Profiting from Fake Pharma

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In one case, a link found in a spam e-mail linked directly to unencrypted customer data. "There were credit-card numbers, names, addresses," Felman says. "They weren't even protected by a password."

And in most cases the money goes to vendors who are highly unlikely to be selling real pills. Ten percent of the pharmacy sites clearly said they didn't require prescriptions from a doctor before selling the drugs. In many cases, the drugs sold for an average price per dose of less than $3, compared with a typical price for the drugs of more than $10 a dose, even allowing for heavy discounting—another indication the pills couldn't have been made by a reputable manufacturer (see BusinessWeek.com, 12/18/06, "Bitter Pills"). "We suspect that given the prices, if they weren't fake they had to be stolen, expired, or diluted," Felman says.

Public Health Issue

Illegal online sales of drugs has become a public health issue. In July, authorities in Canada blamed the 2006 death of a 58-year-old British Columbia woman on sleeping pills purchased online. Officials have sought to crack down on the problem with varying degrees of success. This month, the U.S. Food & Drug Administration traced a million fake versions of a diabetes test strip made by Johnson & Johnson (JNJ) to a distributor in China. And in July, police in that country seized a ton of fake Viagra pills and fake doses of Tamiflu, an anti-influenza treatment made by Roche (RO.S). The raids came on the heels of the execution of the onetime head of China's main drug regulatory agency, who had been found guilty of accepting bribes in exchange for approving drugs for sale in China, some of which were later found to be unsafe.

So what's a consumer to do? When buying drugs online, get them only from pharmacy sites that are certified by the National Association of Boards of Pharmacy (NABP), experts say. The organization has a strict accreditation process and so far has certified only 13 Web sites. Among them are sites run by CVS Caremark (CVS) and Walgreen (WAG), as well as online-only concerns including Drugstore.com (DSCM). (The 13 accredited sites are listed at the NABP's Web site.)

Further, concerned consumers should ignore e-mailed come-ons from unrecognized companies, says Internet Law Group's Praed. "There isn't a single reputable company that sends unsolicited e-mail to consumers," he says. "If it's in your e-mail in-box, it's probably not from a legitimate company."

Hesseldahl is a writer for BusinessWeek.com in New York