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and treatment, with the cost thereof, directly or indirectly, included in his charges, it is conceivable that such would be deemed the dispensing of such devices, and a violation of the proposed Act.

I submit that the broad definitions, the absence of any definition of the verb "dispensing," and the burden which would be imposed on the medical practitioner of determining whether or not the circumstances, as to each patient, are within one of the exceptions to the unlawful acts, place an unreasonable and unjustifiable burden upon the physician in his use of drugs and devices in the treatment of his patient. His primary concern, and that of his patient, is proper treatment and care. Who is to judge what circumstances constitute an emergency; what constitutes dispensing of a drug or device; and when dispensing is occasional and not a usual course of doing business? If this Bill should be adopted, a physician would determine such matters at his peril.

4. In Section 3(e) of the Bill, "the term 'community pharmacy,' when used in relation to a medical practitioner, means a pharmacy situated within 10 miles of any place at which such medical practitioner maintains an office for professional practice.” Under Section 5, one of the exceptions from what would otherwise be unlawful in the dispensing of drugs or devices by a medical practitioner, is, “(3) dispensing a drug or device to a patient by a medical practitioner where there is no community pharmacy available to the patient; ..."

Although such a definition and exception may be meaningful and practical to proponents of this Bill in metropolitan areas where a number of pharmacies likely are located within a 10-mile radius of the practitioner's office, this legislation, if enacted, could only impose great harm and hardship upon patients residing in rural and sparsely populated areas. In such areas, there likely would be only one pharmacy with one pharmacist. When there is need for a drug or device to be dispensed to a patient, the pharmacy may be closed and the pharmacist unavailable. If the prescription is written during normal business hours, the roads between the practitioner's office, the pharmacy, and the patient's home may be dangerous or impassable due to weather. The patient in all likelihood will not desire to drive up to ten miles each way in order to obtain the drug or device. A mother needing a prescription for her sick child, or the aged, may not have transportation to the pharmacy. Many other situations, often arising in the course of a rural practice, could be cited to illustrate the unnecessary hardship to patients which would result from enactment of this Bill, which simply does not recognize circumstances as they exist in rural communities.

It also is a fact that many of the pharmacies located in the small towns in Kansas do not always maintain drug inventories adequate in quality, quantity or variety, comparable to those maintained by pharmacies associated with clinics.

I should also call attention to the question of who is to determine if a community pharmacy is "available to the patient."

5. Section 9 of the Bill provides that anyone "who shall be injured in his business or property by reason of violation of this Act may sue therefor. . . . and shall recover threefold the damages sustained by him, and the cost of suit, including a reasonable attorney's fee.” This provision, particularly in view of the scope of the prohibitions and the vagueness and uncertainties of the exceptions contained in the Bill, will subject the medical practitioner to multitudinous and vexatious lawsuits.

6. It is to be observed that it is not the patients nor representatives of the public generally who are advocating the passage of this kind of legislation. Notwithstanding inferences and biased statements and testimony from the proponents of similar proposals upon which hearings were previously held before the Senate Judiciary Subcommittee, the facts, which can be documented by impartial study, are that the patient is not the "captive" of his physician in respect to drugs and devices prescribed or used for the benefit of the patient. He is not exploited by the physician. Except in very limited and unusual cases, the patient is free to buy and does buy his drugs from the pharmacy of his choice, and customarily he does his buying after taking into account the factors of convenience, price, service, confidence, and reliability.

Recently, our Association made a survey of comparative prescription costs at retail in the communities served by the member clinics. The survey was made in respect to a number of drugs, which were selected at random and which are commonly prescribed. Purchases were made from independent pharmacies, clinic pharmacies, and discount drug outlets, in the respective communities. The prescription was identical in every respect, relative to each comparative purchase. This survey showed that generally the retail cost to the patient for

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such drugs was less at the clinic pharmacies than at the independent pharmacies, but that discount houses (which are for the most part chain drug companies) sold the same drugs for lower prices than either the independent or clinic pharmacies.

7. On the matter of ethics, the position of the American Medical Association is that it is not unethical for a physician to own or operate a pharmacy so long as there is no exploitation of the patient. The Judicial Council of the AMA, in respect to the relationship between physicians and pharmacies, has established the following advisory principles:

The patient is entitled to a copy of his prescription for drugs or appliances.

The patient must have a clear right to have his prescription filled wherever he choses.

The physician must not enter into any agreement to dispense prescription in code.

The Council looks with disfavor upon use of a direct telephone line between physician and pharmacist.

Prescription blanks should not include the name of any pharmacy,

You may be assured that the member clinics of the Association which I represent, concur in and abide by those principles.

