Mr. HARROP. That the word "efficacy" be taken out. If you are going to put up a list, let it be toxic drugs that are too dangerous for administration and then the administrative process would not be nearly so dangerous. Mr. HESELTON. Finally, I thought that I understood you to say in response to one of Mr. Wolverton's questions that there are a number of drug manufacturers who are engaged in illegal business in and of itself; that is, imitating other products. Mr. HARROP. Yes, sir. Mr. HESELTON. How extensive is that? Mr. HARROP. It has become quite extensive now. They are small outfits and they spring up overnight and operate for a short period of time and then move on. We have had some litigation; most of the legitimate manufacturers have. You get a judgment against them but you find that they are not collectible. Then they are out of business and the next thing you know they are in business again not in New York this time but they are in Chicago. I think I have seen some estimates that probably 10 to 15 million dollars' worth of drug business a year is done in this substitute field. Mr. HESELTON. Is there any check on that? Mr. HARROP. It is pretty much up to the private manufacturer in trying to prevent a substitute being sold for his product. It is a sort of a bootlegging proposition. Mr. HESELTON. Is it a matter of less cost and more profit? Mr. HARROP. That is right. They take all of the research work that has been done by the legitimate manufacturer, copy the formula when it is not protected by any patent and most of them are not, and even copy the label insofar as they possibly can, and try to avoid trade-mark infringement and then having none of those administrative overhead costs and a very small operation, they will offer it at a cut price. Mr. HESELTON. Is there any power under the Federal law to check that? Mr. HARROP. There is one provision in the act that might be brought into force. I have discussed it with Mr. Larrick. The Food and Drug Administration is very sympathetic to our views but they have got a pretty big enforcement problem in trying to enforce other provisions of the act. We have never felt that it was fair to ask them to get at this illegitimate business unless the product is misbranded or adulterated. Where it is just a question of imitation we feel that that is our job to clear that up. If it is misbranded or adulterated drugs, then they should get after it. Mr. HESELTON. It would occur to me as a layman that there would be far more public interest in preventing improper manufacture of drugs that may be inherently dangerous than there is in policing legitimate concerns that are themselves undertaking to act properly. Mr. HARROP. Well, I think the Food and Drug Administration is trying to police it as much as they can. They have a large enforcement problem. I think that a number of those exhibits will ultimately result in cases brought against the party that is guilty of the misbranding. Mr. HESELTON. That is all, Mr. Chairman. Mr. WOLVERTON. Mr. Chairman, the witness has said that the pharmacist has nothing to worry about if the suggestion of the witness is adopted. If the manufacturer was wrong in his determination, the particular drug could be sold without prescription and then, if a pharmacist sold it without prescription, would the pharmacist not be subject to prosecution? Mr. HARROP. I think he can rely on the guaranty that he receives from the manufacturer. Mr. WOLVERTON. Are you stating that, as a principle of law, the pharmacist could rely on the guaranty that he got from the manufacturer? Mr. HARROP. I was in the middle of my answer to it, Mr. Wolver ton. Mr. WOLVERTON. I beg your pardon. I wanted to make sure. You said that you were a lawyer and I assumed your statement would be based upon legal principles. You had gone far enough to create doubt in my mind. Mr. HARROP. The guaranty section relieves a purchaser of an interstate drug, who in good faith hands out the same package, from a charge that it was originally misbranded or adulterated if he has received the drug under a written guaranty and makes that and all of the records available to the Food and Drug Administration. Mr. WOLVERTON. You mean there is a provision of law that exempts him from liability? Mr. HARROP. As far as the sins of the other party are concerned, yes, Mr. Wolverton. It is to protect him from something over which he has no control. Mr. WOLVERTON. What do you mean, the sins of the other party? Mr. HARROP. If the manufacturer or whoever introduces the product in interstate commerce has either misbranded or adulterated the drug, the person who receives it may not be in a position to know whether it is adulterated or misbranded. If he receives it under the written-guaranty provision in the law. Let me read this guaranty provision: No person shall be subject to the penalties of subsection (a) of this section, (1) for having received in interstate commerce any article and delivered it or proffered delivery of it if such delivery or proffer was made in good faith, unless he refuses to furnish on request of an officer or employee duly designated by the Administrator the name and address of the person from whom he purchased or received such an article and copies of all documents if any there be pertaining to the delivery of the article to him; or (2) for having violated section 301 (a); or (3) if he establishes a guaranty or undertaking, signed by and containing the name and address of the person residing in the United States from whom he received in good faith the article, to the effect in case of an alleged violation of section 303 (a), that this article is not adulterated or misbranded within the meaning of this Act, designating this Act, or to the effect in case of an alleged violation of section 301 (d) that such article is not an article which may not under the provisions of section 404 or 505 be introduced in interstate commerce; or for having violated section 301 (a) where the violation exists because the article is adulterated by reason of containing a coal-tar color not from a batch certified in accordance with regulations promulgated by the Administrator under this Act, if such person establishes a guaranty or undertaking signed by and containing the name and address of the manufacturer of the coal-tar color, to the effect that such color was from a batch certified in accordance with the applicable regulations promulgated by the Administrator under this Act. It is designed to place the responsibility where the responsibility really belongs, and to relieve the good faith operator who is not in a position to be aware of the facts from being responsible. The druggist who gets a drug has no way in the world, unless he wants to open up every bottle and take out a tablet and analyze it, to know whether or not it is adulerated, and if it is adulterated it is misbranded. The only person who knows is the manufacturer that has sold it to him. The manufacturer should be responsible under those conditions, and I am sure that you will agree. Mr. WOLVERTON. I have no hesitancy in agreeing with you on that, but I do have some hesitancy in following you to the extent that you go in saying that the druggist has nothing to worry about. We had before us two bottles this morning. I don't remember the name. It was too technical for me to remember. One of them required it to be dispensed under a prescription and the other did not. Now, there was a difference of opinion and yet I think that you said that it did have danger in it and that the average druggist would know that and, notwithstanding the labels on the bottle, would not dispense it without a prescription. Suppose he bought from the concern that required prescription. Suppose that some dire results followed. Of course he would not be liable in such a case because he had done it on the prescription of a physician. The physician would be the one that would be liable. Suppose, however, that he took it out of the other bottle that didn't require a prescription and, notwithstanding the toxic character of the drug, he dispensed it without a prescription and then dire results followed. Would you say that the druggist was not responsible under those circumstances? Mr. HARROP. He has responsibility in such case if he has knowledge above and beyond the labeling on the package he receives and can't bring himself within this guarantee. What I was trying to say when I said he had nothing to worry about, I think I was talking about the proposal that we made to try to give him a guide for the refilling of prescriptions without a doctor's authority. We have tried to set up a standard so that he can look at his labels and if it has the "caution" legend on it he knows that he may not refill it without the doctor's authority. If it does not have the "caution" legend on it, he may fill it without such authority. The responsibility for that proper labeling is placed on the manufacturer who has the knowledge and should have such responsibility for proper labeling. If the manufacturer has violated the law, as far as the manufacturer's responsibility is concerned, he is directly liable in an action by the Food ́and Drug Administration or he is indirectly liable if the druggist turns over his guaranty and throws the liability back on the manufacturer where it should be placed. Mr. WOLVERTON. I will not pursue my questions any further, but my questions were not based on responsibility of the druggist from the standpoint of the Food and Drug Administration, because I can see that a different element enters into it there, but I have been speaking of it from the standpoint of the individual who purchased the drug, the private individual. Mr. HARROP. Well, I think the good faith of the druggist would enter into all of those transactions. Mr. WOLVERTON. That is all an element of proof. Mr. HARROP. That is right. Mr. WOLVERTON. And before a jury, but that doesn't eliminate the case and therefore it does not eliminate the worry of the pharmacist. Mr. HARROP. I will withdraw my statement that he has nothing to worry about. That is too broad a statement, anyway. Mr. WOLVERTON. That is all. Mr. BEAMER. I have just one question, if I may, Mr. Chairman. Did I understand that in your page 2, you made a suggestion for a substitute and later on I think you stated, too, that probably the part that disturbed most of the folks was the efficacy provision? Mr. HARROP. Yes, sir. Mr. BEAMER. Suppose there be some substitute language that might clarify that, or would you recommend a listing, and if so would you like to suggest for the consideration of the committee some wording that might assist them in that direction? Mr. HARROP. I can't fairly recommend a listing because we are