That Uneasy Feeling

The U.S. drug industry has a big reason to feel great -- like a man who has taken at least one a day. The industry's 10.6% profit margin last year was the highest in all of U.S. industry, comparing with 4.6% margin for automakers and 7.5% for oil companies. Yet the drugmakers seem to feel nervous, harassed and out of sorts. Reason: along with profit records, they have been hit by increasing controversy, stepped-up Government regulation, a bad public image and a tangle of lawsuits. Last week they got more unfavorable publicity when a federal grand jury indicted Wallace & Tiernan Inc., a small New Jersey firm, and two former company officials on criminal charges of failing to report adverse reactions -- including three deaths -- among users of a tranquilizer called Dornwal, which was withdrawn from sale in 1961.

Legal Donnybrook. The industry's failures are relatively few -- 13 drugs have been removed from the market for reasons of safety in the last three years -- but they are usually the kind that raise a storm. Five months ago, Richardson-Merrell of New York pleaded no contest to criminal charges that it had concealed information about the harmful side effects of MER/29, an anticholesterol drug; it thereupon was hit with an $80,000 fine and a rash of suits by users of the drug. The three-year congressional investigation of the industry by the late Senator Estes Kefauver and the scandal of thalidomide caused birth defects have led Congress to give the Food and Drug Administration broader powers to police the research, manufacture and testing of drugs. Previously, drug companies were not required to consult the FDA on a new drug until they were ready for final market clearance. Now the FDA supervises every step of testing, and the companies complain that it costs extra time and money to get a drug approved.

While undergoing added scrutiny, the industry is also divided against itself. In a legal donnybrook over the price and patents of the tetracycline antibiotic, some 30 suits and countersuits have been filled by producers, buyers, sellers and the Federal Trade Commission. Criticism of the prices charged by big companies has led smaller ones to increase their output of generic drugs, which generally sell for half the price of brand-name products. Compounding the industry's frustration is the fact that, despite steady increases in research budgets, fewer than 20 new basic drugs will be introduced this year compared with 45 in 1960; the reasons lie more in the erratic nature of research than in any FDA delays.

Wooing the Public. For an industry that used to take professional pride in staying out of the public glare, the effect of all this controversy has been basic: instead of concentrating on wooing only doctors, as before, drugmakers are now going out of their way to win over the public. Several companies recently joined to launch a national advertising campaign to revive the drugmakers' image, and the Pharmaceutical Manufacturers Association is serving up a strong prescription of publicity, in the hope that it will cure the uneasy feeling that affects the industry.

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