2. Robins agrees: (a) xxxx (b) To invoice all products shipped hereunder at 2% thirty (30) days, net 45 days, from date of invoice. As amended in the 1967 agreement it reads as follows: (b) Except as otherwise provided in Section 5(c) of this Agreement, to invoice all products shipped hereunder at 2% thirty (30) days, net 45 days, from date of invoice. Section 5(c) of the 1966 agreement reads as follows: (c) Robins products shipped pursuant to an order by Wholesaler, but not paid at the time any termination of this Agreement becomes effective, shall be paid for according to the provisions hereof. As amended in 1967, it reads as follows: (c) In the event of termination of this Agreement by either party on fifteen (15) days written notice, net payment shall be required in advance in respect of any order received by Robins after such notice has been given, but before the effective date of such termination. Any order received by Robins prior to the giving of such notice shall be paid for in accordance with Section 2(b) hereof, irrespective of the effective date of such termination. In the event of the immediate termination of this Agreement for any cause specified in sub-section (b) of this section, Robins shall not be required to fill any further orders by Wholesaler, regardless of when received by Robins and all monies owed Robins by Wholesaler in respect of any order already shipped shall become immediately due and payable irrespective of the applicable invoice terms. A copy of the 1968 agreement, which is the same as the 1967 agreement, is being submitted herewith. 32. See confidential answers. A. H. ROBINS CO., INC., MANUFACTURER-WHOLESALER AGREEMENT This agreement made as of the 1st day of January, 1968, by and between A. H. ROBINS COMPANY, INCORPORATED, a Virginia corporation whose address is 1407 Cummings Drive, Richmond, Virginia, hereinafter referred to as "Robins," and. whose address is hereinafter referred to as "Wholesaler." WHEREAS, Robins is engaged in the production and distribution of pharmaceuticals; and WHEREAS, Wholesaler is engaged in the wholesale sale and distribution of pharmaceuticals to retail drug stores, industrial companies and private or Government hospitals or institutions and in connection therewith has facilities for warehousing such products and for shipment and invoicing direct to such customers; NOW, THEREFORE, in consideration of the premises and of the mutual covenants and conditions hereinafter set forth, Robins and Wholesaler agree as follows: 1. Robins hereby selects and appoints Wholesaler as a wholesale distributor of its products. 2. Robins agrees: (a) To sell its products to Wholesaler at current prices, less trade discounts for warehousing, sales promotion, delivery, and the like normal wholesaler services. Such trade discounts shall be as follows: (i) For purchases of Robins products other than narcotic products listed in Schedule A hereof, Wholesaler shall receive a discount of 16%% of Robins' then current prices therefor; (ii) For purchases of narcotic products listed in Schedule A hereof, Wholesaler shall receive a discount of 20% of Robins' then current prices therefor; and (iii) For drop-shipment purchases, Wholesaler shall receive a discount of 10% of Robins' then current prices therefor. (b) Except as otherwise provided in section 5(c) of this Agreement, to invoice all products shipped hereunder at 2% thirty (30) days, net 45 days, from date of invoice. (c) To prepay all shipping charges to Wholesaler on orders of $300 list or more, and orders for narcotic products listed on Schedule A; provided, however, that cost of special shipping requests (by air, etc.) will be charged to Wholesaler at a figure amounting to the difference between such shipments and normal sur face transportation. (d) To prepay all shipping charges to Wholesaler for automatic shipments of new products. 3. Wholesaler agrees: (a) To pay all invoices in accordance with the terms set forth therein, or as otherwise provided herein. (b) For the purposes of assuring an immediately available supply in every area of Robins products that may be prescribed by physicians or needed by hospitals, institutions or individuals, to facilitate control of dated products and coded product lots, and to enable Robins to determine proper credit for its sales representatives, Wholesaler shall maintain at all times a complete inventory of Robins products sufficient to supply demand of retail drug stores, industrial companies and private or Governmental hospitals and institutions, shall permit a sales representative of Robins to inspect stock and inventory records, shall allow a sales executive of Robins to review its sales invoices for any immediately preceding two-month period, and shall render all other reasonable assistance necessary for the foregoing purposes. (c) To order individual products in the minimum case shipping quantities specified in Robins' current Wholesale Stock Record Book, to order in each single order a minimum of $300 list, and to place no more than three (3) orders per month exclusive of drop shipments, orders for products subject to special pro motion and orders for products listed on Schedule A hereof. In the event that an order placed (i) is for less than the minimum amount, Robins may, at its option. refuse the order or increase it to $300 list, (ii) is in excess of the maximum number of orders specified above, Robins may, at its option, refuse the order of fill it charging all shipping costs for the particular order to Wholesaler, or (ii is, in respect of individual products, for other than case quantities, Robins may at its option change the order to the nearest whole case. (d) To include products of Robins at frequent intervals in lists, bulletins or like advertisements, as they may be issued by Wholesaler to its customers; and otherwise to promote actively the sale and use of Robins products to its cus tomers through methods customarily employed in its business on products of like character to Robins products on a basis at least as favorable to Robins as that accorded to other products of similar character. (e) To provide proper storage facilities for Robins products, giving due con sideration to their character and to any special suggestions or directions which Robins shall give in respect to a particular product or products. (f) To accept automatic shipments of new products. (g) To handle return goods strictly in accordance with instructions set forth in Schedule B hereof. (h) To compensate its salesmen for the sale of Robins products at an amount or rate of commission not less than that paid on any competitive product pro viding similar gross profit to wholesaler. 