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Mr. KINTNER. Thank you, Mr. Dingell, and I again congratulate you and your subcommittee and your counsel here for your courage in opening up this field, which is very much in the public interest.

Mr. DINGELL. Thank you. The Chair will observe that it is not the intention of the Chair to plow old ground. We intend to go into new ground. We don't intend to go into how much drugs cost and matters of this kind but to see to it that the antitrust laws and other laws of the United States are being fully and carefully carried out.

Thank you very much, Mr. Kintner.

The Chair observes we have two additional witnesses for today. The first is Mr. Skinner, past president of the Indiana Pharmaceutical Association of Plymouth, Ind.

Mr. Skinner, the Chair notes the House is in session. The subcommittee has not yet received permission to sit. If it would not inconvenience you unduly, would it be possible for us to hear you this afternoon?

Mr. SKINNER. That would be fine, sir.

Mr. DINGELL. The Chair also notes Mr. Morris Blatman, secretary of the Philadelphia Association of Druggists, is our second witness. Mr. Blatman, could you testify this afternoon?

Mr. BLATMAN. That will be fine.

Mr. POTVIN. Mr. Alvin N. Geser, secretary of the New Jersey Pharmaceutical Association, has written to the subcommittee and requested our consent to his appearing on the 10th of this month rather than today.

Mr. DINGELL. That will be quite appropriate. Without objection, it will be so ordered.

The subcommittee will then stand adjourned until 2 o'clock today. (Whereupon, at 12 noon, the subcommittee recessed until 2 p.m. of the same day.)

AFTERNOON SESSION

Mr. DINGELL. The subcommittee will come to order.

This is a continuation of the hearings on small business problems in the drug industry conducted by Subcommittee No. 5 of the House Committee on Small Business.

Before recognizing our first witness the Chair will recognize subcommittee counsel, Mr. Potvin, to enter a number of items into the record.

Mr. POTVIN. Mr. Chairman, I would like, if I may, to submit for the record at this time the following:

A letter dated March 31, 1967, from Eugene M. Elson, counsel for the California Pharmaceutical Association, together with an exhibit which is a price list for certain drugs; a statement by a member of the Glendale-San Fernando Pharmaceutical Association concerning the effect of multiple pricing of drugs by manufacturers and a statement by members of Pharmacists Professional Society of the San Fernando Valley concerning the effect of multiple pricing of drugs by manufacturers; a letter from the Honorable Don Edwards, Member of the House of Representatives, covering a resolution passed by the California Conference of Machinists on the question of drug prices; a letter addressed to the Honorable Joe L. Evins, chairman of the House Small Business Committee, from Mr. Stroud O. Brewer, Jr., of Durham, N.C.; a letter from Congressman Glenn Cunningham, of

the Second District of Nebraska, forwarding a letter from Mr. James E. DuBe, a druggist of Omaha, Nebr.

Mr. DINGELL. Without objection, the articles referred to, letters, and communications will be inserted into the record at this point.

(The matter referred to follows:)

Mr. GREGG POTVIN,

LOS ANGELES, CALIF., March 31, 1967.

Counsel, Select Committee on Small Business,
Washington, D.C.

DEAR MR. POTVIN: Upon my return to Los Angeles I took up with my client, the matters that you and I discussed and it was thought that the best way to bring their position to the attention of your Committee would be the preparation of a statement signed by members of one or two local associations and supported by addresses and statements by various persons well known and conversant in the field.

I am enclosing statements by "Pharmacists Professional Society of the San Fernando Valley" and a statement by "Glendale-San Fernando Valley Pharmaceutical Association." These are only two of many of such local associations in the State of California and I can assure you that I would have no trouble in obtaining a similar statement from all of those associations. Time has simply not permitted me to do so and it was felt that inasmuch as the ones I am sending to you are representative of the whole, it would be sufficient at least for present purposes.

It was thought that this would be a better method of bringing it initially to the attention of the Committee rather than having individuals come back and testify before it at the present time. If, however, you believe that it would be helpful to have individuals testify, I can produce them but what they would have to say would simply be that which is found in the statements presented and in the Exhibits filed in support thereof.

I want you to know that I appreciate very greatly your reception of me when I was in Washington last month and I can assure you that my clients and I are willing to do anything possible to assist your Committee in its endeavor. Attached hereto are lists of drugs dispensed on prescriptions by hospital pharmacies to non-hospitalized persons. This information was extracted from current prescription files of the respective hospitals.

Cordially yours,

EUGENE M. ELSON,

Legal Counsel, California Pharmaceutical Association.

