support of S. 1575 from all over the country. I have a tremendous file from these pharmacists throughout the country that would like very much to have this legislation passed. Over in the State of Virginia, just across the river, for the sake of comparison, we have about 1,200 drugstores. We have about 300 dispensing physicians. We have the same provisions that are provided for in S. 1575. The physician may be licensed in rural areas where pharmaceutical services are not readily available. We have 80 such physicians licensed in Virginia. We do have an increasing problem with medical center pharmacies being owned by physicians and the leases being on some percentage basis such as prescriptions and some even on gross volume that are rather inequitable to the pharmacist. If the physician owns the building, the leases are pretty hard to live with I think most of the State pharmaceutical associations in the country are on record as endorsing this legislation. Ours has been ever since its inception. I think that is about all I can add to what has been said here. Senator HART. Mr. Simmons? Mr. SIMMONS. Mr. Chairman, of course I would like to first express our sincere thanks and gratitude to you for the fine leadership you have provided for this proposal. We are indebted to you, of course. I think the pharmacists will be benefited to some degree because after all, Mr. Chairman, I think it means the life and death of a business in some rural communities in this country and some small towns and some of the larger cities where the pharmacists spend a tremendous amount of money for his education, the investment in his business. When he competes with a physician down the street dispensing medication, then I think that we are losing something that is valuable to that particular community, a retail pharmacy. Of course, we have had records and letters from pharmacists and others in the communities throughout this country supporting this bill. Obviously the public will be benefited by this legislation and we are grateful to you. I want to thank you again for permitting us to file this with you this morning. Senator HART. Again, gentlemen, thank you for coming. If there is not objection, I will put the letter in the record from a physician in Minnesota. It is dated June 11, and excerpts from it run like this: I would just like to let you know that many of us in medicine support heartily your efforts in the drug and appliance trade as it relates to the practice of medicine. *** It is impossible for a physician to be impartial in prescribing medication or appliances in which he has ownership. *** I am sure you have heard many testifying to the contrary, but I feel our opinion is just as valid and represents just as many people in organized medicine as the opposition would indicate they represent. I would just guess from my experience that the younger physicians in particular are particularly concerned about this questionable ethical business alliance. (Letter follows:) Senator PHILLIP HART, Senate Office Building, Washington, D.C. JOHN R. HOLTEN, M.D., Moorhead, Minn., June 11, 1969. DEAR SENATOR HART: I would just like to let you know that many of us in medicine support heartily your efforts in the drug and appliance trade as it relates to the practice of medicine. Far too many individuals and groups are tied so closely with a pharmacy, an optical shop, and an orthopedic appliance shop that it is difficult for them to divorce their clinical practice from their business practice. I feel all of these outside trades represent an honest profession that someone else could well handle without having a physician ownership. It is impossible for a physician to be impartial in prescribing medication or appliances in which he has ownership. We would strongly urge you to continue your efforts to divorce those businesses from the practice of medicine. I am sure you have heard many testifying to the contrary but I feel our opinion is just as valid and represents just as many people in organized medicine as the opposition would indicate they represent. I would just guess from my experience that the younger physicians in particular are particularly concerned about this questionably ethical business alliance. Several other small items I would hope you would support in the field of medicine. John Knowles, the administrator of Massachusetts General Hospital, Boston has been opposed by the AMA to become Deputy under Secretary of HEW. I feel this opposition is unfounded and not to the best interests of that department. I would urge you and your colleagues to support his nomination without regard to the AMA's opposition. You only have to know who runs the AMA to recognize why they oppose so many social economic problems. Also I would urge you to look into the possibility of a national fee schedule. As you know, we are now under a system of "usual and customary fees". I feel this has been ruthlessly exploited even though the concept was valid and just. I am afraid physicians are like any other group in America today and have exploited this beyond bounds. The only answer lies in federal legislation in a national fee system with possible adjustments for localities. I think most of the profession expects this although they hope that this windfall will not quit. I hope you continue to remember that no other consumer in America has so little voice in the product he buys as does the medical consumer. This poor individual is completely at the mercy of the winds. Somebody must be their watchdog and I am afraid the Federal government will have to step in and do just that. Sincerely yours, JOHN R. HOLTEN, M.D. Senator HART. Thank you, gentlemen, very much. Mr. WINTON. Senator Hart, before closing, I certainly