NARD DEMAND FOR GODDARD'S RESIGNATION WILL TEST ASSOCIATION'S POLITICAL STRENGTH; QUALIFICATION IN HIS COMMENT ON CLOSING DRUGSTORES IS OVERLOOKED IN PRESS

NARD's demand for FDA Com. Goddard's resignation, based on his off-thecuff statement that the "corner drug store should be closed down," will provide a test of whether the organization of retail drug store owners still has the kind of political strength it enjoyed during the 1930s when it secured enactment of the Fair Trade laws.

First reaction from H-E-W's topside indicated that NARD still is respected as a political force, though it has not been able to demonstrate its strength in recent years. H-E-W- Undersecty. Wilbur Cohen telegraphed NARD Exec Secty. Willard Simmons with assurances that neither the dept. nor FDA favors the closing of drug stores.

APhA Exec Director William Apple held his fire, explaining that he has asked Goddard for a clarification of his impromptu remark. Apple said he would comment after he had heard from Goddard.

Apparently the unusual series of events put Goddard in the middle of the intrapharmacy cross-fire between NARD and APhA.

Goddard concedes he was quoted correctly-but incompletely-in the lay press. But his controversy-provoking comment is understandable against the background of his views, previously expressed publicly and privately, that the march of medical science will change the way pharmacy is practiced. His views in this respect parallel those expressed by Apple on a number of occasions.

Goddard's off-the-cuff comment was made in a meeting with lay-press reporters before the delivery of a speech on drug efficacy before the American Assn. for the Advancement of Science Dec. 30 in NYC. His statement reflected Goddard's feeling that the pharmacist is rapidly emerging as a therapeutic advisor to both the doctor and the patient.

As the patterns of medical practice change to meet increasing demands from the public for the delivery of medical services, Goddard believes, more pharmacists will practice their profession in closer coordination with doctors, either in hospitals or offices. If this comes about, the focal point of pharmacy will move from the retail store to newer settings.

Goddard told the NYC press conference that "the corner drug store should be closed down, although I know that's a radical statement." He advocated instead that drugs be dispensed in medical centers and MDs' offices.

Goddard qualified his statement by predicting that any such development was 20 years away, but this was not reported in the lay press, nor reflected in the Natl. Assn. of Retail Druggists (NARD) demand that the FDA chief resign.

HEW UNDER SECRETARY COHEN'S TELEGRAM TO NARD

WILLARD SIMMONS

EXECUTIVE SECRETARY

This will confirm my telephone conversation with you in which I stated unequivocally that neither the dept. nor FDA favor or endorse any proposal for closing down drug stores now or in the future.

Blue Cross Rx Prepayment Covers MD-Dispensed Drugs as an option "if the customer demands it," James Goodman, Blue Cross manager of product development, said May 7. He told the American College of Apothecaries in Miami Beach that an MD covered by such an option would have to sign the same sort of participation agreement that a pharmacist does. Goodman commented that the MDdispensing coverage is something he personally does not like.

At present, Goodman estimated, prepayment covers some 2% of legend drugs' total cost, a figure that is sure to rise with the mushroooming growth of prepayment. He said that although about 28% of the U.S. population has "some form of protection against drug costs (primarily major-medical type of either insurance companies or Blue Cross and Blue Shield), we know by comparing prepayment drug payouts with total legend drug costs that the protection is minimal."

The front-end deductibles of major medical plans block "substantial third party payment for Rx legend drugs where the average overall annual expenditures are only $15.40 per year," Goodman noted. "If prepayment is to make a significant dent in Rx drug costs, it seems mandatory to us that the whole class of expenditures should be moved from the so-called major medical eligible expense classification, or that of a prolonged illness category, and treated as a separate line item of health-care cost," he added.

