BRADENTON — No matter how tough business gets these days, Don Flowers Sr. keeps plugging away at his small Bradenton pharmacy.
Revenue is down by about 10-15 percent at Fosters Drugs and Surgical Supplies over last year, and Flowers knows it will take more than consumer confidence to drive sales.
Like many independent pharmacies, Flowers’ business is getting financially drained because of mail-order drug companies’ hold on the industry.
“We’re hanging in there,” said Flowers, who bought the company in 1974. “Luckily, I’m my own landlord and I own this building. If I was having to pay rent there’s no way I could be here.”
Fosters Drugs has survived competition from chain drug stores such as CVS Pharmacy and Walgreens popping up just miles from his downtown corner pharmacy at 540 13th St. W.
Now he and small pharmacists nationwide are battling a new foe, pharmacy benefit managers, large corporations which own mail-order drug companies and administer prescription drug plans for Medicare Part D.
Medicare Part D is a federal program that subsidizes the costs of prescription drugs for Medicare recipients to make medications more affordable.
However, the affordability is not equally passed on to pharmacies when they purchase prescription drugs. That’s because Medicare uses pharmacy benefit managers to administer the plan and contracts are negotiated differently with each pharmacy. So chain drug stores that can afford to purchase large quantities receive a better price than smaller independent pharmacies.
John Norton, spokesman for the National Community Pharmacists Association, said contracts are problematic for small pharmacies. They control prescription drug reimbursement rates and pharmacy benefit managers can limit drug supplies that pharmacies receive and also exclude medications that come with rebates. Patients then turn to bulk order mail companies for better pricing.
“The pharmacy benefit managers force us into take-it-or-leave-it contracts,” Norton said.
And the smaller the pharmacy, the less bargaining power it has to get a more favorable and affordable contract, said Jim Owen, director of professional practice at the American Pharmacists Association.
“A lot has to do with the size and negotiation power of individual pharmacies versus a larger chain,” Owen said.
Robert Pelot, owner of Pelot’s Rexall Drugs, at 831 Manatee Ave. E., said his pharmacy is losing money because the reimbursement rates in his contract do not fully compensate him for prescription drugs he purchases.
Pelot did not disclose what his reimbursement rate is but Medicare Part D plans pay the pharmacist based on a contracted rate that varies with each plan. Pharmacy benefit managers make an average $3.50 for every mail order prescription they fill compared to $1.40 for a prescription filled at small pharmacies, according to the National Community Pharmacists Association.
Flowers said reimbursement for drugs he orders for Foster Drugs has been as much as $30-$35 per order less than what he paid.
“It’s one of our biggest problems,” Flowers said.
And, Part D plans typically take four to eight weeks to reimburse a pharmacy, while pharmacists must pay wholesalers every two weeks.
Independent pharmacies like Pelot Rexall Drugs also lose customers to mail order companies because they can’t compete with rates offered by mail order.
“This is a retirement town and a lot of people turned over to (mail order) Medicare Part D,” Pelot said. “You just try to stay competitive, try to give them good service.”
The National Community Pharmacists Association has filed complaints with the Federal Trade Commission over issues with pharmacy benefit managers.
In addition, Norton said the association is pushing for legislation that will allow pharmacists to negotiate their contracts with pharmacy benefit managers.
“Right now they don’t have to answer to anyone,” Norton said. “If something isn’t done about it they’ll continue to struggle.”
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