limits are to be established "do not generally vary significantly in quality from one supplier to another."

Under present circumstances, it seems clear that implementation of the MAC proposal could jeopardize the quality of drug therapy available to Federal health care beneficiaries, contrary to express congressional intent.

Other provisions in the medicare-medicaid statutes guarantee patient's freedom of choice and preclude Federal interference with the practice of medicine or pharmacy. But, as long as the possibility of significant quality differences remains, limiting reimbursement to the level of a potentially inferior brand of a drug product would improperly restrict this freedom of practice. Further, the very limited physician certification expection in MAC cannot disguise the fact that the proposal would severely restrict a physician's freedom to treat his patients with the products he prefers. Such an exemption for the pharmacist is nonexistent in the proposal.

A fundamental principle of administrative law is that agency action which is irrational or unsupported by relevant facts is arbitrary and capritious. Since the medicare-medicaid statutes preclude implementation of a program such as the MAC proposal unless findings of quality assurance and therapeutic equivalence can properly be made, HEW must consider the evidence on those issues does not support the required findings.

Until HEW comes forward with evidence which will support such findings, adoption of a MAC program will lack the required rational connection between the facts found and the choice made. The evidence does not provide a factual predicate which will support the assumptions underlying the MAC program. Thus, implementation would be arbitrary and capricious.

Mr. Chairman, this concludes our brief statement. If there are questions, we would be glad to attempt to answer them.

The CHAIRMAN. Thank you, Mr. Stetler. We appreciate your taking the time to come and present your statement.

You will submit that material for the record?

Mr. STETLER. Yes.

Mr. GORDON. Mr. Stetler, do you have a copy of the submission that you would like to make, that is, a copy of the statement that you presented to the Department of HEW on the proposed regulations? It is a fairly long paper.

Mr. STETLER. Yes.

Mr. GORDON. Will you please turn to page 4. In the third paragraph down you say:

In considering the attitude of the public in this regard, it is interesting to note that a recently conducted national survey regarding prescription drugs contains the following question: "If the Government paid for drugs, should it pay for any brands of a particular drug a doctor might want to prescribe? Or, to keep costs down, should the Government only pay for those brands of a drug whose price is under a certain limit?"

Despite the fact that the public has been exposed to exaggerated estimates of price disparities among drug products and potential savings, 68 percent of those questioned responded that the Government should pay for the specific brand prescribed. Only 27 percent said that the Government should pay only for those brands under a certain price limit while five percent expressed no opinion.

Can you tell us something about that survey? I presume-I notice that the source that you give is, "Executive Overview: Public Opinion on Maximum Allowable Costs," findings based on a national survey conducted by Decision Making Information, Santa Ana, Calif.

Mr. STETLER. The study was paid for by the G. D. Searle Co.

Mr. GORDON. Here is a copy of the study on the cover of which it states that it is prepared by G. D. Searle & Co., and Decision Making Information prepared for the Pharmaceutical Manufacturers Association. Now

Mr. STETLER. I gather the paper you had was prepared for us, because the study wasn't prepared for us.

Mr. GORDON. "Executive Overview of Public Opinion on Maximum Allowable Costs."

Mr. STETLER. The paper you have is probably prepared for us, but the study itself was not.

Mr. BRENNAN. The study was done by DMG.

Mr. STETLER. I didn't even know the study was undertaken until after the fact. I don't care what the paper says, the fact is that it was not prepared for us.

Mr. BRENNAN. What you have in front of you is an excerpt from the study, but not the study itself.

Mr. GORDON. So the excerpt was prepared by G. D. Searle, but the whole study was paid for by Searle?

Mr. STETLER. What we quoted in our submission was an excerpt from the study, the report itself, from that independent survey outfit, and the study was paid for and initiated by G. D. Searle & Co.

Mr. BRENNAN. Our excerpt correctly reflects those particular questions asked by the company.

Mr. GORDON. On page 14 of that statement-I just want to bring something else to your attention-you quote Dr. Charles Edwards:

In 1970, Dr. Charles C. Edwards, then-Commissioner of the FDA, warned that: "It has become increasingly apparent that drug products which purport to be equivalent and which may satisfy chemical and other analytical tests of equivalence, may not be therapeutically equivalent,"

and so forth and so on. In 1974, however, Senator Nelson asked the question of Dr. Edwards as follows:

The industry itself keeps raising the question about the terrible problem of bioavailability potential and role and so forth. Just what do you think about the issue of bioavailability that continues to be raised respecting assurances of comparability of drugs?

