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January 25, 2003  
Enforcement Actions Against Online Pharmacy Sites
AdultInternetLaw.com


In the September 25, 2002 newsletter, I discussed new legal requirements that effect online pharmacies and affiliates promoting these programs. The article focused on a revision to the Controlled Substance Act in Nevada addressing the regulation of online pharmacy sites, the beginning of what I predicted would be a trend in many states. Recently, the medical and pharmacy boards of various states have taken the predicted path of increasing enforcement of the regulations and I expect many more prosecutions will follow. Following is a summary of two recent enforcement actions and the respective outcomes.

Nevada Enforcement Actions

In January of 2003, the Nevada State Board of Pharmacy reached an administrative settlement with Prescriptiononline.com in which fines totaling $204,500 were levied. The case arises from the Board's claim that the online pharmacy is a danger to public health because doctors never see the patient in person, but make a diagnosis and provide a prescription over the phone. Since going online in July 2001, the pharmacy allegedly sold more than roughly 5 million doses of hydrocodone, a painkiller that allegedly is addictive. The hydrocodone sales accounted for 90% of the total sales by the pharmacy, well above the industry standard of 15%. The excessive rate of prescribing hydrocone was damning to the online pharmacy, particularly when combined with the fact that the physicians were not performing a physical exam of the patient.

As part of the settlement, PrescriptionsOnline.com agreed to a fine of $200,000 and the loss of its license to sell prescription drugs. Joseph Auralle, a pharmacist for the online pharmacy, submitted to a fine of $3,000 and license suspension for one year. Julie Levitt, a second pharmacist, agreed to a fine of $1,500 and a six-month suspension. In this particular case, no affiliates of the site were named as defendants. You must realize, however, that future prosecutions in Nevada will undoubtedly include affiliates sending traffic to online pharmacies, as prosecution of affiliates are clearly called for under the statute.

General Counsel for the Nevada State Board of Pharmacy, Louis Ling, was recently quoted as indicating that the prosecution of PrescriptionOnline.com was the second of "many to come." He further indicated that the Board had earlier prosecuted an unnamed online pharmacy company, which resulted in a fine of $1,000,000. As with most companies, the large fine forced the company to file for bankruptcy protection and the outcome of the matter is not currently clear. Regardless, Webmasters must realize that the promotion of online pharmacy sites can carry significant legal risks. Nevada is not the only state becoming active in enforcing regulations in the online pharmacy industry.

California Enforcement Actions

In a decision that will go into effect on February 21, 2003, the Medical Board of California will revoke the medical license of Dr. Jon Steven Opsahl for prescribing medications online. The apparent basis for the ruling lies in the fact that patients of Dr. Opsahl were not being given a physical examination, a key element to determining if prescription medication is appropriate for a patient. Administrative Law Judge Vallera J. Johnson ruled that Dr. Opsahl had prescribed over 8,000 painkillers online without physically examining the patients. Judge Johnson also found that Dr. Opsahl had prescribed Cipro over the Internet without examining patients during the anthrax scare in 2002. Ironically, recent events have led to Cipro being deregulated to the extent that it can now be sold without a prescription. Alas, this development came a bit late for Dr. Opsahl. According to the decision, Dr. Opsahl has been permanently stripped of his license although he will undoubtedly apply for reinstatement in the future.

Webmasters Should Take Notice

These enforcement actions should put you on alert. While no affiliates were mentioned in the above-referenced cases, it is clear that affiliates of online pharmacies can be prosecuted in states such as Nevada. If you are promoting these programs, you run the risk of being dragged into one of these cases. There is little doubt that the industry will see many more prosecutions in this area of the online industry.

The above discussion is intended to be a general commentary on the above scenario. Each situation is different and this article is not intended as legal advice for your specific situation. Further, nothing in this article is intended to create an attorney-client relationship. If you have additional questions, please Joe Obenberger at AdultInternetLaw.com.

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AdultInternetLaw.com

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Next Newsletter
In the next newsletter, you should look for a discussion of tax issues since we are coming up on that dreaded time of the year. Subjects will include methods to get money back from the IRS as well as, hopefully, an interview with an accountant regarding general tax issues. This is a must read for those of you with tax questions.


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