The Drug, Chemical and Pharmaceutical Industries

Memorandum prepared by the Socialist Medical Association for the Health Advisory Committee of the National Executive Committee of the Labour  Party 1954

The CHEMICAL DRUG and PHARMACEUTICAL INDUSTRIES and The NATIONAL HEALTH PHARMACEUTICAL SERVICE

The Chemical, Drug and Pharmaceutical Industries are basic industries and are as vital to the economy of the nation as coal and steel.

As suppliers of fertilisers, pest destroyers and soil sterilisers they are essential to the agriculture and the horticulture of the nation.  As manufacturers of war materials they are fundamental in national defence. As investors of large capital resources they wield powerful influence over the level of employment, and as suppliers of exportable goods they are indispensable industries for the export markets.

They show monopoly cartelisation, price-fixing and control. They exercise  restrictive practices in  production  and in distributions they prohibit free price fluctuation, prevent free production and distribution, show discrimination and attempt to rationalise the industries in the interests of private capital. International restrictions abroad and monopoly at home have given great power to these industries, which is used politically and economically against the interests of the country.

The industries also  provide the household chemicals and drugs and the medicines for the national pharmaceutical service.

To fully appreciate the scope and size of these industries and the close integration between them of capital, of production of distribution and of monopolist tendencies, it is necessary to discuss the impact of the National Health Service on them, and finally their place in the economy of the country.

THE NATIONAL HEALTH SERVICE – The Pharmaceutical Service

The advent of  the National Health Service in July 1948 had an immediate and profitable  result  on the drug,  chemical, and pharmaceutical industries.    They have become solvent highly profitable and have attracted much foreign capital into the industries  chiefly American. Retail pharmacy has also become  solvent and has undergone a major change, a change for the better, these last few years.

The dispensing of medicines and the supplying of surgical appliances under the Act  are  undertaken in three  establishments:-

a.   The Hospitals where a very high standard of pharmaceutical practice and service is  given, involving not  only the routine preparation of medicines for the in-patient and out-patient, participating also  in research for new pharmaceutical products, entering  into the new techniques and assisting in the formulation of new therapeutic preparations .

b. The general practitioner or chemist shop pharmacist where the bulk of the dispensing of the mass of prescriptions is done. The  standard of  this dispensing has shown great improvement  due  partly to the more  satisfactory remuneration received by the  pharmacist for  this work but  in particular  to  the increased competition in his section of  the  pharmaceutical industry. It is the cost of each prescription dispensed by this section of the pharmaceutical health service which is causing the Minister of  Health the most concern.

c. Health Centres those institutions in existence before the Act now  taken over; they are few in number and rightly described as  the ‘lynch-pin’  of  the Act, but so far there  is dismal implementation of this  socialist measure.

Cost of Drugs in the NHS

The present cost of the whole Health Service to the nation is in the region of £450,000,000;  it is steadily rising and is presumably the explanation for the setting up by the Minister of Health of the Guillebaud Committee, whose terms of references include the determining of ways and means of preventing the costs of the Health Service from rising.

Drugs supplied, by the chemists in the NHS. cost around £50,000,000 excluding the cost of drugs supplied and used in the Hospitals, which is possibly not more than 5% of the cost of drugs supplied by the chemist. The fees paid to the chemist for his dispensing are divided as follows – the cost of the drugs – the profit or on-cost on this, now at 26.6% – the dispensing fee, which is an average of 1/- and a container allowance of 1¼d per prescription.

The Minister continues to make attempts to lower the basic cost of drugs, since no cuts are possible in the other fees paid to the chemists unless the Minister wishes to reduce the wages and salaries paid in the pharmaceutical service and also attack the conditions of work.

It is interesting to note that the cost per prescription in Hospitals is estimated to be at least 1/- lower than that which occurs in the chemist  shop as there is no added profit on-cost and it bears also a lower dispensing fee. If costs of dispensing in the Health Centres were available these would no doubt show a lower cost than that of the chemist shop.

Economies in the Cost of Drugs in the NHS

Amongst the provisions laid before Parliament to allow charges in the NHS was the ability to impose a charge on prescriptions which the present Tory Government have used with the resultant distress to those among us who could least bear these additional burdens.

The 1/- on the form and not on the prescription has enabled the Minister to obtain his ‘shillings,’ but again, as foreseen, at the expense of the health service. The number of forms issued became at first appreciably less but gradually the number of prescriptions or items on each form increased appreciably by as much as 70%-80% – thus in effect the economy in number of prescriptions hoped for has not materialised.

Furthermore the cost of each prescription has also increased until it is now at least 1/- more than before the imposition of the 1/- charge. There are several reasons for this and not the least significant has been the reaction of most doctors to tend to increase the quantities of medicines and surgical dressings on each prescription to off-set the 1/- charge.  The introduction of the antibiotics into medicine has also tended to increase the cost, for the NHS has given an enormous impetus to manufacturers to research into these and into the other new therapeutic products which are becoming more and more, available as a result of this research.

The hospitals have been shedding much of their out-patient dispensing and many of the new drugs at one time usually confined to hospital and specialist use have become available to the mass of people on prescription with very real benefit. In effect the best and most modern drugs through the NHS have become part of the conception that there is no class or money barrier possible or desirable, under the NHS . The remarkably successful domiciliary treatment of the TB patient also tends to raise the cost of the chemist shop dispensing.

In this clamour for economies in the cost of drugs in the health service, and Labour is guilty of sharing in this, we should guard against false economy at the expense of the sick in not providing for them the best methods of care and of treatment, of exercising false economy in research and in preventing the use of new drugs and medicines becoming more and more available on the grounds of cost.

