Sunday, October 03, 2004
Authorities crack down on online pharmacies
In 2000, Virginia's law was clarified making it illegal for doctors to prescribe drugs over the Internet to patients they have never examined.
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jeff.sturgeon@roanoke.com 981-3251
Internet pioneers of the 1990s saw great promise for online pharmacies.
If consumers could shop online for a pair of jeans, a mutual fund or even a house, why not prescription diet pills or tablets for arthritis pain?
Two pharmacists and an entrepreneur in the Roanoke Valley reached for a piece of the emerging Internet pharmacy industry. In 1999, they became drug suppliers associated with Web sites and doctors who prescribed medicine online.
Although two of them found it lucrative, it didn't pay off in the long run. All three have been punished and, this month, one is going to prison.
When they filled the drug orders, they did not believe they were doing anything wrong and say they thought they had the blessing of the state Board of Pharmacy.
According to authorities, the problem was this: Patients typed their health information and medication needs into Web sites without undergoing a physical examination by the prescribing doctor. Patients in some cases received excessive quantities of drugs.
Drugs must be dispensed for a legitimate medical purpose in the course of a valid doctor-patient relationship, or else their sale is illegal. While online pharmacies are convenient for patients and can be a profitable way to sell a lot of drugs fast, many authorities argue that peck-and-order Internet pharmacies pose a threat. Regulatory authorities and health care leaders see a continuing need for doctors to examine patients before they prescribe drugs and monitor them as long as they're taking the drugs. In addition, the quality, packaging and overall reliability of prescription medications available online to American consumers is uncertain, because some vendors can operate beyond the reach of regulators.
"Virtual" consultations in which a patient and doctor communicate through a Web site have been condemned by state boards of pharmacy, boards of medicine, the U.S. Food and Drug Administration and the American Medical Association, according to the National Association of Boards of Pharmacy. The prescriptions that result are invalid and, in many states, including Virginia, it is illegal for a druggist to fill such prescriptions.
In 1999, that was less clear.
Two now-defunct Roanoke companies did fill Internet-derived prescriptions, earning hundreds of thousands of dollars for owners.
The ventures were short-lived, wrapping up in 2000.
Years passed. The law was changed. Then authorities brought sanctions.
Daniel Michael Varalli of Salem spent 14 years during the 1980s and '90s as chief of the pharmacy at the Veterans Affairs Medical Center in Salem. Several years after leaving the hospital, he filled prescriptions at Home Prescription Services in Roanoke, where Internet-derived prescriptions began as a short-term, temporary source of business before expanding.
Varalli and Tommie Jo Nichols, another pharmacist, said they asked the Virginia Board of Pharmacy staff beforehand about the legality of filling such prescriptions and received no clear guidance. Nichols said state officials never told her to stop after the filling began in 1999. She said she is sure the state knew what was happening because she was candid with the state inspector who examined her pharmacy. He did not cite her.
"We were under the assumption from the Board of Pharmacy that we weren't doing anything wrong," Nichols said.
Elizabeth Scott Russell, executive director of the board of pharmacy, has said she recalls telling Varalli when he inquired that, if she were him, she wouldn't do it.
Nichols, whose primary interest was retail pharmacy, stopped after a few months, while Varalli continued such work at a newly formed mail-order pharmacy in Roanoke, Rx Direct. The pharmacy filled prescriptions for many doctors nationwide, only a few of whom did online prescribing, and sold only low-risk drugs such as diet pills, Viagra, Propecia for hair loss and Claritin, president Robert Patane said at the time.
Patane told Nichols he also thought he had clearance from the pharmacy board staff. He told The Roanoke Times in 2000 that online prescriptions were "a great niche" for his company, which Varalli co-owned.
Neither Patane nor Varalli would speak on the record for this article.
In summer of 2000, Virginia's law was clarified to say that a valid doctor-patient relationship requires at least one physical examination to have occurred. That made it illegal for doctors to prescribe drugs over the Internet to patients they had never examined.
Rx Direct closed within a year, according to records of the Virginia State Corporation Commission.
In the late spring of 2002, the state Board of Pharmacy brought disciplinary action against Nichols and Varalli for filling Internet-derived prescriptions. "Said prescriptions did not result from a bona fide practitioner-patient-pharmacist relationship," the state alleged, because no examination occurred.
Nichols told authorities she thought Internet communication between patients and doctors did create a bona fide relationship because the board of pharmacy staff had led her to think that. She was fined $6,000, reprimanded, placed on probation and told if she failed to follow the law, she'd have to pay another $6,000. She remains the owner and operator of Valley View Pharmacy in Roanoke.
Varalli, whose activity had continued for several months after Virginia toughened its law on Internet pharmacies, was fined $50,000 and placed on probation. He did not contest a statement released by authorities that he had filled 140,000 online prescriptions and that inspectors had found deficiencies in the Rx Direct pharmacy.
Federal authorities mounted their own offensive.
In October 2003, after a long investigation, federal prosecutors indicted the Internet pharmacy enterprise that had sent prescriptions to Varalli and Nichols to fill. In all, 10 businesspeople, doctors and pharmacists as well as several companies were accused of conspiring to distribute controlled substances and other prescription medicines illegally through Web sites and toll-free numbers. Prosecutors said at least $125 million worth of diet pills and other prescriptions went out the door between December 1998 and June 2003.
According to the indictment, a group led by Vincent Chhabra of Florida moved the operation out of Ohio after Ohio authorities grew suspicious and searched one of the operation's Ohio offices. The group re-established its operation in Virginia, relying on Rx Direct to keep the drugs moving during and after the transition, according to the federal indictment.
Prosecutors said drugs were supplied outside the "usual course" of a physician practice and without a clear medical purpose, as required by federal law. Though physicians worked with the Web sites involved, which went by names such as get-it-on.com, cybrx.com and rxclinic.com, the doctors did not routinely examine the drug purchasers and did not verify the accuracy of information they submitted electronically or monitor such developments as weight change, prosecutors said.
Prosecutors have obtained multiple convictions..
Carmen Catizone, executive director of the National Association of Boards of Pharmacy, said the enforcement strategy of federal and state authorities appears to be to "go after the most egregious sites," such as those advertising heavily or sending volumes of unsolicited e-mail and those selling controlled substances, steroids or other dangerous products. The Chhabra enterprise fit the bill; Catizone was scheduled to testify in the case but hadn't by the time of a recent interview.
Varalli's participation spanned only about a year beginning midway through 1999, during which he sold tens of thousands of illicit prescriptions and earned $720,000 in wages and profits, according to an account agreed to by Varalli. Varalli acknowledged dispensing large quantities of drugs to the same patients, adding weight to the prosecution's case that the enterprise was not primarily a medical one.
He pleaded guilty in April to a federal criminal violation of dispensing laws for federally controlled substances. In addition to drawing a prison term of 2 1/2 years, he forfeited $100,000. The Virginia Board of Pharmacy then suspended his druggist's license.
Varalli is scheduled to report to prison Oct. 15.
Patane pleaded guilty to a misdemeanor criminal charge of placing misbranded drugs into interstate commerce. The government views drugs dispensed from illegitimate prescriptions to be misbranded. A Roanoke businessman, Patane was fined $100,000. He could get up to a year in prison at his sentencing, scheduled Dec. 14.
