termine from time to time that the plant continues to fulfill the requirements under paragraph (b) with respect to that drug. Whenever the Secretary finds that such means for that determination are no longer available he shall suspend or revoke the license. A license of a foreign plant shall include compliance with the provisions of the Food, Drug, and Cosmetic Act, as amended by this bill and any other conditions which the Secretary determines necessary for the protection of public health and safety. His license shall also be conditioned on the payment of such fees as are necessary to provide and maintain adequate inspec tion as prescribed in the bill.

Paragraph (e) provides for a public hearing upon objections by an applicant or licensee to a refusal to license or the suspension or revocation of a license within 30 days after notice by the Secretary of such action by him. Evidence must be received on issues raised by the objections. The Secretary then as soon as practicable shall enter his final order supported by his findings of fact and his conclusions. No final order suspending or revoking a license shall take effect until 90 days after its publication, unless the Secretary finds that emergency conditions exist which necessitate an earlier date. In that case such conditions shall be specified in his order. If the Secretary finds the requirements for a license are being violated he may immediately, on notice to the licensee, suspend the license. Procedure for reinstatement of a suspended license is set out in this paragraph of the bill.

Paragraph (f) provides for an appeal from a final order of the Secretary to the U.S. Court of Appeals for the circuit in which the appellant lives or has his principal place of business, or for the District of Columbia. Appropriate service is provided and a transcript of the proceedings before the Secretary and his findings shall be filed in the court. The court may affirm or set aside the order in whole or in part. The findings of the Secretary as to questions of fact shall be sustained if based upon a fair evaluation of the entire record at the Secretary's hearing. The court shall advance on the docket and expedite the disposition of all cases filed under this section.

The bill provides for the taking of further testimony in certain cases and further procedures in such instances. The judgment of the circuit court is final, subject to review by the Supreme Court.

Paragraph (g) makes any person who knowingly obstructs or interferes with, or conspires with any other person to do so, the performance by any officer or agent of the Department of any duty under this section subject to fine of $500 or imprisonment for not more than 1 year, or both.

One of the principal problems involved in encouraging lower costs of medicine for the consumer is the large expenditures by the drug companies for promotion of drugs by brand names. The 22 largest drug companies reported to the subcommittee a total promotion expenditure in 1958 of some $580 million.

In addition to $330 million spent on salesmen's and detailmen's compensation and expenses and ancillary items, the 22 largest drug companies spent a quarter of a billion dollars on advertisements in medical journals, direct mail ads, samples, and miscellaneous items. The subcommittee staff estimates the current promotion expenses for the entire industry to be around $750 million per year, which is about four times the total funds available to all medical schools in the United States for their education programs.

These expenditures, which add significantly to the cost of drugs to consumers, do not serve the normal purpose of promotion of products in increasing the market demand. The consumer only buys prescription drugs when his doctor prescribes them, and the doctor prescribes when the patient is sick or ailing. Increasing the amount spent on drug advertising does not increase the underlying demand for drugs, which is the incidence of illness.

Not only does this large expenditure for promotion add to the cost to the patient without corresponding benefits but also it tends to freeze the small manufacturer out of the retail prescription business. A small manufacturer without great financial resources for promotion to doctors cannot secure access to this market regardless of the quality of his products. As I have said before, this is one of the principal sources of monopoly-control.

The large drug companies have been quite successful in their campaign for making well advertised brand names synonymous with high quality. In consequence, doctors are reluctant to prescribe by generic names. Most of them prescribe heavily promoted trade names which come almost automatically to their minds.

This logjam must be broken. If the physicians are assured that a given drug made by one manufacturer is from a plant meeting proper standards and the chemical structure, strength, quality, purity, safety, and efficacy of the drug are assured to be as good as that drug made by another, the need for prescribing by trade names is certainly lessened. Where drugs which are not subject to patent controls are prescribed on the basis of generic names, the small manufacturer can survive. Competition will flourish and consumers will benefit from lower prices.