Proprietary Preparations in the National Health Service

In August 1953 the Minister of Health sent to doctors a list which gave the cost of many drugs and preparations  ordered on the NHS. This cost was the  total cost to the NHS  of a prescription for the quantity shown  and included the net cost of the ingredients (at the time of going to press)  the on-cost or profit,  the dispensing fee and the container allowance.

The list is  divided into two parts,  Part 1 dealing with some National Formulary Preparations and Part 2 with some Proprietary Preparations and their Equivalents. The term ‘equivalent’  is given to the drug which is identical  or reputed to have analogous therapeutic  effect to the proprietary preparation.

It is in the Part 2 section, that most interest and speculation lies.  There are 243 entries none of them of substances which are  advertised direct to  the  public and are therefore known as ethical proprietary products. Of these 243 ethical proprietary products the cost of the proprietary is higher than its equivalent in 67 cases, lower in 47 and the same in 10. For the remaining ethical products, 119 there is no cost comparison as no therapeutic equivalent is given. The ethical proprietary preparations which are lower in price than the equivalent or standard drug, i.e. in the British Pharmacopoeia or in the British Pharmaceutical Codex fall into the following categories – Sulphonamides,  Barbiturates, Vitamins, Oestrogens and Androgens

The explanation for this curious anomaly is that both types of products ie the ethical, proprietary, and the standard equivalent, are made by the self-same manufacturers. This cost comparison shows that there exists between the manufacturers a very tight system of price fixing and price control.  Another fact emerges, that the manufacturers are pursuing a policy of placing the same percentage of all their costs in research, in advertising and propaganda and in marketing on all their products irrespective  of  type supplied to the NHS. One other factor is that the dispensing fee for the proprietary fixed by the Ministry is less than for the standard equivalent.

The effect of the issue of the List on the prescribing habits of the doctors has already resulted in a slight reduction in the prescription cost. This was stated to be on the average of  1½ d lower in August-September 1953 than the 1952 level,  in October 2d lower and in November slightly higher than 1952. What the long term effect will be as a result of this economy campaign it is difficult to foresee. It is Labour’s  responsibility however to accept no diminution or reduction of standards of care and of treatment, or the withholding from the NHS on the score  of  cost, the newer medicines and drugs for the treatment of ill health.

The Chemical Drug and Pharmaceutical Industries

Composition

The CHEMICAL INDUSTRY is the largest of the three and  provides the raw materials and the manufactured products for industrial, agricultural, horticultural, domestic and pharmaceutical uses. The importance of the industry to the economy of the country is self-evident. With notable exceptions it is estimated that there are sufficient supplies of essential raw materials available  in this  country and in the case of Sulphur a scheme produced by the Labour Government, in conjunction with certain manufacturers, is producing enough to enable us to be self-sufficient from 1954 onwards.

The DRUG INDUSTRY is the smallest section and its raw materials and  manufactured products are required by the same users as mentioned above, but for the greater part of our supplies we have to rely on sources from abroad. To deal with this drug importation there has long been established in London, and in certain other ports, an extensive drug import business with the characteristic for this type of business of price-fixing and supply limitation by the system of supply and demand and of barter. Many of these drug warehouses are old and are very seriously infested by vermin, to such a degree that the vermin preventive measures are totally ineffective and the warehouses are a national disgrace. The wastage and pollution caused by vermin are preventable and the nation should see to it that this is speedily done as is also required to prevent the continued pollution of much of our stored food.

The PHARMACEUTICAL INDUSTRY is the channel through which the Chemical and Drug Industries supply their products to meet the demands for household drugs, and remedies, for proprietary medicines, for standard British Pharmacopoeial and British Pharmaceutical Codex products and for the ethical preparations.

The degree of integration and close interdependence within these  industries is such that it is well-nigh impossible to indicate a clear line of demarcation as further study will show.

Organisation

The industries are divided into production and distribution sections, with no sharp division between them. The producers and the distributors have in the course of time developed their internal or national and external or international distribution channels, and in many instances the capital employed by some companies is used in manufacturing, in wholesaling, and in retailing.

Within the industries are private and public companies and in the case of retail business, of single proprietors. The private companies obtain their monies from family or from other private sources and the public  companies by means of shares.

There are four channels of distribution used in the industries:-

  1. Manufacturer –  Consumer .
  2. Manufacturer – Wholesaler – Consumer.
  3. Manufacturer – Retailer Consumer.
  4. Manufacturer – Wholesaler – Retailer – Consumer.

These are traditional methods of distribution in this country and where the capital is used by companies either directly or through subsidiaries in each stage of distribution profit is earned

Finance and profits

An estimate  only can be given of the total capital employed in the  industries, this cannot be less than £400,000,000 if the retail side and the I.C.I. are to be included. This is a considerable sum and shows how important are  the industries to the economic life of the country.

There is an increasing amount of  American capital being  invested into the Pharmaceutical Industry since the introduction of the NHS. American companies are establishing subsidiaries in this country and are not content  to use the existing manufacturing and distributing facilities which the British manufacturers and distributors  can offer, but are building up their own manufacturing plants and extensive distributing channels.

The amount of new British capital invested since the advent of the NHS, is relatively small compared with this enormous potential capital of the American  companies, and the struggle between British and American capital in the industries is being intensified. The outcome may not be healthy for British capital or for the economy of the country. Labour should look at this increasing amount of American capital being introduced into the economy of this country, not only in the Pharmaceutical industry but in all fields of industry and commerce.

