Source: Business Week
Date: 18 December 2006

The Deadly Side Effects of Net Pharmacies

Operating in a legal grey area, their doctors write thousands of prescriptions for people, sight unseen. Is better regulation required?

Maxine Frith reports

For 30-year-old plastics salesman Craig Schmidt, life was supposed to be getting good. In April, 2004, he and his wife, Anna, had just moved into a new house in the Chicago suburbs. She was pregnant with their first child. He played basketball with his buddies on weekends and golfed regularly with clients. When he had time, Schmidt read Dostoyevsky and Hemingway.

Still, the pressure of a demanding sales pace required 70-hour work weeks while putting 60,000 miles on his car each year. His back bothered him. The stress had never been worse.

Checking his e-mail one day, Schmidt noticed spam pitches for the anxiety drug Xanax and the painkiller Ultram—quick remedies requiring no doctor's visit and no waiting on pharmacy lines. He only had to fill out an online questionnaire and type in his credit-card number. Unknown to Schmidt, two doctors—one in New Jersey, another in Philadelphia—then clicked on a button to approve the prescriptions. Neither had ever seen or spoken with Schmidt.

Testing the Market Not that either doctor would have the time. An accomplished "doc-in-a-box," as the hired hands of online "pharmacies" are known, typically approves Internet prescriptions at a rate of more than 1,000 a day—without communicating with the purchaser or, in many cases, reading the questionnaire. Such work may be less challenging than the average medical practice—and can be swiftly rewarding. For each prescription, a "doc-in-a-box" typically earns up to $10, and sometimes even more. An ambitious doctor can earn over $1 million a year.

Some shady online pharmacies don't even bother with prescriptions or doctors at all, they just respond to orders. Others hire doctors to approve prescriptions, generally required by law, for controlled pharmaceuticals. But without a physical exam, discussion of symptoms, consideration of medical history, and a diagnosis, a person can suffer unexpected consequences from medication they believe can help alleviate their condition. In Schmidt's case, he nearly died and has been left permanently impaired.

How easy is it to get prescription drugs online? In 2004, private investigators at Beau Dietl & Assoc., hired by the drug industry group Pharmaceutical Research & Manufacturers of America, easily obtained a range of prescription medicines by lying on questionnaires. Among them: antidepressants Zoloft and Paxil, muscle relaxant Zanaflex, and weight-loss drugs Meridia and Bontril. In a June, 2006, report for Columbia's National Center on Addiction & Substance Abuse, the same investigators noted that "it was rare for an online pharmacy to reject an order or even follow through with a phone call."

Redefining a Relationship That's why many medical boards and authorities, including the Drug Enforcement Administration, consider invalid any prescription of drugs that doesn't involve a face-to-face consultation. Under federal regulations, prescriptions are valid only if issued by a doctor "in the usual course of his professional practice."

Just what that means in the Internet Age isn't clear. "The government position is that if there's no face-to-face, traditional Marcus Welby M.D. kind of exam, the prescription isn't valid. It's as if you're selling heroin on a street corner," says John Vandevelde, a Los Angeles lawyer defending a person accused of illegally distributing drugs through a number of online pharmacies. "Maybe the old Marcus Welby model doesn't make sense. Maybe the world is too fast, too busy, and health care is too expensive to be that way," he says.

Even the lawmakers aren't clear on what's legal or not. By complying with federal law which requires prescriptions—but then having doctors approve them without seeing or speaking with a patient—"some rogue sites operate in a legal gray area," noted a legislative attorney for the Congressional Research Service in a May, 2005, report to Congress. "This practice, though potentially unsafe for patients who may be diagnosed incorrectly, is not necessarily illegal," the attorney added.

Unhappy Awakening Congress and the courts may have to sort it out. A big item on the DEA's wish list is an overdue definition by Congress of exactly what constitutes a modern doctor-patient relationship. State laws usually apply to doctors and pharmacies, but not to the borderless world of the Internet. What's more, some major companies now routinely encourage employees to consult doctors online. When is that permissible, and when not? Then there's the problem of whether all drugs need to be treated alike.

Schmidt wasn't thinking about such things, and, anyway, spending $400 online for brand-name drugs like Xanax and Ultram simply seemed easier and more discreet than visiting a doctor. When he received the brown manila envelopes, which he had ordered from and, Schmidt quickly took one tablet of each drug and headed for an errand at the local hardware store.The next thing Schmidt remembers is waking up in a Chicago hospital room three weeks later. His family had all but abandoned hope he would live. Doctors had diagnosed Schmidt's condition as hypoxic encephalopathy—widespread brain damage.

It turned out that each Xanax tablet Schmidt received contained 2 mg.—quadruple the usual starting dosage a doctor would prescribe. The overdosage apparently caused Schmidt to grow confused and take more pills—one of the reasons doctors don't generally prescribe such a large first dose to a new patient. The combination also apparently caused him to black out and wreck his car. He suffered a heart attack and fell into a coma. Despite several attempts, BusinessWeek could not reach the operators of the online pharmacies Schmidt used.

