The letter goes into detail as to the information they desire concerning the cooperative advertising program. Will you please return all of this information to me with a copy of the letter that you write to Bob. Sincerely yours, WILLARD SIMMONS, Mr. WILLARD SIMMONS, Executive Secretary, IOWA PHARMACEUTICAL ASSOCIATION, National Association of Retail Druggists, DEAR WILLARD: I would first like to extend you a sincere word of congratulations on a tremendous NARD convention. You are to be highly commended for providing and conducting one of the finest conventions ever put on by the NARD. For your first one, it was simply tremendous. In view of the discussion which took place with respect to cooperative advertising programs and the resulting resolutions, urging or offering the services of the NARD and Mr. Earl Kintner to review such programs as to their legality and propriety, I am submitting herewith material for the I. Ph. A. cooperative advertising program. Included is the following: 1. Letter of August 1, 1962, to Mr. George Gale appointing him the association's agent or business manager to the program. 2. Letter of August 1, 1962, clarifying the association's position with respect to Antitrust and FTC involvement. 3. Letter from Mr. Gale of August 15 regarding information to be sent the firm of Brookhart, Becker & Dorsey to obtain Antitrust and FTC clearance. 4. Letter to Brookhart, Becker & Dorsey with material and information requested as well as material developed for announcing program to pharmacies in Iowa. 5. Letter of August 17, 1962, from Mr. Gale advising of a meeting with FTC and Antitrust Division. 6. Letter of August 17, 1962, from Mr. Gale regarding Chesebrough-Ponds, Inc., and my reply. 7. Letter of September 7, 1962, from Mr. Gale indicating type of letter to be mailed participating pharmacies with regard to form to be used and mailed to determine co-op ad funds available. Letter of September 19, 1962, from Mr. Gale regarding form and copy of form in part. 8. Letter of September 20, 1962, from Mr. Gale with copy of opinion from Brookhart, Becker & Dorsey regarding legality of program. Similar letter of September 24, 1962, indicating we could proceed. Copy of my letter of September 24, 1962, explaining the position with regard to the legal opinion. 9. Copy of letter of September 17 which was sent to service drug wholesalers for their information. In view of the legaal opinion from Brookhart, Becker & Dorsey, we have modified or corrected the announcement to go to pharmacies as indicated in proof of the material. I would also advise you that the form from Brookhart, Becker & Dorsey to the I. Ph. A., subject "Material Needed-Antitrust Clearance" (enclosure 3), was prepared by them not the I. Ph. A. We answered those questions relating to price as requested and established the advertising committee's function to clarify their activity in conformance to the information requested. We will also change and amend the executive committee resolution to clearly state that prices of such advertised products will never be discussed by the association or any committee thereof. It would be hoped that the advertising agency who prepares the ads and copy will place the manufacturers suggested price in the ad-if that is acceptable. The I. Ph. A. respectfully requests that the NARD review the material enclosed and that it then be forwarded to Mr. Earl Kintner for his evaluation and opinion as to the legality of this cooperative advertising program. The I. Ph. A. will be exceedingly appreciative of your immediate attention to this request and a reply as soon as convenient. With sincere appreciation of your cooperation and assistance, I remain, ROBERT G. GIBBS, Executive Secretary. AUGUST 1, 1962. Mr. GEORGE GALE, President, Marketing Programs, Inc., DEAR MR. GALE: The executive committee of the Iowa Pharmaceutical Association at an officially called meeting on July 26 approved the Marketing Programs, Inc., program of advertising and hereby appoint you as the association's agent or business manager to negotiate advertising allowance contracts in its behalf in accordance with your presentation at our meeting in Des Moines. It is understood that this action does not and will not incur any financial obligation to the Iowa Pharmaceutical Association or its members. It is also understood that any money not used within the terms of this agreement is the property of the association. It is agreed that the association and its advertising committee reserves the right to pass final acceptance on all contracts and agreements for advertising entered into with manufacturers and advertising copy and layout and may reject any that are unsatisfactory or objectionable. The terms of this agreement cover a 1-year period of weekly advertisements, as outlined, in the Sunday edition of the Des Moines Register. This agreement is subject to cancellation by either party upon receipt of written notice received 1 month prior to cancellation. Sincerely, IOWA PHARMACEUTICAL ASSOCIATION, AUGUST 1, 1962. Mr. GEORGE GALE, President, Marketing Programs, Inc., DEAR MR. GALE: Just a note to clarify part of the letter written by Jack Siefkas of July 27. As you are aware, organized pharmacy has been under recent attack by the Justice Department, Antitrust Division, regarding what they feel is a violation of the Sherman Antitrust Act. In view of this, the executive committee and the I. Ph. A. legal counsel are increasingly concerned about any involvement in any program which could be construed as a violation of this act. It is for this reason, as a necessary safeguard, they have requested that a statement be obtained from the Justice Department, Antitrust Division, as to the legality of the I. Ph. A. and its advertising committee using prices for commodities so