The arbitration board awarded a royalty rate of 50 percent of gross selling price in bulk and 10 percent in final dosage form. Hexagon's counsel objected to the arbitration board on the ground that one member of the three-man board was prejudiced in that he had done business with Schering. The district court granted a motion to vacate the award. Schering appealed and the matter was argued in the U.S. Court of Appeals in Philadelphia just about 2 weeks ago. Hexagon is a manufacturer of organic chemicals who has heretofore sold its products in bulk only. They are making one exception in making histachlor tablets in dosage form. In other words, all their business before had been directed at companies who packaged and sold in final form and Hexagon does not want to destroy its own market by competing with its customer. Hexagon has just in the past few days had a Government bid acceptedhistachlor tablets at $425 a kilo. Schering had previously sold this same product to the Government (GSA) for $1,750. With respect to the arbitration board referred to earlier, the three members were: 1. Jerome Handler, New York attorney 2. John H. Schwoon, attorney and retired banker Mr. Massler relates that in the first day or so of hearings, Mr. Fanto asked questions which led him to believe that Fanto was very well informed or very thoroughly briefed before the hearings. He apparently challenged Fanto's qualifications to sit on the board in view of this and requested Fanto to step down but Fanto stood firm and emphatically denied any prejudice or biased feelings. It later developed that Fanto was in the export-import business and had previously imported liver bile and in turn sold it to Schering. Mr. Montrose Massler has been representing Hexagon in its controversy with Schering for many years and feels strongly that his client has been mistreated and discriminated against. He also feels that the U.S. Government should take a firm stand in this matter since the policy of the Government was to open the patents for licensing on a reasonable royalty, nonexclusive basis, and thereby other producers would have an opportunity to enter the field and the resulting competition would encourage more widespread production of these products at the lowest possible price to the public. He contends that Schering has failed to negotiate in good faith with applicants for licenses as it has been directed to by the Attorney General and the courts. CITATIONS Brownell v. Schering, 129 F. Supp. 879 affd. 228F. 2d. 624 cert. den. 351 U.S. 954 Brownell v. Schering, 146 F. Supp. 106 Rogers v. Schering, 165 F. Supp. 295 Rogers v. Schering, 262 F. 2d. 180 (NOTE. After this memorandum was written, it came to my attention that the U.S. court of appeals affirmed the ruling of the U.S. district court in vacating the award of the arbitration board. The ruling of the board was set aside on the ground that the arbitration board procedure was improper. It was then taken to the U.S. Supreme Court which denied certiorari. (Thereafter, the matter went back to a new arbitration board which awarded a royalty rate of 25 percent of gross selling price in bulk and 10 percent in final dosage form in a licensing arrangement between Schering Corp. and Hexagon Laboratories, Inc. This matter was finally settled in 1960, approximately 8 years after Hexagon first applied for a license from Schering). D.D.G., January 2, 1962. PHARMACETUICAL MANUFACTURERS ASSOCIATION, SUBCOMMITTEE ON ANTITRUST AND MONOPOLY, U. S. Senate, Washington, D.C. DEAR SIRS: In my prepared statement on S. 1552, delivered on December 7, 1961, under the heading "Dissemination of Information,” I made the following points (tr. (transcript) 22-24): "1. PMA believes that one of the most important responsibilities of the drug manufacturer is prompt and widespread dissemination to the medical profession of accurate and complete scientific information about drugs. "2. Assurances that physicians are fully informed are provided by the efforts not only of the manufacturer, but also of public and private agencies. "3. In addition to the FDA requirements, the American Medical Association has a comprehensive program for maintaining and increasing the flow of information on drugs." I then stated (tr. 23) that: "It is clear that through these efforts physicians already have full and objective information readily available. The complex requirements in S. 1552 would be a costly and unnecessary duplication of effort. with no practical benefits to physicians or patients." During the questioning, Mr. Flurry referred (tr. 99) to the foregoing statement as to "costly and unnecessary duplication of effort, with no practical benefits to physicians or patients." He said that the sponsor of the bill had no desire te duplicate what could be required under present law, and he requested me t submit a list of the duplications in the bill as compared with requirements under present law (tr. 100). At the outset it should be noted that my comments before the subcommittee in respect of duplication of effort related to prescripion drugs. This was implies from my testimony (tr. 23). I believe the most helpful way in which to respond to Mr. Flurry's request is to indicate more precisely how the requirements in S. 1552 would be a costly and unnecessary duplication of effort in terms of the functional requirements of the comprehensive and complex law and regulations governing the labeling of prescription drugs. 1. Duplication of effort by the pharmaceutical industry a. Labeling on or within the container of the drug.