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, 1946-66 111.1 108. 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 74.6 93.2 90.4 89.2 87.5 87.5 86.4 82.4 80.3 78.4 72.4 65.9 1 December 1963-100. Source: U.S. Department of Labor, Bureau of Labor Statistics. For sale by the Superintendent of Documents, U.S. Government Printing Office SPECIAL COMMITTEE ON AGING HARRISON A. WILLIAMS, JR., New Jersey, Chairman GEORGE A. SMATHERS, Florida 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 EVERETT MCKINLEY DIRKSEN, Illinois WINSTON L. PROUTY, Vermont THRUSTON B. MORTON, Kentucky WILLIAM E. ORIOL, Staff Director SUBCOMMITTEE ON HEALTH OF THE ELDERLY EVERETT MCKINLEY DIRKSEN, Illinois WAYNE MORSE, Oregon 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.) CONTENTS Opening statement by the chairman... CHRONOLOGICAL LIST OF WITNESSES Brown, Howard J., M.D., administrator, New York Health Services Ad- Cherkasky, Martin, M.D., director, Montefiore Hospital and Medical Sheps, Cecil G., M.D., general director, Beth Israel Medical Center... 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- 426 436 437 Carter, Patricia, director, consumer education project, Hudson Guild 438 Harris, Helen M., executive director, United Neighborhood Houses of Youngblood, Edna, member, William Hodson Community Center.. Kinoy, Susan, project director, promoting home health and social services 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 486 STATEMENTS Halpern, Seymour, Representative in Congress from the State of New 359 377 361 447 Haughton, James G., M.D., M.P.H., first deputy administrator, Health Kennedy, Robert F., a U.S. Senator from the State of New York. APPENDIXES APPENDIX 1-Additional information or exhibits from witnesses.. Item 2: Additional statements by James G. Haughton, first deputy |