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February 13, 2003  

$48,000,000 In Fines Levied Against Six Online Pharmacists


As I have been reporting, online pharmacies have come under attack from various states. As predicted, the attacks are increasing in both volume and impact. On February 10, 2003, the Medical Board of California levied fines totaling $48,000,000 against six doctors for filing online prescriptions. In light of these fines, one has to wonder how much longer online pharmacies will be able to effectively function. More importantly, each of you should evaluate whether it is wise to continue to promote such programs.

$25,000 Fine Per Prescription

Under section 2242.1(a) of the California Business and Professions Code, the California Medical Board is authorized to levy fines up to $25,000 per prescription against medical professionals that write illegal online prescriptions. The specific law is as follows:

2242.1(a) No person or entity may prescribe, dispense, or, furnish…dangerous drugs…on the Internet for delivery to any person in this state, without a good faith prior examination and medical indication therefore…

(b) …a violation of this section may subject the person or entity to…to a fine of up to $25,000 per occurrence…
Using the above authority, the Medical Board investigated 1,952 online prescriptions written for residents of California for such drugs as Viagra, Celebrex, Propecia, Xenical, Meridia and Phentermine. Based on the investigation, the board levied the following fines:

· Michael Brunsman, M.D, licensed in Arizona, was fined $1,800,000 for issuing 72 prescriptions to Californians.
· Martin Feldman, M.D., licensed in Rhode Island and Florida, was fined $3,925,000 for issuing 157 prescriptions to Californians.
· Harry Hoff, M.D., licensed in Florida, was fined $1,250,000 for issuing 50 prescriptions to Californians.
· Carlos Levy, D.O., licensed in Florida, was fined $39,175,000 for issuing 1,567 prescriptions to Californians.
· David Livingston, M.D., licensed in Tennessee, was fined $1,500,000 for issuing 60 prescriptions to Californians.
· Jose Crespin, M.D., licensed in Florida, was fined $1,115,000 for issuing 46 prescriptions to Californians.

Enforcement Reaction

Representatives for the Medical Board indicated that the fines levied were to protect consumers from the "irresponsible and illegal" prescribing of medication over the Internet. The Board has taken the position that any prescription written without a physical examination is improper.

Importantly, the various lawyers for the physicians have indicated a strong appeal effort will be undertaken to reverse the fines. Unlike other enforcement actions, the size of the fines levied by the Medical Board make a settlement highly unlikely. Webmasters should expect to see this case move through the appellate courts and, potentially, to the U.S. Supreme Court. If the courts uphold the fines levied in a published opinion, particularly if the appeal is handled by federal court, the future of the online pharmacy industry will be in serious doubt.

Impact On Webmasters

The statute used in these enforcement actions does not have a provision punishing affiliates of online pharmacies. As a result, it is not anticipated that California will pursue affiliates in the near future. Affiliates must recognize, however, that laws in other states such as Nevada do allow for enforcement against affiliates sending traffic to online pharmacies.

Regardless of the state law referenced, online pharmacies and affiliates of such sites should give significant consideration as to whether the "game is up" for the online pharmacy industry. With major fines being levied, one has to wonder how much longer physicians will be willing to write online prescriptions. If physicians stop writing these prescriptions, the sites will necessarily go out of business. If this occurs, many affiliates could lose significant anticipated revenues. At this time, it is our recommendation that those of you promoting online pharmacy sales for Viagra, etc., move to other sponsor programs. The risk is simply not worth it.

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 contact Joe Obenberger at AdultInternetLaw.com.



Due to the huge fines noted in attached matter, we aresending this newsletter out as soon as possible. There is no "Right Column" information provided as webelieve it is vital that you have this information assoon as possible. The right column content will returnin the next newsletter, which should come out nextweek.

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