
DATE: Saturday, June 28, 1997               TAG: 9706280346

SECTION: FRONT                   PAGE: A1   EDITION: FINAL 

SOURCE: BY STEPHANIE STOUGHTON, STAFF WRITER 

                                            LENGTH:  125 lines

3 DRUG RETAILERS KNEW OF STATE RULES ON PRESCRIPTIONS IN ECKERD'S RUSH TO TAKE OVER REVCO'S STORES, TOO FEW RECORDS CAME ALONG.

Three big drugstore chains involved in Eckerd's buyout of 114 Revcos in Virginia knew about a state law requiring them to make two years of store prescription records available to pharmacists.

But in Eckerd's rush to take over, coupled with time demands on a multibillion-dollar merger between Revco and CVS Corp., the three companies decided to provide only four months of records.

``We all thought what we were doing was within the spirit of the law,'' said Dan Pero, a spokesman for Clearwater, Fla.-based Eckerd, which began taking over the Revco stores on June 17.

Pero said Eckerd's Virginia pharmacies should have the remaining 20 months of store records by the end of next week. Initially, CVS had agreed to send them within a few days, he said.

``CVS obviously didn't do that,'' he said.

The lapse, which is being investigated by state regulators, may have jeopardized customers' safety and hurt Eckerd's entrance into a lucrative Virginia market, according to state officials and retail analysts.

The scene at many of Virginia's Eckerd stores has company officials cringing in embarrassment: long waits, with customers complaining that they can't get prescriptions refilled or use their insurance cards. At least two Hampton Roads residents claim Eckerd made mistakes with their prescriptions.

``Someone didn't think it through,'' said Kenneth M. Gassman Jr., a retail analyst with Davenport & Co. in Richmond. ``As a result, they've made a grave error. Somebody should have stepped back and said, `Wait a minute.' ''

The problems began with the CVS-Revco merger.

In January, Woonsocket, R.I.'s CVS announced plans to purchase Revco D.S. Inc. - a deal that would create the nation's second-largest drugstore chain with $11 billion in sales and 4,000 stores.

But before CVS could ink the deal, it had to address federal anti-trust concerns. Federal regulators were particularly worried about the combined company's huge clout in Virginia.

CVS officials began talking to Eckerd Corp., which was hungry to expand in the Mid-Atlantic. The two sides agreed that Eckerd would purchase 114 of Revco's 234 Virginia locations.

On May 30, CVS made two announcements: its sale of stores to Eckerd and its completed buyout of Revco.

Somewhere along the way, Eckerd discovered that it could not immediately transfer prescription data from Revco's computer network.

Eckerd could have solved that problem by keeping Revco's computers. But neither CVS nor Revco wanted to give Eckerd access to an advanced computer network containing confidential information.

In the end, the three companies decided to make available four months' worth of prescription records on microfiche.

Fred McGrail, a spokesman for CVS, said the companies could have complied with the law by leaving two years' worth of paper records at the stores. But they decided this would have given pharmacists bigger headaches.

``It really would have been unworkable because the stores would have been overwhelmed with paper,'' McGrail said.

Industry observers, however, say the chains could have avoided the confusion.

First, Eckerd's move into the Revco stores could have been delayed until the glitches were worked out - even if it meant pushing back the CVS-Revco merger. But CVS' McGrail said there were time constraints on the CVS-Revco merger.

Still, Eckerd officials could have balked until they got what they needed.

``First of all, you have to realize who's in trouble,'' said Eric Bosshard, a retail analyst with Midwest Research. ``CVS got its check and now it's on with life. The onus and the responsibility is on Eckerd. Why didn't Eckerd demand the records?''

The Virginia Department of Health Professions began investigating the drugstore companies after receiving ``numerous'' complaints from Eckerd pharmacists and customers.

Customers say they endure long waits, only to find out that their neighborhood drugstores no longer have any information about them - from their insurance companies to their allergic reactions to certain medications.

In more serious cases, residents complain that Eckerd made mistakes with their prescriptions.

Gale Black said she went to pick up a prescription at a Virginia Beach Eckerd and was told by a pharmacist that she had no refills left. She knew he was wrong, so she asked to see the original prescription.

Her eyes widened when the pharmacists pulled out the prescription. It listed another customer's name and an entirely different medicine.

``It just frightened me,'' Black said. ``It scared me that they didn't have enough information to give me the right medicine.''

David John DeLisle purchased medicine to treat his cold symptoms at an Eckerd pharmacy in Portsmouth. He was shocked to find his son's name listed on the bottle.

``Would they have given my son an adult prescription?'' asked DeLisle. ``They should have noticed this.''

The state agency said it has sent additional inspectors to investigate allegations against the drugstore chains. The three companies - CVS, Revco and Eckerd - could face penalties of up to $1,000 a day for each store in violation. The agency also has the authority to suspend or revoke pharmacy licenses.

``We want them, for the sake of their patients, to comply with the law immediately,'' said Robert Nebiker, deputy director of the state health professions department. ``As for any violations, where the responsibility lies will have to be determined later.''

Even if all three companies get in trouble with the law, the biggest loser probably will be Eckerd, retail analysts said.

In Hampton Roads, for example, Eckerd clearly has the biggest share of the area's estimated $320.9 million in drugstore sales, according to research reports. But Eckerd risks losing some of those sales if it can't remake its image here, analysts said.

``Regardless of what happened, customers certainly have a long memory for incomplete and inadequate service,'' analyst Bosshard said. ``It's certainly not the way Eckerd wanted to start in a market.'' ILLUSTRATION: [Color Photo]

LAWRENCE JACKSON/The Virginian-Pilot

Eckerd's temporary sign at the former Revco store at Downtown Plaza

in Norfolk is similar to ones seen displayed throughout the area.

FROM REVCO TO ECKERD

On Jan. 27, CVS Corp. announced plans to purchase Revco D.S. Inc.

- a deal that would create the nation's second-largest drugstore

chain with $11 billion in sales.

The Federal Trade Commission, however, warned CVS that it would

have to address antitrust concerns, particularly in Virginia, where

both chains operated. To get the FTC's OK, CVS needed to find a

chain that would buy some of its 234 locations in Virginia.

Eckerd Corp., based in Clearwater, Fla., jumped at the