CALIFORNIA CONFERENCE OF MACHINISTS, Hon. DON EDWARDS, Member of Congress, House Office Building, Washington, D.C. DEAR SIR: I am enclosing for your consideration a copy of Resolution #9 recently adopted by the delegates to the First Quarterly California Conference of Machinists. We respectively urge your aid and assistance in furthering the objectives of the resolution which we believe are self explanatory and would be of great benefit to the citizens of our country. Thanking you for your consideration, I remain Sincerely yours, JOHN T. SCHIAVENZA, Secretary-Treasurer. RESOLUTION No. 9 Whereas the late United States Senator from Tennessee, the Honorable Estes Kefauver, left a monument to his own great memory by his investigation of the prescription drug industry and its extortionate profits, vicious high prices, and immoral agreements, compacts and cartels with each other, and with prescription drug companies abroad, and Whereas this great work was left unfinished at the untimely death of Senator Kefauver, and Whereas the said prescription drug companies still extort profits up to twenty to thirty percent, net before taxes, by their resolute application of high prices that deny the benefits of the healing sciences to the poor, and especially the elderly, and Whereas the said high profits are now a direct drain on the Treasury of the United States, through Medicare, and on the State Treasuries through their participation in Medicaid, and Whereas the said drug companies still combine with each other and with companies abroad, to preserve their narrowly monopolistic organization by which the said high prices and profits are enforced, and Whereas it is morally wrong, and should be legally a crime, for any company or companies to amass unreasonable profits at the expense of the health and comfort, and often the lives, of the needy, ill and aged, and Whereas The Honorable Russell Long, United States Senator from Louisiana, has been quoted in the press as stating that he would resume the investigation of the prescription drug companies, their prices, profits and relations with one another, as a necessary preliminary to legislation to prevent the abuses herein complained of, and Whereas both the personal and family welfare of the members of this District, and the public policy of the District itself, both demand most urgently a more ample supply of prescription drugs, at a price more consistent with their real Cost: Now, therefore, be it Resolved, That this Delegate Body of District #508 of the International Assn. of Machinists and Aerospace Workers, AFL-CIO, does hereby request and endorse the most searching further investigation by the Senate of the United States into the prescription drug industry; and be it further Resolved, That copies of this Resolution be sent by the Secretary-Treasurer to Senator Long, both Senators from California, and to Congressmen Edwards and Gubser; and be it further Resolved, That this Resolution be also forwarded by the Secretary-Treasurer this District's delegates to the next California Conference of Machinists, and to the delegates of the Local Lodges of this District to the said California Conference of Machinists, with the request and recommendation that said conference take whatever action it deems advisable to secure the same purpose; and be it finally Resolved, That the California Conference of Machinists in Convention assembled in the City of Fresno, January 19, 1967 through January 22, 1967, go on record as concurring in the spirit and intent of this Resolution. BREWER DRUGS, Durham, N.C., March 29, 1967. Hon. JOE L. EVINS, DEAR REPRESENTATIVE EVINS: In connection with the hearings of the drug industry's distribution practices on small business before a House small business sub-committee on April 3 of which you are chairman, I would like to point out some pros and cons for the drug industries distribution practices. Attached is a copy of a Washington drug chain advertisement that will serve as an illustration and the items in question are marked:1 1. Maalox Liquid.-For an independent or small drug store to buy this direct, he would have to buy $100.00 order of all Rorer products to qualify for a 15 & 2% discount, normally this order would be made up largely of Maalox Liquid since this company has very few prescription items and nonprescription items as compared to the larger companies. Thus the cost of Maalox per bottle bought direct from Rorer would be 88¢ less 2% which net would be 86 (List price $1.10 less 15 & 2%). So from the attached advertisement their price is 786, thus it seems it's too low for a loss-leader. 2. Dayalets Vitamin Tablets.-Abbott Laboratories offers to all retailers 40 & 2% off list and all vitamins in over the counter sizes are sold on the basis of 2 packages free with 10 packages. Thus on this basis along with the other Abbott Vitamins listed were bought on this deal, hence the Dayalets cost them net around $2.71. So at their price of $2.99, their profit is low but this would not be a true loss-leader. 3. Parke-Davis Vitamins.-Their offerings to all dealers are similar to that of Abbott with the exception that they offer to consumer a 30 day supply of vitamins free. This free supply is attached to the 100 size. Thus the profit picture is the same as that of Abbott products. 4. White's A & D Ointment 12 oz.-A deal is offered to all retailers of 6 tubes free with each 30 tubes purchased with a net cost to the retailer of around 45¢. So at a retail price of 53¢, a profit is being made, a low one at that. 5. Ortho Creme.