the Doctor total control over whether or not there could even be a substitution. Any Doctor could prohibit a substitution by merely indicating on the prescription form that he does not want a substitution or that he wants the prescription filled as written. Furthermore, a legislative subcommittee, which I chaired, found that physicians have less training in pharmacology than the pharmacists. More than 60% of physicians surveyed felt that pharmacists were qualified to 'substitute' generic equivalents, according to data collected in Michigan. The same study indicates that physicians err in identifying equivalent and 6 non-equivalent drugs two-thirds of the time. Exhibit C states: "Doctors pick and choose among these products based on a myriad of factors". In reality, drug promotions play a major role in influencing a physician's choice. The PDR, used by many physicians, has in fact been an advertising catalogue of the manufacturers. Only recently did the FDA assume a watchdog position on claims made therein. Also, estimates on the amount of money spent in drug company advertising per physician range from $3,000 to $5,000 annually. This cost is heaped on consumers in the form of higher drug prices. The third major argument used by antisubstitution forces centers around money. It's two-pronged; one side is the claim that generic drugs do not save consumers money and the other is that brand name manufacturers use the money from profits to research new and better quality drugs while generic manufacturers are strictly profit-motivated. The money theme dominates Exhibits B, C, D, F, G and II. To prove the lack of savings to consumers via generic substitution, these documents provide "evidence" from several states and the dominions of 7 Canada which already have substitution laws. The "Saskatchewan" case, mentioned in Exhibits B, C and D, refers to a 1973 study conducted by one Professor William Tindall into cost savings resulting from the 1971 substitution law. His study, according to these documents, showed prices going up 19% in cases of generically substituted drugs. Exhibit B, which contains the most descriptive account of this case, was massively distributed to House members. In response to a call made by me to Professor Tindall inquiring into the accuracy of this statement, I received a telegram refuting the facts listed in Exhibit B. See Exhibit J. In actuality, all drug prices decreased after repeal of antisubstitution. Other studies referred to in the aforementioned exhibits include references to 1972 formulary laws in Kentucky and Maryland which showed no measurable consumer savings to date and Massachusetts' 1970 limited substitution law with a formulary resulting in no significant savings to consumers. In refutation of these claims--according to sources in both Maryland and Kentucky, no studies have been conducted yet to determine financial savings. The same is 8 true in Massachusetts. Exhibit Fasks the question: "Why endanger your health for a savings of probably only 50¢ or a dollar?" Exhibit H also stresses: "even if this legislation resulted in a dollar savings, it could exact a high price in health". Studies done by the Illinois Consumer Advocate Office showed that the average price difference in metropolitan Chicago between generic drugs and their brand name equivalents was 93%! Both the FTC's Prescription Drug Task 9 Force and NEW found significant savings in purchases of generic drugs. One source found that the average brand drug cost three times more than the 10 generic equivalent. On the same lines, these antisubstitution materials mention the fact that drug prices haven't gone up much. According to Exhibit C, "the price of prescription drugs had edged up orly 10 percent (in 10 years)." This figure Exhibit D claims that "prescription prices have risen only 3 percent since 1967". The truth--HEW notes that the Consumer Price Index erroneously bases its data on a dozen old drugs which are no longer representative of the market's most widely used drugs. The newer drugs are generally more expensive and as a result, the average 11 prescription cost has been rising. is based on the Consumer Price Index. As to profit motives of generic drug manufacturers, Exhibit E sums up the rationale of antisubstitution forces: "major drug manufacturers spend millions of dollars on research, creating drugs that are lengthening lives. They are entitled to retrieve their research money plus a profit...but do you realize that the ONLY motivation of a "copier" of those drugs is profit?" Sad but true, however, is the fact that name brand drug manufacturers spend less than 10% of their total sales on research and development while spending up to 12 four times more on promotion. An important point to make is that after research and development of a new drug is completed, a manufacturer gets a 17 year patent period during which time there is no competition in the form of generic equivalents. Consequently, a manufacturer is able to recoup the research and development cost many times over during this 17 year period. In addition, brand name manufacturers purchase from generic companies and resell under their brand at a significantly higher price. 13 A California study revealed that most brand name companies bought from generic houses. 14 Also, the drug industry ranks first in profit returns and has so ranked every 15 So much for the profit motive belonging solely to year from 1950 to 1975. generic manufacturers. Finally, I would like to submit to the Committee's attention Exhibit K, the Illinois Consumer Advocate Office's Study: "An Inventory of Deceptive Advertising by Oklahoma Opponents to Generic Substitution". Unfortunately, this office no longer is in existence and therefore, cannot submit testimony of its own. This study was undertaken in January, 1977 and outlines in great detail the deceptive advertising used to defeat Oklahoma's generic substitution bill. It is possible that more deception was used during this campaign than in any other antisubstitution campaign in the country. In summary, due to the misleading information distributed to Illinois legislators by reputable associations, it took six years to pass a generic drug substitution bill in Illinois. The exhibits presented here today are only a small sample of the massive amount of material distributed. What disturbs me most is that most legislators are conscientious and strive to educate themselves on Jegislative issues. They look to authorities in the field and in the case of generic drugs, they naturally turn to medical societies, pharmacists, and drug companies for information and opinions--trusting they will get the honest facts. It is unfortunate that in two states at least, Illinois and Oklahoma, such was not always the case. I strongly urge this Subcommittee to consider ways of promoting "truth-in-lobbying" on the part of drug companies so that future abuses of this type do not reoccur. FOOTNOTES 1. Richard Burak, M. D., The New Handbook of Prescription Drugs, (Ballantine Books, N. Y.), 1975. 2. 3. 4. 5. 6. Gene Knapp, Assistant Director for Drug Monographs, Bureau of See Source No. 1. Consumer Advocate Office Study: "An Inventory of Deceptive Advertising by Oklahoma Opponents to Generic Substitution", January, 1977. (pg. 14) K. L. Melmon, "Preventable Drug Reactions--Causes & Cures", New Goldberg, Moore, Koontz, Facione, Aldridge, Vidis, Vadasy & Jones, "Evaluation of Impact of Drug Substitution Legislation", Journal of the American Pharmaceutical Association, Vol. NS16, No. 2, Feb. 1976. 7. Three sources: Dr. James L. Goddard, Commissioner, FDA, speaking before the Subcommittee on Intergovernmental Relations, House Committee on Government Operations, 1970. "Regulation of Prescription Drug Advertising", Report of the House Committee on Government Operations, December, 1970. Senator Gaylord Nelson, June 11, 1973. 8. Two sources: Jeanie Tuttle. Secretary to the Kentucky Generic Council, telephone conversation with Consumer Advocate Office of Illinois, Jan. 1977. Ralph Quarles, Commissioner, Maryland Pharmacy Board, telephone conversation with Illinois Consumer Advocate Office, January, 1977. 9. Two sources: FTC Prescription Drug Task Force, Wesley J. Liebeler, Chairman, May, 1974. Dr. Charles Edwards, Assistant Secretary for HEW, March, 1974. 10. "Welfare Losses from Monopoly in the Drug Industry: Oklahoma Antisubstitution Law", Antitrust and Economics Review, 97, 1972. |