For THE PUBLIC DOES NOT KNOW THEREFORE THERE IS NO PROTECTION IN THE PHRASE "When Goods Usable for the Same General Purpose Are Available to the Public from Other Sources." •MRS JOHN CONSUDDER Date Ꭱ TABS. Dase (·5) M. D. Reg. No.. BATON ROUGE, LA. S/ JOHN DOE M. FOOD TOWN PHARMACIES, INC. "Precitely As Your Doctor Prescribed" Florida at Margaretta 33rd Street M. D. BATON ROUGE, LA. "DEXAMYL SPAN SULES DEXTRO. AMPHETAMINE # 2 (S.K. F.) ē AMO BARBITAL #2 Disp: # 100 SIG: AS DIRECTED 3.46 For. THE PUBLIC DOES NOT KNOW THEREFORE THERE IS NO PROTECTION IN THE PHRASE "When Goods Usable for the Same General Purpose Are Available to the Public from Other Sources." •PRS JOHN CONSUMER Address NEM BUTAL Sodium Date (12 BOATS Be APS SODIUM DISP #100 SIG: AS DIRECTED M.D. Reg. No. 98 5/ JOhAL DOE FOOD TOWN PHARMACIES, INC. "Precisely As Your Doctor Prescribed" Phone DI 4-2666 M.D. FOR MRS JOHN CONSUMER DEXTRO-AMPHETAMINE DISP: # 100 3.18 M.D. Reg. No.. Federal Trade Commission cannot prevent natural monopoly of a patented product The following excerpt from FTC correspondence reflects that the "goods usable for the same general purpose ***" phrase will not prevent fixed price monopolies : "While CIBA has a natural monopoly in the sale and distribution of its particular patented products or those standard products for which it has its own registered trademark, it would appear that CIBA is in open competition with numerous other manufacturers of pharmaceuticals, which perform the same functions and produce the same results as those sold by CIBA. For instance, Serpasi, which you mention, is merely CIBA's registered trademark for reserpin U.S.P., there are, of course, numerous reserpin products of other manufacturers." (Not on a recipe.-Editor.) This question is not intended to reflect unfavorably on CIBA or the FTC, but is to illustrate a situation produced by the 45 States which have legalized price fixing at one time or another. One hundred and fifty-eight thousand U.S. physicians and millions of consumers could be victims of the prescription pharmaceutical monopoly Because the Federal Government inspects approximately 1 percent of all drugs and pharmaceuticals manufactured, in most instances a physician must prescribe a patented or trademarked or price-fixed product; usually he cannot risk the health of his patient by prescribing the generic product of an unknown manufacturer. In this way the doctor is the victim of the manufacturer's pricefixing and there is no product “usable for the same general purpose." The physicians' dependence on trade names is most accurately described in a wise statement attributed to Mr. Jack Cooper, director of the pharmacy research and development division of CIBA: "It is the physician who bears the prime responsibility for the welfare of the patient, and upon him falls the responsibility of selecting not only the drug, but the manufacturer of the selected drug. "If the physician is confident that no significant differences exist between the same drug as manufactured by different suppliers, nothing prevents him from prescribing by means of a generic name. On the other hand, if he is certain of the quality only as prepared by a particular manufacturer, it is his privilege * matching his responsibility ** to prescribe by trademark." Attacks in Congress and elsewhere on patented, copyrighted, and trademarked merchandise is not the fault of our patent system. It was caused by the price-fixing laws of the State which in effect have permitted manufacturers, under pressure from wholesalers and retailers, to fix high wholesale and retail prices on monopolies and trademarks. American consumers are fortunate in having the products of the world's greatest pharmaceutical manufacturers. This statement is not intended to analyze drug manufacturers' prices and costs, nor to judge those prices without all the facts. In my opinion, pharmaceutical manufacturers have a right to spend 14 percent or more or less of sales for advertising and promotion, and 8 percent or more or less of sales for research as hearings reflected, or any percentage they desire, provided they are not permitted or forced to fix wholesale and retail prices, or otherwise violate our antitrust philosophy, especially as related to monopolies, i.e., patented products requiring a doctor's prescription. American consumers spent $1,800 million for prescriptions in 1958; $2,058 million in 1959; and $2,043 million in 1960; $2,255 million in 1962. The number of prescriptions has increased more than 300 percent since 1940, with the average retail price now $3.21. Prescriptions are one of America's best buys, even if they may be priced too high under legalized price-fixing fair trade in many States. The Quality Stabilization Act would permit prescription price fixing by manufacturers in 50 States for wholesalers and retailers whose cost of operation varies from 12 to 36 percent at a time when costs vary even more because of the fact that approximately 92 percent of these prescriptions are dispensed as manufactured, and only about 8 percent are compounded (according to a New Jersey survey). This reference to cost is not intended to reflect unfavorably on the role of professional pharmacists. Whether pharmaceuticals are dispensed as manufactured, or compounded, a pharmacist performs in a professional capacity of tremendous responsibility and trust, which demands the most exacting professional ability. The Senate version of this act should not empower manufacturers to fix the pharmacist's price and his professional fee, which in some instances might be too low. The Quality Stabilization Act could promote socialized medicine or medicine by Government control By edict dated in the year 1240, German Emperor Frederick II provided for supervision of pharmaceutical practice including development of lists of governmentally established prices which still regulate the price of drugs in many European countries, according to Dr. George B. Griffenhagen, president, American Institute of the History of Pharmacy. Since that time other governments have established medicine price controls. In France, drug prices are closely controlled by the Government and profit margins are set by law. Extra markups on new products are permitted for a period of 2 years. In Italy, drug prices are under Government control to the extreme extent that