To amend the Federal Food, Drug, and Cosmetic Act to create a uniform certification standard for Internet pharmacies and to prohibit Internet pharmacies from engaging in certain advertising activities, to prohibit the use of certain bank instruments for purchases associated with illegal Internet pharmacies, and for other purposes.

April 21, 2005

Mr. WALDEN of Oregon (for himself and Mr. DAVIS of Florida) introduced the following bill; which was referred to the Committee on Energy and Commerce, and in addition to the Committee on Financial Services, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned

To amend the Federal Food, Drug, and Cosmetic Act to create a uniform certification standard for Internet pharmacies and to prohibit Internet pharmacies from engaging in certain advertising activities, to prohibit the use of certain bank instruments for purchases associated with illegal Internet pharmacies, and for other purposes.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

This Act may be cited as the `Safe Online Drug Act of 2005'.

SEC. 2. INTERNET SALES OF PRESCRIPTION DRUGS.

(a) In General- Chapter 5 of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 351 et seq.) is amended by inserting after section 503A the following:

`SEC. 503B. INTERNET SALES OF PRESCRIPTION DRUGS.

`(a) Uniform Certification Standard for Internet Pharmacies-

`(1) IN GENERAL-

`(A) PROHIBITIONS- Subject to subparagraph (B), it is a violation of this section--

`(i) for any person to sell or offer for sale a prescription drug or a restricted device through an Internet site--

`(I) if the Internet site fails to meet the standards established under paragraph (2); or

`(II) if the Internet site fails to comply with all State and Federal regulations for operating as an Internet pharmacy; and

`(ii) for any person to own or operate an illegal Internet pharmacy.

`(B) EXCEPTION- Any person who sells or offers to sell a prescription drug or restricted device through an Internet site, or who owns or operates an Internet pharmacy, is deemed to meet the requirements of this section for purposes of such sale, ownership, or operation if the Internet site or Internet pharmacy meets the certification standards adopted by the Secretary under paragraph (2).

`(2) ESTABLISHMENT OF UNIFORM STANDARD FOR INTERNET PHARMACY CERTIFICATION-

`(A) IN GENERAL- The Secretary, acting through the Commissioner of the Food and Drug Administration, shall establish a program under which all Internet pharmacies operating in the United States are certified by the Secretary as meeting the requirements of this section for certification.

`(B) CONDITIONS FOR CERTIFICATION- As a condition of certifying an Internet pharmacy under subparagraph (A), the Secretary shall require the following with respect to such pharmacy:

`(i) Verification that, in each State in which the pharmacy engages in pharmaceutical activities, the pharmacy, and all the employees and agents of the pharmacy, are in compliance with applicable laws regarding--

`(I) the practice of pharmacy, including licensing laws and inspection requirements; and

`(II) the manufacturing and distribution of controlled substances, including with respect to mailing or shipping such substances to consumers.

`(ii) Verification of controls to ensure that a prescription drug or restricted device is dispensed by the pharmacy only pursuant to a valid prescription, including circumstance in which the drug is shipped or mailed from a country under whose laws the drug is not a prescription drug.

`(iii) An agreement by the pharmacy that, upon certification under subparagraph (A), the facilities and business practices of the pharmacy will be subject to inspection by the Secretary to the extent appropriate to determine whether the pharmacy is in compliance with conditions under this subsection.

`(iv) The prominent display of contact information for the pharmacy, including a telephone number, an electronic mail address, a mailing address, and (if different from the mailing address) the address for the physical location of the principal place of business of the pharmacy.

`(v) The prominent display of complete and accurate information concerning the ownership and management of the pharmacy, including addresses and contact information.

`(vi) The prominent display of the seal provided for under subparagraph (C).

`(vii) The prominent display of a statement that the Internet pharmacy will dispense prescription drugs only upon a showing of a prescription.

`(viii) A certification from the person who owns or manages the pharmacy that a certification under subparagraph (A) for the pharmacy has not previously been terminated by the Secretary, and that no other Internet pharmacy owned or managed by such person has received a certification under subparagraph (A) that has been terminated by the Secretary.

