management control over their drug programs. Although HEW believed that it had taken the initiative in urging the States to adopt procedures to achieve savings without impairment of medical care standards, the Department agreed that more could be done to reduce the costs of prescribed drugs provided welfare recipients in Pennsylvania. The Assistant Secretary informed us that, in trying to obtain physician cooperation in prescribing nonproprietary name drugs to reduce prescribed drug costs, the State would probably be more successful by using a medical advisory committee as part of its staff and that, in forthcoming consultations with the State of Pennsylvania, HEW plans to stress the use of such a committee by the State to aid in the overall administration of the drug program.

The Assistant Secretary informed us also that, in view of the recently passed legislation contained in title XIX of the Social Security Act, authority is available to require all States to have professional medical personnel on their staffs and to increase the use of medical advisory committees in medical care program administration. HEW stated that the Bureau of Family Services' Medical Advisory Committees would be closely consulted in developing such requirements, with the objective of increased use of nonproprietary drugs in State welfare programs having a high priority.

The Assistant Secretary stressed two factors considered to be important in relation to our recommending the increased use of nonproprietary name drugs: (1) considerable discretion was left to the States and localities in determining the conduct of their activities under legislation authorizing Federal participation in Federal-State public assistance programs and (2) the traditional doctor-patient relationship which allows the physician to prescribe as he considers best for the patient is a principle of medical practice and part of the role and responsibility of the medical profession to be taken into account in developing policies relating to drug costs. We recognize that these factors are important.

We believe that HEW's proposal to discuss with Pennsylvania Department of Public Welfare officials the use of a medical advisory committee in the State's drug program administration should, if adopted, contribute to reducing expenditures by the Federal Government and by the State of Pennsylvania for prescribed drugs provided welfare recipients with resultant savings to both. The use of a medical advisory committee should also provide assurance that adequate consideration is given to the doctor-patient relationship concerning physician freedom in prescribing drugs deemed best for the patient. In addition, we believe that the discretion used by the State in the conduct of its public assistance program activities must take into consideration its responsibility for proper and efficient program administration in accordance with the approved State plan.

We believe also that the requirements pertaining to the drug program to be developed by HEW under authority of title XIX of the Social Security Act, enacted July 30, 1965, should, when implemented, contribute to effecting economies in expenditures for prescribed drugs provided to welfare recipients in all States.

In the past, the Department has distributed to the States a pamphlet prepared by the Bureau of Family Services, Welfare Administration, and a document issued jointly by the American Public Welfare Association and the American Medical Association, which suggest guidelines that may be used by States and physicians when considering the use of nonproprietary drugs in prescriptions for welfare recipients. However, these publications are not part of the official regulations issued by the Department. The Department also uses a manual entitled "Handbook of Public Assistance Administration" as an official means of providing States with guidelines and recommendations for the proper and efficient administration of public assistance programs. In our opinion, the inclusion in the Handbook of Public Assistance Administration of a provision, specifically recommending that States encourage physicians to consider the increased use of nonproprietary name drugs for welfare recipients would be conducive in effecting additional savings in the cost of drugs for welfare recipients.

Significant amounts of Federal funds are involved in public assistance payments for prescribed drugs in all States, and the possibility exists that the conditions disclosed in our review in Pennsylvania may also be present in other States. New and expanded legislation that authorizes increased Federal participation in medical care benefits to needy people accentuates the importance of effecting economies in the purchase of prescribed drugs under federally aided public assistance programs.

In December 1965, subsequent to commenting on our findings, the Department of Health, Education, and Welfare issued a directive which requires each of the operating agencies in the Department, including the Welfare Administration, to

take appropriate steps to insure that (1) drugs procured for agency use are purchased under their nonproprietary or generic name whenever it is practicable and economical and (2) grantees are encouraged to prescribe and purchase drugs under their non proprietary name whenever practicable and economical. Recommendation to the Commissioner, Welfare Administration

We recommend that, in implementing the Department's enunciated policy that nonproprietary name drugs be used wherever practicable and economical, the Commissioner, Welfare Administration, issue as a part of the Handbook of Public Assistance Administration a provision specifically recommending that State agencies administering federally aided public assistance programs adopt policies and procedures designed to encourage physicians to prescribe, and pharmacists to dispense, for the use of welfare recipients the less expensive nonproprietary name drugs whenever practicable and consistent with the recipients' welfare. We believe that, to assist the State agencies in implementing this recommendation, the Welfare Administration should obtain information concerning (1) the steps which may have been taken by State agencies to reduce drug costs through encouraging or requiring the use of less expensive nonproprietary name drugs in appropriate cases and (2) the results which have been experienced from these steps, and, after appropriate evaluation, disseminate this information to all the States for their consideration in designing means to achieve economies in the purchase of prescribed drugs in their own federally aided public assistance programs.

