Even the individual who has moved from the business street to the shopping center is a different individual serving a nonfamiliar customer and interested in the volume of business rather than quality, service, or a personal relationship with his customer.

In 1945 the city of Philadelphia had 1,400 pharmacies owned by pharmacists for the most part. În 1967 we have been reduced in number to 800 with a prediction on my part that this reduction would level off at about 700. Within recent months, however, my observations of the present economic and professional future of the big city leads me to revise my estimate downward and honestly believe that the eventual figure will be closer to 500. The population of the city of Philadelphia has remained fairly stable at 2 million.

I do not want the committee to think for one moment that I am crying over the reduction in the number of pharmacies up until now, but the reduction in the number below 700 will cause some hardships, not for the pharmacists, but for the community.

Even now, we have several areas of the city where the number of pharmacies has been so seriously reduced that people must go a relatively long distance to find adequate pharmaceutical service.

The latest figures released by reliable sources indicate that the pharmacists of the United States filled 1 billion prescriptions last year. Most of these were paid for by the public out of their personal income. Yet present trends lead me to believe that within the next few years 30 percent or 40 percent of all prescriptions will be paid for by a third-party concept; namely, by the Government, by insurance programs, by unions, or by industry which employs these people.

The 1,400 pharmacies of 20 years ago in Philadelphia were conceived and operated under a system of health care which bears no resemblance to today's modern concepts. Many of them were not physically designed for anything but pre-World War II era. They were small with inadequate facilities and truthfully served the neighborhood type of health facility which was then centered in the family physician.

The rapid changes in 20 years from that concept through the development of antibiotics, preventive medicine, mental drugs, health insurance, patent expirations, medical care for welfare recipients, congressional investigations, medicare title 19, OEO, child-care centers, cancer-stroke centers, and so forth, have made it impossible for that type of pharmacy to survive.

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So we have 800 left which will soon be reduced to 700 or less. The biggest problem for our continued professional existence is this multipronged effort of the Government to enter into the health-care field for from the cradle to old age. We cannot for one moment even attempt to go back to the good old days; but what we see in the existing and proposed programs would lead me to believe that there is some ultrarapid expansion and growth without regard to existing facilities and services.

Let me explain to you some of the problems that have developed in these 20 years. The records of the Welfare Department of Pennsylvania show that during the month of February 1967, Philadelphia pharmacists received vendor payments in the amount of $168,445. But what their records do not show is that they were payments for October and November of 1966. We are at this moment being paid hopefully, for prescriptions that were filled by us in December 1966.

We have been unable to get the welfare department to issue identification cards to indicate who is eligible for participation in prescription services. We have been given a welfare formulary in Pennsylvania which is optional on the part of the physician. But one of our greatest problems is that to this day the cost of a drug in the welfare program is a debatable figure.

This has come about because of some of the pricing practices of the pharmaceutical industry and has led to much controversy. Add to this the fact that we are receiving compensation for this program under a formula developed 30 years ago. For the record we get the drug cost plus 50 percent of the cost without any allowance for container or other services.

Since the average welfare prescription in Pennsylvania is about $2.60 we are getting 87 cents over cost for each prescription filled. Certainly not a very magnanimous sum.

I have mentioned cost of drugs as a problem in the welfare department. This little problem exists also in our relationship with programs other than the welfare department.

In discussing the problems of pharmacists we are continually made aware by an increasing emotional problem of the American citizen and drug costs. "Prescriptions cost too much." "Prescriptions are too high," and so forth. Since the average American family of four persons spends only a little more than a dollar a week for prescription drugs, we find it a little difficult to understand their gripe. But we find little help from either the manufacturers or the Government.

When the drug manufacturer offers his wares to the Government, and they are purchased by either the Veterans' Administration or the Defense Supply Corps or the military, I doubt that it was the intent of the Congress to have these drugs turn up as supplies for the civilian population in direct competition with the retail pharmaceutical industry. Yet that is what is happening in the OEO programs presently operating in New York, Boston, and Denver and will soon be seen in 50 other cities.

