NO MORE DOUBT RE VALIDITY OF OHIO FT LAW, BASED ON NOTICE: STATE HIGH COURT Ohio Supreme Court's Feb. 1 opinion, decisively upholding the state's 1959 fair trade (FT) statute supplementing the non-signer approach with the "notice" principle, could revive activity among state pharmaceutical assns. for passage of new laws. It also could lead to increased enforcement efforts in Ohio, a hot discount area. On Jan. 1, GE abandoned FT on its small appliances in Ohio. Status of Ohio's new-type FT law has been somewhat cloudy, despite a U.S. Supreme Court decision in its favor several years ago in cases involving Lilly and Upjohn against the Revco discounting chain. The uncertainty resulted from an unusual legal situation. The new case, Olin v. Ontario Store, came to the state supreme court on an appeal from a lower court decision invalidating the act. The high court, in a 4-to-3 decision, overturned the lower court and validated the law for the entire state. In the Revco (Hudson Distributors) cases, the 1959 statute had been upheld by the lower court. The Supreme Court held, 4-3, that the law was unconsitutional. But the high court's ruling didn't knock the law out because the Ohio supreme court cannot invalidate a law upheld by a lower court if more than one justice votes for the law. While an appeal in the Revco case was pending in the U.S. Supreme Court, a number of lower Ohio courts followed the four-man state high court majority in ruling against FT in Olin and other cases. The relatively brief four-man majority opinion in the Olin case was based primarily on a paragraph from former Justice Goldberg's U.S. Supreme Court decision in the Revco cases stating that the wisdom of enacting FT laws is a matter of Congress and the legislatures-not the courts. FAIR TRADE LAW IN OHIO UPHELD BY STATE TOP COURT COLUMBUS, O. (FNS).-Ohio's fair trade law was held constitutional last week by the Ohio Supreme Court in a 4-3 ruling. The ruling stems from a Cincinnati case in which the Common Pleas and Appeals courts there had held the law unconstitutional. Ólin Mathieson Chemical Corp., had sought an injunction to prohibit the Ontario Store of Price Hill from selling firearms manufactured by the company at less than the fair trade price. Judge Paul W. Brown, who wrote the majority opinion, said: "This court is not concerned with the wisdom of this type of enactment. Whether the act is wise or unwise is a question not for the courts but for the General Assembly. "So long as such act does not contravene any constitutional mandate, it is the duty of this court to uphold it." Agreeing with Judge Brown were Chief Justice Kingsley A. Taft, Judge Paul M. Herbert and Seventh District Appeals Judge Nils Johnson. They pointed out, "The act under consideration is clearly an expression of the will of the public inasmuch as it was almost unanimously concurred in by the representatives of the people in both Houses of the General Assembly." ARIZONA HIGH COURT UPHOLDS FAIR TRADE LEGISLATIVE ACTION IS THE ONLY WAY TO CHALLENGE STATUTE, TRIBUNAL SAYS IN SKAGGS CASE The Arizona Supreme Court has upheld the constitutionality of the state's fair trade law-declaring in blunt terms, that the only way such laws can be altered is through legislative action. Although the Arizona high court's decision doesn't establish any new concept in support of fair trade, the ruling is noteworthy because of the forcefulness with which it rejects the challenge to the Arizona statute. Participants in the case were Skaggs Drug Centers and U.S. Time Corp., which was seeking to prevent Skaggs from selling Timex watches below fair trade minimums. In its ruling, the Arizona high court declared that the fair trade statute. Does not, as charged by Skaggs, violate the Arizona law prohibiting price fixing. • Does not violate the "due process" amendment to the U.S. constitution. • Does not constitute an illegal delegation of police power to the legislature. Not Concerned: "This court is not concerned with the wisdom of the fair trade act, nor may we substitute our judgment for that of the legislature in its choice of method of enforcement." "Our inquiry is limited to the question of whether the act contravenes the state and federal constitutions. Wisdom, necessity, propriety, or expediency of the act are matters exclusively within the province of the legislature. "Fair trade acts have been enacted in more than 40 states of the union, most of which have been attacked as violating the constitutional rights of 'non-signers'. "We have found that, in 17 states, in addition to Arizona, the 'non-signer' provision has been held constitutional, whereas in 24 states such provisions have been declared unconstitutional." NJ anti-Chain Bill Killed in Caucus would have required all pharmacy executive officers, active directors and holders of voting stock in drugstore corporations to be registered pharmacists. Introduced June 3 by NJ Assembly Speaker Albert Smith (R-Atlantic County), the bill had been scheduled for quick floor action without a hearing, but the caucus cmte. failed to approve it. The bill said "introduction