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Caylor, Dr. Harold D., Caylor-Nickel Clinic, Bluffton, Ind., on behalf of
Dr. Edward M. Wurzel, executive director, American Association of
Medical Clinics__

Attachment to the statement.

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Iowa Physician-Pharmacist Code of Understanding, article... -

KMA Council Urges Doctors To Dispose of Stock in Prospect Drug Firm, article..

Landess, Richard R., letter of August 20, 1969_.

Mahaffey, Fred T., executive director, National Association of Boards of
Pharmacy, letter of September 12, 1969.



Meyers, Joseph H., Acting Commissioner, Department of Health, Education, and Welfare, letter of July 6, 1967

Official Says Million Get Pill Illegally, article_

Price Support Opposed, article..

Simmons Tells Aussies OEO Hurts U.S. Drugstores, article.

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Simmons, Willard B., executive secretary, National Association of Retail
Druggists, letter of August 21, 1969-

Switzer, Mary E., Administrator, Social and Rehabilitation Service,
Department of Health, Education, and Welfare, excerpt...
Trade and Government Memos, article..


Winton, J. Martin, statement and letters..

Woods, William E., Washington representative, National Association of
Retail Druggists, letters of:

November 29, 1968-

July 9, 1970.

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TUESDAY, JUNE 16, 1970



Washington, D.C.

The subcommittee met at 10 a.m. in room 5110, New Senate Office Building, Hon. Frank E. Moss (chairman of the subcommittee) presiding.

Present: Senators Moss, Hart, and Pearson.
Senator Moss. Good morning.

I am pleased to welcome you this morning to the Senate Subcommittee for Consumers and the opening day of our hearings on S. 1575, the Regulation of Trade in Drugs Act.


Senator Hart, as the principal sponsor and long-time advocate of this measure, was scheduled to open the hearings this morning, but has been detained and will not be able to attend for a half-hour or so.

I would like to open this morning with a statement of the view Senator Hart and I share on this bill.

At issue in these hearings is the doctor-merchant: Does he serve the public interest?

The bill before us answers: Generally not. However, it does provide that doctors who are dispensing drugs and devices in the public interest may continue.

What are we attempting to eliminate? Let me list some examples: First are deaths. More than 60 persons allegedly died because "fat doctors"—those specializing in obesity control-passed out handfuls of "rainbow pills." The pills, we learned in earlier hearings, either should not have been taken by those patients-or should not have been taken together by any patient.

Second is illness. It is unknown how many patients have been made ill by doctors who gave them unneeded medication as a way of bolstering the sales of their pharmacy or drug repackaging company. We do know it is not unusual for patients on the diet pills to become seriously ill.

Third are inflated bills-both to tax-supported programs and to individuals. One doctor, for example, wrote $10,000 in welfare prescriptions one year. But the next year-after buying his own pharmacy-the figure was $50,000.

Staff member assigned to this hearing: John Cary.

Fourth is unnecessary illness. Many patients, we have been told, lingered in their illness because the most effective medication didn't happen to be stocked in the doctor's office, pharmacy, or drug company.

Fifth is overspending for the right medication. Patients have met costs up to 1,000 percent higher when the doctor-merchant prescribed a drug packaged by his company rather than the identical drug called by its generic name.

Sixth are bankruptcies or economic hurt to competitors. Numerous-probably hundreds of drugstores and drug companies have felt this because they didn't have either the foresight or good luck to have doctor-owners.

In short, we seek to eliminate the same bad fruit of these arrangements that the American Medical Association found distasteful up until 1955.

Until then, the AMA Code of Ethics read:

An ethical physician does not engage in barter or trade in the appliances, devices, or remedies prescribed for patients, but limits the source of his professional income to professional services rendered the patient.

Unfortunately, that ethic was modified after 1955. And the number of doctor-merchants has been growing.

During earlier investigations of the Antitrust and Monopoly Subcommittee there was some hope that the AMA could at least deal with part of the problem: doctor ownership of small drug repackaging companies.

In 1964, the Antitrust and Monopoly Subcommittee turned over to the AMA the names of 140 companies which had doctor-stockholders. The AMA promised that because they still had an ethical rule against such ownership, they would take care of this matter.

Two spot checks-one of them earlier this month-revealed that the doctors are still stockholders in these companies.

I had hoped for the AMA report at these hearings but, unfortunately, the AMA has declined to appear.

But, I think we can lay to rest any talk that this is a problem which the profession can handle.

As that list in the beginning of this statement indicates, if war is too important to be left to the generals, so too, control of doctormerchants be left to the doctors.

Congress has a responsibility-for the health both of the people and their pocketbooks. We have been dallying too long. All I can add is that I hope this is the beginning of the final round of this problem which we are considering here today.

(The bill and agency comments follow:)


S. 1575


MARCH 17, 1969

Mr. HART (for himself, Mr. MAGNUSON, and Mr. Moss) introduced the following bill; which was read twice and referred to the Committee on Commerce


To regulate trade in drugs and devices by prohibiting the dispensing of drugs or devices by medical practitioners and their participation in profits from the dispensing of such products, except under certain circumstances, and for other purposes.


Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 3 That this Act may be cited as the "Regulation of Trade 4 in Drugs Act of 1969".

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6 SEC. 2. The Congress finds and declares that the dis7 pensing of drugs and devices, directly or indirectly, or the 8 knowing receipt of rebates, refunds, discounts, or commis

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