-A standard discount of 5% on two dozen and 10% on four dozen is offered to all retailers by the wholesaler on all Ortho products, and with this concern I suppose they are sold direct by the Ortho Co. thus they are getting more profit by direct buying. I hope the above examples will shed a little light on your undertakings and I feel that all the members of the drug industries are not to be condoned for the actions of the few. Also, I feel that one of the greatest needs for business to-day especially the small business would some form of price stabilization or fair-trade legislation. I would greatly appreciate if you would send me a report along on the hearings which you will be conducting within this committee. Thanking you in advance for your kindness, I remain, Yours truly, STROUD O. BREWER, Jr. P.S.-I fail to point out that I am a registered pharmacist and am an operator of a small drug store and have no connections with any mutual buying concern or national franchise drug lines. CONGRESS OF THE UNITED STATES, House of Representatives, March 31, 1967. MINORITY CLERK, House Small Business Committee B343B RHOB, Washington, D.C. DEAR SIR: Mr. James E. DuBé of Omaha, Nebraska, has asked that I forward to you his letter and enclosures concerning drug prices and drug companies. They are enclosed herewith. With kindest regards, I am, Sincerely yours, GLENN CUNNINGHAM, Member of Congress. 1 The material referred to is retained in subcommittee files. O'BRIEN DRUG, INC., Omaha, Nebr., March 22, 1967. Hon. GLENN CUNNINGHAM, CONGRESSMAN CUNNINGHAM: Would you do me the favor of forwarding this letter and the enclosed sheets to one of your colleagues on the appropriate committee? I understand that a committee of Small Business is going to do some investigation of drug prices and drug companies. It is practices such as those mentioned here and the policies of some companies of treating small stores and large stores differently when accepting merchandise for exchange which is hurting the small pharmacy owner. I myself am not a pharmacy owner, large or small, but prefer to practice my profession in the small stores which offer service to their customers rather than the large stores and am therefore interested in this matter. Thank you, JAMES E. DUBÉ. ROCHE LABORATORIES, Nutley, N.J. Introducing-Libritabs (chlordiazepoxide) 5 mg, 10 mg, 25 mg DEAR FELLOW PHARMACISTS: Roche is pleased to announce the availability of Libritabs (chlordiazepoxide), which provides the activity of Librium (chlordiazepoxide HCl) in a useful new form. You may wonder why we have introduced LIBRITABS (chlordiazepoxide) when Librium (chlordiazepoxide HCl) is already the most widely prescribed in its field. Libritabs (chlordiazepoxide), a tablet form, is designed to provide a new therapeutic option and added flexibility, enabling the physician to: facilitate management of the patient who prefers a tablet to a capsule prescribe a "new" course of therapy; for example, for members of the same family satisfy the psychoneurotic with greater flexibility of dosage forms prescribe alternate dosage forms for psychologic effect in long-term treatment We are convinced that this new tablet form, by extending the therapeutic usefulness of Librium (chlordiazepoxide HCl), will be in large demand quickly. It is important to note that, with respect to clinical activity, the base of chlordiazepoxide and its hydrochloride salt are indistinguishable and may be used interchangeably on a milligram-for-milligram basis. From all available information, there will be rapid physician acceptance and specification of this new tablet form. All strengths of Librium (chlordiazepoxide HCI) and Libritabs (chlordiazepoxide) will receive full sales and advertising support. We suggest that you order an adequate supply of each of the three strengths of Libritabs (chlordiazepoxide) from your wholesaler today: Enclosed is complete product information on both Librium (chlordiazepoxide HCI) and Libritabs (chlordiazepoxide). You will probably wish to advise physicians of the availability of Libritabs (chlordiazepoxide). Please feel free to call on us if we can be of further assistance. Sincerely, ROBERT E. ABRAMS, Director of Distribution and Institutional Sales Development. Designed primarily, in my opinion, to greatly increase their sales by the simple fact that practically every drugstore must buy one bottle of the 5 and 10 mg. tablets. Many of these will be used for one or two prescriptions, possibly 12 to 24 tablets and then the bottles will set there useless. They cannot be returned after being opened. If for example, 50,000 drugstores had opened bottles of each of the 5 and 10 mg. sizes which were only half used, this would represent an increase in sales to the company of $620,000. The figure 50,000 stores is not unrealistic from cases similar to this in the past. Lederle laboratories did the same thing a couple of years ago with 150 mg. Declomycin which they offered both in the well established capsule and later, a tablet. The company intensively details the product to establish a demand, and then after the drugstores have adequate supplies, they quit detailing the product and the partially used bottles sit there on the shelf. This company, Roche, is the same one that announced several months ago that it was instituting a policy of refunding part of the costs of drugs used in welfare programs. Highly commendable but the company didn't pay the costs. the small businessman did. At the same time, the company cut the discounts of the products which account for the greatest portion of its sales from 15% to 12%. JAMES E. DUBÉ, Pharmacist. Mr. DINGELL. Our first witness this afternoon is Mr. Merritt L. Skinner, a pharmacist from