of nonprofessional ownership has been harmful" and ownership of narcotics and dangerous drugs "should be by pharmacists in pharmacies and should not be left to commercially-oriented lay people." [From F.D.C. Reports Apr. 22, 1968] TRADE AND GOVERNMENT MEMOS APhA Frowns on Rx Advertising in draft of new code of ethics that obviously tries to avoid clash with antitrust laws by aiming at the conduct of the pharmacist rather than advertising of the drug dispensed. The focus on the individual engaged in the practice of a profession is similar to the way the AMA and the bar assn. codes deal with MDs and lawyers advertising their services. The code, proposed by APhA's recently formed Judicial Board, says in the eighth paragraph of a nineparagraph draft that "a pharmacist should not solicit professional practice by means of advertising." Another provision in the proposed code, when considered with the language on advertising, could be construed as creating pressure on pharmacists not to work for chains, discounters or even independent community pharmacies which advertise Rx prices, products or services in any way. The provision says, in part, that "a pharmacist should not agree to practice under terms or conditions . . . which require him to consent to unethical conduct." In its report prepared for the APhA House of Delegates sessions at the Miami Beach convention the week of May 5, the Judicial Board explained the meaning of the provision. "This section establishes that a pharmacist is responsible for the unethical conduct of an employer respecting pharmacy by consenting to that conduct through a continuing employment relationship," the Board said. The proposed code will be submitted to the APhA membership this year for study, with a mail ballot on it probably next year. REV CO Objects to Ban on Rx Price Advertising being considered by Va. state senate subcmte. President Sidney Dworkin, testifying before the subcmte., said outlawing advertising of Rx price advertising is "a direct violation of the free enterprise system." He claimed that the bill, which has passed the House, was apparently prompted by the Cleveland discounter's entry to the Va. market through the acquisition of the 17-unit Patterson chain which has about $4 mil. sales, half in Rxs. [From FDC REPORTS, Mar. 10, 1969] *** Retail Rx Ads Okayed By Fla. Supreme Court except for unchallenged law that still outlaws advertising narcotics, CNS stimulants, tarnquilizers, barbiturates, and "other hypnotic and somnifacient drugs." Ruling permits law-challenger Webb's City and other discounters to continue to name and price Rx drug ads aimed at senior citizens and others with chronic diseases. Some 35 states have laws or regs banning Rx ads (last paragraph on page 4 is incorrect re this). Fla. decision is first overturning a law, but a number of state pharmacy board anti-ad regs have been rejected by the courts.. (Page 4) Rx Price Ad Ban Called "Anti-Consumer" Legislation and an "artificial barrier against free and open competition," by a spokesman for the Natl. Newspaper Assn. testifying at FTC's consumer protection hearings. Paul Conrad, the assn.'s general counsel and govt. relations director, criticized state laws banning price advertising of Rx drugs and optometric devices and services as "rendering truthful advertising illegal." Conrad, whose D.C.-based assn. is composed of 7,000 daily and weekly papers in 50 states, added that "an agreement not to advertise, from the viewpoint of a tradesman, is the next best thing to out-and-out price fixing." Conrad said that if professional assns. "choose to make advertising a violation of their self-imposed code of ethical conduct, that is their privilege." But he insisted that govt. "has no business making truthful advertising by individual practitioners in these professions . . . a violation of the law." APHA JUDICIAL BOARD SAYS BROAD RANGE OF RX PRICE ADVERTISING PRACTICES VIOLATE ASSOCIATION'S CODE OF ETHICS; SEVERAL CHANGES SUGGESTED IN PROPOSED CODE A broad range of Rx price advertising practices violate APhA's Code of Ethics because "the pharmacist is not dealing in commodities but is engaged in a professional practice to which the rules of the market-place do not apply," the assn.'s Judicial Board ruled Nov. 25. In a report to the special meeting of the APhA House of Delegates in Chicago, the Judicial Board termed "unethical" 11 methods of "solicitation of professional practice" questioned by an APhA member. Involved were in-store, window, newspaper, radio, TV, and other forms of advertising. (EDITORS' NOTE: Reproduced on the next page is the text of the 11 "Although the practice of the community pharamcist has traditionally existed in a commercial environment, the dispensing of drugs and medications. is a professional service . . . and because the pharmacist is engaged in a professional practice, the reasons inherent in the prohibition of solicitation of professional practice by other health professions . . . apply with equal force," the Judicial Board said. This principle has been recognized by several states which have