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The bill also absolves manufacturers and advertisers from telling consumers the consequences of indiscriminate use of drugs.

We believe passage of this bill would betray the general public for the greater profits of a few manufacturers who don't like the present legal limits on their exploitation of the public.

Mr. SADOWSKI. I think we can proceed with Mr. Cassedy, our next witness.

FURTHER STATEMENT OF JAMES W. CASSEDY, SPECIAL ATTORNEY,

FEDERAL TRADE COMMISSION
Mr. CASSEDY. Mr. Chairman, I do not think I will take very long.

I appreciate the fact that I have taken possibly too long already. So I will try to get through as quickly as I can.

Mr. REECE. Did I understand you to say, Mr. Cassedy, that you came with the Commission in 1939 ?

Mr. CASSEDY. No, sir: I said I came March 9, 1913.

Mr. REECE. You have been with the Commission 3 years? That was what I wanted to get cleared up. I was not sure as to my recollection.

Mr. CASSEDY. Mr. Chairman, in the letter of Hon. Paul V. MeNutt of May 3

Mr. "REECE. Before you go into another phase of the question, Mr. Chairman, may I again refer back to the Dearborn case, which Í admit is becoming somewhat shopworn, but for the purpose of keeping the record straight in connection with the time that this case was instituted, since it involved either the good judgment or the propriety of one of the witnesses who referred to it in the first instance. Mr. CASSEDY. I would like to correct a statement I made if I may. Mr. REECE. That was what I was getting around to. Mr. CASSEDY. All right. I appreciate your suggestion.

Mr. REECE. If I may add first: Now, in checking back further on it, it is my understanding that a stipulation was drawn up in this case in 1937.

Then the complaint was served on September 17, 1938, which was after the Wheeler-Lea Act was passed, some 6 months afterward. That is what I understand the facts to be.

Mr. Cassady. I do not know what you have in mind, Congressman Reece, about this case. As I stated before, this case is based upon section 5, on unfair methods of competition, and is not based on the Wheeler-Lea amendments at all.

Now, the investigations in this case were begun long prior to the enactment of the Wheeler-Lea amendments.

I believe they were enacted March 21, 1938. I think that is the effective date of those amendments. The complaint in the Dearborn case was issued September 17, 1938, and I have in my hand a copy of the complaint and a copy of the order.

Mr. REECE. But the stipulation was signed prior to the enačtment of the Wheeler-Lea amendments, and then things went along; and then after the Wheeler-Lea amendment was passed, which, of course, gave the Federal Trade Commission additional authority, a complaint was served in the Dearborn case.

Mr. CASSEDY. I beg to differ with you. I do not see that the Wheeler-Lea amendments have anything to do with the Dearborn Mr. REECE. Well, I infer from your statement that all of your proceedings are under section 5, and that you exercise very little authority under the Wheeler-Lea amendments.

case.

Mr. CASSEDY. I can point out to you that the cases referred to dealing with labeling, as an unfair method of competition, are under section 5.

Now, when we follow the policy that you have criticized under section 15 (a), relating to the advertisements failing to disclose the consequences of use of the products, you are under the Wheeler-Lea amendments. But the two types of cases are entirely different.

Mr. REECE. In an earlier phase of your statement, you referred to the proprietary association, I think, as having favored the WheelerLea amendment back in 1938, giving the Federal Trade Commission this authority which it is now exercising.

I thought it might be well to clarify the record in that respect. In going back over the hearings, I find that while the association did oppose the original Tugwell bill, so to speak, which was introduced in 1933, in 1935, when Mr. Hoge appeared for the association and various other clients before the Chapman subcommittee, of which I happened to be a member, he made reference to the fact that the association did oppose the original Tugwell bill.

Mr. Chapman made the statement: Just at that point, for my own part I am frank to say that I was very much opposed to it, and this committee in fact never did conduct any hearings on it.

Then Mr. Hoge stated-and this was on August the 10th 1935—
We do not oppose the bill here today, and we do not propose any amendments.

That is the Chapman bill, which gave all jurisdiction over food, drugs, and cosmetics to the Food and Drug Administration and removed the jurisdiction over advertising to the Pure Food and Drug Administration.

So far as I have been able to ascertain, that was the last statement made for the proprietary association. I am just putting that in the record to clarify it in that respect.

Because one would draw the inference from what you said that the association was one of the sponsors of the Wheeler-Lea amendment.

There is no record that they opposed the Wheeler-Lea amendment, but that is the statement that was made with reference to the Chapman bill which placed complete control including advertising, in the Food and Drug Administration. I might also say that while I was interested in the subject at that time, the chief proponent of the proposal, the ones with whom I advised with more closely with reference to the proposal, that the Federal Trade Commission control over advertising of food, drugs, and cosmetics, was the Commission itself, which was quite proper.

