THE PROFIT IN PILLS

...About $9,000,000 of this comes from drug promotion...

...Accounting for this spectacular phenomenon are a variety of factors, including the development of the so-called wonder drugs, a steady increase in the per capita consumption of medications, and the trebling of the cost of the average prescription...

...While the patient foots the bill, the sole target of the strident promotion of the so-called ethical drugs are the doctors...

...Prior to his appointment as the new head of the FTC, the agency charged with policing advertising practices, Paul Rand Dixon was chief counsel of the Kefauver anti-trust and monopoly subcommittee...

...The other is to use the stores as a pilot enterprise for a contemplated drug insurance scheme...

...The AMA has solidly lined up against the proposal to give the FDA authority to pass on whether new drugs live up to the claims made for them by the manufacturers...

...A crucial point to bear in mind in considering the economics of the drug industry is that the consumer of its products has no choice and no influence over their price and quality...

...The combination of rising drug prices and broadening utilization has significantly altered the relative standing of the major components of the medical care dollar...

...As a brand-name item, this drug now retails at $6.75 for 100 pills...

...This argument has been forcefully refuted by a long procession of prominent physicians, most of them connected with medical schools, who told the Senate subcommittee that doctors are increasingly confused and misled by high-pressure promotion, that many of the new drugs are worthless and sometimes dangerous and that drug prices are higher than they should be...

...But the trouble is that medicine has become so complex and the volume of professional literature so vast that overworked doctors are rarely able to evaluate the sweeping claims made for the hundreds of new drugs pouring into the market every year...

...The pharmaceutical industry is unique in that it can make exploitation appear a noble purpose," the Kefauver subcommittee has been told by Dr...

...Much of this advertising was so out of line, it is reported, that it had to be canceled to comply with the new rules...

...Probably as important is the fact that censure of the drug makers carries the connotation that not all doctors are well trained enough to be impervious to sales ballyhoo...

...Further expansion of medical services in hospital outpatient departments and group practice clinics inevitably would impinge greatly upon the present system of drug manufacture and distribution...

...It has issued new regulations requiring drug manufacturers to provide a more precise description of their products, including potential hazards and conditions under which the medications should not be used, in their promotional literature and on labels...

...The pharmacopoeia has been completely revolutionized in the past few decades with the emergence of the antibiotics, the sulfonamides, the tranquilizers, the antihistamines, a variety of hormones, a multiplicity of combinations of vitamins, agents for the treatment of high blood pressure, and a galaxy of other new products...

...Among other things, it has been shown that one hormone preparation which costs the manufacturer $1.57 for a bottle of 100 tablets is sold to retail druggists for $17.90 and by them to the consumer for $29.83...

...The biggest change has been in the portion going for drugs...

...He reported that the drug manufacturers are now spending about 750 million dollars a year for promotion of their products, a rate averaging about .f5,000 annually for each of our 150,000 practicing physicians...

...An outstanding example is one variety of reserpine, a drug used for the treatment of high blood pressure and as a tranquilizer...

...Nor is the financial tie-up between the drug industry and medical societies always limited to journal advertising...

...It is reported to be not uncommon for drug firms to subsidize medical society meetings through elaborate exhibits and by other means...

...The manner in which ethical drugs are promoted has other disturbing implications...

...So sharp has been the jump in the price of drugs and in their use that any consideration of the economics of health care must increasingly take into account the large proportion of the bill now being spent for prescription medicines...

...One is to furnish the union members and their families with drugs at prices expected to be at least thirty per cent below what they now pay...

...This is precisely the purpose of the huge outlay going annually into heavy medical journal advertising, a lavish distribution of free samples, a steady barrage of gaudy promotional literature, and an army of some 15,000 traveling salesmen, known as detail men, whose job is to high pressure doctors into accepting new drugs and specifying proprietary names in prescriptions...

...According to as respectable an authority as the AMA Archives of Internal Medicine, there have been occasions where medical journals have refused to publish articles criticizing particular drugs for fear of offending advertisers and where some medical societies have turned down papers scheduled for delivery at their meetings because they were critical of products of exhibitors...

...With the steady rise in drug company advertising budgets, the publications of national and state medical societies have increasingly come to depend on such revenue...

...Backers of the new Medstore Plan report than many other unions have expressed an interest in the program and predict that within a year it will cover more than a million persons in the New York area...

