NATIONAL RECOVERY ADMINISTRATION 

CODE OF FAIR COMPETITION 

FOR THE \ 

WHOLESALE DRUG 

INDUSTRY 

AS SUBMITTED ON AUGUST 25, 1933 

REGISTRY No. 698-2-23 

The Code for the Wholesale Drug Industry 

in its pres{'nt form merely reflects the proposal of the above-mentioned 

industry, and none of the provisions contained therein are 

to be regarded as having received the approval of 

the National Recovery Administration 

as applying to this industry 

I L. 

.. .. "' ... ---

U.S. DEttoa'tTOP\Y 

UNITED STATES 

GOVERNMENT PRINTING OFFICE 

WASHINGTON : 1933 

For sale by the Superintendent of Documents, Washington, D.C. - - - - - - - - Price 5 cents 

CODE OF FAIR COMPETITION OF THE WHOLESALE 

DRUG INDUSTRY 

ARTICLE I-PURPO E 

SE 'TION 1. The Code is adopted pur uant to Title I o:f the 

National Industrial Recovery Act. 

SEc. 2. The purpose of the Code is to effectuate the policy of 

Title I o:f the National Industrial Recovery Act insofar as it is 

applicable to Wholesale Druggists. 

ARTICLE II-DEFINITIONS 

SEcTio :r 1. The term '"\Vholesale Druggist " is defined in accordance with the definition adopted by the Bureau o:f Indu t~ial Alcohol, U.S. Treasury Department, Regulations No. 2 Art1cle 15, 

Section 1501 (e), issued April 1, 1931, as follows: 

"' vVHOLESALE DRUGGIST' means a person who is engaged in the 

business of selling at wholesale a repre entative as ortment of 

pharmaceuticals and other articles and Inaterials such as drugs, oils, 

chemicals, proprietary medicines, and druggists' sundries, and who 

carries a stock of representative pharmaceuticals and uch other 

articles and materials in uch assortments and quantities as will 

enable him r egularly to supply froin tock, from day to day, the 

usual and immediate medical requirements o:f retail druggists, pharmacists, physicians, hospitals, and dispensaries, and who is duly 

qualified under the laws of the State in which he does business to 

carry on such business." 

\iVherever in this Code the words "Wholesale Druggist" or "employer" or words of similar import are used, they are intended 

to refer to a Wholesale Druggist as hereinbefore defined. 

SEc. 2. The word " merchandi e " as used in this Code is defined 

to mean: (a) drugs and (b) cosmetics and toilet preparations. 

(a) The term ' drug " n1eans and includes all pharmaceutical 

products, including substances and preparations recognized in the 

United States Pharmacopoeia or National Formulary or any supplements thereto and all substances, preparations and devices intended for use in the cure, mitigation, treatment or prevention of 

disease in, or the preservation or enhancement of bodily or mental 

comfort or condition of, man or other animals and all ubstances 

and . prep~r~tions, other. than food (but including medicinal or 

quasi-mediCinal preparatwns, such as those sold or produced primarily for their vitamin content), and all substances, preparations 

and devices, intended to affect the structure or any function of the 

body of man or other animals. 

(b) The tenn " cosmetics " and the term " toilet preparations " 

means and includes perfumes, toilet waters, face powders, face 

8192--33 (1) 
2 

Preams, rouaes shaving cream. , dentrifice , oaps, and imilar substances and preparations de igned and intended for application to 

the person for the purpo e of clean ing, improving the appearance 

of, refre hing or pre erving the p r on. 

ARTICLE III-MEMBERSHIP 

Any Whole ale Druggi t i eligible for membership in the Code: 

and may be ome a member of th de b ignina and delivering 

to the Seer tary of th Drug In titute of Am rica, Incorporated, 

330 Wet 42nd Street New York, N.Y., a 1 tter ub tantially in 

the form annexed hereto. 

ARTICLE IV-Ho R OF LABOR RATE OF PAY, A :ro OTHER CoNDITIO :rs 

OF EnrPLOYMENT 
3 

under which no employee (other than apprentices) shall be paicl 

less than $12 per week in any city with a population of less than 

100,000 ;. and under which apprentice employee.~ shall be paid not 

less than $2 per week under the ·e minimum wages. The population 

in each case shall be determined by the United States cen us of 1930. 

