or
adulterated. All imported drugs are required to meet the same standards
as domestic drugs. Drugs imported by individuals that are unapproved,
misbranded, or adulterated, are prohibited. This includes drugs that
are foreign versions of FDA-approved medications, and drugs that are
dispensed without a prescription. As stated previously, under the FD&C
Act, FDA-approved drugs that are manufactured in the U.S. and exported
may not be imported by anyone other than the manufacturer.
At mail facilities, 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 these requirements and the
volume of regulated products imported by mail, the detention and
further processing of mail parcels consumes large amounts of FDA
resources. 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.
FDA Personal Importation Policy
Under FDA's personal importation policy, as described in guidance
to the Agency's field personnel, FDA staff may exercise enforcement
discretion in limited circumstances to permit the importation of
certain unapproved prescription medication for personal use.
First adopted in 1954, the policy was last modified in 1988 in
response to concerns that certain potentially effective treatments for
AIDS patients were not available in the U.S., but were available in
other countries. The Agency expanded the guidance for humanitarian
purposes to allow individuals suffering from serious medical conditions
to acquire medical treatments legally available in foreign countries
but not approved in the U.S. The policy is articulated in guidance to
FDA field personnel and is not a license for individuals to import
unapproved, and therefore illegal, drugs for personal use into the U.S.
The current personal importation policy permits the exercise of
FDA's enforcement discretion to allow entry of an unapproved
prescription drug if:
<bullet> The intended use is for a serious condition for which
effective treatment may not be available domestically.
<bullet> The product is considered not to represent an unreasonable
risk to the patient.
<bullet> The product is for personal use.
<bullet> There is no known commercialization or promotion to U.S.
residents by those involved in the distribution of the product.
<bullet> The individual seeking to import the product affirms in
writing that it is for the patients own use and provides the
name and address of the U.S.-licensed doctor responsible for
his or her treatment with the product or provides evidence that
the product is for the continuation of a treatment begun in a
foreign country.
FDA's personal importation policy, as written, is difficult to
implement with respect to mail shipments of drugs. This is due, at
least in part, to the difficulty faced by BCBP and FDA inspectors, and
even health care practitioners, in identifying a medicine simply by its
appearance or its labeling, which may nonetheless falsely identify a
product. From a practical standpoint, FDA inspectors cannot always
visually examine drug products contained in a mailed parcel and
accurately determine their content, identity or the degree of risk
posed to the individual who will receive these drugs. Also, largely
because of the advent of Internet sites selling prescription drugs from
all points around the globe, the volume of parcels containing
prescription drugs has increased dramatically. This increase in volume
presents a significant challenge for BCBP and FDA. However, in order to
respond to this growing concern, utilizing a risk-based approach, the
Agency has deployed its limited enforcement resources across competing
priorities, across field offices, and across regulatory product
categories to protect the public health from unapproved products that
pose the most significant potential public health concern. These
enforcement activities are described in more detail below.
fda import enforcement efforts to protect public health
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 the counterfeit
Lipitor matter.
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. The Agency is currently conducting
such exercises at two FDA import locations. These actions 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.
Miami Enforcement Successes
FDA has had numerous enforcement successes on prescription drug
import cases. One such example that is worth noting is a Miami broker,
Eagle Global Logistics that continued to improperly import FDA
regulated medical device, pharmaceutical, and radiation emitting
products after being advised of reporting errors. The broker had a 22
percent error rate, and working with BCBP, the broker was assessed
penalties of $30,000 for failing to exercise responsible supervision
and control.
Florida District's Miami Import Office recommended penalties to be
assessed against Catalysis Corporation, an importer and broker that
continued to declare over-the-counter drugs as cosmetics despite FDA
efforts to counsel the company. BCBP approved a $46,000 penalty against
the importer for aiding illegal importation under Title 19, United
States Code 1595a(b). Actions seeking additional penalties are pending.
Other 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 AstraZenecas 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.
<bullet> 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.
<bullet> 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. The defendants face up to
10 years in prison and a $250,000 fine for these actions.
Lipitor
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.
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 Mens Clinic, and related
sites, that sold a variety of prescription medications.
In September 1999, OCI received information regarding the Norfolk
Mens 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, and the company
itself, pled guilty to distributing misbranded drugs. 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 serve 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. Diet
drugs and U.S. currency were seized 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.
florida districts miami import office
FDA's Florida District Office (FLA-DO) import operations are
strategically located throughout the district with the largest
operation in Miami, Florida. Their work assignments encompass all of
FDA's regulated products and are not limited to pharmaceutical
products. Miami is the largest port-of-entry for fresh seafood in the
U.S. It is also one of the main ports in the U.S. for fresh produce.
Moreover, Miami is the major distribution point for Latin American
electronics, device, and drug products.
Consequently, the Miami Import Office is responsible for a very
dynamic and busy port that handles a large volume and variety of
imported products.
One of the busiest locations for the Miami Import Office is the
Miami International Mail Facility. The import activities at the mail
facility that focus on imported pharmaceutical products are a top
priority for the district office. They do this by examining products at
the Miami International Mail Facility including commercial drug
shipments, large parcels shipped to individual consignees and parcels
that are suspected to contain counterfeit or unapproved drugs. The FLA-
DO and the Miami Import Office work in collaboration with the BCBP, and
use a team approach to work on commercial entries and the review of
import-export documents. This collaboration has a history of regulatory
and enforcement success against problematic importers and brokers, and
during 2002 this collaboration led to the collection of ten fines, the
conducting of ten seizures and the initiation of 268 penalty cases.
Most of the seizures were related to medical devices, and drugs.
Organizational Structure of the Florida Districts Miami Import Office
Florida District's Import Operations oversees all import activities
and import personnel throughout the Florida District. An Import Program
Manager (IPM) reports to the Director of Investigations in the FLA-DO,
who reports to the Florida District Director. The District's Compliance
Branch also provides some assistance to Florida District's Import
Operations. The import operation has 38 field employees, 33 of whom are
in Miami. These 38 employees include the IPM, 2 supervisory consumer
safety officers, 4 compliance officers, 1 consumer safety technician, 2
students, 2 legal instruments examiners, 9 consumer safety inspectors,
and 17 consumer safety officers.
Joint FDA Import Group/BCBP Initiatives
For many years, the FLA-DO has had an excellent working
relationship with BCBP. This working relationship has led to many
innovations and improvements in how FDA and BCBP handle imported FDA-
regulated products.
The Miami Import Office has worked with BCBP to develop a joint
FDA/BCBP team called ``Team 488.'' This team has created a Work
Agreement and Standard Operating Procedures for processing joint
regulatory and enforcement actions. Its purpose is to increase
cooperation and enhance compliance of imported products. As a result of
the work of this team, the Agency has achieved increased detection of
substituted products and reduced erroneous declarations.
In addition, the Miami Import Office is in the process of
implementing a new data system to store and review electronic data from
private laboratories for products detained without physical examination
and to store information regarding the inspection of private
laboratories. Private laboratory analytical package review has
customarily been conducted by transmitting hard copy reports and
certificates from the private laboratory to FDA import groups
responsible for detentions without physical examination. This pilot
program is designed to expedite the import process, promote a paperless
system, and better protect the public health.
In addition, there has been an increase in FDA/BCBP cooperation
regarding:
<bullet> The collection and handling of liquidated damages claims.
<bullet> The detection of substituted products at the time of sampling
and at the time of destruction.
<bullet> The collection of civil money penalties for the substitution
and destruction of refused goods.
<bullet> The ability to ensure compliance among importers for exporting
and destroying refused goods.
This working relationship also has led to many awards for the FLA-
DO including the Hammer Award for reinventing government. Despite the
strong role that FLA-DO has played and continues to play in protecting
the public health, recent events have caused the Agency to conduct an
internal review of the Florida District's Import Operations.
Recent Developments Regarding FDA's Miami Import Office
As discussed above, the Miami Import Office is responsible for
conducting a large percentage of the Florida Districts varied import
assignments. Recently, FDA advised the Energy and Commerce Committee
and the American public of irregularities related to its handling of a
large shipment of unapproved Viagra apparently from Belize. Through a
series of procedural irregularities, foreign versions of Viagra were
detained and subsequently released by FDA to consumers. FDA is
conducting an ongoing internal review of these events and is taking
steps to ensure that these mistakes do not occur in the future.
The Circumstances Surrounding the Discovered Irregularities
As we discussed earlier in this testimony, under the FD&C Act,
unapproved, misbranded, and adulterated drugs are prohibited from
importation into the U.S. and may be subject to detention. If the
Agency detains a drug that is in violation of section 801 of the FD&C
Act, its implementing regulations require the Agency to issue a notice
of detention to the products owner or consignee and offer an
opportunity for a hearing before it can refuse admission of the product
into U.S. commerce. In the case of the 1,233 packages of unapproved
``generic Viagra'', the Agency issued a single notice of detention to
BCBP, and BCBP was incorrectly designated as the consignee for the
products. This was done despite the fact that the products were
destined to multiple owners. After detaining the product in this
manner, FDA directed BCBP to release the unapproved ``generic Viagra.''
After the products were released by FDA, the Agency sent a letter to
each consumer who received these unapproved foreign versions of Viagra,
alerting them to the fact that such products are unapproved drugs under
the FD&C Act and that the Agency cannot provide any assurance of
quality, safety, or effectiveness for these products. The details
regarding this detention and the subsequent release of the unapproved
Viagra were provided to the Committee in our response to Chairman
Tauzins June 5, 2003, letter.
The Agency's Internal Review
These irregularities in the Agency's administration of the Act, its
regulations and FDA internal procedures led the Agency to initiate an
internal review into how Miamis Import Office handles the detention of
pharmaceutical shipments at the Miami International Mail Facility. The
internal review is continuing. Nonetheless, the Agency acknowledges
that administrative mistakes were made. As of this date, the Agency has
taken several actions to rectify the situation and we expect to make
additional improvements in the future. We believe that these FDA short-
term and mid-term steps will strengthen our Miami Import Office
operations.
Next Steps Based on the Agency's Ongoing Internal Review
In the wake of the discovery of these administrative mistakes,
Florida District managers have undertaken several steps to ensure that
import detentions are handled properly in the future. First, Florida
District (the District) managers held an all-hands meeting with the
personnel at the Miami Import Office where they discussed the
circumstances surrounding the detention of the unapproved ``generic
Viagra.'' At this all-hands meeting, the District managers also
conducted training on section 801 of the FD&C Act and the regulation
and procedures that govern the proper handling of an import detention.
The managers reemphasized the importance of properly reviewing records
and making regulatory decisions in accordance with Agency policy.
Second, in addition to reminding compliance personnel that documents
must be reviewed carefully before making regulatory decisions, the
District implemented new requirements regarding the initialing and
dating of mail entry reports so that District personnel can more easily
determine what records have been reviewed and whether they have been
reviewed properly. Third, the District is drafting new standard
operating procedures for the handling of mail entries. Fourth, the
District acknowledged its mistake to the BCBP supervisor at the Miami
mail facility regarding the improper handling of the detention of the
unapproved Viagra shipment. Fifth, the District is going to be
conducting bi-weekly meetings with the BCBP Assistant Port Director for
Miami or her representative in order to strengthen the Miami Import
office's relationship with its partners. Sixth, the District will meet
with the BCBP supervisor at the Miami mail facility on a monthly basis
in order to enhance our working relationship with BCBP. Seventh, the
District will provide BCBP with hard copies of all of the Import Alerts
that the Agency issues. Eighth, the District will review its Import
Operations Quality Assurance Audit plan and determine the type of
specific changes that are in order. Ninth, the Regioal and District
management will review several proposals that focus on improving the
management structure and the supervisory ratio in the Miami Import
office so that there is greater management oversight.
In addition to these measures, Howard Lewis has been assigned, on
an indefinite basis, as the Florida District's IPM. Mr. Lewis is from
FDA's New Orleans District and he has a strong compliance background
and a wealth of knowledge on domestic and import compliance issues.
These strengths will allow him to identify additional improvements that
will strengthen the Miami Import Offices role in protecting the public
health. The steps noted above are designed to ensure that the Miami
Import Office is working at an optimal level and that product will be
detained properly in the future. In addition to the continuing
improvements in Miami, FDA is focused on making improvements to all of
its import operations that will enhance the Agency's management of its
import operations and its ability to protect the public despite the
increasing volume of imported products.
Strategic Planning
In order to target its limited import resources more efficiently as
part of a risk-based import surveillance system, the Agency also is
developing Agency-wide strategies and action items that are meant to
protect the public health by decreasing the risk that unsafe,
ineffective, or violative products will enter U.S. commerce through our
borders, ports and other import hubs. To achieve the most cost-
effective approach to managing import risks, theses strategies and
action items focus on building a foundation that will allow the Agency
to engage in a more rigorous analysis of risks and apply this approach
to all phases of the full import life cycle.
In the Risk Management Goal contained within the Commissioners
Strategic Action Plan there are several action items that will help FDA
achieve this goal. These action items include:
<bullet> The development of procedures for implementing Center policies
to reduce import examination rates for articles imported from
foreign facilities where inspections demonstrate substantial
compliance with manufacturing, processing, or sanitation
quality and safety principles.
<bullet> The development of an information-sharing Memorandum of
Understanding with at least one other country concerning
product safety, quality and/or security issues.
<bullet> The development of a strategic integrated WorkPlan for field
import activities that is uniformly managed, planned,
evaluated, and supported/resourced by all of FDA's Centers.
<bullet> The revision of Compliance Program Guidance Manuals (CPGMs)
and the Regulatory Procedures Manual (RPM) to incorporate
import policies and guidance to improve efficiency and
effectiveness of FDA's use of Import Alerts and Detention
Without Physical Examination.
<bullet> The modification of CPGMs, the RPM, Compliance Policy Guides
(CPGs), the Investigations Operations Manual (IOM), and
Establishment Inspection Report formats so that during domestic
inspections inspectors examine, report, and track counterfeit
imported products, returned imported products, rejected
imported products, and compliance files concerning imported
products.
<bullet> The exploration of the development of Risk Assessment
Predictive Approaches that capture and repurpose risk
information for use in import entry screening and enhanced
targeting of import operations and resources.
<bullet> The creation of a closed docket to gather information on
technologies being implemented by industry to ensure proper
shipping conditions (time-temperature indicators) and the
integrity (anti-counterfeiting and anti-tampering) of human
drug products and shipments while in international distribution
and shipping routes.
FDA believes that as each of these strategies and action items is
completed, it will have an impact on the Agency's import operations and
they will improve the Agency's ability to protect the public health by
decreasing the risk that unsafe or ineffective FDA-regulated products
will enter U.S. commerce through our borders and ports.
Improvements to FDA's Import Compliance Program
FDA is reevaluating, 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, Alzheimers disease, arthritis, heart disease,
high cholesterol and high blood pressure.
drug cost initiatives
The Administration also currently is engaged in a number of
initiatives to reduce the costs of prescription medications. These
actions will result in more affordable prescription drugs and will
reduce the incentive to look to foreign sources for cheaper
medications.
New Medicare Drug Benefit
The President is working with Congress on legislation this year to
bring more choices and better benefits to the Medicare system. The
President has committed up to $400 billion over the next ten years to
pay for modernizing and improving the Medicare system. An essential
component of this legislation is a prescription drug benefit, which
will make medicines more affordable for senior citizens.
New Rule on Generic Drugs
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.
New Funding
The Presidents 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 programs 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.
New Education Outreach and Scientific Study
FDA will expand its educational programs and partnerships involving
generic drugs to help health care practitioners and consumers get
accurate information about the availability of generic drugs for their
health care needs. Further, FDA will undertake additional scientific
studies of certain types of generic drugs to improve the approval
process.
Bipartisan Approach on Affordable Prescription Drugs
Last week, the Senate voted in favor of bipartisan legislation
sponsored by Senators Gregg and Schumer that would complement FDA's
rule by providing greater access to more affordable generic drugs. The
Senate bill would codify elements of FDA's final rule and adds a
provision limiting 180-day exclusivity to accelerate generic
competition in the marketplace.
New Drug Development
FDA is taking steps to support market competition as a means of
addressing the cost of developing and manufacturing drugs, and the
availability of generic drug alternatives. Two new FDA initiatives in
the Commissioners 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.
For example, sponsors may be uncertain about what specific evidence is
required to demonstrate safety and effectiveness for a given disease.
As a result, they may continue research with a drug that will not lead
to the required evidence.
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.
A planned formal guidance for industry will help to minimize
guesswork and improve the design of clinical trials. This will benefit
participating patients and allow more cost-effective use of Research
and Development funds. FDA also is taking steps to identify and address
the root causes of avoidable delays in new drug review through
retrospective analysis, better review management and prospective
evaluation of our review process from the perspective of both FDA and
drug innovators.
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. As a
consequence, the Agency must employ 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. In sum, at this time the Agency cannot assure the American
public that drugs purchased from foreign sources are the same as
products approved by FDA, or that they are safe and effective. The
Agency acknowledges the concerns raised by the Committee regarding
recent problems with enforcement in the Miami field operations and has
already undertaken several actions designed to address the specific
issues that were cited. The Agency looks forward to continuing to work
with the Committee to identify additional solutions to address these
pressing concerns. We appreciate and share the Committees interest in
assuring that the American public has access to safe and affordable
medicines and we look forward to working further with Congress and
other concerned parties on this important public health goal.
We would be happy to answer any questions you may have.
Mr. Greenwood. Thank you, Mr. Taylor.
Ms. Durant.
TESTIMONY OF ELIZABETH G. DURANT
Ms. Durant. Mr. Chairman, members of the committee, thank
you for this opportunity to testify. Today I would like to
discuss with you the Bureau of Customs and Border Protection
efforts to address the ever-increasing trend of personal and
bulk importations of pharmaceutical products into the United
States.
Although the main focus of the Bureau of Customs and Border
Protection is to protect the United States from terrorist
attacks, BCBP also enforces over 400 requirements for more than
40 other Federal agencies at U.S. borders. These include the
laws that prohibit the importation of illegal or unapproved
pharmaceuticals that fall under the jurisdiction of the Food
and Drug Administration.
The BCBP is concerned with three ways that pharmaceuticals
are imported: those that are purchased through the Internet and
shipped through our international mail or express courier
facilities; those carried into the United States by individuals
transiting our land borders; and bulk shipments of adulterated
or counterfeit pharmaceuticals. Millions of packages come
through mail and express courier facilities every year.
Thousands of packages, particularly in the mail, are found to
contain illegal and unapproved pharmaceuticals. We also
estimate that 10 million people cross the land border annually
carrying the same unapproved products. A disturbing trend is
the increase in bulk shipments through the mail indicating that
these products could be making their way to pharmacy shelves.
Detecting prohibited pharmaceuticals among the tens of
millions of parcels passing through our facilities each year
presents a massive challenge. Our limited resources require a
risk management approach, with which we utilize advance
intelligence, records of past seizures, and other factors to
locate packages that present the most significant threat.
We work in cooperation with the FDA on this important
function. Our laboratories help us find discrepancies in
shipments of bulk and finished pharmaceuticals. FDA establishes
effective national standards for the interdiction of
pharmaceuticals subject to FDA laws.
Based on an operation nicknamed ``Operation Safeguard''
that we have carried out over the last couple of years, we have
found the volume of pharmaceuticals shipped through
international mail to be enormous. We have also found that a
significant number of these do not contain an active
pharmaceutical ingredient, but merely contain substances such
as starch or sugar. Other problems include expired materials,
unapproved products, improper usage instructions, and products
made in facilities not under proper regulation. The vast
majority of the pharmaceuticals that enter the U.S. via the
mail do so in a manner that violates present FDA or other
requirements.
Additionally, we have found that many parcels contained
different types of pharmaceuticals that, if taken
simultaneously, could cause dangerous interactions. Individuals
not under the direct supervision of a physician could easily
purchase these products. Thus, we cannot assume that these
products would be used properly. It is important to note that
after 3 weeks of one phase of Operation Safeguard, the quantity
of illegal and defective pharmaceutical shipments slowed
significantly.
During a phase of Operation Safeguard that took place at
two international mail branches, 31 parcels containing 52
different types of questionable pharmaceuticals underwent
intensive chemical analysis. The analyses of these products
showed that 8 of the so-called pharmaceuticals or 14 percent
contained no identifiable active ingredient and 40 percent
contained a substance that is regulated under the Federal
Controlled Substance Act. Additionally, during this phase of
the operation it was found that large parcels of fake or gray
market pharmaceuticals are being split into different mail
shipments but arrive at the same address. Accordingly, there is
a possibility that State side pharmaceutical distributors could
be using these products as a source of supply.
This summer, the Bureau of Customs and Border Protection
intends to conduct ``blitz'' operations at four international
mail branches. Our scientists will work with inspectors to
target, examine, and test packages containing pharmaceuticals.
This operation will enable us to evaluate the type, volume and
quality of imported medication.
It is clear that this remains an overwhelming problem and
we are working cooperatively with the FDA to improve our
enforcement efforts in this area including efforts to address
the immediate return of imported pharmaceuticals and travelers
who attempt to import pharmaceuticals upon their return to the
U.S.
From an overall perspective, a spiraling volume of goods at
our borders has put immense pressure on our ability to enforce
the Nation's laws while facilitating international trade and
protecting the borders against the threat of terrorism.
Although we have taken some positive steps, successfully
identifying and handling imported pharmaceuticals presents a
daunting challenge for us.
I want to thank you and the members of the committee for
considering us in your review of the importation of personal
and bulk pharmaceuticals. This is an issue that speaks directly
to our mission. We will continue to make every effort possible
to work with the Congress and our fellow agencies to address
the health and safety concerns of the American people.
Thank you, Mr. Chairman.
[The prepared statement of Elizabeth G. Durant follows:]
Prepared Statement of Elizabeth G. Durant, Executive Director, Trade
Compliance and Facilitation, Bureau of Customs and Border Protection
Mr. Chairman, members of the Committee, thank you for this
opportunity to testify. I am Elizabeth Durant, Executive Director of
Trade Compliance and Facilitation at the Bureau of Customs and Border
Protection (BCBP). Today I would like to discuss with you BCBP efforts
to address the ever-increasing trend of personal and bulk importation
of pharmaceutical products into the United States.
Although the main focus of the BCBP is to protect the United States
from terrorist attacks, BCBP also enforces over 400 requirements for
more than 40 other federal agencies at U.S. borders. These include the
laws that prohibit the importation of illegal or unapproved
pharmaceuticals that fall under the jurisdiction of the Food and Drug
Administration, or FDA.
The BCBP is concerned with three particular ways that
pharmaceuticals are imported: those that are purchased through the
Internet and shipped through our international mail or express courier
facilities; those carried into the United States by individuals
transiting our land borders; and bulk shipments of adulterated or
counterfeit pharmaceuticals.
