The number of independent pharmacies in the United States dropped from 23,106 in 2011 to 21,909 in 2017, according to NCPA Digest.
I recently spent the day with Chris Castagna, RPh, an independent pharmacist who owns 3 stores in New Jersey. Owning more than one store can help with inventory and overhead costs, he said. Most independent owners are older, having been in business in the same community for many years. As I sat and talked, Castagna never stopped working. He was always on his feet, darting between the computer, the phone, and the counter.
Castagna got into the independent pharmacy business, he joked, because “if I had to work for an idiot boss, at least the idiot I could work for would be myself.”
Castagna decided about 15 years ago to expand his array of pharmacy services, offering home delivery, providing vaccines, and offering more professional counseling. He noted the great lengths he has gone over the years to differentiate himself from the competition, notably, providing great customer service and sound advice for clients. These efforts have paid off, in the form of him being able to buy 2 more stores in a large suburban area, one of which services a retirement community.
At one point in our discussion, Castagna’s assistant interrupted us to say there was a customer at the counter who had a letter stating he had to go to one of the local chains. He had been a customer for 30 years. Castagna had seen this man’s children grow up, and had been there for him during several illnesses. The man felt badly but felt he couldn’t afford to not to go to the retail chain as directed. Castagna said he’s never gotten used to losing patients like that but had no choice. That practice, and the fact that many people had moved across the river from New Jersey to Pennsylvania because of the tax structure has cut into his business in recent years, he said.
Complicating the independent pharmacy business, Castagna discussed pharmacy benefit manager (PBM) involvement with drug pricing. Their extraction of fees from the pharmacy companies keeps the price of brand name drugs high. Payers don’t care if prices are high, they just, in turn, raised copays, he said. The high prices made it difficult to keep in stock all of the new medicines because it was money just sitting on the shelf waiting for a customer to fill a prescription. Occasionally, he said, he would lose a customer who couldn’t wait a day for him to order the medicine.
PBM extracting fees from community pharmacists, coupled with the fact that generics are priced so low, are driving pharmacy profits lower, Castagna noted. Generic wholesalers with whom he had arrangements dictated the prices after they skimmed off the profit from the generic medicines. As an independent he could join a group of other independents who would negotiate prices with the distributors, but they didn’t have the clout of the big chains. Also, the cost to fill a prescription dropped from the price of about $11, which was the Medicaid rate 5 years ago, to now .40 to .60. The people that did the negotiating charged him $1.50 cents for each prescription filled. On many generics he lost money.
During this point in our conversation, the pharmacy phone rang. It was a customer who wanted to know why she got a letter saying her blood pressure pills were “poison.” He explained the situation—due to the disclosure of certain cancer-causing substances in certain blood pressure medications, many have been recalled--and advised the customer he would take them back. He hung up and told me that China now controlled all the chemicals necessary to make drugs and controlled the generic market, along with India. Castagna said he felt a slight doubt about the quality of generic drugs and the FDA’s oversight on these generics, but he noted there was probably no way to reverse that, since China had most of the rare earth minerals essential to drug making.
He had been doing compounding for a while but recent laws had made that financially prohibitive because of the cost of quality control that had been imposed. He eventually lost one of his two helpers because he couldn’t pay her so he was doing most of the work himself.
Our interview was interrupted by a patient that questioned Castagna about why her pill color had now switched from green last month to yellow this month. He had to change brands due to cost, he said. She didn’t understand why everything had to be so complicated. Neither did I. As we spoke his computer kept printing out reams of paper with electronic prescriptions. Some couldn’t be filled for incomplete information, some needed prior authorization, a process that had been increasing of late. He had to call a local physician and be put on hold for 5 minutes before he could talk to anyone. His fax machine wasn’t working and Verizon was already 2 hours late in coming out to repair the phone line. All the while, we talked he paced back and forth, counting pills, answering the phone, talking to customers.
I ended our interview by asking him if he would go into independent pharmacy and start all over again. Without hesitation he said, “Hell would have to freeze over first. At least I had some good years, and my kids are through college, and if I had to work for an idiot, at least it was me.”
Despite his own challenges, Castagna said that motivated pharmacists looking to get into independent pharmacies can thrive. He encouraged use of technology and diversifying inventory to more carefully curtail care for each customer.
Of note, Castagna mentioned stocking more high end vitamins and cosmetics, as well as cannabidiol, which has proven itself to be a big seller and is helping pay the bills. Educating one’s self on what these compounds offer in terms of safety and efficacy is key, he explained.
Simon Murray, MD, is an internist based in Princeton, NJ and the chief medical officer for MJH Life Sciences. The piece reflects his views, not necessarily those of the publication.
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