AMA ON GENERICS AND DRUG COSTS

Accepting a special report from the Board of Trustees, AMA meeting at Las Vegas (Nov. 28-Dec. 1) adopted resolution reaffirming present policy "that physicians should be free to use either the generic or the brand name in prescribing drugs for their patients." House of Delegates also agreed on policy to "encourage physicians to supplement medical judgements with cost considerations in making this choice." AMA believes MDs should be free to use either the generic or the brand name in prescribing for all their patients-indigent and Medicare, included. Generic prescribing, the Board's report said, delegates the choice of source-ofsupply to someone else, and the MD should not do this unless "he is convinced that he can rely upon the quality and purity of the drug that will be dispensed." Only two other AMA actions were in drug field: (1) Conn. resolution asking for telephone prescribing of Class A narcotics was rejected by reference cmte.; and (2) Ore. resolution, reiterating AMA's opposition to false and misleading advertising of proprietary drugs, was accepted, including newsworthy language in its first whereas: "Ethical promotion of proprietary medicines through recognized and ethical media is reasonable and justifiable in the promulgation of the free enterprise system."

MD ownership and dispensing, a lively issue at recent AMA meetings and one in which pharmacy has a major interest, received no official attention at Las Vegas. The AMA had gone as far as its internal political situation would allow at its meeting last June when it resolved favorably on respecting the profession of pharmacy.

Overriding interest at Las Vegas meeting was on operation of Medicare and Medicaid; many resolutions were on maintaining "separate billing" from MDs to patients, and on "reasonable" or "prevailing" charges under Medicare. After the meeting, top AMA-ers met with H-E-W Undersecty. Wilbur Cohen in what has been described as the first real dialogue between govt. and the medical profession in almost 30 years.

Though medical judgements must always come first, the AMA Board said in its report on generics and costs, MDs should be encouraged to take cost into consideration in making a choice of the drugs they use. The AMA pointed out that costs vary even among different brands of the same drug. “Medical considerations must be paramount in the selection of drugs," the Board said but the MD "also has an obligation to be mindful of the economic consequences of the treatment he prescribes." The Trustees' report said an MD who prescribes by brand "should inform his patient of the medical considerations which have led him to the decision . . . and of the cost considerations which have led him to prescribe a particular brand. He should also encourage the patient to be cost-conscious in having the Rx filled." In choosing the drug, the report noted, "the MD has an opportunity to serve his patient by designating an acceptable brand which can be purchased by his patient at the lowest possible cost." If the MD chooses to prescribe generically, the report added, he "should be assured that whoever actually makes the choice of supplier can and will take into account not only the medical needs of his patient, but will protect the patient's economic interests as well."

"FAIR TRADE ENDANGERS PUBLIC'S HEALTH"

PRESIDENT'S COUNCIL IMPLIES MANY CAN'T PURCHASE DRUGS BECAUSE FAIR TRADE KEEPS PRICES HIGH

Did you know that the fair trade laws constitute a possible danger to public health?

That's what the Johnson Administration—a hardline opponent of fair tradewould have you believe.

In the just-issued annual report of the President's Council of Economic Advisors, a section dealing with the alleged evils of resale price maintenance declares, among other things, that:

"While resale price maintenance is used for many products, including household appliances, cosmetics, beverages, and many other items, it is most extensively used in the sale of pharmaceutical supplies and proprietary drugs.

"Because of the adoption of Medicare and the growing public concern with improvement in health standards, it is particularly important to evaluate the impact of resale price maintenance for this group of products."

Implication: The suggestion here is that large numbers of needy individuals are unable to purchase drugs because prices of these products are being artificially maintained via resale price maintenance.

What the CEA report fails to make clear is that, in point of fact, not very many drug products are fair traded these days even in the 20 states that still have valid fair trade laws. The practice is rare for legend drugs, and its incidence among o-t-cs is spotty, and is diminishing.

But reading the CEA comments, one is given the impression that virtually all drugs are fair traded in the states.

No Domination: It will be of interest to small retailers besieged by discounters to learn from the CEA report that "protection of inefficient firms is not a purpose of the antitrust laws. A small number of very large firms will not dominate retail markets in a competitive environment. For one thing, entry costs in retailing are typically low, so that any attempt to seize and hold the dominating market share in any major retail market would be futile.

"Whatever the case may have been in the 1930s for depression-born modifications of the basic competitive philosophy, that case does not apply in today's and tomorrow's expanding economy," the report concludes.

"In a healthy and viable market economy, effective competition will inevitably see some enterprises fall and go under."