Mr. CASSEDY. Mr. Reece, I wish to point out that those statements you referred to were made by Mr. Montague. I did not make those statements about the proprietary association.

Mr. REECE. If I am in error on that, I am sorry, but I thought when you were speaking of Mr. Hoge that you made some reference.

Mr. CASSEDY. I did refer to their connection with the Commission's policy under section 15 (a), but not with reference to the enactment of the law.

* "

In the letter of Hon. Paul V. McNutt of May 3, 1945, while he was Federal Security Administrator in charge of the Food and Drug Administration, written to Congressman Clarence F. Lea, the chairman of this committee, Mr. McNutt states with respect to the proposed amendment of section 15 (a):

Section 3 of the bill would amend the definition of false advertisement in section 15 (a) of the Federal Trade Commission Act. The amendment would change a provision of the act which is identical in its import with a provision of section 201 (n) of the Food, Drug, and Cosmetic Act. It would repeal the mandate of the present law to the administrative agency and to the courts to take into account, in determining whether representations for an article are misleading, failure to reveal facts material with respect to the consequences which may result from the use of the article under the conditions prescribed in those representations, or under such conditions as are customary or usual. In deleting this mandate, we think the conclusion is inescapable that the standard of truthfulness set up by the statute is lowered. While the amended language could perhaps be construed as broadly as the original provision, it is by no means apparent how the courts could do so in the light of the legislative history created by Mr. Reece's declared purpose in making the change.

We are gravely concerned that the adoption of this amendment will furnish a persuasive basis for a similar amendment to section 201 (n) of the Food, Drug, and Cosmetic Act. This would unquestionably impair the effectiveness of the act in controlling misrepresentations that result in harm to health.

Section 4 of the bill would include the Food, Drug, and Cosmetic Act definition of labeling in section 15 of the Federal Trade Commission Act which lists definitions “for the purposes of sections 12, 13 and 13

Because of its limitation to these sections, we do not see that it would have any practical effect on the relationship between activities in the enforcement. of the two laws since, so far as we are aware, the Federal Trade Commission's proceedings against labeling have not been under sections 12, 13 and 14 but under section 5. (See Fresh Grown Preserve Corporation V. Federal Trade Commission (125 Fed. (20) 917, 919).)

Dr. P. B. Dunbar, Commissioner of Food and Drugs, in his letter dated July 13, 1945, to Congressman Reece regarding the Reece bill, makes an argument that there should be no division of responsibility in the control of adulteration, misbranding and false advertising of food, drugs and cosmetics, and that the agency best qualified_to administer the law should be charged with its enforcement.

Dr. Dunbar states:

I am not urging that regulatory control of these commodities be combined under any particular agency.

But his argument stresses his view that the Food and Drug Administration is much better qualified than the Federal Trade Commission to administer and enforce the law regulating false advertising as well as adulteration and misbranding of food, drugs and cosmetics. In support of his argument, Dr. Dunbar refers to several cases which will be hereinafter discussed.

These cases are: Federal Trade Commission v. Willard Tablet Company, Inc. (Docket 3100, 27 F. T. C. 1076); Federal Trade Commission v. Capon Water Company et al. (Docket 2736, 26 F. T. C. 423); Federal Trade Commission v. W. Gordon Pervis (Docket 2540, 23 F. T. C. 1096); Federal Trade Commission v. Sekov Corporation. (Docket 4061, 31 F. T. C. 898); Federal Trade Commission v. The Carlay Company and Carl A. Futter (Ayds Candy), (Docket 4898); Federal Trade Commission v. Carter's Products, Inc., (Docket 4970), in which trial is incomplete.

Each of the above cases were proceedings by the Federal Trade Commission against false advertising, in the first three as an unfair method of competition and in the others as an unfair or deceptive act or practice. None of these cases involved false labeling or misbranding. It will be noted that Dr. Dunbar does not refer to a single case wherein a Federal Trade Commission proceeding against false labeling of food, drugs, devices or cosmetics as an unfair method of competition interfered in any way with the jurisdiction of the Food and Drug Administration over false labeling.

It should also be noted that Dr. Dunbar does not point out a single instance where an action of the Federal Trade Commission requiring an advertiser to reveal facts and consequences in advertisements, or at his option in labels, interfered in any way with the Food and Drug Administration.

