Mr. MEADER. It takes you just as much work to deny one as to grant one; is that it?

Dr. HOLLAND. Sometimes more.

Mr. BLATNIK. In your determination, is your prime consideration the safety of the drug, plus the toxicity or side effects Do you go into the effectiveness of the drug?

Dr. HOLLAND. The law, Mr. Chairman, specifies safety. One cannot make a judgment as to safety, however, without some fair and adequate consideration of efficacy. Safety is a relative concept, not an absolute one. Someone must always take into account other aspects of the use of the drug.

May I illustrate? A physician with a patient with acute pneumococcus pneumonia with a temperature of 105°, a disease which had a very high mortality rate prior to the advent of effective antibiotics, is willing to take much more of a risk in terms of the medication which he employs. Even the antibiotics, as good and effective as they are, have their own set of side effects and toxic effects. The doctor is much more willing to take a risk in terms of using potent medication for the treatment of that patient whose life may be in danger than he is in the treatment of a simple self-limited acute upper respiratory effect; that is, the common cold, where he just wouldn't think of using a drug of the same potency or the same implications in terms of adverse effects. So that safety and efficacy are, in my judgment, two sides of the same coin. It is rare that we permit a new drug application to become effective or feel we can't stop it from becoming effective knowing full well that the drug has absolutely no therapeutic value, and in those instances I think it is both morally and legally incumbent upon us to then legally proceed under another section of the law and attempt to take the manufacturer to task on a charge of misbranding or false and misleading labeling statements. Mr. MEADER. That almost means that you do pass on efficacy; doesn't it?

Dr. HOLLAND. I say, sir, I believe that safety and efficacy are inseparably related and to reach any mature or considered judgment of safety with potent medications, one must take into account efficacy. I think that is not only the Food and Drug Administration taking this into account, but it is my personal conviction that the reputable segments of the pharmaceutical industry take this into account and give it very serious consideration for they have long since learned that they can't compete satisfactorily with products that will not perform or are not reliable or are inefficacious.

Mr. BLATNIK. Thank you very much, Dr. Holland.

We have our last witness this morning, Commissioner Sigurd Anderson, of the Federal Trade Commission.

Commissioner, will you please take the chair. We apologize to you and your staff and thank you for your patience in your long wait this morning.

Commissioner, you have a prepared statement. If you have no preliminary or introductory remarks, please proceed with your prepared statement.

STATEMENT OF SIGURD ANDERSON, COMMISSIONER, FEDERAL TRADE COMMISSION; ACCOMPANIED BY EARL KINTNER, GENERAL COUNSEL; JOHN T. LAUGHLIN, ASSISTANT GENERAL COUNSEL; HARRY BABCOCK, DIRECTOR, BUREAU OF INVESTIGATION; FREDERICK W. IRISH, DIVISION OF SCIENTIFIC OPINION; CHARLES R. MOORE, LEGAL ADVISER ON DECEPTIVE PRACTICES; AND THOMAS P. BAXTER, CHIEF, DIVISION ON MANAGEMENT AND ORGANIZATION

Mr. ANDERSON. Mr. Chairman and members of the committee, I would like at the outset of my testimony to be afforded an opportunity to present two of my fellow colleagues, Hon. William C. Kern, and Hon. Edward Tait. Chairman Gwynne and Commissioner Secrest, former Members of Congress, are not able to be here this morning and they express their regret.

There are with me at this time certain members of the staff, including Earl Kintner, chief counsel, Harry Babcock, the Director of the Bureau of Investigation, and a number of other members of the staff that have come here to be of help in the event that the committee would like to present questions that as Commissioner I would not be able to answer.

With that privilege accorded me, Mr. Chairman, I would like to proceed with the reading of my statement.

Mr. BLATNIK. Please proceed.

Mr. MEADER. Could we have a little biographical background on the Commissioner, too?

Mr. BLATNIK. Commissioner, will you give us a brief summary of your biographical background?

Mr. ANDERSON. Mr. Chairman, members of the committee, I do not have a distinguished medical background as have previous witnesses this morning. My medical history is found mostly in connection with illness and a couple of operations.

I would like to say that most of my work has been in the field of public service. I served the State of South Dakota as its attorney general and its governor, and am now a member of the Federal Trade Commission. I come from out in the great well-known Middle West and find, if I might make an observation here, that this eastern weather is something terrible to contend with, and I can well understand why medical investigations are being held to determine the use and value of antibiotics and other curative devices.