Millions of packages come through mail and express courier
facilities every year. Thousands of packages, particularly in the mail,
are found to contain illegal and unapproved pharmaceuticals. We also
estimate that 10 million people cross the land border annually carrying
the same unapproved products. A disturbing trend is the increase in
bulk shipments through the mail indicating that these products could be
making their way to pharmacy shelves.
Detecting prohibited pharmaceuticals among the tens of millions of
parcels passing through our facilities each year presents a massive
challenge. Our limited resources require a risk management approach,
with which we utilize advance intelligence, records of past seizures,
and other factors to locate packages that present the most significant
threat.
We work in cooperation with the FDA on this important function.
BCBP laboratories help us find discrepancies in shipments of bulk and
finished pharmaceuticals. FDA establishes effective national standards
for the interdiction of pharmaceuticals subject to FDA laws.
Based on an operation nicknamed ``Operation Safeguard'' that we
have carried out over the last couple of years, we have found the
volume of pharmaceuticals shipped through international mail to be
enormous. We have also found that a significant number of these do not
contain an active pharmaceutical ingredient, but merely contain
substances such as starch or sugar. Other problems include expired
materials, unapproved products, improper usage instructions, and
products made in facilities not under proper regulation. The vast
majority of the pharmaceuticals that enter the U.S. via the mail do so
in a manner that violates present FDA or other requirements.
Additionally, we have found that many parcels contained different
types of pharmaceuticals that, if taken simultaneously, could cause
dangerous interactions. Individuals not under the direct supervision of
a physician could easily purchase these products. Thus, we cannot
assume that these products would be used properly. It is important to
note that after three weeks of one phase of Operation Safeguard, the
quantity of illegal and defective pharmaceutical shipments slowed
significantly.
During a phase of Operation Safeguard that took place at two
International Mail Branches, 31 parcels containing 52 different types
of questionable pharmaceuticals underwent intensive chemical analysis.
The analyses of these products showed that 8 of the so-called
pharmaceuticals or 14 percent contained no identifiable active
ingredient and 23 (or 40 percent) contained a substance that is
regulated under the Federal Controlled Substance Act. Additionally,
during this phase of the operation it was found that large parcels of
fake or gray market pharmaceuticals are being split into different mail
shipments but arrive at the same address. Accordingly, there is a
possibility that state side pharmaceutical distributors could be using
these products as a source of supply.
This summer, BCBP intends to conduct ``blitz'' operations at four
International Mail Branches. BCBP scientists will work with inspectors
to target, examine, and test packages containing pharmaceuticals. This
operation will enable BCBP to evaluate the type, volume and quality of
imported medication.
It is clear that this remains an overwhelming problem and BCBP is
working cooperatively with the FDA to improve our enforcement efforts
in this area including efforts to address the immediate return of
imported pharmaceuticals and travelers who attempt to import
pharmaceuticals upon their return to the U.S.
From an overall perspective, a spiraling volume of goods at our
borders has put immense pressure on our ability to enforce the nation's
laws while facilitating international trade and protecting the borders
against the threat of terrorism. Although we have taken some positive
steps, successfully identifying and handling imported pharmaceuticals
presents a daunting task for BCBP.
I want to thank you and the members of the committee for
considering the BCBP in your review of the importation of personal and
bulk pharmaceuticals. This is an issue that speaks directly to our
mission. We will continue to make every effort possible to work with
the Congress and our fellow agencies to address the health and safety
concerns of the American people.
Mr. Greenwood. Thank you.
And the Chair recognizes himself for 8 minutes for
questioning.
Let me start with you, Mr. Hubbard. We have heard of
limiting these importations and we heard from Mr. Bass a
question about well where is the harm? We see all of the
counterfeit drugs, we hear the horror stories about them having
no potency. We hear the horror stories about them being tainted
and so forth. But where are the deaths, where are the injuries?
It strikes me that, for instance, if you are a cancer
patient and you order your drugs over the Internet and those
drugs do not have in them the molecules that you need to treat
your cancer and you die from cancer, you are not going to die
from necessarily the counterfeit drug, but you may very well
die prematurely from the disease or you may not get a cure for
a disease and the medical examiner will diagnose the death,
attribute the death to the disease not to the drug. Am I right
about that? Is that the assumption that you folks at FDA make?
Mr. Hubbard. You are absolutely right, Mr. Chairman. You
would not expect to take these drugs and have an immediate
adverse reaction that would cause injury or death. What really
is happening, as you say is, patients are not being treated. So
the example you gave is correct. And the example of, say, of a
person with hypertension whose blood pressure should be lowered
40 points, maybe it is not lowered at all, maybe it is lowered
10 points. And he is not going to know that, but yet he is
being injured by taking that subpotent or ineffective drug.
Mr. Greenwood. And I would think that that would be the
same for a cholesterol control drug?
Mr. Hubbard. Absolutely.
Mr. Greenwood. If you were taking Lipitor, whether it is
counterfeit Lipitor or real Lipitor, you probably figure you
have got the problem under control. You are not necessarily
rushing back to have cholesterol counts taken unless you are
very conscientious. And, in fact, your cholesterol may rise,
may be doing all kinds of damage to your cardiovascular system
and you have no way of knowing it.
Mr. Hubbard. That is absolutely true. And, of course, in
the case of a diabetic or someone with a very serious acute
illness, missing a dose or taking an ineffective drug could be,
frankly, hazardous in the shorter run.
Mr. Greenwood. Now, the intention of this hearing is to
reexamine the problem, and we hope to hold and intend to hold
another hearing in July to really go at the solutions. But I
just want to press you little bit about that. Because we have
talked, and I have talked to Mr. McClellan about a risk-based
approach.
We know that given 30,000 parcels a day coming into the
United States that there are a variety of sources. Some of them
are big commercial websites and the product may be coming from
Thailand and then through Canada down into the United States.
Another possibility may be Aunt Myna sending Aunt Betsy some
drugs that she forgot to take with her when she was visiting
and so forth. And so there is a whole range of sources and
volumes of these drugs.
And so if we do not return every package to sender,
including Aunt Myna's package, what do we do, where do we start
to look for the highest risk and places where we could clamp
down that would have the greatest impact in protecting safety?
Mr. Hubbard. As you say, we obviously have to focus on the
large commercial shipments and the ones that can pose an
expanded risk to patients. I will ask Mr. Taylor to expand upon
that.
Mr. Taylor. Yes. Sure.
Mr. Greenwood. Please do.
Mr. Taylor. Mr. Chairman, I mean just as a general rule,
the two type of products that we would give the highest
priority to are those products that lead to affirmative harm to
a consumer or in the alternative, there are in some cases, and
again as we have alluded to today, there are some products that
are marketed in a way that might cause a person to decide not
to use the unapproved version instead of the approved version
this product. So, generally across all our programs, those are
the highest priority products that we focus on.
But taking that and actually implementing that requires
some additional steps. In the context of imports, we need to
take and evaluate information better so that we develop
priorities for import detentions. Obviously, as we have
discussed today the numbers are so overwhelming that we cannot
necessarily detain every product that is violative, but in
terms of focusing on those products that pose the greatest harm
to the public, I think we need to take steps to develop
priorities that really help us decide when we should go ahead
and do a detention.
I think we also need to make sure that we are employing
resources at the busiest import facilities, whether they be
mail facilities, whether they are handling drugs, foods or the
other competing priorities that we have to deal with. But I
think we need to go back and make sure we are utilizing our
limited resources most efficiently.
I think we also need to go back and take stock of where we
are and retrain our people regarding those products that we
deem compose the greatest risk. And then, obviously, that
training needs to be updated as additional information comes to
us regarding potential risk.
Mr. Greenwood. Let us assume, excuse me for interrupting
but time is short. But let us assume that there is a website
that purports to be a Canadian source and, in fact, it is
established through investigation that the real source may be
in India or Thailand or some combination of places, and that
the drugs that are coming through there are really consistently
substandard or counterfeit, dangerous. Walk me through what we
could do about that. How do you go shutdown a facility in
another continent and prohibit its materials from coming in?
And even if you said this company is called the YXZ company and
when we see their packages come in, we will put them off? What
seems a pretty simple matter to change your company's name to
the ABC company and continue to send the product in.
Mr. Taylor. Well, your question certainly underscores some
of the challenges in dealing with some of these Internet sites.
But walking through the process, what we would do is we would
triage the site and try to determine the nature of the
products, how many times we have seen these products in the
past. We would try to get as much information as we can that we
could share with the foreign government where the site resides
so that we could try and work with that government to identify
those instances where products have been sent from the company
so that we have better information that would allow us to
interdict those products when they reach our borders.
Obviously, it is challenging because of the volume of
products coming from overseas. And the reason why we employ
this strategy is because, as you know, from a jurisdictional
standpoint we cannot necessarily if the site is, indeed,
overseas, it is difficult to hold the site owner culpable. So
what we need to focus on is ensuring that we can try and stop
the product at the border. In addition, if the product somehow
has made its way into domestic commerce, we would make it a
high priority to do recalls, talk papers, physician letters if
it is appropriate as well as using seizures and criminal
prosecutions to try and assure that the product is not spread
through the domestic market.
Mr. Greenwood. We have talked about resources and Mr. Bass
in his opening statement said something about even if we had
12,000 drug police, it would not be enough. And I tend to
concur with that. The volume if you use this current system
that you have in place, the number of personnel that you would
need to really have a pretty foolproof system would be
unrealistic. We could not do it. So is it not the case that we
really need to change the system that we use to approach this
problem rather than simply call for more resources?
Mr. Taylor. I think that is correct. I mean, currently I
have 537 investigational personnel devoted to this task. And
those bodies do not just handle pharmaceutical products. They
handle foods, biologics, they are involved in preventing the
spread of BSE to this country. They are involved in taking
steps to prevent the monkey pox outbreak from growing. They are
involved in homeland security and food safety. So those 500
some odd people are vested with a large job, and it is simply
not true that increasing the resources will not really cause a
big dent. We really need to change the system.
Mr. Greenwood. My time has expired.
The Chair recognizes the ranking member, Mr. Deutsch, for 8
minutes.
Mr. Deutsch. Mr. Chairman, I would like to see if we can
have Mr. Dingell ask the first series of questions.
Mr. Greenwood. All right. Mr. Dingell is recognized for 8
minutes.
Mr. Dingell. This is quick, just yes or no. We have no
exact inventory for what the various bags of products were in
the Miami facility during the time that the staff visited in
March. Is that correct?
Mr. Taylor. That is correct.
Mr. Dingell. All right. Thank you.
Mr. Taylor. If the product is not detained, we do not
have----
Mr. Dingell. Thank you. My time is limited.
It is known, however, that a large shipment of
approximately 1,233 shipments of purported fake Viagara were
detained during the October/November timeframe. Is that not
correct?
Mr. Taylor. That is correct.
Mr. Dingell. What happened to those shipments?
Mr. Taylor. They were released, sir.
Mr. Dingell. The staff inquired into whether those were
detained, why they were detained and FDA immediately released
it. Is that right?
Mr. Taylor. We did not immediately release it. We released
it several--the product was released several months after the
detention. But, yes, it was released.
Mr. Dingell. A curious set of events.
Mr. Taylor. Yes.
Mr. Dingell. The staff inquires as to why these are being
detained and you release them. The staff was concerned about
the safety. You released them. A very curious arrangement.
Can you tell us why these were released? What was the
grounds on which they were released?
Mr. Taylor. Sure. When the information surrounding this
detention first came to me, my inclination was to have the
staff go back and detain the products properly.
Mr. Dingell. Did you establish that these were safe? Did
you establish that these were, in fact, Viagara? Did you
establish that this shipment was, in fact, Viagara which was
generic or not? On what grounds was it released?
Mr. Taylor. Sir, I did know that the product was indeed
unapproved Viagara. Those were the facts that were provided to
me.
Mr. Dingell. So, that's curious. Is this a regular practice
of releasing shipments of prescription pharmaceuticals with so
little attention and care?
Mr. Taylor. Well, actually if you may, in this particular
case, as I said before, my inclination was to detain these
products properly. However, when provided with information
regarding----
Mr. Dingell. You are supposed to keep illegal shipments.
You are supposed to keep out shipments of prescription
pharmaceuticals that do not meet good manufacturing practices,
that do not comply with our patent laws. You are supposed to
see to it that you have a careful coordination with the Customs
Service and that they have clear understandings of your
policies.
Mr. Taylor. Absolutely.
Mr. Dingell. Is that not so?
Mr. Taylor. That's absolutely correct.
Mr. Dingell. Do you have agreements in written form of
cooperative management agreements with Customs Service on
matters of this kind? Yes or no.
Mr. Taylor. I do not know if we have a cooperative
agreement, but we----
Mr. Dingell. You do not.
Mr. Taylor. Okay.
Mr. Dingell. I happen to know you do not.
Now, can you tell us whether you contacted Pfizer, which is
the patent holder on this matter to find out what was going on
there or did you not?
Mr. Taylor. We have spoken to Pfizer about this matter.
Mr. Dingell. Did you call them in connection with this
release?
Mr. Taylor. No. I did not personally, no.
Mr. Dingell. Did anybody at Food and Drug?
Mr. Taylor. I am not sure. I know that we have had
discussions with them regarding this particular shipment in
this matter.
Mr. Dingell. Now Food and Drug has had many warnings that
the Miami facilities had problems. They have a huge backlog of
shipments. FDA has made reference to 1,233 shipments of fake
Viagara in response to the June 5 request for information sent
by this committee. Is that not so?
Mr. Taylor. Correct.
Mr. Dingell. In your June 19 response to the committee you
explain how 1,233 shipments of fake Viagara were released. In
response in mentions that there is a discussion and a resulting
decision by Mr. Taylor to release these shipments of Viagara,
that is at page 4 Exhibit 20. Do you know what all this other
product in the photo is?
Mr. Taylor. I'm sorry, sir, which photo? What number?
Mr. Dingell. The staff will show you the photo. Page 4,
Exhibit 20.
And I ask unanimous consent that that be inserted in the
record.
Take it down and show it to him.
Mr. Greenwood. Without objection it will be.
Mr. Dingell. Exhibit 20.
Staff reported at the time of their March 2003 visit there
was a fake product being stored in a cage, but also huge
quantities were stored outside the cage, and you will see that
in Exhibits 15 and 16. Who authorized the release of the
product outside the cage of at least 928 additional packages?
Mr. Taylor. Well, first, sir, clearly it appears that the
product is unapproved. I am not sure if it is fake or not.
In the case of those situations where we do not detain the
product, the product is set aside and therefore it is released
if indeed we do not decide to detain the product. And the
release would be based on our discussions with Customs.
Looking at this product again, it looks like the product is
indeed unapproved. I cannot say that it is necessarily fake,
which seems to connote counterfeit, but it definitely is
unapproved product here.
Mr. Dingell. Do you know whether it was approved or not
approved?
Mr. Taylor. It says Viagara, and based on the indications
here and the note that is on top of this bag, at the very least
it looks like it is unapproved product.
Mr. Dingell. It is unapproved product?
Mr. Taylor. Correct.
Mr. Dingell. All right. So FDA is busily releasing
unapproved product.
Now, Customs provided a Xerox copy of some fake Viagara
from a company by the name of DurusPharma. That is in the
Committee Memo in Exhibit 17. I assume you are familiar with
that product?
Mr. Taylor. I am familiar with that product, and we have an
import alert that was put----
Mr. Dingell. Now, I would note that an import alert for
Dureas Pharma was issued by Food and Drug before April 4, 2003.
Why was this import then permitted after you had had an import
alert for a product coming in from these people?
Mr. Taylor. The import alert does not prevent the product
from entering. What the import alert does is it sensitizes the
staff of FDA and Customs for the need to make it a priority in
terms of detaining the product.
Mr. Dingell. Apparently it did not have much effect because
not much happened, their product was released, is that not so?
What purpose did this import alert serve then?
Mr. Taylor. I mean in regards to the DurusPharma product, I
am not familiar with the specific shipment you were talking
about. But I----
Mr. Dingell. Well, my time is limited to 5 minutes, but I
find this to be a very curious situation.
Can you tell me what the distinction between FDA's
definition of a counterfeit drug and the Belize drug that was
found during this inquiry by the committee staff?
Mr. Taylor. Sure. In Section 201(g) of the Act there are
several components to the definition of a counterfeit drug.
One, just to paraphrase, one part of the definition focuses on
sort of the trademark or property right, the use of a trademark
or some symbol as an initial signal as to whether a product is
counterfeit. However, the second part of the definition focuses
on the product marketed in lieu of the authentic. So, for
example----
Mr. Dingell. Well now you would note that the patent on
Viagara is still in place, is it not?
Mr. Taylor. Indeed. But I also----
Mr. Dingell. There is no proper admission, there is no
proper marketing of Viagara as a generic at this time?
Mr. Taylor. That is right. But that does not mean that the
product----
Mr. Dingell. And so you still went ahead and released it.
Can you explain that to us?
Mr. Taylor. Sure. We released based on the fact that I had
to weigh competing priorities, the need to deal with homeland
security and pending BSE issue, versus the resources that would
be needed to--which at that time looked to be 4 to 8 weeks of
moving personnel over to solely and properly detain this
product. Given that very difficult decision----
Mr. Dingell. In other words, you were busy doing other
things?
Mr. Chairman, is my time up?
Mr. Greenwood. Your time is up, sir.
Mr. Dingell. Thank you, Mr. Chairman.
Mr. Greenwood. The Chair advises the gentleman----
Mr. Dingell. I ask unanimous consent that I be permitted to
submit a list of questions to the Commissioner of Food and Drug
and ask to have a place kept in the record so that those can be
inserted. Because this is a most curious behavior by this
agency.
And I thank you.
Mr. Greenwood. We are continuing to investigate it. And
without objection the gentleman's request will be in order.
The gentleman from New Hampshire, Mr. Bass is recognized
for 8 minutes.
Mr. Bass. Thank you very much, Mr. Chairman.
Before I begin, I just want to make sure that my position
relevant to the substance of this hearing is clear. Counterfeit
drugs are bad and they are illegal and they violate all kinds
of law besides the issue of importation. In fact, counterfeit
drugs are just as likely to be manufactured domestically as
they are abroad.
Second, the artificial price controls that are imposed by
foreign governments with socialized medicine systems are also
not right. And they create an inequity in the marketplace.
However, for better or for worse and for one reason or another,
the manufacturers of these drugs have accepted this system and
are playing by the rules of that foreign government, which is
unfortunate. And in my opinion we ought to be vigorously
pursuing trade negotiations with these countries so that they
terminate these artificial barriers or creation of price
controls that result in the inequities.
Mr. Hubbard, I did not hear you when you passed around this
counterfeit Procrit package and the authentic one. Very
briefly, where were these made?
Mr. Hubbard. I am not sure.
Mr. Bass. Are they as likely to have been made in the
United States or not?
Mr. Hubbard. Well, certainly American citizens were engaged
in the manufacturing. Where they got some of the material is
not known.
Mr. Bass. So this is not necessarily a reimportation issue.
These could have been in Washington, DC as likely as India,
right?
Mr. Hubbard. Yes.
Mr. Bass. Okay. Fine. So this is a counterfeit drug issue,
not an importation issue.
Why do you think that the guy who purchased the drugs, why
would anybody purchase drugs over the Internet? What is the No.
1 reason, in your opinion, to do it?
Mr. Hubbard. Well, there are two things. Obviously, is the
price differential, as you have pointed out. Second, there is
quite a bit of purchasing of what we call life style drugs,
like Propecia for hair growth, Zenecal for weight loss, and
Viagara. And those individuals when, we have asked them, say
they do not want to go to their doctor and admit they have got
that problem, and so they just go straight to the Internet and
buy the drug.
Mr. Bass. If the FDA had some mechanism whereby they could
establish FDA approved drug purchasing program over the
Internet, would that solve the problem?
Mr. Hubbard. Well, we certainly could point consumers to a
program run by the State Boards of Pharmacy called VIPS, which
does authenticate Internet sites that sell drugs. In fact,
there are legitimate sites like merckmedco.com, and those are
perfectly legitimate. But many of these sites, of course, are
not legitimate and they aren't even in the United States.
Mr. Bass. Well, let us say for example it was legal drugs
that were manufactured in facilities that were approved by the
FDA, no matter where they were. In your opinion would that
eliminate at least part of the problem that you face with this
avalanche of drugs coming across a border?
Mr. Hubbard. Obviously, such assurance would ameliorate our
concerns. The problem there, of course, is you still have drugs
moving around in ways that are outside normal licensing
procedures.
Mr. Bass. Well, if drugs sold within the United States were
the cheapest in the world, what would your situation look like
versus in some instances, the most expensive in the world?
Mr. Hubbard. We would certainly hope that that might cause
fewer counterfeit drugs and therefore they would be buying
safer drugs. As I pointed out, generic drugs are cheaper in
this country. We hope patients would certainly buy those in
this country before they went to an Internet site or overseas.
Mr. Bass. Clearly one of the issues is moving to more
generics. But I guess my point is that if the underlying
problem here is that many drugs sold in the United States are
more expensive than they are anywhere else in the world, for
one reason or another which those issues need to be addressed,
and therefore by the natural movement of a free market we are a
beacon of profitability for both legal and illegal
manufacturers of these drugs. And is it not true that the issue
here is ultimately if prices were the same or competitive
between the U.S. and any other country, then the only issue you
would be facing would be the issue of counterfeiting; and
illegal, people who are violating patent laws, people who are
violating FDA regulations that require that drugs be
manufactured, you know, be licensed properly by the Food and
Drug Administration?
Mr. Hubbard. That may be true. You know, again, the price
issue is not one FDA can do much about except for the things
that we are trying to do such as get more generics on the
market and get more new drugs on the market. But we can't
directly regulate prices, obviously.
Mr. Bass. Right. Okay.
I will yield back to the chairman.
Mr. Greenwood. I thank the gentleman and recognize the
gentleman from Florida, Mr. Deutsch.
Mr. Deutsch. Thank you, Mr. Chairman.
Actually even before, even with the limitation on time, I
also want to respond to some of the comments actually Mr.
Ferguson made in the opening comments. And I think this is part
of sort of debate. I am glad he is still here and maybe he will
take his time.
You know, saying that America has the best health care
system in the world, I just do not agree. We have 40 million
Americans who woke up this morning, went to work and do not
have health care insurance. I mean, that is not the best health
care system in the world.
We have, literally, by any objective standard in terms of
first world country, western industrialized countries, we spend
more on health care per capita than any other country. Yet on
objective standards life expectancy, instances of cancer, the
instances of hypertension, other issues we are the worst.
So, again, I can agree that at the high end of the scale we
have the best innovations. But to say we have the best health
care system in the world, unfortunately I think is an absolute
mistake and a misnomer of the facts that exist in America
today.