How can the full service of pharmacy, paying taxes and overhead and compelled to show a profit, compete with a nontaxpaying, no-overhead facility dispensing drugs whose drug cost is sometimes onefourth of our cost. The irony of these programs is that if the same prescription patient also needs a hot water bottle they call the neighborhood pharmacist and ask him to please deliver the item and charge it until they get their next paycheck.

I see a very dim future for pharmacy in the metropolitan areas where billions of dollars are being poured into programs designed around existing medical centers, OEO fixed and satellite programs; child-welfare centers and the cancer-stroke centers, and so forth.

I am in favor of better health care but the present speed of these programs doesn't give anyone a chance to integrate existing services and capabilities. These same hospitals and medical centers have cut deeply into community practices and personnel.

Hospitals have gone into the real estate business on their nonprofit. nontaxpaying grounds and erected office buildings and apartment facilities for their staffs to the loss of people in the community who also have office space and apartment space to rent.

I hear the phrase "patient convenience", "one-stop medical care" and "save time for busy practitioner." But Mrs. Jones lives 10 miles from

the hospital and when she needs her medicine renewed it is far from being convenient.

Physicians seem to be quite perturbed about drug reaction and reporting drug reaction. They approve of the pharmacist keeping a record of all the drug sensitivities that happen to the members of a family. But they also want the patient to use the convenience of their hospital office, hospital laboratory, and hospital pharmacy.

The community pharmacist has frequently complained about prices charged to hospitals; but the manufacturer has always had a quasiexcuse by pointing out that the hospital rendered services to the poor and the indigent. It might be pointed out also that prior to the days of hospitalization insurance, most hospitals were considered poor credit risks and quantities of drugs shipped to them were absolutely minimum.

With the growth of health insurance and plenty of Government subsidies the hospital has become economically solvent and some departments even show a profit.

We could agree that there is justification for a quantity price, but we have always questioned the judgment of manufacturers who offered the same quantity discount to nonprofit hospitals, profitmaking hospitals, clinics, dispensing physicians, and nondispensing physicians. It has always been incongruous for a manufacturer to require a pharmacist to buy $25 worth of products for a direct shipment but a physician could receive and be billed for 1 vaccine point. It seems that administrative costs, shipping and billing costs are different for them than for us.

But something else has happened. The pharmaceutical manufacturer wishes to get his product into the hospital and will do so at almost any price. Thus, if the hospital pharmacist were to advertise that he wishes to purchase 100,000 meprobamate tablets, you can bet good money that one of the proprietary brand suppliers will bid low enough to get his product awarded the contract and, lo and behold, the well-known, easily recognized, and trademarked tablet will be dispensed even when the generic name is called for.

When a nonbed patient gets a prescription filled at a hospital price we in the community practice cannot compete with the hospital pharmacy. Then there is the manufacturer who makes certain sizes only available to hospital pharmacies.

I am referring there to hospital package sizes.

Then there are special deals to private physicians and we cannot compete with this either.

Mr. DINGELL. Counsel has a question to ask you.

Mr. POTVIN. Could you be more specific and describe in a little detail the "special deals to private physicians"?

Mr. BLATMAN. It has come to our attention, sir, that where a manufacturer is interested in having his product sold, both in the pharmacies or physician's prescriptions and he also offers the same material available to a physician to buy, and I recognize the right of a physician to dispense and I don't think we want to debate that argument-but I think it is incongruous when the manufacturer asks me to buy a thousand and pay a thousand price and the physician, in the case of some of the deals which have been mentioned here previously gets a thousand free when he buys a thousand.

Mr. DINGELL. Are you able at this point to catalog exactly the precise nature of some of these so-called special deals received by the physician?

Mr. BLATMAN. I did not come prepared.

Mr. DINGELL. Would you like to submit that?

Mr. BLATMAN. I think if I can or if I have an opportunity to perhaps speak privately with some of the investigators or some counsel for the committee I shall make available whatever information we have.

Mr. DINGELL. We would appreciate having this information. We are concerned with regard to the special deals of the private physicians and hospitals so we can have some understanding of the nature of the different pricing structures which are in the industry.

Mr. BLATMAN. I believe some of that information I shall be glad to develop if we can do it, not at the present time.1

Mr. DINGELL. Fine.