`(ix) Meaningful and accessible opportunities for a consumer to consult with a licensed pharmacist regarding a drug prior to the time at which the pharmacy dispenses the drug to the consumer.

`(x) Controls to ensure that the Internet pharmacy provides for authentication and security of prescription orders.

`(xi) Effective, accessible systems for communication with consumers, including systems for consumer reporting of adverse drug reactions and errors, systems by which consumers can effectively track and report problems with unfulfilled orders, systems for the investigation and redress of consumer complaints, and systems facilitating effective communication between the pharmacy and consumers concerning drug recalls.

`(xii) Controls to ensure the protection of patient privacy and confidentiality, including but not limited to the prevention of unauthorized internal and external use of personally-identifiable patient information.

`(xiii) Adherence to a quality assurance policy meeting standards established by the Secretary.

`(xiv) An agreement by the pharmacy that the pharmacy will notify the Secretary within 10 days concerning any change in information submitted under this subsection as a condition of certification under subparagraph (A).

`(xv) Such additional criteria as the Secretary determines, after notice and opportunity for comment, to be appropriate for the sound operation of certified pharmacies or the protection of consumers.

`(C) SEAL- The Secretary shall provide for a seal that Internet pharmacies certified under subparagraph (A) are required to display for purposes of indicating to the public the fact of such certification.

`(D) ANNUAL APPLICATION; DURATION OF CERTIFICATION-

`(i) IN GENERAL- The Secretary may certify an Internet pharmacy under subparagraph (A) only if the pharmacy submits to the Secretary an application for such certification that demonstrates compliance with the conditions under subparagraph (B) and is in such form, and is made in such manner, as the Secretary may require. The Secretary shall establish an application form for purposes of the preceding sentence, including an electronic application form.

`(ii) DURATION OF CERTIFICATION; RENEWAL-

`(I) IN GENERAL- A certification under subparagraph (A) is effective for the two-year period beginning on the date on which the application under clause (i) for such certification is approved by the Secretary. The Secretary may renew the certification, pursuant to the submission of an additional application under clause (i), and the number of renewals of the certification is not limited. The Secretary may establish an abbreviated process for such renewal applications.

`(II) RENEWAL EVALUATION- Before renewing a certification under subparagraph (A), the Secretary shall conduct an evaluation to determine whether the pharmacy involved is in compliance with the conditions under subparagraph (B). The evaluation, at the Secretary's discretion and as applicable, may include testing of the Internet site of the pharmacy or other systems through which the pharmacy communicates with consumers, and may include physical inspection of the records and premises of the pharmacy pursuant to subparagraph (B).

`(iii) FEES- The Secretary may impose a fee on the submission of an application under subparagraph (D). Any such fee is due upon the submission of the application. To the extent provided in appropriations Acts, such fees are available to the Secretary for carrying out this section.

`(iv) INFORMATION CAMPAIGN- The Secretary shall carry out activities to inform the public of the program under subparagraph (A), including information on the significance of the seal under subparagraph (C) when displayed by an Internet pharmacy, and including information on the benefits of doing business with a pharmacy certified under subparagraph (A) as compared to an illegal Internet pharmacy.

`(v) TERMINATION OF CERTIFICATION- The Secretary, upon the own initiative of the Secretary or a petition by an interested person, may terminate a certification under subparagraph (A), after notice to the Internet pharmacy involved and an opportunity for a hearing, after a finding by the Secretary that an Internet Pharmacy is not in compliance with the provisions of this section, or has made an untrue statement of material fact in its certification application; or is in violation of any applicable federal statute or regulation related to the sale and distribution of a pharmacy product.

`(3) DEEMING AUTHORITY- The Secretary may provide that an Internet pharmacy is deemed to meet the requirements of this section if the Internet pharmacy is certified by the National Association of Boards of Pharmacy's Verified Internet Pharmacy Practice Sites program.

`(4) INTERSTATE COMMERCE- For purposes of this section, Internet pharmacies are deemed to operate in interstate commerce.