And Dr. Edwards answered: "Mr. Chairman, I have said from the very beginning that I thought that bioavailability or equivalency as it relates to our pricing policy has no relevance. I think it is being used more or less as a smoke screen by those who prefer not to have a pricing policy," and so on and so forth.

Now, the 1974 statements seems to be at variance with the 1970 statement. Wouldn't you think that quoting the 1974, a later statement, would be more appropriate?

Mr. STETLER. I don't think they are necessarily in conflict. In 1974, Dr. Edwards answered a specific question as to whether he thought there is any relevance between the bioavailability problem and a pro

posed Government pricing policy. In his quote which we used he wasn't talking about pricing policy. He was stating his views on the scientific issue.

Mr. GORDON. Well, he says here-the bioequivalence has not relevancy. But you are relating it here to a pricing policy?

Mr. STETLER. I am relating it in this section of the report to a discussion of the issue of bioequivalency.

Mr. GORDON. That is right. And you are discussing bioequivalency as it relates to a pricing policy.

Mr. STETLER. No doubt about it.

Mr. GORDON. But your quotation of Dr. Edwards does not reflect Dr. Edwards' later thinking.

Mr. STETLER. I didn't think he had changed his mind on the specific issue.

Mr. GORDON. I am just calling that to your attention, because it is inaccurate, I think, to use an early statement when the same person has subsequently changed his mind.

Mr. STETLER. You have to look at the circumstances under which he made his statement, too.

The CHAIRMAN. Thank you very much, gentlemen. I appreciate your taking the time to come up.

[Whereupon, at 1:10 p.m., the subcommittee adjourned, subject to the call of the Chair.]

APPENDIX

MATERIAL SUPPLIED BY THE NELSON SUBCOMMITTEE FOR INCLUSION IN THE HEARING RECORD

CENTRAL MEDICAL CLINIC,

MONTEREY PENINSULA,

Pacific Grove, Calif., February 13, 1975.

HEARING CLERK,

Food and Drug Administration,

Rockville, Md.

GENTLEMEN: I read with dismay the recent A.M.A. editorial in the February 3rd American Medical News concerning the M.A.C. Drug Reimbursement Program. Ironically, the editorial framed an A.M.A. blurb in the center of the page titled "What has the A.M.A. done for you lately?"

Obviously, I am in full disagreement with the A.M.A. stance, and find it curiously at variance with the proposed deletion of drug advertising from the J.A.M.A. So you won't question my political motives, I should include that I am a long-time A.M.A. member, politically conservative, have been in practice for 19 years, and have recently worked to become recertified in Internal Medicine.

Because of poor continuing education habits, physicians generally know little of clinical pharmacology and prescribe drugs based upon these poor habits and defective information. Because of the large segment of this type of member, the A.M.A. reacts in a protective self-serving way and clouds the real issues, those being which drugs really by necessity must not be prescribed and dispensed, being a poor generic substitute. All of the drugs that come to mind are those with a narrow toxic-therapeutic range, such as Digoxin, Diphenylhydantoin, Warfarin to name a few. The vast array of "new" antimicrobials, with the exception of perhaps Gentamicin, are certainly easily and effectively substituted by cheaper products. Probably all symptom modifying drugs can be substituted. Informed clinicians, clinical pharmacologists, microbiologists, etc. have pointed this out for years. The Medical Letter has over and over cited this.

Getting back to "What has the A.M.A. done for me?"; in this instance it has improperly added my voice and the voices of a large number of thoughtful and informed physicians to the Medicine-Drug lobby harangue. I hope this can be read into the record of February hearings in spite of its late submission. Sincerely,

EARL J. KOLB, JR., M.D.

ABBOTT COMMENTS ON UPJOHN STUDIES

ABBOTT INTEROFFICE CORRESPONDENCE

October 31, 1974.

From: J. A. Seitz, R. E. Singiser, Scientific Affairs, Pharmaceutical Products Division.

