On the opening day of the hearing, December 7, 1959, Kefauver, in his prefacing remarks, established the anti-industry stance of the committee's investigation: It is our purpose to inquire into the question of whether the drug manufacturers are setting their prices at an excessive level ...to determine whether the public is adequately protected by competition and, if not, to devise some means of securing such protection ... the consumer's ability to shop aroundfor lower prices... is severely restricted by thefact that prescriptions are usually written in terms of trade names rather than generic names ... there is... in ethical drugs an intermediary, as there must be, between the producer and the buyer, namely, the physician who writes the prescription. As a consequence, the drug industry is unusual in that he who buys does not order and he who orders does not buy.8 Kefauver vs. The Pharmaceutical Industry The first witness, Francis C. Brown, president of Schering Corporation, was questioned on the company's pricing on its steroid, Meticorten (prednisone). Concentrating only on production costs, Kefauver charged the product was overpriced. The next morning, working with cost analysis provided by the committee, headlines in newspapers across the country labeled the industry as profiteers. For example: "Find Drug Markups As High As 7,000 %" (New York Daily News) "Drug Firm Accused of Boosting Product Price 7,000% Above Cost” (Los Angeles Times)9 Kefauver and his staff had scored a telling publicity victory over the drug industry, which subsequent corrective testimony as to the cost of research, promotion, and distribution by Brown, John T. Connor (Merck), E. Gifford Upjolin (Upjohn) and other drug executives could not reverse. The crusading senator continued the hearings on the drug industry, generating further negative press throughout 1960 and 1961 on company pricing, licensing, research, and opposition to generic drugs. Witnesses from all aspects of the pharmaceutical scene appeared before the committee: numerous Rx company executives, representatives of the AMA and other medical groups, the Pharmaceutical
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