Drugs dispensed on prescriptions by hospital pharmacies to nonhospitalized persons— This information extracted from current prescription files of the respective hospitals, Mar. 31, 1967

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Drugs dispensed on prescriptions by hospital pharmacies to nonhospitalized persons—
This information extracted from current prescription files of the respective hospitals,
Mar. 31, 1967-Continued

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STATEMENT BY MEMBERS OF GLENDALE-SAN FERNANDO VALLEY PHARMACEUTICAL ASSOCIATION RE EFFECT OF MULTIPLE PRICING OF DRUGS BY MANUFACTURERS The undersigned are pharmacists, licensed as such by the State of California, and are members of the Glendale-San Fernando Valley Pharmaceutical Association, located in Southern California and each of whom own and operate retail pharmacies in that area.

This statement is made for consideration by the Select Committee on Small Business of the House of Representatives in its investigation of practices detrimentally affecting small businesses which we understand commences April 3, 1967.

For several years manufacturers of pharmaceutical products have indulged in multiple pricing of their products, i.e., they sell them to State Agencies at one price; to hospitals at another price; to physicians at another price and to retail pharmacists such as the undersigned at another price which is considerably higher than the other three.

As a result of this practice, hospital pharmacies buy drugs at a far lesser price than is available to the retail pharmacy. In many instances hospital pharmacies sell drugs to out patients at prices less than it is possible for the retail pharmacy to purchase the same drugs from the manufacturer. In connection with such transactions the hospital pharmacy is in direct competition with the retail pharmacy. There is no basis in fact or reason why the manufacturer should be permitted to discriminate in this fashion against the retailer. By this practice the

community retail pharmacy is at such a competitive disadvantage that many find it impossible to remain in business and have been forced to close their doors. In support of the foregoing assertions we attach hereto the following as exhibits:

Exhibit "A".-Address by Grover C. Bowles, President, American Pharmaceutical Association, April 6, 1966.

Exhibit "B".-Report of the Committee on Social and Economic Relations, House of Delegates, American Pharmaceutical Association, April 1966.

Exhibit "C"."A Community Pharmacist Looks at Differential Discounts" by Merritt L. Skinner in "The Indiana Pharmacist," December 1965. The foregoing exhibits are but a fraction of the material that can be supplied to this Committee on the subject.

It is earnestly hoped that this Committee will be able to find a solution to this problem which is gradually destroying the retail pharmacy. Any further assistance that may be desired to assist this Committee will be gladly given.

Dated March 31, 1967.

M. F. Haugen, 1555 Valley View Road, Glendale, Calif.

Charles E. Butterwick, 800 Patterson Ave., Glendale, Calif.

J. Benom, 800 N, Pacific, Glendale, Calif.

Jack F. Richardson, 221 N. Central, Glendale, Calif.

Richard Headley, 1122 N. Brand, Glendale, Calif. 1400 Kemmett Rd., Glendale, Calif.

Geo. Beill, 1653 W. Glen Oaks, Glendale, Calif.

835 W. Glenroad, Glendale, Calif.

George F. Orsoline, 524 Dartmouth Rd., Burbank, Calif.
Jeremiah R. Murphy, 500 S. Chevy Chase Dr., Glendale, Calif.
Fred Vernon, 1313 N. Spazire Avenue, Glendale, Calif.
Dr. Gary F. Krueger, 1338 C N. Columbus, Glendale, Calif.
Ernest L. Lock, 17048 Chatsworth St., Granada Hills, Calif.
Morris H. Wise, 3067 St. George St., Los Angeles, Calif.

Ted Janis, 3808 Riverside Dr., Burbank, Calif.

Henry Krane, 4107 W. Alomeda, Burbank, Calif.

Willis Stamm (Manager), Adams Square Pharmacy, 1100 E. Chevy Chase Dr., Glendale, Calif.

J. F. Morello, 610 N. Central, Glendale, Calif.

Dennis Hugo Churchill, Tite Prescription Pharmacy, 633 N. Central, Glendale, Calif.

Charles A. Riley, Jr., Riley's Phcy., 540 No. Central, Glendale, Calif.

Carmen G. Silicato, North Brand Pharmacy, 600 N. Brand Blvd., Glendale, Calif.
Charles K. Jewell, Jewell & Son Pharmacy, 609 N. Central, Glendale, Calif.
Arthur O. Shenns, Flintridge Pharmacy, 447 Foothill Blvd., La Canada, Calif.
Victor Lee, 1937 Sunny Heights, Dr., Los Angeles, Calif.

Anita June Chong, 2480 Moreno Dr., Los Angeles, Calif.

William M. Jeunig, Six Ten Pharmacy, 3224 Glendale Blvd., Los Angeles, Calif. Frank S. Lemmon, Jr., 1032 Lavender Lane, La Canada, Calif.

Joseph C. Rhodes, 150 N. San Fernando, Burbank, Calif.

Al Beul, 22215 Welky Way, Canoga Pk., Calif.

