Word: cyanamid
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Last August the Justice Department's Antitrust Division brought suit against three major drug makers-American Cyanamid. Bristol-Myers and Chas. Pfizer & Co.-on charges that they had conspired to fix prices of three "broad spectrum" antibiotics. The trustbusters' charges were similar to those that the Federal Trade Commission had been pressing since 1958 against six drug companies-including the three under fire from Justice. Last week the drug industry got a shot in the arm when FTC Hearing Examiner Robert Piper ordered dismissal of the FTC charges...
...antibiotics cited in the Justice Department suit are aureomycin, terramycin' and tetracycline-three broad-spectrum antibiotics, so called because, unlike narrow-spectrum penicillin, they treat a wide variety of diseases. Until 1953, according to Government charges, Cyanamid's aureomycin and Pfizer's terramycin accounted for 92% of the broad-spectrum market. At that point, all three defendants, plus New York's Heyden Chemical Co. (now Heyden-Newport Chemical Corp.), applied for patent rights on tetracycline, a new antibiotic made with an aureomycin base...
...Threat. "Pfizer and Cyanamid," says last week's indictment, "knew that tetracycline represented a threat to the continuation of their dominant positions and unreasonably high profits." To keep that threat in check, the indictment alleges, Cyanamid bought out Heyden's rights to the development and agreed to help Pfizer get the tetracycline patent. In return, charges the Justice Department. Pfizer licensed Cyanamid to produce the drug. Later, to avoid a court fight that might have nullified the patent, Pfizer and Cyanamid let Bristol-Myers...
...result of these arrangements, says the Government. Cyanamid. Pfizer and Bristol-Myers were able to maintain ''non-competitive and unreasonably high prices'' for all their broad-spectrum drugs; wholesale prices to druggists on the broad-spectrum antibiotics generally range between 25? and 30? a capsule. In addition, according to the indictment, the three defendants and their associates* were able to keep for themselves 70% of the $165 million broad-spectrum market as late...
...each, and their chief executives would be liable to as much as a year in jail plus $50,000 fines. But the embattled drug executives clearly had no intention of surrendering without a fight. Snapped Pfizer's McKeen: "The charges are positively not true." Said Cyanamid's Malcolm: "Harassment." And Bristol-Myers' Schwartz promised: "This action will be vigorously defended...