Senator NELSON. Welcome to the committee.

Dr. APPLE. To my right is Robert F. Steeves who is director of our legal division.

Senator NELSON. Mr. Steeves.

Would you for the record, Dr. Apple, recite your professional credentials and professional background?

Dr. APPLE. Mr. Chairman, I will be glad to submit a biographical sketch for the record, but very briefly, I have a bachelor of science degree in pharmacy, a masters in business administration with a major in marketing, and a Ph. D. in pharmacy administration from the University of Wisconsin and an honorary doctor of science degree from Long Island University. I am also a registered pharmacist in the State of Wisconsin.

Senator NELSON. And were you associated with the University of Wisconsin School of Pharmacy while you were in Wisconsin?

Dr. APPLE. Yes, for a number of years I was a member of the faculty, and chairman of the department of pharmacy administration at the University of Wisconsin.

Senator NELSON. Then subsequent to that?

Dr. APPLE. I left the University of Wisconsin to come here on July 1, 1958, and became executive director of the association on August 22, 1959.

Senator NELSON. Thank you very much. I have a couple of preliminary questions I would like to ask.

How many members are there in your association?

Dr. APPLE. Mr. Chairman, every time we appear before a congressional committee we are asked what our membership is, so I thought for once I would try to settle it. We have our membership roster on a computer, and I have brought with me the entire membership list of the American Pharmaceutical Association. As of November 6, 1967, we have 46,000 paid members of which approximately 14,000 are student members.

Senator NELSON. And these are, except for the students, all practicing pharmacists?

Dr. APPLE. No, sir; they are not. There are roughly 787 who are not engaged in the practice of pharmacy.

Senator NELSON. And what is the activity of those 700-plus?

Dr. APPLE. Well, some of them are teachers, some of them are researchers, some of them are in the category of people who are interested in pharmacy and are employed in some administrative or executive positions.

Senator NELSON. What percentage of the practicing pharmacists in the United States do you have in your association, do you know? Dr. APPLE. Roughly a third of those actively engaged in practice. Senator NELSON. Is there any other national organization of pharmacists?

Dr. APPLE. Yes, Mr. Chairman, there are a number of specialty organizations of pharmacists. Two of them-American Society of Hospital Pharmacists and the American College of Apothecaries-are directly affiliated with us. There is another association made up of owners of drugstores; there is another association of chainstores. There are wholesaler organizations. There are organizations ad infinitum in pharmacy. But the only organization that speaks for the

profession as a whole is the American Pharmaceutical Association which was established in 1852, 5 years after the American Medical and 5 years before the American Dental Association. It is the professional society, sir.

Senator NELSON. Your association is a nonprofit, tax exempt association?

Dr. APPLE. We are a 501 (c) (6). We also have a foundation which is a 501(c)(3).

Senator NELSON. But it is a tax exempt organization?

Dr. APPLE. Yes, sir. It is.

Senator NELSON. What is the basis of this exemption?

Mr. STEEVES. It is exempt, a tax exempt organization as a business league under section 501 (e) (6), which includes trade associations and professional societies.

Senator NELSON. How many people do you employ in your national office?

Dr. APPLE. We have currently a staff of around 75 full-time professional and clerical employees.

Senator NELSON. Do you have any objection to submitting your financial statement to the committee?

Dr. APPLE. Mr. Chairman, each year we submit a report to our entire membership, active and student, published in our journal which contains the complete proceedings of our annual meeting, its house of delegates, all of its committee reports, the reports of the officers. For example, in this document you will find the report of the treasurer for 1966 on page 300, and you will find our financial statement under exhibit B in schedule 1.

Senator NELSON. Is this the statement that you submit to IRS?
Dr.APPLE. Yes, sir.

Senator NELSON. This is the full statement?

Dr. APPLE. Yes, sir. It isn't the copy of our income tax return. It is the statement prepared by certified public accountants for distribution to our members which shows the source of our entire income as well as the expenditures in detail made by the association. We would be glad to submit a copy of our income tax return if that is what the Senator wishes.

Senator NELSON. If you would submit it to the committee we will decide whether or not we will print it, but we will at least print your financial report to your members in the record.

(The financial report referred to follows:)

AMERICAN PHARMACEUTICAL ASSOCIATION, FINANCIAL STATEMENTS,
DECEMBER 31, 1966

Dr. HUGO H. SCHAEFER,

OLIVER T. GRAHN, CERTIFIED PUBLIC ACCOUNTANT, Severna Park, Md., March 18, 1967.

Treasurer, American Pharmaceutical Association,
Washington, D.C.

DEAR SIR: I have examined the combined statement of assets, liabilities and fund balances at December 31, 1966, of the American Pharmaceutical Association and the related statements of income and expenses for the year then ended. My examination was made in accordance with generally accepted auditing standards, and accordingly included such tests of the accounting records and such other auditing procedures as I considered necessary in the circumstances.

In my opinion, the accompanying combined statements of assets, liabilities and fund balances, and of income and expenses present fairly the financial position of the American Pharmaceutical Association at December 31, 1966, and the results of its operations for the year then ended, in conformity with generally accepted accounting principles applied on a basis consistent with that of the preceding year.

EXHIBIT A

OLIVER T. GRAHN, Certified Public Accountant.

AMERICAN PHARMACEUTICAL ASSOCIATION-COMBINED STATEMENT OF ASSETS, LIABILITIES, AND FUND BALANCES, DEC. 31, 1966

EXHIBIT B

AMERICAN PHARMACEUTICAL ASSOCIATION GENERAL FUND-STATEMENT OF INCOME AND EXPENSES FOR THE YEARS ENDED DEC. 31, 1966, AND DEC. 31, 1965

1 Direct expenses in connection with this activity are included under "Expenses: Communication division." ¿Direct expenses in connection with this activity are included under "Expenses: Scientific division."

SCHEDULE 1.-AMERICAN PHARMACEUTICAL ASSOCIATION SECURITIES, DEC. 31, 1966

Dr. APPLE. As the Senator will note, the total dollars and percentage of our income derived from membership dues exceed any other single source. Last year it went over the 50-percent mark and this year it will be even larger in terms of percentage and actual number of dollars received from pharmacists in the United States as membership dues in support of the activities of the association.

Senator NELSON. Does your association publish a regular publication that is distributed to the membership?

Dr. APPLE. We have a number of publications, sir. We have the Journal of the American Pharmaceutical Association.

Senator NELSON. How often is that published?

Dr. APPLE. That goes to each member monthly. We have a newsletter that goes to each member every other week. We have a Journal of Pharmaceutical Sciences which goes to those members who wish to have that journal sent to them. We also publish the National Formulary.