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Additional information-Continued

Food and Drug Administration-Continued

New York District Inspectors' Work Plans, March 1966-
Sobol, M., Inc., report of inspection-----

Statement regarding reported instances of lack of therapeutic
equivalency..

Statement regarding cost of batch certification of all drugs..
Statement regarding the benefit to the taxpayer of a U.S. drug
compendium in order to provide a cost-benefit ratio....
Statement regarding trade-name manufacturers who also pro-
duce generic products..

Page

484

451

378

381

384

412

Guilford Drug Co., Hartford, Ala., letter to Hon. Bill Nichols, March 16, 1968..

932

Herbert, John, letter to Dr. Frankel.

Hoffman-La Roche, Inc., answers to written questions of House
Small Business Committee.

1043

570

Exhibit A.

Exhibit B

Exhibit C.

Exhibit D.

Exhibit E.

Infant mortality rates...

573

574

575

575

576

993

A170

536

Iowa Methodist Hospital, letter to Hon. John D. Dingell, March 22, 1968

Junker, David S., counsel, Wyeth Laboratories......

Kaufman exhibits:

1.-Office of Economic Opportunity letter to Project Directors,
comprehensive neighborhood health services programs, Octo-
ber 25, 1967_ .

2. Maryland Pharmaceutical Association letter to Dr. Talmadge
H. Pinckney, July 10, 1967...

Provident Hospital Comprehensive Neighborhood Health
Center, pharmaceutical services for the

3.-"Minutes, Board of Estimates" (Community Action Agency-
Provident Hospital).

4. Letter to Auxiliary Members and Provident Supporters, Sep-
tember 13, 1967, "Emergency"

Survey-Neighborhood, residents...

5. City Council Ordinance 2259 appropriating $800,000 for
Provident Hospital Comprehensive Neighborhood Health Cen-

ter...

6. Sunpapers article November 7, 1967, "Council Cool to Phar-
macy-Item in Provident Hospital plant lacks committee aid".
7.-Letter from Maryland Pharmaceutical Association to Hon.
Joseph J. Curran, November 9, 1967....

8.-Form letters sent to Baltimore City Council re Provident
Health Center pharmacy.

943

944

946

946

948

949

950

951

952

Lilly & Co., Eli:

Lakeside Laboratories, Division of Colgate-Palmolive Co., "Dear
Doctor" letter__

13. Baltimore City Council letter to John M. Frankel, February
19, 1968-

12. Office of Economic Opportunity letter to William D.
Schaeffer, February 15, 1968.

10. Article by Stephen J. Lynton, January 17, 1968, “OEO
Threatens To Cancel Provident Hospital Grant"
11.-Baltimore City Council letter to George McCarthy, Janu-
ary 1, 1968__.

8A. Amendments to City Council Ordinance 2259_
9.-Office of Economic Opportunity letter to Parren Mitchell,
January 11, 1968.

954

961

962

964

965

966

967

390

Diversified operations..

Number of generic drugs manufactured.

501

Warehousing and distribution service agreement..

Wholesale distributors and availability of drugs (map)

Response to questions forwarded by Representative Joe D.
Waggonner.

508

512

502

524

1967...

Quantity discounts___

Additional information-Continued

Lilly & Co., Eli-Continued

Wholesale drug distributors added in the last 10 years, through

Maryland Pharmaceutical Association, letters to:

Page

528

532

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J. Joseph Curran, November 9, 1967..

1053

Maryland Pharmacist, August 1966 article, "Maryland's Medical
Assistance Program'

1055

Massengill Co., The S. E., "Dear Doctor" letter..

Medical World News, March 8, 1968, article, "For Those Who Need It
Most ***"

386

989

Merck Sharp & Dohme:

Invoice specimen_.

646

Statement of principles on distribution and possession of sample
drugs....

[blocks in formation]

"Trading areas," where paucity of independents are concen-
trated....

333

Entire States with not a single independent full line NWDA
wholesaler..

336

Great American cities with only one "full line" NWDA whole-
saler..

363

States containing 75 percent or greater multibranched NWDA
full-line wholesalers as opposed to independents

364

Statement of election to accept the District of Columbia Non-
profit Corporation Act..

[blocks in formation]

Memorandum re "guidelines for Comprehensive Neighborhhood
Health Services Programs".

1002

Organon, Inc., "Dear Doctor" letter

391

Ortho Pharmaceutical Corp.; answers to questions by Committee___
Parke, Davis & Co.:

[blocks in formation]

Pfizer, Chas., & Co., Inc., letter to Hon. John D. Dingell, March 27,

[blocks in formation]

Plan for pharmaceutical services..

Pharmaceutical services for the

Letter to Auxiliary members Sept. 13, 1967..

Additional information-Continued

Provident Hospital Comprehensive Neighborhood Health Center-Continued Area pharmacies...

Page

981

1054

1049

1051

Record card_.

Letter to Charles G. Tildon, Sept. 21, 1967_

Robins, A. H., Co.:

Answers to general questions submitted by committee..

1051

976

871

Additional questions answered...

874

Manufacturer-wholesaler agreement.-

875

[blocks in formation]

1967 sales by major product to Defense Personnel Support
Center-

688

Wholesalers appointed, 1961-67.

690

Shrage, Nathan, letter to Hon. John D. Dingell, July 3, 1967---.
Skinner's Pharmacy letter to House Select Committee on Small
Business, July 9, 1967..........

A169

A169

Smith, Kline & French Laboratories:

Customers added, 1958-68_.

Wholesalers distribution and promotion agreement, 1966---
Wholesaler distribution agreement, 1968--
Answers to questions submitted by committee_.

