The importance of price as the major argument used by govt. and other promoters of generics may be diminishing in the face of Gosselin data showing that the average charge for dispensing a generic is increasing faster than the average for all new Rxs.

The average charge for all new Rxs rose from $3.70 to $3.86 in 1969-up 4.3%but the average for all new generics went from $2.81 to $3.02, a 7.5% gain and the average for the "Top 10" generics-including tetracycline and the five other important drugs-increased 9.1% in 1969 from $2.76 to $3.01.

Even greater percentage and dollar increases in the average price of generic Rxs are evident when 1969 is compared with 1959. The average charge for all new Rxs rose only 22.5% from $3.15 in 1959 to $3.86 in 1969. This compares with a 26% increase in the general cost-of-living index during the 10-year period.

But the average price for all generic Rxs jumped 63.2% from $1.85 in 1959 to $3.02 in 1969, and the average for the "Top 10" generics went up 99.3% from $1.51 in 1959 to $3.01 in 1969.

Contributing to the big increases is a major change in the kind of drugs now in the generic group. Expiration of patents and other developments have placed important drugs in the generic category. Only five of the "Top 10" generics in 1959 were on the same list in 1969-phenobarbital, thyroid, penicillin G, paregoric, and nitroglycerin. The remaining five of the "Top 10" for 1969 are: tetracycline, ampicillin, prednisone, digoxin, and meprobamate. The "Top 10" account for over half of all the Rxs written generically.

Medicaid Rxs may provide a unique prescribing pattern, it was indicated in Gosselin data from a special study of Rxs dispensed in Iowa in 1968. Ataraxics (tranquilizers), with 15.1% of all Iowa Medicaid Rxs, topped the list of therapeutic categories in the govt. program. Antibiotics, which led non-Medicaid Rxs with 23.6% were ranked fifth in Medicaid dispensing at 7.2%.

In Iowa, 13.6% of all Rxs dispensed were through Medicaid, Gosselin noted, but early NPA data indicates a natl. figure of 10% as the Medicaid share of total Rxs dispensed. In some states, Gosselin said, the Medicaid percentage may be higher. Gosselin's NPA is now collecting, on a routine basis, nationwide data on Medicaid Rxs and on other Rxs dispensed under third-party programs, including Blue Cross and private insurance carriers, particularly those involved in handling the United Auto Workers contract. Cardiovascular products ranked as the Number Two therapeutic category in the Iowa Medicaid study; analgesics are Number Two in Iowa non-Medicaid Rxs.

AMHO'S WORLdwide drug SALES GAIN $68 MILLION TO $632 MILLION; U.S. RX VOLUME ACCOUNTS FOR $31 MILLION OF INCREASE; DOMESTIC PROPRIETARIES FOR $12 MILLION

AMHO's worldwide drug business jumped $68 mil. (12%) in 1969 from about $564 mil. to $632 mil., increasing from 52% to 53% of the firm's $1-bil.-plus total sales. Pharmaceuticals accounted for the bulk of the gain, rising from $380 mil. to $429 mil. Proprietaries recorded a 10% increase for the second straight year, from $185 mil. to $203 mil.

Growth was somewhat better outside the U.S., both in pharmaceuticals and proprietaries. Domestic Rx sales advanced 12% from about $262 mil. to $293 mil. compared to a 15% increase overseas from $118 mil. to $136 mil. U.S. proprietary volume was up about 8% from $148 mil. to $160 mil. v. a 16% increase abroad from $37 mil. to $43 mil.

AMHO reports its divisional, foreign and domestic breakdown on the basis of gross sales. The figures reported above and in the accompanying table are computed by "The Pink Sheet" by applying to net sales the percentage each group contributed to gross.

Leading AMHO's pharmaceutical sales increase were Wyeth's Omnipen ampicillin, Ovral 1/2-mg. OC, the Tubex line of sterile, disposable, prefilled needle-cartridge syringe units, and its Serax mid-range tranquilizer. Wyeth's Equagesic tranquilizer also had "appreciable sales gains," and its SMA infant formula "made good progress" aided by the new 32-ounce can of SMA Ready-to-Feed, introduced in April.

CALIFORNIA ATTORNEY GENERAL SAYS PHARMACISTS DON'T DISPENSE LOWESTCOST DRUGS FOR MEDI-CAL; ACQUISITION COST DEFINITION BRINGS CRITICISM OF RETAILERS AND FORMULARY

The Calif. attorney general has charged that many pharmacists are violating the Medi-Cal formulary's rule that "the pharmacist shall, in consultation with the prescriber, dispense the lowest-cost item he has in stock, including generic equivalent, which meets the medical needs of the recipient."

