Shadow RegulationAmericans pay by far the highest prices in the world for most prescription drugs, and of course big pharma would like to keep it that way. Key measures that the industry relies upon in this regard are the Prescription Drug Marketing Act [PDF] and Ryan Haight Online Pharmacy Consumer Protection Act [PDF], which make it unlawful for most Americans to access lower-priced drugs from overseas, coupled with the powers of U.S. Customs and Border Protection (CBP) to seize such drugs at the border on their own initiative.

In practice however, discretionary guidelines developed by the Food and Drug Administration (FDA) and enforced by the CBP allow American consumers to import a 90-day supply of some prescription medications for personal use, including by bringing them across border checkpoints in personal luggage, or by mailing them from overseas. In the latter case, a large market exists for pharmacies registered in other countries such as Canada, Australia and Turkey, that will accept online orders and mail genuine pharmaceuticals to American consumers at cheaper than local prices.

Big pharma doesn't like this [PDF], but since the importation is already technically against federal law, they can't do much more about it. At least, not through legal channels…and that's where they get creative. As we described last week, where industry can't get government to regulate the Internet in the way they want, they frequently turn to private deals with Internet intermediaries that we've termed Shadow Regulation. Big pharma is a major proponent of this practice, having spearheaded a range of such private deals that they use in an attempt to quell the supply of prescription drugs to Americans through overseas online pharmacies.

This private censorship regime insinuates multiple links in the chain between Internet content and its audience. This includes blocking blacklisted pharmaceutical websites from access to payment services [PDF], online advertising services, and domain names. You might assume that the various terms of service of these companies, although all addressing online pharmaceutical sales in a similar way, were devised independently and voluntarily. But that isn't the case.

Profile of a Shadow Regulation Network

This particular Shadow Regulation network contains a confusing web of similar-sounding organizations with overlapping memberships, such as the Alliance for Safe Online Pharmacies (ASOP) and the Center for Safe Internet Pharmacies (CSIP). In simple terms the former is comprised mostly of the pharmaceutical industry, whereas the latter pulls in its partners such as Internet platforms (Facebook, Google, Microsoft and Yahoo!), payment processors (PayPal, Mastercard, and American Express), delivery providers (UPS), and domain name companies (GoDaddy and Rightside). A third key player is LegitScript, which was instrumental in the formation of both ASOP and CSIP, and carries out most of the operational level arrangements that are agreed at a level of principle by those organizations. Internet users are not represented at board level in either ASOP, CSIP, or LegitScript.

A hallmark of Shadow Regulation is that government is also often quietly involved behind the scenes, and so it is here. The formation of the CSIP was announced at a White House-hosted industry event [PDF] on October 14, 2010, following months of talks between the administration and the CSIP's founding industry members. Similarly, LegitScript is led by the former Associate Deputy Director Office of National Drug Control Policy, and subsists on lucrative contracts from government as well as from private industry. With this framework in place, the "voluntary" adoption by Internet intermediaries of measures that primarily benefit the pharmaceutical industry suddenly becomes very easily explicable.

Internet Blacklists

Two registers of online pharmacy websites are approved by both the ASOP and the CSIP. These are run respectively by LegitScript, and by the National Association of Boards of Pharmacy (NABP) under the name Verified Internet Pharmacy Practice Sites (VIPPS). A third, independent register is run by the eponymous, which the ASOP and the CSIP do not recognize. This is because while all three exclude sellers of fake and counterfeit drugs from their approved lists, only the U.S. pharmaceutical industry-run registers LegitScript and VIPPS also exclude overseas online pharmacies that supply genuine drugs to Americans under the FDA's personal use policy.

EFF has no quarrel with the use of these lists by users who wish to check that an online pharmacy complies with relevant safety standards and regulations, either according to the stringent pharma-industry approved lists or the more liberal PharmacyChecker list. What we do have a problem with is when the pharma industry lists are used as a secret content censorship mechanism, which prevents Americans from even finding pharmacies who can fill prescriptions in full compliance with FDA policy. This is what happens when such online pharmacies are blocked from access to essential Internet intermediaries such as domain registrars, payment processors and online advertising networks.

The latest extension of this Shadow Regulation regime is through the new top-level domain .pharmacy, which was granted by ICANN to the NABP last year notwithstanding a petition with almost 25,000 signatures from users opposed to the move. Websites registered in that domain space must comply with the same restrictive policies that qualify pharmacies for approval for the LegitScript or VIPPS registers.

This is perhaps not such a tragedy while there are other top-level domains in which pharmaceutical websites can be registered. But the NABP would like to see that changed too [PDF]. ICANN itself disclaims responsibility for policing the content of pharmaceutical websites, and rightly so. But the NABP is demanding ICANN force domain registries and registrars to require that any pharmaceutical website produce a license to dispense medicine to any jurisdiction that it ships to. This would not only shut non-U.S. pharmacies out of the .pharmacy domain, but effectively wipe them off the Internet altogether.

Where are the voices of healthcare consumers and Internet users in all of this? Their voices are not being heard, because the mechanisms of Shadow Regulation that have been put in place by powerful government and private industry forces have deliberately shut them out. The unsurprising result is that the measures put in place by this closed and captured process are too broad, favoring the private interests of big pharma, limiting access to information and access to safe and affordable medicine.

We agree that fake and substandard medicine sales are a problem that regulatory and law enforcement agencies should address. But they should do so through proper legal channels, or at least through cooperative mechanisms that are inclusive, balanced, and accountable—which ASOP, CSIP, LegitScript, and .pharmacy are not.

This article has been updated to correct the former job title of Legitscript CEO, John Horton.

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