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greater price competition in the industry, either at the manufacturing or at the retail level. The pharmaceutical industry is characterized by high concentration, high advertising costs, and intense nonprice competition.

Drug manufacturers attempt to differentiate their brand names from. the generic name of the drug through intensive advertising campaigns. For the 22 major pharmaceutical companies, the Kefauver Committee found that the selling expenditures of drug manufacturers accounted for 25 percent of the total sales dollar. The drug industry spends about $3,000 per doctor per year in advertising to the medical profession. Since the rapid advances in drug therapy during recent years have made it impossible for any physician in private practice to read and evaluate all of the information on new drugs, doctors obtain a great deal of their information about the efficacy of drugs from the manufacturer. The "detail men" of pharmaceutical companies provide a major source of new information to physicians on the advantages or disadvantages of their drug products.

A physician frequently prescribes a costly brand-name product when an equivalent lower-cost drug could be made available to his patient under the generic name. The doctor may be unaware of the existence of the less expensive drug, or he may be more familiar with the effects and dosage of the brand-name product. He may also be uncertain about whether two drugs with the same generic name are actually equivalent in therapeutic value. Although there are a number of different sources and formularies which describe the merits of many drugs, there exists no official or authoritative compendium which a doctor can consult for information about the efficacy of a drug. Moreover, even if the doctor prescribes a drug by its generic name, the pharmacist has no incentive to give the consumer the least-cost generic drug. Brand-name prescribing raises the cost of drugs not only to patients but also to the taxpayer when drug costs are covered by public programs. There is considerable sentiment in Congress to require or encourage generic purchasing or prescribing of drugs under all Federally financed programs. Before such legislation becomes feasible, however, doubts about the therapeutic equivalence of drugs with the same generic name must be erased. A major study should be undertaken of the most frequently prescribed drugs to determine the efficacy of brand-name products and their supposed generic equivalents.

APPENDIX

Medical Care Price Components of the CPI, Annual Averages, 1946-66

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111.1 108. 0 105. 2 104. 7 102. 7 100. 2 97.2 94.9 93.1 92. 2 89.2 86.4 84.6 81.5 79.6 76.5 72.6 67.0

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74.6

93.2 90.4 89.2 87.5 87.5 86.4 82.4 80.3 78.4 72.4 65.9

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1 December 1963-100.

Source: U.S. Department of Labor, Bureau of Labor Statistics.

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For sale by the Superintendent of Documents, U.S. Government Printing Office
Washington, D.C. 20402 - Price 70 cents

SPECIAL COMMITTEE ON AGING

HARRISON A. WILLIAMS, JR., New Jersey, Chairman

GEORGE A. SMATHERS, Florida
WAYNE MORSE, Oregon

ALAN BIBLE, Nevada

FRANK CHURCH, Idaho

JENNINGS RANDOLPH, West Virginia

EDMUND S. MUSKIE, Maine

EDWARD V. LONG, Missouri

FRANK E. MOSS, Utah

EDWARD M. KENNEDY, Massachusetts
RALPH YARBOROUGH, Texas
STEPHEN M. YOUNG, Ohio
WALTER F. MONDALE, Minnesota

EVERETT MCKINLEY DIRKSEN, Illinois
FRANK CARLSON, Kansas

WINSTON L. PROUTY, Vermont
HIRAM L. FONG, Hawaii
JACK MILLER, Iowa

THRUSTON B. MORTON, Kentucky
CLIFFORD P. HANSEN, Wyoming

WILLIAM E. ORIOL, Staff Director
JOHN GUY MILLER, Minority Staff Director

SUBCOMMITTEE ON HEALTH OF THE ELDERLY
GEORGE A. SMATHERS, Florida, Chairman

EVERETT MCKINLEY DIRKSEN, Illinois
FRANK CARLSON, Kansas
HIRAM L. FONG, Hawaii

WAYNE MORSE, Oregon
EDMUND S. MUSKIE, Maine

EDWARD V. LONG, Missouri

FRANK E. MOSS, Utah

THRUSTON B. MORTON, Kentucky

RALPH YARBOROUGH, Texas

HARRISON A. WILLIAMS, JR., New Jersey

EDWARD M. KENNEDY, Massachusetts

WALTER F. MONDALE, Minnesota

Part 1-Washington, D.C.

Part 2-New York, N.Y.

(Additional hearings anticipated but not scheduled at the time of this printing.)

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CONTENTS

Opening statement by the chairman...

CHRONOLOGICAL LIST OF WITNESSES

Brown, Howard J., M.D., administrator, New York Health Services Ad-
ministration, accompanied by Albert F. Moncur, deputy commissioner,
New York Department of Social Services----

Cherkasky, Martin, M.D., director, Montefiore Hospital and Medical
Center

Sheps, Cecil G., M.D., general director, Beth Israel Medical Center...
Reader, George G., M.D., director, comprehensive care and teaching
program, Cornell Medical College..

Thompson, David D., M.D., director, New York Hospital_

Wise, Harold B., M.D., project director, Montefiore Hospital neighborhood medical care demonstration, Bronx, N. Y., accompanied by Mrs. Davis and Mrs. Lopez..

Page

357

360

382

395

399

403

415

Thaler, Seymour, New York State senator, 10th district, Queens-
McDonough, Ethel, Fulton Senior Association, Manhattan.
Negron, Bernardo, Hudson Guild Fulton Center...

426

436

437

Carter, Patricia, director, consumer education project, Hudson Guild
Fulton Center..

438

Harris, Helen M., executive director, United Neighborhood Houses of
New York.......

Youngblood, Edna, member, William Hodson Community Center..
Fraiter, Leon, member, Redshield Day Center, Manhattan..

Kinoy, Susan, project director, promoting home health and social services
to New York's aging, Community Council of Greater New York.....
Newburgher, Walter, president, Congress of Senior Citizens...
Himler, George, M.D., coordinator, Council of the County Medical
Societies of New York City.

442

446

449

449

460

463

Brindle, James A., president, Health Insurance Plan of Greater New York City, accompanied by Samuel Shapiro, vice president and director of research and statistics__

477

Gitman, Leo, M.D., director, Department of Community Health, the
Brookdale Hospital Center, Brooklyn, N. Y.

486

STATEMENTS

Halpern, Seymour, Representative in Congress from the State of New
York...

359

377

361

447

Haughton, James G., M.D., M.P.H., first deputy administrator, Health
Services Administration, City of New York---

Kennedy, Robert F., a U.S. Senator from the State of New York.
Weitzman, Helen, caseworker, William Hodson Community Center___

APPENDIXES

APPENDIX 1-Additional information or exhibits from witnesses..
Item 1: Floor statement by Senator Robert F. Kennedy on medicaid
amendments..

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Item 2: Additional statements by James G. Haughton, first deputy
administrator, Health Services Administration, City of New York.
Exhibit A. The future of public general hospitals.
Exhibit B. Government's role in health care, past, present, and
future__

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