`(b) Prohibition on Certain Advertising Activities by Internet Pharmacies-

`(1) SALES WITHOUT PRESCRIPTION- It is a violation of this section for an Internet pharmacy to represent, by advertisement, sales presentation, direct communication (including telephone, facsimile, or electronic mail), or otherwise, that prescription drugs may be obtained from the Internet pharmacy without a prescription.

`(2) ADVERTISEMENTS FROM ILLEGAL PHARMACIES- It is a violation of this section for provider of an interactive computer service to accept advertisement from or provide links to any illegal Internet pharmacy. An interactive computer service will be deemed in compliance with this section if the pharmacy has obtained a copy of the certification issued to the Internet pharmacy under this section.

`(c) Definitions- For purposes of this section:

`(1) The term `illegal Internet pharmacy' means an Internet pharmacy that fails to comply with the standards established by this section.

`(2) The term `Internet' means collectively the myriad of computer and telecommunications facilities, including equipment and operating software, which comprise the interconnected world-wide network of networks that employ the transmission control protocol/internet protocol, or any predecessor or successor protocols to such protocol, to communicate information of all kinds by wire or radio.

`(3) The term `Internet pharmacy' means an Internet site that is used to sell one or more prescription drugs and that is not operated by a State-licensed retail pharmacy located in the United States.

`(4) The term `link,' with respect to the Internet, means one or more letters, words, numbers, symbols, or graphic items that appear on a page of an Internet site for the purpose of serving, when activated, as a method for executing an electronic command--

`(A) to move from viewing one portion of a page on such site to another portion of the page;

`(B) to move from viewing one page on such site to another page on such site; or

`(C) to move from viewing a page on one Internet site to a page on another Internet site.

`(5) The term `page,' with respect to the Internet, means a document or other file accessed at an Internet site.

`(6) The term `prescription drug' means a drug that is subject to section 503(b)(1).

`(7) The terms `site' and `address,' with respect to the Internet, mean a specific location on the Internet that is determined by Internet Protocol numbers, including any successor protocol for determining a specific location on the Internet.'.

(b) Prohibited Acts- Section 301 of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 331) is amended by inserting after paragraph (k) the following:

`(l) The sale or offer for sale of a prescription drug or restricted device, or the ownership or operation of an illegal Internet pharmacy, in violation of section 503B.'.

SEC. 3. PROHIBITION ON THE USE OF CERTAIN BANK INSTRUMENTS FOR PURCHASES ASSOCIATED WITH ILLEGAL INTERNET PHARMACIES.

(a) Regulations- Before the end of the 6-month period beginning on the date of the enactment of this Act, the Federal functional regulators shall prescribe regulations requiring any designated payment system to establish policies and procedures reasonably designed to identify and prevent restricted transactions in any of the following ways:

(1) The establishment of policies and procedures that--

(A) allow the payment system and any person involved in the payment system to identify restricted transactions by means of codes in authorization messages or by other means; and

(B) block restricted transactions identified as a result of the policies and procedures developed pursuant to subparagraph (A).

(2) The establishment of policies and procedures that prevent the acceptance of the products or services of the payment system in connection with a restricted transaction.

(b) Requirements for Policies and Procedures- In prescribing regulations pursuant to subsection (a), the Federal functional regulators shall--

(1) identify types of policies and procedures, including nonexclusive examples, which would be deemed to be `reasonably designed to identify' and `reasonably designed to block' or to `prevent the acceptance of the products or services' with respect to each type of transaction, such as, should credit card transactions be so designated, identifying transactions by a code or codes in the authorization message and denying authorization of a credit card transaction in response to an authorization message;

(2) to the extent practical, permit any participant in a payment system to choose among alternative means of identifying and blocking, or otherwise preventing the acceptance of the products or services of the payment system or participant in connection with, restricted transactions; and

(3) consider exempting restricted transactions from any requirement under subsection (a) if the Federal functional regulators find that it is not reasonably practical to identify and block, or otherwise prevent, such transactions.