In the case of Federal Trade Commission v: Fresh Grown Preserve Corporation (125 F. (2) 917 (C. C. A. 2, 1942) ), the complaint was based upon false labeling as an unfair method of competition, but it was not issued until after the failure of the Food and Drug Administration in its case United States v. Fresh Grown Preserve Corporation in the District Court for the Eastern District of New York on May 17, 1938. The Commission's order to cease and desist was upheld by the circuit court of appeals.

And I wish to add to that statement that that case was instituted, so I am informed, at the specific request of the Food and Drug Administration, and with their full cooperation.

They furnished, I believe, some analyses of the product involved, which was analyzed in their laboratory.

In the case of Federal Trade Commission v. Capon Water Company, the complaint, which was based upon false advertising as an unfair method of competition, and did not involve false labeling, was not issued until after the failure of the Food and Drug Administration in its case, United States v. Ninety-Four Dozen, More or Less, Half Gallon Bottles Capon Springs Water (48 F. (20) 378) (District Court for the Eastern District of Pennsylvania), which was dismissed upon appeal (3 Cir., 51 F. (20) 913).

That is one of those condemnation proceedings, as we call them. Mr. O'HARA. Libel proceedings are proceedingsMr. CASSEDY. Where the property is seized because of some false labeling in violation of the food and drug law.

The Commission's order to cease and desist was upheld by the circuit court of appeals (107 F. (20) 516 (C.C. A. 3, 1939)).

That case was also instituted at the request of the Food and Drug Administration, which is indicated in this letter that I have in my hand from the Food and Drug Administration, that was written by Dr. F. J. Cullen, who at that time was Chief of the Drug Control of the Food and Drug Administration.

Mr. O'HARA. Mr. Cassedy, yould you give us the date of the letter, please?

Mr. CASSEDY. The date of the letter is March 8, 1932. That is the date stamped on the letter. The date received by the Federal Trade Commission, is March 9, 1932.

I will read it. It is addressed to the Federal Trade Commission in Washington, D. C.

UNITED STATES DEPARTMENT OF AGRICULTURE,

FOOD AND DRUG ADMINISTRATION,

Washington, D. C., March 8, 1932. FEDERAL TRADE COMMISSION,

Washington, D. C. (Attention of Mr. E. J. Adams.) GENTLEMEN : We are submitting photostat copies of the labels for Capon Mineral Water which are used in the District of Columbia, also those used on their interstate shipments, also a large leaflet entitled "Analysis Capon Mineral Water and Clinical Reports,” and a photostat of a circular letter dated February 4, 1932.

This water has been the subject of consideration by the Department on several different occasions. The original labels recommend it as a cure for rheumatism, gout, syphilitic rheumatism, chronic inflammations, diabetes, kidney trouble, etc. Several revisions have been made but the one now in use is not entirely satisfactory because of its references to "health” and “restoring the normal activity of the kidneys and bowels."

Mr. REECE. Do you know where a person could get a bottle of that?

Mr. CASSEDY. If it could do all of that, it might be a good thing to have a bottle. It is not necessary to read the whole letter. I merely point out that that letter was sent to the Federal Trade Commission, and as a result, the Federal Trade Commission proceeded against that concern. That was not a label case.

Mr. REECE. That was while he was with the Food and Drug Administration?

Mr. CASSEDY. Yes, sir.

Mr. REECE. And of course that letter was written before the Food and Drug Act was passed ?

Mr. CASSEDY. Before the act of 1938 was passed.

Mr. REECE. And before that, the Pure Food and Drug Administration had very inadequate authority; that is, the Copeland-Chaplin bill gave greatly extended authority to the Pure Food and Drug Administration for protecting the public, did it not?

Mr. CASSEDY. I think the act of 1938 extended the authority that the Food and Drug Administration had, especially in the enactment of 201 (n), which gave them the right to require the labels to reveal the consequences of use of the product.

Mr. REECE. That was a new bill, however, which greatly extended the scope and authority of the Federal Trade Commission. I do not think you need to be too reserved in expressing your view on that.

That was widely recognized by all authorities and all informed people; and if you are not informed as to that effect, it greatly impairs your effectiveness as a witness.

Mr. SADOWSKI. I think Judge Davis can answer that.

Mr. Davis. Mr. Chairman, I think Congressman Reece overlooked the fact that Mr. Cassedy is replying to the letter to Congressman Reece from Mr. Dunbar, in which Dr. Dunbar specified this particular case as an indication of conflict between the two agencies. And he is just calling attention to the fact that after they had lost the case they asked the Federal Trade Commission

Mr. REECE. But my dear Judge, the letter to which he refers was written back when the Pure Food and Drug Administration was proceeding under the old Wylie bill, which was wholly incomparable with the 1938 act insofar as vesting the Pure Food and Drug Admin

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