Intellectual Property Law

Auction Websites and the Sale of Prescription Drugs

By IBLS Editor

The United States (US) Food and Drug Administration (FDA) and the Federal Trade Commission (FTC) are the government agencies regulating and controlling the sale of prescription drugs in the US.  US online sites illegally dispensing prescription drugs may face liability and be the subject of lawsuits filed by any of these agencies, specially the FTC.  Likewise, private auction sites are contribute to controlling the sale of prescription drugs in the US by assuring that its customers do not list these items in their websites.  This article provides information on the online sale of prescription drugs in the United States.

The Federal Trade Commission
Under 15 U.S.C. §§ 45(a) the US Federal Trade Commission is empowered and directed to prevent persons and corporations from engaging in unfair or deceptive trade practices.  15 U.S.C. § 53 authorizes the FTC file complaints, petitions for preliminary injunction, and restraining orders against individuals or corporations engaged in unfair or deceptive practices. Therefore and in compliance with the mandates of Title 15 of the US Code, the FTC has stated its position regarding the online sale of prescription drugs. 
The Federal Trade Commission (FTC) has set strict rules regarding the online sale of prescription drugs.  For instance, the FTC requires those websites selling prescription drugs, or online pharmacies, to clearly provide the following information:
1. the 'name, business address, and phone number of the pharmacy that will dispense the prescription drug, and the state or states where such pharmacy is licensed or registered to do business;'
2. 'the name, address and phone number of the physician who will review the information provided by the consumer for the purpose of determining whether to issue or authorize the prescription, if such service is offered, and the state or states where the physician is licensed or authorized to practice medicine;'
3. 'the name, business address, phone number and a contact person for the entity offering the prescription drugs;'
4. 'the state or states from which the entity will accept orders for prescription drugs; and
5.  a legal notice stating that "Dispensing a prescription drug without a valid prescription is a violation of Federal law.'
Even though the above requirements are directly affecting online pharmacies, they may also apply to those individuals or companies selling prescription drugs through eBay or other online auction sites.   The FTC requires that prescription drugs offered for sale online are sold by pharmacies, through an approved physician or other medical personnel. 
  

Auction Sites Legal Agreements
Regarding online auction sites and prescription drugs listings, almost all US-registered auction sites properly expel out in their contractual agreement with member that the sale of prescription drugs, hazardous materials, or controlled substances is strictly prohibited in their sites.  Additionally, most of these sites include a general clause prohibiting the sale of products that violate any law or regulation of the US.   These agreements are legally binding and so clear and unambiguous that they usually do not survive summary judgment as a matter of law.  
For instance, in the Ohio case of Dr. Durick v. eBay, (case No. 05-MA-198, and 2006), the Ohio Court of appeals confirmed the summary judgment entered for the defendant eBay, by the US District Court. Durick, a dentist, was registered in defendant's site, eBay, and sold prescription drugs.  eBay notified Durick that the sale of prescription drugs, controlled substances, and hazardous materials was prohibited and in violation of the membership and parties' contractual agreement. Thus, eBay requested Durick to remove listing prescription drugs from its site or his membership could be suspended and/or terminated.  Over a period of 2 years, eBay notified Durick of its intent to cancel Durick's membership due to Durick's listing of prescription drugs in the eBay.   eBay canceled Durick's membership in eBay after Durick's refusal to remove those items from the auction site.    Durick sued eBay for breach of contract and requested damages. 
The District court granted summary judgment for the eBay and Durick appealed.  The Ohio Court of Appeals confirmed the trial court judgment and held that eBay's contractual agreement with its customers constituted a binding contract.  Further, the court held that the auction site's membership agreement prohibiting the sale of prescription drugs, controlled substances, and hazardous materials was clear and unambiguous and deserving of summary judgment as a matter of law.  Durick claimed the prescription drugs he sold in eBay were 'bottles with a nostalgic value,' in other words; they were antiques or collectors' items.  The Court held that even Durick violated its contractual agreement with eBay even if the items he sold were merely nostalgic; the court said Durick indeed listed prescription drugs and hazardous materials in the defendant's website.  

Full post as published by IBLS Internet Law Blog on June 09, 2008 (boomark / email).