SEc. 4. No per on under ixteen (16) year of age hall be employed, except that per ons between fourteen (14) and ixteen (16) 

years of age may be employed not to exceed three (3) hours per 

day, between 7: 00 a.m. and 7: 00 p.m. in . uch work as will not 

interfere with the hours of daytime schooling. 

ARTICLE V-PRICE AND TERMS OF p A YUENT 

SECTION 1. From time to time after the effective date of this Code, 

the Drug Institute of America, I ncorporated shall publish or cause 

to be publi heel and shall furnish or cause to be furnished to each 

vVholesale Druggist who is a member of the Code, lists specifying the "co t-sold" of a many item and group of items 

of merchandi e as practicable, and from time to time shall 

publish or cause to be published and shall furnish or cause to be 

furnished to each member of the Code as promptly as practicable 

any amendment of the " cost-sold " of any such items and groups 

of items of merchandise when and as circumstances require such 

amendment. The "cost-sold" of any such item or group of item 

of merchandise hall be calculated by the Drug Institute ·of America, 

Incorporated, in consultation with the Statistical Division of the 

National Wholesale Druggists Association and the F ederal 'Vholesale Druggists Association on the basis of their own research and 

the economic, statistical, and accounting reports submitted to thmn 

from time to time by the members of the Code. In calculating the 

" cost-sold " of any merchandise, the cost to the entire 'Vholesale 

Drug Industry shall be approximately determined, including cost of 

acquisition or r eplacement of the merchandise, handling char ges, 

the allocable portion of overhead, includina all general and administrative expense and taxes, the cost of ales and deliveries, and any 

other appropriate charges, all determined in accordance with good 

accounting practice. The " cost-sold " of any merchandise may, in 

the discretion of the Drug Institute of America, Incorpor ated, be 

published in the form of manufacturers' list prices with pecified 

maximum discounts indicated. The "cost-sold" of any specified 

merchandise, or any amendment of such " cost-sold ", shall go into 

effect on the tenth day following its publication, as above provided; 

and no member of the Code hall sell any uch specified merchancli e 

at a price or prices below the " cost-sold " therefor in eff ct at the 

time of the sale or of contracting to sell. All discounts allowed by 

members of the Code shall be cash discounts and shall be allowed 

only if paid within the customary cash discount period; and no discount whatever shall be allowed which bring the net selling price 

to the purchaser of any merchandise below the " co t-sold " then in 

effect for such merchandise. 

SEc. 2. Subject to such regulations as may be adopted in a Code 

for the entire Drug Industry: (a) Wholesale Druggists shall have 

the right to contract with manufacturers to observe the re ale prices 
4 

of proprietary and/ or trade-marked merchandise at all times during 

the operation of this Code; and (b) Wholesale Druggists shall have 

the right to contract with retail druggists or other distributors of 

merchandi e to observe the resale prices of proprietary and/or trademarked merchandi e a e tabli hed by the manufacturer. 

ARTICLE VI.-U NF AIR PRACTI ES 

For all purpo es of the Code the following de cribed acts shall 

constitute unfair practices: 

SECTION 1. Making r I romi ing to any purcha r or pro pective 

purchaser of any product , or to any officer, emr loyee, agent, or 

representative of any such purchaser or pro pective purcha er, any 

bribe, gratuity, gift, or other payment or remuneration, directly 

or in lirectly. 

SE . 2. Procuring, otherwise than with the consent of any member 

of the Industry, any information concerning the business of such 

member which is properly regarded by it as a trade ecret or onfidential within its organization, other than information relating to a 

violation of any provision of the Code. 

SEc. 3. Imitating or simulating any design, tyle, mark, or brand 

used by any other member of the Industry or knowingly elling or 

passing off any product with any uch imitated or simulated design, 

style, mark, or brand. 

SEc. 4. Using or ubstituting any material or product different in 

brand, kind, or quality from that pecified by the purcha er thereof. 

