by Declan McCullagh
3:00 a.m. May. 26, 2000 PDT
WASHINGTON -- Internet shoppers, look out: The next time you buy from an overseas pharmacy, you might go to jail.
The problem of Americans ordering from unregulated drugstores abroad is so acute that new federal penalties are necessary, administration and congressional officials said during a hearing Thursday.
"I believe that the noose is slowly tightening around the neck of domestic sites ... but the question on foreign sites is what can we do about them?" asked William Hubbard, senior associate commissioner at the Food and Drug Administration.
"An effective Internet enforcement process requires establishing priorities, identifying and monitoring potentially violative websites, and making appropriate referrals for criminal prosecution," Hubbard told members of the House Commerce Subcommittee on Oversight.
The Justice Department had its own proposal: Grant it the power to block related financial or credit card transactions.
"Such an amendment (to existing law) would provide the department with an important weapon to combat the harms posed by offshore ... online pharmacies," said Ethan Posner, deputy associate attorney general.
Posner said it is currently illegal to order unapproved drugs from another country. He also said it's against U.S. law for an overseas pharmacy to sell prescription drugs to Americans without a prescription.
But if drugs are legal in other countries and not in the United States, there's little incentive for foreign companies to kowtow to the Justice Department or FDA rules.
So that leaves the unpalatable prospect of checking packages at the border. But the Customs Service needs larger budgets and more staff to do a good job, one official said.
"With the resources we have, we must take a risk management approach," said Betsy Durant, director of Customs' office of trade programs. She said that the agency plans to "proactively search the Internet" for foreign drugstore sites.
Ed Hudgins, director of regulatory studies at the free-market Cato Institute and an FDA critic, said the feds should give up.
"These guys realize the Internet is a threat to their regulatory authority," said Hudgins, who has criticized President Clinton's regulatory proposal from last December.
"By this logic the federal government can control any kind of e-commerce," Hudgins said. "They're doing this supposedly to protect the public from fraud. .... Every other government agency will have justification to regulate the Internet too."
Representative Tom Bliley (R-Virginia), chairman of the full House Commerce Committee, described unapproved drugstore orders as "the biggest problem we face."
It was a bipartisan sentiment.
"If we don't get control of these rogue sites, we might just find out the hard way," said Representative Ron Klink (D-Pennsylvania), the most senior Democrat on the panel.
Representative Richard Burr (R-North Carolina), however, dissented on one point. He said a White House-backed proposal went beyond traditional regulations.
"Your bill calls for administrative subpoena power and civil monetary penalties that don't exist in the offline world," Burr said. "So if you're trying to match up the offline and the online worlds, you might have gone too far."
The FDA on May 2 sent to Congress the Internet Prescription Drug Sales Act, which would regulate online pharmacies.
Nicholas Morehead contributed to this report.