Competitive Problems in the Drug Industry

SELECT COMMITTEE ON SMALL BUSINESS

[Created pursuant to S. Res. 58, 81st Cong.]

ALAN BIBLE, Nevada, Chairman

JOHN SPARKMAN, Alabama

RUSSELL B. LONG, Louisiana

JACOB K. JAVITS, New York
PETER H, DOMINICK, Colorado

HARRISON A. WILLIAMS, JR., New Jersey MARK O. HATFIELD, Oregon

GAYLORD NELSON, Wisconsin

JOSEPH M. MONTOYA, New Mexico
FRED R. HARRIS, Oklahoma

THOMAS J. MCINTYRE, New Hampshire
DAVID H. GAMBRELL, Georgia

ROBERT DOLE, Kansas
EDWARD J. GURNEY, Florida

J. GLENN BEALL, JR., Maryland
ROBERT TAFT, JR., Ohio

LOWELL P. WEICKER, JR., Connecticut

CHESTER H. SMITH, Staff Director and General Counsel
MICHAEL S. GORDON, Minority Counsel

Statement of—

Campbell, James F., Assistant Administrator for Program and Man-
agement Services, Agency for International Development; accom-
panied by Leslie Grant, Deputy General Counsel; Seymour Barondes,
Chief, Commodity Eligibility and Price Branch, Office of Controller;
and Raymond Torrey, Chief, Industrial Resource Division, Office
of Procurement.

Edwards, Dr. Charles C., Commissioner, Food and Drug Administra-

tion; accompanied by Dr. Henry S. Simmons, Director, Bureau of

Drugs; and Peter Barton Hutt, General Counsel__

Hayes, Brig. Gen. G. J., Medical Corps, U.S. Army, Principal Deputy

Assistant Secretary of Defense (Health and Environment); ac-

companied by Col. Douglas Lindsey, MC, USA, Director of Medical

Materiel, Defense Personnel Support Center (DPSC) -

Seggel, Richard L., Deputy Assistant Secretary for Health Policy

Implementation, Office of the Assistant Secretary for Health and

Scientific Affairs, DHEW; accompanied by Albert J. Richter, As-

sociate Commissioner, Medical Services Administration, Social and

Rehabilitation Service; Marion J. Finkel, M.D., Deputy Director,

Bureau of Drugs, Food and Drug Administration; Morris Older,

Deputy Assistant Bureau Director, Division of Provider Reim-

bursement and Accounting Policy, Bureau of Health Insurance, So-

cial Security Administration; Allen J. Brands, Chief Pharmacy Of-

ficer, Public Health Service; and Jonas Rose, Pharmaceutical Con-

sultant, Medical Services Administration, Social and Rehabilitation

Services

Staats, Hon. Elmer B., Comptroller General of the United States; ac-
companied by Gregory J. Ahart, Director, Manpower and Welfare
Division; Dean K. Crowther, Deputy Director; Charles Collins, As-
sistant Director; and Paul Shnitzer, Assistant General Counsel___
Wells, Dr. Benjamin B., Deputy Chief Medical Director, Veterans'
Administration; accompanied by Dr. Lyndon Lee, Jr., Assistant
Chief Medical Director for Professional Services; Roland Harding,
Chief, Pharmacy Service; Clyde Cook, Deputy Director, Supply
Service; and Philip Warman, Associate General Counsel___

EXHIBITS

Page

8745

8510

8589

8686

8537

8615

Letter dated February 29, 1972, from Dr. Robert D. Dripps et al., to Hon.
Paul G. Rogers, Representative, U.S. House of Representatives_

Letter dated May 19, 1972, from Dr. Charles C. Edwards, Commissioner,

Food and Drug Administration, Department of Health, Education, and

Welfare, to each of the signatories of the February 29, 1972 letter--

"Dear Doctor" letter dated May 19, 1972, from Eli Lilly & Co--‒‒‒

Letter dated May 9, 1972, from John D. Heller, Associate Director, Man-

power and Welfare Division, U.S. General Accounting Office, to John D.

Twiname, Administrator, Social and Rehabilitation Service, Depart-

ment of Health, Education, and Welfare__.

8532

8534

8535

8545

Letter dated July 10, 1972, from Hon. Elmer B. Staats, Comptroller Gen-
eral of the United States, to Senator Gaylord Nelson, chairman, with
accompanying enclosures--

8554

Letter dated February 3, 1972, from Hon. Elmer B. Staats, Comptroller
General of the United States, to Senator Gaylord Nelson, chairman, with
accompanying enclosure..

8585

(III)

Discussion of nine questions outlined in Chairman Nelson's May 16, 1972,

letter to the Secretary of Defense___

List of drugs by the Department of Defense, from February 28, 1971, to

April 30, 1972, by Federal stock number, deleted: 152, limited standard:

179, total actions: 331___

Excerpts of minutes of committee meetings of the Veterans' Administra-
tion Therapeutic Agents and Pharmacy Review Committee___

Professional services letter dated June 19, 1972, from Dr. Lyndon Lee, Jr.,

Assistant Chief Medical Director for Professional Services, Veterans'

Administration, to directors of hospitals, domiciliary, outpatient clinics

and regional offices, with accompanying enclosures--

A paper entitled "Market Research Summary of Physician's Attitudes

Toward Antibiotics”.

List of 16 high-priced drugs ineligible for Agency for International Devel-

opment financing, by generic and brand name....

8638

Detail of significant examples of reduced prices under AID's special rules

as compared with prices requested by suppliers or previously financed

by AID...