...THE PROFIT IN PILLS by SELIG GREENBERG THE PROFIT-SWOLLEN pharmaceutical industry has good reason for concern over recent proposals in Congress and the signs of greater vigilance by Federal regulatory agencies regarding the manufacture and sale of drugs...

...The drug industry's rate of return on investment, after taxes, has in recent years amounted to more than twenty per cent, or nearly double that for all manufacturing...

...These stricter requirements, which went into effect in January, have put a crimp into some of the more sweeping advertising claims and played hob with a good deal of advertising copy contracted for in advance for the first quarter of 1961...

...There is good reason to believe that much of this increase has resulted not so much from clearly demonstrated medical need as from the effects of frenetic drug company promotion upon busy and guljible physicians...

...Above all, there is the factor of a common interest by organized medicine and the drug manufacturers in the preservation of the status quo...

...But its operations are now being streamlined under a Presidential reorganization plan recently approved by Congress, and the new chairman has promised to use his authority to the utmost to curb some of the excesses of drug promotion...

...In the period from 1953 to 1958, the share of the medical care dollar spent for hospitalization increased from 19.6 to 23.4 cents, that for physicians' services declined from 37.3 to 33 cents, and the portion for drugs went up from 14.7 to 20.2 cents...

...The practice, the Journal has said, "has no merit other than to increase the profits of the manufacturer" and "the cost of drugs to the consumer...

...The present general practice of prescribing drugs by specific trade names instead of generic or chemical names often means that the consumer is forced to pay more for a product which is no better than available cheaper substitutes...

...Their bill would require Federal licensing of pharmaceutical manufacturers, authorize the Food and Drug Administration to test all new prescription drugs for effectiveness as well as safety before they could be marketed, strengthen inspection of manufacturing plants and relax patent rights on certain products, thereby making manufacturing know-how more readily available to competing firms and paving the way for material price reductions...

...One of the reasons for the high costs of drugs, Dixon has told a House committee, is that about twentyfour cents out of every dollar that drug manufacturers get for prescription medicines go for promotion and other sales expenditures...

...Cocktail parties and dinners given by pharmaceutical houses for their friends and clients are a usual feature of many medical conventions...

...Dale Console, former medical director for E. R. Squibb & Sons, a major drug firm...

...But pecuniary pressures sometimes figure in the picture...

...Harry F. Dowling of the University of Illinois School of Medicine, a noted authority on pharmacology, has said, "prescribes by suggestion and not from information...

...It is difficult to say to what extent advertising revenue and drug company largesse are responsible for the generally cool attitude of organized medicine toward criticism of the pharmaceutical industry...

...Despite the overwhelming evidence to the contrary, AMA spokesmen have maintained that the organized profession itself can best do the job of telling its members which of the new drugs are truly effective...

...Mounting resentment against high drug prices has led thirteen New York labor unions with a combined membership of 350,000 to organize a non-profit corporation to run a chain of cut-rate drug stores in the metropolitan area...

...Rising revulsion is clearly developing within the medical profession against the drug industry's damn-theconsumer attitude and the threat it represents not only to the patient's pocketbook but to the practice of medicine itself...

...According to the New England Journal of Medicine, the most respected medical publication in the United States, prescription by copyrighted trade names is responsible for an unnecessary and confusing proliferation of products which are for the most part chemically identical...

...The inevitable effect of the incessant drumfire of flamboyant commercials is confusion...

...But serious questions have been raised by competent authorities about the justification for the sweeping extent of the rise in the per capita use of drugs...

...Few, if any, industries in the American economy," says the latest report of the Kefauver group, "spend as small a proportion of their sales receipts to produce the goods they sell as does the pharmaceutical industry...

...Not only are drugs beginning to approach hospital charges in importance but they represent the largest out-of-pocket item in the nation's health budget, since they are not covered by insurance...

...The average doctor now gets annually about 5,000 pieces of drug mail advertising, much of it trash disguised as science...

...Since these drugs can be sold only on a doctor's prescription, their advertising is confined to medical journals...

...The drug manufacturers, aided by organized medicine, are sure to put up a bitter battle against tighter government regulation of the manner in which they make and merchandise their products...

...This has led some observers to question whether organized medicine can be expected to maintain a truly objective attitude toward the business from which it derives its principal support...

...The same medication can be bought on a generic basis from small manufacturers at prices ranging from thirty cents to $1.23 for 100...