SE . 5. Using or ub tituting any material or any method of manufacture distribution marketing or ale not in a cor with any 

applicable law, rule, or reaulation of any aovernm.ental authority. 

SE . 6. The secret payment or allowance of rebat refund concessions, advertising allowance , or unearned li count wh h r in 

the fonn of mon y or otherwi e, or ecretly xt ndino· to c rtain 

purchasers sp cial services or privileges not extended to all purcha ers under like terms and condition . 

SEc. 7. To prev nt, by uninvited persua ion li paragina innuendo, or by concealm nt, a cu tomer or prosp tiv cu t m r fr m 

purcha ing a particular product which h has r qu t lThe uninvited di uading or the attempt to di ua 1 a u t m r 

or pro pective cu tom r from purcha in an arti le of a parti ular 

bran 1 trade mark or typ , whi h ·u h u t m r ha r qu t and 

p r uading or attempting to r uacl u h u t m r I ur ha 

an ar i l cal ulated and design l to r th ame uq o , but 

of a cliff r nt brand, trade mark or ype than th arti l r u t 

unle th v nd r ha not a ailabl f r al h arti l u , t d 

and unl u h fact i li l 1 to u h u t tiY 

u tom r . 

.. E . • To p rmit the sub ti u i n of a pr 1u 

u. t m r li h i pur ha inO' in ln linO' th 

ry t a p r on f an ar icl f , iii r n rl 

mark fr m that whi h th u t m r 1 ti 

h i 1 ur ha ing, unl u h fa l 

fr r f r al by th r t 
5 

SEc. 9. Disseminating, publishing or circulating an y false or misleading information relative to any member of the Industry or to 

any product or price for any product manufactured or old by 

any member of the Industry (including one's own business or products), or the credit standing, business conduct or ability of any 

member thereof to manufacture any product, or to the conditions 

of employment among the employees of any member thereof. 

SEc. 10. All advertising or statements made to promote the sale 

of drugs, cosmetics and toilet preparations, whether written or oral, 

including all forms of printed or oral recommendation of one's 

goods under the control of the manufacturer, such as publicity of 

all kinds, including newspaper and magazine advertising, circulars, 

labels, booklets, radio advertising, and statements made orally in the 

promotion of sales of such products by salesmen or others employed 

directly or indirectly by any member of the Industry, must be 

truthful and hall not be false directly, or by ambiguity or inference 

tend to create a misleading impression. The truth of an advertisement shall be judged by its intended effect as well as by a literal 

rendering thereof. 

SEc. 11. Inducing or attempting to induce by any means any 

party to a contract with a member of the Indu try to violate such 

contract. 

SEc. 12. Aiding or abetting any person, firm, business trust, association or corporation in any unfair practice. 

SEc. 13. Making any sale or contract of sale of any product 

under any description which does not fully describe such product 

in terms custo)11arily used in the Industry and conforming to any 

applicable law, rule or regulation of any governmental authority. 

SEc. 14. Any violation of any State or Federal law now or hereafter in force relating to the manufacture and sale or advertising 

of the products of the Industry. 

SEc. 15. Any violation of any other provision of the Code, whether 

or not therein expressed to be such, or using or employing any practice not hereinabove in this Article described which the Committee 

shall have declared to be a practice that would tend to defeat the 

policy of Title I of the National Industrial Recovery Act and, therefore, an unfair practice, and of which determination by the Committee its Secretary shall have given notice to the members of the 

Code and to the President of the United States. 

ARTICLE VII-REPORTS AND STATISTICS 

The Drug Institute of America, Incorporated, 330 We t 42nd 

Street, New York, N.Y., and the Statistical Division of the National 

Wholesale Druggi ts' Association, 51 Maiden Lane, New York N.Y., 

and the Federal Wholesale Druggist ' A sociation, 123 l\1arket Place, 

Baltimore, Md., are hereby constituted as agencies of the Industry 

to conduct research for all purposes of the Code, and to collect, receive, and tran mit to the President of the United States such reports 

concerning wages, hours of labor, " cost-sold " and unfair methods 

of competition as the Comn1ittee may deem advisable or as may be 

required by the President under the provisions of the National Industrial Recovery Act unle s and until any other agencies are elected by the Committee. 
6 

