I have your letter of October 6 and ask your understanding for the time lapse in replying; I was at the NARD Convention and elsewhere on the road in the interim. Nevertheless, I trust this will reach you in time for your October 28 presentation.

As a matter of policy we believe in exchanging views and discussing programs with as much openness and candor as possible. For a number of reasons, including possible legal and competitive considerations as well as the chance some aspect might be inadvertently mis represented, we do not make it a practice to fill in questionnaires

Aware of the problems inherent in what is commonly called "dual pricing, we made important changes in 1963 and took major steps toward the one-price-concept. This we communicated to all retail pharmacists in one letter and, in more detail, to our direct retail accounts in another letter. These letters are still valid and I am happy to enclose them as a written statement of our pricing philosophies.

JEH:nw

Enclosures

Sincerely,

é

John & Haas

John E. Haas, Director

Professional Relations and Distribution

We have just completed a comprehensive reviews & ar asinbution program. The result is our first major change in this area in almost a decade. The new policy is designed to the opportunties, challenges and problems of today's market place, and to take into account both our needs and the needs of our customers,

In a few days you will receive a new CBA Drug Price List booklet, with an accompanying letter explaining many of the changes. In this letter we shall give you advance notice of the highlights, as well as discuss matters of concern only to our rect accounts, including new Agreements for you to sign.

1. "One-Price-List Concept - The new price schedule rep-
resents a major step toward the "one-price-list" concept.
This is to say: all our hospital-only packages are being
made available to the entire trade, and the trade list price
for each item in the Drug Price List is the same to all
classes of trade. Our hospital accounts buy at the same
discount as our direct retail accounts. Our products will
be sold to nonprofit and/or tax-supported institutions with
the stipulation that they are intended only for legitimate
use within the institution. Thus, by taking this major step
toward the "one-price-list" concept we hope to eliminate
the encroachment of non-retail outlets into the area of
retail pharmacy.

2.

3.

Return Goods Policy - The policy has been completely
revised, with intent to make it fair, reasonable and work-
able. It is explained in the new Drug Price List and has
fewer restrictions than our current policy.

Fair Trade - CIBA over the years has entered into Manu-
facturer-Retailer Fair Trade Contracts in all states in
which Fair Trade Acts were constitutional. In some states,

78-783 O-67-24

2

Attachment 5(a)

4.

5.

however, the Act itself is constitutional, but the non-
signer clause has been found unconstitutional. This has
brought about a number of inequities: to wit, our direct
account has been bound by Fair Trade because of his
contract with us, but the nondirect store has not been
so bound. We intend to stay on Fair Trade only in those
states in which enforcement against "non-signers" is
legal. In accordance with Paragraph 8 of our Manufac-
turer-Retailer Fair Trade Contract, we hereby give
official written notice that all of these contracts are
terminated as of May 1, 1963, except those in the follow-
ing states:

Our Manufacturer-Retailer Fair Trade Contracts in these
states remain fully in effect.

Bids and Drop Shipments In the past a few direct re-
tailers have bid for hospital or government institution
business and have asked us to drop-ship. Under the one-
price-list concept we shall have no occasion to quote
special prices to retail accounts nor shall we drop-ship
for this purpose.

Retail Distributor's Agreements - In accordance with
Section V of the CIBA Retail Distributor's Agreement
with you, we hereby terminate this Agreement, effec-
tive May 1, 1963. We are enclosing two copies of a new
CIBA Distributor's Agreement, effective May 1, 1963.
Please read it carefully and, if acceptable to you, exe-
cute in accordance with the instructions at the end of
this letter.

- 3

Attachment 5(a)

6.

net annually, beginning with calendar
1964. In 1963 you may meet the mini-
mum volume by purchasing at least
$375.00 net in the second half of the
year or by purchasing at least $750.00
in the full calendar year. We do not
feel either our product line of special-
ties or our physical plant (three ship-
ping points) warrants an ever-growing
number of direct retail accounts.

Hence, this minimum annual volume.

Other new paragraphs: Sections II(h), II(i), II(j), II(k).

Orders in April - We reserve the right to limit quantities
in any unreasonably large orders received prior to May 1st.

As we noted at the outset, more specific information on individual prices and packages accompanies the Drug Price List now in the mail. For past cooperation and support we extend our appreciation. With our new policies we anticipate a mutually beneficial future.

(Announcement To Go With Drug Price List Booklet)

(CIBA Letterhead)

April 1, 1963

Attachment 6

Dear Sir:

Enclosed is a CIBA Drug Price List booklet which is punched to fit your CIBA binder. The prices and packages shown in this booklet reflect a number of changes. The entire schedule is effective May 1, 1963.

This price schedule represents a major step toward the "one-pricelist" concept. This is to say: all hospital-only packages are being made available to the entire trade, and the trade list price for each item in this price list is the same to all classes of trade.

Now for specifics:

Title Page:

Note that our Chicago branch warehouse has moved
to a new address in suburban Niles, Illinois.

Price Information Page: Notice that we have entered into Fair Trade contracts in all states in which enforcement against "non-signers" is legal.

General Information Pages: We have expanded "Labels, Cartons, Empty Containers" section to include: "Reproduction of CIBA labels and package inserts except, in the latter case, for purposes of providing professional information to inquiring physicians, is expressly prohibited."'

We have added a new paragraph, but not a new
policy, on "Shipping".

We have completely revised our Return Goods Policy.
We believe the new Policy is fair, workable and under-
standable. It provides for all returns direct to CIBA,
once proper authorization is obtained in accordance
with the provisions of the Policy.