363 



With particular respect to the drug industry, there were additional 

 unique features: its critical bearing on public health and welfare, the 

 fact that drugs were purchased by the patient but selected by the 

 physician, the fact that demand for drugs was inelastic (not respon- 

 sive to price changes), and the fact that large production was pos- 

 sible with small capital investment. Given these facts, the subcom- 

 mittee asked, How^ well did the industry serve the public, and how 

 competitive were its commercial practices? 



In its final report, the subcommittee called attention to the wide 

 spread between costs and prices of ethical drugs. The research efforts 

 of drug manufacturers, adduced as justification for high prices, had 

 yielded meager returns, while effort was wasted on minor molecular 

 modification of drugs to get around patents. Wasted research was 

 also evidenced by drugs of doubtful effectiveness, and drug com- 

 binations, turned into a source of income by promotional rather than 

 medical skills.^ The subcommittee was impressed with the outstand- 

 ingly profitable nature of the drug industry, which had led all other 

 industrial groups since 1956.'' This profit picture was attributable to 

 "control over the market" which, in turn derived from (a) the grant- 

 ing in this country of pix)duct patents on drugs, (b) intensive and 

 costly advertising and sales efforts directed to the physician, and (c) 

 the success of the drug companies in persuading physicians to 

 write their prescriptions in terms of brand names rather than generic 

 names.'^ 



According to one authority, the total cost of direct mail advertising 

 to physicians amounted to $210 million a year. This same commen- 

 tator compared the figure with an asserted $194 million for drug 

 research.^ 



The patent system in the industry led to such consequences as — 

 Emphasis on minor molecular manipulation to create new 

 drugs ; 



Vigorous exploitation and promotion, while the exclusive 

 patent right remained valid, and before the competition could 

 come up with a patentable modification ; 

 Speedy testing of new modifications; 



A vast literature of test data concerning an enormous array 

 of drugs that differed in slight degree.^ 



Professional critlcisin of drug indust?y and drug control 



However, for the most part, the physicians who testified before the 

 Kefauver subcommittee were not particularly exercised over the finan- 

 cial condition or the favorable profit picture of the drug industry. 

 Rather, they were concerned over quite specific weaknesses in the total 

 system for the control of the safety and efficacy of new drugs, and the 

 reliability of the information that the prescribing physician received 

 about them. For example. Dr. Louis Lasagna, of the Johns Hopkins 

 University School of JVIedicine, said that "the average physician today 

 is incapable of serving as an expert in evaluating the totality of adver- 

 tising." He was "inundated" by advertising literature for several hun- 

 dred new drugs each year, caught on the dilemma of being either out 



6 Ibid., pp. 126-132. 



" Ibid., p. 55. 



"Ibid., p. 105. 



8 Ibid., p. 163. 



» Ibid., pp. 105-154, especially pp. 127-130. 



