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A very high percentage of the cost of malpractice insurance goes to the law firms for defending the case. So the fact is that patients in most instances get very little out of the final suit because the cost of litigation is so great.

This is a dramatic area where a tremendous drop in the cost of medical care could be effected. Physicians are paying fantastic fees in malpractice insurance, and on top of that, the patients are not getting the benefit of being paid for some of the things that happen to them.

It's exactly the same with automobile insurance, of which the biggest cost is medical care. About 80 to 90 percent of the premiums for automobile accidents—and the medical care involved-again goes to law firms and yet there are bills in the legislatures throughout the country trying to eliminate the middle man, the lawyer, so that the patient gets paid directly if he is injured.

And the fact is that there is more than enough money to pay the patient, whether the doctor was at fault or not, from that $500 million, yet they go through years of litigation, the bulk of the money ends up in the hands of the legal profession, and the patient is not getting the money nor is the problem being solved.

So here is an area involving hundreds of millions of dollars, of malpractice insurance and I don't know what the cost of automobile insurance in which there is a major conflict of interest because legislators are sitting on their hands.

Senator Moss. I am glad to have you bring that up. Of course, we have that legislation before this committee. We have been already holding hearings and trying to determine whether there is a way to have insurance repayment situation, particularly in injuries from automobiles—although it does go into malpractice too-without going through the mechanics of finding out fault.

You see, the tort system under which we operate always relates back to who is at fault. You must find out who is at fault, and the one that is at fault has the obligation to pay. And this has become very complex, as you say, and very lucrative to those practitioners of the legal profession who are involved in it.

And, as you say, it's been estimated that we could restore everybody that has an injury or damage out of an accident out of just the premium funds, and never be concerned about this question of who is at fault, trying to put the blame on somebody.

Dr. BRENT. There is one other aspect to your point and that is the total cost of the medical care to the accident victim. Let's say a person is in an automobile accident. If there were two sides or three sides, he has to go to three doctors or four doctors because each insurance firm and each law firm wants to have their own examination, And furthermore, each—the plaintiff-I guess it would be the plaintiff-knows that the more times he goes to the doctor, the more debilitated he appears. Frequently he goes every week and loses wages from his income because he is not at work. And what happens is, in order to prove your point, you have to get five times as much medical care, and the whole thing spirals into a cost that is way out of proportion to the actual problem.

Senator Moss. Well, you have pointed to an area where certainly we have something equally serious, or maybe even more serious, than the problem we are talking about directly, which has to do with the medical involvement with the dispensing of drugs. And I am glad to have you make this comment, because I feel strongly about that point too, and I hope we can move in that area.

Senator PEARSON. Dr. Brent, I will read your testimony. We had a conflict of committee meetings for me this morning. Let me ask you this question-it may have been covered.

Yesterday I inquired of a physician that was a part of a clinic, in group practice of medicine, whether or not there was any distinction to be made between the case of an individual physician owning an interest in a pharmacy, and the situation where there is a group practice in a clinic that owns a pharmacy as a part of their total group practice of medicine.

Do you see any distinction between those two?

Dr. BRENT. Only quantitatively, not qualitatively. As I mentioned before, I think if you just say to yourself, don't put yourself in the position of being able to be accused of a conflict of interest. Remember that the practice of medicine itself is a very rewarding profession, both financially and from the standpoint of intellectual stimulation. There is no need to own a pharmacy solo or in a group.

There is absolutely no reason to get involved in the dispensing of drugs in any manner or fashion, as was pointed out by the American Pharmaceutical Association. They have people who spend years in training, to learn to mix, store, package and dispense drugs. The physician is not prepared to do this.

Now the group practice-owned drugstore could possibly do it, but there is a conflict of interest there which is perfectly obvious, and there is no reason for it. Of what benefit is it to the patient?

Senator PEARSON. Do you see a valid exception? My State is Kansas. In the western part of our State they have a difficult time getting doctors. There's a conflict as to whether or not it is good to have some of our small county hospitals operate, and so forth.

But out in the high western plains of Kansas, or in the State of Utah, in the rural areas, do you see this as a sensible, feasible approach to offering medical care?

Dr. BRENT. You mean if the physician is way out in the rural area and there is no pharmacy around? I think that is a legitimate reason to dispense drugs. But somebody has to determine whether he knows how to dispense drugs. If he is in that situation, he has to meet the same standards as a pharmacist. He has to be instructed what the laws are, what bottles he has to stock, and the bill doesn't say that.

