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and criticisms that PMA has, or any member of the PMA has, of the conduct of these hearings, and let the record speak for itself.

I am confident that the record will show that we have given every consideration to the industry that it is possible to give, and if there is some consideration I have omitted, I would be glad to hear about it. I publicly invited every single member of the PMA to appear before the committee months ago. They are all free to come and make any statement that they may wish to make before this committee. Of the 136 PMA members, only two thus far have volunteered to come. Three others have come at invitation.

I would ask the Pharmaceutical Manufacturers Association what more this chairman can do, to give the members of the industry a chance to be heard so that their case can be fairly presented?

I now repeat my invitation to every single member company of your association to appear before this committee. If all 136 want to appear, we will hear them-if I am still here long enough to hear that many. At the end of today's hearings, or next week, or any other time, I will accept from the president of the PMA a list of your members who want to testify. I will make arrangements for them to testify. And then, if you have any legitimate complaints against the conduct of these hearings, I think you should tell us today exactly what those complaints are, so that the committee may consider them. If not, then I think you should not make criticisms elsewhere around the country that you are not willing to make to the committee itself. I think that is fair.

So at some stage, I would like to hear the complaints you have about the hearings and if there is any way I can rectify them, I will, because I have not offered the medical profession, or the pharmacologists, or the pharmacists, or any other group, the right to send in every single member, as I have in the past to the Pharmaceutical Manufacturers Association, without any results thus far, except for the volunteering of two companies.

The amount of material that you have presented is quite massive. I am not sure what is the best way to handle it, or whether with the amount we have it will be possible to get through all of it today.

But there are a number of matters that I want to take up first. One of them is immediately current, and I would like some discussion of that sometime today. I refer to a PMA advertisement which appeared in the Reader's Digest this month. And I will read-in order to be more precise my comments on that.

An advertisement by the Pharmaceutical Manufacturers Association in the form of an eight-page pullout pamphlet has appeared in the November 1967 issue of the Reader's Digest. The format of the section is designed to look like part of the ordinary editorial content of the magazine. The only indication that this section is paid advertising is the words "Special Advertising Section" which appear in small print on only the first page of the eight-page section.

On the next page, the first of four articles which comprise the section begin without any further indication that these articles are, in fact, the advertising matter to which reference has been made. To further confuse the reader, ads clearly identifiable as product advertisements have

been interspersed among regular Reader's Digest articles which immediately follow the PMA section. Thus, the reader may be led to believe that it is these latter ads which actually make up the "Special Advertising Section.”

At the same time that this ad is being run in the Reader's Digest, reprints of this pamphlet are being circulated to offices of practicing physicians for their waiting rooms and to various government agencies. These reprints, however, differ from the section which appears in the Reader's Digest in one very important respect: The PMA has deleted the words "special advertising section." The result, of course, is that there is absolutely no indication that this pamphlet is an advertisement. Neither the doctor nor the patient who reads this ad while waiting to see his doctor has any way of knowing that he is reading ad copy which glorifies the members of the very group who paid to have this material written.

Further, a note appears opposite the first page of the section which tells the reader that he may order a reprint by writing to "Health,” Post Office Box 28111, Washington, D.C. The designation "Health," rather than the actual name of the organization involved, seems to me to give the impression that a nonindustry philanthropic group is sponsoring the reading matter which follows-not a trade association representing drug manufacturers.

I wrote to the U.S. Department of Justice, the Federal Trade Commission, and the Food and Drug Administration to call this matter to their attention and to ask for their comments.

The Department of Justice subsequently took an interest in this question and in a letter which I received on Monday, Edwin M. Zimmerman, Acting Assistant Attorney General, Antitrust Division, stated that:

The omission of the words "Special Advertising Section" might mislead the recipients into believing that material prepared by the Association or its members for purposes of an advertisement was initiated by disinterested authorities, for the purpose of discouraging the sale of generic drugs.

Accordingly, this circulation of the reprints may raise problems under Section 5 of the Federal Trade Commission Act which proscribes unlawful and deceptive practices in commerce.

We are conferring with representatives of the Federal Trade Commission to determine what further action should be taken.

In a response received by me on Tuesday, Paul Rand Dixon, Chairman of the Federal Trade Commission, informed me that an investigation is being undertaken by his staff "to determine whether the practices in question constitute a violation of section 5 of the Federal Trade Commission Act, which prohibits unfair methods of competition and unfair or deceptive acts or practices in commerce."