Mr. Hubbard, let me respond to something, and this is a
series of questions and it is getting somewhat frustrating, in
fact incredibly frustrating. We had a field hearing, I believe
it is 4 months ago in South Florida. We asked the FDA to get
their arms around the amount or the number of people, the
amount of scripts being written or the number of people who are
availing themselves of purchasing drugs through the Internet or
specifically through Canada. Do you have any sense of what that
number is today?
Mr. Hubbard. Mr. Deutsch, we made an attempt to extrapolate
from a study 3 years ago and we have said since then we believe
the number has increased.
You know, whether we could do a survey----
Mr. Deutsch. Let me just respond. Again, this goes pretty
fast. Your answer is no? Your answer is no. Four months, your
answer is no. Let me tell you, there are some people who do
know. I mean, Glaxo knows. I mean the pharmaceutical companies
know.
Mr. Chairman, one of the suggestions I think we might have
to do is pull some of the companies in here who seem to know.
How could I have any trust, how could any American
watching, listening, reading about this tomorrow, you have no
idea, you have no concept how many--you do not know if the
millions or tens of millions. Is that accurate?
Mr. Hubbard. We think it is in the single digit millions
based on what----
Mr. Deutsch. Answer my question. You do not know if it is
in the millions or 10 million, is that accurate?
Mr. Hubbard. We do not have an accurate figure.
Mr. Deutsch. You do not have a clue. You do not have a
clue.
Mr. Hubbard. I would dispute that. I think we do have a
clue.
Mr. Deutsch. You do not know if it is 5 million, 10
million, 15 million?
Mr. Hubbard. I am not sure those numbers matter that much.
Mr. Deutsch. You do not think it matters?
Mr. Hubbard. It is too much and it should not be coming in
at all.
Mr. Deutsch. Well, you said that it does not matter much,
because you just testified under oath that people are doing it
for lifestyle reasons. Have you talked to any seniors?
Mr. Hubbard. I said some people, Mr. Deutsch.
Mr. Deutsch. Well, I am asking you a question. Have you
talked to any seniors? Have you ever talked to a senior that
has purchased drugs through the Internet?
Mr. Hubbard. Mr. Deutsch, I----
Mr. Deutsch. I am asking you a question.
Mr. Hubbard. Yes, I can----
Mr. Deutsch. Have you personally talked to a senior?
Mr. Hubbard. I get hundreds of letters----
Mr. Deutsch. Have you personally--answer the question, sir?
Mr. Hubbard. Yes. Yes.
Mr. Deutsch. Who have you talked to?
Mr. Hubbard. Individuals who have called to complain that
we----
Mr. Deutsch. Do you have a record of that? Can you supply
the committee the name of any senior?
Mr. Hubbard. I have----
Mr. Deutsch. Can you describe a particular senior that you
have talked to?
Mr. Hubbard. I certainly know that seniors contact----
Mr. Deutsch. That is not my question. That is not my
question. My question is have you talked to a senior?
Mr. Hubbard. Yes.
Mr. Deutsch. And who is it? Can you describe that person?
Mr. Hubbard. I would be glad to get you----
Mr. Deutsch. Please do. Describe the person? Who is it?
Where do they live?
Mr. Hubbard. Generally we are talking----
Mr. Deutsch. Generally? I just asked you a question. You
are under oath. Have you talked to a senior?
Mr. Hubbard. Yes, Mr. Deutsch, I----
Mr. Deutsch. And who have you talked to? And describe the
person. I do not need the name of the person.
Mr. Hubbard. Okay. We have talked--I would rather not go
into details, but----
Mr. Deutsch. Do generalizations. I am asking you a
question. Have you talked to a senior in the United States, one
of the 10, 15 million seniors who woke up this morning who did
not want to purchase their drugs through the Internet but did
because they had to? Have you talked to one?
Mr. Hubbard. Mr. Deutsch, we try to----
Mr. Deutsch. Answer my question.
Mr. Hubbard. Yes, Mr. Deutsch.
Mr. Deutsch. Describe in a general way who that person is,
where are they from, what is their age, what drugs are they
purchasing? What person? What person, Mr. Hubbard? One person?
Mr. Greenwood. Will the gentleman yield?
Mr. Deutsch. No, I do not want to yield. I want him to
answer the question. He has already lied under oath that he has
talked to seniors that he cannot describe----
Mr. Greenwood. The Chair will intervene. The gentleman does
not know that the witness has lied. The gentleman----
Mr. Deutsch. Well, I have given him every opportunity to
describe in a general way. He has testified under oath.
Mr. Greenwood. I suggest to the gentleman give him the
opportunity to provide that information to the committee.
Mr. Hubbard. I will be happy to.
Mr. Deutsch. No. And I want you, you are here right now,
describe in a general way a senior who you have told me now you
have talked to seniors.
Mr. Hubbard. Okay. But just briefly an email exchange----
Mr. Deutsch. Is that talking?
Mr. Hubbard. Well, certainly I was at a meeting in----
Mr. Deutsch. You can tell me yes or no have you talked to a
senior who has actually purchased a drug through the Internet?
Mr. Hubbard. I----
Mr. Deutsch. Yes or no?
Mr. Hubbard. Yes, Mr. Deutsch.
Mr. Deutsch. And when? Describe in a general way. And are
you telling the truth?
Mr. Hubbard. In Philadelphia 1 month ago after I gave a
talk, several seniors came up to me and we had a discussion. I
can't describe for you what they look like and who they were--
--
Mr. Deutsch. What did they describe to you? What did they
tell you they did?
Mr. Hubbard. They basically said we are very concerned that
you are attempting to keep us from buying drugs from Canada.
And I said we are concerned about the safety.
Mr. Deutsch. And would they tell you that they were doing
it?
Mr. Hubbard. Certainly one of the lady--a 76 year old lady
said ``Yes, I am doing that. Will you take away my drugs?'' And
I said no.
Mr. Deutsch. Okay. And what you are describing is is
exactly that. Let me talk very specifically. Okay. Because
first of all, again, I mean it is an offense to the 10 million
seniors that woke up in America today that did not have a
choice that had to purchase their drugs, not because they want
to. You know, my mother-in-law does it? There are tens of
thousands of seniors in South Florida who are doing it every
day. There are a dozen prescription Canada pharmacies that have
opened up. I do not like it. I wish it did not occur, because I
agree with you that it definitely is a risk factor.
In fact, the most interesting thing that you said today was
providing those websites. Because I tell you, you look at those
websites and it looks like they are coming from Canada. I mean,
you know, the names of the website. And what are we doing to
let seniors know that those are bogus websites?
Mr. Hubbard. We certainly are trying to alert seniors.
Mr. Deutsch. What are we doing? What are we doing?
Mr. Hubbard. We have got information on websites. We hand
out brochures at the border. We do a lot of press----
Mr. Deutsch. What are we doing? I mean, let me tell you,
that is something that really concerns me. Because there is no
question that there are seniors who are going to those
websites.
You know, can we shut them down? You had a Miami Beach
address. Has someone gone to that address?
Mr. Hubbard. Not as----
Mr. Deutsch. Have you gone to the U.S. Attorney in the
Southern District of Florida and told them about that website
and that address?
Mr. Hubbard. I understand that's a bogus address and the
site is not really in Miami Beach. But we can get more
information on the site.
Mr. Deutsch. I mean, is there an investigation? Has someone
gone to that location? I mean, because that is fraud. This is
law enforcement issues. I mean, I think what you have said and
what you have testified to is that the Canadian system, and we
know it is going through the Canadian system, that there is a
certain amount of efficacy that exists there. All right. And,
again, there are issues we have gone in, there are
counterfeiting issues in the United States. There are both
these issues which we are going to get testified in the second
half, whether you go to the local Eckerd or CVS. And the same
way if you go to a Canadian pharmacy in Canada.
But you know what? One of the things, again, that really
concerns me is exactly what you are describing, that if people
are going on the Internet and thinking they are buying
Canadian, because obviously people know. I mean, these are
people who ought to be put in jail forever who are doing this,
because the reality is I agree with you a 100 percent that
those type of situations there is no control.
I mean, Mr. Taylor, did you want to respond particularly on
those investigations?
Mr. Taylor. Well, I wanted to respond more broadly. I think
your point is absolutely right. When we started doing our
Internet investigations, there were a lot of different factors
that were causing people to purchase products over the
Internet, but one of the biggest factors lately, indeed,
appears to have been price. And so what we have done is we have
adjusted our public health message to make sure that we are
reaching, doing a better job of reaching just those very people
in the elderly community and other communities where their
conditions are comprised to make sure they understand the
competing interest. And a lot of that refinement came at the
wake of the March hearing where we, indeed, did try and take
stock of people's perceptions of purchasing products through
the website. And one of the things we recognized is that
people--we need to do a better job of letting people know of
the balance that they----
Mr. Deutsch. Could I just follow up with one very short
question.
Mr. Taylor. Yes.
Mr. Deutsch. Okay. You guys have come up with something
that is real, that is significant, that can help people today.
Okay. That we got bogus sites up there. You know, got Canadian
flags that are called Canada Drug, whatever. I mean, how do we
let people know that besides people who are listening to this
hearing and what can we do tomorrow to let that happen? Because
that is very problematic, I mean, for real people today who
want to avail themselves of an alternative system?
Mr. Taylor. FDA has a website regarding online drug sales.
And one of the things that we have done is we have sent warning
letters that we brought significant cases. IF there are sites
that are a particular public health concern, what we have tried
to do is post that material so that people can use that
material to help inform them regarding their purchasing
choices. And this website is accessed almost more than I think
any other part of the FDA website. And we found it very useful
in getting the word out.
But also in regards to each case that we have brought, we
have tried to do a better job of including a talk paper or
something so that people who do not have access to the website
can learn more about the sites or products that we feel are
problematic because of the reasons that Mr. Hubbard stated
earlier.
Mr. Greenwood. The time of the gentleman has expired.
The Chair would note that this is obviously an important
issue, lives are at stake in this issue. The charge of lying
under oath is a serious issue as well, one that this committee
would almost be compelled to pursue.
The Chair would note for the record that there is no
evidence that the gentleman, Mr. Hubbard, said anything but the
truth under oath. He cited a particular case of a woman in
Philadelphia for instance, and the Chair would want the record
to show that.
The Chair recognizes the gentleman from New Jersey, Mr.
Ferguson, for 8 minutes.
Mr. Ferguson. Thank you, Mr. Chairman.
At the risk of bearing the wrath of my friend from Florida,
I just want to address a point that he was making about a point
that I was making earlier regarding the health care system in
our country.
I still contend, and I do not know too many people who know
anything about health care who would not agree with the fact
that we have the best health care system in the world. There is
no question that not everyone has access to that system, and
that is a problem and that is something that all of us are
concerned about that we are trying to address just about
everyday that we go to work here in Washington and providers
and others around the country. That is one of our main
challenges is making this great health care system available to
everyone, not just to some or most Americans.
But anyone who would question that we do not have the best
doctors, the best nurses, the best medical facilities, the best
researchers, scientists, pharmaceutical companies; those who do
enormous work, do enormous research, invest untold hours of
time and energy and billions and billions of dollars in
research to find new medicines and cures for tomorrow and
procedures and devices, and everything else that simply is not
the case.
We clearly have the best health care system in the world.
That is why not only patients from all around the world want to
come to the United States to be treated, but it is also why the
best and brightest minds in the world want to come to the
United States to be trained to go to school, to become a part
of this system. Because it is the best in the world.
So we may have a disagreement or we may acknowledge that
today there is a problem. Not everyone has access to it. We
have a pool of uninsured Americans today, that is a problem
that we are trying to address. But I don't think anybody who
knows anything about health care would disagree with the fact
that we have the best health care system in the world. It is
something we should be proud of. It is something that we need
to continue to work very hard and be diligent to maintain. And
the work of the FDA and our oversight, and work with the FDA to
make sure that they are continuing to be a part of that great
health care system is, of course, a part of what we are doing
here today.
I do have a couple of questions which I am going to get to
in a second. A couple of my colleagues, including my friend Mr.
Bass from New Hampshire, have used the term reimportation. And
I have a problem with that term because it is a misnomer, it is
an inaccurate term because it suggests that reimportation means
taking drugs that were manufactured here in the United States
and shipped to other countries, are then reimported into the
United States. And that is simply inaccurate.
What people mean when they are talking about reimportation
today is taking drugs that were manufactured in other
countries, not under the strict guidelines of the FDA, not in
facilities that have the strict oversight of the FDA, these are
not subject to our high standards of efficacy and safety here
in the United States. We have some of the very best standards
in the world. That's one of the reasons our health care system
is the best in the world. So to suggest that reimportation is
simply bringing drugs back in here to the United States that
were made here and subject to our very high standards is
inaccurate, and that's one of the reasons I don't like or use
the word reimportation. It is simply the importation of illegal
drugs into the United States.
That kind of law in our country allows for bringing drugs
into the United States that are made in other countries as long
as the Secretary of Health and Human Services can certify that
those drugs are safe. That hasn't happened. President Clinton's
Secretary of HHS couldn't do it, President Bush's Secretary of
HSS couldn't do it. We simply do not have the ability to say
with a high level of certainty that drugs manufactured and made
in other countries, not subject to our standards, not subject
to our FDA are safe for American consumers. If they were, they
would be allowed into this country today.
So, for those who use the word reimportation and suggest
that we should be liberalizing these laws or relaxing these
regulations are actually suggesting and recommending that we
relax our safety standards to let more of these cheap drugs
into the United States without regard to the safety of the
American people. I have a problem with that.
Now, I would agree with my friend Mr. Bass that we need to
be working with our trade partners to encourage them not to
impose price controls or other completely anti-market,
completely anti-capitalistic, anti-freedom and free market
policies in their own countries. But it also means we should
certainly not be importing their price controls, their
socialist tendencies into the United States.
That was my second opening statement, I guess. Let me get
to my questions.
Mr. Hubbard, let me ask you a very basic question. Is it
safe for you as a consumer today to import pharmaceuticals from
foreign countries outside of the U.S. distribution chain and
outside the oversight of the FDA?
Mr. Hubbard. We do not believe it is.
Mr. Ferguson. Why?
Mr. Hubbard. Because we have seen so many instances of
drugs that don't meet specifications. In fact, none of them
meet specifications. There are these sorts of examples we have
today of drugs that simply should not be dispensed or sold to
Americans.
Mr. Ferguson. And there is no way right now at HHS or at
the FDA that anyone with any certainty can say that drugs made
outside of the U.S. are safe for U.S. consumers?
Mr. Hubbard. We don't see how to do that. We have said you
can think of ways to ameliorate the risk, but you can't
eliminate it and you would lower safety if you allowed those
sorts of foreign drugs to be imported, in our view.
Mr. Ferguson. But there are lots of folks who go to Canada
or bring drugs in from other places in the country? Some of
these Internet sites or mail-order Canadian operations are
saying that Congress made the personal importation of a 3 month
supply of drugs legal and allowable. Are they correct or is
this a violation of law?
Mr. Hubbard. No, they are not. There is a personal
importation policy that is limited to experimental drugs for
people with serious diseases. These websites often misquote
that statement and say that it is okay to bring in 3 months'
supply when in fact that is only for experimental drugs.
Mr. Ferguson. After this subcommittee's June 2001 hearing,
the FDA proposed to the Department of Health and Human Services
that it allow FDA and customs to deny the entry of all of these
illegal drugs into the U.S. and return them to sender. What is
the current status of that proposed regulation?
Mr. Hubbard. Well, we still believe that was a good
recommendation. We have not heard back from the department. But
there is a procedural problem that Mr. Dingell and others have
pointed out that FDA cannot deal with this huge influx of these
products and we either must let them in or go to the very
expensive process of notifying people, and the latter is not
feasible.
Mr. Ferguson. Well, that was 2 years ago when you were
talking about that proposed regulation. Has that been
implemented?
Mr. Hubbard. No, it has not. But, you know, I think we
would still believe that that is a procedural change that
Congress should look at.
Mr. Ferguson. But that is not something that you feel you
can do at FDA without some sort of congressional approval?
Mr. Hubbard. I believe we have concluded in consultation
with our lawyers that we need a statutory change to effectuate
that recommendation.
Mr. Ferguson. Okay. I yield back and my time is up.
Thank you, Mr. Chairman.
Mr. Greenwood. The Chair thanks the gentleman and
recognizes the gentleman from Florida, Mr. Davis, for 8
minutes.
Mr. Davis. Thank you, Mr. Chairman. I would like to ask a
few questions to try to develop the record a little further,
and I will be brief and ask you to please be brief. And I have
got some general questions to ask you. These will probably be
best answered by Mr. Hubbard or Mr. Taylor.
Is it correct that a large shipment of approximately 1200
shipments of purportedly fake Viagara were detained in the
October/November timeframe?
Mr. Taylor. That is correct.
Mr. Davis. Okay. And it is true that the Office of Criminal
Investigation took an interest in this product as a possible
case to investigate as reflected in Exhibit 3?
Mr. Taylor. I believe that is correct.
Mr. Davis. Okay. And you are aware that as far back as
January of this year OCI sent samples of the fake Viagara to
your research lab in Ohio for chemical analysis?
Mr. Taylor. Yes. The Forensic Chemistry Center.
Mr. Davis. And you are further aware that when the staff of
this committee interviewed senior management from your Office
of Regulatory Affairs in the Florida District office they were
unaware that this product was being tested by the FDA?
Mr. Taylor. That is my understanding.
Mr. Davis. Okay. All right. Would you agree that when the
OCI is sending product for testing as they did in this case,
that information should have been shared with the Office of
Regulatory Affairs?
Mr. Taylor. My understanding, sir, is that even though it
was not shared with the managers of the Florida District, that
there were some employees at ORA that were aware of that. But
indeed, the staff is correct, it was not shared with the
District Director who was interviewed by the staff and the head
of the inspections branch.
Mr. Davis. So you would agree that it should have been
shared and in the future it ought to be shared?
Mr. Taylor. Absolutely.
Mr. Davis. Okay. You are also aware that the test results
came back and showed a sizable difference in the active
ingredient from what was advertised, what actually was in the
product?
Mr. Taylor. The test results showed that in some cases even
though the product contained the same active ingredient,
solidenafil, which is the active ingredient for Viagara, that
in some cases it was possibly subpotent and in one case it
might have been superpotent.
Mr. Davis. So as far as your word ``some case,'' could you
give me some general sense of proportion here?
Mr. Taylor. I do not have it in front of me, sir, the
analytical results. The information on the analytical worksheet
defines those parameters. I do not have it in front of me. But
that is the general finding of the analytical laboratory.
Mr. Davis. Is it in the record? Okay. What exhibit is it?
Okay. I have got Exhibit 3 that has been handed to me. And you
can, perhaps, look at this and come back and comment in a later
question that reflects what appears to be the level of
proportions, and they appear to be significant. So, if you want
to refer to this during a break in the questioning, my question
to you now and then again is going to be after you reviewed the
exhibit, did a significant proportion of this product represent
a significant health risk to consumers.
Mr. Taylor. Based on the analysis, it certainly shows that
there was variance in the level of active ingredient in the
product. I cannot say definitively that the subpotent product
presents a risk to the public, but certainly in the context of
being superpotent, in some populations that could indeed
present a risk.
Mr. Davis. Okay. Was this information you have just
referred to shared with other parts of the FDA in order to
prevent the release of the product?
Mr. Taylor. It was not shared with me at the time of the
release of the product.
Mr. Davis. And why not?
Mr. Taylor. Sir, I do not know. That is part of what we are
trying to determine as part of our ongoing internal review. I
became aware of these analytical results as part of our ongoing
review to determine why these mistakes occurred.
Mr. Davis. So you are taking steps to understand why the
mistake occurred----
Mr. Taylor. Absolutely. Absolutely. We have an ongoing
internal review. Based on what we know up to this point, we
have several steps that we are going to take and they are
outlined in the written testimony. But if indeed there need to
be additional steps that need to be taken based on the
continuation of this internal review, we will do so.
Mr. Davis. And this product was ultimately released to the
public?
Mr. Taylor. Yes, sir, it was.
Mr. Davis. Do we have any idea about accidents, injuries,
deaths or problems?
Mr. Taylor. No, we do not have any adverse reports at all.
Subsequent to its release we sent a letter to the consumers
that ordered the product and we have heard back from some of
them. We have no reports of adverse events.
Mr. Davis. Is this investigation still continuing with
respect to possible injury of the public?
Mr. Taylor. Well, we are continuing to monitor our adverse
events site, in our Medwatch System, and to this date we have
not seen anything that suggests that this product has harmed
anyone.
Mr. Davis. What other products were released at the same
time as well as the product we have just been describing?
Mr. Taylor. I do not have it in front of me, but indeed
there were other products released around----
Mr. Davis. I am told slide 2 reflects some of those
additional products. Would you agree with that?
Mr. Taylor. Yes, sir. Yes, sir.
Mr. Davis. What is that product and what are the
quantities?
Mr. Taylor. It appears to be 928 packages of what appears
to be possibly additional Viagara from Belize.
Mr. Davis. And who authorized the release of that and has
there been any investigation as to any injury of the public as
a result of that release?
Mr. Taylor. I do not know who authorized the release of it.
I presumed that it was released as part of our general process
for handling these products. But it was not released as part of
the same discussion that led to the release of the 1,233
packages that you----
Mr. Davis. You say you do not know what was released that
day? Are you going to be able to figure out what was released
on that day?
Mr. Taylor. That is what we are trying to do. I cannot
guarantee it, but that is something we are trying to determine
as part of our ongoing review.
Mr. Davis. Perhaps one of the few things we can agree upon
here today is what the rate of growth has been in this problem.
Can you give me some numbers as to the fact, including
projections about what the growth of the problem is going to
continue to be if nothing changes in terms of government
policy?
Mr. Taylor. Well, as Mr. Hubbard said, I do not have the
exact number but obviously over the last 2 years we have seen a
growth in the number of mail packages based on proliferation of
foreign websites and the proliferation of storefront
pharmacies.
Mr. Davis. Can you give me some sense of proportion or
quantity here, even if it is general or speculative?
Mr. Taylor. Millions. I mean, we are talking millions of
packages coming through. And there is nothing to suggest that
trend will not continue.
Mr. Davis. So what has been the rate of growth in these
packets from last year or the last 2 years, would you say?
Mr. Taylor. I do not have the exact number, sir. Based on
the type of data that others have collected and based on our
own extrapolation from 2 years ago----
Mr. Davis. You fear in the face of explosive rate of growth
it's just going to compound immensely in the absence of any
change in official policy?
Mr. Taylor. Yes. It certainly has been explosive growth and
there is no reason to suggest it will not stop.
