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Clinton's Internet Assault is Bad Medicine

by Edward L. Hudgins

This article appeared on cato.org on January 11, 2000.

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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 plan.

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 agencies.

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. 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 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 attended.

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.