The 74-page report, covering all aspects of the Medi-Cal program, was accompanied by a four-page press release which helped it garner extensive lay-press coverage, including the Wall Street Journal and the New York Times.

The report listed some nine ways "in which pharmacies are engaging in activities which violate the laws and regs governing Medi-Cal." The charges ranged from outright fraud and kickbacks to situations, such as dispensing "excessive" Rxs, where the fault may lie with the MD, not the pharmacist. (See box on next page for text of the violations imputed to pharmacists.)

The criticism about failure to dispense the lowest-cost drug contended that "a brand name is always more expensive than the generic-name drug" and often "is as much as two or three times more expensive." It added that "in situations where an inexpensive generic drug could have been dispensed, the patient has been given an expensive brand-name drug."

COMPULSORY GENERIC PRESCRIBING ON GOVERNMENT PROGRAMS NOT FEASIBLE UNTIL CLINICAL EQUIVALENCY IS PROVEN, H-E-W REPORT MAY TELL WHITE HOUSE Compulsory generic prescribing on all federal programs is not feasible until it can be demonstrated that generic equivalents actually provide the same therapeutic benefits, the H-E-W Dept. may tell the White House in its report on the costs of medical care.

If reflected in the final report, scheduled to go to President Johnson in a few weeks, this view will be in line with the thinking of FDA Com. Goddard, who arranged a trip for dept. officials to the military drug procurement center in Philadelphia last December ("The Pink Sheet" Jan. 2).

Purpose of the meeting was to learn how the military insures quality drugs for its personnel via a procurement program based largely on generics. Both Goddard and Public Health Service Surgeon General Dr. William Stewart are understood to be interested in getting appropriations to support studies of "clinical equivalency" by their agencies.

Drug prices have not made a major contribution to the increasing costs of medical care, the report might say, quoting Consumer Price Index statistics to show that MDs fees and hospital charges have shot upward.

A statement like this in a prestigious govt. report would support the case which the Pharmaceutical Mfrs. Assn. (PMA) has been preparing and documenting for months in anticipation of attacks on Capitol Hill during this session as part of the drive to enact generic drug legislation. The PMA case was unveiled to closed meetings of members held in NYC and Chicago last week, and was well received as a good start on a "professional job."

White House Report May Call For Competition At Pharmacy As Well As Manufacturing Level

H-E-W, however, may dull the thrust of its "good word" for the industry by pointing out that drug costs are higher than they would be if greater price competition existed, either at the manufacturing or retail pharmacy levels. The Kefauver investigation might be used as a reference to show the role of promotion costs in the prices of branded drugs.

Absence of an official or authoritative source of information for MDs on the effectiveness and safety of drugs, and the need for FDA to do something about this-another Goddard favorite project-also could be discussed in the White House report.

Even when generics are prescribed, the report may say, the pharmacist might not dispense a lower cost drug. Some drafts of the report are critical of the mark-up system in this regard.

While the White House report is being finished, memos also are circulating around the dept. among officials who have to deal directly and immediately with

drugs and their costs as part of on-going programs, such as Medicaid and the use of vendor systems in state welfare programs. Still other officials are preparing the dept.'s position on anticipated generic drug investigations and/or legislation on Capitol Hill.

For example, a Welfare Administration memo takes issue with the so-called Goddard view by recommending a study beamed at the enforcement program used by the military to get good generic drugs. Import as a study of clinical equivalency may be, the H-E-W official contends, this project should not be mixed up with efforts the dept. must make in the area of establishing policy on drug pricing. Included in suggestions is a study on the broad range of mfrs.' prices to various levels of the trade, and the effect of rebates offered by mfrs. to state welfare programs.

CHAINS' AVERAGE PRICE FOR GENERIC RX IS $2.44 V. $3.05 FOR INDEPENDENTS, GOSSELIN TELLS NACDS CONFERENCE; AVERAGE FOR ALL RXS IS $3.38 V. $3.86

The spread between average chain and independent pharmacy prices is greater for generic Rxs-$2.44 v. $3.05-than the average for all Rxs-$3.38 v. $3.86.market researcher Raymond Gosselin told the NACDS Pharmaceutical Converence No. 3.