Mr. Davis. Has there been any prosecution undertaken by any
law enforcement authorities with respect to these websites
providing the bogus information that were discussed earlier?
Mr. Taylor. You mean in regards to the----
Mr. Davis. Viagara or any product?
Mr. Taylor. In regards to this particular Viagara shipment,
there were some discussions initially with the Department of
Justice. However, a case was not initiated on the Viagara.
In regards to some of the other products that we have
talked about, the answer is yes.
Mr. Davis. There are prosecutions that have been
undertaken?
Mr. Taylor. Ongoing investigations into some of these
products.
Mr. Davis. What exactly would you suggest that Congress
needs to do to be a part of the solution here? We are spending
our day talking about the problems so far. And it is easy to
sit here and criticize you, but what we are entitled to, and
what the public is entitled to, for you to be painfully direct
with us as to exactly what Congress needs to do to be part of
the solution here? Because if you are not part of the solution
on this, you are part of the problem.
Mr. Taylor. I quite frankly, as a starting point, looking
at some comprehensive solution that just does not focus at
providing additional resources. Because as I stated earlier,
providing us with additional investigators does not seem to be
the answer. And no matter how many investigators you provide
us, it seems that based on the numbers we still struggle to
look at these packages and prevent their entry into the United
States.
Mr. Davis. So what else besides resources?
Mr. Walden [presiding]. The gentleman's time is----
Mr. Davis. Mr. Chairman, if I could just finish this last
question, then I will stop there.
What else besides resources?
Mr. Taylor. Well, I guess what I am saying is that
resources are not the answer, that some type of comprehensive
solution that focuses on why people are purchasing these
products and importing them into the United States seems to be
the answer.
Mr. Hubbard. Perhaps I could add, Mr. Davis, that several
suggestions have been ones that have come up over the years.
One would be some sort of disclosure to know whether these are
legitimate or illegitimate websites.
And, of course, there is the return to sender, a policy
that we proposed to Congress. So there are some ideas that have
been out there that Congress could certainly discuss.
Mr. Davis. Thank you. Thank you, Mr. Chairman.
Mr. Walden. You're welcome.
Ms. Durant, in your testimony you state that Customs found
that large parcels of fake or gray market pharmaceuticals are
being split into different mail shipments but arrive at the
same address. Can you expand on that?
Ms. Durant. It is just a growing trend. Bulk
pharmaceuticals are of particular concern because we believe
those are the most likely to go to distributors that might end
up in pharmacies that people consider to be legitimate in the
United States.
We are going to, this summer, conduct an operation at four
of our major mail sites to try and get a better handle on
whether we have growth in that area. Our last operation
indicated that as much as 14 percent could be phoney or
counterfeit or just contain starch, etcetera. So we do plan to
redo that operation this summer so that we can see if the 14
percent is stable or whether we should have----
Mr. Walden. Fourteen percent are drugs that are not pure?
Ms. Durant. Of all the packages we detained and analyzed,
because it does take a chemical analysis, 14 percent were
counterfeit or had inactive ingredients that were not what
people thought they were, imported.
Mr. Walden. Okay. I want to pursue this issue of perhaps
those counterfeit drugs getting into our pharmaceutical chains.
Is that happening to those that get broken up and then end up
at the same address; are you seeing a flow of imported drugs
going into existing pharmacies, if I went down here to CVS or
somewhere?
Ms. Durant. We do not trace that. The FDA----
Mr. Walden. Who does? FDA does? Are you seeing that? Is
anybody checking that?
Mr. Taylor. We work with the States to look at what is
going into the wholesale market. And based on the recent
counterfeit cases that we have worked on, we think that the
wider distribution patterns of those counterfeit products is
based on a wider introduction into the whole sale market.
Mr. Walden. What do you mean by that? What is happening?
Mr. Taylor. Okay. I am sorry.
Mr. Walden. If my constituents go to a pharmacy in any town
in America?
Mr. Taylor. Sure.
Mr. Walden. Are they certain those drugs have not come in
through a reimportation system that is not being regulated and
inspected?
Mr. Taylor. Well, obviously, as part of working with the
States, we have dual jurisdiction or complimentary jurisdiction
with the States regarding pharmacy issues. And so if the
States, for example in the context of these storefront
pharmacies that have proliferated or in the context of some
other situation where a pharmacy believes that the product that
they are getting is what it purports to be, we would work with
them to try and determine that source.
I think that----
Mr. Walden. But that is if the pharmacy thinks that. What
if the pharmacy is part of the game here?
Mr. Taylor. Well, that is exactly right, and that is why I
was going to go on. But that is just one part of the chain.
What we really are relying upon is a closed regulatory
system that has worked very well to ensure that the American
public is getting good quality products. And I still think that
the American public should feel confident that the products
that they----
Mr. Walden. But I have heard from some of my colleagues
that there are storefront pharmaceutical pharmacies being set
up that are, you know, Rx Canada, I do not know the names but
that are being set up that are apparently importing directly
from other countries. They would have no reason to come to you
to say hey check us out, right?
Mr. Taylor. Right. They would not come to us to say check
us out. However, it is occurring.
We have sent a warning letter to a storefront pharmacy,
actually two warning letters. One, and the entity is Rx Depot.
We sent one in conjunction with the State of Arkansas, and then
we sent another warning letter to the President of the company
who is in Oklahoma. So we essentially made sure we were sending
it to two locations.
In that context it was a storefront pharmacy that was
facilitating the purchase of products from Canada and
specifically as part of its marketing scheme it was claiming
that the products were U.S. approved products.
We have received a response to our warning letter that we
deem inadequate, and we will respond accordingly. At the same
time the States are taking action against that storefront
pharmacy and we are also working with the States very closely
to identify other storefront pharmacies that might require some
type of follow up action.
Mr. Walden. Okay. Back to Ms. Durant. Customs has the
responsibility to detain all imported controlled substances.
Are you seeing a similar increase in the importation of
controlled substances? Can you give the committee a better
understanding of the procedures and resources that must be
expended to seize and destroy a controlled substance?
I understand perhaps Valium and some of these other
controlled substances are making their way into----
Ms. Durant. We have seen an increase. Although we do not
have hard numbers, we have seen an exponential increase in all
areas including controlled substances like Valium.
We are required for every detention and seizure to give the
victim of that seizure, if you would, or the importer, due
process which requires us to detain. Even if it is under our
own authority to seize, we do have to give a notice of seizure.
There is a petition period and a forfeiture. And during the
time that we have those drugs, we have quite considerable care
and custody requirements.
Mr. Walden. But are you seeing an uptick, though, in the
number?
Ms. Durant. Yes.
Mr. Walden. Okay. Now, I want to move on to another topic,
which is the safety of our food supply. Does FDA have
jurisdiction over imported foods?
Mr. Taylor. We have jurisdiction over some imported foods.
We regulate about 80 percent of the food supply and USDA
regulates the other 20 percent.
Mr. Walden. And of the 80 percent that you regulate, how
much of that is inspected, what percent that comes across the
border?
Mr. Taylor. For imported foods, I think the latest figure
that I saw was probably about 1.7 percent of imported food.
Mr. Walden. Because the issue that I get is we get all this
food imported and we do very little inspection. Why can we not
get our pharmaceutical drugs imported? I mean, what is the
difference? They could be poisoning our food supply or using
different chemicals to raise food to compete with our farmers
and you do not inspect it to see if it meets the U.S. standards
because you can only inspect 1 percent? Do we not also have an
issue on that front as well?
Mr. Taylor. Well, I mean, I think sir, in order to protect
the public health we are trying to balance our resources across
all the programs. As I noted earlier in my testimony, the
investigational bodies that we devote to import functions work
on import related issues that effect all our products. So with
our limited resources, whether it be foods, pharmaceuticals,
medical devices what we are trying to do is a better job of
assessing risk, and then using that to determine our priorities
and then directing our resources in a manner that best protects
the public health.
Mr. Walden. Do you see a difference in threat assessment
between imported food and imported drugs?
Mr. Taylor. As of right now our work on foods is directly
directed to threat assessments and intelligence that we have
regarding specific food commodities. And as part of our risk-
based strategy we use that intelligence information,
information that we get from several sources, to determine what
foods we give greater targeting to.
Mr. Walden. Do you have a risk threat assessment for
imported drugs?
Mr. Taylor. For imported drugs, no we do not. We do not
have the same type of risk assessment that we have for food.
However, to the extent that we are privy to intelligence that
relates to drugs, we obviously would take those steps in
accordance with whatever information we receive.
Mr. Walden. All right. My time is up.
Mr. Taylor. And one of the reasons why, is in the context
of the bio-terrorism legislation, one of the requirements is
that we do a threat assessment regarding food. So we have
contracted one out, but we have also done one on our own.
Mr. Walden. Is there not the same sort of requirement for
threat assessment for importation of drugs?
Mr. Taylor. No, sir, not as part of that Act. Not that I
know of, sir.
Mr. Walden. All right. Thank you.
My time has expired.
Ms. Schakowsky is next.
Ms. Schakowsky. I thank you, Mr. Chairman.
As one who has worked on health care issues, prescription
drugs and particularly with the elderly for a long time, I feel
like those people are the largest consumers, as other consumers
of prescription drugs in this country kind of get it at both
ends by this administration and actually every one leading up
to this: That is that we have done nothing to control the price
of drugs and they keep escalating And while they have certainly
added to the longevity and quality of life, they are
inaccessible to many seniors. So it is no wonder that they are
going to, and others, that they are going to do whatever they
can to get the prescription drugs that they need. And it seems
to me, as long as we keep resisting doing anything about the
cost of pharmaceuticals, the resource for which a lot of it has
been done with taxpayer dollars so let us not get too carried
away with R&D, because a lot of that is already provided by the
taxpayers of this country. And then so they look for other
solutions and then we fail to protect them from unsafe and
dangerous, in some cases, drugs or ineffective drugs.
I was looking at the upcoming testimony of Robert Penezik,
I do not want to say it wrong, the Assistant Statewide
Prosecutor for the State of Florida, who listed the most
commonly--let me use his words so I do not say it wrong,
characterize these wrong. Hold on.
``The most commonly found drug to either have been
counterfeited or otherwise adulterated drugs,'' and when I
compare that to the list of drugs and the price in the United
States as compared to the price in Canada, here is what I find.
Celebrex is on that list. It is 63.5 percent discounted in
Canada. Or Flonase Nasal, 64 percent less in Canada. Lipitor,
38 percent less. As interested as all of us are in Viagara. Let
me just point out that Tomaxafin for breast cancer is 91.3
percent less in Canada than in the United States. So is it any
wonder that consumers are turning to other places to get it?
But the problem, he also says this and this is where anyone
is free to answer. Maybe this is mostly a question for Customs,
I am not sure. But what he says is as prosecutors we are now
seeing a trend of prior illegal narcotic traffickers entering
into the prescription drug business.
I mean, imagine. Now it is not going to be cocaine, it is
going to be Lipitor or Celebrex that are going to be blackmail
that if you think about, is not any surprise. Because people
want, need, demand these. And so we get kind of back to the
demand side, are we not going to make these available to people
at a reasonable price, but at the very least then what are we
going to do about this growing criminal element that is now
involved in the trafficking of prescription drugs? I would like
to ask Customs.
Ms. Durant. Customs has no specific information regarding
that. I can check back and see if perhaps our sister agency has
any indication and provide it for the record. I do not have any
specific information that would indicate that that is true
today.
Mr. Taylor. Sure, I can comment on this.
We have seen a wide array of people starting to get
involved in counterfeiting products. And our response to these
type of defendants is the same response that we would have in
other counterfeit cases, which is really to respond to the
counterfeit situation in two complimentary ways. Our first
priority is to protect the public health by, first of all, in
trying to figure out how far the counterfeit products have been
dispersed, initiating recalls, educating the public to the
potential harm from taking the products, working with the
States, the pharmacies and the manufacturer of the invented
product to learn more about the product so that we can find
more information about what the product contains. And then as a
sort of a complimentary role but not a mutually exclusive role,
we would also conduct a criminal investigation to try and
determine who is responsible for the introduction of these
counterfeit products. And in some cases we have seen people who
have been involved in other illegal activities involved in
possibly the counterfeiting of pharmaceuticals.
Mr. Schakowsky. It was stated in your testimony, Ms.
Durant, and I think we have hit on it somewhat that people who
go to their local pharmacy may now be finding that these
products are on the pharmacy shelves. Let me say the serving
trend is the increase involved shipments through the mail
indicating that these products could be making their way to
pharmacy shelves. There is a possibility that stateside
pharmaceutical distributors could be using these products as a
source of supply.
So what is it that will assure people that when they go to
their Walgreens or CVS they are not going to find that these
products are on the shelves?
Mr. Taylor. Well, let me just give you a concrete example
of some of the steps that we take to protect the public. I
think the ongoing Lipitor investigation is a good example of
where were fearful that the product had made its way to
pharmacies.
When we first learned of this information, we did one
recall that based on the information that we had before us that
was focused on, quite frankly, the size of containers that are
commonly sent to pharmacists. So as part of our initial recall
and outreach to the community we focused on getting the message
to pharmacies to be on the lookout for identifying information
that would have helped them determine whether or not the
product they had was indeed counterfeit as opposed to the
authentic Lipitor.
In addition, we informed the public to the potential risk
of taking the product. And at the same time, as part of both
our regulatory and criminal investigation, we tried to
determine, and we are still looking at how widely the product
was dispersed.
So these are some of the steps that we take once we
discover that a product might be counterfeit to try and protect
the public.
Mr. Schakowsky. Let me say this last sentence. I think the
best thing you could do for yourselves is to encourage this
administration to establish a program that helps to lower the
cost of drugs to the American public instead of in the Medicare
bill that just came out of this committee, there is a
prohibition on the Department of HHS to actually negotiate for
lower drug prices under a Medicare prescription drug program.
This will only make your job harder. And as long as those drug
prices are sky high, we are going to see that there is going to
be efforts on the part of consumers and therefore on the parts
of the criminal elements to bring these drugs into the United
States.
Thank you, Mr. Chairman.
Mr. Walden. The gentle woman's time has expired.
The Chair recognizes Mr. Rush.
Mr. Rush. Thank you very much, Mr. Chairman.
This question may have been asked and answered already,
however I want to see if I can get an answer for myself.
Much of today's hearing has spoken to the fact that
reimported drugs are unsafe and even lethal in some cases. Can
you remind the committee of the death rates of consumers when
they have taken these drugs? In other words, how many American
citizens have died because of imported and unsafe drugs?
Mr. Taylor, can you answer that for me?
Mr. Taylor. Sir, I do not have those specific figures. As
part of----
Mr. Rush. Does any of the panel have those figures?
Mr. Hubbard. We believe that is an unknowable thing, Mr.
Rush, because there is no system that tracks such injuries. And
people that buy these drugs will tend to be not the sort of
people that would report. They recognize that they bought them
outside of the normal practice to buy them.
But as we discussed before you came in, the more likely
injury from these drugs is that someone would not have their
disease treated. You do not take a fake drug and have an
adverse effect because it just does nothing. What happens is
your illness is not treated, and that effect can occur over
many months or even years.
Mr. Rush. So these drugs are not lethal in themselves? They
do not cause death or injury?
Mr. Hubbard. Yes. Generally many of these drugs themselves
are not going to immediately hurt you. They are just not going
to help you. And the purpose of taking a drug, of course, is to
treat an illness, not to just take a placebo or a sugar pill.
And many of these drugs in fact are just that, they are
subpoent or they are lacking in any active ingredient. You
would not expect an injury from that, but you also would not
get the medicinal treatment that the drug was intended for.
Mr. Rush. I want to switch my line of questioning here. The
FDA, is it not the case that because it is Customs and not FDA
that typically works--Customs typically works mail facilities.
And Customs inspectors would be the ones to intercept those
products for which FDA has an import alert. What is the
coordination nexus between the FDA and Customs, and how can you
better provide better coordination between the FDA and Customs?
Mr. Taylor. I can start.
In the context of the mail facilities, you are absolutely
correct. Customs sets aside packages that they think are of
concern. FDA, who does not traditionally have a presence at the
mail facility, will then come by and take a look at the
packages that Customs has set aside. And pursuant to our own
statute, we will make a decision whether or not to detain a
product. And if we do decide to detain a product, then we need
to issue a notice of detention, a notice of hearing and notice
of refusal, thereby giving the right of the owner of the
product to oppose or argue that the product is indeed not in
violation of the Act and should be imported to the United
States.
Mr. Rush. Well, are you aware that when staff interviewed
Customs officials in Miami they were told that they do not
regularly receive import alerts from the FDA?
Mr. Taylor. I am aware, and that is why in my oral
testimony and my written testimony I cited one of our
improvements is going to be the fact that we are going to
provide written or hard copies to Customs of all import alerts
so that we can insure that communication problem does not occur
in the future.
Mr. Rush. Thank you, Mr. Chairman.
Mr. Walden. The gentleman yields back his time.
The Chair recognizes the gentleman from Michigan, Mr.
Stupak, I believe, is next.
Mr. Stupak. Thank you, Mr. Chairman.
Many of us have been here for the last 4 or 5 years going
through this, and nothing seems to change here. I guess the
only thing that changed is the volume is getting greater. Is
that fair to say, Ms. Durant?
Ms. Durant. Yes, it is.
Mr. Stupak. I know you have testified a couple of times
here.
Ms. Durant. Yes, it is.
Mr. Stupak. There is no due diligence here and follow up a
policy or any kind of procedure to handle this drug situation,
is there? There is no due diligence on behalf of the FDA? We
just keep going around circles here for the last 4 or 5 years,
right?
Ms. Durant. FDA continues to work with us, but I think we
are jointly overwhelmed by this problem in terms of the
volumes.
Mr. Stupak. Ms. Durant, before you detain a drug--could we
put slide 9 up there?
When you get a drug in, you have it detain it, correct?
Ms. Durant. That is correct.
Mr. Stupak. Okay. And the drug on the packaging must have
on their written declaration affirming personal use, it must
have a 90 day supply or less, right? The evidence of medical
supervisor or prescription on the package and product that has
to be unavailable in the U.S. Those are the four criteria we
look at, right?
Ms. Durant. Those are among the criteria that we look at.
Mr. Stupak. Okay.
Ms. Durant. We detain other types of pharmaceuticals
besides those.
Mr. Stupak. But from the FDA's import guidance, those are
the four things you basically look at?
Ms. Durant. Those are among the things we look at. We look
at source countries, we look at packaging for potential
counterfeit.
Mr. Stupak. And if it does not have those four things, can
you not just send the package back?
Ms. Durant. No, we cannot under our own authority. We can
seize controlled substances under our own authority. But the
FDA actually has the jurisdiction. So we detain it. We put it
aside for the FDA to----
Mr. Stupak. If the FDA told you, and I am looking at this
is our October 2000 hearing. The FDA import guidelines, this is
from the Department of Customs, those four factors that I
listed for you: Written declaration affirming personal use, 90
day supply or less, evidence of medical supervision or
prescription and product unavailable in the U.S. If the FDA
told you if it does not have these four criteria, our import
guidance, could you just ship that package back?
Ms. Durant. If the FDA told us, we could ship it back.
Mr. Stupak. Has that not been what we have been saying, at
least myself and some of the others saying since 2000 just the
FDA give them the guidance so you can just ship it back, right?
Ms. Durant. We would like that guidance from the FDA.
Mr. Stupak. Sure. So the FDA has to give Customs, tell you
to ship it back if it does not have those guidance, right?
Ms. Durant. That would be correct.
Mr. Stupak. So slide number 9 there with all those
packages, how many of those would you anticipate had the
guidance, those four criteria on the package?
Ms. Durant. Well, that is not the only criteria that we----
Mr. Stupak. Sure. Sure. But how many would just have these
four?
Ms. Durant. Probably not----
Mr. Stupak. None of them, right?
Ms. Durant. Probably not.
Mr. Stupak. In fact in October when we did the Dulles and
Oakland facilities, none of them had that four criteria on. Of
the 513 packages we seized off the line, none of them had that
criteria?
Ms. Durant. That would probably be correct.
Mr. Stupak. So all 513 could have been shipped back, they
would not have been sitting in some bins like we have right
here, correct?
Ms. Durant. I'm sorry?
Mr. Stupak. All 513 could have been shipped back, they
would not have been sitting in bins like that? We would not
have this big huge supply, you would not be holding detaining
drugs, correct?
Ms. Durant. If the FDA----
Mr. Stupak. Would just provide you to do that?
Ms. Durant. [continuing] provided that guidance. Correct.
Mr. Stupak. Correct? FDA, why do you not do it?
Mr. Hubbard. I think, as we have explained, our law would
require that each of those packages be put into our system and
address----
Mr. Stupak. No, no, no. These are your FDA import
guidelines I have read. It does not say to detain. It said it
had to have four specific things. That is your guideline. You
even reiterate it in your testimony. Why do you not just tell
Customs if it does not have these four factors, ship it back?
Mr. Hubbard. Personally I wish we could.
Mr. Stupak. Why do you not? You do not need congressional
oversight on that.
Mr. Hubbard. No. Unfortunately, our attorneys tell us we
cannot do that.
Mr. Stupak. Your attorneys? All right. In your testimony
today you said large commercial shipments is what you look for,
correct? Mr. Taylor, you said that, too, right?
Mr. Hubbard. That was referring to trying to prevent
commercialization. Because we cannot deal with these small
packages, we have got to deal with the big ones.
Mr. Stupak. What is large? What is large? A gentleman there
has a package in his hand, is that large? It is right behind
you there. It is on the screen. It is on over here. Are those
large? Quantify large for me.
Mr. Taylor. I personally did not mention large package.
Mr. Stupak. Oh, yes. Mr. Dingell you said large commercial
shipments, additional steps we prioritize, we cannot detain
everything, the greatest public harm, the business facility,
train and retrain people.
Let us just start large. Quantify large for us.
Mr. Taylor. You cannot quantify large. I guess----
Mr. Stupak. And why do you not use your four guidelines and
ship them back so we do not have thousands of packages sitting
here?
Mr. Taylor. My point is that merely saying something large,
that is just one factor. Obviously, at the end of the day the
most important factor is the harm that a product could cause
or----
Mr. Stupak. Well, wait a minute. You do not know what harm
it is causing. You only inspect, what? About 1 percent, if you
do that?
Mr. Taylor. Well, to the extent that we do look at the
products, we do apply this risk-based approach----
Mr. Stupak. Well, we know that the facilities tell us you
guys do not even come by. They detain it and you do not even
come by.
Mr. Taylor. Obviously the resources prevent us from----
Mr. Stupak. No, no, that is not a resource issue. It is a
policy issue. Now you are either going to come by or not. If
you do not have the people to do it, why do you not just send
it back? It does not have these four criteria. You do not have
to worry about resources then.
