Price Fixing in Polio Shots?

When the Salk vaccine proved successful in 1955. six drug firms were licensed to produce the vaccine. Exhorted by the U.S. Public Health Service to produce as fast as they could, the companies turned out more than 205 million doses of vac cine through 1957. sold 103.5 million doses to the Government for distribution to an eager public. Last week five of the companies -Eli Lilly & Co.. Allied Laboratories Inc.. American Home Products Corp.. Merck & Co.. Inc. and Parke. Davis & Co. -were indicted in a Trenton (N.J.) federal court on antitrust charges that they had criminally conspired to fix prices, submit uniform prices in sales to the Government.

At the time, the Government raised no objection to the price (63-c- to 70-c- per dose). In the rush to get the vaccine, it had asked for sealed bids instead of negotiating prices, which would have allowed the Government to inspect company records on costs.

The National Foundation for Infantile Paralysis, which also bought millions of doses of the vaccine, got its vaccine at 30-c- to 35-c- per dose. But this bore no relation to costs. The foundation drove a hard bargain because it had guaranteed to buy the vaccine even before it knew the vaccine was successful, had poured $22.4 million into 17 years of research that produced the vaccine.

The Justice Department does not know whether it will proceed with a civil suit to recover some of the $53.6 million in federal funds spent for the vaccine, because it is still not sure the price was too high. It noted that the five companies twice cut prices voluntarily, when the vaccine was in short supply. What the department objects to is that the price cuts were always identical.

The drug companies angrily denied the charges. Prices of vaccine, they noted, had been cut five times, to a little over half the initial price. "It would be a strange conspiracy," said Eli Lilly's President Eugene N. Beesley, "that had as its purpose repeated decreases in prices -never an increase.'' Lilly's average profit, said Beesley, was only 6 1/4-c- per dose, against which the company took the gamble of producing vaccine without assurance of a market. Currently, Lilly has an inventory of 24,043,000 doses. Since demand has fallen way off, Lilly may have to destroy the vaccine, because it loses potency after a certain time. Said Beesly: "It is incredible that, as a postscript to one of our greatest achievements, we should be confronted with these unfounded charges."

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