That is where I pointed out an exception to the bill. If there is a geographic limit, then the physician should be able to dispense or he should consult with the American Pharmaceutical Association. They may be able to decide if a pharmacist could be put in that specific area, if the area might be able to support a pharmacist. You need some interaction between the two to decide if this isn't or is enough business for the pharmacist to make a living in the area. Then, if not, the physician has to do the job, but somebody has to tell him how.

And we don't in medical school. We don't tell a doctor how to be a pharmacist in medical school.

Senator PEARSON. I am glad you touched on that in the statement.

Dr. BRENT. The bill does exempt some people that I don't understand--why ophthalmologists?

Senator Moss. It beats me. I don't know.

Dr. BRENT. Maybe I didn't read the bill correctly, but there is an exemption to a group of people there that I don't understand.

Senator Moss. Yes. Exclusive of ophthalmologists, optometrists, dentists and veterinarians.

Dr. BRENT. Why ophthalmologists?

Senator Moss. I can't answer offhand. I am glad it is in the record, and we will find out why that was put in there.

Dr. BRENT. Again, I can understand in a small town if there is nobody who can prescribe lenses, why a physician might also have a service for providing glasses. But in a city, he should be too busy to be involved in selling glasses.

Senator Moss. I am glad you raised the point, Doctor, and I will have to have some justification for that.

Senator Pearson. I have no further questions. Thank you.
Senator Moss. Thank you, Dr. Brent. We appreciate it, sir.
Dr. BRENT. Thank you, Mr. Chairman.

Senator Moss. Dr. Harry A. Horstman of the American Academy of Allergy will be our next witness. We are glad to have you with us, Dr. Horstman, and look forward to your testimony.

STATEMENT OF DR. HARRY A. HORSTMAN, AMERICAN ACADEMY

OF ALLERGY, WASHINGTON, D.C.

Dr. HORSTMAN. Thank you, Mr. Chairman. I regret that the original material sent by the American Academy of Allergy contained an error which has now been corrected. We were seeking an exemption under section 5, where the original material said section 4. This has been corrected in the material which I put out.

Mr. Chairman, I am appearing on a strictly technical matter which I feel is extremely important. My name is Harry A. Horstman, Jr., M.D. I am a physician practicing allergy in Washington, D.C., and a fellow of the American Academy of Allergy. I am appearing before you at the request of Dr. Saul Malkiel, president, the executive committee, and the Medical Services Committee of the Academy, to present a statement relative to bill S. 1575.

The Academy is composed of over 1,900 members representing nationwide interest and expertise in research, teaching, and practice in the field of allergy and immunology.

Thus, allergenic extracts, as therapeutic materials, used in the treatment of patients with allergic diseases, are an integral part of the specific treatment and must be formulated and especially prepared for that particular patient. Such formulated and prepared treatment extract mixture may not be suitable for any other patient.

The concentration of especially formulated and prepared allergy treatment extract has to be varied from patient to patient, depending upon the degree of sensitivity of each case. And should have been added—also the dosage is varied frequently throughout the treatment year.

Systemic constitutional reactions, following injections of such extracts, may occur and may be serious. Such reactions would be more likely if each treatment extract mixture were not "personalized” for each patient in its formulation and preparation.

There is as yet no universal standardization of allergenic extracts, a fact which is giving concern to the Division of Biologic Standards and

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the National Institute of Allergy and Infectious Diseases. Extracts of the same substance, supplied by different manufacturers, may vary appreciably in strength, and furthermore, different batches of extracts supplied by the same company may vary in clinical potency. This would preclude the compounding of therapeutic allergenic extracts by pharmacies, upon prescription.

In order to render the best medical care and offer the best clinical results of therapy, as well as to best avoid undesirable effects of illformulated and ill-prepared allergenic treatment extracts, the physician, in the practice of allergy, with the knowledge of the degree of sensitivity of the patient, must supervise the formulation and preparation of such treatment extracts for clinical use in the specific treatment of patients with allergic diseases.

It is urged, therefore, that allergenic extracts be made an exception in section 5 of the Hart bill, S-1575.

Senator Moss. Thank you, Dr. Horstman. Now, an allergy is something—the treatment of something that breaks out the body-do

I understand that, as a layman?

