Risky Medicine for the Internet
By Edward Hudgins
March 12, 2000
The Clinton administration is proposing that all Web
sites selling prescription pharmaceuticals online be
licensed by the Food and Drug Administration. This unnecessary
move is first a far-reaching assault on e-commerce freedom.
Second, it is more generally an attempt to preserve
a failing regulatory system that is being undermined
by the Internet. And third, it is part of the administration's
effort to foist Clinton care on the public via the installment
Pharmacies are Already Licensed
Licensing pharmaceutical Web sites is pitched as a small
move to protect the public from the sale of counterfeit
products. Currently, pharmacies are licensed by state
governments, but since Internet purchases often are placed,
processed and shipped in different states, the federal
government claims it should regulate such sales.
But a similar argument might be made for the federal
regulation of all e-commerce to prevent fraud, sales
of defective or counterfeit products, or fly-by-night
operations that steal credit card numbers or never ship
orders. Such actions already are crimes that should
be prosecuted, and Internet entrepreneurs themselves
are developing ways to prevent such abuses. For example,
the survival of Amazon.com and other reputable Web sites
depends on customers who trust them enough to divulge
credit card numbers and to believe that the products
will arrive. Those firms have developed safety mechanisms
on their own, without government regulators.
Honest Internet entrepreneurs selling pharmaceuticals
can formulate effective, private consumer protection
guidelines and procedures. Those that subscribe to them
can post on their Web sites a seal of approval similar
to the Underwriters Laboratory seal for electrical devices.
And naturally they advertise that customers deal with
non- certified Web-based firms at their own risk. The
proposal that Web sites selling pharmaceuticals be registered
with the FDA is also government's reaction to the fact
that the Internet is undermining the raison d'etre
of the Securities and Exchange Commission, the Consumer
Product Safety Commission, and many other regulatory
For example, the justification for the existence of
the FDA is that neither doctors nor patients have the
information available to judge the safety and efficacy
of medicines. Thus the FDA must certify the truth of
any claims by pharmaceutical manufacturers about their
products. This process often takes years, adds billions
of dollars to the costs of drugs and leaves thousands
of patients suffering or dying while waiting for medication.
Information is Power
The FDA exercises strict censorship over everything manufacturers
can say about their products. If FDA doesn't approve it,
it is a crime to say it. But the Internet is allowing
individuals to take their health care more into their
own hands. Today, most individuals returning home from
the doctor can go online to seek information about their
illness and participate in discussion groups for patients
with similar problems. There is no reason, save FDA prohibitions,
why pharmaceutical manufacturers can't post test results
for their products online for all to evaluate, and allow
their representatives to answer questions in chat rooms.
The FDA realizes that the Internet and free access
to information in general threatens its existence. That
is why on October 24, 1995, it held a conference on
regulating Internet sales and censoring information.
Of course, it is easy to post information on Web sites
in other countries (as well as to sell pharmaceuticals
from overseas Web sites), thus representatives of other
governments and of the World Health Organization also
The FDA is particularly prone to overreaching with
its power. For example, it tried to classify a urine
sample cup in a HIV home testing kit and a hair sample
envelope in a drug testing kit as Class 3 "medical devices"
in the same category as heart valves requiring strict
regulations. It claimed jurisdiction over outdoor laser
light shows in Las Vegas that supposedly were interfering
with aircraft because lasers, even used for entertainment,
are classified and can be regulated as medical devices.
We can only imagine the new ways FDA will devise to
limit online speech and control e-commerce.
The plan to register Web sites selling pharmaceuticals
also is part of the Clinton administration's attempt
to implement its health care plan in installments. In
1993 Hillary Clinton attacked with particular vitriol
the pharmaceutical industry, which she blamed in part
for high health care costs and saw the need to regulate.
Americans decisively rejected her plan for socialized
medicine. And recently the administration renewed attempts
to regulate pharmaceuticals. For example, it is proposing
that the prices of drugs for seniors be controlled and
that the government in effect become the purchaser of
such products for the elderly. This is clearly an attempt
to exert control over pharmaceutical manufacturers and
health care consumers.
Where government would try to restrain some drug costs
by force, Internet sales can hold down the prices of
medicines the way Amazon.com helps hold down the price
of books through competition. The Internet also places
a large part of the health care sector beyond the control
of government, something that runs contrary to Clinton's
plan for health care.
The Clinton administration's Web site registration
plan is clever. It would begin massive regulation of
e-commerce, provide a model for preserving regulatory
agencies from the Internet threat, and help socialize
health care in the bargain. For these reasons the plan
should be rejected.
Edward L. Hudgins is Director of Regulatory Studies
at the Cato Institute.
This article was originall published in the January/February
issue of Health
The FDA exercises strict censorship over everything
manufacturers can say about their products. If FDA
doesn't approve it, it is a crime to say it . .
. We can only imagine the new ways FDA will devise
to limit online speech and control e-commerce.