REVIEW OF OFFICIAL NAMES OF DRUGS

The Food, Drug, and Cosmetic Act, section 201, defines "official compendium" as the U.S. Pharmacopoeia, Homoeopathic Pharmacopoeia, and the National Formulary or any supplement thereto. However, there is now no legal authority vested in the Secretary to determine official names of drugs. In most instances the manufacturers establish the common names as well as the brand names of drugs appearing in the official compendia.

First, I should explain that these publications are the officially recognized listing of drugs and their official names. In most instances they prescribe tests and methods of assay of the drugs. These publications are accepted in the medical and pharmaceutical professions. Nothing in this bill will, in any way, interfere with their present responsibilities or functions.

Section 509 would set up a system for the designation of official names for drugs. It, however, does not prohibit a manufacturer from also using brand or trade names. Paragraph (a) authorizes the Secretary to determine official names of drugs in the interest of usefulness and simplicity. Only those names approved by the Secretary are to be the official names used in the official compendia for promotion purposes and the like. This does not apply to combinations of drugs. Here the official names of the component ingredients must be indicated.

Section 509 of the act as amended by the bill requires in paragraph (b) the Secretary to cause a review to be made of official names or titles by which drugs are identified in the official compendia at least once in each period of years to determine whether revision of any of the names is necessary or desirable in the interest of usefulness and simplicity. The number of years is to be determined after hearings on the bill.

Paragraph (c) of the bill requires the Secretary to designate another official name which will be useful when he finds the official name in use is unduly complex or is not useful. When the Secretary determines that there are two or more official names for a single drug or there are two or more drugs which are identical in chemical structures and pharmacological action and substantially identical in strength, quality, and purity, he shall designate for such drug or drugs a single official name which is useful. He shall also designate an official name to any drug found not to have such a name.

Under parapgrah (d) of the bill, after each review of the official compendia and at such other times as the Secretary determines to be desirable, he shall cause to be published a list of all revised official names and such other matters as he deems necessary for the effective use of those drug names.

Paragraph (e) requires the official name caused to be compiled and published by the Secretary shall be the exclusive official name of the drug.

The purpose of this section is to provide for each drug one official name which is useful. These are several weaknesses in our present system for providing official names of drugs. Too many of the official names are now to long and difficult to use whereas brand names are usually short and usable. The length and unpronounceable nature of current official or generic names has of course tended to induce physicians to write their prescriptions in terms of the simpler and shorter trade names.

Moreover, in some cases a single drug has more than one official name, while in others there is no official or generic name whatever. This is confusion compounded. If we are to place patients and doctors in postion to obtain lower cost medicine, we must do a better job on official names.

MATERIAL FOR PHYSICIANS' INFORMATION

Our present drug laws are deficient in two respects relating to the providing of full information to doctors. A new section to the bill has therefore been added which would become section 510 of the Food, Drug, and Cosmetic Act.

Paragraph (a) of that section requires the Secretary to publish and distribute to physicians annually, and at such other times as he deems desirable, a list of drugs which have the potentiality of particularly serious, dangerous, or harmful effects as he may consider in the interest of public health.

Paragraph (b) requires the Secretary to publish in convenient and readable form and distribute to doctors, hospitals, medical and nurses' training schools, and Federal, State, and local government offices concerned with handling and the utilization of drugs, copies of all printed matter which the Secretary has required to be included in any package in which a drug is sold.

In conclusion, the bill is reasonable and fair. It does not seek to establish price control of drugs. Rather, it seeks the objective of lower prices by making more effective the operation in this industry of our traditional free enterprise system. That system can never operate successfully when it is impeded by the restrictions of monopoly. The bill seeks only to replace the restrictions of monopoly with the dynamics of competition.