...Many hospitals and clinics already insist on dispensing drugs on a generic basis...

...Both would be directly affected by any reorganization of the existing system of health services...

...The AMA's operating budget now amounts to $16,500,000 a year...

...But is it really in the public interest to entrust the postgraduate education of the medical profession to salesmen...

...It is an issue in which all of us have not only a financial but also a life-conserving stake...

...In a survey made not long ago by the American Medical Association, about two-thirds of the doctors questioned admitted that they depend on detail men as their chief source of information on new drugs...

...Drug advertising carefully avoids any mention of price...

...In the meantime, the FDA itself has been stung into more vigorous administrative action...

...Among the most outspoken witnesses were two members of the AMA's Council on Drugs, who testified that their group was not even consulted on the organization's stand against the proposed legislation...

...The close alliance between organized medicine and the pharmaceutical industry, often in brazen disregard of the interests of the consumers, has again been demonstrated in recent weeks at the Senate hearings on the Kefauver-Celler legislation for tighter Federal policing of the manufacture and sale of drugs...

...As many new and more potent medications have become available an increase in the rate of their utilization was inevitable...

...One study has shown that in the five-year period between 1953 and 1958, per capita drug consumption jumped by nearly seventy-five per cent...

...Annual sales of pharmaceutical firms in the United States have climbed in the past twenty years from 300 million dollars to more than 2.5 billion dollars...

...As a direct result of the disclosures at the Kefauver subcomittee hearings, legislation to clamp stiff new curbs on the drug industry has been introduced jointly by the Tennessee Senator and Representative Emanuel Celler of New York...

...They also have been a bonanza for the drug business, which has grown from a minor offshoot of chemical manufacturing into a major and booming industry with a striking profit record...

...Many of the new drugs have contributed enormously to better health and longer life...

...The average physician is often unaware of the price of the medication he prescribes and in any event is unlikely to worry about cost if he is convinced that the drug is indicated...

...In criticizing the indiscriminate use of antibiotics in conditions where these medications are not only worthless but can be harmful, the New England Journal of Medicine has commented that the "siren song of the purveyors of pills helps to lull the hurried and harried physician into a tranquilized state...

...Already jittery over the searching examination of its high profits and huge promotional expenditures by the Senate anti-monopoly subcommittee headed by Senator Estes Kefauver, the drug industry can draw no comfort from President Kennedy's choice for the chairmanship of the Federal Trade Commission...

...But remedial action in the public interest appears equally certain, even though it will probably come only piecemeal, in view of the clear record of profiteering by the big drug companies and the flagrant abuses in their promotion and marketing practices...

...The extent of this revolution may best be judged from the fact that fully ninety per cent of the drugs now being prescribed were nonexistent twenty years ago, and about forty per cent were unknown as recently as 1954...

...It is ironic, if nothing else, that while the code of medical ethics sternly forbids physicians to advertise, medical societies now generally find themselves in the advertising business up to their necks...

...The bewildered physician," Dr...

...Pressure for such action is constantly growing as the cost of drugs becomes a major issue in the debate of how medical care can best be organized and paid for...

...Much of the voluminous testimony before the subcommittee has amply supported this comment...

...For the consumer, on the other hand, these developments are good news indeed, offering hope for more stringent quality controls and some relief from a mounting drain on his pocketbook...

...Nearly fifty-three per cent of the AMA's income in 1959 came from advertising in its publications and an additional 2.7 per cent from exhibits at its meetings, also largely paid for by drug companies...

...Among the methods by which Medstore plans to cut costs are mass purchasing, more economical packaging and dispensing, and elimination of duplication by keeping inventories to a minimum...

...While a lot of this propaganda winds up unread in the wastebasket, its effects nevertheless are reported to be considerable on many physicians who lack the time to follow carefully the scientific literature on new drugs...

...The pharmaceutical companies themselves have boasted that their promotional efforts constitute a valuable form of "postgraduate education" for busy doctors...

...The FTC's legal powers over drug advertising are limited...

...One pharmacological expert has said that probably no more than six of some 400 new compounds coming out every year are "really new drugs of material assistance in treatment/' But doctors who commonly see between twenty and thirty patients a day are only too eager to use the short cut of medication and to prescribe fancy and expensive variations of old products...

...The project, to be financed by payments of one dollar a year for every member of the participating unions, has two basic objectives...