-Each prescription drag package must contain on or within it labeling bearing adequate information fer the use of the drug "including indications, effects, dosages, routes, methods, and frequency and duration of administration, and relevant hazards, contraindications, side effects, and precautions under which prectitioners licensed by law to administer the drug can use the drug safely and for the purposes for which it is intended, including all purposes for which it is advertised or represented” (sec. 1.106 (b) (3) of the drug regulations, effective Mar. 5, 1962). If the drug is a prescription form of new drug, insulin, or certifiable antibiotic, the labeling mast be the labeling specifically authorized by the Food and Drug Administration The only exception to these requirements is a practical one: prescription drugs for which such information is "commonly known" to the licensed practitioner may be omitted from the drug container if the drug is not a prescription form of new drug, insulin, or certifiable antibiotic. b. Labeling disseminated apart from the container.-In order to enable and encourage physicians to prescribe new prescription drugs cleared for use under the provisions of section 505 of the FDC Act, manufacturers, of necessity, must provide them with information concerning the proper use fo such drugs. The labeling requirements for prescription drugs, however, proscribe the disseminstion of any labeling to a physician unless such labeling also bears adequate information for the use of the drug, including "any revelant hazards, contraindic tions, side effects, and precautions" (sec. 1.106 (b) (4) of the drug regulations). This is true even though such information may be "commonly known" to the physician (cf. sec. 1.106 (b) (3)). 2. Duplication of effort by medical profession Every doctor is responsible, by law and under ethical principles, for applying the skill and knowledge common to his profession, and for maintaining knowledge of progress made in medicine. This responsibility is met through the efforts of the individual practitioner and of the organized medical profession. Because of the increasing importance of drugs in medical practice, the organized medica Although the relevant provisions of S. 1552 include all drugs, it is and was not believed that dissemination of information with respect to nonprescription drugs, dreg which may be purchased by the consumer over the counter, present any significart problem of physician education or information since existing law would appear quie adequate for these drugs of relatively low potency and toxicity. The law requires that the labeling of such drugs bear (1) "adequate directions for use" by the consumer and (2) "adequate warnings" to the consumer. Sec. 502(f) of the FDC Act. profession itself has undertaken to fulfill its responsibility by expanding and improving its own programs, independent from those of the manufacturers, for lisseminating to practicing physicians complete and authoritative information on new drugs when they are first introduced, and by continuing up-to-date information on significant developments in drug therapeutics. During the present hearings, the AMA described the progress it was making in supplying all physicians with complete and readily available data on all drugs (record 42). The foregoing efforts of the manufacturer and of the medical profession under existing law would be generally duplicated by a. Proposed subsection 502 (m) (1), under which manufacturers would have to include, "with any information transmitted to any practitioner," copies of the package inserts and copies of the findings of fact and determinations made by the Secretary when he approved the new drug application. b. Proposed subsection 502 (m) (2), which would provide that manufacturers must include "in all advertisements (as defined) and other descriptive printed matter" warnings approved by the Secretary and full and correct statements of efficacy. c. Proposed subsection 510(a), which would require the Secretary to distribute a list of dangerous drugs together with information about "dangerous or harmful effects." d. Proposed subsection 510(b), under which the Secretary would be required to distribute, to physicians, hospitals, and others, copies of all package inserts which the Secretary has required to be included in drug packages. In conclusion, I would say that the provisions with respect to dissemination of information proposed in S. 1552 would not add to the usable information already provided to physicians by manufacturers and by the organized medical profession. Some of the new provisions merely require sending out information which is already being sent to physicians. Others merely require that the same information now being sent in one or more forms be sent over again in some other form or by some other person. The net effect would be to cause the present flow of information to become a flood of information, repeating and duplicating what is now readily available to the physicians under the present practices and requirements, and involving substantial burdens in terms of time and cost to physicians, to manufacturers, and to the Government. Sincerely yours, Dr. JOHN M. BLAIR, EUGENE N. BEESLEY, THE CITY COLLEGE, Chief Economist, Subcommittee on Antitrust and Monopoly, Committee on the Judiciary, U.S. Senate, Washington, D.C. DEAR DR. BLAIR: During the course of Mr. Connor's testimony on December 8, 1961, you asked (tr. 542) whether the subcommittee could have access to the actual prices on which calculations were based in the preparation of the index described in my statement entitled "The Producer Price Index of Prescription Specialties." In accordance with your request, I enclose an eight-page schedule entitled "Red Book Prices for Products Used in Computation of Ethical Price Index." The schedule which was prepared by Mr. William Helfand, of Merck, Sharp & Dohme (the firm which has cooperated with me in the preparation of my indexes) has been checked by me. Sincerely, JOHN M. FIRESTONE. 73753-62-pt. 4-38 |