The study also showed that generic Rx dispensing, while on the increase since 1966, is still far below the proportionate level of the mid-1940's. Generics will account for 8.6% of the 14 bil. Rxs dispensed in 1969, Gosselin predicted, up from 6.4% of 1 bil. Rxs in 1966 and 7.1% of 500 mil. during 1956, but well under the 1946 level of 36% of 250 mil. Rxs.

Gosselin's presentation to NACDS represented the first time he has broken down his Natl. Rx Audit figures by size of operation, and the first time he has compared generic and all-Rx figures on a chain v. independent basis. His statistics are based on a survey of more than 1,000 pharmacies.

Generics accounted for a great proportion of Rx chains (11 or more units) than independents, but Gosselin warned against generalizing that the ratio of generics increases as chain size grows. Pharmacy operators with 4-10 units ranked lowest in generic dispensing (5.8%), followed by 2-3 store firms (7.4%), single outlet pharmacies (8.9%), and chains (9.3%).

Comparing new Rxs with refills by size of operation Gosselin said single stores have a 46.5% new-Rx rate, while the figure is 51.3% for 2-to-3-store firms, 49.6% for 4-to-10-unit operations and 50.1% for chains with 11 or more pharmacies. Total Rxs Will Double in Next 10 Years With or Without Third-Party Programs

The total Rx market, Gosselin predicted, will double again within the next 10 years "with or without third-party programs." He questioned estimates made earlier in the conference by H-E-W's special asst. for pharmaceutical affairs, Dr. Mark Novitch, who said third-party plans would cover 60-to-70% of all Rxs by the mid-1970's.

Gosselin said he had no quarrel with the number of pre-paid Rxs being forecast, but he contended the future demand for non-third-party Rxs was being underestimated. "The third-party field hasn't been researched enough, especially by govt.," Gosselin declared.

Retail v. hospital Rx sales is another area riddled with misconceptions, Gosselin said. "Predictions that hospitals will take over the Rx drug business are almost as unfounded now as they were 10 years ago," he said. Between 1958 and 1968 the retail share of the Rx drug market has held even at 75%, and over the next 10 years "at best, hospitals may grow from 25% presently to 28% or 30%," he added.

Some 160 drug chain execs attended the Nov. 2-4 meeting in Chicago, which focused on third-party programs (see next story). Speakers on other subjects were Purdue pharmacy Dean Varro Tyler, and Bruce Bernstein, director, retail drug div., Roth-Young Personnel Services.

NACDS will hold its 1970 Pharmaceutical Conference at Williamsburg, Va., Sept. 9-12. Its Cosmetic Conference will be in NYC June 7-9, the Control & Methods Conference Nov. 3-6 in Dallas, and the assn.'s annual meeting April 12-16 in Bal Harbour, Fla.

Professional Fee Boosts Rx Cost Only 2.1%, Virginia Blue Cross reported after a survey of 12 pharmacies in areas ranging in population from under 4,000 to over 500,000. The survey was conducted to determine the feasibility of replacing the acquisition-cost-plus-professional-fee reimbursement system with payment based on usual and customary charges. The Va. Blue Cross Rx prepayment plan now uses a $1.85 fee.

The survey found that the average Rx price on the usual-and-customary basis is $3.82-$2.05 for the ingredients and $1.77 markup. The average was 8e higher, $3.90, when the $1.85 fee was used. The study excluded OCs and o-t-c- drugs. On the markup basis, the average charge ranged widely, with a high of $4.61 in one pharmacy in a city of 500,000 to 599,999 persons. The low, $3.40, was recorded in two pharmacies. One was in a town with 3,000 to 3,999 population, the other in a community of 10,000 to 14,999 persons.

[From the New York Times, Wednesday, June 10, 1970]

OFFICIAL SAYS MILLION GET PILL ILLEGALLY

(By Richard D. Lyons)

WASHINGTON, June 9.-The head of the Food and Drug Administration, Dr. Charles C. Edwards, estimated today that one million American women were obtaining birth control pills illegally.

Testifying before a House committee investigating F.D.A. affairs, Dr. Edwards said it was difficult to control such traffic and that precise figures of illegal oral contraceptive sales were unknown.

Privately, however, he said that his agency had received estimates that between 15 and 50 per cent of the 8.5 million American women getting the pills were doing so without prescriptions.

Dr. Edwards said he considered the 50 per cent estimate far too high and that the more correct figure was closer to the lowest estimate, which would mean about one million.

