Small-Town Pharmacists Closing Doors

The Associated Press
Monday, September 17, 2007; 10:33 PM

WASHINGTON -- After nearly 25 years as the proud owner of Home Town Drugs and Gifts in Sweet Home, Ore., Dave Redden closed down this summer, joining a growing trend among small-town pharmacists.

Competition from mail-order pharmacies and larger retailers played a role in his decision. So did the long hours that came from running a business.

But Redden, 62, said one factor, the Medicare drug benefit, outweighed them all.

Before the benefit started on Jan. 1, 2006, many of his customers paid cash. Under the new system, private insurance plans pick up much of the tab. That was good news for the customers; not so for Redden.

The insurers used their considerable clout to demand bigger discounts. Plus, they did not have to pay Redden right away. The pharmacist said he often waited months for insurance plans to reimburse him.

Redden's bills did not wait, however. He took out loans to ease the cash flow crunch. First for $50,000, then a second for $60,000. The interest further reduced his profit margin. Eventually, he had enough. He closed shop and now works behind the pharmacy counter of the local Safeway.

"It just got hard to be continually borrowing money and getting more into debt and not seeing any light at the end of the tunnel," Redden said in a telephone interview.

Lobbying groups representing pharmacists say Redden's case highlights a serious decline in the ranks of independent pharmacists. About 5 percent of independent pharmacies, or 1,152, went out of business last year, according to the National Community Pharmacists Association.

The association says the Medicare drug benefit, known as Medicare Part D, led to lower and slower payments to pharmacists. The group wants Congress to pass legislation that would require Medicare's drug plans to reimburse pharmacists within 14 days of an electronic submission of a claim and within 30 days of all other submissions.

The legislation has bipartisan support. It has 200 co-sponsors in the House and about a dozen in the Senate. Most come from rural districts and states. About half of the independent pharmacies are in communities with fewer than 20,000 residents.

Opposition to the legislation comes from the insurance industry and the middlemen they hire to manage a plan's drug benefit, pharmaceutical benefit managers.

Currently, Medicare and the private sector routinely use a 30-day standard when paying doctors and hospitals, so insurers should not be treated differently, the bill's opponents say.

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