passed laws to abolish certain methods of solicitation by pharmacists, and by courts which have approved such legislation, the Board noted. It said the legislative recognition "is reinforced by the APhA Code of Ethics which . . states in its most relevant part: The pharmacist holds the health and safety of his patrons to be of first consideration; he makes no attempt . . . to offer for sale any drug or medical device merely for profit.” In the case of other health professions, "courts have sustained legislation prohibiting advertising on the ground that a state may go so far as to 'ban practices... tending to unseemingly competition and lowering of standard'," the Judicial Board said. "There is no less justification for . . . pharmacy to uphold advertising limitations relating solely to the professional services on the grounds of protecting the profession from commercial exploitation, aiding in maintaining a high standard of professional ethics, and protecting the public from deception and imposition," the Board added. The questioned methods of solicitation "may well be appropriate for ordinary commodities, but they are not appropriate for the professional service provided by the pharmacist," the Judicial Board said. It added that the methods support the inference that those using them "practice pharmacy solely for profit and that the health and safety of patrons are not of first consideration," which is "a discredit to the profession." The Board's opinion has been in the works since May, when the panel told APhA's annual meeting in Miami Beach that the ruling was being reviewed by the assn.'s general counsel to determine whether it could be released for publication. The Chicago meeting was told that the lawyers had approved release of the opinion, which was made under APhA's old Code of Ethics, now in the process of being revised. RX ADVERTISING PRACTICES COVERED BY APHA JUDICIAL BOARD ADVISORY OPINION In-store advertising over the Rx dept. which reads: "Are you paying high prices for your prescriptions? Bring your next Rx to (pharmacy) and save.' Window advertising which reads: "Let us price and fill your next Rx." Newspaper advertising which states: "Have (pharmacy) price and fill your next prescription . . . Compare and save." TV advertising which states: "Price and compare . . . Have (pharmacy) fill your next prescription at a lower price." Solicitation of Rxs from the MD through the use of price lists, with the suggestion that "You might wish to show this list to your patients when the occasion arises doctor, in the interests of saving them money.' The use of both radio and TV commercials which state: "Are you in the dark about prescription prices? Price and compare, then bring your prescription to (pharmacy) for low, low, prices." Offering a "free tube of tooth paste or a bottle of shampoo for permitting the pharmacist to price the next prescription.' In-store advertising which presently reads: "Dear senior citizen... You don't have to join a plan or carry a card to get your prescription filled for less at (pharmacy). Matter of fact, you don't have to be a senior citizen. Point is, everyone gets (pharmacy's) lowest prescription prices because we believe it is our professional responsibility to provide every customer with the finest pharmaceutical service at lowest possible prices. And our prices.. we promise are as low or lower than anywhere else including any senior citizen discount plan.' The use of a "get acquainted certificate" upon which is written: "Fine professional pharmacy service, at the lowest prices in the nation. This will entitle the bearer (whose name appears above) or a member of his immediate family to a credit of up to $1 on his first prescription purchase.' An in-store sign of gigantic proportions which reads: "If we aren't filling your prescriptions, you're paying too much." An in-store sign on the Rx dept. which reads: "Are you paying too much for free Rx delivery?" PMA SUGGESTION FOR MORE DETAIL RX DRUG PRICE ADS PRODUCES JOINT NARD-APHA ACTION; WRITE PMA DEMANDING RETRACTION, IDENTICAL LETTER URGES PHARMACISTS Officers of APhA and NARD, in a joint action, are urging everybody in pharmacy to write "directly to PMA" demanding a retraction of its suggestion that pharmacists advertise Rx prices to the public and that state legal barriers to this practice be removed. Top officers of both NARD and APhA, meeting in Washington Thursday Oct. 31, drafted a joint letter on the subject. The next day, identical letters were issued by APhA and NARD-only the letter-heads and the signatures at the bottom were different. NARD's was signed by Exec Secty. Willard Simmons; APhA's was signed by Exec Director William Apple (see below for text of letter). APHA AND NARD NOV. 1 LETTERS TO PHARMACEUTICAL ASSOCIATION EXECS We were astounded by the recent PMA recommendations that pharmacists advertise Rx prices directly to the general public and that legal barriers to Rx drug price advertising be removed. To coordinate the profession's response to these PMA recommendations which disregard the best interest of the individual patient, the