It will be of interest to list these American Drug and Chemical companies, many of whom have become established since July 1948, and is indicative of the prosperity now enjoyed by the industries:-

Abbott; Bayer, originally  German,  Capital now chiefly American; Park, Davis, Sharp & Dohme, now amalgamated with Merck; Lederle; Wyeth; International Chemical Co; Monsanto; Laporte; Searle; Warner; Lilly; Chas. Phillips; Smith, Kline & Smith; Lambert; Burroughs Wellcome etc., an imposing list of companies but not at all complete.

The advantage to the industries and to the health service of the country is questionable.

The PROFITS earned are striking, more especially since the introduction of the National Health Service.

Glaxo showed profits in 1951/2 of £2,581,916 and, in 1952-3 of £2,231,201.

Boots profits have risen since July 1948, as follows- Year ending March 31st, 1948 – £784,000; 1949 – £875,000; 1950 – £977,000; 1951 – £1,085,000; 1952 -£958,000; 1953 – £1,225,000 (These are net profits)

Beechams Group Ltd. show income  from  sales of proprietary products in year ending March 31st 1953 amounted to £19,193,361 and from sales by their grocery wholesale companies, £5,958,736.

The net profits earned by a few of the Group’s subsidiaries were as follows :-

Year ending; March 51st 1952.                      Year ending March 1955

Beecham Maclean Holdings Ltd £379,000.           £670,000

Eno Proprietaries Ltd       £403,212                            £414,481

Veno Drug Co. Ltd.               £96,243                            £117,685

Macleans Ltd                        £212,863                             £404,858

In Sept 1949 the Chairman of the Beecham Goup Ltd., when reviewing the results for the year ended the previous March, commented that the effect of the NHS on the business of the Company had not been adverse as expected. They had indulged in the formulation and marketing of ethical products during the previous years and had therefore cushioned any possible losses. It is obvious that the 1952/53 trading results of this Company have not been adversely affected by the NHS.

The effect generally on the proprietary medicine  trade by the NHS is difficult to ascertain, as many manufacturers have followed the example   of the Beecham Group in marketing so-called ethical products  most of which are duplicated products and not the result of initial research.  It is the curse  of  the NHS that these duplicated products are tolerated, since they add considerably to the cost of  the  drugs supplied under the NHS for by propaganda and advertising the doctors tend to order these products by the names prompted to them by constant advertising.

Nevertheless there are very many patent medicines which have ceased to exist because of the NHS. One obvious reason is the lack of advertising money available to meet this new challenge. Compiling a list of the casualties would  provide memories of past epoch medical discoveries.

Monopolies

The  close interdependence and extensive integration of the  production and distribution sections have produced inevitable co-ordination and cooperation amongst the rival companies  with the result that the industries show all the facets of modern capitalistic economy. The huge public companies by continual absorption of the smaller are gradually eliminating their competitors and consequently tend more and more to dominate the trends of both production and distribution.

The industries show therefore:-

  1.  Trusts   – The Imperial Chemical Industries
  2.  Cartels  – ICI,  Du Pont,  U.S.A.  German I.G. Farben.
  3. Production limitation
  4. Agency and Selective  Production Channels – Insulin
  5. Distribution limitation
  6. Agency and Selective Distribution –these activities are shown by the antagonism to the Co-operative Societies
  7. g. Trade Associations
    1. The Association of British  Chemical Manufacturers.
    2. The National  Pharmaceutical Union
    3. The Multiple Chemists Association
    4. The Co-operative Societies Chemist’s Association.

From these latter Associations is formed the Chemists Contractors Negotiating Committee which determines with the Ministry of Health the terms upon which the dispensing of medicines is undertaken in the  National Health Service by retail  chemists.  It is  significant that no employee has  a voice in these negotiations.

THE IMPERIAL CHEMICAL INDUSTRIES

The ICI is the colossus of the British Chemical industry. It  is engaged in chemical manufacture in dyes and dyestuffs, in explosives, in fertilisers, pest  destroyers  and soil sterilisers, in copper and brass smelting, in paint, in colour and varnish,  in non-metalliferous mines and quarries, in plastics, including Perspex,  nylon, and polythene,  and more and more in the pharmaceutical industry. This is a staggering production list and it is being supplemented by an increasingly comprehensive distribution machine.

It has an authorised capital of £95,000,000 and has recently been given permission to raise this by a  further £30,00,000. It has accumulated in past years a total of £173,692,265 in  undistributed profits which it has decided to give to its 214,000 shareholders in bonus shares free to the value of £80,282,240 leaving a reserve of  profits yet to be distributed of £93,410,025. At the same time in Feb 1954 the Ordinary Dividend of the Company has been raised from 13 to 15% on the results  of  the 1953 trading.

The  I.C.I. employs  thousands  of workers and possesses an international network of subsidiaries with which it enters into marketing  agreements and participates in international cartels with other huge foreign chemical concerns. Further as part of the comprehensive scheme engineered by its Board of Directors  it has agreed to share markets, to honour the patents and process agreements binding these huge concerns and in this country it dominates and, entirely controls vital sections of the chemical industry.

These cartels have and are continuing to endeavour to prevent any prospective political or legislative action on the part of governments to influence their relations with other foreign concerns or prevent their participation in monopoly and in cartels. The ICI has enormous economic power which it can use for the good or evil of the state at home and abroad.