Mr. Taylor. Because, as Mr. Hubbard explained, we still are
bound under the Act to follow the----
Mr. Stupak. Now wait now. Wait now. Now, you do not get to
Section 801 until Customs accepts it. If you tell Customs not
to accept it, it doesn't trigger Section 801. Your attorneys
are right on 801 once you accept it. But you do not have to
accept it if you just enforce your own policy and guidelines
that you refuse to do.
Mr. Taylor. Sir, those policies and guidelines that you are
talking about, they are what we call our personal importation
policy. They do not make--as part of that policy----
Mr. Stupak. Excuse me. Slide number 9. Are those not for
personal use right there? That is your personal importation
guidelines?
Mr. Taylor. I'm sorry, sir.
Mr. Stupak. Well let me go to another one. You guys put out
these alerts, right? Import alerts, that is authority to detain
products. Last time we had testimony last fall on the drug
Acutane, we talked about that, about the dangers of Acutane and
FDA was going to put out an import alert on that. Has FDA ever
done that?
Mr. Taylor. Yes, they have.
Mr. Stupak. When did they do it?
Mr. Taylor. Sir, I do not have the exact date, but it was I
believe the middle of December.
Mr. Stupak. Middle of December?
Mr. Taylor. Yes.
Mr. Stupak. Did you provide that to Customs?
Mr. Taylor. I do not know if--obviously, in the context of
Miami, it looks like there is some miscommunication issues. But
I know that Customs was involved in the discussions surrounding
that import alert.
Mr. Stupak. So if they did not have it, you only send it to
certain facilities or what on Acutane?
Mr. Taylor. No. In terms of Acutane, we worked with Customs
not only at the policy--at the time that we were putting the
import alert together. And I know we communicated to Customs.
The only reason I am hesitating is in light of the information
that we have determined as part of our ongoing review that
there were communication issues in Miami that do not allow me
to say definitively that was shared all throughout Customs.
Mr. Stupak. Right. And you have those same communication
problems in Dullas and Oakland and the rest of the places.
How do you know if it's Acutane in a box if you have never
opened it?
Mr. Taylor. Obviously, that is one of the challenges.
Mr. Stupak. Well, if you would just follow your four
guidelines, you would not even have to open a package, would
you?
Why cannot FDA just tell Customs not to accept it, because
if you accept it you go into Section 801? Why cannot the FDA
just put forth a policy that says if it does not follow these
guidelines for importation of use, we reject it? Why do you not
just do that?
One more question while you are at it so I have an answer
for me, since the 106th Congress we have talked a lot about the
importation of drugs through the web, the Internet, we have had
the bill--I have had the bill to ban it. Okay. Certain criteria
had to be followed. FDA has never taken a position on my bill.
I have reintroduced it again this year. Would the FDA finally
take a position on our bill, either support it or not support
it? When you talk about needing insight and supervision from
Congress, I have been around since the 106th Congress trying to
give you that input and the FDA refuses to even take a position
on our legislation. Would you promise this committee that to at
least look at our bill and tell us whether or not you will
support it or not to cut down on these Internet purchases of
drugs? Yes or no. You going to take a position on it or not
this year? It has been 4 years we have been waiting?
Mr. Taylor. Sir, I do not know if the administration has a
position on your bill. This is simply information I do not
possess.
Mr. Stupak. Could you ask them to do that? It has been 4
years and we are still waiting for an answer.
Mr. Greenwood. The time of the gentleman has expired.
Mr. Stupak. Thank you.
Mr. Greenwood. The gentleman from Texas, Mr. Green is
recognized for 8 minutes.
Mr. Green. Thank you, Mr. Chairman.
And to follow up my colleague from Michigan, I think the
concern I have is that the commercial quantities that we see on
the slide as compared to the individual quantities. And if you
could leave that slide back up, I want to talk about that a
little bit.
Our seniors, in fact when I went home last Friday, I had
seniors at a group in Houston, one of the couples asked me,
said we get our pharmaceuticals from Canada because we cannot
afford them if we got them here in Houston, Texas. And I said
well the concern I have is that you buy from those places,
although they had a reputable pharmaceutical and what have you.
What I am seeing up there is does not look like it is for
personal use, it looks like it is for commercial use. It is not
my seniors from Houston, Texas or from Chicago buying
individual 90 day supplies, or even 6 month supplies. I know
the law is 90 days. But I have seniors who drive to Mexico from
Houston, 6\1/2\ to 7 hours, just like people go across to
Canada. And I have actually bought pharmaceuticals in Latin
America.
And so I can understand the concern from the FDA, but I am
also concerned that we are seeing commercial importation of
drugs that have no quality control on them.
Like my colleague from Chicago, if we had an affordable
system, we would not have this problem. That people would not
have to if they could not get them for half the price in Canada
or Mexico, or even off the web it somebody says they are from
Europe.
I understand there is significant risk associated with
taking imported pharmaceuticals, and the product impose
significant risk. For example, it seems that drugs manufactured
in the United Kingdom, Canada, France, Japan and other
industrialized countries would probably be far safer than drugs
manufactured in some lesser developed countries. When we heard
about Belize or the Bahamas, or someone else that maybe does
not have these infrastructure like these.
Does the FDA have a system of gauging the potential risk
based on where the drugs are imported from?
Mr. Hubbard. No, we do not. We have no statutory direction
to do such a thing. There is no such thing as reciprocity or
equalization along those lines that you are suggesting, Mr.
Green.
Mr. Green. So we would have to actually give the FDA the
statutory authority to look at pharmaceutical manufacturers,
say, in France or western Europe that want to import into the
United States or export into the United States? There is no FDA
authority now if someone is exporting in the United States that
their factories or their plants have to be meet some quality?
Mr. Hubbard. Well, if a facility in another country wants
to sell a drug in the United States, that's perfectly
acceptable if that facility is making an FDA approved drug and
that facility has been inspected and improved by the FDA to
make that drug.
Mr. Green. Okay. And that happens, I assume? We import
pharmaceuticals on a commercial basis?
Mr. Hubbard. Yes, that is correct.
Mr. Green. Do these same plants----
Mr. Hubbard. They also make finished pharmaceuticals. Some
finished pharmaceuticals. The actual pill that you purchase
come from foreign plants that are inspected by FDA.
Mr. Green. Okay. Is there any of this information available
to the customers or is it just to the businesses or the people,
you know, the pharmacists or we call them PPMs that may import
these?
Mr. Hubbard. Well, generally if you the patient get a drug
from any licensed pharmacy, you are almost certain to get an
FDA approved that from an FDA inspected facility.
Mr. Green. Okay. What about a senior citizen that is not
going to a licensed pharmacy in the United States, but using a
website that says they are in Canada, that may or may not be
true, but is there any security that we could give this group
saying, you know, these are the places that you can buy your
own individual prescriptions from?
Mr. Hubbard. Not for foreign sites. There certainly is a
system to identify the legitimate domestic sites called VIPS,
run by the National Association of Boards of Pharmacy. But for
the foreign sites, there is no assurance that a patient is
getting a drug from a legitimate site or that it is a truthful
site. In many cases we see sites that are not truthful.
Mr. Green. Well, and it seems like that there should be,
like my colleague from Michigan talked about his legislation to
give the FDA that authority to do that. Because again the
frustration is, is that I cannot sit here and say I am going to
tell that couple that I just talked to last Friday that we are
going to shutdown your only way you can afford your
pharmaceuticals that your doctor tells you to. Or shutdown my
constituents who will drive to Mexico and go over and buy their
pharmaceuticals. And, again, it is in their own individual
quantities because they know they can be stopped by Customs if
they have anything larger than that. However, at one time
before the increase in I guess surveillance at the border, I
had people paying for their trip and buying it for other
neighbors. And they had the prescriptions, but it was not in
their names. But I do not encourage them and tell them, you
know, you are going to seized. However, I do not know how many
people that are 65 or over that the Customs detains in bringing
back medication.
Mr. Hubbard. May I just say, Mr. Green, it is important the
constituents know we do not threaten or search or otherwise
intimidate citizens bringing drugs back for their own use.
Mr. Green. Well, if it is not the FDA, it would be Customs,
I would assume that would be doing it.
Ms. Durant. That is correct. That is correct.
Mr. Green. Because I know FDA does not have the manpower to
do it at the borders, but Customs has agents there. And they
will ask if you are bringing back pharmaceuticals.
Ms. Durant. They do ask. They do ask and they do check. And
we do take it away. I hope we do not intimidate them too much.
But if it does not meet that criteria, we do, we take them.
Mr. Green. Okay. But an individual could bring back a 90
day supply if they have a written prescription from their own
doctor?
Ms. Durant. I believe that is the case, 50 dosage units
comes to mind.
Mr. Hubbard. That is for controlled substances, I believe.
For prescription drugs the 90 day supply issue is for
experimental drugs for which there is no therapy in the United
States. Legally they should not be bringing back any other
prescription drug. However, FDA does not attempt to take those
drugs away from patients who have gone to buy them.
Mr. Green. Well, I can tell you the pharmaceuticals that
they are purchasing and bringing back, it is probably a rarity,
and the only reason they're doing it is because of cost. They
just can't afford them in the United States, so they'll go to
Mexico or Canada.
Thank you for your testimony. Obviously we need to empower
the FDA and hopefully this hearing will also allow Customs and
FDA to have a working relationship. Because, again, those look
like commercial quantities that should not be accepted in the
United States.
Thank you, Mr. Chairman, for allowing me to sit in.
Mr. Greenwood. The Chair thanks the gentleman.
As everyone can tell, we have a series of votes that start
now. So I think probably the prudent thing rather than to
squeeze the testimony from the next panel, is to dismiss this
panel. We thank you kindly for your patience and your testimony
today.
And we will recess. I am going to guess it will be at least
1:15 until we finish this series of four votes and get back and
bring on the second panel.
So the hearing is now recessed.
[Brief recess.]
Mr. Greenwood. The committee will come to order.
The Chair thanks the witnesses for our patience. We should
be able to sail right through now.
The chairman officialy calls for Mr. Robert Penezik,
Assistant Statewide Prosecutor for the State of Florida, Office
of Statewide Prosecution and Dr. Greg Jones, Pharmaceutical
Program Manager at the Drug, Devices, and Cosmetic Regulation,
Bureau of Statewide Pharmaceutical Services, and Dr. Cesar
Arias, Drug Inspector Supervisor for the Florida Department of
Health, Bureau of Statewide Pharmaceutical Services.
Thank you all for coming here. I think that you are aware
that the Oversight Investigation subcommittee takes it
testimony under oath and I need to ask if any of your gentlemen
have objection to giving your testimony under oath this
afternoon? Good.
I should also advise you that you have the right to be
represented by counsel. Did any of you want to be represented
by counsel? I didn't think so. Okay.
If you would stand and raise your right hand then?
[Witnesses sworn.]
Mr. Greenwood. Okay. You are under oath. And, Mr. Penezik,
we will start with you and you are recognized for 5 minutes for
your opening statement.
TESTIMONY OF ROBERT M. PENEZIK, ASSISTANT STATEWIDE PROSECUTOR,
OFFICE OF STATEWIDE PROSECUTION, STATE OF FLORIDA; GREGG JONES,
PHARMACEUTICAL PROGRAM MANAGER, DRUG, DEVICES, AND COSMETIC
REGULATION, BUREAU OF STATEWIDE PHARMACEUTICAL SERVICES; AND
CESAR ARIAS, DRUG INSPECTOR SUPERVISOR, FLORIDA DEPARTMENT OF
HEALTH, BUREAU OF STATEWIDE PHARMACEUTICAL SERVICES
Mr. Penezik. Thank you for the honor, privilege and
opportunity to speak to this subcommittee. Mr. Chairman and
members of the committee, I am Robert Penezik, Assistant
Statewide Prosecutor for the State of Florida. Today, I will
talk about the issues and problems raised in the Interim Grand
Jury Report, which served as the conduit of the legislation,
and ultimately the law signed by the Governor on June 13, 2003.
The citizens of the State of Florida and the United States
are safer today due to the collective efforts of a broad
spectrum of representatives in the State including: Governor
Jeb Bush, Attorney General Charlie Crist, State Senators Durell
Peaden and Walter ``Skip'' Campbell, State Representative Ed
Homan, Department of Law Enforcement Commissioner Tim Moore,
Secretary of Health Dr. John Agwunobi, Statewide Prosecutor
Pete Williams, and last but not least the members of the
Seventeenth Statewide Grand Jury.
The overall process that led to the new State law, was
truly government at its best, because all parties recognized
the problem and worked diligently and tirelessly to solve it. I
think it is especially important to recognize the contributions
of Governor Bush and Attorney General Crist for their
leadership and vision.
This morning, millions of people took a prescription drug.
Most consumers probably gave little or no thought to where
their prescription drugs came from or who handled them before
they received them from their pharmacist. We all know that
significant precautions are taken in the preparation and
manufacture of our prescription drugs. However, most of us are
unaware of the current lack of controls on prescription drugs
once they leave the custody of the manufacturer.
To put it in the simplest of terms, before the new
legislation in Florida, when you walked into any pharmacy that
I'm aware of, you had no idea who handled your prescription
drug, how it was handled, or if anyone had done anything
inappropriate to it. Further, the pharmacists who dispensed
your medication might themselves not even know the trail your
prescription drug had traveled. Unless the drug store bought
all of the prescription drugs it dispensed directly from the
manufacturer, the risk is present. This is the problem that I
would like to address and to discuss with you today.
I personally before I got involved in this investigation
never gave a pause or a moment's thought when I ingested or
took my own prescription. After this investigation I cannot
tell you that there is not a single prescription that I would
fill for myself or my family that would not cause me to at
least give thought about the safety and prior whereabouts of
that prescription drug.
Some background about the Interim Grand Jury Report. At the
end of last year, Governor Bush was briefed on the adulterated
and counterfeit prescription drug problem in Florida caused by,
among other things, the secondary pharmaceutical drug wholesale
market. Governor Bush immediately petitioned the Florida
Supreme Court to convene a Statewide Grand Jury. The
Seventeenth Statewide Grand Jury was impaneled in early 2003
and, after weeks of testimony, the Grand Jury issued the
``First Interim Report of The Seventeenth Statewide Grand
Jury'' in February 2003.
In the Interim Report, the Grand Jury made a number of
significant findings and proposed a comprehensive series of
recommendations. The Grand Jury expressed its concern for the
high risk of adulterated and counterfeited drugs entering the
prescription drug supply of the State of Florida. It heard
testimony of the many ways by which these adulterated drugs
enter the stream of commerce and eventually end up on the
shelves of our pharmacies, clinics and hospitals. They heard
about prescription drugs that were sometimes sold three, four,
five times without any apparent legitimate economic reason,
before reaching the ultimate dispenser.
The Grand Jury also found that the ``pedigree papers,'' or
paper audit trails that track the drugs from the manufacturer
to the point they are dispensed, are the most effective way to
prevent diverted, adulterated or counterfeit drugs from
entering the marketplace. Such pedigree papers would allow each
purchaser of prescription drugs to determine who previously
handled the drugs, and would thus serve to greatly minimize the
introduction of adulterated drugs into the marketplace.
However, the Grand Jury found that the pedigree paper standing
alone was not enough. It stated, ``we believe that Florida
should require pedigree papers to be delivered all the way from
the manufacturers to dispensers and that all buyers be required
to verify pedigree papers through the exercise of due
diligence.''
The Interim Report of Florida's Seventeenth Statewide Grand
Jury Report illustrates the potential danger to the citizens of
Florida as well as the citizens of this Nation. The Grand Jury
found that the wholesale pharmaceutical industry in Florida has
been corrupted by the infiltration of a criminal element that
is potentially reaping enormous illicit gains while tainting
the prescription drug supply. The Grand Jury made several
recommendations to address these problems The Grand Jury made
several recommendations to address these problems, including:
1. Creating a standardized form of pedigree paper; 2.
Require pedigree papers in every transaction from the
manufacturer to the end-user; 3. Create new crimes for offenses
involving pedigree papers; 4. Increase the penalties for anyone
who introduces adulterated or counterfeit prescription drugs
into the stream of commerce; 5. Clarify the definition of an
authorized distributor of record; 6. Give the Florida
Department of Health clear authority to shut down wholesalers
in violation of State statutes; 7. Give the Florida
Department--I have been asked to stop. May I continue or do you
want me to----
Mr. Greenwood. No, you may finish your statement, sir.
Mr. Penezik. Thank you, sir.
Give the Florida Department of Health clear authority to
seize and destroy drugs that pose a threat to the public
health, and; 8. Increase the requirements to become a licensed
pharmaceutical wholesaler in Florida.
Based on this compelling report from the Seventeenth
Statewide Grand Jury, Florida Attorney General Charlie Crist
immediately crafted legislation to address the problem and
enact the Grand Jury's recommendations. The Florida Legislature
responded quickly, and many of the Grand Jury's recommendations
were proposed in bills sponsored by various legislators. That
bill was signed by Governor Jeb Bush on Friday, June 13, 2003.
Among other things, Florida's new legislation requires or
provides for:
1. Vastly improved documentation of vital pharmaceuticals
in order to prevent their adulteration or counterfeiting; 2.
Full pedigree papers on all prescription drugs by July 1, 2006;
3. Due diligence by those receiving pedigree papers; 4. Full
authority by the Florida Department of Health to destroy
medication that has been adulterated or improperly stored; 5.
Full authority by the Florida Department of Health to shut down
licensed wholesalers in violation of State statutes until the
deficiencies are corrected; 6. Increased criminal penalties for
pedigree paper violations, as well as other violations
involving adulterated drugs; 7. Increased permitting
requirements for drug wholesalers in Florida, including raising
bonding requirements and stricter background checks.
It is extremely important to note that the legislation was
a product of cooperation between the Attorney General, law
enforcement, the Florida Legislature, the regulators at the
Florida Department of Health, and representatives of the
legitimate prescription drug whole industry. This bill and law
is an important first step in identifying and solving this
problem. The legislation imposes an immediate requirement of
pedigree papers on a select list of approximately 35
prescription drugs that have been shown by law enforcement to
have been counterfeited or mislabeled. And the opportunity
exists later to add to those drugs if necessary.
As you know, prescription drugs are wholesaled and
dispensed in every State and often travel through many States
before they arrive at their ultimate destination. Therefore, an
action or lack of an action in one State can easily affect the
citizens of another State. That is why we believe it so
important to have a uniformed law applied and enforced
nationwide.
By now you have probably heard the horror stories involving
counterfeit prescription drugs. For example, the doctor who
thought his son was being injected with a growth hormone, when
in reality he was getting insulin. The young boy who thought he
was receiving medicine to increase his red blood cell count,
but was actually receiving counterfeit medication. More
recently you may have heard of the individuals placing tap
water in vials of medication and then labeling those vials with
the name of a cancer medication. These despicable
counterfeiters are preying upon people who already have
suffered a great misfortune.
Much of the illegal activity is centered on very expensive
so called high-end drugs. However, it should be noted that
fraudulent activity has been detected in lesser priced drugs as
well.
In conclusion, the business of selling counterfeited and
adulterated drugs is booming. As with almost all criminal
activity, the motive is money. In the case of buying and
reselling adulterated prescription drugs, the money that can be
made from illegal activity is staggering. As prosecutors, we
are now seeing a trend of prior illegal narcotic traffickers
entering into the prescription drug business. Unfortunately for
consumers, the drug traffickers have not had a moral
enlightenment. Rather, they now apply the tools of their
illegal trade to the prescription drug business.
Most of us probably know someone that takes one or more
prescriptions drugs daily. I do have a 17 month old child, 2
parents and an 83 year old grandmother who takes prescriptions
drugs. I have a goal that someday when I walk into a pharmacy
there will be a sign at that pharmacy saying we trace every
drug that we have in our possession and we know the origin, who
has handled it and how it was handled. I also have a goal that
I do not want to ever have to give pause when I take another
prescription drug or administer one to my child.
Thank you, Mr. Chairman.
[The prepared statement of Robert M. Penezik follows:]
Prepared Statement of Robert M. Penezic, Assistant Statewide
Prosecutor, State of Florida
Thank you for the honor, privilege and opportunity to speak to this
sub-committee. Mr. Chairman and Members of the Subcommittee, I am
Robert Penezic, Assistant Statewide Prosecutor for the State of
Florida. Today, I will talk about the issues and problems raised in the
Interim Grand Jury Report, which served as the conduit of the
legislation, and ultimately the law signed by the Governor on June 13,
2003.
The citizens of the State of Florida and the United States are
safer today due to the collective efforts of a broad spectrum of
representatives in the State including: Governor Jeb Bush, Attorney
General Charlie Crist, State Senators Durell Peaden and Walter ``Skip''
Campbell, State Representative Ed Homan, Department of Law Enforcement
Commissioner Tim Moore, Secretary of Health Dr. John Agwunobi,
Statewide Prosecutor Pete Williams, and the members of the Seventeenth
Statewide Grand Jury. This overall process that led to the new State
law, was truly government at its best, because all parties recognized
the problem and worked diligently and tirelessly to solve it. I think
it is especially important to recognize the contributions of Governor
Bush and Attorney General Crist for their leadership and vision.
This morning, millions of people took a prescription drug. Most
consumers probably give little or no thought to where their
prescription drugs came from or who handled them before they received
them from their pharmacist. We all know that significant precautions
are taken in the preparation and manufacture of our prescription drugs.
However, most of us are unaware of the current lack of controls on
prescription drugs once they leave the custody of the manufacturer.
To put it in the simplest of terms, before the new legislation in
Florida, when you walked into a pharmacy, you had no idea who handled
your prescription drug, how it was handled, or if anyone had done
anything inappropriate to it. Further, the pharmacists who dispensed
your medication might themselves not even know the trail your
prescription drug had traveled. Unless the drug store bought all of the
prescription drugs it dispensed directly from the manufacturer, the
risk is present. This is the problem that I would like to discuss with
you today.
First, I believe it would be helpful to define a few terms included
in the testimony.
Drug Diversion--is the movement of legal drugs into the illicit
marketplace.
Adulterated drugs--are counterfeit, mislabeled, diluted, improperly
stored and/or improperly handled prescription drugs are all considered
to be adulterated drugs under Florida Statutes. Any of these acts make
the drugs unfit for human consumption.
background & interim grand jury report
At the end of last year, Governor Bush was briefed on the
adulterated and counterfeit prescription drug problem in Florida caused
by, among other things, the secondary pharmaceutical drug wholesale
market. Governor Bush immediately petitioned the Florida Supreme Court
to convene a Statewide Grand Jury. The Seventeenth Statewide Grand Jury
was impaneled in early 2003 and, after weeks of testimony, the Grand
Jury issued the ``First Interim Report of The Seventeenth Statewide
Grand Jury'' in February 2003 (the ``Interim Report''). Copies have
been provided to the Members of the Subcommittee.
