George’s Corner

Fifty years ago (1966) Medicaid started to exist. It was an add-on to Medicare, which was enacted in late 1965. California was one of the first states to implement Medicaid. We started calling it Medi-Cal a couple of years later. In the late spring of 1966 one of my mentors told me that the state thought it might need a pharmacist to work on the Medicaid drug program. A couple of interviews later I found myself in an amazing job. I was the staff person in charge of all the Medi-Cal drug program’s policies.There are many fascinating stories to tell. (I am gradually writing an autobiography. Here is part of one chapter.)


My introduction to the significance of the job was interesting. I was in charge of the pharmacy in a hospital in Berkeley. One day a local drug salesman came in and said that the company’s man in Sacramento wanted to meet me. At that time I had been interviewed once, by one person in Sacramento. Only the following people knew that anything was afoot: my wife, my boss, my soon-to-be boss, and me. The “Sacramento” guy came, and he and I and the local salesman had lunch in the hospital’s cafeteria. I went through the line first to be sure I paid for my lunch. We sat down and chatted about the weather until the “Sacramento” guy finally gave up and started asking questions. I gave evasive answers, which was easy because I had not been offered the job. But at that point I knew I really wanted it, because its importance had just been confirmed. After I had been on the job a couple of weeks I mentioned the incident to my boss. He said that the only way that the “Sacramento” guy could have found out about me was to have gone into my boss’s office and read a memo sitting on his desk.


This drug (brand names: Miltown and Equanil) was being marketed as the first tranquilizer. The two companies manufacturing it were very interested in getting it listed in the Medi-Cal formulary. The salesmen were constantly bugging me about how important it was. One of those salesmen told me he would lose his job if he didn’t get it on the formulary. Another one asked me if there was anything they could do to get it on the formulary. I said yes. His eyes lit up and he asked what could they do. I said, “Make it the same price as Phenobarbital, because as far as I’m concerned, it does the same thing.” Neither one was happy. I am sure one of them lost his job.

Bribes I have truly forgotten who it was and whom he worked for, but I clearly remember one salesman in my office telling me that there was a pharmacist in another state whose home mortgage was being paid for by a drug manufacturer. I interpreted that as an opener for an offer of a bribe. I did not rise to the invitation, and he soon left. I never saw him again.


At that time there were many tetracycline products on the market — tetracycline, chlortetracycline, oxytetracycline, and others. They all had the same wholesale price. I remember it as $12.00/100. Each one had a partner product that added an antifungal (nystatin or amphoteracin). Those were about $23.00/100. Nystatin alone was $7.00/100.

We had an advisory committee of physicians and pharmacists that reviewed proposed policies and formulary changes. The meetings were open to the public (drug salespeople) but only members of the committee could speak during the meeting.

I told the committee that one of the drug manufacturers had reduced its price for tetracycline to $4.00/100 and suggested that a ceiling price of $4.25 be established. They rapidly agreed.

I then said that I would like to have their opinion regarding the other tetracyclines, and they said that those all did the same thing so we might as well take them off the formulary.

I then said that the combination products should be evaluated, since they cost significantly more than the separate components — even after including the second pharmacy fee. They said not only would it be less expensive, but they did not like the combination products and felt they were unnecessary.

The audience was getting squirmy. It was all in a medium-size meeting room that had one standard three-foot wide door. There were two phone booths in the lobby. Remember, this was in 1969 — no cell phones, no Internet. At the moment that the chairman banged the gavel to close the meeting there was a rush for the door, with several people pushing and shoving to be the first out the door to get to the phone booths.

I then asked what the physicians were asked by the salespeople. They said that the question was: “Do you want the government to dictate how you practice medicine?”

There were protests. We got lots of phone calls, lots of mail, and lots of pressure. One of the manufacturers was able to set up a meeting with my boss’s boss’s boss. On the meeting day my boss and I went to the meeting room, which was filled with about six of the manufacturer’s VIPs from New York. A secretary-type person poked her head in and said that the high-up state executive was unable to attend, and to carry on. The manufacturer’s representatives presented us with thick binders full of journal reprints and told us they had done a survey about the issue. The conclusion was that the vast majority of physicians did not want to have this change occur. I asked how they had done the survey so rapidly, since it had only been a week or 10 days since the advisory meeting. They said they had their salespeople conduct the survey. We were not impressed. I then asked what the physicians were asked by the salespeople. They said that the question was: “Do you want the government to dictate how you practice medicine?” My boss (a wonderful M.D.) smiled and asked if there was anything else that they wanted to say. They said no. The meeting ended.

We made all of the changes. Within the next six to 18 months the tetracycline analogs were all reduced in price or disappeared, and all of the combination (tetracycline/antifungal) products disappeared. Nationwide.

This is the first time, to my knowledge, that the above stories have been shared in print. Anyone who has any questions should email me. CT

George Pennebaker, Pharm.D., is a consultant and past president of the California Pharmacists Association. The author can be reached at; 916/501-6541; and PO Box 25, Esparto, CA 95627.