want the committee members to understand that the vast majority of pharmacists throughout our Nation understand that the majority of doctors are kind people and are more interested in taking care of the medically deserving citizens of our community. We get along fine with these people. The people that are creating the problem are a very, very small minority and I think your legislation solved this problem. An along with Mr. Woods, we strongly support your legislation. Friday is Senator Cranston's birthday and I will go up and wish him a happy birthday. (The following information was subsequently received for the record:) THE NATIONAL ASSOCIATION OF RETAIL DRUGGISTS, Washington, D.C., July 9, 1970. Hon. FRANK E. Moss, DEAR SENATOR Moss: Illustrating and amplifying the point made by the National Association of Retail Druggists in its June 16 Statement to the Consumer Subcommittee of the Senate Commerce Committee on S. 1575, N.A.R.D. wishes to submit the title pages of two contracts used by Blue Cross in Virginia. The two contracts equate pharmacies with dispensing physicians and pay each on the same basis for drugs dispensed. The titles of these two contracts are "Prescription Drug Agreement between Virginia Hospital Service Association and Cooperating Pharmacy" and "Prescription Drug Agreement between Virginia Hospital Service Association and Cooperating Physician." The contracts are identical in wording except that physicians are being invited to increase their drug dispensing by the contract for a "cooperating physician" which is intended as a substitute for the "cooperating pharmacy" contract. Sincerely yours, Enclosures. WM. E. WOODS, Washington Representative. PRESCRIPTION DRUG AGREEMENT BETWEEN VIRGINIA HOSPITAL SERVICE AssoCIATION AND COOPERATING PHARMACY (Virginia Hospital Service Association, P.O. Box 656, Richmond, Va. 23205) PRESCRIPTION DRUG AGREEMENT BETWEEN VIRGINIA HOSPITAL SERVICE AssoCIATION AND COOPERATING PHYSICIAN (Virginia Hospital Service Association, P.O. Box 656, Richmond, Va. 23205) Senator HART. Our next witness is Dr. Harold D. Caylor who speaks for the American Association of Medical Clinics. Dr. CAYLOR. Mr. Chairman, I am substituting for Dr. Edward Wurzel who, because of a conflict of dates, could not appear. I would like to read a portion of his statement. STATEMENT OF DR. HAROLD D. CAYLOR, CAYLOR-NICKEL CLINIC, BLUFFTON, IND., ON BEHALF OF DR. EDWARD M. WURZEL, EXECUTIVE DIRECTOR, AMERICAN ASSOCIATION OF MEDICAL CLINICS Dr. CAYLOR (reading): I am Edward M. Wurzel, M.D., Executive Director of the American Association of Medical Clinics. The American Association of Medical Clinics is a voluntary, non-profit, professional association representing approximately 250 group practices in this country and 1 in Canada. The Association was formed in 1949. Its objectives include elevating the standards of medical practice in clinics, improving graduate education and research in medical group practices, increasing scientific knowledge relating to group practice and providing two-way communications between the legislators in the health field and the physicians and other professionals engaged in the group practice of medicine. The Association is currently deeply involved in improving the health care delivery system. Until 1969 only multi-specialty groups were eligible for membership. We now have a class of membership for single-specialty groups, a number of which are already members. AAMC maintains an Accreditation Program, publishes a monthly journal, Group Practice, an annual Directory a copy of which I have here for you— and topical bulletins as indicated, sponsors national and regional conventions, has an associated research foundation, and supports 17 committees in fields of appropriate interest. There are 81 member clinics which own pharmacies on their premises; 91 rent space to pharmacies; 59 which have no pharmacy on the premises. Definite information is lacking on about 20 other member groups. I will not take the valuable time of this committee with too many details about the Association; I believe that most of the members are already familiar with it. I am, however, attaching a Directory of the Association to the original of this report for the benefit of those who may wish to see the distribution of our membership and the organization of the clinics represented. I would like to bring to the attention of the committee excerpts from our member clinics referring to the current bill. They will indicate that the statement appearing in the findings of fact of this bill, S. 15175, do not apply to the group practices we represent. It is our hope that the bill can be altered in such a way that it will not work contrary to its purpose by including these group practices in the prohibition envisioned by the act. The bill includes the following phrases: “*** the Congress finds and declares that the dispensing of drugs and devices directly or indirectly *** by medical practitioners *** is inconsistent with the best interest of the public health * * *, denies consumers free access to an open market for such products moving in or having moved in interstate commerce and tends to induce unfair trade practices in connection with trade in such products." The statements which follow show that quite to the contrary of being inconsistent with the best interests of public health the maintenance and operation of pharmacies by our members is decidedly in the best interest of public health; that rather than denying consumers free access to an open market, it assures them of free access; and that rather than inducing unfair trade practices in connection with trade in such products, it contributes to fair trade practices. Then follows a series of statements