In the Interim Report, the Grand Jury made a number of significant
findings and proposed a comprehensive series of recommendations. The
Grand Jury expressed its concern for the high risk of adulterated and
counterfeited drugs entering the prescription drug supply of the State
of Florida. It heard testimony of the many ways by which these
adulterated drugs enter the stream of commerce and eventually end up on
the shelves of our pharmacies, clinics and hospitals. Some prescription
drugs were sold and resold 4 and 5 times, without any apparent
legitimate economic reason, before reaching the ultimate dispenser.
The Grand Jury also found that the ``pedigree papers,'' or paper
audit trails that track the drugs from manufacture to the point they
are dispensed, are the most effective way to prevent diverted,
adulterated or counterfeit drugs from entering the marketplace. Such
pedigree papers would allow each purchaser of prescription drugs to
determine who previously handled the drugs, and would thus serve to
greatly minimize the introduction of adulterated drugs into the
marketplace.
However, the Grand Jury found that the pedigree paper standing
alone was not enough. It stated, ``[w]e believe that Florida should
require pedigree papers to be delivered all the way from the
manufactures to dispensers and that all buyers be required to verify
pedigree papers through the exercise of due diligence.''
The Interim Report of Florida's Seventeenth Statewide Grand Jury
Report illustrates the potential danger to the citizens of Florida as
well as the citizens of this nation. The Grand Jury found that the
wholesale pharmaceutical industry in Florida has been corrupted by the
infiltration of a criminal element that is potentially reaping enormous
illicit gains while tainting the prescription drug supply. It is
important to note that we are not referring to the major prescription
drug wholesalers. Rather, Florida's concern arose with some of the
other 400 wholesalers licensed in the Florida and another 900
wholesalers licensed to ship prescription drugs into Florida. As the
Grand Jury noted, Florida's licensing requirements for prescription
drug wholesalers was inadequate.
The Grand Jury made several recommendations to address these
problems, including:
1. Create a standardized form of pedigree paper.
2. Require pedigree papers in every transaction from the manufacturer
to the end-user.
3. Create new crimes for offenses involving pedigree papers.
4. Increase the penalties for anyone who introduces adulterated or
counterfeit prescription drugs into the stream of commerce.
5. Clarify the definition of an authorized distributor of record.
6. Give the Florida Department of Health clear authority to shut down
wholesalers in violation of state statutes.
7. Give the Florida Department of Health clear authority to seize and
destroy drugs that pose a threat to the public health.
8. Increase the requirements to become a licensed pharmaceutical
wholesaler in Florida.
florida legislature
Based on this compelling report from the Seventeenth Statewide
Grand Jury, Florida Attorney General Charlie Crist immediately crafted
legislation to address the problem and enact the Grand Jury's
recommendations. The Florida Legislature responded quickly as well, and
many of the Grand Jury's recommendations were proposed in bills
sponsored by Florida Senators Durell Peaden and Walter ``Skip''
Campbell, together with Florida Representative Ed Homan. This led to
the passage of Senate Bill S 2312, the ``Prescription Drug Protection
Act,'' which was signed into law by Governor Bush on Friday, June 13,
2003. A copy of this bill may be found at MyFlorida.com. Further
information regarding the adulterated drug problem is addressed in a
report issued by the Office of Program Policy Analysis and Government
Accountability (OPPAGA). A copy of the OPPAGA report can be found at
www.oppaga.state.fl.us.
Among other things, Florida's new legislation requires or provides
for:
1. Vastly improved documentation of vital pharmaceuticals in order to
prevent their adulteration or counterfeiting.
2. Full pedigree papers on all prescription drugs by July 1, 2006.
3. Due diligence by those receiving pedigree papers.
4. Full authority by the Florida Department of Health to destroy
medication that has been adulterated or improperly stored.
5. Full authority by the Florida Department of Health to shut down
licensed wholesalers in violation of state statutes until the
deficiencies are corrected.
6. Increased criminal penalties for pedigree paper violations, as well
as other violations involving adulterated drugs.
7. Increased permitting requirements for drug wholesalers in Florida,
including raising bonding requirements and stricter background
checks.
In describing the new legislation, Florida Attorney General Charlie
Crist said, ``We now have new tools to combat this type of health care
fraud. Our most vulnerable citizens now have a place to go when money
overwhelms compassion.''
It is extremely important to note that this legislation was a
product of the cooperation between the Attorney General, law
enforcement, the Florida Legislature, the regulators at the Florida
Department of Health, and representatives of the legitimate
prescription drug wholesalers. The legislation imposes an immediate
requirement of pedigree papers on a select list of approximately 35
prescription drugs that have been shown by law enforcement to have been
counterfeited or mislabeled. (Should law enforcement detect criminal
activity in additional drugs, the legislation also provides for the
emergency listing of such new drugs on the full pedigree paper list by
the Florida Attorney General.) The pedigree paper requirement on the
remainder of all prescription drugs, regardless of whether they are
sold by authorized distributors of record, takes effect on July 1,
2006, in order to allow the pharmaceutical drug industry to develop
cost effective technology for the tracking of every prescription drug
shipment.
Attorney General Crist is proud of this accomplishment and is
hopeful that other states and the nation will consider taking similar
action. Prescription drugs are wholesaled and dispensed in every state
and often travel through many states before they arrive at their
ultimate destination. Therefore, an action or lack of action in one
state can easily affect the citizens of another state. That is why we
believe it so important to have uniform laws applied and enforced
nationwide.
By now you have probably heard the horror stories involving
counterfeit prescription drugs. The doctor who thought his son was
being injected with a growth hormone, when in reality he was getting
insulin. The young boy who thought he was receiving medicine to
increase his red blood cell count, but was actually receiving
counterfeit medication. More recently you may have heard of the
individuals placing tap water in vials of medication and then labeling
those vials with the name of a cancer medication. These despicable
counterfeiters are preying on people who already have suffered a great
misfortune.
Much of the illegal activity is centered on very expensive drugs
such as Epogen, Neupogen and Procrit, which are used in the treatment
of cancer or HIV. However, it should be noted that fraudulent activity
has also been detected in such lesser priced drugs like Lipitor and
Viagra. In our opinion, the list of prescription drugs that could
potentially be adulterated or counterfeited is quite large.
Below are the prescription drugs most commonly found to have been
either counterfeited or otherwise adulterated: Neupogen; Gammagard;
Epogen; Gammimune; Procrit; Oxycontin; Serostim; Viagra; Nutropin AQ;
Viramune; Panglobulin; Sustiva; Venoglobulin; Prevacid; Zyprexa;
Risperdal; Trizivir; Rocephin; Combivir; Avandia; Epivir; Lamisil;
Viracept; Cipro; Megace; Lipitor; Crixivan; Celebrex; Serostim; Mepron;
Diflucan; Aricept; Norvir; Zoloft; Zocor; Ziagen; Vioxx; Zithromax;
Albuterol; Ipatropium; Flonase; and Nizoral.
conclusion
The business of selling counterfeited and adulterated drugs is
booming. As with almost all criminal activity, the motive is money. In
the case of buying and reselling adulterated prescription drugs, the
money that can be made from illegal activity is staggering. For
example, a 2001 investigation discovered that South Florida criminals
had counterfeited Procrit, a drug used to boost the immune systems of
cancer and HIV/AIDS patients. The criminals re-labeled approximately
110,000 bottles of low strength Epogen to make the bottles appear to
contain high strength Procrit, a drug 20 times the strength of the
Epogen in the bottles. The criminals resold the re-labeled drugs into
the wholesale market with forged pedigree papers, passing the drugs
through four states. Investigators located 800 boxes of the counterfeit
Procrit at a large Texas wholesaler, which had unknowingly purchased
the counterfeit Procrit. In addition, investigators found some of the
product in Kentucky. In all, investigators recovered less that 10% of
the counterfeit Procrit. It is estimated that the criminals in the
chain may have made an illicit profit of approximately $46 million. As
prosecutors, we are now seeing a trend of prior illegal narcotic
traffickers entering into the prescription drug business. Unfortunately
for consumers, the drug traffickers have not had a moral enlightenment.
Rather, they now apply the tools of their illegal trade to the
prescription drug business.
Most of us probably know someone that takes one of the above-
mentioned prescription drugs. This, more than anything, illustrates the
need for Congressional action. Thank you for the opportunity to speak
to this sub-committee. I am happy to respond to any questions you might
have.
Additional reports filed by the State of Florida are available at:
http://www.oppaga.state.fl.us/reports/pdf/0318rpt.pdf
http://myfloridalegal.com/grandjury17.pdf
http://www.muflorida.com/includes/directoryshtml
Mr. Greenwood. Thank you, sir. Appreciate your testimony.
Mr. Jones, you are recognized for your testimony.
TESTIMONY OF GREGG JONES
Mr. Jones. Thank you Mr. Chairman and members of the
subcommittee for the chance to raise the awareness of problems
effecting the safety and the integrity of our Nation's drug
supply. Mr. Arias on my left and I gained much of our early
investigative experience working the cases that came before you
in 1986 to 1990.
I have submitted a written statement and will try to keep
my verbal statements brief.
Despite the shocking stories you will find our testimony, I
am confident that the United States drug supply remains
unequalled in safety and efficacy. A Florida task force has
been intensely and tirelessly investigating criminal
prescription drug diversion since late 2001. Local, State, and
Federal criminal law enforcement involvement has been essential
in unraveling and revealing a nationwide secondary wholesale
market that is riddled with corruption. The FDA's Office of
Criminal Investigation plays a vital role in our investigation.
This corruption is allowing the entry and counterfeit of
adulterated drugs into our drug supply and is damaging the
legitimate wholesale industry.
Our citizens and health care professionals have complete
confidence that their prescription drugs are safe and
effective. Unlike other countries around the world, our
citizens have never had to worry whether their drugs are
counterfeit or adulterated in anyway. Physicians place a blind
faith in ordering a drug for a patient and assume the potency
and the identity that they ordered. They have never had to
worry or, as you have indicated earlier, suspect that a cancer
patient who failed to respond to a treatment and it was the
result of the drug being counterfeit or subpotent.
When I tell pharmacists and physicians that increasingly
the numbers of drugs that they use don't travel in the
traditional route from manufacturer to wholesaler to pharmacy,
they are shocked. Prescription drug laws strive to maintain our
drugs in a closed distribution system that is licensed and
tightly regulated from manufacturer to drug wholesaler to
pharmacy to patient. In reality, major holes exist in the
integrity of our prescription drug delivery system allowing
large quantities of questionable drugs to enter our drug
supply. These include stolen and hijacked drugs including a
case we had from last year where HIV and transplant drugs
requiring refrigeration were hijacked. One Miami wholesaler was
offered the same drug stolen from their own warehouse.
Drugs bought off the street of Miami from victimized
Medicaid patients enter the drug supply. The pharmacy labels
are peeled off and removed with lighter fluid and heat guns.
Special low priced drugs sold to closed pharmacy and other
health care entities are still prevalent in the secondary
market. A good case of this are the doctors recently buying
excessively large amounts of the drug Lupon for office use at
reduced prices and selling these into the wholesale market.
Counterfeit drugs, both subpotent and even contaminated
with dangerous bacteria that is life threatening to immuno
compromised patients taking these drugs to save their life is
prevalent in our drug distribution system today. In the past 2
years 10 counterfeit drugs have moved through Florida valued at
tens of millions of dollars. It is gut wrenching to think about
the poor father, a physician no less, that injected his son
with counterfeit growth hormone 3 times before giving in to his
son's complaints about the inflammation and the burning from
the contaminated drug.
Some day many of us, if you have not already, will have to
sit in an oncologist's office and receive a devastating
diagnoses, maybe even for those you hold dearest; your spouse,
your parents, worst of all a child. Millions of questions will
flood your mind. The last one you need to worry about is
whether the drug that you are going to get to save your life,
such as the drugs that we have here, are counterfeit or
subpotent.
We also see drugs that are sold for export at reduced
prices and never exported. Last summer Mr. Arias stopped sales
in Miami of 50 pallets of Gammagard, Baxter's immune globulin
that was found stored in an unlicensed Miami food warehouse.
We are seeing ever increasingly drugs that have been
repackaged as in the case of the recent counterfeit Lipitor.
Every major wholesaler distributes large numbers of commonly
used repackaged drugs to pharmacies. This is an alarming new
avenue for counterfeit or smuggled foreign drugs to easily make
their way to the pharmacy shelf.
We have found the pedigree paper to be a valuable tool for
regulators and law enforcement. There is very little use of the
pedigree paper outside of our State and I have situations where
drugs are offered to customers with papers or without papers.
Drugs with pedigree papers costing more.
The PDMA became law in 1988 and today 15 years later, the
final rule on pedigree set to take effect in 1999 has been
stayed a fourth time. This subcommittee recognized the
importance of knowing a drug's origin 15 years ago as a tool
for wholesalers in the industry to identify where a drug has
been before they buy it. Your vision of the pedigree revealing
the true source of a drug has never been implemented
nationwide.
Florida's legislators recognized the value of the pedigree,
and in 2006 if a Florida wholesaler did not buy a bottle of a
drug directly from the manufacturer, they will need a pedigree
back to the manufacturer and must pass it all the way to the
pharmacy.
In September of this year a full pedigree will be required
for a list of 30 drugs that are commonly counterfeited and
adulterated.
Only when State laws and Federal laws alike are
strengthened will we have the tools necessary to fight this
problem. Regulators cannot convince law enforcement to
investigate or prosecutors to prosecute when violations are
only misdemeanors. We have worked with many States over the
past 2 years, and I am convinced that most States have these
problems and do not know it. Our counterparts are learning the
corrupt wholesaler is changing.
It is mindboggling to think about all the issues effecting
prescription drugs today. Patients that buy drugs from foreign
countries with or without a prescription, lifestyle drugs
purchased with a questionnaire over the Internet or just buying
drugs off of the street. These patients are taking a conscious
risk.
The laws that we are addressing today effect the mainstream
drug supply of our country and are designed to work behind the
scenes preventing problems so that physicians, pharmacists and
citizens will have complete trust that the drugs used to treat
our sickest from cancer patients to our children with ear
infections can have complete confidence.
Thank you for the opportunity to discuss these important
issues effecting the safety and the integrity of not only
Florida, but our Nation's drug supply.
[The prepared statement of Gregg Jones follows:]
Prepared Statement of Gregg Jones, Pharmaceutical Program Manager,
State of Florida
Mr. Chairman and Members of the Subcommittee, I am Gregg Jones,
Pharmaceutical Program Manager for the Bureau of Statewide
Pharmaceutical Services, Florida Department of Health (FLDOH) and
registered pharmacist. I have 18 years of drug regulatory experience
with Florida's Department of Health. Also present representing
Florida's Department of Health is Mr. Cesar Arias, Drug Inspector
Supervisor in South Florida. Together Mr. Arias and I represent 34
years drug diversion investigative experience with the FLDOH. We both
gained much of our early investigative experience working in Miami on
many of the cases and issues that came before this committee from 1986
to 1990.
Thank you for the opportunity to discuss the issues affecting the
safety and integrity of our nation's prescription drug supply. Despite
the concerns that we are raising today, I am confident that the United
States drug supply remains unequaled in safety and efficacy. We will
share problems being faced in Florida with counterfeit and adulterated
drugs entering the wholesale drug market, the schemes, the magnitude of
the problem, and efforts to fight the problem.
The Bureau of Statewide Pharmaceutical Services is a part of the
Florida Department of Health, a public health agency, whose mission is
to promote and protect the health and safety of all people in Florida
through the delivery of quality public health services and promotion of
health care standards. The Bureau is responsible for enforcing
Florida's Drug and Cosmetic Act that is modeled after the federal Food,
Drug and Cosmetic Act. We license over 4500 companies, approximately
1000 out of state. We have a broad range of regulatory responsibilities
that include the licensure and inspection of Drug, Device, and Cosmetic
manufacturers, including compressed medical gas manufacturers,
dispensers of medical oxygen for home use, veterinary drug
distributors, drug return companies, and drug destruction companies. We
have a small administrative staff and a total of nine drug inspectors
all of whom are registered pharmacists. Our inspectors are not sworn
law enforcement officers. All actions taken by the Bureau are done
under Florida's Administrative Procedures Act, although we are
increasingly making referrals of violations to law enforcement agencies
and work very closely with these agencies in the investigation and
prosecution process.
Florida currently has approximately 435 licensed drug wholesalers,
including brokers that do not take possession of drugs. We also license
approximately 975 out-of-state drug wholesalers that sell prescription
drugs into the State of Florida. The 975 out-of-state drug wholesalers
are made up of many drug manufacturers and multiple locations of major
wholesalers.
wholesale industry
The number of small secondary drug wholesalers who typically sell
drugs among themselves is increasing. The drugs they sell appear to
travel from secondary wholesaler to secondary wholesaler to secondary
wholesaler, until ultimately they are sold to a primary wholesaler, or
directly to a pharmacy. Many of the small secondary drug wholesalers
never handle products and only generate elaborate paper trails, their
existence only serving to hide the original source of the drugs. State
laws vary widely as do enforcement actions, and minimal penalties allow
the entry of counterfeit and adulterated drugs into our drug supply. We
are working closely with other states and we know that our counterparts
are also concerned about the increase in small drug wholesalers
entering tainted drugs into the national drug supply through their
states.
A Florida task force has been intensely and tirelessly
investigating the criminal side of Florida prescription drug diversion
since late 2001. The task force includes members from the Miami-Dade
Police Department, the Attorney General's Offices of Statewide
Prosecution and Medicaid Fraud, and the Florida Departments of Law
Enforcement and Health. Criminal law enforcement involvement has been
essential in unraveling and revealing a nationwide secondary drug
wholesale market riddled with corruption drugs of questionable
integrity.
The prescription drug distribution system in this country is
complex. Ideally the prescription drug distribution system of the
United States would be a closed system of distribution from
manufacturer to wholesaler to dispenser to the patient. The most
recognized closed distribution system for drugs is found with
controlled substances. Every unit of a controlled substance is tracked
from the manufacturer to the distributor and to the dispenser through a
uniform federal system administered by the Drug Enforcement
Administration. Many states expand on this tracking and some monitor
information on the flow the actual prescriptions of the most abused
controlled substance. This system has been continually strengthened for
many decades.
The U.S. prescription drug industry is one of the most tightly
regulated and monitored industries in the world. Oversight and
licensing is extensive from drug development, approval, manufacturing,
and distribution, to medical prescribing, administering, and pharmacy
dispensing. Unlike controlled substances, however, the history of drug
wholesale regulation is very short. When the 1987 Prescription Drug
Marketing Act was being drafted, a little over 30 states licensed their
wholesalers. It has only been 11 years since all states were required
to license their drug wholesalers in accordance with federal guidelines
established by the Food and Drug Administration. A huge gap existed in
drug protection between the time a drug left the manufacturer and
arrived at the pharmacy, hospital, or doctor's office. These same
concerns remain today, fifteen years after the passage of the
Prescription Drug Marketing Act. A crime is committed every time a
diverted drug enters the system through an unscrupulous wholesaler, yet
little threat of punishment, and the lure of millions of dollars in
profits, continues to fuel the problem nationwide. A diverted drug is
one that has left the regulatory channels of licensed wholesalers,
thereby bypassing health authority oversight.
chronology
Events leading to the present situation in Florida:
1992--Florida's Legislature as part of complying with FDA
guidelines on licensure of drug wholesalers required the pedigree
paper, once created to go back to the manufacturer and be passed on,
even by an authorized distributor of record once it was created. The
intent was to prevent an authorized distributor of record from not
passing a pedigree paper when it purchased a drug from a non-authorized
distributor of record.
Mid 90's--FLDOH began warning and educating drug wholesalers that
did not provide pedigrees of drugs that were purchased from non-
authorized distributors of record.
Late 90's--FLDOH began seeing increases in the number of small
wholesalers whose primary function was dealing in expensive brand name
medications that were purchased from licensed wholesalers and resold to
licensed wholesalers. In conjunction with the City of Miami Police
Department, the Attorney General's office of Medicaid Fraud, and FDA's
Office of Criminal Investigation among other local, state, and federal
law enforcement agencies FLDOH investigated the proliferation of drugs
dispensed to Medicaid patients being sold to ``Street Brokers'' and
then sold back to pharmacies.
2001--FLDOH began verifying pedigree papers finding large numbers
to be falsified. Counterfeit drugs began to proliferate. With the
assistance of FDA's South Florida Office of Criminal Investigation,
FLDOH sought the assistance of Florida's Attorney General's Office of
Statewide Prosecution in the case of a small secondary wholesaler
dealing in a counterfeit of the drug Serostim.
Late 2001--FLDOH began working with the Florida Department of Law
Enforcement investigating the sources of drugs in both licensed and
unlicensed drug wholesale operations. This investigation rapidly
developed into a task force composed of the Miami-Dade Police
Department, the Attorney General's Offices of Statewide Prosecution and
Medicaid Fraud, the Florida Departments of Law Enforcement and Health.
In November of 2001 the FLDOH sent a letter to every licensed drug
wholesaler in the format of Q and A regarding the pedigree paper due to
the increase in counterfeit and adulterated drugs entering the market
with false pedigree papers or no pedigree papers at all. The industry
was informed that the FLDOH had begun to initiate action where
pedigrees were at issue. In short it said that Florida's pedigree
requirement was stricter than the federal law requiring:
1. PEDIGREES TO GO BACK TO THE MANUFACTURER
2. PEDIGREES MUST BE PASSED ON EVEN BY AN AUTHORIZED DISTRIBUTOR
ONCE CREATED.
3. AUTHORIZED DISTRIBUTOR STATUS IS TRANSACTION (BOTTLE) SPECIFIC
(If you purchased a bottle of a Rx Drug from any one other than direct
from the Manufacturer, you must pass on a Pedigree showing every prior
sale of that bottle.)
The drug wholesale industry responded with serious concerns about
FLDOH's interpretation of the state law and requested a delay in the
implementation of FLDOH's interpretation of the pedigree from the
Secretary of Florida's Department of Health, John Agwunobi, M.D. After
meeting with industry, Dr. Agwunobi, announced the formation of an Ad
Hoc committee composed of representatives from industry and government.
This committee met monthly for 7 months. Dr. Agwunobi charged the
committee with presenting recommendations to resolve the pedigree paper
dilemma that satisfy the department's public health mission to protect
the public from misbranded and adulterated drugs, while attempting to
lessen the regulatory cost of compliance on the regulated industry.
This charge included empowering the department by providing
investigative tools to trace the source of drugs that are counterfeit
or that have been diverted from regulated distribution channels so as
to identify and prosecute the person or persons putting these drugs
into the marketplace. This committee recommended that licensing
requirements be strengthened, penalties be increased, and a full
pedigree be enforced for certain high cost drugs.