708

713

697

701

707

Tilden-Yates Laboratories, Inc.:

Physician price list, July 1967.

887

884

Letter to House Small Business Committee, March 18, 1968---

Wholesale price list, May 1967.

Tufts University Health Center, letters to Dr. Greenfield- ___ 1015, 1016 Upjohn Co., The:

Recent changes in discount structures.

Trade catalog price changes, from June 1, 1967....

Warner-Chilcott Laboratories:

Answers to general questions submitted by committee...

[blocks in formation]

Equanil, average of annual purchases by ten 250-bed hospitals..

668

674

630

631

633

634

635

637

639

640

547

549

SMALL BUSINESS PROBLEMS IN THE DRUG INDUSTRY

TUESDAY, AUGUST 8, 1967

HOUSE OF REPRESENTATIVES,

SUBCOMMITTEE ON ACTIVITIES OF REGULATORY AGENCIES

OF THE SELECT COMMITTEE ON SMALL BUSINESS,

Washington, D.C.

The subcommittee met, pursuant to recess, at 10:10 a.m., in room 2359 Rayburn House Office Building, Hon. John D. Dingell (chairman of the subcommittee) presiding.

Present: Representatives Dingell, Smith, and Conte.

Also present: Gregg Potvin, subcommittee counsel; Myrtle Ruth Foutch, clerk; and John J. Williams, minority counsel.

Mr. DINGELL. The subcommittee will come to order. This is a continuance of the scrutiny of the Small Business Committee Subcommittee on Regulatory Agencies of practices in the retail, wholesale, and manufacturing pharmaceutical industry. The committee has been scrutinizing certain practices which may or may not involve violation of the antitrust laws, the Robinson-Patman Act, and certain other Federal statutes. As part of these hearings, the Chair is happy to welcome Dr. William S. Apple, executive director of the American Pharmaceutical Association, who is accompanied by Mr. Robert Steeves.

Gentlemen, the Chair is happy to welcome you for your statement this morning.

The Chair notes that you do have a prepared statement, Dr. Apple, So we will be most pleased to recognize you for that.

Parenthetically, the Chair has to note with some regret that the public television bill is up before the Commerce Committee and-I do not think Mr. Conte is aware of this yet, but, Mr. Conte, you may be called upon from time to time to chair the committee, and we will rely upon your good graces so to do.

Dr. Apple?

TESTIMONY OF DR. WILLIAM S. APPLE, EXECUTIVE DIRECTOR, AMERICAN PHARMACEUTICAL ASSOCIATION; ACCOMPANIED BY ROBERT F. STEEVES, DIRECTOR, LEGAL DIVISION

Dr. APPLE. Mr. Chairman, the American Pharmaceutical Association is the national professional society of the pharmacists of the United States. I am Dr. William S. Apple, executive director of the American Pharmaceutical Association, and I am accompanied by Mr. Robert F. Steeves, director of our legal division.

Mr. Chairman, on April 3, when you first invited me to appear, we were getting ready for our 114th annual meeting. We appreciate your postponing our appearance not only as a matter of convenience, but

because our committees and house of delegates extensively discussed the problems about which we are testifying.

In his message to the Congress on older Americans last January, President Johnson noted:

Medicare does not cover prescription drugs for a patient outside the hospital. The President then said:

We recognize that many practical difficulties remain unresolved concerning the cost and quality of such drugs. This matter deserves our prompt attention. I am directing the Secretary of Health, Education, and Welfare to undertake immediately a comprehensive study of the problems of including the cost of prescription drugs under Medicare.

On May 31, 1967, Secretary Gardner, in announcing the establishment of the special task force on prescription drugs, stated:

Prescription drugs are an essential element of modern medical care. In the last 25 years we have witnessed greater advances in the use of drugs than in the whole previous history of medicine. Today, drugs and biologicals make possible the prevention and successful treatment of illnesses that were formerly serious and frequently fatal.

The major functions of the profession of pharmacy are involved with the distribution of prescription drugs to patients. We have been following the hearings of this subcommittee because the economics of the distribution system that provide our practitioners with their drug inventory are directly related to the economics of the final charge patients must pay pharmacists for their prescriptions.

Some people argue that individual and governmental expenditures for drugs and pharmaceutical services are too high. Others argue that the expenditures are relatively insignificant compared with the value received. We didn't come here today to play the "numbers game" or discuss percentages. We did come here to describe a critical problem facing our profession-a problem in which every American has a stake. We need not describe to the Congress the critical health manpower situation which now exists in our country. Of all the health professions, pharmacy is in the best position to meet the expanding demand for service. The bulwark of our strength is the private practicing pharmacist who has located himself to conveniently serve the noninstitutionalized patient. Yet it is this very same pharmacist who is now being threatened with extinction because of gross inequities in the distribution system.

When a patient learns from the public news media that congressional hearings have revealed that the Government paid only 50 cents for the prescription drug for which he has just paid his pharmacist $20, all "hell" breaks loose, to put it mildly. Patients who turn to the pharmacist for an explanation won't be any happier when the pharmacist explains that he had to pay $17 for his inventory. Many patients don't even give the pharmacist this opportunity. They write their Congressmen demanding relief.

We are not suggesting that the public be kept in the dark or that congressional inquiry be terminated. Nor do we suggest that the overall profit structure of the pharmaceutical industry is unreasonable. No one can deny the great contributions that our pharmaceutical industry has made to health care in the United States and the world. We do not think that the industry is guilty of amassing tremendous profits at the expense of the sick. But some of the current marketing practices which

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