I have also received an answer from Dr. Herbert L. Ley, Director of the Bureau of Medicine of the Food and Drug Administration. Dr. Ley's review of the section for content accuracy revealed that parts of the four articles which make up the section contain material which is misleading in its implications as to the industry's accomplishments and the relative quality of brand name and generic drugs.

(The letters referred to follow :)

U.S. DEPARTMENT OF JUSTICE, Washington, D.C., November 13, 1967.


Chairman, Monopoly Subcommittee,

U.S. Senate,

Washington, D.C.

DEAR SENATOR NELSON: The Attorney General has asked us to reply to your letter dated November 2, 1967, the receipt of which he acknowledged to you by letter dated November 3, 1967.

Your letter requested our views as to a special advertising section placed in the Reader's Digest by the Pharmaceutical Manufacturers Association, reprints of which were thereafter circulated by the Association without disclosing that the reprint was a paid advertisement and not part of the editorial content of that publication.

Such an omission from the reprints might mislead the recipients into believing that material prepared by the Association or its members for purposes of an advertisement was initiated by disinterested authorities for the purpose of discouraging the sale of generic drugs. Accordingly, this circulation of the reprints may raise problems under Section 5 of the Federal Trade Commission Act which proscribes unlawful and deceptive practices in commerce.

We are conferring with representatives of the Federal Trade Commission to determine what further action should be taken.

Sincerely yours,

Acting Assistant Attorney General,
Antitrust Division.

Re file No. 682 3194.


FEDERAL TRADE COMMISSION, Washington, D.C., November 14, 1967.

Chairman, Monopoly Subcommittee, Select Committee on Small Business,
U.S. Senate, Washington, D.C.

DEAR MR. CHAIRMAN: In accordance with your request, I have made inquiry as to the status of the consideration being accorded by the Bureau of Deceptive Practices to the matter of the publication of a section in the November, 1967, issue of The Reader's Digest, paid for by the Pharmaceutical Manufacturers Association, and the dissemination of a reprint thereof.

I am advised that the staff is now engaged in an inquiry seeking to develop sufficient evidence to enable the Commission to determine whether the practices in question constitute a violation of section 5 of the Federal Trade Commission Act, which prohibits unfair methods of competition and unfair or deceptive acts or practices in commerce.

You will, I am sure, understand that I cannot at this time offer any comment respecting the legality of the practice, inasmuch as the matter will be before me for decision when the pending investigation has been concluded. With best wishes, I am, Sincerely yours,





Washington, D.C.

Chairman, Subcommittee on Monopoly, Select Committee on Small Business, U.S. Senate, Washington, D.C.

DEAR SENATOR NELSON: This responds to your request for our comments on the advertisement by the Pharmaceutical Manufacturers Association, which appeared in the November, 1967 issue of Reader's Digest.

This advertisement is not product oriented in the usual sense. Primarily because the advertisement is not specific as to the name of a drug manufactured, packed or distributed by a named firm, we do not believe that the Federal Food, Drug, and Cosmetic Act provides a clear basis for proceeding against the ad or its subsequent use as a promotional pamphlet under any provisions of the

Act. Our regulations in point are concerned primarily with advertisements and other promotional material directed to prescribers, not to the public.

About a year ago, we discussed with the advertising agencies and the pharmaceutical firms some of the problems that would arise if promotional labeling for prescription products, particularly oral contraceptives in that case, should be directed to the public. We concluded that such promotions would be acceptable provided that they included appropriate warning information and specified the particulars in a policy statement published in the Federal Register on September 13, 1967.

Since that time we have discussed with individual pharmaceutical firms the content of institutional advertisements which offered the possibility of crossing the line to product promotion. Advertisements that are product oriented (which the Reader's Digest article is not) would require a brief summary of indications, side effects, and contraindications and they would have to contain this information in a form that would be understandable to the non-professional audience.