In December of 2002, due to increasing concerns over the safety and
security of Florida's prescription drugs, Governor Jeb Bush petitioned
Florida's Supreme Court to impanel a Grand Jury to investigate
counterfeit and adulterated drugs entering Florida's drug supply.
In February of 2003 the Seventeenth Statewide Grand Jury of Florida
issued its First Interim Report. It is an understatement to say that
the findings were shocking. The report speaks for itself and can found
at http://myfloridalegal.com/grandjury17.pdf.
Also in late February of 2003, Florida's Office of Program Policy
Analysis and Government Accountability (an office of the Florida
Legislature) released a report on its investigation of counterfeit and
diverted drugs within the prescription drug wholesale market.
Essentially both entities made the following recommendations.
1. Clarify state law related to pedigree papers and direct the
department to enforce the state law.
``Requiring pedigree papers to accurately trace drug sales
histories back to the manufacturer is vital to ensuring the integrity
of Florida's prescription drug market.'' ``pedigree papers are
necessary for investigators to trace counterfeit and diverted drugs
back to their source.''
2. Authorize the department to strengthen the permitting process.
3. Authorize the department to levy increased administrative
penalties and fines.
4. Consider increasing criminal penalties for prohibited acts
involving prescription drugs.
In May of 2003, the Florida Legislature passed the Prescription
Drug Protection Act, a comprehensive rewrite of Florida's prescription
drug laws aimed at protecting Florida's citizens from counterfeit drugs
and drugs adulterated by diversion. Governor Bush signed this law into
effect on June 13, 2003, less than two weeks ago. At the signing
Governor Bush stated, ``The bill I am signing today supports our
efforts to ensure that when our citizens fill their prescriptions, they
get what their doctor ordered.'' Florida Attorney General Charlie Crist
said ``It is hard to imagine a more heinous individual than one who is
willing to profit from the suffering of others.''
The new law raises the standard for wholesalers by adopting new and
more strict requirements for permitting wholesalers including the
following provisions:
<bullet> Raises bond requirements to $100,000
<bullet> Requires stricter background checks
<bullet> Requires every wholesaler to designate a contact person
responsible for all transactions enhancing accountability for
the drugs wholesalers distribute.
<bullet> It strengthens criminal laws by creating new felony crimes
penalizing anyone who tries to obtain or sell drugs without
proven history or ``pedigree papers.'' It also creates more
serious felonies for forging drug labels, prescription drug
trafficking of more than $25,000 worth of prescription drugs
and the sale of prescription drugs that result in injury or
death to a person.
<bullet> It requires wholesalers to authenticate prior transactions on
the pedigree papers.
<bullet> The law requires that by 2006, all drugs (each bottle) not
purchased from a manufacturer, must have a pedigree that goes
back to the manufacturer, and is passed all the way to the
retailer by anyone that receives a pedigree. It eliminates the
ambiguity of the industry's current interpretation of
Authorized Distributor of Record. In the interim, it allows the
FLDOH to create a list of specified drugs for which full
pedigree requirements must be met. The full pedigree
requirement will go into effect for a list of 30 drugs in
September of this year.
<bullet> Increases regulatory authority of the Department of Health by
allowing the department to shut down wholesalers operating in
violation of Department of Health rules and to seize and
destroy adulterated drugs posing an imminent danger to the
public.
problems observed in the wholesale industry
I am sure there are legitimate drugs in the secondary market but
many of the drugs we see moving among small wholesalers are of
questionable origin. These drugs all enter at some weak point in the
system, usually a small drug wholesaler.
Special priced drugs from Health Care Entities
Drugs sold at reduced price to closed-door pharmacies, nursing home
pharmacies, and physicians represent a large amount of drugs in the
secondary market. These drugs are often looked on as not presenting a
public health threat because the drugs are good, only being diverted
from their intended channel of trade. However, a fraud is being
committed against the manufacturer, and both state a federal drug
distribution laws are being violated. The pathways these drugs take
into the mainstream wholesale market punch holes in the integrity of
our closed drug distribution system and allow the entry of drugs from
every conceivable scheme of diversion.
The drug Lupron is a good example. It is sold to physicians cheaper
than to drug wholesalers. Physicians all over the country have been
buying excessive amounts of the drug, in some cases obtaining drug
wholesale licenses to sell these products back into the market. Others
simply sell the drugs with no license to drug wholesalers or unlicensed
individuals willing to violate both state and federal law.
Stolen Drugs
Within the last 2 years we have seen the same drugs stolen from one
wholesaler sold back to them. A trailer containing $3,000,000 worth of
drugs was hijacked in route to South Florida from the wholesaler
Cardinal and the entire contents removed. A trailer hijacked in Miami
last fall contained HIV and Transplant drugs requiring refrigeration.
Drugs Intended for Export
Drugs are often sent to Miami freight forwarders for shipment
overseas. These are most often drugs shipped form the manufacturer to a
location of their customer who has represented themselves to be a
charitable group or agent of a foreign account. A couple of years ago a
generic drug sold to a South American hospital at 10% of the domestic
price was shipped to Miami for export but within a week the drug showed
up in a large Southeastern U.S. wholesaler. Last summer 50 pallets of
Gammagard, Baxter's immune globulin was shipped to a freight forwarder
in Miami for export. The drug was transferred to an unlicensed food
storage warehouse where it stayed for several months while small
quantities were diverted to Miami wholesalers. One of the wholesalers
was actually an authorized distributor of Baxter, thus was not
producing a pedigree when selling the product.
Repackaged Adulterated/Counterfeit/Foreign Unapproved Drugs
The recent case of counterfeit Lipitor being repackaged by MED-PRO,
Inc., of Lexington, NE illustrates this alarming new avenue for
substandard drugs to enter the market and easily make their way to
pharmacies, nursing homes and other institutions. It is a common
practice for drugs to be repackaged from large containers into units
convenient for dispensing such as 30's 60's and 90's for sale to
pharmacies by all levels of the wholesale market. Some drugs are
repackaged in unit dose packages for sale to nursing homes or other
institutions. A recent case in Florida involved a smuggled a foreign
drug being repackaged into unit dose. In our case, the drug was
purchased from a licensed wholesaler, however no pedigree was issued.
The paperwork, which is the only thing left behind after a sale, did
not identify the foreign drug. This scheme has a huge potential for
entering tainted drugs into the market because the original packaging
is lost. (Florida's new law will require repackagers to provide
pedigree papers.)
Medicaid Drugs diverted from patients into the wholesale market
Sophisticated operations buy drugs from patients and the drugs are
resold into the wholesale market. We are certain that this form of
diversion is not unique to Florida and is happening in other states.
The obvious public health threat is the lack of proper handling,
especially for refrigerated items.
Counterfeit Drugs
Between 1985 and 2001 only 5 counterfeit drug cases were
investigated by Florida's Department of Health. During the past 2
years, ten counterfeit drugs have moved through Florida drug
wholesalers valued in tens of millions of dollars. With every new case
we are shocked at the level of sophistication in the reproduction of
labels, seals, and containers. The Serono product Serostim has been
counterfeited to the point that the company has abandoned the drug
wholesale system to deliver its product and now ships only directly to
certain pharmacies authorized to dispense their product. In several of
our cases the pedigree paper played a critical role.
The number of smaller wholesalers selling directly to pharmacies
and hospitals is increasing. They send emails, faxes, and sell online
with daily specials. They are finding a new outlet for diverted drugs
without having to sell them into the mainstream wholesale market. No
pedigree is provided and the pharmacist or physician has no clue where
the drugs have been. This is why the pedigree should go to the retail
level, as required by the Florida legislation, effective 2006.
We have found that the pedigree paper is a useful tool in
uncovering counterfeit drugs for regulators, law enforcement, and
equally if not more important in terms of prevention, the drug
wholesalers themselves. Both Federal and Florida law requires that the
pedigree be passed prior to the sale. Wholesalers could use the
pedigree to insure the quality of the drugs they purchase. Our findings
however, are more consistent with the Florida Grand Jury when they
reported ``It's not surprising to us that no one checks the pedigree
papers because they simply don't want to know the true background of
what they're buying. This is nothing less than a blatant example of
willful blindness.'' There is very little use of the pedigree paper
outside our state, and we have seen situations where drugs are offered
to customers ``with papers'' or ``without papers'' drugs with pedigree
papers costing more.
conclusion
Florida will begin enforcing pedigree requirements that are bottle
specific (must go back to the manufacturer), be passed on by everyone,
regardless of authorized distributor status once a pedigree is created,
for a list of 30 drugs, beginning in September of 2003. In 2006 all
pedigrees will be furnished to the pharmacy. While the future is bright
for technological advances like computer chips the size of grains of
sand storing information on a label as complete as the serial number of
the bottle, this technology is years away and we can not delay the
protection of our drug supply any longer. The PDMA became law in 1988
and today, 15 years later, the final rule on pedigrees, set to take
effect in 1999, has been stayed for a fourth time. This is a valuable
tool that the Florida legislature recognized should be utilized with
it's original intent, to simply reveal the true source of a drug.
In 1987 this committee found that ``American consumers cannot
purchase prescription drugs with the certainty that the products are
safe and effective'' and ``the integrity of the distribution system for
prescription drugs is insufficient to prevent the introduction and
eventual retail sale of substandard, ineffective, or even counterfeit
drugs.'' As evidenced by the problems we have shared here, these same
concerns still remain today, fifteen years after the passage of the
Prescription Drug Marketing Act. Only when State laws and federal laws
alike are strengthened will we have the tools necessary to fight this
problem. Tougher licensing requirements and penalties are needed for
perpetrators of the unconscionable crime of counterfeiting drugs used
by the sickest and most vulnerable patients.
The environment for corrupt prescription drug wholesalers is
changing in Florida. A tremendous effort is being made by our Governor,
legislature, health officials, law enforcement, and the regulated
wholesale drug industry, working together to identify and remedy the
problems in our drug delivery system and restore trust to our
healthcare professionals and our citizens. We have a responsibility to
do a better job of insuring the safety and efficacy of the drugs on
which we depend to improve the quality, extend, and even save the lives
of our citizens.
Thank you for this opportunity to discuss these important issues
affecting not only Florida's, but also our nation's prescription drug
supply. I would be happy to answer any questions.
Mr. Greenwood. Thank you, Mr. Jones.
Mr. Arias?
TESTIMONY OF CESAR ARIAS
Mr. Arias. Good afternoon, Mr. Chairman. I want to thank
the committee for the honor to speak to you about prescription
drug diversion activities and counterfeit drugs, which have
recently been uncovered in Florida.
I'm a registered pharmacist employed by the State of
Florida Department of Health as a Drug Inspector Supervisor in
the Miami area for 16 years. Our inspector and I in South
Florida have witnessed the growth of pharmaceutical drug
diversion over the span of my career, and increased drug
counterfeiting over the last 2 years.
When I started the job, the primary force behind
pharmaceutical drug diversion was the different prices charged
for the same drug by the pharmaceutical manufacturers to the
different classes of trade. That is still a major cause for
diversion, but today there are many other sources for diverted
drugs including foreign drugs, stolen drugs, drugs purchased
from unlicensed street brokers, and this includes counterfeit
drugs.
The street broker is an individual who is unregulated and
has no clue how to handle or store these pharmaceuticals which
are temperature-sensitive products. The integrity of the drugs
acquired through these channels is clearly a public health
concern because there is no guarantee as to the drug's quality
or stability. There is no way to know under what conditions
these products have been stored or handled.
These brokers or illegal distributors funnel huge amounts
of diverted drugs from the streets of South Florida back into
the drug distribution system. Not just in Florida, but also
throughout the Nation.
Our office was involved in one investigation involving
drugs purchased off the street where a wholesaler in Ft.
Lauderdale sold over $1 million in very expensive drugs to
treat HIV and cancer. And these were sold through some of the
largest wholesalers in the Nation in a 6 month period. All of
the drugs had come from the streets of Miami via 2 unlicensed
street brokers who would store these temperature sensitive
injectable drugs requiring refrigeration at above 90 degrees,
for hours at a time, in the trunks of their vehicles.
Our office is currently working cases as part of a task
force, which is overseen by the Attorney General's Office of
Statewide Prosecution, for which Mr. Penezik works. The task
force includes the Florida Department of Law Enforcement, the
Medicaid Fraud Control Unit of the Attorney General's Office,
the Miami-Dade Police Department and the Florida Department of
Health. During the last year and a half, the task force's
efforts have resulted in identifying 11 different
organizations, which the task force is currently investigating.
These organizations, or cells, are responsible for the
diversion of an estimated $250 million a year in
pharmaceuticals that are obtained from the streets of Florida.
These cases involved numerous types of prescription drug
diversion including cargo thefts, burglaries, smuggling of
foreign made drugs and the diversion of specially priced drugs
sold to specialty physicians.
Some of these cells have perfected schemes, which involve
the opening of shell corporations in other States. These
companies obtain wholesale licenses for the sole purpose of
creating false pedigree papers. The shell companies allow these
folks to fool other States' officials and the ultimate
customers to believe that the drugs have been obtained from
legitimate wholesalers when in fact the drugs come from the
streets of South Florida.
It was through the efforts of the task force that the
presence of counterfeit Epogen and Procrit, was detected in the
Nation's drug supply. This was the direct result of an
undercover purchase of 100 boxes of counterfeit Epogen by a
Florida Department of Law Enforcement agent. The importance of
the pedigree was made evident in this case. When the purchase
of the Epogen was made, the investigators had no clue, even
after examining the boxes, that the injectable drugs or
products were counterfeit. What we knew was that the pedigree
was false and therefore we had diverted product. Only after we
submitted some of the boxes to the manufacturer and to the FDA
did we learn that they were counterfeit. Up until that moment
in April 2002 neither the FDA nor Amgen, the manufacturer, were
aware that there was a problem of this sort with their product.
Subsequently our investigation discovered that up to
110,000 doses of Epogen 2000 unit product strength had been
relabeled and converted to Epogen and/or Procrit 40,000 units
strength. In effect, roughly about 25,000 patients received a 1
month supply of diluted drugs, about \1/20\th of the required
strength or the actual labeled strength.
Due to Florida's intervention and the information sharing
with the FDA's Office of Criminal Investigations and the Texas
authorities seized large amounts of counterfeit Epogen at a
national wholesaler in Kentucky, and counterfeit Procrit at a
second national wholesaler in Texas, respectively.
Through the efforts of the task force, we have been able to
shut down about a dozen wholesalers in Florida and have alerted
various other States to assist them in shutting down others in
their respective States. The task force, through the efforts of
FDLE, has shared information with FDA's Office of Criminal
Investigation, which have followed up in other States and
conducted search warrants, collected evidence to make criminal
cases. It was through the evidence collected by the task force
and shared with the Office of Criminal Investigation for FDA
that led to the recent seizures and recalls made of the
counterfeit Lipitor found in a Nebraska re-packer and a Kansas
City wholesaler.
In each instance in which counterfeits or diverted drugs
have made their way into the mainstream distribution system it
has been through a dishonest wholesaler. Once the drugs enter
the system they can end up in any pharmacy in the Nation. That
is why there is no patient in the Nation that can know with 100
percent certainty that the drugs they are getting are what they
are purported to be or if they are, that they have not been in
the trunk of someone's car, or sitting in a hot warehouse or a
crackhouse in South Florida.
The work of the task force has exposed the tremendous
problem that we are experiencing in Florida with drug diversion
and counterfeiting. The law recently signed by Governor Jeb
Bush, Florida's Prescription Drug Protection Act increases
penalties, requires a new standard for wholesale licensing, and
strengthens the pedigree paper requirement. People throughout
Florida rely on the safety of our pharmaceutical supplies, and
our efforts to protect them. Hopefully, Florida's new law and
the work of our task force will be a model for the rest of the
Nation.
Thank you for allowing me to bring this matter to your
attention.
[The prepared statement of Cesar Arias follows:]
Prepared Statement of Cesar Arias, Florida Department of Health
Good morning my name is Cesar Arias. I want to thank the committee
for the honor to speak about prescription drug diversion activities and
counterfeit drugs, which were recently uncovered in Florida. As a
registered pharmacist employed by the State of Florida Department of
Health as a Drug Inspector Supervisor in the Miami area for 16 years, I
have witnessed the growth of pharmaceutical drug diversion over the
span of my career, and increased drug counterfeiting over the last two
years.
This is not the same job I had 16 years ago. When I started on the
job, the primary force behind pharmaceutical drug diversion was the
different prices charged for the same drug by the pharmaceutical
manufacturers to the different classes of trade. That is still a major
cause for diversion, but today there are many other sources for
diverted drugs including foreign drugs, stolen drugs, drugs purchased
from street brokers, and even counterfeit drugs.
The street broker is an unregulated individual, who has no clue how
to handle or store these temperature-sensitive products. The integrity
of the drugs acquired through these channels is clearly a public health
concern because there is no guarantee as to the drug's quality or
stability. There is no way to know under what conditions they have been
stored or handled.
These brokers funnel huge amounts of diverted drugs from the
streets of South Florida back into the drug distribution system(not
just in Florida, but also throughout the nation. I was involved in one
investigation involving drugs purchased off the streets where a
wholesaler in Ft. Lauderdale sold over $1 million in Neupogen for
treating HIV to one of the largest wholesaler in the nation in a six-
month period. All of the Neupogen had come from the streets of Miami
via two unlicensed street brokers who would store this temperature
sensitive injectable drug(requiring refrigeration(at above 90 degrees,
for hours at a time, in the trunks of their cars.
Our office is currently working cases as part of a Task Force,
which is overseen by the Attorney General's Office of Statewide
Prosecution. The Task Force includes the Florida Department of Law
Enforcement (FDLE), Medicaid Fraud Control Unit of the Attorney
General's Office and the Miami-Dade Police Department. During the last
year and a half, the task forces joint efforts have resulted in
identifying 11 different organizations, which the Task Force is
currently investigating. These organizations, or cells, are responsible
for the diversion of an estimated $250 million a year in
pharmaceuticals just in Florida. These cases involved numerous types of
prescription drug diversion including cargo thefts, burglaries,
smuggling of foreign made drugs and the diversion of specially priced
drugs sold to specialty physicians.
Some of these cells have perfected schemes, which involve the
opening of shell corporations in other states (about 20). These
companies obtain wholesale licenses for the sole purpose of creating
false pedigree papers. The shell companies allow these folks to fool
other states' officials and the ultimate customers to believe that the
drugs have been obtained from legitimate wholesalers when in fact the
drugs come from the streets of South Florida.
It was through the efforts of the Task Force that the presence of
counterfeit Epogen and Procrit, was detected in the nations drug
supply. This was the direct result of an undercover purchase of 100
boxes of counterfeit Epogen by a Florida Department of Law Enforcement
agent. The importance of the pedigree was made evident in this case.
When the purchase of the Epogen was made, the investigators had no
clue, even after examining the boxes, that the injectable products were
counterfeit. What we knew was that the pedigree was false and therefore
we had diverted product. Only after we submitted some of the boxes to
the manufacturer and FDA did we learn that they were counterfeit. Up
until that moment in April of 2002 neither the FDA nor Amgen, the
manufacturer were aware that there was a problem with counterfeit
Epogen.
Subsequently our investigation discovered that up to 110,000 doses
of Epogen 2000 Units strength had been relabeled and converted to
Epogen and Procrit 40,000 Units strength. In effect, 25,000 patients
received a one-month supply of diluted drugs(1/20th of the required
strength. Due to Florida's intervention and information sharing, the
FDA's Office of Criminal Investigations (OCI) and the Texas authorities
seized large amounts of counterfeit Epogen at a national wholesaler in
Kentucky, and Procrit at a second national wholesaler respectively.
Through the efforts of the Task Force, we have been able to shut
down about a dozen wholesalers in Florida and have alerted various
other states to assist them in shutting down others. The Task
Force(through the efforts of FDLE(has shared information with FDA's
OCI, which have followed up in other states and conducted search
warrants, collecting evidence to make criminal cases. It was through
the evidence collected by the Task Force and shared with OCI that led
to the recent seizures and recalls made of the counterfeit Lipitor
found in a Nebraska re-packer (Med-Pro) and a Kansas City wholesaler
(Albers Medical).
In each instance in which counterfeits or diverted drugs have made
their way into the mainstream distribution system it has been through a
dishonest wholesaler. Once the drugs enter the system they can end up
in any pharmacy in the nation. That is why there is no patient in the
nation that can know with 100% certainty that the drugs they are
getting are what they are purported to be(or if they are(that they have
not been in the trunk of someone's car, or sitting in a hot warehouse
or a crackhouse in South Florida.
The work of the Task Force has exposed the tremendous problem that
we are experiencing in Florida with drug diversion and counterfeiting.
The law recently signed by Governor Jeb Bush, Florida's Prescription
Drug Protection Act increases penalties, requires a new standard for
wholesale licensing, strengthens the pedigree paper requirement. People
throughout Florida rely on the safety of our pharmaceutical supplies,
and our efforts to protect them. Hopefully, Florida's efforts will be a
model for the rest of the nation.
Thank you for allowing me to bring this matter to your attention.
Mr. Greenwood. Thank you, Mr. Arias.
And the Chair recognizes himself for 8 minutes for inquiry.
Let me get right back to you, Mr. Arias. You have described
in some detail how law enforcement officials have found the
counterfeit products at the user end and even at the wholesale
end. Have you been able to get to the manufacturing sources?
Have you been able to find where these counterfeit drugs are
actually being produced?
Mr. Arias. We are actively investigating a case right now,
Mr. Chairman.
Mr. Greenwood. Okay. And as we look at some of these
counterfeit products, the packaging, I mean it is so skillfully
done. It sort of raises a question in my mind as to how this
can be done by criminal elements. For instance, it seems to me
that most products have a fairly unique plastic bottle, or a
tube or a box. And so they either reproduced or purchased from
the same producer, I would think. And I am wondering what you
have learned about that and has anybody gone to the people who
produce the packaging, the raw plastic bottles and so forth and
said are you selling this to anybody besides the actual
legitimate manufacturer?
Mr. Arias. Well, we have alerted FDA about that issue as
well as the recent case in which they made the three arrests in
Miami, and the people have pled guilty. The individual
purchased the stoppers and the crimps, this metal crimp around
here. They bought that on the Internet. So FDA has been made
aware of that situation.
Mr. Greenwood. So you can buy stoppers and crimps like that
on the Internet?
Mr. Arias. That is what we learned from this individual.
Mr. Greenwood. Do any legitimate manufacturers acquire
their stoppers and crimps on the Internet? It would seem to me
there would probably be more conventional paths for those
things to go in, that it seems to be suspect automatically if
it is being sold on the Internet?
