Buying Drugs over the Internet--Caveat Emptor or a Case for Stricter Regulation?

Buying products over the internet has exploded in the past decade. I don't know about you but I buy most of the books I want, some clothes for myself, and flowers as gifts online, and I'm sure you do too. But you probably don't buy drugs online because you have insurance that keeps your direct drug costs affordable using your local drugstore and more importantly if you purchased a drug online, it's difficult to know if you've been sold the real product. We can all tell if a book's binding is falling to pieces, or if the shirt we ordered is not of a good material, but can we tell a good pill from a bad one?

And there are certainly many bad pills out there. According to the World Health Organization, 50% of the drugs bought from internet pharmacies that conceal their addresses are fake (although establishing exactly how this figure was arrived at has eluded me). And it's quite possible that of all the web sites selling drugs only a very small percentage actually sell good quality products. This is what I assumed when I investigated the web pharmacy phenomenon myself last year.

In the U.S., the National Association of the Boards of Pharmacy represents the state boards of pharmacy which oversee the licensing of pharmacies at the state level. The NABP argues that the online pharmacies they accredit through the Verified Internet Pharmacy Practice Sites, or VIPPS program, will sell good products, whether bricks-and-mortar or web-based.

The formulations may have been slightly different, the packaging was quite different, but the key difference was obviously not the quality but the price--the reason many people buy online to begin with.

Understanding this, I thought it would be good to stratify samples of drugs bought from web sites by their status according to NABP and other categories. Working with able support from several colleagues, I bought from those sites approved by NABP, those sites not approved but not listed as bad, and then bought from those sites listed as rogue, as well as a random selection from the spam our team received over the previous months.

In the course of our investigation we came across other groups that evaluate website pharmacy quality. I've always been wary of credentialing agencies ever since I visited a restaurant which had apparently won a seemingly prestigious culinary award only to discover that the restaurant ran the award and was the only winner.

But independent credentialing agencies often are cheaper to run and more responsive to changing circumstances than ones directly run by the government, or given the authority by government, such as NABP. One private sector group seemed to do a thorough job of credentialing web pharmacies and that was And since some of the sites it approved overlapped with NABP's program it seemed a reasonable entity to compare with NABP. also approves non-U.S. pharmacies, most based in Canada, something NABP does not do, and I intended to buy, as U.S. consumers do, from myriad sites including those dispensing drugs from non-U.S. pharmacies, which are claimed to sell cheaper drugs.

All in all we bought samples of five different types of popular drugs (Celebrex (pain relief), Nexium (acid reflux treatment), Lipitor (cholesterol lowering), Viagra (erectile dysfunction) and Zoloft (antidepressant)) from a small spectrum of the different types of web pharmacies. When we posted a working paper on this last summer (paper can be found at we provided results from 26 pharmacies, but with further analysis and a bit more sampling we have 34 sites (with some data still to be analyzed). We bought from over 40, although some sent drugs in formats we could not test.

Some of the web pharmacies required us to send in actual hard copy prescriptions, others accepted faxed or emailed copies, others did not ask for prescriptions and simply asked for us to fill out online medical questionnaires. I unintentionally but incorrectly filled out one or two of the questionnaires and was surprised, even gratified to see that somebody called to check on the reasons for the mistakes/failures. For example, I mistakenly said I'd had an abnormal EKG recently and was told by the web pharmacy employee that she could not sell me Viagra under such circumstances--even a site not requiring me to send in a prescription was acting ethically.

Of those samples we did receive, we recorded information about packaging, pricing, and the general conditions.

The products came from 5 European nations, Australia, New Zealand, Canada, China, and India. We tested all the products with Ahura's TruScan--a raman spectrometer, which is very good at identifying whether the product delivered is in fact the brand name product. A detailed spectrum of the original product is lodged in the memory of the TruScan computer, and then each sample is tested against this spectrum. Each pill gives a unique spectrum, with only near-identical comparisons to the approved brand passing the test. A generic substitute may fail the spectrometry test because it has different excipients, even if it is a bioequivalent product. This meant that generic substitutes could not be fairly tested with the technology at hand. Although brand originals were requested, some pharmacies did provide generic substitutes, including well known pharmacies such as CVS. The vast majority did not.