Refund claims asserted by AID against pharmaceutical suppliers, supple-

ment to claims information furnished to Senate Subcommittee on

Monopoly on July 31, 1970, as of May 31, 1970

APPENDIXES

I. Exhibits provided by the Food and Drug Administration:

Prepared statement of Charles C. Edwards, M.D., Commissioner

of Food and Drugs, Public Health Services, Department of

Health, Education, nad Welfare__.

The Drug Efficacy Study; Fixed Combination Prescription

Drugs; Oral Hypoglycemic Agents___

8769

Methotrexate: Use in Psoriasis; Spectinomycin for Acute

Gonorrhea; Problem With Digoxin; Isoniazid: Labeling

Changes

8775

Diethylstilbestrol Contraindicated in Pregnancy.

Hexachlorophene and Newborns----

8781

Hexachlorophene in Drugs, Soaps, and Cosmetics; Coronary

Vasodilator Efficacy; FDA to Evaluate O-T-C Drugs;

Nitroglycerin Packaging Affects Potency; Caution Advised

in Use of Irrigating Fluids_.

8784

8786

Oral Hypoglycemic Drug Labeling; Methadone for Heroin

Addiction; Iodochlorhydroxyquin and Travelers' Diarrhea;

Imipramine and Alleged Birth Defects; FDA's Use of Out-

side Consultants___.

8790

Letter dated October 7, 1971, from Neil L. Chayet, Esq., Chayet &

Flash, counsellors at law, to Charles C. Edwards, M.D., Commis-

sioner, Food and Drug Administration_.

Letter dated June 5, 1972, from Charles C. Edwards, M.D., Commis-

sioner, Food and Drug Administration, to Neil L. Chayet, Esq--- 8796

8793

II. Exhibits provided by the General Accounting Office:

Listing of drugs purchased under the Mississippi medicaid pro-

gram during the period July 1, 1970, to February 19, 1971,

which were classified either as "ineffective" or "possibly effec-

tive" by FDA..

8822

Prepared statement of Hon. Elmer B. Staats, Comptroller General

of the United States__

8801

Listing of drugs purchased under the Illinois and New Jersey

medicaid programs during July and October 1970 which were

classified as "ineffective" by FDA__

8822

Listing of drugs purchased under the Ohio medicaid program dur-

ing the months of January, April, July, and October 1970 which

were classified as "ineffective" by FDA.......

8823

Letter dated August 11, 1971, from Hon. Elmer B. Staats, Comp-

troller General of the United States, to Senator Gaylord Nelson,

chairman

8824

II. Exhibits provided by the General Accounting Office-Continued

Comparison of selected pharmaceutical prices, 1971, prepared by

the Office of Research and Statistics, Social Security Adminis-

tration, Department of Health, Education, and Welfare----

Procurements by DPSC and the VA from foreign firms for cal-

endar years 1968 through 1971__

III. "A Comparative Evaluation of Marketed Analgesic Drugs," by C. G.

Moertel, M.D., D. L. Ahmann, M.D., W. F. Taylor, Ph. D., and Neal

Schwartau, B.S., from the New England Journal of Medicine, April

13, 1972, pages 813-815_.

"Dear Doctor" letter dated April 17, 1972, from Eli Lilly & Co----

"American Scientists Charge U.S. Medicine Lags, Urge Major

Change in Regulatory Policies-Ask a Review of Impact of Medi-

cine, Research," from the Medical Tribune, April 5, 1972__

"Behind Proposal to House Subcommittee-Growing Therapeutic Gap

Worries American Scientists," from the Medical Tribune, April 12,

"For Moderation . . And a Moratorium," editorials from the Med-

ical Tribune, April 12, 1972____

"Dr. Freis, Gilman, and Lasagna Comment-Experts Blame FDA

for New Drug 'Standstill,'" from the Medical Tribune, April 19,

"For More Outside Consultants and Affirmative Action," ed-

itorials from the Medical Tribune, April 19, 1972_

"Human Resources-Drug Industry Lobby Riding High," by Bruce E.

Thorp, from the National Journal, November 12, 1971, pages 2455-

2457

Public Information-Notice of Proposed Rulemaking of the Food and

Drug Administration, Department of Health, Education, and Wel-

fare, 21 CFR Parts 1, 2, 4, 8, 121, 130, 135, 146, 191, from the Fed-

eral Register, May 5, 1972, volume 37, No. 88, pages 9128-9138----

"Darvon and Darvon-N," from The Medical Letter, May 26, 1972,

volume 14, No. 11, pages 37–38__

"Use of Drugs Under the Mississippi Medicaid Program," by Alton B.

Cobb, M.D., M.P.H., Donnie P. Wilson, and John M. Abide, Uni-

versity of Mississippi School of Medicine..

"Drug Prescribing and Use in an American Community," by P. D.
Stolley, M.D., M.P.H., H. H. Becker, Ph. D., M.P.H., J. D. McEvilla,
Ph. D., L. Lasagna, M.D., M. Gainor, M.A., and L. M. Sloane, M.A.,
reprinted from Annals of Internal Medicine, volume 76, No. 4, April
1972

"The Study of Prescribing as a Technic of Examining a Medical Care

System," by Charlotte F. Muller, Ph. D., F.A.P.H.A., reprinted from

American Journal of Public Health, volume 57, No. 12, December

1967

IV. Exhibits provided by the Department of Defense:

8871

Minutes of the Therapeutic Agents Board Meeting and Adverse