A Profitable Sideline

Ever since the antibiotic era dawned, the miracle drugs made from molds have had no more ardent champion than a tough-looking, hard-working civil servant named Henry Welch. Starting with a 1943 crash project to develop standards for penicillin and methods of testing its purity and potency, he advanced to become undisputed czar of the industry. So bright did Welch's star shine that his bosses in the Food and Drug Administration boosted him from chief of the Antibiotics Division, at $14,450 a year, to the supergrade rank of director, at $17,500.

Last week, as the full story of Henry Welch's career unfolded before Senator Estes Kefauver's antitrust subcommittee, it became clear that the guardian of public interest in antibiotics also had a personal stake in the matter. Over the years Welch had pocketed $260,766, derived, in one way or another, from the interests he was sworn to regulate.

Germs of Conflict. A graduate of Brown University (Ph.B. '25), with a Ph.D. in bacteriology at Western Reserve University's School of Medicine, Welch joined FDA in 1938. During World War II, as head of FDA's microanalytic division, he built a small pilot plant to grow his own penicillin, soon had the required standards and tests worked out. He was in on the ground floor when other antibiotics came along.

According to records subpoenaed by the subcommittee, Welch hooked up in 1952 with a Manhattan publishing outfit called MD Publications Inc. to put out a series of medical journals puffing new drugs. As editor, he got quite a deal: 7 1/2% of the net advertising income, plus 25% of the income from the cost of adding "extra," late-closing pages, plus 50% of the net income from the sale of reprints.

Most lucrative of the journals was Antibiotic Medicine and Clinical Therapy, which was passed out free to as many as 60,000 physicians. With guarantees of a big professional audience, leading drug-makers took acres of ads--spurred on by articles mostly favorable to new antibiotics and often written by researchers working for the companies themselves. The drugmakers bought plenty of reprints of the articles to deluge doctors with publicity for their newest products.

Splitting the Kitty. In eight years Welch got $31,730 from his cut on advertising and odd extras, plus $173,293 from reprints. Nor was that all. Parke, Davis & Co. invested $100,000 in a Brit ish edition of Antibiotic Medicine and Clinical Therapy, and when it failed, there was $37,945 left in the kitty--which Welch split with the publisher and principal owner of MD Publications, Spanish-born Dr. Felix Marti-Ibanez.

Along the way, Welch and Partner Marti-Ibanez formed Medical Encyclopedia Inc., with themselves and their wives as sole owners. They made a go of it, with a liberal assist from the U.S. Each year for five years, the Antibiotics Division helped sponsor a symposium on antibiotics. The technical reports presented, often by experts from Government lab oratories and great universities, were published in an Antibiotics Annual for the profit of Medical Encyclopedia Inc. That netted Welch an extra $36,750.

Deals Without Details. The wonder was that Welch got away with so much for so long. He carefully told his superiors before making any deals, but never told--and was not asked--about the details. Many doctors disagreed with his puffs for new and more expensive drugs (prime example: Welch crusaded for combinations of two or more antibiotics in one costly capsule), but contented themselves with polite arguments on the professional level, sometimes in the very journals he edited and in which he gave himself plenty of space for rebuttal.

Last year, when Welch's superiors finally started asking questions, he told them that he got about $3,500 a year in "honorariums" from the journals. Believing his story, HEW Secretary Arthur S. Flemming merely ordered him to quit his editorships to avoid any conflict of interest. But at last week's hearing (Welch pleaded that he could not testify because of a heart condition), Flemming learned the fuller story from the subpoenaed records. Said Flemming: "It is clear that Dr. Welch deliberately misled his superiors." Though Welch had put in for retirement June 1 at the age of 57, Flemming angrily ordered him to resign now or face dismissal. He resigned.

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