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DRUG INDUSTRY ANTITRUST ACT

WEDNESDAY, JULY 19, 1961

U.S. SENATE,
SUBCOMMITTEE ON ANTITRUST AND MONOPOLY
OF THE COMMITTEE ON THE JUDICIARY,

Washington, D.C. The subcommittee met, pursuant to recess, at 10:15 a.m., in the caucus room, Old Senate Office Building, Senator Estes Kefauver presiding.

Present: Senators Kefauver (chairman) and Hruska. Also present: Bernard Fensterwald, Jr., staff director; Horace L. Flurry, counsel; Peter N. Chumbris, counsel for the minority; Nicholas N. Kittrie, counsel for the minority; Dean W. Wallace, counsel for the minority; Victor E. Ferrall, Jr., assistant counsel; Lucile B. Wendt, attorney; Dorothy D. Goodwin, attorney; Dr. John M. Blair, chief economist; Dr. E. Wayles Browne, Jr., economist; Dr. Irene Till, economist; Julian F. Granger, assistant editorial director; and Gladys E. Montier, clerk.

Senator KEFAUVER. The committee will come to order.
Our first witness this morning is Dr. David Barr.

Dr. David Barr has been invited by the chairman of this committee to testify on the proposed legislation. He is a very eminent physician

a and surgeon. Dr. Barr is from New York City, born in 1889.

You graduated from Cornell University College of Medicine in 1944; is that right?

STATEMENT OF DR. DAVID P. BARR, PRESIDENT AND MEDICAL DIRECTOR, HEALTH INSURANCE PLAN OF GREATER NEW YORK Dr. BARR. Yes.

Senator KEFAUVER. You are a full-time specialist in internal medicine, American Board of Internal Medicine. You are certified and practice in New York. You are a member of the Association of American Physicians, American College of Surgeons, American Society of Chemical Research, Intern, Bellevue Hospital until 1916, member of the AMA through New York; is that correct, Doctor?

Dr. BARR. Yes, that is correct.

Senator KEFAUVER. You have been a member of the council on drugs. Are you still a member!

Dr. BARR. No. I have been.
Senator KEFAUVER. When were you a member?
Dr. BARR. I retired from that about 25 years ago.

Senator KEFAUVER. You are director of the Health Insurance Plan of New York, is that right?

Dr. BARR. That is correct.
Senator KEFAUVER. What is that program, Dr. Barr?

Dr. BARR. The Health Insurance Plan of Greater New York is a voluntary health company which attempts to arrange comprehensive continuing medical care for those who subscribe. It takes care of something more than 600,000 New Yorkers, about one-thirteenth of the population of Greater New York.

Senator KEFAUVER. Dr. Barr, we appreciate your coming here today. We know you are very well qualified to talk about the matters that we have before us. We have your statement, so you proceed, sir.

Dr. BARR.1 Senators and members of the committee, it is perhaps unnecessary for me to add anything to the biography that Senator Kefauver has just read.

Senator KEFAUVER. You add anything that you wish.

Dr. BARR. I would like to make it clear that my appearance here has a certain relevance because I am president and medical director of a health insurance plan which is very much interested in the welfare

. and the health of a large number of people, and in making necessary drugs available to this population.

I also appear because for 35 years I was professor of medicine, first at Washington University and then for 17 years at Cornell University Medical College, and was at one time physician in chief to Barnes Hospital, later physician in chief to the New York Hospital.

Senator KEFAUVER. You said the Health Insurance plan of Greater New York provided a medical plan in which about 600,000 people participate, is that correct?

Dr. BARR. That is correct; yes.

Senator KEFAUVER. I believe that the New York Hospital, of which you were physician-in-chief, is about the largest hospital, or one of the largest hospitals, in the United States.

Dr. Barr. It has the arrogant name The New York Hospital, and it is the oldest hospital in Greater New York.

Senator KEFAUVER. All right, Dr. Barr, will you proceed?

Dr. BARR. Drugs in great variety are now necessary for the preservation and restoration of health. It is imperative that they be available to all when required. We may confidently expect discovery and introduction of an ever-increasing number of other drugs that will be useful or essential on occasion. Proposed legislation should be aimed to prevent unnecessarily high costs of drugs and the introduction of useless or dangerous drugs. At the same time it should be so devised as to avoid any obstruction to the acceptance of useful new remedies.

