GOVERN MENT
FAIR PRICE. Between 1948 and 1958 price of Lederle antibiotics dropped 66% despite rising costs of labor (up 70%) and
utilities (up 80%), Lyman Duncan, left, and Dr. Wilbur Malcolm center, testified before Kefauver's subcommittee
Drug Probers Attack Antibiotic Prices Price of tetracycline looks too fixed, Kefauver subcommittee charges. Military's buying of foreign drugs draws strong protest In Washington last week, Sen. Estes Kefauver's Subcommittee on Antitrust and Monopoly concluded its seventh session of hearings on the drug industry. This time the subcommittee's charges of unreasonably high (as well as identical and rigid) prices, lack of competition, and excessive profits were tossed at makers of antibioticsAmerican Cyanamid's Lederle division, Parke-Davis, Bristol Laboratories, and Eli Lilly. The antibiotic hearings, however, failed to produce the headline catching charges of the steroid or tranquilizer hearings. By this time (Sen. Kefauver's investigation of the drug industry has been dragging on for 10 months now) the drug industry has pretty well caught on to the subcommittee's tactics of questioning. For the most part, the antibiotics makers 46
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testifying were well prepared to answer all charges or allegations thrown at them. One witness, Dr. Wilbur Malcolm, president of American Cyanamid, anticipated the questions to the point where instead of extemporaneously answering the subcommittee's charges he read from statements prepared beforehand. Antibiotic that created the biggest stir at this session's hearings was tetracycline. Chas. Pfizer, Lederle, and Bristol manufacture and sell the antibiotic. Upjohn and E. R. Squibb buy bulk tetracycline from Bristol, package, and sell it. Interesting thing about tetracycline, charged Sen. Kefauver's drug probers, is that since 1951 all five companies have sold the product to the druggist at exactly the same price, regardless of the form or quantity purchased—250 mg. (16 cap-
sules), for example, has consistently been priced at $5.10. In addition, all five suppliers suggest the same retail price to the consumer. Last month's 159^ price reduction to the retail trade, initiated by Pfizer and matched by the other four suppliers, was the first tetracycline price reduction in almost 10 years. Not only are all tetracycline prices identical, charged the subcommittee's probers, but prices of other broad spectrum antibiotics are also identical. Since 1951, aureomycin, Chloromycetin, and terramycin have all been sold to the druggist at exactly the same price as tetracycline—$5.10 for 250 mg. (16 capsules). "How do you all get together and charge the same price?," Sen. Kefauver persistently asked Lederle officials. Dr. Malcolm said that Lederle has nothing to do
with other companies' prices, maintained that Lederle's prices are fair and reasonable. Military Buying. Rear Admiral William L. Knickerbocker, executive director of the Military Medical Supply Agency, set off the loudest storm of protest at this session's hearings when he testified that MMSA has been forced to buy drugs from foreign suppliers "because of the uncooperative aspects of their (U.S. drug makers) pricing policies." Since September 1959, MMSA (which bought $33.7 million worth of drugs and biologicals for all the armed forces in fiscal 1960) has awarded five foreign drug contracts with a total value of •SI.7 million. If the drugs had been purchased from U.S. suppliers, said Rear Admiral Knickerbocker, it would have cost the Government $3.6 million. The drugs purchased abroad were tetracycline hydrochloride, nitrofurantoin, and meprobamate. Strong Protest. Sen. Everett Dirksen (R.-Ill.) wasn't impressed with MMSA's bargain hunting. He strongly protested against MMSA's practice of buying foreign drugs with U.S. taxpayers' money. "The $1.9 million savings is meaningless," he told the subcommittee "when all the other factors are taken into account." The Pharmaceutical Manufacturers Association in a statement issued while the drug hearings were in session argued that "if MMSA's practice of buying drugs abroad were projected to its ultimate scope, it would depress our economy to the level of that existing in less fortunate nations." Protests against foreign suppliers were also made by the drug companies. Lyman C. Duncan, manager of Lederle, vigorously tore into the Italian drug industry, accused the Italian pharmaceutical industry of being "a nest of pirates operating in a (patent free) sanctuary." Mr. Duncan pointed out that Italy is the only commercial nation in the world that doesn't now have some kind of patent protection in drugs. "If the Italian drug companies are allowed to continue on their present basis," Mr. Duncan emphasized, "we may be compelled to actually manufacture abroad for some of our U.S. markets."
Nearing the End.
Sen. Kefauver
plans to hold one more session of hearings on the drug industry. The last session will deal with a miscellaneous group of products, including certain vitamins and sulfa drugs.
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