"RX MEN SHOULD SEE TO IT MENTAL PATIENTS TAKE THEIR DRUGS AFTER LEAVING HOSPITAL"

A system whereby community pharmacists are directly responsible for seeing to it that patients released from mental hospitals continue to take the drugs prescribed for them-and thus remain out of the hospital-has been proposed by the North Carolina Pharmaceutical Assn.

According to William Smith, secretary of the association, over 45% of the patients released from North Carolina's state mental hospitals ultimately return to these institutions. A big reason for this, he said, is that there's no really adequate followup program for these patients-and, in particular, no mechanism to make certain that these patients actually take the tranquilizers that can act as the principal protection against a return to the hospital.

Mandate: The association, he continued, has therefore proposed to the state's Commission of Mental Health that community pharmacists be given the job of dispensing these drugs, and, further, that they be given a mandate to inform mental patients when they're due for a refill.

Under existing procedures, the state provides a week's supply of drugs to released patients, and refers them to a local physician for followup treatment. Patients who are needy enough to qualify for the state's welfare program generally can and do get prescriptions filled for the tranquilizers they need.

Unprotected: Unprotected, said Mr. Smith, are a large percentage of mental patients who, though they aren't poor enough to qualify for welfare aid, nevertheless can't afford the expense of buying tranquilizers.

"It's this group that we think the community pharmacists could help. It's our belief that the state should set up machinery to supply free tranquilizers to this group of patients through community pharmacists, and enlist the aid of community pharmacists to see to it that these patients get the drugs they need."

APHA PLANS STUDENT AWARD

The American Pharmaceutical Assn has decided to establish an annual award for the outstanding student chapter.

The competition will begin this year.

[From Drug Topics, Feb. 6, 1967]

PRICE SUPPORT OPPOSED

WASHINGTON.-Unexpectedly, President Johnson's Council of Economic Advisers is showing new interest in resale price maintenance-which it still opposes.

This interest, dormant for some time, was revived "because of the adoption of Medicare and the growing public concern with improvement in health standards," the Council said in its annual report to the President. The report was sent to Congress by the President, who made no mention of resale price maintenance in his message. The Council noted, however, that "the administration has consistently opposed" resale price maintenance.

The Council also expressed interest in increasing costs of medical care, but the President's message did not discuss this, either. The advisers noted that "prices of drugs and medicines have not risen in recent years," but added "neither have they been reduced."

The discussion of resale price maintenance by the Council followed one on antitrust law activities. This noted that "effective antitrust cannot provide for the protection of individual competitors at the expense of the protection of competition." The Council pointed out that during the early 1930's many states acted to restrict competition in the field of retail distribution "when the pervasive economic distress bankrupted many small firms and threatened countless others with failure."

"Relief was sought, and frequently obtained, in the form of restrictions on the pricing policies of larger and more efficient firms-especially in chain stores and mail order houses," said the advisers' report. "Resale price maintenance is such a device, largely born in the 1930's, which can impair the competitive force of free markets."

The report pointed out that resale price maintenance laws are on the books in 40 states, but that because use of adverse legal decisions they are fully effective in less than 20.

"Resale price maintenance permits manufacturers to guarantee attractive margins to retailers in order to encourage them to promote their products rather than those of competitors," said the report. "But by providing a shield from competition, price maintenance agreements often raise prices to consumers. Moreover, they can induce the development of excess capacity in some branches of retailing, as well as blunt price competition in manufacturing industries dominated by a small number of large firms.

"While resale price maintenance is used for many products, including household appliances, cosmetics, beverages, and many other items, it is most extensively used in the sale of pharmaceutical supplies and proprietary drugs. Because of the adoption of Medicare and the growing public concern with improvement of health standards, it is particularly important to evaluate the impact of price maintenance for these products.

"A basic purpose of the antitrust laws is the maintenance of a market system in which many firms can operate effectively. But protection of inefficient firms is not a purpose of the antitrust laws. A small number of very large firms will not dominate retail markets in a competitive environment. For one thing, entry costs in retailing are typically low, so that any attempt to seize and hold a dominating market share would be futile.

"Whatever the case may have been in the 1930's for depression-born modifications of the basic competitive pilosophy, that case does not apply in today's and tomorrow's expanding economy.'