To: Mr. W. D. Pratt, D-383 (AP)

Re Upjohn Studies CS #050, CS #071 and CS#077

Since we commented so extensively on earlier Upjohn studies (CS #037 and CS #056), I do not feel that we need to go into such extensive and detailed evaluation of these studies. Obviously, Upjohn has done many studies and we could be faced with the prospect of commenting on studies beyond the foreseeable future.

(11815)

The main point that we wish to make is that Upjohn is using bioavailability studies for promotional purposes. To do this they are designing their bioavailability studies to be biased in favor of their product and negatively biased toward competitive products. Certainly, we feel this is a prostitution of the science of bioavailability and does little credit to scientists who allow such distortion to occur. Such use of bioavailability data tends only to create confusion in the minds of the hospital and retail pharmacists, who are usually not sufficiently knowledgeable of the science of bioavailability to detect the effect of these protocol designs. The pharmacist is unduly influenced by studies that he does not realize were improperly conducted. The Upjohn studies consistently insert this protocol design bias in favor of their product and no acknowledgment of this bias is ever given in the study. We know it is highly unlikely that the pharmacist will recognize these subtle biases nor will he go to the trouble to determine for himself whether such bias does exist. Since the Upjohn studies are consistently done with these built-in biases it is obvious it is not accidental or unintentional. We consider this action of Upjohn unscientific and unconscionable. A few specific comments on each study follow :

STUDY CS NO. 050

In this protocol the dosing schedule is at fault. This is a more subtle difference than seen with some of the earlier studies that were analyzed. The time at which the dose is given in relation to meals does influence the blood levels of erythromycin that are obtained. Our product literature recognizes that erythromycin stearate gives optimum blood levels when taken before meals and we do not recommend any dosing after meals. Our product enclosure for ErythrocinR Stearate Filmtab® states, "Optimum blood levels are obtained when doses are given on an empty stomach." Our experience has shown that Erythrocin Stearate Filmtab gives optimum serum levels when the product is taken one or two hours before meals. Serum levels of E-Mycin (erythromycin base) are substantially altered, depending on whether the drug is given one or two hours before meals. This is obviously why th E-Mycin dosage recommendation in the 1974 Physicians' Desk Reference is, "E-Mycin is well absorbed when given orally immediately after meals or between meals on an empty stomach." This direction does not indicate that E-Mycin should be taken at least two hours before meals to obtain optimum levels but is perhaps covered by the "between meals" indication. The enclosed studies show this difference. These studies compare the E-Mycin to Abbott Erythromycin Base Filmtab Tablets. Study #72-9 shows the effect of giving both products two hours before meals. Comparable levels are obtained. Study #72-82 shows the effect giving the same medication an hour before meals. In this case, the E-Mycin levels are significantly reduced. This simply illustrates that the protocol design can be expected to influence the outcome of the study results. Note also that our studies compare two different dosage forms (tablets, Abbott vs. enteric tablets, Upjohn) of the same chemical entity, not different chemical entities (erythromycin stearate vs. erythromycin base) as does Study CS #050. We feel the former comparison is more valid than the latter, since each chemical has different dissolution patterns, absorption characteristics, gastric resistance, etc. Our previous comments pointed out the short-comings of entericcoated tablets (E-Mycin, Upjohn).

As we previously stated, when bioavailability data are presented as average values, it effectively masks the results of individual subjects. Therefore, subjects with no levels are not apparent nor is the deviation from the average value apparent. It is for this reason that we believe that average values should be given along with the standard deviation. Data on the number of subjects that had no measureable blood levels at any of the sample periods should also be mentioned. Note that this information is provided in our Studies #72-9 and #72-82. For further discussion of this, refer to the paper by Drs. Chun and Seitz that was included in our first submission. E-Mycin, because of its enteric coating, does have an unusual drug absorption pattern. It is for this reason that the dosage administration is restricted to immediately after meals or between meals on an empty stomach.

STUDY CS NO. 071

The problem with this sutdy should now be quite obvious. This protocol calls for Erythrocin® Stearate Filmtab® to be administered immediately after meals. As we have previously pointed out, this is absolutely contrary to our recommended dosage schedule. It would be expected that erythromycin stearate would