David R. Rodriguez, 3835 El Caminito, La Crescenta, Calif.

Jack E. Butler, 1101 Alameda, Burbank, Calif.

Lina Ras, 10661 Riverside Dr., No. Hollywood, Calif.

STATEMENT BY MEMBERS OF PHARMACISTS PROFESSIONAL SOCIETY OF THE SAN FERNANDO VALLEY RE EFFECT OF MULTIPLE PRICING OF DRUGS BY MANUFACTURERS The undersigned are pharmacists, licensed as such by the State of California, and are members of the Pharmacists Professional Society of the San Fernando Valley, located in Southern California and each of whom own and operate retail pharmacies in that area.

This statement is made for consideration by the Select Committee on Small Business of the House of Representatives in its investigation of practices detrimentally affecting small businesses which we understand commences April 3, 1967.

For several years manufacturers of pharmaceutical products have indulged in multiple pricing of their products, i.e., they sell them to State Agencies at one

price; to hospitals at another price; to physicians at another price and to retail pharmacists such as the undersigned at another price which is considerably higher than the other three.

As a result of this practice, hospital pharmacies buy drugs at a far lesser price than is available to the retail pharmacy. In many instances hospital pharmacies sell drugs to out patients at prices less than it is possible for the retail pharmacy to purchase the same drugs from the manufacturer. In connection with such transactions the hospital pharmacy is in direct competition with the retail pharmacy. There is no basis in fact or reason why the manufacturer should be permitted to discriminate in this fashion against the retailer. By this practice the community retail pharmacy is at such a competitive disadvantage that many find it impossible to remain in business and have been forced to close their doors. In support of the foregoing assertions we attach hereto the following as exhibits:

Exhibit "A".-Address by Grover C. Bowles, President, American Pharmaceutical Association, April 6, 1966.

Exhibit "B".-Report of the Committee on Social and Economic Relations, House of Delegates, American Pharmaceutical Association, April 1966.

Exhibit "C".--"A Community Pharmacist Looks at Differential Discounts" by Merrit L. Skinner in "The Indiana Pharmacist," December 1965. The foregoing exhibits are but a fraction of the material that can be supplied to this Committee on the subject.

It is earnestly hoped that this Committee will be able to find a solution to this problem which is gradually destroying the retail pharmacy. Any further assistance that may be desired to assist this Committee will be gladly given.

Dated March 31, 1967.

Donald Levine, 5930 Graves Ave., Encino, Calif.

Arnold Spellman, 14952 Gilmore St., Van Nuys, Calif.

Joe Greene, 16100 Ventura Blvd., Encino, Calif.

Alford Perlis, 9900 Balloon Blvd., Northridge, Calif.

Herbert Woloshin, 16032 Knapp St., Sepulveda, Calif.

Edwin I. Rosenberg, 5863 Alcove Ave., North Hollywood, Calif.
Leonard Biande, 4401 Angustine Pk., Tarzana, Calif.

Bernard V. Orredul, 8725 Woodman Ave., Pacoima, Calif.

Robert Monguchi, 4901 Van Nuys Blvd., Sherman Oaks, Calif.
Edwin Drucker, 11273 Laurel Canyon Blvd., San Fernando, Calif.
Henry Lipon, 4920 Balboa Blvd., Encino, Calif.

James D. Reed, 320 South Brand Blvd., San Fernando, Calif.

C. E. Kertel, 39158 11th St. W., Palmdale, Calif.

Tom Pasag, 40217 97th W., Peoria Valley, Calif.

Earl J. Brady, 15202 Parthenia St., Sepulveda, Calif.

Harlan D. Unruh, 2732 Brookhill, La Crescenta, Calif.

L. Ruth McKenzie, 1368 Raymond Ave., Glendale, Calif.
George Junde, La Canada, Calif.

R. A. Cooke, 2201 Honolulu Ave., Montrose, Calif.

CONGRESS OF THE UNITED STATES,

HOUSE OF REPRESENTATIVES,
Washington, D.C., March 28, 1967.

Hon. JOHN D. DINGELL,

Chairman, Subcommittee on Regulatory and Enforcement Agencies, Rayburn House Office Building, Washington, D.C.

DEAR MR. CHAIRMAN: I am enclosing a copy of a resolution adopted by the California Conference of Machinists at their January 19-22 convention, urging that further Congressional inquiry be conducted into the prescription drug industry.

The Conference's support may be of interest to your Subcommittee in view of the hearings scheduled April 3, dealing with drug distribution practices and drug pricing. I have informed the Conference Secretary-Treasurer of the Subcommittee's forthcoming investigation, and I am sure the Machinists will follow the proceedings with great interest.

Sincerely,

DON EDWARDS, Member of Congress.

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