"Russian Roulette" Today, Schmidt's brain damage has permanently impaired his balance. He can't drive. He can't walk far without stumbling. He takes medicine for spasms in his legs. The salesman who once kept a fierce pace can no longer hit a golf ball or type more than 20 words a minute. "Don't do what I did," says Schmidt. "It's like playing Russian Roulette."

Schmidt now lives in Indiana with his parents, who care for him. He works in the family business, a microbrewery. "There's a lot of anger in me," says his father, Tom. "This has changed our lives, his wife's life, everything."

Last January, Schmidt obtained a $650,000 out-of-court settlement from the malpractice insurer of a Philadelphia internist, Steven Klinman—the doctor whose name appeared on his bottle of Xanax. Schmidt also sued Ranvir Ahlawat, a practitioner in Tom's River, N.J., who had prescribed Ultram. But Ahlawat wasn't held liable. His lawyer argued successfully that Xanax caused Schmidt's problems.

Indicting Internet Docs In an unrelated criminal case, a Philadelphia grand jury in September indicted Klinman and Ahlawat for approving thousands of online prescriptions without having communicated with the purchasers. The doctors were charged with violating federal law—distributing controlled substances by writing "invalid" prescriptions "without a legitimate medical purpose and outside the course of usual professional practice."

Klinman has pleaded guilty and could be sentenced to up to 41 months in prison. His attorney, Glenn Zeitz, hopes to get the term reduced by highlighting ambiguities in regulations and guidelines for the growing online practice of medicine and drug delivery. "There's a large public-policy issue out there. Should all of this conduct be criminalized, or are there areas where there's an appropriate way telemedicine can be conducted?" says Zeitz.

Ahlawat has yet to enter a plea in the Philadelphia case. His lawyer, Robert Mintz declined comment. Ahlawat, reached in Tom's River, also declined requests to talk, explaining he was "too busy with patients."

Lack of Guidelines According to court documents, during a 16-month period from 2003 to 2004, Ahlawat was paid more than $1.3 million by Los Angeles-based pharmacy For reviewing customer orders over five months in 2004, Klinman made $221,028. Prosecutors say the Internet pharmacy grossed nearly $34 million during a 15-month period from 2003 to 2004.

Ahlawat, Klinman and three other "review doctors" were paid by up to $10 for every prescription they approved, according to court documents. One of the site's operators, Michael Bezonsky, is an Internet marketer. He's now in custody in San Diego for his role in running a number of online pharmacies.

According to court records in Philadelphia, where he's accused of selling drugs without a valid prescription, Bezonsky founded and a successor company in Costa Rica. His lawyer, John Vandevelde, declined to discuss the specifics of the case, but says "one of the problems for the government and for the industry is that Congress hasn't made it clearly a crime to engage in Internet prescription and delivery of drugs."

Underground Networks Bezonsky's partner in, a longtime Internet marketer of inkjet cartridges and mortgages named Thomas Beaulieu, has pleaded guilty to a reduced charge stemming from the outfit's reliance on invalid prescriptions. "There's a reason we walked out with a misdemeanor: The government's theories of prosecution on this whole concept don't work well," says Beaulieu's lawyer, Benjamin Gluck. "Online prescriptions are not per se illegal."

Although Schmidt's Xanax and Ultram list Ahlawat and Klinman as the prescribing doctors on the bottles, the drugs came from a different online pharmacy than Review doctors tend to work from their home or office for more than one online pharmacy. When Schmidt placed his order, he could have unwittingly tapped into a network of at least a dozen Internet pharmacies whose ever-changing Web sites, shifting bases of operation, interlocking companies, and nationwide stable of prescribing doctors had eluded authorities for two years.

That is, until October, 2004, when an alert UPS employee in Minnesota opened a package addressed to a city that didn't exist. Out spilled a pharmacy vial of Xanax. Other packages had originated at the same set of return addresses. The UPS employee checked. None were registered pharmacies. Some were vacant buildings.

Filthy Factories A check of UPS accounts used to send the packages eventually led to one of the biggest Internet "pill mills" ever uncovered. By July, 2005, a law enforcement crackdown in Miami had led to the arrests of 22 people involved in a racket said to have sold more than $10 million in addictive pain killers and other drugs through Web sites such as,,,,, and, according to court documents in Florida. Attempts to reach operators of the Web sites, some of which still appear active, were unsuccessful.

In arrest affidavits, Florida authorities described the places where pills were made and shipped out as huge, filthy rooms where rotting food and UPS shipping cartons lay strewn about. At one location, a former nightclub, fiberglass insulation drifted down from ceilings above high-speed pill-counting machines. In the machines' trays, spilled powder from one formulation contaminated others—the kind of mixing that could cause a severe reaction in patients. The operation processed 2,000 orders each week.

Authorities said the rogue factory was run by a couple who owned a pharmacy called "La Familia"—the family. That was what the label on Schmidt's bottle of Xanax had read: "La Familia Pharmacy." .

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