Electronic Wine and Drug Sales Causes Stir In States

By: - May 3, 1999 12:00 am

WASHINGTON – The cyber marketplace seems to know no geographical boundaries, but Web-surfing wine connoisseurs and e-pharmacy shoppers should check their state laws before they order a case of California Chardonnay or a vial of Viagra with the click of their computer mouse. 

pharmacy shoppers better check their state’s laws before they order a case of California Chardonnay or a vial of Viagra with the click of their computer mouse.

Currently, liquor may be sold across state lines to residents in only16 states without restrictions, such as limits on sales volumes. Some 20 states prohibit direct-to-consumer sales of alcohol and six make it a felony.

While no state has yet banned outright the importation of pharmaceuticals purchased online, some states require that online pharmacy sites be licensed by a state’s pharmacy board to sell to clients in that state. A bill recently introduced in the New York state Senate would prohibit the sale of a prescription drug over the Internet. Currently, regulating drug sales is near impossible in the online world, according to pharmaceutical industry officials.

Alcohol sales online

On the alcohol front, the direct sales are largely limited to wine. Direct sales of hard liquor are effectively barred throughout the nation and attempts by purveyors of beer to mimic wine’s success in the 16-state zone of trade have failed in part because of shipping costs.

Those especially interested in promoting online wine sales are small family-owned California wineries that feel they are left out of the traditional system of marketing alcohol: producer to wholesaler to retailer. Of the 1,600 wineries around the country, more than 800 are in California and those wineries produce over 90 percent of the nation’s wine. Not all of these small vintners can sell to wholesalers because retail shelf space is limited and because there are not enough distributors to adequately market the 7,000 to 10,000 American wine labels currently for sale.

The 21st amendment, which repealed Prohibition in 1933, set up the “three-tier” system of sales and then handed the power to regulate alcohol over to the states. States’ ability to regulate and tax alcohol sales within their borders has bred a variety of laws that have made selling wine cumbersome.

Now, Sen. Orrin Hatch (R-Utah), chair of the House Judiciary Committee, is bringing the issue back into the federal arena because he worries that computer-savvy teens may be side-stepping anti-drinking laws by getting liquor on the Net.

Hatch introduced a bill in March called the “Twenty-First Amendment Enforcement Act,” that would allow a state attorney general to file an action in federal court for an injunction to stop illegal shipments of alcohol into states with tough restrictions.

“States need to ensure that minors are not provided with unfettered access to alcohol. Unfortunately, indiscriminate direct sales of alcohol have opened a sophisticated generation of minors to the perils of alcohol abuse,” Hatch told a Senate Judiciary Committee hearing.

Hatch’s bill has been endorsed by Mothers Against Drunk Drivers and by a new group called “Americans for Responsible Alcohol Access,” founded by an association of wine wholesalers.

But Hatch must reckon with another new group in Washington strongly opposed to his bill: the Congressional Wine Caucus. This bipartisan group of 61 members of Congress has a larger agenda than merely to hold wine tastings.

The group’s founders, two California representatives and coincidentally, vintners, Mike Thompson (D-Napa Valley) and George Radanovich (R-Mariposa) told Hatch’s committee in March that limits imposed by his bill could damage the efforts of many wineries to market their products.

“America’s family wineries simply wish to be able to respond to requests from adult customers wanting to purchase premium wine,” Thompson testified in March.

California Sen. Dianne Feinstein, a Democrat who is a member of the wine caucus and sits on Hatch’s Judiciary Committee, is also against the measure.

“The Internet presents a tremendous opportunity for small wineries to grow their business and for wine consumers to dramatically increase the wine selection to which they have ready access. Congress should be working to promote and encourage electronic commerce, not taking steps which could stifle and chill its growth,” Feinstein said.

Steve Gross, the state government relations director for the San Francisco-based Wine Institute says that Hatch’s worries about minors buying wine online are unfounded.

Gross said that wineries conducting direct sales have agreements with the shipping companies to use color-coded tape on the box that signals to the deliverer that an adult’s signature is required upon delivery. He said that in the 30 years of direct shipping in California he is “not aware of any documented case of any sale to a minor reported to an alcohol beverage control board that is anything other than a sting operation.”

“Our position is that this is a state issue. The 21st Amendment gave each state the right to regulate sales,” Gross said.

Pharmaceutical sales online

Selling drugs online is not hampered by the Constitution, but by current rules in place for mail-order drug companies. The National Association of Boards of Pharmacy is just now getting around to regulating e-pharmacies with a program called the Verified Internet Pharmacy Practice Sites, or VIPPS.

Sites participating in the program will display a VIPPS seal on their site that means that the company is “complying with the federal and state laws and regulations governing pharmacy practice.”

According to the National Association of Boards of Pharmacy, some 40 states require that out-of-state pharmacies be licensed within that state if they are to mail products within its boundaries.

Susan Winckler, the association’s director of policy and legislation, said regulation takes place at the state level because it involves the practice of pharmacy and the practice of medicine.

Winckler suggests that people using online pharmacies stick with one site, so that the pharmacist knows what other medication the patient is taking, make sure the pharmacy is licensed to serve people in their area, and use a site that allows its customers to directly speak to a pharmacist, versus allowing only e-mail communication.

The pitfalls of online pharmacies are that “you lose that face to face interaction…there are some things you can’t see in an e-mail, such as difficulty breathing because of an asthma attack,” Winckler said.

Another worry of the pharmaceutical industry is the difficulty of regulating online pharmacies outside the United States. “We have protections and requirements for pharmacies licensed in the U.S. that foreign sites don’t have,” Winckler said.

Some products with prescription-status in the United States are over-the-counter drugs in other countries, such as Premarin, an estrogen-replacement therapy, which is a prescription drug in the United States but not in Mexico.

Although some sites only fill prescriptions, others also consult and write them.

For instance, online sites selling the impotence drug Viagra proliferated when the FDA approved the drug in March 1998.

Winckler attributes some of the interest in regulating online pharmacies to the hype caused by the onslaught of Viagra-selling sites.

“It is such a potential danger for some people, without the consultation of a doctor, to just to go out and get a drug with a click of the mouse. I think that is what state legislators are concerned about,” said Jacob Herstek, a policy associate with the Health Policy Tracking Service, a component of the National Conference of State Legislatures.

Herstek says that although New York is the only state to introduce legislation that prohibits the prescription of a drug over the Internet to New York citizens, other states have begun to show interest, “but regulating what is sold on the Internet is not an easy thing to do for a state legislative body.” 

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