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Mr. POTVIN. McKesson & Robbins, of course, is about as full-line as you can get?

Mr. SHRAGE. They would be full-line.

Mr. POTVIN. Yes, sir. Do you receive any discount from M. Sobol? Mr. SHRAGE. Yes, I do.

Mr. POTVIN. And how much would that be?

Mr. SHRAGE. Ten percent, sir.

Mr. POTVIN. And does this require a minimum amount of orders per item?

Mr. SHRAGE. No minimum amount from short-line.

Mr. POTVIN. Do they deliver to you?

Mr. SHRAGE. They deliver what I need, every day to me, no matter how large or small.

Mr. POTVIN. With a 10-percent discount?

Mr. SHRAGE. That is correct, sir.

Mr. POTVIN. Do you deal with any other full-line wholesaler besides McKesson & Robbins?

Mr. SHRAGE. No; I couldn't. My business wouldn't allow it. As it is, it is about $800 with McKesson and the others would require about the same and that is why I am stuck. Formerly I was able to do it but today I cannot and that is all.

Mr. POTVIN. Does this not impose a hardship on you in that if McKesson & Robbins is short on an item that you order you just have to wait until they get it in?

Mr. SHRAGE. That is correct, sir.

Lots of times I promise a patient a certain item, and McKesson may not have it and I am just stuck. If I get a boy to run around perhaps I pick up that item but if I cannot then I have to give him back the prescription.

Mr. POTVIN. Has McKesson & Robbins ever discussed giving a discount to you?

Mr. SHRAGE. Not necessarily. They sent me a little pamphlet here that they would give me certain discounts if I could give them business $1,250 every 15 days and payment with 15 days.

Mr. PorvIN. And how much discount would they give you?

Mr. SHRAGE. Well, on certain items they would give me, let's say fast-moving pharmaceuticals 12 percent plus 4 would be about 15.5 percent. Sundry items 10 plus 4.

Mr. POTVIN. What do you mean when you say 10 plus 4?

Mr. SHRAGE. It would come to about 13 percent, because you first take 10 percent off, and then the rest.

Mr. PoTVIN. You take 4 percent of what is left?

Mr. SHRAGE. It comes to about 13.6 percent.

Mr. POTVIN. The second figure, the 4 percent, you would take off the

90 percent that is left after you have taken the first 10?

Mr. SHRAGE. That is it, so it would be 13.6 percent exactly.

Mr. POTVIN. And is there any other category on the sheet, sir?

Mr. SHRAGE. Dozen, packed deals containing a dozen of one item in size, 8 plus 4, which would be about about 11.8 percent.

Mr. POTVIN. And why have you not availed yourself of this seemingly generous offer, sir?

Mr. SHRAGE. Because I can't afford it. I am a small man. I want to pay my bills. I want to discount them as best I can. I have been honorable and I do not want to get into trouble.

Mr. POTVIN. In other words, your volume is not large enough to qualify?

Mr. SHRAGE. That is correct. Formerly I could but not right now. Mr. POTVIN. Yet, sir, it would seem that, of necessity, you have to deal with a full-line wholesaler because there is no other source of supply for Eli Lilly, Meade Johnson, and certain other important lines?

Mr. SHRAGE. Perfectly right.

Mr. POTVIN. You do, in fact, deal with McKesson & Robbins?
Mr. SHRAGE. I do.

Mr. POTVIN. You are required to give them how much a month?
Mr. SHRAGE. At least $800 a month.

Mr. POTVIN. If you do not give them that much in volume, they will not deal with you at all?

Mr. SHRAGE. No. The salesman said if you cut we can't deal with you. It doesn't pay us to deal with you.

Mr. POTVIN. The majority of the items that McKesson & Robbins offers for sale you can also buy from your short-line wholesaler? Mr. SHRAGE. That is right, sir.

Mr. POTVIN. And that would be for 10 percent less?

Mr. SHRAGE. That is right.

Mr. POTVIN. But on certain items you can get only from your fullline wholesaler?

Mr. SHRAGE. That is right.

Mr. POTVIN. Of the $800 a month business that you give McKesson & Robbins, is all of that items that you cannot get from a short-line wholesaler?

Mr. SHRAGE. Many items that I give them I can get from a shortline wholesaler but I want to keep up that $800 so I get them from

them.

Mr. POTVIN. In other words, you are required to purchase items from them at 10 percent more to make up this minimum figure of $800?

Mr. SHRAGE. That is right, sir.

Mr. POTVIN. Then as far as that 10 percent goes, how would you characterize that?

Mr. SHRAGE. Well, you see the idea, in order to meet a certain amount of competition, I am not able to meet that. I try to meet it to an extent. It is a poor neighborhood there. I want to give them the best possible price. It is taken off my profit.

Mr. PoTvIN. Isn't the situation such that you are paying involuntarily an additional 10 percent on part of this $800?* Mr. SHRAGE. That is correct.

Mr. POTVIN. And to this extent it serves no useful purpose from your point of view.

And it is, in fact, extortionate in nature. Is that not correct, sir? Mr. SHRAGE. Well, I wouldn't-I mean I don't want to hurt anybody.

Mr. POTVIN. That is my conclusion, not yours.

Mr. SHRAGE. That is right, sir.