SCOPE OF REVIEW

Our review covered principally the expenditures made by the Pennsylvania Department of Public Welfare for prescribed drugs for welfare recipients. Our work was performed at HEW Washington headquarters and in the State of Pennsylvania and included:

1. A review of the basic legislation authorizing the programs and related legislative history.

2. An examination of prescription invoices and a cost analysis of the prices paid and the range of prices available from various manufacturers that could have been paid for the drugs prescribed and dispensed to welfare recipients.

3. A review of the policies, procedures, and controls of the HEW Welfare Administration governing the approval and administration of State plan provisions concerning payments to vendors and the prescribing and dispensing practices adopted by various hospitals in Philadelphia, Pa., and drug cost controls used by certain other States.

IMPROVEMENTS NEEDED IN DIAGNOSTIC LABORATORIES

Mr. FOGARTY. We recently talked informally about the job that is being done in the diagnostic laboratories throughout the country, both private and Government, and also that in the next 10 or 15 years the present-day laboratory will be as antique as the Model T Ford because of automation, and so on.

It has been brought to my attention on several occasions that more mistakes are being made in these diagnostic laboratories than people realize. Your successor at CDC, when he comes before us, will be asked some questions about it. Do you care to make comment on it as a former director?

Dr. GODDARD. I was made aware of this through our laboratory improvement program at the Communicable Disease Center, and it is also true of the activities of the New York City Health Department Laboratories, and special studies that have been carried out which indicate, indeed, there is great cause for concern in that proper supervision frequently is lacking for laboratory personnel.

By this I mean that one individual may supervise five or six laboratories and spend only a couple hours a week in a given laboratory, and delegate to the top technician the full responsibility for seeing that other technicians do the job.

Coupled with this, as in other fields, there is the increase in complexity of the laboratory procedures. I am sure you are aware of the shortage of laboratory technicians.

All of these factors together, along with the increasing use of laboratory tests, greater burdens and greater pressures, has led to a situation where there is an almost unacceptable error rate, as demonstrated in some of the special studies that have been carried out.

COMMUNICABLE DISEASE CENTER PROGRAM

The program of the Communicable Disease Center, which will be testified on later, works with the State health departments, Government hospitals, and other organizations to try to get at this matter, and to try to bring about an improvement. There is certain need for a vigorous national program in this area.

Mr. FOGARTY. I have heard that some of the State laboratories are the poorest.

Dr. GODDARD. I wouldn't say that they are today. We have sent out blind samples to them from CDC and they reported back their results. I was pleased over the period of my tenure as chief to see the significant improvement that took place in their capability of diagnosing certain viral conditions as reflected by the laboratory samples, the samples sent them, and also marked improvements in other areas.

It may have been true that they had significant problems when the problem started but certainly they made a good showing as a result of the seminars, workshops, and training activities they have engaged in along with CDC.

CONFIDENTIALITY OF FDA REPORTS

Mr. FOGARTY. Are you acquainted with the problem which arose before the Food and Drug Administration back in June or July about the confidentiality of reports?

Dr. GODDARD. Yes.

Mr. FOGARTY. The Secretary at that time, Mr. Celebrezze, told the Food and Drug Administration to go ahead and release these confidential reports.

others, I wrote a letter He didn't answer but He said they would

After talking to some of your people and to the Secretary asking him to reconsider. Dr. Dempsey, Acting Assistant Secretary did.

study it. That was on August 12 and I have heard nothing since. Are you up to date on this?

Dr. GODDARD. Yes. I can tell you that I do not think this will be a problem.

Mr. FOGARTY. It was then, was it not?

Dr. GODDARD. Apparently it was then, but we are changing our procedures in the reporting system so that the names of the physicians and the names of the patients are not reported to us but are available to us, or others, if the need arises, so that we do not deprive ourselves of the opportunity to fully investigate unusual types of drug reactions that may occur.

In this fashion, however, we really need to know about the type of adverse reaction, the name of the patient and physician becoming

of significance only when we have to backtrack and get additional details which certainly is not in the majority of cases, so this procedure I think would handle that problem.

Mr. FOGARTY. Insert those letters in the report.

(The letters referred to follow:)

Hon. ANTHONY J. CELEBREZZE,

CONGRESS OF THE UNITED STATES,
HOUSE OF REPRESENTATIVES,
Washington, D.C., July 27, 1965.