In short, all the products we received from all web pharmacies where we could actually speak to someone and which had an address, passed raman spectrometry tests for authenticity. Ignoring generic substitutions, only those products, and essentially only Viagra, from web sites concealing an address, failed--primarily from China, although one shipped from India was not properly identified as a copy version (it wasn't a Pfizer product, but as such was not counterfeit in the labeling sense). In other words all products passed from web sites approved by NABP and, and many other non-approved sites. Whether the drugs were in pill pots from U.S. or Canadian pharmacies, or blister packs from Europe, India or Australia, all passed the tests.

I have to say I was surprised by this result. I expected far more of the drugs to fail such a test, particularly from web sites that did not require a prescription. Of course the sample set of drugs was small, the sample size was small, but then I looked at the products and they all were likely to pass the test; they were all legitimate products made by western companies (mainly Pfizer, given the drugs chosen), in myriad locations. The formulations may have been slightly different (capsules or pills), the packaging was quite different, but the key difference was obviously not the quality but the price--the reason many people buy online to begin with. We'll come back to that in a minute.

The NABP wrote to me following an article I had written for the Wall Street Journal on internet pharmacies. The letter said that as of December 18th last year, 96% of the web sites they reviewed fell short of good standards: a full 5087 out of 5310 sites failed.

But with no disrespect to NABP, so what? No one agency or even the entire U.S. Government can control web pharmacies domiciled in many places in the world. NABP results indicate that a full 223 sites did pass more exacting, standards. It would be interesting to know whether those 223 sites get the lion's share of sales traffic. But even if rogue sites make multiple sales, is the aim of NABP to make sure that only web sites selling and mailing good products exist? It sounds a great aim, but in practice it is impossible. Does NABP really want to control the internet and the postal service? Does it want to control sites registered in Vanuatu, or China, or Bermuda? Surely not, but that's how it comes across. Surely it is not whether any sites selling bad drugs exist, but whether the consumer can identify those which sell good products.

And as my small study, and indeed evidence from NABP and other groups, shows, there are many sites selling good products. This shouldn't be a surprise; after all, some of them are outlets of the bricks-and-mortar establishments we have used for years (CVS, Walgreens, Rite Aid . . . and also other big names not usually associated with drugs, like Costco).

But there are numerous other sites which sell good products too. NABP focuses on the largest U.S. entities and that's fine, that's their job. But having spent most of my life living in Europe, I'm not afraid of EU standard drugs, and neither should Americans, especially since they are often made by the same people at the same factories as we buy in the United States.

So what criteria should one follow--here NABP and offer good advice. Make sure to follow their approval lists--and buy from:

  1. A licensed pharmacy;

  2. which requires a prescription;

  3. and has a physical address, where one can speak to someone;

  4. Also, make sure the site offers a privacy policy;

  5. and encrypts pages over which financial and personal information is transmitted.

But unfortunately, at least for underinsured and uninsured Americans, NABP demands a lot more for approval, which makes very effective smaller business not applicable. NABP approves (as of end Feb 2010) only 18 online pharmacies. When I tested products a year ago it was 15, of which only 5 could we actually buy drugs from for cash--having insurance and a specific pharmacy benefit plan was required to use these sites. lists about 40 web sites, mostly in Canada, with about 200 wider web members, who are assessed by and show their bona fides, precisely so they could advertise on search engines like Google.

So the main difference between NABP and PharmacyChecker programs is that the former excludes non-U.S. pharmacies, some of which are approved by

But why would anyone buy from foreign, ostensibly Canadian, sites? Apart from being illegal, transport costs should be higher, drug insurance should only cover U.S. bought products, economies of scale mean production costs for generic manufacturers are lower in U.S. than most other wealthy nations, and there is also easier recourse to legal action if one is wronged by a pharmacy. Finally you're buying what many see as the gold standard--FDA-approved products sold by NABP-approved pharmacies. So I suspect most web traffic will go to U.S. entities.