public health, the professions of medicine and pharmacy and the pharmaceutical industry, a group of officers of the APhA ... met with officers of the NARD. . . in Washington Oct. 31. The leaders of both organizations agreed that consumer advertising of Rx drug prices is detrimental to public health and patient safety. Consumer advertising of Rx drugs and pharmaceutical services places prescription drugs on the same basis as that of commercial goods. There are many important differences between prescription drugs and commercial goods. Historically and traditionally professional practitioners do not solicit professional practice. Pharmacists render specific, individual services which the general public cannot evaluate or judge either in terms of quality or price. The profession of pharmacy strongly recommends that every individual or family choose a pharmacist to provide all of their pharmaceutical services, including non-prescribed as well as prescribed drugs. The selection of a personal pharmacist should be based on the same considerations by which MDs and dentists are selected professional reputation, services and conveniences offered, location and availability of services. Pharmacists, like physicians and dentists, are willing to discuss with individual patients the charges they place on the professional services they render. The APhA and NARD officers in attendance recommended that every pharmaceutical association, college of pharmacy and board of pharmacy support these views by writing directly to the PMA demanding that PMA retract its recommendations. We urge your prompt action on this matter. The suggestion for increased advertising of retail prices for Rxs was made by PMA in its critique on the second interim report of the H-E-W Dept. Rx Drug Task Force ("The Pink Sheet" Oct. 21, page T&G 1). Angered leaders in both pharmacy organizations interpreted the suggestion-rightly or wrongly-as an effort to shift the congressional and govt. heat on drug prices from the mfr. to the pharmacist. The PMA suggestion also was regarded in pharmacy circles as favoring the chains, particularly the discounters who use Rx price ads-where legal to build volume and traffic. In a conciliatory statement on the NARD-APhA joint letter, PMA President C. Joseph Stetler said that it was not the purpose of PMA's comments on the Rx task force report "to harass pharmacy nor to diminish its professional status." Text of the NARD-APhA letter became available in Washington at noon Firday Nov. 1; PMA's statement was issued in the afternoon (for full text, see facing page). PMA PRESIDENT STETLER'S COMMENT ON APHA AND NARD LETTERS During the past year there has been considerable discussion in the Congress and in govt. agencies about drug prices and profits. In connection with this matter we have commented on several occasions about the need for more price information to be available at both the mfr. and retail level. Most assuredly our purpose in making these comments and in our critique of the report of the H-E-W Task Force on Rx Drugs is not to harass pharmacy nor to diminish its professional status. Our purpose is to find ways to avoid the intrusion of govt. into the free market, and to alleviate the concern about drug prices that has been expressed on a mounting scale by consumers, the govt., and congressional leaders. Surely more active price competition at the retail and mfr. level is preferable to legislated price control or maximum reimbursement allowances. We believe the consumer will continue to select the pharmacy from which to buy based on his assessment of numerous factors, including price. Equal or more important, however, will be professional competence and services. Stetler raised the specter of govt. controls or interference in the drug market and said that active price competition at both the mfr. and retail level is preferable to govt. price controls or maxim reimbursement allowances. Leaders in pharmacy indicated they did not regard the PMA statement as meeting the request for a retraction and there were hints that the profession might be planning other steps. Execs of pharmaceutical houses can be expected to be questioned about the PMA suggestion at the next meetings of their pharmacy advisory councils. The PMA suggestion on Rx drug advertising apparently succeeded-obviously without intention-in doing what mounting pressure inside pharmacy, including strong efforts by state assn. execs, had failed to accomplish, i.e., bring NARD and APhA into a joint meeting which produced unified action on an issue which the profession regards as important. Until the Oct. 31 meeting, NARD was widely regarded as leaning more toward the PMA side of the gap between the manufacturing group and APhA. Attending the meeting for APhA were President Max Eggleston, PresidentElect William Hennessy, Board of Trustees Chairman Dr. Lloyd Parks, House of Delegates Chairman Mary Louise Andersen, and Apple. Representing NARD were President Michael Perhach, Exec Cmte. Chairman Nick Avellone, Exec Cmte. members Leonard Rosenstein and John B. Tripeny Jr., and Simmons. |