from practically all over the United States, which I won't bore you with. You can consult these at your leisure. Here is one from South Dakota: It certainly is true in our situation that we can control the quality of the drugs, dispensing of them and control the quality of the drugs, dispensing of them and control the profit that is made on these preparations. It has always been our policy to supply the drugs to the patient with a normal profit. The profit being the one suggested by the manufacturer or below this, which we feel many times is advisable because of the cost of the drug and the amount of profit that would be realized. We feel that our prices aid to control the prices of the surrounding drug stores since we are well aware that any of the pharmacies that are more than 40 miles away, universally carry a higher retail price on their drugs than the clinic dispenses theirs for. Here is another one from Missouri: We make no restriction on the prescription given our patients. They may get them filled at our pharmacy, or any of the other pharmacies in our city or surrounding area. For some of our referred or out of town patients we suggest they get their prescription filled in their locality for convenience, particularly if refills may be necessary. Then we go to Kansas where it says: Although there are numerous valid objections to proposed legislation of this character, I shall limit my comment to the following: 1. In Section 2, the Bill is premised, in part, upon the erroneous assumption that the dispensing of drugs and devices by medical practitioners, directly or indirectly through ownership of pharmacies or interests therein, is inconsistent with the best interest of public health, and denies "consumers free access in an open market * * * and tends to induce unfair trade practices. "The fact is that pharmacies owned by medical groups, or which occupy space leased from medical groups, are numerically infinitesimal. Less than 1 percent of the estimated 70,000 retail pharmacy outlets in the United States fall into such pr category or classification. "Although a purpose and objective of the Bill is purportedly to free and broaden the market for drugs and devices and to curtail alleged unfair trade practices, the obvious result of its enactment would be the reverse. It could only serve or tend to limit or restrict the ownership of pharmacies, thereby reducing the market opportunities of the consumer, at his ultimate expense. it. I this ber ***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. Then Illinois, where it says: We have a small prescription pharmacy whose main function is to serve our patients and has a very limited clientele outside our own clinic patients. Our dispensing by the contract for a "cooperating physician" which is intended as a substitute for the "cooperating pharmacy" contract. Sincerely yours, Enclosures. Wм. E. WOODS, Washington Representative. PRESCRIPTION Drug AGREEMENT BETWEEN VIRGINIA HOSPITAL SERVICE AssoCIATION AND COOPERATING PHARMACY (Virginia Hospital Service Association, P.O. Box 656, Richmond, Va. 23205) PRESCRIPTION DRUG AGREEMENT BETWEEN VIRGINIA HOSPITAL SERVICE ASSOCIATION AND COOPERATING PHYSICIAN (Virginia Hospital Service Association, P.O. Box 656, Richmond, Va. 23205) Senator HART. Our next witness is Dr. Harold D. Caylor who speaks for the American Association of Medical Clinics. Dr. CAYLOR. Mr. Chairman, I am substituting for Dr. Edward Wurzel who, because of a conflict of dates, could not appear. I would like to read a portion of his statement. STATEMENT OF DR. HAROLD D. CAYLOR, CAYLOR-NICKEL CLINIC, BLUFFTON, IND., ON BEHALF OF DR. EDWARD M. WURZEL, EXECUTIVE DIRECTOR, CLINICS Dr. CAYLOR (reading): AMERICAN ASSOCIATION OF MEDICAL I am Edward M. Wurzel, M.D., Executive Director of the American Association of Medical Clinics. The American Association of Medical Clinics is a voluntary, non-profit, professional association representing approximately 250 group practices in this country and 1 in Canada. The Association was formed in 1949. Its objectives include elevating the standards of medical practice in clinics, improving graduate education and research in medical group practices, increasing scientific knowledge relating to group practice and providing two-way communications between the legislators in the health field and the physicians and other professionals engaged in the group practice of medicine. The Association is currently deeply involved in improving the health care delivery system. Until 1969 only multi-specialty groups were eligible for membership. We now have a class of membership for single-specialty groups, a number of which are already members. AAMC maintains an Accreditation Program, publishes a monthly journal, Group Practice, an annual Directory a copy of which I have here for you and topical bulletins as indicated, sponsors national and regional conventions, has an associated research foundation, and supports 17 committees in fields of appropriate interest. There are 81 member clinics which own pharmacies on their premises; 91 rent space to pharmacies; 59 which have no pharmacy on the premises. Definite information is lacking on about 20 other member groups. I will not take the valuable time of this committee with too many details about the Association; I believe that most of the members are already familiar with it. I am, however, attaching a Directory of the Association to the original of this report for the benefit of those who may wish to see the distribution of our membership and the organization of the clinics represented. I would like to bring to the attention of the committee excerpts from our member clinics referring to the current bill. They will indicate that the statement |