advertised. They recognized that the statement to be inserted on the bottom of the ad, indicating that some members might sell the above item for less, may be sufficient to prevent antitrust implication. However, the executive committee and legal counsel want to be positive about it. They did not feel that the telegram you read from a representative of Marketing Programs, Inc., indicating a clearance with the Federal Trade Commission was sufficient from a strictly legal point of view. I am considerably enthused about the program and am most anxious to get the program underway. I can see tremendous potential in such a program. As I expressed to Jack Siefkas, there is an important practical problem insofar as obtaining from members a record of purchases to be transmitted to you to be processed through Remington Rand. Most retailers have a dislike for administrative work and our members may feel that to provide such information is not worth the bother and time. It's a selling job and I hope via mail and direct personal communication at our meetings in October to have the success that will be required. I will keep in close contact with Jack Siefkas and with you as we develop the program and look forward to the close association this participation will provide. Sincerely, MR. ROBERT G. GIBBS, IOWA PHARMACEUTICAL ASSOCIATION, MARKETING PROGRAMS, INC., Executive Secretary, Iowa Pharmaceutical Association, DEAR MR. GIBBS: First of all, please pardon my delay in thanking you for sending in your signed agreement. In regards to your letter of August 1, may I suggest that your legal counsel communicate immediately with our attorneys in Washington, who are now preparing material for the Anti-Trust Division of the Department of Justice and the FTC. Please have the communications addressed to Mr. Murray Callahan, Brookhart, Becker & Dorsey, 1700 K Street, Northwest. The information that they would like to have should be sent to them along the lines of the enclosed questionnaire. In answering question No. 5, please indicate by marking 1, 2, and 3 in front of your competition in the order of importance. Mr. Callahan would also like to have a copy of your membership application form, a copy of your by-laws and a copy of your charter. When I spoke to Mr. Callahan this morning on the telephone, he said that all three of these are necessary when they consult with the authorities in Washington. In answering question No. 9, they would like to know if your executive committee will set the prices, how your executive committee is appointed or elected, and the reason you will establish prices on the items so selected. Mr. Callahan has informed me that it will be necessary to get the release for each individual association, and at the present time they are putting together the presentation for the Greater Lowell Pharmaceutical Association. Time may be saved by having your counsel communicate directly with Brookhart, Becker & Dorsey. There will be no charge to you for this service. GEORGE GALE, President. Mr. MURRAY CALLAHAN, Brookhart, Becker & Dorsey, Washington, D.C. DEAR MR. CALLAHAN: I am enclosing herewith the information requested in an effort to obtain antitrust clearance for the cooperative advertising program to be sponsored by the I. Ph. A. in behalf of its members offered by Mr. George Gale, Marketing Programs, Inc. The material has been reviewed by Mr. William Wimer, I. Ph. A. legal counsel, and the I. Ph. A. executive committee for their approval and information. If you require further data or information in your effort to acquire necessary FTC and antitrust clearance, please advise. Our ability to implement this program depends on this clearance and it is hoped that you can immediately discuss approval of the Antitrust Division on behalf of the Iowa Pharmaceutical Association. We have all arrangements completed here and can institute the advertising immediately pending this approval. Sincerely, IOWA PHARMACEUTICAL ASSOCIATION. Executive Secretary. To: Brookhart, Becker & Dorsey. From: Iowa Pharmaceutical Association. Subject: Material needed, antitrust clearance. 1. There are 794 drugstores in the area served by your association. 2. There are 513 member pharmacies in the area served by your association. 3. The average weekly dollar volume per member store is $2,000 to $2,500, approximately. 4. The average number of inventory items carried by each member drugstore approximates 1,800. 5. Our competition in order of importance is : (2) Chain drugstores. (1) Supermarkets. (1) Super markets. (Indicate the relative order of the competition by the use of numbers in the blocks opposite the indicated competitors; for example, greatest competition would numbered "1".) 6. Please indicate whether your association has any of the following: (a) Charter or articles of incorporation. (b) Membership application form. (c) Bylaws. X X (Please attach to this questionnaire copies of any of the above documents which are in use by your association.) 7. Our association is associated with the National Association of Retail Druggists. 8. Our prescription business amounts to 35.8 percent of our total weekly business. 