"We are certain that a tremendous number of women in the United States are getting their drugs through other channels [than prescriptions for themselves]," Dr. Edwards told the House Committee on Government Operations.

OVERUTILIZATION OF PRESCRIPTION

He cited one source of the illegal traffic as "overutilization of one prescription," explaining that some women receive prescriptions for an indefinite number of refills, some of which are given to women for whom they were not intended.

He said college campuses were areas in which illegal birth control pill traffic was high, but that it was almost impossible to stop it because "doctors couldn't conceivably ride herd on all the people taking oral contraceptives."

Representative L. H. Fountain, Democrat of North Carolina, the committee chairman, asked if prescriptions could be written limiting the number of refills. Dr. Edwards said that it was possible, but that doctors themselves were the "controlling factor."

The exchange took place during the first of three days of hearings called to inquire into the deficiencies of the F.D.A. Today's hearing focused on oral contraceptives and whether women were being adequately informed of potential hazards of birth control pills.

Dr. Edwards announced that starting tomorrow his agency would require that each package of oral contraceptives contain a 132-word leaflet warning the purchaser: "Do not take this drug without your doctor's continued supervision."

VARIETY OF SIDE EFFECTS

The leaflet states that the prescribing physician will, upon request, provide a more extensive written statement describing the variety of side effects, some of them fatal, that oral contraceptives can cause.

The two written statements are a compromise between what Dr. Edwards announced March 4 that the F.D.A. might require and what the American Medical Association, the drug industry and higher officials in the Department of Health, Education and Welfare wanted done.

On March 4, Dr. Edwards proposed that a 660-word leaflet giving specific details of side effects be included in each pill package.

Dr. Edwards and William Goodrich, assistant general counsel of H.E.W. for food and drugs, testified today that the original version was opposed by the American Medical Association, the American College of Obstetrics and Gynecology, the Pharmaceutical Manufacturers Association, four drug companies and four state medical societies.

The main argument against the longer version was that it was too complicated for the average woman to understand. Mr. Goodrich said the list of side effects in the shorter version was incomplete and that because of this a woman would be unable to make an accurate judgment as to her own condition.

Then followed a long series of questions from Congressmen and committee staff members as to why Dr. Edwards changed the leaflet that he had originally drafted.

DOCTORS' POSITION

Dr. Edwards said that "pressure was being exerted by the American Medical Association and the American College of Obstetricians and Gynecologists." These groups have taken the position that doctors, not women, are best qualified to determine if birth control pills are harmful to a particular woman and that the leaflet is an intrusion into the "sacred doctor-patient relationship."

Consumer and feminist organizations have contended that women have a right to know as much as possible about the drugs they are taking and thus the shorter version does not contain enough information.

Dr. Edwards would only state for the record that Dr. Roger O. Egeberg, the assistant secretary of H.E. W. for health and scientific affairs, and Robert H. Finch, who is vacating his post as H.E.W. Secretary, were "involved in" the revision.

Both Dr. Egeberg and Mr. Finch have stated that they ordered and approved the shorter version because they felt that most women either would not read or could not understand the longer version.

Dr. Edwards also announced that the F.D.A. would undertake a market survey by the end of the year to determine exactly what type of information about birth control pills was being received by American women.

Goddard's Comments on MD-Dispensing, made during Sen. Hart's diet-pill hearings, put him in the politically awkward position of indirectly opposing the Mich. Demo's bill to limit MD-dispensing. The FDA chief's Feb. 2 remarks were prompted by a question from Jerry Cohen, chief counsel to Hart's Antitrust Subcmte. "Doesn't it make sense to say that MDs ought not to be allowed to dispense drugs from their own offices?" Cohen asked.

"I'm torn badly on such a question," Goddard said. “It becomes very difficult (to answer) when you look at the practice of medicine There is appropriate dispensing by physicians. I would suggest that remedial action (against bad dispensing practices) could more appropriately be made by (state and local) medical societies, in concert with AMA, rather than by FDA."

Cohen then spoke of possible "conflicts of interest when you give an MD license to act as a businessman . . selling pills,' and asked, "shouldn't we let the pharmacist be the businessman?" Goddard replied that he wished "it were that simple" and questioned if Cohen would "stop the physician from giving an injection?" Goddard recalled his own rural practice in which "I dispensed all the drugs and included (their) cost" in his fee of $2 per office visit. "I feel that stronger actions are needed by the medical profession itself, but I would find it very difficult to draw the line," Goddard added. "I think this is a subject that the AMA can more properly discuss."