8. This proposed legislation represents an encroachment upon the basic rights and privileges of the individual practitioner, who may be found in violation of this Act, regardless of whether or not under any fair and just standard he has committed a bona fide wrongful act or is guilty of professional misconduct.

The Act would prohibit a medical practitioner from investing in legitimate business, even though through such an investment, he provides convenience and service to and fulfills the need of the patient.

9. The proposed legislation does violence to my understanding of the rights and powers vested in the respective States. The States have jurisdiction in respect to the licensing of physicians and pharmacists; and the States have established appropriate regulatory agencies. If, in any State the practices complained of by proponents of this Bill are extensive (which certainly I do not believe is the case in Kansas), then corrective action should and will be taken within such States, by the appropriate regulatory agencies or professional associations. I do not believe there is any need or cause for Federal intervention or encroachment.

I trust that I have been helpful to you in your consideration of S. 1575. If I may furnish additional information or answer any questions, please let me know.

Senator Moss. I would agree that we ought to have before us a rational discussion of the problem and certainly one that has been prepared in that manner. It is set forth for our consideration, it ought to be in this record for us to look at as we consider this bill. We do thank you, Dr. Steinfeld, for coming and testifying for us. We appreciate your statement of general support of the bill and your offer to confer further if need be on any proposed amendments that you might have to improve the bill. We appreciate that.

Our next witness will be Mr. William E. Woods, the Washington representative of the National Association of Retail Druggists and he will be accompanied by three other gentlemen who I will ask him to introduce when he comes to the table.

We are pleased to have you gentlemen here. I will ask Mr. Woods to introduce each of those at this time.

I am going to have to leave because I am involved in another hearing. I will ask my colleague, Senator Pearson, to continue with the hearing. I understand that Senator Hart will be here very shortly now. It is important that we have a good record made so that this committee may act on the record and we appreciate all of your efforts in coming here to help us make this record.

Senator Cranston would like to introduce the next group of witnesses.

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Senator CRANSTON. You are most thoughtful. I appreciate your thoughtfulness and graciousness in permitting me to say just a few words. I did not come here to testify on the legislation. I came here to say a few words about a Californian who is here as a witness. J. Martin Winton who is a long time friend and associate of mine in California I simply wanted to say that he has an outstanding record as a pharmacist for many years and has been a leader in the pharmaceutical field and his activities and leadership in California have been wonderful. His testimony indicates various very important positions he has held in the State advisory organizations and in the profession in California. I simply wanted to urge the committee to give particular weight to what he has to say.

Senator PEARSON. Thank you, a great deal.
Senator CRANSTON. Martin, hello to you.
Mr. Winton. Thank you.

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STATEMENT OF WILLIAM E. WOODS, WASHINGTON REPRESENTA

TIVE, THE NATIONAL ASSOCIATION OF RETAIL DRUGGISTS, WASHINGTON, D.C.; ACCOMPANIED BY WILLARD B. SIMMONS, EXECUTIVE SECRETARY-GENERAL MANAGER, NATIONAL ASSOCIATION OF RETAIL DRUGGISTS, CHICAGO, ILL. ; MARTIN WINTON, FORMERLY PRESIDENT OF CALIFORNIA STATE BOARD OF PHARMACISTS, FRESNO, CALIF., AND RALPH ROOKE, CHAIRMAN, NATIONAL ASSOCIATION OF RETAIL DRUGGISTS, COMMITTEE ON NATIONAL LEGISLATION, RICHMOND, VA.

Mr. Woods. Mr. Chairman, it is an honor for representatives of the National Association of Retail Druggists to appear before this important Consumer Subcommittee of the Commerce Committee of the U.S. Senate.

On behalf of our entire membership who own some 40,000 independent retail drugstores where about 75,000 pharmacists practice their professions we are here today to give strong and unqualified endorsement to S. 1575. In fact, strong resolutions supporting such legislation have been adopted at our annual convention for many years.

NARD is a professional and business association organized almost a century ago so that the owners of independently operated retail pharmacies might have a strong voice to act in the public interest and to meet competition effectively. The wisdom of establishing this association is proven by the spirit and size of our owner membership which is greater than that in all other national pharmacy organizations combined.

About 75 percent of all prescriptions dispensed in the United States each year are dispensed in NARD member stores.

We appear before you today with mixed emotions. Naturally we are glad for the opportunity of being invited to explain why we feel S. 1575 is a vital necessity for consumers and our members. On the other hand, we are concerned and discouraged that consumers are still being denied the protection which S. 1575 would provide after more than 6 years of hearings and several volumes of testimony.

We realize, Mr. Chairman, that you share this concern and we feel the public owes you and others who have fought so long and so unyieldingly for this legislation a great debt of gratitude.