Madam President, in the press release issued by Representative Celler and myself it is pointed out that in general the proposed legislation, which is limited only to prescription or ethical drugs, is designed to promote competition and protect the public interest in these principal ways:

First. By making it unlawful under the antitrust laws for large drug companies to agree upon which company will obtain a patent, to agree which companies shall be awarded licenses in the event that a patent is issued, and to make similar restrictive agreements.

Second. By requiring compulsory licensing of qualified applicants-after 3 years-under product patents for prescription drugs.

Third. By providing that the Food and Drug Administration shall pass on the efficacy as well as the safety of drugs.

Fourth. By seeing to it that physicians are provided with clearer, better, and additional information on the bad as well as the good features of drugs. Fifth. By requiring fuller and more comprehensive inspection of drug manufacturing plants, thereby, giving to physicians greater confidence in prescribing on the basis of generic rather than trade names.

Sixth. By providing for the licensing of drug manufacturing companies which should also give physicians greater confidence in prescribing by generic names since a company could lose its license to do business if it did not meet the requirements of the Food and Drug Administration.

Seventh. By giving to the Food and Drug Administration authority to establish the official or generic names for drugs, thereby providing a means of simplifying generic names which, in contrast to the short and simple trade names, are often so long, complex, and unpronounceable that they cannot possibly be remembered or used by physicians.

The PRESIDING OFFICER (Mr. Metcalf in the chair). The bill will be received and appropriately referred.

The bill (S. 1552) to amend and supplement the antitrust laws with respect to the manufacture and distribution of drugs, and for other purposes, introduced by Mr. Kefauver, was received, read twice by its title, and referred to the Committee on the Judiciary.

Mr. KEFAUVER. Mr. President, I suggest the absence of a quorum.
The PRESIDING OFFICER. The clerk will call the roll.

The legislative clerk proceeded to call the roll.

Mr. CLARK. Mr. President, I ask unanimous consent that further proceedings under the quorum call be dispensed with.

The PRESIDING OFFICER. Without objection, it is so ordered.

Senator KEAUVER. I am glad to be able to refer now to Mr. John Kelly who is the general counsel for the Pharmaceutical Manufacturers Association.

Mr. Kelly, following my analysis of April 12, prepared his own analysis. Some of the discussion is almost identical-and the basis of the technical parts of the discussion of April 12 was prepared by Mr. Flurry. Mr. Kelly has done a very expert and fair analysis of S. 1552. It is a concise summary of what is provided in the bill, and it seems quite accurate to me, to Mr. Flurry, and other members of the staff who have gone over it. It is a very excellant,

precise summary of the provisions of this bill, and we are very grateful to Mr. Kelly for it. It appeared in Drug Trade News of May 1, 1961. Without objection, it will be placed in the record. (The document referred to may be found on p. 929.)

Senator KEFAUVER. We have with us today Dr. Hugh Hussey, Jr., dean of the Medical School at Georgetown University. Dr. Hussey has just been elected chairman of the Board of Trustees of the American Medical Association at last week's convention. He has been a member of the board of trustees for some time. He is now serving his second term which expires in 1964. Under the present AMA constitution, the term is 5 years.

To Dr. Hussey's right is Dr. Ernest B. Howard, assistant executive vice president of the American Medical Association. The information I have is that prior to Dr. Blasingame's appointment as executive vice president in 1958, Dr. Howard served as assistant to Dr. Hull, who was the predecessor of Dr. Blasingame.

The AMA release of May 13, 1959, states that Dr. Howard has held an executive position with AMA since 1942. He secured his M.D. degree from Boston University Medical School.

And with you, also, Dr. Hussey, is Dr. Milford Rouse, vice speaker of the house of delegates.