(c) Compliance With Payment System Policies and Procedures- A creditor, credit card issuer, financial institution, operator of a terminal at which an electronic fund transfer may be initiated, money transmitting business, or international, national, regional, or local network utilized to effect a credit transaction, electronic fund transfer, or money transmitting service, or a participant in such network, meets the requirement of subsection (a) if--

(1) such person relies on and complies with the policies and procedures of a designated payment system of which it is a member or participant to--

(A) identify and block restricted transactions; or

(B) otherwise prevent the acceptance of the products or services of the payment system, member, or participant in connection with restricted transactions; and

(2) such policies and procedures of the designated payment system comply with the requirements of regulations prescribed under subsection (a).

(d) Enforcement-

(1) IN GENERAL- This section shall be enforced by the Federal functional regulators and the Federal Trade Commission under applicable law in the manner provided in section 505(a) of the Gramm-Leach-Bliley Act.

(2) FACTORS TO BE CONSIDERED- In considering any enforcement action under this subsection against any payment system, or any participant in a payment system that is a creditor, credit card issuer, financial institution, operator of a terminal at which an electronic fund transfer may be initiated, money transmitting business, or international, national, regional, or local network utilized to effect a credit transaction, electronic fund transfer, or money transmitting service, or a participant in such network, the Federal functional regulators and the Federal Trade Commission shall consider the following factors:

(A) The extent to which such person is extending credit or transmitting funds knowing the transaction is in connection with illegal Internet pharmacies.

(B) The history of such person in extending credit or transmitting funds knowing the transaction is in connection with illegal Internet pharmacies.

(C) The extent to which such person has established and is maintaining policies and procedures in compliance with regulations prescribed under this paragraph.

(D) The feasibility that any specific remedy prescribed can be implemented by such person without substantial deviation from normal business practice.

(E) The costs and burdens the specific remedy will have on such person.

(e) Definitions- For purposes of this section:

(1) The terms `credit,'`creditor,' and `credit card' have the meanings given such terms in section 103 of the Truth in Lending Act.

(2) The term `designated payment system' means any system utilized by any creditor, credit card issuer, financial institution, operator of a terminal at which an electronic fund transfer may be initiated, money transmitting business, or international, national, regional, or local network utilized to effect a credit transaction, electronic fund transfer, or money transmitting service, or any participant in such network, that the Federal functional regulators determine, by regulation or order, could be utilized in connection with, or to facilitate, any restricted transaction.

(3) The term `electronic fund transfer'--

(A) has the meaning given such term in section 903 of the Electronic Fund Transfer Act; and

(B) includes any fund transfer covered by Article 4A of the Uniform Commercial Code, as in effect in any State.

(4) The term `Federal functional regulator' has the same meaning as in section 509(2) of the Gramm-Leach-Bliley Act.

(5) The term `financial institution'--

(A) has the meaning given such term in section 903 of the Electronic Fund Transfer Act; and

(B) includes any financial institution, as defined in section 509(3) of the Gramm-Leach-Bliley Act.

(6) The term `illegal Internet pharmacy' means an Internet pharmacy that fails to comply with the standards established by section 503B of the Federal Food, Drug, and Cosmetic Act.

(7) The terms `money transmitting business' and `money transmitting service' have the meanings given such terms in section 5330(d) of title 31, United States Code.

(8) The term `restricted transaction' means any transaction or transmittal to any person engaged in the operation of an illegal Internet pharmacy, of--

(A) credit, or the proceeds of credit, extended to or on behalf of such other person (including credit extended through the use of a credit card);

(B) an electronic fund transfer or funds transmitted by or through a money transmitting business, or the proceeds of an electronic fund transfer or money transmitting service, from or on behalf of the other person;

(C) any check, draft, or similar instrument which is drawn by or on behalf of the other person and is drawn on or payable at or through any financial institution; or

(D) the proceeds of any other form of financial transaction as the Federal functional regulators may prescribe by regulation which involves a financial institution as a payor or financial intermediary on behalf of or for the benefit of the other person.

SEC. 4. EFFECTIVE DATE.

This Act and the amendments made by this Act are effective 6 months after the date of the enactment of this Act.

END