It is rather significant that the Chairman of ICI has seen fit to issue a statement in a foreword to a Blue Book published by the Company attacking the Labour Party plan to nationalise or transfer parts of the chemical industry under public ownership. It is proposed to discuss Labour’s plans, and Dr. Fleck’s statement later in the memo.

Patents and Patent Rights

The industries are rife with patents, patent rights, patent processes, protected names and protected formulae etc. all  for profit and private interests and used entirely for monopoly purposes.

The fate of Penicillin is indicative of the scandalous use of patent rights.

The work on Penicillin was first undertaken in Britain and during the war for strategic purposes.  The methods of manufacture were made known to our  American allies. Free from war interference the American manufacturers were able to evolve new industrial manufacturing processes which increased enormously the output of Penicillin. In return for the ‘know how’of  present penicillin manufacture undertaken in America, our own producers have to pay royalties to the Americans for the right to use these processes or any modifications.

Patent rights and patent processes exist also in the manufacture of many of the Sulpha drugs, and thus payments are made to certain American manufacturers although again the first work on these drugs was done by the Germans and we were not very much behind in the research.

Thus patent and patent rights and the laws governing them need drastic revision, so that, ultimately all Rights should belong to the nation.

Trade Associations

Trade Associations play an important  part in the organisation and functioning of all  industries and trade  in modern capitalistic economy.

They exist for the promotion and the protection of the interests of their members thus, most chemical manufacturers belong to the British Association of Chemical Manufacturers- the ABCM. The ABCM performs its functions satisfactorily in that there is price fixing, and price control for almost the entire, output of chemicals and drugs, and monopoly production and distribution throughout the industries.  The ABCM ensures that this state of affairs and the other evils of monopoly capitalism continue and prosper.

The private employer proprietor pharmacist belongs to the National Pharmaceutical Union which affords professional coverage and protection against  unfair competition, price cutting and ensures monopoly distribution.

Another body known as the Proprietary Articles Trade Association exists, consisting of manufacturers, wholesalers, and retailers, and as its name implies it has the task of promoting and protecting the interests of its members engaged in the pharmaceutical  proprietary medicine industry. Its activities have already been the subject of an investigation by the Lloyd Jacob Committee on Monopolies. The PATA accepts into membership manufacturers who agree to restrict the distribution of  their products   to  those wholesalers  and retailers  who in turn further the sales of these  products by display and  recommendation.

The Co-operative Societies’ retail pharmacies  are not members of the NPU or the PATA and as a consequence are constantly subject to the restrictive practices of these monopoly trade associations.

Patent or Proprietary Medicines

The British Medical Association published in 1909 a book called “Secret Remedies, what they Cost and what they Contain” and followed in 1912 with another book  “More Secret Remedies”. The publication of the two books, caused the Government of the day to set up a Select Committee.

The Report of this Committee was presented on August 4th 1914. Some of the findings are  now obsolete and some of its recommendations have  become law, but the main context  of the Report must still be the basis  of any case of reform.

There  are many reasons for the delay in implementing the main provisions of the Report. Vested interests have been and are still powerfully entrenched. There have been two world wars. The press, dependent  for much of their  revenue on advertising have paid no attention to it and the public has not made it a case for action.

Efforts  in 1920, 1924 and in 1925 to introduce Bills in the two Houses  of Parliament failed and it was not until 1936 that the first Bill, the Medicines and Surgical Appliances (Advertisement) Bill was agreed to, later to be implemented by the provisions concerning stamp duty in the Pharmacy and Medicines Act 1941.

Witnesses giving evidence  before a Select Committee of the House of Commons in 1936 estimated the capital in the patent medicine industry as ‘largely in excess  of £100,000,000’.  Today the capital is roughly of the order of £200,000,000 to £250,000,000 and is slowly. increasing not so much by the introduction of new British capital but by the American drug companies mentioned previously.

Proprietary medicines range  between the  product which can only be  classified as a fraud on the public and the scientific medicine manufactured as a contribution to therapeutics and which is the result  of most costly research. To assume that all patent medicines are worthless is a mistake for many of them are either simple  drugs of known physiological activity or combinations of these put together on well-known and recognised therapeutic principles.

They fall into the following categories:-

  1. The Patent medicine – advertised and sold directly to the public. Generally the name only is patented.
  2.  The Household Medicine – aspirin etc. All manufactured to the standards  laid down in the British Pharmacopoiea or the  British Pharmaceutical Codex.
  3.  The Ethical Medicine -not advertised to the public but to the professional health worker in their press, by mail or by personal canvas  by representatives. The fact that they are advertised only to  the profession does not in any way guarantee  that they are efficacious, reasonably priced or free from false advertising. This method of direct professional advertising is being pursued more intensively than ever before, and has caused a profound change in the prescribing habits of the professional worker in the NHS.

In 1948 prior to the advent of the NHS the percentage of these so-called ethical medicines, prescribed under the old National Health Insurance scheme was 18%. Since July 1948 the percentage has gradually increased until it is now nearing 40%.  On the Continent and in the USA the percentage of ethical medicines prescribed and dispensed is from 80 to 90%.  To cite one example of modern medicine, namely Penicillin, its prescribing and dispensing can only be undertaken in the new standardised forms.  It would be retrograde to go back to the old ‘bottle of medicine’ attitude on the grounds of cost.

The profits of Glaxo already referred to and their spectacular rise over the years since the end of the war is illustrative of this new  tendency, for Glaxo are pioneers in the research and exploitation of Penicillin and of other antibiotics. It is ironical that the national wartime Government was responsible for giving every assistance, including financial aid, to Glaxo, Boots etc. to produce Penicillin, and  then ultimately to hand over this handsome profitable product gratis to these manufacturers. The manufacture of Penicillin still remains in the hands of three manufacturers, with price fixing and price control.