Mr. POTVIN. It is 10 percent that you are not getting anything for? Mr. SHRAGE. That is correct.

Mr. POTVIN. About what percentage of this $800 would fall into that category in most months, sir?

Mr. SHRAGE. I would say about 10 percent-10 to 15 percent.

Mr. POTVIN. It would vary from month to month?

Mr. SHRAGE. That is correct.

Mr. POTVIN. What would be the highest percentage that you would encounter during a month that you could have gotten from your short liner?

Mr. SHRAGE. About 15 percent.

Mr. DINGELL. Mr. Williams?

Mr. WILLIAMS. One question. We had testimony here previously of a druggist who "bulked" an order with another drugstore in order to arrive at the minimums required by the wholesaler. Have you ever considered this? Is this possible under the arrangement which you have with McKesson & Robbins?

Mr. SHRAGE. You mean if I go in with somebody else to buy?
Mr. WILLIAMS. Right, on your purchases.

Mr. SHRAGE. They have never mentioned that to me. I have tried to speak to a few, perhaps we can get together to save ourselves, but to be honest with you, the small man, perhaps that is why we are small men, there is jealousy between them and they won't do it. They are sort of individual and it is very difficult to get anything with them. I have tried, in order to save myself, but they are just independent and they say no, they won't do it. I have spoken to a few of them. Perhaps we can help one another because it is impossible. I will be frank with you. I don't sleep nights and worry and in the squeeze that I am in and with the stealing that is going on, I am afraid of my own shadow there, Frankly, they even come and take items off my shelf, and I can't say a word. You don't know what we are going through. This is a hard situation.

Mr. DINGELL. In your own shop you can't say a word?

Mr. SHRAGE. That is correct, sir. In fact, I had two telephones. I had to take out these two telephones.

Mr. DINGELL. May we have the McKesson & Robbins flier for the

record?

Mr. SHRAGE. Certainly you may have it. (The information referred to follows:)

WHAT MCKESSON IMPROVED DISCOUNT PROGRAM

CAN MEAN TO YOU

DOZENS AND PACKED DEALS CONTAINING 1 DOZEN OF 1 ITEM AND SIZE

8% + 4% = 1168%

MOST PREPACKED SUNDRY DEALS

10% + 4% + = 13.6%

FAST MOVING PHARMACEUTICAL ITEMS

-- 12% + 4 % = 15.52%

UP TO

"IT'S GOOD BUSINESS TO DO BUSINESS WITH MCKESSON"

* BASED ON PURCHASES OF 1250.00 EVERY 15 DAYS AND PAYMENT WITHIN 15 DAYS OF STATEMENT DATE.

Mr. PorVIN. Mr. Shrage, isn't McKesson & Robbins a rather large firm with something like 185 branches?

Mr. SHRAGE. I wouldn't know.

Mr. POTVIN. Can you tell us which office you deal with and where it is located?

Mr. SHRAGE. The one that is in the Bronx.

Mr. POTVIN. Now would this flier that you read be part of the McKesson & Robbins so-called cooperation-plus program? Does that sound familiar to you?

Mr. SHRAGE. That is what it is. In order to meet certain competition, I guess, from other wholesalers, and if you are doing enough business, they want to get you. They want you to buy from them as much as possible.

Mr. Porvin. It is part of their so-called cooperation-plus program? Mr. SHRAGE. That is correct.

Mr. POTVIN. Now, do you get next-day delivery from McKesson & Robbins?

Mr. SHRAGE. If I call in the morning, I get the same day delivery. Mr. POTVIN. Is there a special time in which you must place your order to get that type of service?

Mr. SHRAGE. Yes. There is no problem. Generally before 2 o'clock in the afternoon, if I order, I will get it about 6 or 7 o'clock.

Mr. POTVIN. We have had testimony from several individual druggists on what is alleged to be the undue proliferation of various forms of the same drug. Examples are Librium in a capsule form, and Libtab in a tablet form. These, of course, are put out by Roche.

Another example that the subcommittee received a complaint about was declomycin, manufactured by Lederle in both capsule and tablet form. Can you tell us whether you stock declomycin?

Mr. SHRAGE. I do. I have it in 150 milligram tablet form, and I have the 150 so-called capsule form.

Mr. POTVIN. Are they both moving?

Mr. SHRAGE. No, the capsule is moving. The tablet is not moving, sir, just laying there on the shelf.

Mr. POTVIN. Your money is, so to speak, sitting there on the shelf? Mr. SHRAGE. That is correct.

Mr. POTVIN. What about the Libtab situation?

Mr. SHRAGE. While talking to some of the physicians in the neighborhood I said, "Look, I can't afford to have these two products. They are the same identical thing. You have to help me because I can't af ford to keep all this merchandise on hand. Please prescribe the capsule."

Mr. POTVIN. Sir, as a small businessman, certainly one of the smaller retailers in the Metropolitan New York area, do you find that the number of items that you are required to stock constitutes a hardship upon you?

Mr. SHRAGE. With different duplications it certainly does, very much so, very much so. It just chokes you. I have so many duplications. Naturally a doctor writes, you try your best. I never try to substitute, I try to give just what the doctor wants, unless it is impossible, I send around and I can't get it, then I will call the physician and ask his approval. If he can't, then the patient has to wait, that is all.

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