You, Senator Kefauver, in your opening remarks at this hearing presented clearly some of the present inadequacies of drug manufacture and distribution. The situation leaves much to be desired.

Prices of ethical drugs are generally unreasonable and excessive. Extravagance in advertising and promotion is the custom of all manufacturers that can afford it. Manufacturers may introduce drugs before their efficacy is established and may even without great punishment withhold full information of possible toxic reactions. Prepara

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1 The full text of Dr. Barr's prepared statement may be found on p. 1059.

tions representing mixtures or slight modifications of existing remedies are being offered before their utility is demonstrated.

Generic names proposed by the American Medical Association and the United States Pharmacopeia are not official and are often not accepted by drug manufacturers. Nomenclature of drugs has become too confusing for the practitioner to assimilate. There is a carefully nurtured suspicion that drugs presented under generic names may be inferior in quality. The use of brand names instead of generic names for drugs greatly increases the cost to the consumer.

The hard-worked and conscientious practioner is bombarded by literature and besieged by detail men distributing free samples and extolling the virtues of drugs which are often not very completely described. Package inserts now required by law are not being sent to the physician and the advertising of most drugs does not include this information. Usually the busy doctor has neither the time nor the experience to explore the true nature of the drug or the validity of the claims advanced by the manufacturer. In his confusion and because of doubts of drugs prepared to sell under official or generic names, he oftens orders the drugs described by detail men and enthusiastic advertisements.

In our present situation, the possible harm that drugs may cause receives too little consideration. It is not always realized that no drug possessing activity in the modification of the internal environment of the body can be used without hazard; that the harmful effects may not be immediately apparent; or that a drug which is ineffective therapeutically may posses toxic properties which may add to the already appalling risks encountered in the use of drugs now available.

This unsatisfactory state of affairs is continuing in spite of the intent of the present laws, the efforts of the Federal Food and Drug Administration, and the admirable program of education conducted by the American Medical Association. In spite of all existing measures and efforts, bad practices and abuses continue and increase.

I think it is obvious to everyone who is acquainted with this situation that reform is necessary to safeguard the availability of essential remedies at prices which people can afford, to prevent the introduction of useless remedies as well as those that possess toxic reactions, and at the same time assure the prompt introduction of new remedies that are useful or necessary.

Personally I am eagerly interested in the proposed legislation for a variety of reasons.

As a physician I am keenly aware of the economic problems of patients of moderate income in purchasing necessary drugs. As an officer in a nonprofit health insurance plan, I am interested in the economic protection of those who subscribe.

The Health Insurance Plan of Greater New York, of which I have already spoken briefly, has been in operation nearly 15 years.

It was set up to offer comprehensive, continuing medical care in home, office, and hospital on payment of a single premium. It offers medical, surgical, and specialist care as well as X-ray and laboratory services but has never included in its insurance plan the cost of drugs.

When the plan was founded, this omission seemed not too important, for the expense of drugs constituted a relatively small part of the total cost of medical care. With the constantly increasing number and cost of necessary drugs, this item can no longer be ignored and it is apparent that many people who are otherwise protected by health insurance are threatened financially by the cost of drugs, which in a single year may greatly exceed the premium that they pay for all other services.

Under the circumstances, it is obviously desirable to include drug costs in health insurance. This is not now feasible because the cost of important drugs is inflated by misuse of patents, by trade agreements, and by excessive promotional and advertising costs. Furthermore, the use of brand names instead of generic names where they exist introduces an unpredictable expense to any insurance plan. Insurance against the cost of drugs cannot now be offered at a premium which can be afforded by those who need it most urgently. The eventual introduction of drug insurance will depend upon deflation of unnecessarily high costs, upon the establishment of a generic name for every drug, and upon complete assurance that the quality of drugs issued under generic names is dependable. It will be greatly aided by the adoption of formularies that include the most essential and proven drugs, such as are now maintained by some great hospitals.