Plymouth, Ind. The committee is happy to welcome you here today, Mr. Skinner. Do you have any of your membership or counsel with you that you choose to have at the table? Mr. SKINNER. No, just myself. Mr. DINGELL. All right. You are welcome for whatever statement you choose to present. Please give your full name, office, and address to the reporter for the record. TESTIMONY OF MERRITT L. SKINNER, COMMUNITY PHARMACIST, PLYMOUTH, IND. Mr. SKINNER. My name is Merritt L. Skinner of Plymouth, Ind. I am a community pharmacist licensed to practice pharmacy in the State of Indiana. I have been engaged in the practice of pharmacy since 1934, first as an employee pharmacist and later as a pharmacy owner, In 1963 I was elected to the presidency of the Indiana Pharmaceutical Association. In 1964 and 1965 I was chairman of the Professional Relations Committee of the American Pharmaceutical Association. As I appear before you I am representing no group or association of pharmacists but rather, I am here, as invited, as an individual community pharmacist. I am advised that this committee is interested in the subject of pharmaceutical manufacturers' differential pricing practices. I too have been interested in this subject for several years, to such an extent in fact, that my alma mater, Purdue University, invited me to participate in a pharmacy management conference with the assigned subject of "A Community Pharmacist Looks at Differential Discounts." In order to present a paper which would be as factual and useful as possible, I prepared a brief questionnaire and forwarded it to the 126 member firms of the Pharmaceutical Manufacturers Association, along with a covering letter describing the purposes of the questionnaire. Essentially, my questionnaire was an attempt to establish graphically the pricing pattern of the pharmaceutical manufacturers based on their discount schedules to all elements of pharmaceutical product distribution. Fifty replies were received. Forty firms more or less completed the questionnaire, but 10 of the larger companies sent letters to me, some of which were quite elaborate but cleverly evasive regarding pricing J structures. The results of this study were disappointing to me and did nothing to alter my impression that the pricing systems used by most of the pharmaceutical manufacturers is often inconsistent, discriminating, unfair and generally chaotic. Mr. POTVIN. Mr. Skinner, do you have with you a copy of the questionnaire to which you have alluded? Mr. SKINNER. Yes, I have that with me. Mr. POTIN. Do you have the replies from the 50 firms which you mentioned? Mr. SKINNER. I have the file here. Mr. POTVIN. May we have those for the record, sir? Further, Mr. Chairman, I would like to submit if I may, an article "A Community Pharmacist Looks at Differential Discounts," by Mr. Skinner, which was printed in the Indiana Pharmacist. Mr. DINGELL. Without objection, it will be inserted in the record at this point. The replies and questions will be inserted in the record also. (The information referred to follows:) [From the Indiana Pharmacist, December 1965] A COMMUNITY PHARMACIST LOOKS AT DIFFERENTIAL DISCOUNTS (By Merritt L. Skinner, Plymouth, Ind.) Fellow pharmacists, ladies and gentlemen: It is indeed a privilege for me to appear before you today. It has been my pleasure to have participated in previous pharmacy conferences here at Purdue, but as I recall at those times my assigned subject was easy compared with the task I am faced with today. The subject of pricing structures and differential discounts is one of the most complicated problems confronting those of us who are involved in the distribution of pharmaceuticals today. There seems to be universal agreement that the pricing system currently in use by most of the pharmaceutical manufacturers is often inconsistent, discriminating, unfair and generally chaotic. In order to try to determine what the pricing situation is today. I prepared a brief questionnaire and forwarded it to the 126 member firms of the Pharmaceutical Manufacturers' Association along with a cover letter describing the purpose of the questionnaire and requesting assistance in gathering the desired data. Forty-eight replies were received; a return of 38%. Statisticians say that this is a good sampling, but I am disappointed that my report to you is not flavored with statistical data from some of the larger companies. Ten of these giants failed to venture a reply to my request for pricing data; I wonder why. Could it be that they don't have a price policy? Is it possible that they light have a different policy for each customer? Or could it be that their attorneys have warned them not to disclose their discriminatory pricing schedules to their customers? The questionnaire was designed to make the job of completing it as easy as possible, and to simplify the task of extracting the data from the completed forms. Nevertheless, some of the companies reporting complicated my planned procedures by writing elaborate letters containing cleverly composed phrases of evasion instead of completing the questionnaire as requested. Generally, the questionnaire forms were returned to me quite promptly, but these letters of nebulous explanation are still slowly dribbling in. A few companies simply sent me a series of price lists in hope, I imagine, that I had plenty of time to try to locate the desired information therein. Upon opening an envelope from one of the reporting manufacturers I found the following: 1. A retail price list. 2. A wholesale price list. 3. A physician price list. 4. A surgical supply price list. 5. A hospital price list. |