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Web group to screen bogus drug sellers
Source: Financial Times
Source Date: Monday, September 20, 2010
Focus: Institution and HR Management
Created: Oct 06, 2010

PHARMACEUTICALS

In a victory for the fight against criminal networks distributing counterfeit and adulterated drugs over the internet, the world's second-biggest seller of website addresses is to begin screening customers for unapproved drug sales.

Under pressure from security professionals, the internet governance group Icann and the White House, the domain-name seller eNom last week quietly retained LegitScript, a company that vets internet pharmaceutical concerns to make sure they are licensed to do business in the US.

While GoDaddy, the world's biggest seller of domain names, and other registrars have knocked thousands of rogue pharmacies offline, until now eNom, owned by Demand Media of Santa Monica, had refused to act without a court order or law-enforcement directive.

The changed approach was disclosed in an amended securities filing for Demand Media's planned initial public stock offering. The filing says LegitScript will assist eNom "in identifying customers who are violating our terms of service by operating online pharmacies in violation of US state or federal law".

ENom came under fire in June, when security research concern KnujOn accused it of handling registrations for 4,000 bogus pharmacies.

Pressure mounted as Demand Media - best known for its eHow and other freelancer-filled content sites - filed to sell stock. Icann, made up of commercial, government and consumer interests, asked the company how it planned to respond to complaints on the drugs issue.

In addition, Andrew Klein, the Obama administration's senior adviser for intellectual property enforcement, had invited registrars to a meeting in the White House later this month to discuss fake pharmaceuticals.

Legal orders against those selling counterfeit drugs are hard to get because the sellers are usually based in other countries, particularly in eastern Europe.

In part because of the difficulty of co-ordinating international law enforcement, internet drug sales have become one of the largest drivers of cybercrime. Gangs use viruses to capture computers inside homes or businesses, and then use the machines to spew spam e-mails advertising the drugs.

One website traced back to eastern Europe investigated by Cisco Systems security researcher Patrick Peterson was grossing an estimated $50m-$100m in profit as far back as 2006.

"Hundreds of millions of dollars in annual revenue generated by the illegal online pharmaceutical business acts as a magnet attracting cybercriminals and catalysing their efforts to attack [US] citizens," Mr Peterson told the Financial Times over the weekend.

LegitScript is endorsed by the National Association of Boards of Pharmacy, which represents the US state panels that oversee licensing of dispensaries. It already has a similar deal to vet customers of GoDaddy.

Credit: By Joseph Menn in San Francisco

 

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