Secretary, Department of Health, Education, and Welfare,
Washington, D.C.

DEAR MR. SECRETARY: During the past several weeks, I have become increasingly aware of a conflict which has developed between the Food and Drug Administration and Representative H. L. Fountain and the staff of the subcommittee on certain matters dealing with what the FDA considers to be privileged information. The two fundamental issues appear to me to be: First, the request by the staff of the House Subcommittee on Intergovernmental Affairs for access to a tape recording made during the meeting of an FDA Advisory Committee; and reports which include matters of identification such as names of doctor, patient, and hospital. I understand that your office has directed the Commissioner of the Food and Drug Administration to turn over such materials to the staff of the subcommittee.

My purpose in writing is to strongly urge you to reconsider this matter and perhaps even request the President ot declare executive privilege on tape recordings of scientific advisory committee meetings and patient records wherein the patient and or doctor and/or hospital may be identified. It is also my belief that you should personally enter this controversy and lend complete support to the FDA. I endorse the Food and Drug Administration's opinion that tape recordings of scientific adivsory committee meetings shluld be transmitted to a committee staff for study, but that the name of doctor, patient, and hospital must be removed from the record to guarantee confidentiality of the report. To pass along such information, in my opinion, would destroy the confidentiality of such reports and will not only place the Government in an embarrassing position, but would ge politically unsound.

Thank you for your consideration, and best wishes.
Sincerely yours,

JOHN E. FOGARTY,

Member of Congress.

Department oF HEALTH, EDUCATION, AND WELFARE,

OFFICE OF THE SECRETARY, Washington, D.C., August 12, 1965.

Hon. JOHN E. FOGARTY,

House of Representatives,

Washington, D.C.

DEAR MR. FOGARTY: In view of his imminent departure from the city, Secretary Celebrezze has asked me to reply to your letter of July 27.

We are of course much concerned about the relations between the Food and Drug Administration and the Subcommittee on Intergovernmental Relations. The problem is a difficult one in that we certainly want to cooperate wholeheartedly with congressional committees and at the same time we must secure maximum assistance from the public in order to assure success of the programs for which we are responsible.

I can assure you we are giving the matter our most serious thought. It goes without saying that I shall of course be glad to discuss this or any other matter with you at your convenience.

Sincerely yours,

EDWARD W. DEMPSEY,
Acting Assistant Secretary.

VENEREAL DISEASE CONTROL PROGRAM

Mr. FOGARTY. Do you still think we can get rid of venereal disease in this country with the program we started, and tuberculosis?

Dr. GODDARD. On venereal disease if we get a significant improvement in physician reporting we can.

Mr. FOGARTY. How can we do that?

Dr. GODDARD. The American Medical Association recently has started to, shall I say, push the physicians, or educate them, try to get them to see that they are, (1) required to report it by law, and this does not violate physician-patient relationships; and (2) that their cooperation is essential if we are going to eradicate the disease.

It was very disturbing to find that of the new cases reported only 11 percent of the cases known to physicians were indeed reported. This was an AMA survey carried out in conjunction with the Public Health Service and the American Social Health Association 2 years ago, I believe.

The program cannot succeed unless the physician becomes a willing partner in it.

The TB control program is making substantial progress and going along very well toward meeting the goals the task force laid out.

BUILDINGS AND FACILITIES

Mr. FOGARTY. For buildings and facilities, the appropriation for 1966 is $5,720,000 and the request for 1967 is $4,080,000. The construction program really has bogged down.

Dr. GODDARD. Yes, sir.

RATE OF OBLIGATION

Mr. FOGARTY. At the rate you are going this year it will take you over 6 years just to obligate the funds you already have if we didn't appropriate another dollar.

What is behind all this slowdown in this program? What are you doing to straighten it out?

Dr. GODDARD. First of all, as you know, the problems connected with the changeover from lease arrangements for the District buildings, converting this program to Federal construction, GSA did interpose higher standards. This was part of the delay.

Secondly, there was failure in followup in getting the job done.

I have looked into this with the staff, and as far as the field facilities are concerned, by the end of this fiscal year all of the contracts for the planning will have been let and most of the construction contracts will have been let, with completion dates in 1969, fiscal 1969 and calendar 1968. Therefore the field construction program I think is back on the track. It is slowed up and delays are regrettable but I will see to it that every step is taken to prevent further delays.

NEW LABORATORY AT BELTSVILLE

Mr. FOGARTY. You are making a request for $950,000 for planning a new laboratory facility at Beltsville? There has been a lot of opposition to putting more Federal buildings in this area.