Advertising of proprietory medicines

Before the last war it was estimated that expenditure on advertising of proprietary medicines in newspapers and periodicals was between £2,500,000 to £3,000,000 a year, without the huge sums  spent on advertising on public vehicles, on hoardings and in other ways. The expenditure at present must be in the region of £10,000,000 – £15,000,000 a year.

In 1952-53 Beechams Group Ltd, out of gross sales of over £25,000,000, spent over £3,000,000 on advertising, an expenditure of 1/8th or 12% of income. This is probably a higher percentage of advertising expenditure than is general throughout the industry which is probably between 5 to 7 ½%  The protagonists for advertising argue that this reduces cost, but price reduction in the proprietary medicine field is unknown or very rare.

The expenditure on advertising incurred by the manufacturers of ethical medicines is much more difficult to assess, since increased, emphasis is laid on the personal professional contacts by the representatives whose costs can be included in salaries and wages. But it is undoubtedly a very heavy charge on the industry and must be a very serious, burden to many British manufacturers who are finding it increasingly difficult to counter the high-powered salesmanship of the American companies.

What are some of the charges made against proprietary medicines sold and advertised in this country?

  1. Widespread, exaggerated and persistant advertising of these medicines makes the public conscious of disease, of ill-health and cultivate the habit of taking medicine.
  2. The public postpone seeking the advice of their doctors and thus may prejudice successful treatment. By implication and directly, this advertising undermines public confidence in the N.H.S. and in the health workers who provide the service.
  3. An atmosphere of fear is created by many advertisements  suggesting permanent ill health, fear of an operation, of premature old age of incurable diseases and of harm to children. Many testimonials put forward are valueless since they come from people who do not possess the experience and knowledge of assessing evidence. Sufferers from chronic conditions, such as asthma and rheumatism, have hopes held out of cures which cannot be realised.
  4. Advertisements couched in pseudo-scientific or semi-scientific terms are designed to deceive and mislead and are often undertaken to circumvent the law relating to the disclosure of the composition of  the medicines.
  5.  It is claimed that  the power of  the purse of the proprietary medicines manufacturers as  advertisers prevents the ventilation of reforms or of exposure in the public press, that no one person or body of people dare risk the law of libel and that the freedom of  the press  is therefore derogated.

Research

A Federation of British Industries Survey in 1950-1, stated that the sum of £45,000,000 to £60,000,000 is spent in research and development by manufacturing establishments in Great Britain as compared with an estimated figure of $2,000,000,000 in the USA. This is of course the overall figure for industry, and on current fundamental research in the UK not more than £1,500,000 was spent excluding the sum spent on research in nuclear physics.

Government  scientific research in Britain for industrial needs is carried out by the Department of Scientific and Industrial Research, which, owing to enforced economies in finance and staff complained recently that basic research is hardly worth doing if the effort that can be devoted to it is insufficient to  secure steady progress.

The  amount of money spent  on research in the drug industries is not easy to determine but it is  not likely to be much more than £1,000,000.  During the early part of the last war a few of the major drug and chemical manufacturers set up a Joint Research Council at the request of the war time Government to try to make good any loss of essential drugs and chemicals due to the war. In 1946 this joint effort was dissolved as its  original purpose was no longer operative.

The Medical Research Council,  a Government financed organisation, is responsible for national clinical research, chiefly that delegated to it by the Government eg. research into the common cold, into BCG   etc. Until the last  few years research done upon human beings, sick or well, has been largely observational and not experimental due to the limited amount of useful work experimentally which could be done without harm. Recent advances in electrical and micro-chemical techniques and in physiology, biochemistry, neurology and endocrinology,  have made possible experiments on man himself without risk of ill-effects. Furthermore there  is now a fair supply of trained clinicians, although it has not always been easy to  find opportunities for them to work

In theory all hospitals in the NHS, due to the 1948 Act could provide facilities  for clinical research; in practice most have been too busy and funds have not been adequate. Recent discussions between the Ministry of Health, the Dept. of Health for Scotland and the Medical Research Council have  resulted in giving clinical research a new status as a career in its own right. A Clinical Research Board is to be set up which will organise clinical research centrally whether this is done in hospitals, in medical schools or at  any suitable place and will appoint trained clinicians to do research under its own aegis.

For this new desirable step forward the Medical Research Council is to allocate at first £50,000 annually rising to£250,000 in three or four years time. What the Boards will get  is not  known since the Regional Hospital Boards and the Boards of Governors will also get additional monies for clinical research.

A  new sphere for urgent and priority clinical  research is that of industrial or occupational health, due to the lag in research in this field and to the increasing hazards caused by the new scientific and technological developments in industry. The atomic industry is an example of new occupational health hazards.

Legal Regulations

There are many important legal regulations which govern the sale, supply and distribution of drugs and chemicals, and also the activities of the industries and of those engaged in them.

To list a few of the more important these are:-

  1.  The Poison Rules ,
  2.  The Dangerous Drugs Acts.
  3.  The Pharmacy and Medicines Acts.
  4. The Food and Drugs Acts,
  5.  The Therapeutic Substances Acts

etc.  etc

There are many of  these Acts  bringing up to date older regulations and are constantly being  added to by new provisions in Parliament.  Many more legal regulations are in force but space forbids further references, except  to  those which lay down standards of  purity of composition etc.

a. The British Pharmacopoeia which is published on the authority of the Privy Council. It is prepared by a   Pharmacopoeia Committee  appointed periodically from representatives of the British Medical Association of the British Pharmaceutical Society and of the Ministry of Health.

b. The British Pharmaceutical Codex is a similar standard book of  reference.