ARTICLE VIII-AmurNISTRATI N 

SECTION 1. The administration of this Code shall be under the 

direction of a Committee of even member , four of whom hall be 

elected annuall} by the Board of Control of the National Wholesale 

Druggi ts' A ociation, two of whom hall be le ted annually by th 

Executive Committee of the Fe leral 1Vhole al Drugo·i t A ocia- tion and the eventh of whom shall be elected annually by the other 

six member of the Committee from the proprietor or executive 

officers of ompanies in the group of Whole ale Druao-i. ts who are 

members of the ode but who lo not belong to either the National 

1Vholesale Drugo·ists' As ociation or the Fe leral \Vhole ale Druagi ts' A sociation. SEc. 2. The Committee hall have all uch pow r an l dutie a 

ma} be nece ary and proper in it eli cretion, to nable it fully to 

administer and effectuate the purpo es of the Cod . The Committee shall also hav the power to mak u h a m nt ~ 

a aainst the members of this Cole as may be nece ary to defra~ the 

expenses of admini tration. Such a se ments shall be rna l on 

such equitable basis as the Committee may from time to time det rnlin , giving some con i l ration to the relativ gro sal during 

the preceding calendar year made and reporte l by each memb r of 

the Code; and the aggregate a ments made again t an3 n member in re pect of any one cal n lar year :hall n t exceed 250. The 

failure of any member of th de to pay any uch a ment f r 

a period of thirty (30) day after the late on which it become; ... 

payabl hall con titute a violation of the Code. 

ARTICLE IX-GENERAL PnoYrro_ 
7 

material used in the manufactur of products for export. The term 

"export shall include in addition to shipments to foreign countries, hipment to uch United States' po ession as may be defined 

by the Industry, but shall exclude the re-importation of any export 

shipments. 

SEc. 7. If any member of the Code, whether his capacity be that 

of a manufacturer whole aler, or retailer act in addition thereto 

in any other capacity or capacities, the business conducted by uch 

member hall be governed in each of the capacities in which he may 

so act by the provision of the Code applicable to any capacity or 

ca.pacitie in \\hich uch member's bu iness may be conducte L 

ARTIOLE X-Al\IENDMENT 

SEc. 1. This Code and al.l the provision hereof are expre ly made 

subject to the po\\er of the President of the United States, in accordance with the provision of Clause 10 (b) of the National Industrial Recovery Act, from time to time to cancel or modify any 

order, approval, licen e, rule or regulation i sued under Title I of 

said Act and specifically to the power of the President to cancel or 

modify his approval of this Code or any conditions imposed by him 

upon his approval hereof. 

SEc. 2. Such of the provisions of this Code as are not required to 

be included therein by the National Industrial Recovery Act may 

with the approval of the President, be modified or eliminated, as 

changes in circumstances or experiences may indicate by method 

to be outlined by the Committee. It is contemplated that from time 

to time supplementary provisions to this Code or additional Code 

not inconsistent with the provisions hereof will be submitted for 

the approval of the President to prevent unfair competition in price 

and other unfair and destructive competitive practices and to effectuate the other purposes and policies of Title I of the National 

Industrial Recovery Act. 

F R~r OF LETTER OF As E.L -T TO THE ConE 

To the Secretary of 

The Drug In titute of America Incorporated, 

330 Wet 42nd St. New York N.Y. 

Dear Sir : The under igned, desiring to become a member of the 

Code of Fair Competition of the Whole ale Drug Indu try dated 

---------------------- 1933 a copy of which has been received b 

the undersigned, hereby as ents to all of the provisions of said 

Code and by o doing hereby becomes a member of the Code. This 

assent become effective a of the date on which the Code shall 

have been approved by the Pre ident of the United State of 

America as therein provided, or as of the date on which the Code 

shall have been delivered if such date shall be subsequent to the 

appro al of the Code b. the President as afore aid. 

For all purpo es of the Code the address of the under igned, 

until it shall file with you written notice of a change of uch 

address, shall be as et forth at the foot of this letter. 

Very truly yours 

Addre s: 

0 
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