Mr. MEADER. How long have you been a Commissioner?
Mr. ANDERSON. A little over 2 years, Mr. Meader.

The Federal Trade Commission is glad to have an opportunity to discuss with this subcommittee the Commission's administration of the laws regulating the advertising of drugs. Pursuant to the oral request of your staff, I have prepared a brief statement dealing with jurisdiction over drug advertising with particular reference to section 15 of the Federal Trade Commission Act and with tranquilizers.

Federal Trade Commission jurisdiction over false advertising of drugs is governed by sections 5, 12, 13, 14, and 15 of the Federal Trade Commission Act. Sections 12 to 15 were added to the Federal Trade Commission Act by the Wheeler-Lea amendment of 1938. While I do not have figures going back to 1938, the Commission's record room informs me that since 1951, 133 complaints and 141 orders to cease and desist have been based upon the Wheeler-Lea amendment.

It is my understanding that this subcommittee is presently interested in section 15 by reason of its reference to advertisements of drugs disseminated to the medical profession rather than to the consuming public. Section 15 (a) (1) provides as follows:

The term "false advertisement" means an advertisement, other than labeling, which is misleading in a material respect; and in determining whether any advertisement is misleading, there shall be taken into account (among other things) not only representations made or suggested by statement, word, design, device, sound, or any combination thereof, but also the extent to which the advertisement fails to reveal facts material in the light of such representations or material with respect to consequences which may result from the use of the commodity to which the advertisement relates under the conditions prescribed in said advertisement, or under such conditions as are customary or usual. No advertisement of a drug shall be deemed to be false if it is disseminated only to members of the medical profession, contains no false representation of a material fact, and includes, or is accompanied in each instance by truthful disclosure of, the formula showing quantitatively each ingredient of such drug.

The provisions of the last sentence of section 5 (a) (1) are limited to advertisements disseminated exclusively to the medical profession. While our filing system does not index matters according to the profession of the applicant, the staff members charged with handling this type of work recall no instances where the medical profession or any member thereof has complained that a drug advertisement disseminated exclusively to the profession contained a false representation of a material fact or that a drug did not contain a truthful disclosure of its formula.

There has been one court case relating to the issue of jurisdiction under the last sentence of section 15 (a) (1). In the matter of Koch Laboratories, Inc., et al (206 Fed. 311 (1953)), the Federal Trade Commission ordered the respondents to cease and desist from representing

(a) That a preparation "Glyoxylide" is an adequate treatment for cancer, leprosy, malaria, coronary occlusion or thrombosis, multiple sclerosis, arteriosclerosis, angioneurotic oedema, obliterative endarteritis, asthma, hay fever, dementia praecox, epilepsy, psoriasis, poliomyelitis, tuberculosis, syphilis, arthritis, osteomyelitis, allergy, infection, abscess of the prostrate gland, septicaemia, or insanity, or that said preparation has any therapeutic value in the treatment of any of such conditions;

(b) That the preparation B-Q constitutes an adequate treatment for any of the infections or sequelae thereof, gonorrhea, salpingitis, sinusitis, meningitis, infantile paralysis, septicemia, streptococcus sore throat, pneumonia, undulant fever, malaria, coronary thrombosis, any of the allergies, diabetes, cancer, arthritis, or any degenerative disease, or that said preparation possesses any therapeutic value in the treatment of any of such conditions; (c) That the preparation Malonide ketene solution, or either of its components Malonide and ketene constitutes an adequate treatment for any of the allergies or infections, diabetes, cancer, double pneumonia, osteomyelitis, or postoperative meningitis, or that said preparations possess any therapeutic value in the treatment of any of such conditions.

The respondents sought court review in the Court of Appeals for the Sixth Circuit. As to the defense that the advertising material in question had been distributed only to members of the medical profession, the court stated as follows:

Petitioners claim that their material was distributed only to members of the medical profession. They do not assert that it contained any quantitative analysis of each ingredient of the drugs involved.

However, petitioners concede that they advertised in a medical journal which was sent primarily to the members of the medical profession but also to lay persons. Moreover, while structural formulas were given, no formulas showing quantitatively the ingredients of the drugs accompanied certain of the advertisements. For example, this omission exists in petitioners' exhibits 2, 3, and 4. Failure to comply with one of these prerequisites, namely, that an advertisement (1) be disseminated only to members of the medical profession, and (2) be accompanied in each instance by truthful disclosure of the formulas showing quantitatively each ingredient of such drug, would have deprived petitioners of the benefit of the protective provision of section 15 (a). Here both of the requirements were lacking. Petitioners' briefs do not indicate what formulas are relied on as given a quantitative analysis of the drugs and, in fact, they do not deny in this court that there is no such analysis. Yet this is a vitally important requirement for the health and safety of the general public. It is essential that physicians and lay customers should be informed as to the proportions and relative weight of each ingredient. The order of the Federal Trade Commission in this respect did not violate, but on the contrary conformed to and carried out the purposes of section 15 (a).

