Independent Pharmacy Closures Illustrate Need for Pro-Patient, Pro-Pharmacy Policies

By Kevin Schweers

A number of recent news articles sum up both the challenges many independent pharmacists face to care for patients as well as the need for reforms to put patients first, as two bills in Congress would do.

The average independent community pharmacy employs 10 individuals and contributes greatly to the local tax base. With each of these closings, jobs likely go with them. Even when affected employees land at a national chain, the community retains much a smaller share of healthcare dollars spent there. Of course, shifting impacted patients to mail order sends all of those dollars out-of-state in most cases.

Here are a few recent examples:

  • In Florida, the Hillsborough Patch reported that after 44 years, Hillsborough Pharmacy was selling to Walgreens. Owner Tom Greco noted, “We loved what we were doing, but we were having to cut cut cut, and were slowly unable to treat our customers as we had for over 44 years. The loss of profitability and our cost constraints on how we could serve the public were the top two reasons we had to decide to sell.”
  • The Daily Press in Newport News, VA reported that 103-year-old Simpson’s Pharmacy was closing its doors. With employer health plans requiring or at least heavily incentivizing employees to get their prescriptions through mail order, the pharmacy could no longer remain in business. The article mentions a similar occurrence in December with Franklin Pharmacy in Franklin, which was founded in 1887.
  • The Belleville News Democrat of Illinois reported that the Evers Group of pharmacies was closing two locations because they can’t afford to stay open due to low reimbursements from pharmacy benefit managers (PBMs). Company President Todd Evers also cited Medicaid reimbursements as a problem and noted that 2010 was the company’s worst year in two-plus decades. “The crazy thing is that the volumes are good, but the (profit) margins are just in the toilet,” he told the paper. Additionally, the St. Louis Post-Dispatch reported that 30 of Mr. Evers 55 employees have lost their jobs due to these closures.
  • In North Carolina, the Raleigh News and Observer notes that Tom Jones, who had owned Garner Pharmacy for 37 years, was forced to close due to struggles “common among some independent pharmacies.” Jones lamented, “I don’t want any other pharmacy to go through what I just went through.” Longtime patients like Joe Ann Bell said that individual attention can’t be found at bigger pharmacies. “It’s a more personal atmosphere,” she said.
  • On the West Coast, the closing of two California independent pharmacies is a similar tale. “Insurance companies have made it impossible to stay in business,” owner John Hunnell told the Lodi News-Sentinel. “They are paying pharmacies poorly. We just couldn’t afford to stay. In the past two or three years, it has been particularly bad. The companies drive the little guys out of business.” Further south in Fresno, Mel Renge spoke of closing the family pharmacy his father opened in 1951. “Obviously, like everyone else in this economic downturn, we’ve been hurt. We were surviving, but the Medicare reimbursement levels kept decreasing every year,” he told the Fresno Bee, adding that fears of looming MediCal cuts also were a factor.

Fortunately, it’s true that some new independent pharmacies are opening, sometimes even replacing a lost independent pharmacy. Of course, these entrepreneurs will have to grapple with the same, and other, challenges. The hurdles mentioned above have hardly gone away.

Congress can and should look at these examples and ensure patients maintain a choice as to where they can obtain their medications. Two bills introduced in Congress, and endorsed by NCPA, would address many of these issues and help level the pharmacy playing field.

The Pharmacy Competition and Consumer Choice Act (S. 1058/H.R. 1971) would help protect a patient’s choice of pharmacy and rein in what are arguably anticompetitive PBM audit and pricing practices. Meanwhile, the Preserving Our Hometown Independent Pharmacies Act (H.R. 1946) allows independent pharmacies to negotiate contracts with the same leverage as national pharmacy chains.

For their part, independent pharmacists can and should get involved in the grassroots process. And patients who want to preserve their choice of pharmacy can play a part here.

6 Responses to “Independent Pharmacy Closures Illustrate Need for Pro-Patient, Pro-Pharmacy Policies”

  1. 1 Namron Sivad July 18, 2011 at 7:31 pm

    I’ve been in business for 31 years and I’ve never seen conditions as bad as they are now. My business is actually up $58,000.00, but my profit is down $59,000.00. Medicaid slashed their reimbursement and the state teachers changed PBMs and slashed reimbursement. Tricare hardly covers cost and CVS/Caremark continues to strongarm customers away from us and into either their mailorder or local pharmacy. It’s always interesting to note that those who are critical of independents, speak from a position on the class of trade ladder that receives much lower pricing. A good answer would be to eliminate class of trade pricing or to pay actual net cost for each class of trade with the paltry insufficient fees and then see which way the corners of their mouth point. There is no way that I have negotiated any of this mess.

  2. 2 S Eck July 19, 2011 at 12:28 am

    I just celebrated my 60th birthday last week. I imagined at this stage of my life I would be looking forward to retirement plans. Unfortunately, PBM’s and Medicare / Medicaid have stolen most of our maintenance business and forced our remaining profits down to practically nothing. I cannot find a buyer for my store. I am just making ends meet and have not been financially able to upgrade my facility for years. My low overhead has probably enabled me to last longer in this hostile pharmacy environment. But, it looks like there will be no “store retirement” for me after working for over 35 years.

    My patients will miss me when I’m gone…

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