The portion of the Reader's Digest reprint titled "What Ever Became of Those Quarantine Signs" has been reviewed for factual accuracy. No direct claim for pharmaceutical company research involvement is made except for whooping couch (pertussis) "vaccine," and in that case it appears that several pharmaceutical firms supported extramural basic research on pertussis immunization in the 1930's and 40's. The other "vaccines" were developed from basic research not supported to any significant extent by pharmaceutical firms. Although the function of the pharmaceutical industry in production of "vaccines" for marketing is an important credit in their favor, the tone and implications of this article for the general reader go beyond mere credit for manufacturing ability. The facts stated in the article "The Anonymous Drug That Hospitalized a Patient" are in general agreement with those given in Dr. Arnold Carter's letter to the Canadian Medical Association Journal. Attached is a copy of Dr. Arnold Carter's letter to the Journal. The fact that this "generic" brand did not meet the official monograph specifications makes it improper to compare its effectiveness with a product meeting official compendium specifications. It cannot be determined whether only a batch failed in meeting the disintegration specifications or whether the manufacturer produced most of his tablets in this manner. Failures of this type can be checked in the laboratory and action taken accordingly.

The comparable product sold in the United States was introduced to the market in 1957 and has been subject to United States Pharmacopeia standards, including disintegration time testing, since 1960. To the best of our knowledge no comparable problem has been identified in the American product.

The facts in the section entitled "Medicines for the Troubled Mind" could present better historical perspective. By stating that "Dr. Kline reported to the New York Academy of Sciences in 1954 that reserpine had 'proved an effective sedative in mental hospitals,'" the unnamed authors of the article totally disregard historical fact. Reserpine was supplied by the Swiss from CIBA to the Psychiatric University Clinic Burghoelzli in Zurich, Switzerland, where in 1953 it was first used in the treatment of mental illness in the Western world and reported to the medical profession. Similarly the implication of the paragraphs relating to the use of the phenothiazine related compounds ignores the fact that the earliest useful member of this group, chlorpromazine (Thorazine), was synthesized in France in 1950 and first used clinically in France in 1952. If we can be of further assistance, please let us know. Sincerely yours,

Director, Bureau of Medicine.

Senator NELSON. There is no question that the entire ad is designed to avoid disclosing that it is, in fact, advertisement paid for by the drug industry. This calculated deception even goes so far as to include a solicitation to the reader to write to an organization called Health for reprints of the section.

Even on the last page, the words, "Published as a Public Service by the Pharmaceutical Manufacturers Association," are misleading since advertising is not generally considered to be a public service.

81-280-68-pt. 4- -12

Clearly, an attempt has been made here to use the wide circulation of the Reader's Digest to convince a large segment of the public that an advertisement written on behalf of the drug industry and paid for by its trade organization is an ordinary unbiased magazine article. The implication, of course, is that the PMA is supporting an objective discussion of health problems as a matter of public service, rather than an advertisement calculated to serve the interests of its member firms.

I am sure that the PMA was aware of the implications of the ad when they inserted it. I think that as a matter of public interest this ad ought to be discussed here at some stage, because I am of the opinion that a vast majority of the public would not recognize the insert in the Reader's Digest and certainly not the reprint as in fact an advertisement. And whereas PMA is entitled to advertise. I think the public is entitled to know whether an article is an independent objective research article written by an independent individual or whether it is an advertisement sponsored by a trade association. That is why I have brought this out today.

I do not by any means want to preempt all your time-but I shall preempt some of it.

One other matter I want to raise, which I shall not raise immediately, is the question of your obvious strong feeling that there has been a distinct bias against the industry in the witnesses who have appeared here. I would like to take up that question, but I will defer that to a later moment.

How long is the summary that you have there, Mr. Stetler?

Mr. STETLER. My summary will take between 15 and 20 minutes. Senator NELSON. Well, I have not in the past permitted witnesses to summarize for the very simple reason that I have questions to ask about the full statement as I go along. What happens is that if a summary is given and the statement is merely printed in full, I have to go back to the statement and go through it to ask questions which occurred to me in my reading of the material.

Now, I am willing to try that, if you prefer. I am not sure it will shorten the time. A couple of weeks ago one of the witnesses wanted to summarize, and I declined because what happens is that we print your summary, then we print the whole testimony. Then after it is all printed we start asking questions about the full text, which appears somewhere else in the record. So the reader has to jump back and forth from the questions to the testimony itself, whereas the only way it is really understandable is if as your presented statement appears in the record, the questions are raised and answered at the appropriate place.

Don't you suppose that you could start reading, and at various places where you elaborate, just suggest that you would like to summarize in a sentence or two, and if I do not have any questions, we can skip a page here and there."

Would that be satisfactory?

Mr. STETLER. Senator, I will be delighted to do it any way you want it done. I can do it either way.

Senator NELSON. Let us try it that way. I think it will make a better record.

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