The court then went on to agree with the Federal Trade Commission that there had been false representations of material facts.

A complaint in a somewhat similar case was recently issued. It involves a laxative known as Detergen, Docket 6923, complaint issued October 24, 1957. This matter is pending.

The Koch case which I have discussed does not fall within the language of the last sentence of section 15 (a) (1) of the Federal Trade Commission Act because the advertisement was disseminated to the public as well as to the medical profession.

The Federal Trade Commission, as I have noted, has received no complaints regarding advertising materials going only to the medical profession insofar as our records show. I should point out, however, that were it to receive such complaints the Commission would probably apply standards different from those applied to advertising materials which are disseminated to the public. We would take into consideration the scientific training and the ability and experience of the members of the medical profession. It is clear that advertising materials which might deceive untrained lay people would not deceive doctors. Where drugs are obtainable only upon medical prescription, therefore, the public interest would not require action by the Commission unless the medical profession had actually been misled or deceived as to a material fact. As noted, our records show no complaints of deception of doctors.

Mr. MEADER. Mr. Chairman, may I ask a question?

Mr. BLATNIK. Yes.

Mr. MEADER. Mr. Anderson, do you have to wait until you get a complaint from somebody before you can initiate action?

Mr. ANDERSON. Mr. Meader, in the general conduct of the Commission's program, such is not necessary. The Commission may act and does act in a large number of cases generally. However, as we have pointed out, I believe, to this committee and to other committees in

Congress, the public is really our best policeman in this respect, that these are reported to the Commission very, very quickly.

Competitors are usually very, very alert to point out the derelictions and violations of other competitors. In this case, however, Mr. Meader, I presume that since it is such a specialized field that there would be less inclination on the part of the Federal Trade Commission to be as alert to that as it would in the field of Federal Trade Commission regulations generally, because this deals with a very knowledgeable segment of American life. The doctors working with these items every day, who are highly trained, certainly I believe, speaking now as a Commissioner solely and not for the whole Commission, I believe that there we would probably wait for a complaint.

Mr. MEADER. Then I gather from what you have said that there is no instance in which the Commission or its staff has initiated any inquiry into possible misleading advertising under section 12 (a) (1) with respect to the medical profession; is that true?

Mr. ANDERSON. I would have to confer quickly with Mr. Babcock, who has been in charge of the investigation branch, and with Mr. Irish, who is in charge of the scientific opinions. I am sure that they could give us, without any hesitation, whether or not there has been any inquiry.

I would like to ask Mr. Babcock—and, for the record, this is Mr. Babcock, the chief of the investigations branch.

Mr. BABCOCK. Mr. Chairman, my answer to that is that we do rely, in the main, on the complaints from the public, particularly in the field of proprietary medicines. We have not received, as the Governor has told you, complaints from doctors.

Obviously the advertising couldn't be examined for its truthfulness by anyone except doctors or people skilled in that area with a view of establishing any reason to believe that we should employ manpower and money to investigate such claims. We have only two doctors and I assure you that they are stacked up way beyond any load they can carry in other areas where we are conducting our investigations.

Perhaps if we had doctors to examine as to the claim made in this type of advertising, we could do something, but at the present time I assure you we haven't. It has not come to our attention and we have not been using our doctors for the examination of that type of advertising. The rest of the Governor's statement will explain what we have done.

Mr. MEADER. Mr. Babcock, since 1939, when this provision came into effect-incidentally, I think perhaps we should know how long you have been with the Commission staff.

Mr. BABCOCK. Thirty-six years.

Mr. MEADER. You have been there since this became law.

Mr. BABCOCK. Yes.

Mr. MEADER. Have you been in the same division of the Federal Trade Commission?

Mr. BABCOCK. Up until yesterday.

Mr. MEADER. Then you would be in a position to know if any inquiries had been initiated by the Federal Trade Commission without receiving a complaint from the public or the medical profession with respect to section 15 (a) (1)?

Mr. BABCOCK. I believe it is germane to the discussion here that prior to the passage of this law I can recall two instances where this