Dr. HORSTMAN. Allergenic extracts are used primarily in the treatment of severe hay fever and asthma. They are of relatively little value in other types of allergy, and of almost no value in dermatitis cases, or hives, which you may have implied.

, Senator Moss. I see. So this would be mostly hay fever and asthma that you would be dealing with?

Dr. HORSTMAN. This would cover at least 90 percent of the use of allergenic extracts.

Senator Moss. Is it your testimony that a doctor—one who practices allergy—could not properly prepare a prescription that could be then filled by a practicing pharmacist, but that it ought to be really prepared in the office of the physician? Dr. HORSTMAN. That is correct,

sir. Senator Moss. Is this the common practice now? Is this generally done now?

Dr. HORSTMAN. This is the procedure by which allergenic extracts are prepared and dispensed. These may be given in the doctor's office, and this I believe would be preferable under all circumstances. However, there are many patients who require desensitization who cannot make weekly trips to see a doctor. I might use as an example, Duke University, which has a very large allergy section.

Duke gets its referrals from all over the State of North Carolina, and perhaps from many of the other States. A patient comes there and resides either in some sort of a motel or even in the hospital. He is evaluated and a program is then established which the patient returns with to his family doctor or referring physician.

From this point on, the contact with the allergist is by some form of communication, either phone or mail, to regulate the dosage and follow the progress of the patient.

Senator Moss. Are these prescriptions--are they fluid or pills?

Dr. HORSTMAN. They are injection materials. Most of them are in solution. However, some of them are precipitates, and the type of vaccine or the type of extract which is chosen would depend upon a number of rather highly technical subjects.

Senator Moss. Well, a practicing allergist then would have stocked in his office, a number of fluids and drugs out of which he would compound what he was to use for a particular patient?

Dr. BRENT. Maybe I didn't read the bill correctly, but there is an exemption to a group of people there that I don't understand.

Senator Moss. Yes. Exclusive of ophthalmologists, optometrists, dentists and veterinarians.

Dr. BRENT. Why ophthalmologists?

Senator Moss. I can't answer offhand. I am glad it is in the record, and we will find out why that was put in there.

Dr. BRENT. Again, I can understand in a small town if there is nobody who can prescribe lenses, why a physician might also have a service for providing glasses. But in a city, he should be too busy to be involved in selling glasses.

Senator Moss. I am glad you raised the point, Doctor, and I will have to have some justification for that.

Senator PEARSON. I have no further questions. Thank you.
Senator Moss. Thank you, Dr. Brent. We appreciate it, sir.
Dr. BRENT. Thank you, Mr. Chairman.

Senator Moss. Dr. Harry A. Horstman of the American Academy of
Allergy will be our next witness. We are glad to have you with us,
Dr. Horstman, and look forward to your testimony.
STATEMENT OF DR. HARRY A. HORSTMAN, AMERICAN ACADEMY

OF ALLERGY, WASHINGTON, D.C. Dr. HORSTMAN. Thank you, Mr. Chairman. I regret that the original material sent by the American Academy of Allergy contained an error which has now been corrected. We were seeking an exemption under section 5, where the original material said section 4. This has been corrected in the material which I put out.

Mr. Chairman, I am appearing on a strictly technical matter which I feel is extremely important. My name is Harry A. Horstman, Jr., M.D. I am a physician practicing allergy in Washington, D.C., and a fellow of the American Academy of Allergy. I am appearing before you at the request of Dr. Saul Malkiel, president, the executive committee, and the Medical Services Committee of the Academy, to present a statement relative to bill S. 1575.

The Academy is composed of over 1,900 members representing nationwide interest and expertise in research, teaching, and practice in the field of allergy and immunology.

Thus, allergenic extracts, as therapeutic materials, used in the treatment of patients with allergic diseases, are an integral part of the specific treatment and must be formulated and especially prepared for that particular patient. Such formulated and prepared treatment extract mixture may not be suitable for any other patient.

The concentration of especially formulated and prepared allergy treatment extract has to be varied from patient to patient, depending upon the degree of sensitivity of each case. And should have been added-also the dosage is varied frequently throughout the treatment year.

Systemic constitutional reactions, following injections of such extracts, may occur and may be serious. Such reactions would be more likely if each treatment extract mixture were not “personalized” for each patient in its formulation and preparation.

There is as yet no universal standardization of allergenic extracts, a fact which is giving concern to the Division of Biologic Standards and

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