opposed to it. We don't think it is a proper approach and our experience is not too good with administrative hearings. We think a standard like this is a fair way of approaching it. You can amend that by striking out "and efficacious." Mr. BEAMER. Just striking it out, that would be your answer? Mr. BEAMER. I think that answers my question. ELTON J. LAYTON, DETROIT, MICH., May 2, 1951. Clerk, Committee on Interstate and Foreign Commerce, In regard to H. R. 3298 we wish to go on record as being in favor of modification of this bill in the manner suggested by Leslie D. Harrop as general counsel for the American Drug Manufacturers Association. We believe that limiting the dispensing of any drug on prescription only may best be accomplished by definition in the law in language like that now in administrative regulation (sec. 2.106 (B) (1)) applying to section 502-F of the Federal Food, Drug and Cosmetic Act rather than by placing upon the Food and Drug Administration the responsibility to prepare and keep up to date a continually changing list of drugs identified by specific names we also believe the proposed reference in (B) (1) of bill to habit forming drugs is completely unnecessary in the light of section 502 (D) of the present act and the application of now effective narcotic laws and regulations. PARKE DAVIS & Co. KENNETH D. MCGREGOR, Secretary and General Attorney. The CHAIRMAN. The next witness is Mr. Clutter. STATEMENT OF RAYMOND O. CLUTTER, ELI LILLY & CO., INDIANAPOLIS, IND. Mr. CLUTTER. My name is Raymond O. Clutter, and I am representing Eli Lilly & Co., one of the larger pharmaceutical manufacturers, located in Indianapolis, Ind. I have here a prepared statement which was written by Mr. W. M. Wheeler, Jr., our secretarygeneral counsel. Unfortunately, he was not able to attend this hearing and so first I am going to read his statement, after which I will be glad to answer any questions that any of you gentlemen may have. Mr. WOLVERTON. Before the witness proceeds, may I inquire as to what position he holds with the Eli Lilly Co.? Mr. CLUTTER. I am an attorney for Eli Lilly & Co. and I am Mr. Wheeler's assistant. Since 1876 Eli Lilly & Co. has been engaged in the manufacture and sale of medicinal products for use under the direction of a physician. It opposes the legislation now under consideration by this committee because it feels that to place in the hands of any administrative agency the broad powers of drug classification contemplated by H. R. 3298 would be against the best interests of the public. Its reasons may be stated briefly as follows: 1. H. R. 3298 will amount to an abdication by Congress of its legislative powers and a delegation of such powers to an administrative agency. 2. When it is considered that there are many thousands of drug products and many thousands of diseased conditions for which one or more of them may be indicated in the treatment the endless task of administrative classification becomes apparent. Some drugs may be safe and efficacious without medical supervision when recommended for certain conditions and at the same time be quite dangerous for use without medical supervision in the treatment of other conditions. The question of safety and efficacy accordingly depends upon countless factors, among the most important being the nature of the drug, its dosage, method of administration, frequency of administration, the precise condition for which such drug is being administered, et cetera. An administrative classification would accordingly require that consideration be given to each of these factors for each drug with respect to each intended use. Such administrative classification would involve hearings, the attendance of experts, and the taking of testimony. Is it possible for anyone to foresee the end of these proceedings? 3. As opposed to the proposed administrative classification, the existing statute now simply requires that drugs bear "adequate directions for use." This simple statutory mandate is designed to protect the user of medicinal products. It would be difficult to improve upon the present system. In enacting the Federal Food, Drug and Cosmetic Act of 1938 Congress did not attempt to protect the consumer against his own foolishness or against his own willful disregard of label directions. There is no need to do that now. Under the present system, if a drug manufacturer deems that his product requires medical supervision he is at liberty to state that fact clearly on his label and the purchaser is thus given adequate information as to how the product should be used. If the nature of the product and the claims made therefor are such that medical supervision is required, the existing statute makes its own classification. This is a legislative classification and wherever a doubt arises as to the proper labeling of a product the courts have jurisdiction to decide the issue. are opposed to substituting a system of administrative classification for the legislative classification now embodied in the statute. We 4. It is said that H. R. 3298 is necessary to establish the rules for refilling of prescriptions. These rules, by custom and usage of long standing in the pharmaceutical and medical professions, are established by the physician. In writing a prescription, it is his responsibility to give instructions as to the refilling thereof if he contemplates |