Standards, of’ manufacture  of drugs and chemicals and of their purity, poison or toxicity content, composition and recognition are laid down in these two Official publications. Both these standard references together with formulae  compiled over  the period of years in hospitals and by the old National Health Insurance Committees are the sources from which the present important National Health Service Formulary has been compiled.

There are also the  Statutory Committees set up by the appropriate  authorities in the professions e.g. by the General Medical Council, by the Pharmaceutical Society etc., charged with the task of implementing the penalties laid down in the many Acts of’ Parliament against the wrong doers in the professions and in the industries.

CO-OPERATIVE SOCIETIES

The  Co-operative Societies are experienced and competent in the distribution of household medicines, patent medicines and in  the dispensing of prescriptions under the NHS throughout the country through their pharmacies  and their pharmacy departments. Their Wholesale sections have manufacturing and packaging plants, and are effective competitors in some fields of manufacture.

One of the many problems which would arise if the distribution of the chemical and drug industries is placed under public ownership would be the sale and supply of scheduled poisons. The Co-operative Societies through their nationwide distribution- channels  and their pharmaceutical outlets suitably implemented and enlarged supervised and controlled, could deal with this and the other problems which would arise.

However the present private consumer Co-operative Societies must be replaced by State Co-operatives managed and administered financed and controlled locally, regionally and nationally as the existing Societies. The State Co-operatives would include wholesaler and retailer distributive representatives and also of the consumers and be made responsible to a Minister e.g. President of the Board of Trade.

STATE CO-OPERATIVES

In conditions of unemployment and industrial depression many of the distributive trades have looked to licensing and the limitation of shops as a means of remaining prosperous. Trade Associations have endeavoured to introduce these schemes of licensing but hitherto Parliament has refused to recognise these restrictive practices, since traders cannot be impartial when acting  in their own interests.

Even if licensing and limitation came under State or Local Authority administration there is no guarantee that the consumer would benefit by lower prices or by improved services.  Protection against competition would tend to keep up prices and monopoly profits.

Nevertheless the thousands of company shops, private and public company owned and the thousands of single proprietor owned shops make for costly uneconomic and inefficient retail distribution. The same is true in wholesaling and in manufacturing. Too  many in manufacturing, too many in wholesaling and too many in retailing,  absorbing thousands more workers than are economically  required, utilising more and more capital than is essential in bricks and mortar and adding unnecessary distributing costs to the goods sold in shops.

It is important that efficiency in distribution must be a priority in the new planning of the next Labour Government. Positive steps must be taken to improve distribution, reduce its costs, remove the wastage of huge duplicated stocks, duplicated transport costs, duplicated administrative costs, of middle-men profits, and of duplicated unproductive labour in the interests of the nation, and of the consumer.

Labour must place distribution in the hands of State Co-operatives

TRADES UNIONS and WHITLEY COUNCILS

Discussion of these industries would be incomplete without some reference to the trade unions of which there are several catering for the chemical and drug workers and to the Whitley Councils. It is true to say that the workers are badly organised, since they are graded from the unskilled to the semi-called and to the highly skilled who possess high qualifications and high degrees. Thus the “snob” element is very much in evidence.

The unions which do cater for these workers are doing a good job, not perhaps because of the strength of their membership,  but due to clauses in the N.H.S. Act requiring the wages and conditions of the workers engaged in the industries to be  determined through the machinery of the Whitley  Councils. Worker representatives on these Whitley Councils are through the trade unions  and the Councils are being used to negotiate salaries, wages and conditions for all grades of workers in the drug and chemical industries.  The Whitley Councils are used, also by all categories of health workers, except by the doctors.

SUMMARY

The advent of the N.H.S. has geared up the pharmaceutical service to a standard not attained previously, in the hospitals and health centres and in the chemist shops. It has also made the industries solvent and highly profitable, so much so, that it has attracted much American capital with dangerous tendencies.

The cost of drugs supplied to the Health Service cannot be appreciably reduced if profits have still to be levied. The economy measures especially the imposition of the 1/- charge, have acted as a boomerang. The cost per prescription has gone up 1/-.

Research should be encouraged on the antibiotics and on the other new medicaments rather than discouraged by constant clamour for economy. Economies rightly can be made in the Health Service but not at the expense of the sick.

The CHEMICAL DRUG and PHARMACEUTICAL INDUSTRIES

Composition

The three industries  are closely integrated and inter-dependent and can therefore be  considered as  one unit  for all practical purposes.

Organisation

Both sections – production and distribution – show planned co-ordination and co-operation  amongst manufacturers and distributors with general agreement on price fixing and price control, production and distribution limitation and selectivity. The larger public  companies  dominate the trends and policy of production and distribution as  in the case of steel.

Finance and Profits.

Disturbing aspects of the capital situation are the limitation of new British capital, in contrast with the increasing interest taken by American drug manufacturers in the industries. The profits earned are comparable to  those obtaining in  other industries in spite of intensive  competition and of greatly increased advertising and marketing costs.

Monopolies

The industries show all the facets of  modern capitalistic, economy and tend to use their economic power for selfish interests

The Imperial Chemical Industries

The domination by the ICI over the chemical industry is a challenge to modern governments.

Patents and Patent Rights

The need to review and revise the Laws governing Patents and Patent Rights is  fully justified in view of  the injustice and lack of public interest exhibited in their use.