4. Robins, by written notice to Wholesaler, may from time to time, as of a future date specified in said notice, amend this Agreement or Schedule A to (i) eliminate one or more products; (ii) add one or more products; (iii) change the discount for one or more products; (iv) change the number of orders permitted. or (v) change the minimum single shipment required. 5. (a) This Agreement shall be personal, nonassignable and nontransferable. in whole or in part, and shall become effective upon acceptance by Robins in Ric mond, Virginia, evidenced by execution of this Agreement by a duly authorized officer of Robins, and shall continue in force and effect until December 31, 1968, unless sooner terminated. (b) This Agreement may be terminated at any time by either party on fiftee (15) days advance written notice to the other. It may also be terminated by either party immediately on written notice in the event of (i) a breach of any of the terms hereof by the other party; (ii) violation by the other party of any State of Federal drug law; or (iii) if the other party becomes insolvent, makes a general assignment for the benefit of its creditors, files a petition in bankruptcy or has a receiver appointed for its property. (c) In the event of termination of this Agreement by either party on fifteen (15) days advance written notice, net payment shall be required in advance in respect of any order received by Robins after such notice has been given, but before the effective date of such termination. Any order received by Robins prior to the giving of such notice shall be paid for in accordance with section 2(b) hereof, irrespective of the effective date of such termination. In the event of the immediate termination of this Agreement for any cause specified in sub-section (b) of this section, Robins shall not be required to fill any further orders by Wholesaler, regardless of when received by Robins and all monies owed Robins by Wholesaler in respect of any order already shipped shall become immediately due and payable irrespective of the applicable invoice terms. 6. This Agreement cancels and supersedes all prior contracts, agreements and understandings, whether written or oral, between the parties. The relationship created hereby is a buyer-seller relationship and not an agency relationship or franchise. 7. Any notice provided for herein shall be deemed to be given to the party to whom directed when mailed by registered United States mail, postage prepaid, addressed to the party to whom directed at his or its address stated in the heading of this Agreement. A. H. ROBINS CO., INC., 1407 Cummings Drive, Richmond, Virginia 23220. (Wholesaler) By. By SCHEDULE A.-NARCOTIC PRODUCTS Donnagesic Extentabs No. 1 (Codeine 4 gr.) Phenaphen with Codeine Capsules 4 gr. (No. 2) Phenaphen with Codeine Capsules 1⁄2 gr. (No. 3) SCHEDULE B.-RETURN GOODS Wholesaler returning merchandise for credit must in every case contact Robins' representative or write to Robins' Shipping Warehouse serving it for authorization prior to making returns. In either case an inventory of items to be returned and their sizes must be submitted before a written auhorization for return is granted. This prior authorization insures proper handling and thus speeds issuance of credit. 1. The return must be made to the Shipping Warehouse from which the merchandise was shipped. 2. Transportation charges on return or exchange shipments must be borne by the Wholesaler. The following items are not returnable: 1. Products which have deteriorated due to causes beyond the control of the manufacturer (ie., damage caused by heat, cold, water, smoke, etc.). 2. Products which have been opened, label removed or seal broken. 3. Products not purchased by Wholesaler from Robins. Mr. DINGELL. Gentlemen, thank you very much. The subcommittee will stand adjourned until the call of the Chair. (Whereupon, at 3:50 p.m., February 15, 1968, the subcommittee was adjourned, subject to the call of the Chair.) *Please type name and title of signing officer. 78-783-68—vol. 2- -41 SMALL BUSINESS PROBLEMS IN THE DRUG INDUSTRY TUESDAY, FEBRUARY 27, 1968 HOUSE OF REPRESENTATIVES, SUBCOMMITTEE ON ACTIVITIES OF REGULATORY AGENCIES Washington, D.C. The subcommittee met, pursuant to recess, at 10:08 a.m., in room 2359, Rayburn House Office Building, Hon. John D. Dingell (chairman of the subcommittee) presiding. Present: Representative Dingell. 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 morning the Subcommittee on Activities of Regulatory Agencies Relating to Small Business of the House Small Business Committee is continuing its scrutiny into certain pricing practices in the wholesale, retail, and manufacturing end of the prescription and over-the-counter pharmaceutical industry. Our first witness this morning is Mr. John K. Lindsay, president of the Wm. S. Merrell Co. Mr. Lindsay, the subcommittee is happy to welcome you for such statement as you choose to present. The Chair notices that you have counsel with you. Will both of you gentlemen give your full names and addresses? The Chair will be happy to receive your statement. TESTIMONY OF JOHN K. LINDSAY, PRESIDENT AND GENERAL MANAGER, THE WM. S. MERRELL CO., DIVISION OF RICHARDSONMERRELL, INC.; ACCOMPANIED BY FREDERIC D. LAMB, VICE PRESIDENT AND LEGAL COUNSEL Mr. LINDSAY. My name is John K. Lindsay, and I am the president and general manager of the Wm. S. Merrell Co., division of Richardson-Merrell, Inc. With me today is Mr. Frederic D. Lamb, a Merrell vice president and our legal counsel. When I graduated from the University of Wisconsin in 1947, after having majored in international relations, I joined Merrell as a sales trainee with my first assignment in the export department. Between 1949 and 1951 I represented the company in the Philippine Islands. In 1953 I was named export manager, and became vice president of Merrell-National (Overseas) Laboratories in 1956. I was president of our overseas pharmaceutical division from 1957 to 1965. In January 1966 I was appointed president and general manager of the Wm. Š. Merrell Co., Division of Richardson-Merrell, Inc. |