STATEMENT OF HUGH H. HUSSEY, M.D., CHAIRMAN OF THE BOARD OF TRUSTEES OF THE AMERICAN MEDICAL ASSOCIATION; ACCOMPANIED BY ERNEST B. HOWARD, M.D., ASSISTANT EXECUTIVE VICE PRESIDENT; C. JOSEPH STETLER, GENERAL COUNSEL AND DIRECTOR, SOCIOECONOMIC DIVISION; AND JOSEPH JEROME, PH. D., ASSISTANT SECRETARY, COUNCIL ON DRUGS

Dr. HUSSEY. No, Senator, Dr. Rouse was unable to come. Senator KEFAUVER. You said in your statement he was coming with you. You also have with you Dr. Joseph Jerome.

Dr. Jerome, you are assistant to the secretary of the council on drugs, is that correct, and you are a full-time employee of the American Medical Association?

Mr. JEROME. That is correct.

Senator KEFAUVER. Who is the secretary of the council on drugs? Dr. HUSSEY. Dr. William Spring.

Senator KEFAUVER. Did he just recently become secretary?

Dr. HUSSEY. Relatively recently, yes.

Senator KEFAUVER. Where was he before?

Dr. HUSSEY. I do not know that personally, Senator.

Dr. HOWARD. He was with Pfizer.

Senator KEFAUVER. Pfizer Pharmaceutical?

Dr. HOWARD. Yes.

Senator KEFAUVER. When did he leave to become secretary of the council on drugs?

Dr. HOWARD. That was about 3 or 4 months ago.

Senator KEFAUVER. And also with you, I believe, is Mr. C. J. Stetler, who is the director of the Legal and Socioeconomic Division of the American Medical Association, which is part of the executive staff; is that correct?

Dr. HUSSEY. That is correct.

Senator KEFAUVER. Are you a full-time employee of the American Medical Association?

Mr. STETLER. That is correct.

Senator KEFAUVER. Located in Chicago?

Mr. STETLER. Yes.

Senator KEFAUVER. And Dr. Howard, you are from Chicago also? Dr. HOWARD. Yes, sir.

Senator KEFAUVER. As is Dr. Jerome?

Mr. JEROME. That is correct.

Senator KEFAUVER. The correspondence we have had has all been with Dr. Blasingame. I rather hoped Dr. Blasingame might come here and be with us. Is he planning to participate in the hearing? Dr. HUSSEY. No, he is not, Senator.

Senator KEFAUVER. Let me get clear, Dr. Hussey, who do you testify for here? Is this the official position of the American Medical Association?

Dr. HUSSEY. The statement that I plan to give to you is that position; yes, sir.

Senator KEFAUVER. Has it been approved by the house of delegates? Is this the official statement of the house of delegates?

Dr. HUSSEY. The entire statement, which you have had an opportunity to see, has not been reviewed or approved by the house of delegates because this would have been a cumbersome problem. The section of the statement that is of most direct interest was reviewed by the house of delegates recently in New York, and was approved. Senator KEFAUVER. You are referring to the section on efficacy, are you?

Dr. HUSSEY. I am, sir.

Senator KEFAUVER. Do we take it, then, that your testimony is the position of the American Medical Association?

Dr. HUSSEY. Yes, sir.

Senator KEFAUVER. I mean it is not your personal statement?
Dr. HUSSEY. No, sir.

Senator KEFAUVER. It is official?

Dr. HUSSEY. Yes, sir. I am stating this in behalf of the association. Senator KEFAUVER. And the testimony that you give, Dr. Howard, or that you give, Dr. Jerome, will be not your personal statement, but the view of the American Medical Association; is that correct? Do you say it is?

Mr. JEROME. That is correct.

Senator KEFAUVER. All right, Dr. Hussey, is there any other background about your experience you wish to give before you get to your statement?

Dr. HUSSEY. No, I think not, Senator.

Senator KEFAUVER. You have a statement. Is it your desire to go through your statement fully before being asked questions? Dr. HUSSEY. I would prefer to do that; yes, sir.

Senator KEFAUVER. Very well.

I notice that you have some attachments or exhibits to your statement. They will all be printed in the record so that you need not read

them.

Dr. HUSSEY. Yes, sir.