Mr. Arias. I am not the expert on that issue. But I imagine
there are more conventional ways of ordering these.
Mr. Greenwood. It would seem to be a potentially very
fruitful way to investigate these entities if you went to the
sources of the packaging materials. Because I have a hard time
imagining, although it may be possible, that these guys are
actually not only remanufacturing or manufacturing the drug
from scratch, but they are also remanufacturing the containers
and the packaging from scratch.
Mr. Arias. Well, the individuals that were arrested and
have pled guilty were putting the whole thing together. They
were buying the empty vials, cleaning them out and then putting
tap water and, you know, ordering like I said the crimps and
the stoppers from the Internet and putting it together with
some crude machinery that they created.
There is other individuals that are more ingenious in that
they are converting a 2,000 unit strength, which is the weakest
strength of these products, removing the little labels from the
vials and putting a 40,000 unit label. In essence they are
converting a $250 product into $4500. And if they were to test
for this protein, qualitatively it would be there.
Quantitatively it won't be there, but qualitatively it would be
there. So it was a much more devious effort, and that is why a
large amount of that product never was detected.
Mr. Greenwood. Either under your new law or existing State
and Federal laws, what kind of penalties are you able to exact
for that kind of offense?
Mr. Penezik. Under the new law for counterfeiting a
prescription drug it will be a first degree felony.
Mr. Greenwood. And that would----
Mr. Penezik. In the State of Florida that is punishable by
30 years in prison.
Mr. Greenwood. Okay. Now, who has gone to jail so far in
Florida as a result of this? The new law is too brand new, you
haven't completed any prosecutions under the new law?
Mr. Penezik. Mr. Chairman, it does not go into effect until
July 1.
Mr. Greenwood. Okay.
Mr. Penezik. We have prosecuted people under our old law
and people have gone to court and have pled guilty and are
being punishing for----
Mr. Greenwood. Are we getting jail or they getting
probation for that?
Mr. Penezik. Some parts of that I would respectfully wish
not to discuss because it is part of an ongoing investigation.
But people, they are being punished. There are individuals that
will be to prison because of their conduct.
Mr. Greenwood. Okay. Very well.
Ms. Arias, could you expand a little bit more about the
case of, is it Nuepogen?
Mr. Arias. Correct.
Mr. Greenwood. That is not the one you were just holding up
or is it?
Mr. Arias. The Nuepogen was the case in, I believe it was
in 2000.
Mr. Greenwood. That is the HIV drug?
Mr. Arias. It is used to elevate the white blood cell
count. And so when you are immune comprised, they treat you
with this product to build your defenses.
Mr. Greenwood. Now, you said that the wholesaler was able
to get this from street brokers and then sell it to one of the
largest wholesalers in the Nation, is that right?
Mr. Arias. Mr. Chairman, all it takes it one dirty
wholesaler to close their eyes or be willfully negligent, and
that is all it takes. Once that happens, these people have a
license and the next guy up the line, he is buying from a
licensed entity. So unless the pedigree is confirmed, and
that's why the pedigree is such an important tool for
discovering diverted and counterfeited products.
Mr. Greenwood. And what is a street wholesaler? What does
that mean to you?
Mr. Arias. When I refer to the street brokers----
Mr. Greenwood. Street brokers.
Mr. Arias. [continuing] these are people that are in the
business of buying pharmaceuticals that are either stolen from
hospitals or pharmacies, or they are paid for by third party
insurance. And those products make their way back into the
system.
Mr. Greenwood. Have you discovered any evidence, any of
you, that products are being diverted from the actual
manufacturer? IT would seem to be one relatively easy way to do
this would be if you work in some warehouse or some
manufacturing facility for a totally legitimate manufacturer
that where you are moving fork lifts or moving pallets with
great quantities of drugs to throw some of that in the trunk of
your car and then go ahead and alter the labeling or do
whatever you want to maximize the profit? Are you finding that
to be the case?
Mr. Arias. Well, Florida does not have that many
manufacturers, although just the other day I had a conversation
with a Miami-Dade police officer who called me that they had
gotten a complaint or an allegation that a truck was going to
get hijacked. And so nothing happened. They were monitoring it.
But in Florida we do not have that many manufactures. So the
thefts would be from a wholesale establishment or a pharmacy,
or that type of thing. We do not have that many manufacturers,
per se.
Mr. Greenwood. Final question. I have been a legislator now
for 22 years or something like that. And I know full well from
all of that experience that what ends up on the President's
desk or the Governor's desk is not necessarily what I started
out asking for and compromises are made along the way. Were
there stronger tools for law enforcement that you sought from
the State legislature in Florida that you did not quite get?
Mr. Penezik. Yes.
Mr. Greenwood. What did you have to peel off in the
negotiation process? What do you wish you had?
Mr. Penezik. Well, I would just qualify the answer with
saying I was not in Tallahassee when those decisions were being
made and I was not when the compromises came about. So there
may be very good reasons why they took place.
I understand that there is an industry argument that a full
pedigree on all drugs just cannot happen now. So that part that
was phased in, I would like to see it not take so long to be
phased in.
The authorized distributor of record, which really has not
been discussed much and I do not want to get the committee into
the weeds with my long protracted definition and problems with
that, but basically under the current scheme federally and in
our State, an authorized distributor of record does not have to
pass on the pedigree when they purchase a prescription drug,
even if they do not purchase that prescription drug directly
from the manufacturer.
So, in other words, anytime an authorized distributor of
record buys any prescription drug whatsoever regardless of who
they buy it from, as long as they are an authorized distributor
from the manufacturer, they wash in my eyes the pedigree. It
stops and starts all over again.
So if you can get your drugs to an unscrupulous
authorized--excuse me. An unscrupulous authorized distributor
of record, your pedigree washes.
And it is also very important to note manufacturers do not
make the decision who the authorized distributor of record is.
It is a very low threshold. I believe it is 2 to 3 shipments a
year from the manufacturer of any of the manufacturer's drugs
and you become an authorized distributor of record for all the
drugs, regardless of whether you purchase them from the
manufacturer or not.
Mr. Greenwood. Okay. Thank you, sir.
My time has expired.
The gentleman from Florida, Mr. Deutsch is recognized.
Mr. Deutsch. Thank you, Mr. Chairman.
I guess I have a series of questions with some charts. But
before I do that, I am just trying to get a general sense. I
mean, you sat through our first panel which really dealt with
importation from overseas, I mean that was the main issue in
terms of the Customs step that this committee has done. I mean,
how would you relate that problem to the problems you folks
discover?
Mr. Penezik. I would say that, and I know that the
committee flushed out that not all these drugs are headed to
just your average citizen who orders them over the Internet.
These drugs are also finding their way into the wholesale
secondary market. In other words, they are being imported or
reimported and then find themselves distributed into----
Mr. Deutsch. I guess what I am trying to get a sense of, I
mean and I have actually read the Grand Jury Report and I am
aware of what you folks have done. And you have done a fabulous
job, a very significant job for the people of Florida. And I
appreciate it. I know the people in Florida appreciate it. But
I guess what I am trying to get a feel for is to me it almost
seems like there are really two issues.
You know, the reimportation issue and this issue of the
wholesale distribution issue and really fraud and criminal
activity that is going on that is not directly related to the
whole phenomenon of overseas purchases of prescription drugs.
Is that an accurate perspective that I am sharing?
Mr. Penezik. Well, from my point of view that is accurate.
They are two different issues or problems. They do interact
with one another, but they are definitely two separate issues.
Mr. Deutsch. I want to thank all three of you for being
here. We have a selection of slides called from a PowerPoint
presentation that Mr. Jones, that unfortunately we cannot go
through the entirety as each of these 12 slides are shown.
Could one or both of you please describe the point that they
were designated to illustrate? If you can look at the first
one.
Mr. Jones. This slide represents a portion of a spreadsheet
that shows over $17 million worth of pharmaceuticals that were
sold from a small wholesaler in Tennessee to--that were bought
from a small company in Florida sold to a small wholesaler in
Tennessee. And all of the products that were involved, all of
these were drugs that came off the streets, HIV drugs and some
counterfeits.
Mr. Deutsch. It is a huge amount, obviously.
Mr. Jones. I think the significance of this number----
Mr. Deutsch. Over a relatively short period of time? You
are looking at, just got a month and a half.
Mr. Jones. But also as Mr. Arias mentioned earlier, there
are over 11 groups that this Task Force is looking at, and this
is just one of the groups. If you extrapolate at this point,
this is where the drugs left the street and went to and entered
the wholesale market, it is $17 million for this group. If you
extrapolate that, you are looking at hundreds of millions of
dollars.
Mr. Deutsch. If we can go to the next slide, because I want
to try to get through as many as we can. If you comment what
that is attempting to describe?
Mr. Jones. This is just a series of the counterfeits that
we have move through Florida in the past 15 years, between 1985
and 2000. Counterfeit Cecior, back in the mid 1980's. There was
also another antibiotic, Pipericil. Some counterfeit birth
control pills Demulen. An arthritis drug, Feldene. And the
anti-viral drug Retrovir.
Mr. Deutsch. The next slide.
Mr. Jones. These are the drugs that have moved through
Florida, counterfeit drugs in the past 2 years in comparison to
the previous slide.
Mr. Deutsch. Actually, if you could go back to that other
slide for a second. I have actually looked closely at these,
and I will tell you, I mean you have to really be an expert to
distinguish between the counterfeit. I mean, there is no way a
lay person could ever figure this out. These are, obviously,
very sophisticated operations.
Mr. Jones. In the Procrit, this Procrit that was
counterfeited, we alerted Texas officials that they needed to
look at this project. And the first call I had from the Texas
people is that the product looks good to us, it does not look
bad. And we asked them to have it analyzed anyway. And it turns
out that a large volume of it was counterfeit.
Mr. Deutsch. I'm sorry. The next slide.
Mr. Jones. I will let Cesar talk about this when he
addressed it in his testimony. This is the----
Mr. Arias. Okay. This is the product that was relabeled
from the 2000 unit product to 40,000 unit product. And the only
thing this gentleman or these people did was remove this little
label on the actual vial. He left the--or these people left the
rest of the product intact. They did counterfeit the boxes. And
they did save the original inserts, as well. For the most part
as far as we could tell, the inserts were good. So they were
asking their source to save these inserts.
Mr. Deutsch. The next slide.
Mr. Jones. I think if you can hit the--there is another
part of this slide. This was created just to demonstrate, this
is a new Amgen product, which is a more sophisticated version
of Procrit and Epogen used to stimulate red blood cells.
This vial, which as you can see, hold 1 milliliter, one-
fifth of a teaspoon full, cost $800 for the pharmacy. And the
point that we are trying to make here is that this is an
ongoing problem and there are many strengths of that drug with
the same colored vial, all the strengths have the same color,
same size vial. And this product could be easily counterfeited
the same as the Procrit and the Epogen.
Mr. Deutsch. That is amazing, $800 just in terms of the
ability to put colored water in there if you could pass it off.
Mr. Jones. Tremendous amounts of profit can be made in
this.
Mr. Deutsch. May we get the next slide.
Mr. Jones. This slide demonstrates the diversion of special
priced pharmaceuticals. This is the Lupron case. This is the
trail that we saw where TAP Pharmaceuticals sold this Lupron
injectable used to treat prostate cancer to oncologists and
urologists at reduced price, lower than they would sell to a
wholesaler. And the trail this drug took was to a small drug
wholesaler in Miami that brought it in illegally. The corrupt
wholesaler. IT went to a drug wholesaler in Texas. It came back
to Central Florida. It went to a midsized wholesaler in Ohio.
And from there that midsized wholesaler sold it to major
wholesalers nationwide.
The same thing has been happening with the AstraZeneca
product Zoladex, which is a similar type of product.
Mr. Deutsch. You know, there are a number of other slides.
And, again, they will be in the record and I appreciate that.
I just as a closing sort of comment, I mean I listened to
all three of your testimonies. What do we tell people in
Florida today, the people in the whole country, particularly I
mean you folks are the experts in Florida right now, what do we
tell people in Florida?
Mr. Penezik. You will be safer than you were. It was a
great first step. But there is a lot of work that needs to be
done. And they also need to understand that a wholesaler
anywhere in this country can effect what happens in the State
of Florida. And there needs to be national guidelines, a
national law, and it needs to be uniformly enforced.
Mr. Deutsch. Thank you.
Mr. Greenwood. The Chair thanks the gentleman.
The gentleman, Mr. Stupak is recognized for 8 minutes.
Mr. Stupak. Thank you, Mr. Chairman.
When you do your investigations you have subpoena power?
Mr. Penezik. Yes, sir.
Mr. Stupak. What do you use your subpoena power for?
Mr. Penezik. Congressman, what I would like to let you know
is that when I issue a subpoena one of the down sides to it is
anybody brought in under my subpoena is granted a form of
immunity. So typically I will issue a subpoena for a
cooperating witness, or a subpoena for testimony from people
that I do not anticipate are going to be charged.
Mr. Stupak. You use that as an investigative tool?
Mr. Penezik. Yes, sir.
Mr. Stupak. And you can get documents and everything else
with the subpoena, right?
Mr. Penezik. Not only can I get documents, I can require
that someone attend or be held in contempt of court if they
don't.
Mr. Stupak. Yes. Yes. One of the crazy things, the FDA does
not have subpoena power. Probably the only regulatory agency in
the Federal Government that does not have subpoena power. Some
of us tried to give them subpoena power in the last bill and
they did not want it. So I just wanted to ask that.
When the FDA has done these import alerts, do they provide
you with the import alerts?
Mr. Penezik. Not to my office of Statewide Prosecution, but
the Department of Health would be better suited.
Mr. Jones. I think we do receive those import alerts from
the Office of State Federal Relations.
Mr. Stupak. Okay. And then what do you do with them?
Mr. Jones. We circulate them to our inspectors. They look
for these products. If they see them, unfortunately the trails
of these products do not take us back to the point where they
are imported.
Mr. Stupak. So we had some testimony earlier today,
especially on the drug Acutane there, if Miami never got it,
you never would have received it in Florida then, right? If
Customs does not receive it, you would not have necessarily
received it?
Mr. Jones. That is true.
Mr. Stupak. Okay. In Florida you had a case there where,
and there was some testimony about it today, recent recalls of
the counterfeit Lipitor. And I understand that this was
originally with a buy by your Task Force. I further understand
that not only Lipitor but also counterfeit Celebrex was
involved in that buy. But without you going into the specifics,
could you describe how that buy came about, the pattern of
movement of volume of these illegal drugs and did you notify
the FDA that it would involve Lipitor and Celebrex?
Mr. Arias. To answer the lat part of your question, yes, we
communicate very well with them. We have a pretty good
relationship.
Mr. Stupak. As to Lipitor and Celebrex?
Mr. Arias. Yes.
Mr. Stupak. Did they do anything with the Celebrex? We know
they did with Lipitor.
Mr. Arias. We seized the product in Florida and we notified
them, and they were aware of it.
Mr. Stupak. But with the Celebrex, did they do the recall
and all that like they testified they did with Lipitor, do you
know.
Mr. Arias. I have not seen that, but that doesn't mean it
has not happened. I am not aware of it.
Mr. Stupak. Yes. Our information says they did one but not
the other. They did recall the Lipitor but not the Celebrex.
Mr. Arias. Right. I do not know.
Mr. Stupak. Okay. But could you tell me a little bit more
about your buy without getting too much into jeopardizing
anything?
Mr. Arias. Well, usually the way this works is we get
complaints by different owner of pharmacies or wholesalers that
are trying to do the right thing.
Mr. Stupak. The complaint is that this drug is being sold
other places?
Mr. Arias. It is being offered. It is being offered at
acutely discounted prices.
Mr. Stupak. Is that usually the best indication?
Mr. Arias. That is their best indication, yes sir. And then
what happens is we ask the company that is making the complaint
to ask for a pedigree from their source.
Mr. Stupak. Sure.
Mr. Arias. And if they get that pedigree, then we verify
the pedigree. And that is why the pedigree is such an important
tool in ferreting out the counterfeit and the diverted
products.
Mr. Stupak. And the pedigree comes from the pharmaceutical
companies?
Mr. Arias. Correct. It goes all the way to the
manufacturer.
Mr. Stupak. Do they have to notify like the State of
Florida regulatory system that they have issued a pedigree to
an individual or a company? I mean, is it in duplicate? Like if
I send you one, do I then as the drug company have to forward
it to Tallahassee to some agency, regulatory agency?
Mr. Arias. No. The pedigree goes with the product.
Mr. Stupak. Okay.
Mr. Arias. So that the seller is obligated to furnish it to
the buyer.
Mr. Stupak. Sure.
Mr. Arias. Until it gets to the last wholesaler before it
goes to the end user. By the end user, I mean the pharmacy or
the hospital or the physician.
Mr. Stupak. Okay.
Mr. Arias. They do not get a pedigree, unfortunately.
Mr. Stupak. Okay. Would it help if they did?
Mr. Arias. I would say yes, but the law does not require
that.
Mr. Stupak. Sure. And this pedigree, it accompanies the
invoices, is that it?
Mr. Arias. It has to either accompany the product or
precede the sale.
Mr. Stupak. Sure. Go ahead. Anything else you want to add
on that one, on that question, my question?
Mr. Arias. No. I just want to emphasize the importance of
the pedigree.
Mr. Stupak. Sure.
Mr. Arias. Without it a lot of these counterfeits that we
have identified in Florida, we did not know they were
counterfeit when we were looking at them.
Mr. Stupak. Sure. But without the pedigree?
Mr. Arias. The pedigree was the tool that allowed us to
know that there was a problem with that product, that it was--
it did not come through the proper channels.
Mr. Stupak. Is this a pedigree unique to Florida or do
other States use it?
Mr. Arias. I will let my boss answer that one.
Mr. Jones. We have not seen it used in very many instances.
I believe Nevada may be a State that is looking to use it. But
we very rarely see the pedigree.
Mr. Stupak. Sure. You mentioned Texas, and they said no it
looked like the real thing. Do they use a pedigree?
Mr. Jones. I do not think they are enforcing a pedigree
requirement in Texas either. The problem has been with the
delay of the implementation of the final rule on the pedigree
at the Federal level.
Mr. Stupak. The counterfeits there, the drug counterfeits
there, did those originate in Florida?
Mr. Arias. I believe that there is still some doubt as to
the Neupogen IQ.
Mr. Stupak. Okay.
Mr. Arias. But we are pretty certain that the Epogen,
Procrit and Serostim came through--was originated in Florida.
Mr. Stupak. You have that slide up there, slide No. 1,
which came out of Tennessee. It went from Tennessee to Florida.
That was legitimate. And then from there it got counterfeited?
In Florida?
Mr. Arias. No, no. That graph just states the monies that
were transacted between a Florida wholesaler, a very small
wholesaler, to a Tennessee wholesaler.
Mr. Stupak. Okay. Mr. Penezik, am I saying that right?
Mr. Penezik. Yes, sir.
Mr. Stupak. In your testimony you stated that one
counterfeit shipment may have yielded as much as $46 million in
profit.
Mr. Penezik. Yes, sir.
Mr. Stupak. This sounds the word street brokers like street
drug money. Can you tell us about the involvement of
individuals that specialize in like large sales of street drugs
moving into counterfeit pharmaceutical products?
Mr. Penezik. There are instances of people from a variety
of criminal backgrounds that are moving into this business,
several of our targets, prior people convicted or people
convicted in prior instances of racketeering, drug trafficking,
a variety of offenses. This is just more streamlined and from
their point of view more safe. It also has got a high, high
profit with very little risk for them.
There is not a whole lot of effort that they put behind
this business. There is no special qualifications that are
needed to be a prescription drug wholesaler in our State. You
do not have to have any special training. There is a
questionnaire.
Mr. Arias. The new law some provisions.
Mr. Penezik. The new law will require that, but my
understanding is in most States there is no special criteria
needed. Therefore, the criminal element just moves itself in.
They set up a small office. They need a fax machine and a
computer. They comply with the licensing requirements and they
are in business.
Mr. Greenwood. The time of the gentleman has expired.
Does Mr. Dingell care to inquire?
Mr. Dingell. No.
Mr. Greenwood. That being the case, we want to thank the
witnesses for your presence. Thank you for being on the cutting
edge of this important issue.
We congratulate you for the fine work that you do.
You are excused.
And this hearing is adjourned.
Before I do adjourn, without objection we will hold the
record of this hearing open for 30 days so that the questions
that have been put by members to the FDA can be inserted into
the record and for those members who wish to add their opening
statements to the record.
The committee is adjourned.
[Whereupon, at 2:25 p.m., the subcommittee was adjourned.]
[Additional material submitted for the record follows:]
Prepared Statement of Mary R. Grealy, President, Healthcare Leadership
Council
The Healthcare Leadership Council (HLC) appreciates the interest of
the subcommittee on the issue of reimportation. It is critically
important that Congress examine and understand the threats that
reimportation of medicine poses for patients, including threats from
counterfeit, adulterated, or substandard medicines coming into the
United States. We believe that other approaches, such as a
comprehensive Medicare prescription drug benefit, will provide more
choice, quality and lower costs without stifling innovation and
research, and without endangering the safety of beneficiaries.
American consumers have been led to believe that, if prescription
drugs are reimported from Canada, their out-of-pocket costs will be the
same as for patients in Toronto or Montreal, and that they will be
assured of a safe product that is readily available. That is simply not
the case. Consider the following facts:
<bullet> Accessibility. The Canadian market is less than 10 percent of
the American market. Currently the number of Americans securing
reimported drugs ``under the table'' is relatively small and
the Canadian market can handle the demand. If reimportation
were made legal, the amount of drugs available for the U.S.,
with its much larger population, would be minimal and
inconsistent.
<bullet> Safety. Even with current safeguards in place, the World
Health Organization estimates that eight percent of the drugs
currently entering the U.S. market are counterfeit. Consider
the potential harm if reimportation were made legal. Ten former
FDA commissioners have consistently expressed their views that
drug reimportation is dangerous for consumers and patients,
including the current FDA commissioner who stated that the FDA
could not assure the safety of reimported drugs at this time.
<bullet> Cost. Canadian price controls only apply to drugs sold in
Canada. Price controls do not apply to exported products,
meaning if drug reimportation were made legal, there would be
no guarantee of the Canadian price. In addition, inspections,
testing, storage, repackaging and liability insurance will
significantly raise the price of reimported drugs. An
unintended consequence of reimportation should not be to place
an additional large cost burden on those in the drug supply
chain.
HLC's top priority is to promote the highest quality health care
possible. We believe that the best way to achieve this goal is through
competition, innovation, research and continuous quality improvement in
the private marketplace. Federal policy should support such innovation,
not stifle it. HLC continues to urge that Congress reject price
controls, such as reimportation, and instead focus on coverage for more
Americans.
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