I am interested in the legislation for an entirely different reason. As a teacher of medicine and a visitant in the wards of great hospitals, I am also interested in the legislation because I have learned in a long experience to recognize the tremendous hazards that are intrinsic in the use of any drugs. In a study that I conducted and published in the Journal of the American Medical Association in December 1955, it appeared that toxic reactions from the use of approved dmgs employed ethically and conscientiously by capable physicians were encountered in about 5 percent of a ward population. During the period of study, physician-caused or iatrogenic disease in the ag. gregate was the commonest diagnosis in the ward population.

Senator KEFAUVER. Dr. Barr, do you mind being interrupted at this point!

Dr. Barr. Certainly not, sir.

Senator KEFAUVER. I have heard something about the article that you referred to in the J.A.M.A. of December 10, 1955.

Dr. BARR. That is correct.

Senator KEFAUVER. I think it might be useful to the committee, and if there is no objection, we will place it in the record as exhibit 38.

(Exhibit 38 may be found on p. 815.)

Senator KEFAUVER. Will you explain, also, at this point what you mean by iatrogenic disease?

Dr. Barr. The most conscientious physician using drugs under the best known conditions may cause toxic reactions, sometimes very serious, and occasionally fatal. This sort of disease is called iatrogenic disease, coming from the Greek word, “physician caused.” This is inevitable in the use of preparations which are completely necessary to be used in diagnosis and treatment, and no drug which is active is entirely free from these possible harmful effects.

The risk of each drug, the use of each drug, may not be great, but the risk of the use of many drugs may be quite great, and what I have said is that in a ward population of a great hospital under the best conditions, the aggregate of toxic reactions, iatrogenci disease may actually be the commonest single diagnosis in the ward.

!

That means that at any particular time there may be more people suffering from iatrogenic disease than from any other one single disease in the ward.

Senator HRUSKA. Doctor, is there any control on this analysis and study? Is there any way of knowing how many of these might not be there at all or might be even more in a more serious position and situation had it not been for those drugs and the use thereof?

Dr. BARR. The Senator's point is well taken. Those who had toxic reactions might have been dead if the drugs had not been used, and these drugs were used presumably of necessity and to control serious situations.

Senator HRUSKA. So that while there is risk in using them, there is also some benefit, is there not?

Dr. BARR. The benefit is enormous, the risk is relatively small. But, nevertheless, the point I am making is that the risk is there from the use of any drug which has any activity at all.

Senator HRUSKA. Is there any law we can pass to eliminate this 5 percent of the ward population where approved drugs employed ethically and conscientiously result in toxic reaction?

Dr. BARR. I don't think you can do anything about the risk that is incurred from the use of necessary drugs.

Senator HRUSKA. That depends on the doctor, doesn't it, Doctor? Dr. BARR. Yes, that is correct.

Senator HRUSKA. When a doctor operates, for example, he always takes a chance?

Dr. Barr. That is right.
Senator HRUSKA. It might not prove out so well.

Dr. Barr. That is right. The way in which the law might help is to prevent the addition of drugs which are unnecessary.

Senator HRUSKA. Do you know of any drugs on the market that are useless, Doctor?

Dr. BARR. Many have been introduced.
Senator Hruska. Can you name some for use?
Dr. BARR. No, I am not prepared to do so at the moment.

Senator HRUSKA. Would those that you might name be totally useless? Would there be no case in which they could be used ?

Dr. BARR. My unwillingness to name them is because I can't answer your question categorecally. I mean I can't say that any one drug that is on the market could not be used in any situation.

Senator HRUSKA. Thank you.

Dr. BARR. But relative uselessness is common among the druge that are on the market at present, and I repeat that each one of those relatively useless drugs may have toxic reactions.

Senator HRUSKA. What does "relatively useless" mean?

If I have a child in the hospital and that drug happens to help that child and it probably won't help 10 other children in the ward, I wouldn't think that is relatively useless, would you?

Dr. BARR. Expressed in that way, I agree with you.

But I think that the proof that it helps is not available in many instances.

Senator HRTSKA. How can it be obtained?

Dr. Barr. It can be obtained only by experience, and the exposure has to be large in order to prove the utility of a drug

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