COMPETITIVE PROBLEMS IN THE DRUG INDUSTRY 11777

the manpower and other resources necessary to operate this proposed system.

Lastly, each group was asked to develop implementation plans for FDA's assumption of the proposed system and to discuss timing with realistic milestones for completion of the tasks.

All task group reports were completed during February 1975. The task group reports have been discussed in general terms by FDA and DOD operating officials. The task group reports are now under consideration by senior personnel in the FDA, and it is expected that decisions will be forthcoming shortly which will form the basis for the HEW Government-wide quality assurance plan. The HEW plan when developed will then be coordinated with the appropriate Federal departments. It must be recognized that there may be differences that will require resolution. However, a goal of July 1, 1975, has been selected for initial approval of the plan, and it is anticipated that implementation will occur immediately thereafter.

Mr. Chairman, before terminating my discussion of recent efforts to devise a comprehensive plan for the quality assurance of drugs, I would like to take this opportunity to publicly commend those who have been task group participants for these efforts. The objectivity and degree of cooperation demonstrated by these individuals, employees of the DOD, the FDA and the VA, have been outstanding and deserving of our recognition.

In closing, Mr. Chairman, the Department remains committed to reducing the cost and improving the procurement and supply of drugs. The plans and actions described here today are all designed to insure that our patient is getting a quality product at the lowest reasonable cost to the Government.

Mr. Chairman, this concludes my formal statement. My colleagues and I are prepared to answer any questions you may have.

The CHAIRMAN. Thank you very much, Mr. McKenzie.

Yesterday the Commissioner of the Food and Drug Administration testified that he thought that July 1 of this year would be a reasonable date for the FDA to assume the quality assurance function that we have been discussing here.

Does the DOD feel it is prepared to turn the function over by July 1?

Mr. MCKENZIE. Yes, Mr. Chairman. We agree with the FDA that that is a reasonable target date for implementation of the new proposal.

The CHAIRMAN. Presently the DOD performs that whole function, including the inspection of plants, and I assume the assaying of the quality of the drugs bought. Is that correct?

Mr. MCKENZIE. Yes, Mr. Chairman.

The CHAIRMAN. I have forgotten-once on another occasion DOD did testify on this, but I have forgotten the figure. What is the number of plant inspectors that the DOD has?

Mr. MCKENZIE. I do not have with me, Mr. Chairman, although I could supply for the record that specific figure.

We do estimate that on a man-year basis we have 33 man-years involved in permorming this total function.

The CHAIRMAN. You say this total quality assurance or plant inspection?

Mr. MCKENZIE. The total quality assurance function.

The CHAIRMAN. So that includes your determination of the quality of the drugs once they are received by DOD, is that correct?

Mr. MCKENZIE. Yes, Mr. Chairman.

I could provide for the record a detailed break-out of that data. [The information referred to follows:]

QUALITY ASSURANCE FUNCTION

The following data represents the number of Department of Defense personnel engaged in drug quality assurance by position, series, grade and percentage of time devoted to drugs. The personnel reflected under the heading Defense Contract Administration Services (DCAS) perform drug plant inspections. The Defense Personnel Support Center (DPSC) is engaged in determining contract provisions, evaluating test and inspection results and conducting product tests. 5%

Series/Grade

100%

50%

20%

Total

Position

The CHAIRMAN. And whatever date is agreed on, whether it is July 1, or at a different date, is it the intention then that all quality assurance functions would be turned over to FDA, or will DOD reserve some function to itself?

Mr. MCKENZIE. Well, this, of course, is a matter still under consideration and discussion. We do anticipate that there may be some residual functions which would remain with DOD.

The CHAIRMAN. Does DOD generally agree with the GAO and the OMB recommendations?

Mr. MCKENZIE. Yes, Mr. Chairman. We are in general agreement. Mr. GORDON. How does the DOD plan to involve the VA and the FDA in the specification development process?

Mr. MCKENZIE. General Baker, could you respond to that question? General BAKER. In respect to specification writing there are some preliminary landmarks that overhaul some of what we have been doing, sir; for example, the revised good manufacturing practices, the expiration dating. We believe, though, that we will have some continuing need for essential characteristics and specifications that are not presently covered by the compendial standards, and these relate in general to products that are not used outside of the military arena; for example, chemical warfare antidotes.

The CHAIRMAN. What item?

General BAKER. Chemical warfare antidotes, as an example of chemicals that are not used outside the DOD arena, sir.

There is another category related to the special rigors of military usage, worldwide storage and movement and dispensing by nonmedical personnel-that sort of thing. Then there are elements of contractual function, other than the quality issue that relate to other Federal regulation and laws; those things that cover financial responsibility, equal opportunity that family of things that are not related to quality, sir.

So, there will be continuing requirement for some specifications, DOD specific, sir.

The CHAIRMAN. Anyway they will be procured pursuant to those specifications, you say?

General BAKER. Yes, sir.

Mr. GORDON. These specifications will be written so they will not be tailored to any particular company, as there have been many such cases in the past. Is that right?

General BAKER. That is certainly our ambition, sir. In that regard we have reviewed some 1,250 previous specifications and essential characteristics, and purged ourselves of alleged and existent restrictive requirements.

The CHAIRMAN. Thank you very much gentlemen for your taking the time to come here today.

[Whereupon, at 11:33 a.m., the subcommittee recessed, to reconvene upon the call of the Chair.]

COMPETITIVE PROBLEMS IN THE DRUG INDUSTRY

(Present Status of Competition in the Pharmaceutical

Industry)

FRIDAY, MAY 16, 1975

U.S. SENATE,

SUBCOMMITTEE ON MONOPOLY OF THE

SELECT COMMITTEE ON SMALL BUSINESS,

Washington, D.C.

The subcommittee met, pursuant to notice, at 10:10 a.m., in room 318, Russell Senate Office Building, Senator Gaylord Nelson [chairman of the full committee] presiding.

Present: Senator Nelson.

Also present: Benjamin Gordon, staff economist, and Kay Klatt, research assistant.

The CHAIRMAN. The Monopoly Subcommittee of the Senate Small Business Committee is resuming its hearings on drug quality and Federal expenditures on pharmaceuticals.

Our first witness this morning is Dr. James Pittman, Jr., executive dean, the University of Alabama School of Medicine, Birmingham, Ala., and member of the Drug Research Board of the National Acadamy of Sciences.

The committee is very pleased that you have taken the time to come here and testify this morning, Dr. Pittman. You may present your statement. I assume that if we have questions you wouldn't mind if we interrupt?

STATEMENT OF JAMES A. PITTMAN, JR., M.D., EXECUTIVE DEAN, UNIVERSITY OF ALABAMA SCHOOL OF MEDICINE, MEMBER, DRUG RESEARCH BOARD, NATIONAL ACADEMY OF SCIENCES Dr. PITTMAN. Please do, Mr. Chairman.

Mr. Chairman, I am glad to comply with your request to appear before you to discuss interprofessional relations between physicians and pharmacists with particular reference to drug antisubstitution laws. Your letter to me of April 29 requested that I discuss the following:

(a) the development of the Drug Research Board resolution concerning drug substitution;

(b) the respective role of the physician and pharmacist;

(c) the need for justification by the physician when he designates a more expensive product of a specified manufacturer;

1 See prepared statement and attachments beginning at page 12287.

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