Trade  Associations

The  part which trade associations play in  these industries  is contrary to the interests of the consumer and to the economy of the country

Patent or Proprietary Medicines and their advertising

There is no diminution in the advertising expenditure on patent medicines and little or no diminution in the marketing  of new products, especially of new ethical preparations. The power of this purse prevents  exposure of fraudulent claims and through  ventilation of the perniciousness of patent medicine habits. This advertising also undermines confidence in the NHS.

Research

Research in the industries  is wasteful since it is competitive, uncontrolled and uneconomic.  Apart from the specialised work of the Medical  Research Council little or no other Government expenditure or sponsored research exists. Thus the entire monies spent on research are from private capitalist sources.

Legal Regulations

None of the existing regulations give adequate safeguards to  prevent the introduction of spurious, fraudulent and harmful products into the shops for sale or supply in the Health service. This is true of the whole chemical and drug industries including veterinary products, those used in pest  control, in food processing and in many other channels of production and distribution.

Co-operative Societies

The present consumer Co-operative Societies are an integral force in the distribution services in this country and are experienced and competent also in the pharmaceutical service. The question arises – how much better can this service become and what role should they play in the future  distributive services of the country?

State Cooperatives

These do not exist in the present distributive set up. Will they fit the requirements of a distribution service place under public ownership?

Trades Unions and Whitley Councils.

The Labour Government by its insistence on clauses safeguarding the wages and conditions of work of  the employees in the industries  and no less, in the NHS has provided for the first time reasonable standards of work and more adequate rewards for those engaged in the industries.

GENERAL RECOMMENDATIONS

In “Challenge to Britain” Labour has stated in its proposals to reshape our industry that we intend to pay our way in the world and to help under-developed countries. Labour therefore must have a national plan for the expansion of our industries and to maintain full employment.  A major shift in the pattern of production to meet the changing conditions is envisaged and to ensure this we must expand many of the sections of our engineering and chemical industries. Where industries are privately owned the changes required will be difficult  to effect, for to secure the ends we hope for we must get the full co-operation  of the industries concerned.

But where  private  enterprise fails to act in the public, interest  the nation must have the power to step in.  How shall we  set  to work,  for the ventures   of the post war years prove  that large scale  adjustments can be more easily accomplished under public ownership?

Chemicals are as vital to our economy as steel and coal. Chemical production must  expand to  keep pace with the  enlarged requirements, thus  the  new economic plan will make fresh demands on the industry. At present the chemical industry is under tight monopoly control with final decisions in this vital industry in the hands, not of  the community  but of private individuals.

To establish this positive control over the industry’s investment programme, and to overcome the  dangers  inherent in private monopoly power a substantial degree of public ownership is required.

Labour is mainly concerned with the  following sections of the industry:- heavy chemicals (including alkalis,  chlorine, solvents and sulphuric acid), fertilisers, explosives,  dyes, and dyestuffs, plastics  and petro-chemicals.  But these  chemicals are closely interconnected with other chemical products, which make final decisions as to the boundaries of public ownership rest  upon technical and administrative  considerations. A Labour Government will obtain from the industry itself such information and records as will, enable it to determine the most appropriate sections to be acquired and the most appropriate methods of acquiring them.

It is with this policy statement in mind and after the most careful consideration, this Association recommends to its colleagues in the Labour Party the following:-

1. A Policy Discussion Pamphlet giving facts and such information and records as are available to be published by the Labour Party for distribution to its members and constituent bodies. In our view it is only by these means will party members become familiar with the history and record of these industries, and be satisfied that the Party Policy is the correct one.’

2. The S.M.A. has gone on record at each Annual Conference that it recommends the nationalisation of  the drug, chemical and pharmaceutical  industries and has done so for the following reasons:-

a. It reaffirms the Socialist conception that the means  of production and distribution should be under public ownership.

b. Monopolistic private industry is conducted  in a manner antagonistic to the public welfare and is  against consumer interest.

c. The industries are so closely integrated that they can be considered as one unit for nationalisation purposes since the larger public companies dictate trends, prices, and policy, working cooperatively and in co-ordination.

d.  The  take-over of the private ownership of the production system of the British capital involved should first be accomplished at a cost to be determined actuarially.

e. The take-over of the American Capital  interests presents greater difficulty, but as a first step, a halt  should be called to prevent further fresh introduction of capital into any section of the industries.  The American drug companies must use the British industrial resources  in manufacturing and distribution.

f. Until the Labour Party has determined its national distribution policy the remaining wholesale  and retail distributive  channels must  await  this  decision, but the Association strongly urges  consideration  of a  distributor-consumer State Co-operative  system as worthy of trial  in the pharmaceutical industry.

g.  Monopolies in the  capitalist  system resist all  efforts  to be broken or mend their ways then they must become public monopolies conducted for the public welfare.

h. Patent Rights and the Laws governing  them have been developed to allow  exploitation  of patents for personal and private gain, and not for  the public  weal, and since they are an integral part of monopolist policy, then they must come under public ownership.

i. Drug and chemical manufacturers  should be  prevented from giving ‘patented  names’ to products  when these are simple or combinations of simple substances.

j. Trade Associations as at present constituted can have no part  in an industry publicly owned and therefore must be ‘disbanded or their purpose and activities re-orientated to serve their new masters.

k. The sale and advertising of patent medicines continue with insidious persistence despite the advent of the NHS.  To curtail and eventually eliminate all patent medicines, advertising must cease except that of the ethical products to the professional workers in the professional press and by direct mailing.  The employment of travellers and representatives to cease throughout the industries and labour used for productive purposes.

l. There is a need for a responsible Trials or Standards body to determine quality, efficacy and standards in the entire Chemical industry to exercise control over the toxicity and purity of veterinary products, of the chemicals used in pest control, of those used as fertilisers and of those used in food-processing etc. The present Therapeutic Substances Act governing the chemicals and drugs used in the pharmaceutical section does not prevent the marketing of spurious patent medicines, neither do any of the present Pharmacy and Medicines Acts.