the Government may reduce or increase the established price of a drug. In May of 1960, Dictator Nasser, of Egypt, nationalized the drug business except for retailers. Egyptian retailers dropped drug prices immediately to prevent nationalization of the retail drug business in Egypt. Today, England's medicine is socialized to a great degree, and pharmacy in England has its price-fixing fair-trade law, entitled Restrictive Trade Practices Act, passed in 1956. This act permits the price fixers to fix prescription prices. The British Government then pays its socialized share of the prescription fixed price, and the patient pays his share. The Government's share is about 85 percent of the fixed price, the patient pays approximately 15 percent. Since an estimated two-third of all prescriptions in England were developed by U.S. companies and produced in England by subsidiaries or by British companies under license, the following has implications relating to this act: In the United States (1962 data, approximately one-half the States price fixed) Number of prescriptions_ Dollar value_. Average selling price (approximate) – 702, 000, 000 $2, 256, 000, 000. 00 $3.21 The Quality Stabilization Act would increase prescription prices in my company's stores 50 to 100 percent. Prescription prices will increase nationally under quality stabilization, especially in the 26 States now without price-fixing laws. Consider the highly taxed consumer, now struggling with an inflated dollar. If prescription prices go up again under the Quality Stabilization Act, he may decide taxes can't go any higher, even under socialized medicine; he may decide he wants the 14-cent prescription, instead of the better one for $3.21. He may remember reading about the $23.63 price of 1,000 tablets to the U.S. Government, compared to the $170 price for the same 1,000 tablets to U.S. drugstores. American Bar Association: Quality stabilization is not the way to aid small stores The American Bar Association is officially opposed to quality stabilization legislation. Acting on the recommendation of its section of antitrust law, ABA's house of delegates last month went on record as opposing "any proposed legislation which would attempt to create a Federal right of enforcement of resale price maintenance by private persons." Businessman's recommendation for small business assistance The authors and sponsors of the Quality Stabilization Act S. 774 are to be complimented for their sincere desire to help small businesses succeed in the highly competitive marketplace. Our experience as a small business, which is typical, has convinced us that Federal laws empowering manufacturers to fix price on all branded merchandise are not the solution for the many reasons discussed in this statement. Small reseller business tax benefits 1. Under $100,000 sales annually, which is more than national average for drugstores in the United States. (a) Whether these very small businesses are proprietorships, partnerships or corporations (90 percent owned by the active operator-manager), their profits might be excluded from Federal corporation taxes and $100,000 bracket small business should exempt its active owner, active partners, or 90 percent stockholder (active manager-operator) from all income taxes on income derived from one small business (25 percent salaries and net) (now averaging 5 percent net) *** $25,000 salaries tax free plus 5 percent net tax free for active owners and active major stockholders. (b) Eligible businesses should be defined as resellers of products in the distributive system. 2. Small resellers with annual sales of $250,000 or less. (a) Graduate above formula. 3. Small resellers with annual sales of $500,000 sales annually, special tax formula ; $1 million sales annually, special tax formula ; $2 million sales annually, special tax formula. Small business tax benefits would aid labor, farmers, and professional people 1. Quality stabilization will take extra millions from the aggregate income of these groups. 2. Federal tax reduction plan would reduce the labor market by encouraging entire families to work in a very small business, so they could benefit from the average 20 percent payroll which would be tax free to the active proprietor, partners, and 90 percent active stockholder. Change small business loan requirements Present small business loan requirements do not serve the purpose of aiding new small businesses. A new business obviously cannot meet the requirement of showing a period of profitable operation; it usually cannot offer sufficient collateral. Changes in this law should offer a solution for a pharmacist, for example, when he graduates. A small business loan to him personally would be secured by his character, education, ability, and the probability of the success of the venture he plans. Cash required of him should be nominal and interest rates low. The repayment plan should be extended. Operating under the proposed Federal tax plan for small business, this pharmacist, properly capitalized, could compete successfully with his big competitors. To the extent of his productivity, his payroll would be tax-free profit. Quality stabilization more damaging to States rights than fair trade nonsigner clauses (in effect, quality stabilization) Congress, in the McGuire Act of 1952, exempted the nonsigner clause, after the U.S. Supreme Court in the Schwegmann case in 1951, said price-fixing schemes were unconstitutional unless agreed upon by the parties. The Quality Stabilization Act makes nonsigners of all affected brokers, distributors, wholesalers and retailers. 1. Four States never passed fair trade price-fixing laws-Texas, Missouri, Alaska, and Vermont. 2. One State repealed-Nebraska. 3. Twenty-one State courts declared unconstitutional—Alabama, Arkansas, Colorado, Florida, Georgia, Indiana, Iowa, Kansas, Kentucky, Louisiana, Michigan, Minnesota, Montana, New Mexico, Oklohoma, Oregon, South Carolina, Utah, Washington, West Virginia, and Wyoming. Twenty-six States thus have repudiated price fixing similar to quality stabiliza tion. Two States, Idaho and Ohio, are now in question (Trade Regulation Reporter, Feb. 18, 1963). The Quality Stabilization Act empowers manufacturers to fix wholesale and retail prices against the decisions of State supreme courts, and the wishes of the people in 26 and possibly 28 States. |