We will set forth in detail the many reasons NARD strongly endorses the enactment of S. 1575 but we would like to emphasize at the outset there is a greater need today for S. 1575 than there was in the early 1960's when investigations into the subject matter of this proposed legislation began. The previous hearings have documented that organized medicine is either unwilling or unable to terminate the bad practices and patient abuses which are the target of S. 1575. Since the earlier investigations were initiated, the Government has gained several years of experience with the medicare-medicaid programs. This experience should leave absolutely no doubt that S. 1575 is a public necessity for medicaid regulations are inviting and encouraging all of the practices that S. 1575 would eliminate. While we will give detailed attention to these medicaid regulations later in this statement, it should be emphasized that both the American Medical Association and the Department of Health, Education, and Welfare have confused the effect and extent of the present regulations which flip-flopped after pressure from physicians. Dispensing physicians are receiving Federal funds under medicaid in many States. These payments are not limited to dispensing physicians in only a few States as was represented.

For another medicare related reason it is in the consumer's interest that S. 1575 be enacted without further delay. The greatest deficiency in the present medicare program is the absence of drug coverage for the medicare home patient, but it is expected this addition will arrive in the next year or so. The present posturing of medical groups and HEW officials with their regulations and reports would create a "pot of gold” for certain dispensing physicians under medicare if passage of S. 1575 is delayed.

Senator PEARSON. Why would that be so?

Mr. Woods. We feel that under the present medicaid regulations there would really be no curtailment of dispensing physicians. We feel they would invite more dispensing. We will cover that in more detail in the statement. We also know that the task force report has been issued by Social Security within the last year or so after they had made an extensive study on the possibility of including drug coverage for the medicare home patient. In all of those task force reports there have been indications that they planned to pay the dispensing physician. We don't know to what extent, Senator, this possibility would be provided. But, there has been nothing in any medicare task force report that would indicate that they want to curtail the dispensing physician. We know that the present medicaid regulations do invite and encourage physicians dispensing.

Senator PEARSON. Well, that would be particularly significant to our organization. But what relevance does it have to the patient?

Mr. Woods. Mr. Chairman, I believe that we do cover some of that in the statement.

Senator PEARSON. Fine. Just continue with your statement then. You will cover that in what

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have to say. Mr. Woods. One other thing that I would like to mention at this point. The hearings in 1964 and 1967 did set forth many instances of patients' abuse as a result of physicians dispensing. I think it has been well documented in the previous hearings and we continue to receive additional information of this nature, sir.

Senator PEARSON. Would that be in relation to higher cost or the dispensing of drugs which are not required?

Mr. Woods. Well, perhaps both. Certainly the first. And in other situations where the patient receives drugs no record is kept or they are dispensed in improper containers. At one point we had mentioned in this statement we heard from Wisconsin where cardiac patients are receiving nitroglycerin in envelopes. The drug is known to decompose in an envelope which is an improper container. We find many instances, Senator. And, I have some doubt whether the term "dispensing physician" is a fiction or not, because usually a lay person is doing the dispensing, not the physician.

Senator PEARSON. Continue with your statement.

Mr. Woods. It should also be recorded that we are now receiving complaints that even private patients with prepaid health insurance are also finding they are denied the freedom of choice of drugstores. It is unknown whether these insurance contracts with "participating dispensing physicians” are attempts to mimic the existing medicaid regulations or whether they reflect pressure from physicians. In any event such contracts are not limited to the dispensing physicians in a few Midwestern States.

At this point we would like the record to show that the National Association of Retail Druggists realizes that there are many competent, hardworking, conscientious physicians in this country who are not engaged in the practices which Š. 1575 seeks to eliminate which are so unfair to patients. Our remarks are addressed to the physicians who are profiteering from the medications they prescribe and dispense for their patients. We have met with representatives of the American Medical Association on many occasions and expect to continue doing so effectively in the future but frankly we have quit talking about this subject for many reasons. Very few of the AMÅ leaders are engaged in these practices and while they may have reservations about the activities of their colleagues who are so engaged, they are unable to adopt policies consistent with S. 1575. The pressure and influence on AMA from clinic groups with physician-owned pharmacies is thought to be out of proportion to their representation in total AMA membership. In the previous hearings on this legislation it has been established without question that AMA formerly branded these practices unethical.

With respect to the group practice of medicine, a new development at HEW concerning medicare would make legislation like S. 1575 necessary if it were not already before Congress. I refer to part C of title XVIII which has been proposed but not enacted. The part C would encourage more group practice physician-owned clinics, and the number of physician-owned pharmacies with attendant abuses of patients would no doubt explode all over the country.

It is not our intention to prolong the discussion of Government medical care programs or medical care costs in general for they have been documented in many ways by congressional investigations but

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