A National Council for Pharmacy should be set up with the control of a Therapeutic Trials organisation within its ambit as one aspect of its activities. All products  and preparations used in medicines must be scrutinised and vetted by this Therapeutic Trials organisations whoever produces them.

m. A National Research Board should be set up co-ordinating all research  undertaken either in private or in nationalised industry including that in the drug and allied industries and in the national health service. The Board would establish specialised departments responsible for the carrying out of the research but the planning and the purpose of research would be determined by the Board in the public interest.

n. Employment in the industries is unstable and insecure, as so much of their products are included in the exportable surpluses of British Industry. The influence of the trade unions within the industries is unrealistic in view of the vast amount of labour employed and therefore the trade unions have no say in the affairs of the industries.

To safeguard the level of employment and thereby the volume of exports the industries need extensive control and planning in the national interest.

o. In consultation with the Labour Party the Co-operative Societies experienced as they are in marketing and retail distributions must become an integral part in the public ownership of the means of distribution, and to achieve this their private consumer ownership should be replaced by state owned co-operatives.  The transition period should be one of trial and error commencing with the wholesaling and retail distributing of coal,  and then include the marketable products of other industries as these come under public ownership.

p. State owned Co-operatives will afford enormous variety of controls, differing methods  of marketing, opportunities of stabilising supply and demand, place market research under public control, affect reductions in costs of transport and distribution, and raise the standards and conditions of work and secure employment to the distributive worker.

The State owned Co-operative should be democratically controlled by elected representatives from Consumer interests with adequate representation from the, distributor or worker interests. The Co-operative  should be locally, regionally and nationally controlled,  responsible to a Department of Government for policy and finance.

In this way local interests and local customs of marketing and of marketing facilities  of specialised products and resources would be safeguarded and yet come within the ambit of  local, regional and national planning and distribution policy.

The absorption and the taking over of the other wholesale and retail distributive channels and shops could be determined by the local State Co-operative on the  basis of local distribution requirements. The costs of the take-over to be determined actuarily.

The further argument for the state Co-operative would so lengthen these general recommendations as to make this memo too unwieldy.

q. The determination of the Imperial Chemical Industries to challenge the Labour Party on the issue of Public Ownership and control is indicative of the power, economic and political, which it possesses and which it intends using in every conceivable manner. Suffice it should be for Labour to ignore the threats and to concentrate on planning the ways and means for the take-over.

As in the case of the existing nationalised industries none of the workers,  administrators, planners and research workers, technicians, the unqualified, the qualified or the graduate workers have lost their skill or the ability to work because of the change of ownership. Why should it be so in the case of the I.C.I. worker?

Similarly the provision of capital for increasing capital  resources  or the planning of further research or of future progress do not lag behind as resources provide, in the existing nationalised industries.

It is the opinion of this Association that the whole of the productive and distributive resources at home and abroad should come under public ownership.

r. The Association considers the lack of proper controls over the Toilet and Cosmetic industries, the extravagant advertising, the lack of standards of purity, of toxic properties of many of these products associated with these industries is a matter which a Labour Government should look at in the future,

s. Economies in the National Health Service can and should be made, but these must arise as a result of experience over a period of trial and error ‘and in the opinion of members of this Association who have vested interest  in Health the period of trial has been much too short before economies were introduced.

It is apparent that little or no economy can be made in the cost of drugs as supplied to the N.H.S. despite all the efforts of the Ministry to guide the habits of the doctors, since the industries exercise price-fixing and price control and insist on the profit and rake-off.  Central buying methods of drugs and chemicals are successful to a certain degree in reducing total costs but even these methods cannot remove completely all the profits of manufacture and of distribution,

t. The National Health Service is Public Enterprise in Health in which health worker and health consumer take part.  To continue this socialist experiment successfully the Labour Party must plan its future along progressive and enterprising lines.

The treatment of ill-health must be on the most up-to-date methods. The fullest uses must be made of all the latest medical and surgical resources and research must go on at a greatly advanced and co-ordinated scale.

The Prevention of ill health calls for the most vigorous measures to stamp out the provision of dirty food, to close filthy and unsuitable food manufacturing sources and unsuitable retail premises etc., rebuild and improve the public and private conveniences which are unhealthy, and unwholesome. Drastically to remove the causes of industrial and occupational ill-health.

Labour must continue to make Housing and Rehousing one of its priorities in its social welfare planning.

The promotion of good health is also of paramount importance in social welfare planning and requires a new approach in health education, in the provision of adequate recreative facilities and more intelligent use made of leisure.

Lastly and of major importance,  this Association considers, the provision of Health Centres as a priority in the progressive and enterprising planning for the Service of the nation.

u. This Association pledges its entire resources to assist the Labour Party in any way considered desirable and necessary to educate and enlighten members of the Party and of the electorate, in the takeover of any sections of the drug and chemical industry. And further to continue  to assist in the planning and in the ascertaining of the methods and of the information required to determine the most appropriate ways and means  in the take-over.

Mach 1954

T.C.T.