Mr. BLATMAN. Lest you infer that all of our troubles are in the prescription department, let me tell you briefly of a few other areas that make us reluctant to continue the spirit of free enterprise.

Will it surprise you that in large geographical areas of Philadelphia we cannot buy fire insurance; that we cannot buy plate glass insurance; burglary; holdup; and some forms of liability insurance? Cannot the Congress of the United States see to it that the insurance companies of this country be compelled to offer these policies without discrimination? Our efforts in this area have fallen on deaf ears at the State level and we ask you to study the problems and give us a chance to protect our properties and inventories at reasonable rates from companies that would be required to pay bona fide claims.

Have you seen the results of urban redevelopment in Philadelphia? I have. There is a great rebirth of buildings in center city with new skyscrapers, new plazas, new city hall, new mall for Independence Hall, a new mint to make new money; new highways to get you in and out of town faster. But I wonder if anyone has taken you to see the block after block of bricks and weeds that used to be homes in North Central Philadelphia. Where there used to be 10 or 15 pharmacies that no longer exist. Of course, there are no people there, either, now, and little prospect of them coming back in the foreseeable future.

In some places where apartments have risen there have been promises of shopping centers to be built. Few have materialized and we find ourselves forced out of business by the right of eminent domain with little compensation and vague promises of being able to return to the area we were removed from.

Then there is the problem of crime. We appreciate all the groups that are studying the problem. But our problem of dealing with the holdupman, the burglar, the drug-happy teenager, the shoplifting, and the vandalism, sometimes makes me question the sanity of the small businessman. But their dedication and willingness to continue to work in this area sometimes amazes me.

Believe it or not at this moment a pharmacist in Philadelphia has returned to open his business in spite of the fact that 6 weeks ago he was shot during a holdup. He lost the sight of an eye and still carries a bullet in his head. He has more guts than I have.

1 The information was not available at the time of this printing.

We have also found it useful and constructive to reward good police effort and we believe in commending individuals for that effort. But the overall problem with its economic and sociological overtones make it a very difficult problem to solve without Federal assistance.

It would indeed be foolish of me to come here and complain about all of these things without having some constructive suggestions. We need the Congress of the United States to study discriminatory pricing; not with the idea of decimating an industry but rather to seek out the roots of the problem. Why it was done 30 years ago. Why the Government got into the drug industry investigations. What has happened to drugs purchased by the Government. Where differential pricing got out of hand and how it can be corrected.

We believe that the Government purchases of drugs for military personnel, for Government hospitals and facilities is proper. We believe that they should be given every possible price consideration. We believe that nonprofit hospitals should be given reasonable price considerations in keeping with their purchases. But we believe that group medical practices, dispensing physicians, and any other groups competitive for the consumer dollar should be treated as retailers and not given any economic advantage.

I have an abounding faith in the honesty and integrity of the drug manufacturing industry. We look to them for leadership in developing a sound program based upon today's problems, not yesterday's events. We need less interference from Government in the field of public relations for pharmacy. We question the remarks of a consumer consultant to the President that prescriptions cost too much; we are not happy and believe that the remark is without foundation. It may be politically expedient, but it may not be true.

We need help in getting the various redevelopment programs to recreate the need for neighborhood services of the pharmacist, the hardware store, the florist, the appliance repairman, and the jeweler. I have seen classes of SBOC projects where people are learning the complicated administrative skills necessary to survive in this day and age. But many of these people have no place to practice their skills.

There is great value in these programs; but I'm afraid that the Government in its zeal has bypassed some of this potential.

In the final analysis we would like to remain a part of the American scene. We can only do it if we get the opportunity to participate in these programs in their formative stages. All too often we get added as an afterthought when all the programs have been adopted and ratified.

We wish to participate in the OEO health centers; in the Veterans' Administration home care programs; in the Welfare Department projects; in the extended care facilities program of medicare, in the model cities programs; in title 18 and title 19. We wish to share in their planning and not end up as an amendment because no one thought of the community pharmacy as an important part of health care.

The modern pharmacy has much to offer the public. The public obviously wants the many services that are availale in the pharmacy. Convalescent supplies, personal health items, reliable health information, and its customer services.