Before World War I American drug companies made few synthetic drugs of their own. Drugs in bulk, or the license to manufacture them under American labels, were purchased from Germany. The war gave the American drug industry its start by ending the German domination of the American market. Congress suspended the German patents, allowing American firms to copy the German drugs. Local manufacturers of such basic chemicals as acetone and phenol began to provide them as the British blockade interrupted shipments from Germany. The price of the enormous domestic surplus of bulk chemicals dropped after the war, and these building blocks of pharmaceuticals were available and cheap.

The Abbott Laboratories company began its great boom by duplicating German drugs whose patents had been canceled. After the war it started making a local anesthetic similar to the German drug Novocain, simply because the...