9. How will your association establish the prices of the cooperatively advertised products? (a) Will there be a continued designated committee or group representing your entire membership who will establish the prices? If so, what authority exists in your charter or bylaws for the establishment of such a committee? If there is not now a standing committee to whom such a function can be assigned, please provide a membership or board of directors resolution authorizing the setting up of such a group. Please provide the names and offices, if any, of the members comprising the price establishing committee. (b) Describe in detail the standards which the committee will employ in establishing such prices; for example, to meet outside competition. (c) When and how often will such a committee meet to establish prices? IOWA PHARMACEUTICAL ASSOCIATION, ROBERT G. GIBBS, Executive Secretary. Additional answers to questionnaire, above The articles of incorporation establish that the executive committee shall consist of the president, president-elect, first and second vice president, and three immediate past presidents. The treasurer and executive secretary are to be ex officio members. All officers are elected by mail ballot of all members each year. Nominees are selected by the advisory board at its interim meeting. Advisory board article VI, bylaws. No. 6. Articles of incorporation and bylaws enclosed. No membership application form used. Membership dues statement enclosed. No. 7. As an associate member, annual dues of $25 allows for two members in the house of delegates, one serving as a member of the nominating committee and one on the resolutions committee. No. 3 and No. 8. Figures based on Lilly Digest 1961 for the northwest central geographical area which includes Iowa. No. 9. (a) Article XV, articles of incorporation provides for the president to appoint such committees as are necessary to carry out the objectives and purposes of the association. It is therefore anticipated that the president will appoint a continuing designated advertising committee who will have authority to pass final acceptance on all contracts and agreements for cooperative advertising allowances and ad layout and copy and reject any that are not satisfactory or objectionable. (b) The advertising committee will price those beauty and health aids needs advertised according to the manufacturer's current regular price except each weekly and may have 8 to 10 different items or products priced at 20 percent below the current price in order to more effectively meet the present competitive markets. The add will state that the price shown is the approximate price and that some independent participating pharmacies may sell these products for more or less than the price so indicated. Current manufacturers prices will be obtained from price list available direct from manufacturer or as listed in the Red Book or Blue Book. Copy of executive committee resolution authorizing president to appoint said committee is enclosed. No committee has been established pending clearance from the Justice Department, Antitrust Division and Federal Trade Commission. List of advertising committee members will be forwarded at that time. (c) It is anticipated that the advertising committee will convene monthly to review agreements and contracts for cooperative advertising allowances, ad layout and discuss current regular prices and products to be priced to meet competitive markets for each preceding month. Additional information submitted with the questionnaire The Iowa Pharmaceutical Association, Des Moines, Iowa, announces its sponsorship of an exciting, powerful and effective statewide cooperative advertising program for the INDEPENDENT COMMUNITY PHARMACIES OF IOWA See below for complete details on How this plan will work. What you will get out of it. What action you should take to receive maximum benefit as a full participant. HOW THE PLAN WILL WORK At no cost to you or to the Iowa Pharmaceutical Association to effectively meet the competition of chains, supermarkets, and discount houses in the distribution of health and beauty aid needs 1. The executive committee of the Iowa Pharmaceutical Association has authorized the appointment of Mr. George Gale, of Marketing Programs, Inc., New York, to act on its behalf in negotiationg advertising and display allowance contracts with manufacturers. 2. The Iowa Pharmaceutical Association will ask member independent community pharmacies to assign their cooperative advertising agreements with manufacturers and distributors of the Iowa Pharmaceutical Association agreement enclosed. NOTE.-More than $12 million a year is available to pharmacies for cooperative advertising and display allowances that is not used-a tremendous potential of unused money. 3. Acting as coordinator and agent, Marketing Programs, Inc., will negotiate agreements between manufacturers and distributors and the Iowa Pharmaceutical Association to feature manufacturers' products in your Iowa Pharmaceutical Association-sponsored weekly, full-page advertisements in the Des Monies Sunday Register for 1 year. NOTE. The Sunday Register reaches 76 percent of all the families in 76 Iowa counties. The coverage for all 99 counties is 59 percent-a higher coverage than normally provided by most newspapers in their city of publication. 4. Working through the Iowa Pharmaceutical Association Advertising Committee, Marketing Programs, Inc., will plan, produce, and place these full-page advertisements in the Des Moines Sunday Register. All advertisements will contain excellent copy and art reflecting credit on the members of the Iowa Pharmaceutical Association and explain the importance and value of the community independent pharmacist to the local community. 5. The advertisement will also list the name and location of each participating independent pharmacy. The remainder of your ad will sell nationally advertised health and beauty aid needs through the independent community pharmacy. 6. Each member participating independent pharmacy will receive tear sheets of the full-page advertisment each week for his window and interior displays so that he may tie in his weekly sales program with the advertisements. 7. Marketing Programs, Inc., will furnish all the material necessary for the newspaper advertisements and all promotional material without cost to the participating independent member pharmacy or the Iowa Pharmaceutical Association. 97902-63- -8 |