THE VIRGINIAN-PILOT
Copyright (c) 1994, Landmark Communications, Inc.
DATE: Friday, July 22, 1994 TAG: 9407220524
SECTION: BUSINESS PAGE: D1 EDITION: FINAL
SOURCE: BY TOM HOLDEN, STAFF WRITER
LENGTH: Long : 118 lines
Late Thursday afternoon, Dave Halla climbed to the roof of Gray's Pharmacy on Hampton Boulevard and unfurled a banner that read: ``We now honor Optima and Sentara Rx.''
As banners go, it wasn't exactly a Jolly Roger, but it marked an especially sweet victory for Halla and hundreds of other independent pharmacists in the ongoing struggle for Virginia's lucrative prescription drug market.
Starting this month, health maintenance organization customers can now use their health cards at any pharmacy they want, provided the pharmacy agrees to accept what the HMO will reimburse.
The change may not result in cheaper drugs for consumers and, HMOs contend, may actually increase some prices. But it will give consumers more freedom to choose their pharmacist.
Before the new law, which went into effect July 1, HMOs were permitted to force their customers to buy medicines from pre-selected companies, usually chain discount stores or mail-order houses.
The practice has squeezed small independents, which have dwindled in recent years under increasingly stiff competition from high-powered chains that buy at discount.
``In the last few years I probably lost 400 to 500 families because of this, and a lot of them are white-collar families from right around here,'' Halla said.
Halla believes if consumers have a choice, they'll return to smaller pharmacies - like his - and forgo the big chains and discount houses he criticizes as impersonal.
``People come in here even though they have full (HMO) coverage,'' he said. ``Many of them tell me they don't go to (a chain store) because they have to wait so long for their prescription. It's not that they're treated badly. They just have to wait.''
``What we're trying to do,'' he added, ``is get back on an even playing field.''
While the independents celebrate the new law, the region's health care giant groaned.
Jack E. McNamara, president of Sentara Alternative Delivery Systems, the health care company's insurance division, called the bill ``anti-competitive and anti-consumer.''
``If we have to deal with 400 pharmacy outlets rather than one massive outlet, the cost of administration goes higher,'' he said. ``The cost of administering the plan will go up, and we'll pass them on to consumers. Other than that, I don't have any problems with the law.''
At the heart of the debate is the independents' drive to survive. A decade ago there were about 1,050 independent pharmacies in Virginia. Today there are between 400 and 450.
``There are more pharmacies now than ever, but the vast majority of them are chain groups,'' said W. Randall Wampler, executive director of the Virginia Pharmacists Association, in Richmond.
``As far as the mom-and-pop stores, those numbers have been cut by more than 50 percent and most of that can be traced to the fact that before this law, the insurers and HMOs chose to deal only with those large chain drug stores,'' said Wampler, who is a pharmacist.
Like Halla, Wampler believes the law's intangible effect on the pharmacist-patient relationship is important.
``It's been shown that a pharmacist who knows a patient, the patient's family history, et cetera, can improve a patient's health care,'' he said. ``When you start telling patients that they have to go one place this year and another place the next year, you lose continuity of health care.''
But Sentara's McNamara was buying none of it.
``I don't need my pharmacist to know my health history,'' McNamara said. ``I rely on my physician for that. It is certainly good for all of us to go into a drug store and talk to a pharmacist we know, and to have one recommend some over-the-counter medication.
``But beyond that, I would be suspect of any pharmacist giving out advice on anything but the most basic remedies. It's a reaching argument, at best.''
The patron of the law that gave consumers the freedom to choose is Del. Harvey B. Morgan, a 63-year-old Gloucester Republican and pharmacist.
``The problem is that many the HMOs and third-party-practice programs are selecting physicians, hospitals and pharmacists,'' he said. ``One of the problems is that sometimes they will select a pharmacy that is not anywhere near a patient, or they select a pharmacist who may not communicate well with the patient. This bill allows the patient freedom of choice.' ''
Eighteen states have passed bills like his, Morgan said.
``If you get providers who can talk to patients, then means better health care,'' Morgan said. ``If you can keep one person out of a hospital, that alone is equal to many, many prescriptions.''
Whether the law will stabilize the number of independent pharmacies is unclear because many other economic pressure are at work, said Wampler, of the pharmacists association.
A more important problem is an industry practice in which manufacturers offer drugs at deeply discounted prices to chains linked to HMOs - discounts that are not offered to the independents.
``The walk-in retail pharmacy pays the highest price for its drugs and they have to pass that price along,'' he said. ``The HMO or the mail order does not have as high a cost of goods, so they can charge less money.''
For the insured customer with a co-payment, it's not as painful as for those who have no insurance but still need drugs.
``They're paying the highest price in the world for their drugs and most of them are elderly, on fixed incomes. What we hope this law will do is stabilize the situation while we work on other issues.''
Ultimately, McNamara said, consumers will pay for the pharmacists' remedy.
``The law insulates these providers from the reality of competition and, in fact, may discourage competition,'' he said. ``In the market, volume equals lower cost. We can get lower costs of goods and services from providers by volume. . . . I think this is anti-competitive and anti-consumer.'' ILLUSTRATION: At Gray's Pharmacy Dave Halla can fill prescriptions for HMO
customers now. He figures he lost 400 to 500 families to the law
that denied independent pharmacists like him their business.
Graphic
JANET SHAUGHNESSY/Staff
FILLING AN HMO PRESCRIPTION
[For complete graphic, please see microfilm]
by CNB