But people do buy such drugs because of cost, and many are probably uninsured or at least their drug of choice is not covered by insurance. A couple of years ago a Harvard School of Public Health and Kaiser Family foundation poll found that 4 out of 10 Americans said they had trouble buying the drugs they required. According to a Deloitte survey of healthcare consumers, 4% of prescription drug users in the United States said they bought drugs from overseas in 2009.

Obviously not all of these are the poor and uninsured, some just clever who want a better deal. Indeed 20% of drug users said they would buy from overseas if they saved 50% or more (from my analysis 50% savings were possible for most, but not all PC-approved web sites. Some men are too embarrassed to visit their doctor and ask for Viagra. Others may simply be fed up dealing with the increasing paperwork of going to a surgery and using insurance.

I have one or two colleagues who buy from online pharmacies (from Europe and India). Are AEI scholars stupid? No, frankly the opposite, they're economically literate, they've done some research and know that cheaper good quality products exist.

The regulation of drug procurement online is also primarily the outcome of economic deliberations and not safety. The FDA has never, as far as I know, prosecuted anyone for importing non-controlled medications for personal use for up to three months supply, and although technically illegal to import drugs without a specific license, FDA provides advice on its website about such personal use. (See

But the law prevents such importation of drugs on a larger scale. In general I am in favor of market segmentation; it is both equitable and economically efficient for companies to be free to sell their products at differentiated prices in different markets. This enables them to recoup the largest economic rents, while ensuring greatest access to medicines. Market segmentation, and the products and pricing in each segment should be based on income levels and market size for each drug, as well as myriad other factors.

If one allows parallel trade, which destroys any market segmentation, the only other option if one wants moderately efficient pricing and equitable access, is for Congress to provide an anti-trust waiver so that U.S.-based drug companies can act in unison and boycott selling to countries which ratchet down drug prices too abusively in their eyes. I don't recommend this route, but it is an option. Europe's parallel trade allows free riding on Americans higher prices.

So to close. There are thousands, maybe ten thousand, sites that may be selling poor quality drugs, and it is right for a public and private education program to be expanded to warn people of this, I am with NABP on this entirely. And the dangers of these sites are increasingly being heard.

Scientific journals like to publish startling results, just like the press (I have been a beneficiary of this drama-bias in the past having undertaken at least 5 drug studies with striking results, which were published in good peer-reviewed journals). But my internet paper was rejected from the journal submitted, not for methodological reasons, but because the results were not interesting!

But it should be far more interesting, or at least provide more useful information to possible buyers, that there are myriad sites, U.S. and foreign, that sell good products. We should encourage people to use these sites regardless of where they are based. Unfortunately, Google is changing its policies from Monday (1st March) to exclude non-U.S. pharmacies from advertising in the United States. This will drive foreign cheap drug buying further underground, depriving the poor and uninsured of some level of quality control provided by

As a result, because of broader economic concerns, the issue of safety over foreign imports is being used to scare people. Perhaps it is time for FDA to actually push for the decriminalization of personally imported drugs. De facto FDA does not prosecute. The current situation of making people in search of cheaper drugs into criminals whilst doing nothing about it seems both unjust as well as devaluing the law.

Of course, those selling fake drugs over the internet should be punished severely, and we should not make parallel commercial trade legal because it will undermine market segmentation. The current compromise of allowing limited importation for personal use provides market segmentation within the U.S. market without undermining the generally higher prices paid by the insured.

Focusing most attention on policing, in order to close bad sites down, when the internet is a global phenomenon, is bound to fail, regardless what FDA, NABP, or Google does. The intentional focus by industry on drug quality over the internet, when price is the real policy concern, may come back to haunt them--as they appear uncaring about a small and poor part of their market.

Some Americans cannot afford their medicines and we should help them buy good quality drugs, regardless of the location of manufacture. If this means exploring all options including antitrust waivers and pressure on Europe to price freely, decriminalization of web buyers and greater de facto market segmentation within the United States, so be it.

Roger Bate is the Legatum Fellow in Global Prosperity at AEI.

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