During the course of my testimony before the Monopoly Subcommittee of the Senate Small Business Committee on May 16, I promised to supply certain material for the Record.

First, at page 357 of the transcript, I asked for an opportunity to supply a chronology and commentary on the deliberations of the Drug Research Board on the so-called substitution resolution. That comment is enclosed.

Second, I requested, and you agreed, that our submission dated February 14, 1975 to the FDA Hearing Clerk on the Maximum Allowable Cost plan would be made a part of the printed Record; it is also enclosed.

Finally, I wish to correct the implications of a colloquy between Mr. Gordon and myself (pages 368-69 of the transcript) concerning what Mr. Gordon called a misleading PMA "summary" of the Office of Technology Assessment Report on Drug Bioequivalency. Mr. Gordon was of the opinion that we distributed the summary in question, when in fact we did not do so. People who responded to our ad were sent the full report, not a summary. We did assemble a detailed commentary and critique of the OTA Report, having promised one to the OTA. But we sent that document only to a very limited number of individuals, primarily those in OTA, in concerned government agencies, and to our own member firms. There is no connection between the PMA ad and that document. No distribution of a general nature was made, and indeed it is plain from the nature of the document that it is of very limited use to someone who has not already read the Report.

As to Mr. Gordon's assertion that the reader of our critique will be misled to believe that the HEW Task Force on Prescription Drugs considered a specific list of drugs to present "bioequivalency problems", I think our statement is correct and that the matter is very clear: We said, in listing the Task Force candidates for equivalency testing, that those drugs, in the words of the Task Force

Representing manufacturers of prescription pharmaceuticals

itself, "meet requirements for priority attention". It is worth recalling that the Task Force had noted that equivalency studies on some of the products it had identified were underway. For two of the three drugs tested, significant problems were demonstrated (chloramphenicol and diphenylhydantoin). Differences were identified in the third drug, sulfisoxasole, but the researchers were unable to determine their clinical significance. Dr. Christopher Martin, who directed the project, was quoted as saying that "Our findings raise serious doubts about the equality of different products of the same drug in the treatment of disease". So far as we are aware, further bioavailability studies in man under FDA auspices have not been published. In any case, the Task Force list did consist of products about which questions had been raised, and about which questions persist. We believe our allusion to that fact is both accurate and justified.

I would be grateful if you would place this letter, and the enclosures, in the printed hearing record.

Sincerely yours,

Jasyt

белет

Joseph Stetler

Enclosures

Chronology and Commentary*

Discussions of Drug Research Board Regarding

Drug Prescribing and Drug Substitution

June 1975

At the invitation of the Drug Research Board, a delegate from the Pharmaceutical Manufacturers Association met with a Committee of the Drug Research Board on November 30, 1973. One of the eight items on the agenda for that meeting referred to drug substitution. This matter was later discussed at the March 25, 1974 meeting of the DRB and it was decided that the views of the American Pharmaceutical Association should be solicited.

Thereafter a Committee of the DRB consisting of James Pittman, Jr., M. D. and Hugh Hussey, M. D. met with representatives of the APhA on June 21, 1974 and with a delegate from APhA and the PMA on September 26, 1974.

On October 25, 1974, the DRB in regular session, adopted a resolution on drug substitution and drug prescribing (Exhibit I).

In view of the ambiguous nature of the language in the "Resolved" section of the resolution, clarification was requested in a letter from PMA to Frederick E. Shideman, M. D., in November, 1974. No response was received. On January 21, 1975, a press release on this matter was released by the National Research Council. The

Presented by: C. Joseph Stetler, President, Pharmaceutical Manufacturers Association to complete record of May 16, 1975 Hearing, Monopoly Subcommittee, Senate Small Business Committee.

release was incorrect and misleading

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a fact which was called to

the attention of the Executive Director (Thomas J. Kennedy) of the National Research Council on February 14 and March 27, 1975.

At the meeting of the Drug Research Board on March 14, 1975, the matter was discussed again. The October 25 resolution was reaffirmed and a "clarifying statement" was prepared (Exhibit II).

This statement was reviewed by the Executive Committee of the Assembly of Life Sciences on March 17. The DRB's reaffirmation of the October 25, 1974 resolution was approved and the clarifying statement adopted by the DRB at the same meeting (March 14, 1975) was rejected.

In letters to Dr. Frederick Shideman, Chairman of the Drug Research Board, Dr. Kennedy and Dr. Philip Handler, President of the National Academy of Sciences, we expressed our concern with the "high-handed" action of the Assembly of Life Sciences in denying the DRB the right to state its intention in adopting the October 25 resolution and reaffirming it on March 14.

As stated at the time of our May 16 appearance before the Monopoly Subcommittee, Senate Small Business Committee, Dr. James Pittman's testimony represented a minority view and was not representative of the DRB. His testimony included references to certain material presented to him earlier by the American Pharmaceutical Association. We would like to offer the following comments in that regard.

The data presented by APhA to Dr. Pittman included a statement that the R. P. Scherer Co. manufactures chloral hydrate for a number of companies which then sell the drug at varying prices. It stated, in part:

"and yet the prices on those vary tremendously,

and if a pharmacist writes a prescription for chloral
hydrate, Squibb, which costs $5.00 per 100 wholesale price,
and right next to that bottle on the shelf is Purepak for
$1.48 per 100, it is illegal for that pharmacist to pick
the other one, even though he knows that they are manufactured
in the same vat."

There are several things wrong with this statement:

(1) Noctec is not simply drawn from the same batches as are used for other chloral hydrates manufactured by Scherer. It is made in separate batches to Squibb's own specifications.

(2) This is a most unrepresentative case, and it cannot be generalized to form a basis for the conclusion that antisubstitution laws are unnecessary. For the major PMA firms, such as Squibb, relatively few products are manufactured by outside firms such as Scherer and Mylan.

Finally, it should be noted that the typical contract manufacturing operation of Scherer does not as in the case of chloral hydrate

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involve making the actual drug compound. In the typical case Scherer merely encapsulates the bulk compound supplied by its client manufacturer.

(3) The prices quoted are incorrect. Squibb's catalog price for a single bottle of 100 (.5 gram) Noctec is not $5.00 but $4.43, while Purepak's catalog price per single bottle is not $1.48 but $2.41. Normally, pharmacists would purchase more than a single bottle. Squibb's price for a dozen bottles, according to the catalog is $3.99. The layman, reading Dr. Pittman's testimony, might get the impression that consumers have to spend 239 percent more for Noctec than for generic chloral hydrate. Actually, the audit data shows that the average price charged for Noctec in the modal prescription size