DATE: Wednesday, August 20, 1997            TAG: 9708200439

SECTION: FRONT                   PAGE: A1   EDITION: FINAL 

SOURCE: BY STEPHANIE STOUGHTON, STAFF WRITER 

DATELINE: RICHMOND                          LENGTH:   90 lines

STATE BOARD LEVIES FINE, PROBATION ON ECKERD THE PHARMACY BOARD WAS LIMITED IN ITS OPTIONS FOR PUNISHMENT, ITS DIRECTOR SAYS.

A state board decided Tuesday that Eckerd Corp. should pay a $537,000 fine and be placed on a year's probation for the company's ``chaotic'' takeover of more than 100 drugstores in Virginia.

The fine will be reduced to $100,000 if Eckerd installs more complete computerized records in the stores by late September. The company intends to do that, said Eckerd Vice Chairman Robert Hannan.

Independent pharmacists, state lawmakers and others criticized the punishment earlier this month, when it was recommended by a Virginia Pharmacy Board committee.

They said it doesn't address the magnitude of Eckerd's problems as it struggled to move into 113 Revco stores it purchased from CVS Corp. in June.

In addition, they said, the punishment isn't harsh enough to hurt a mammoth retailer like Eckerd, which posted $5 billion in sales and $93.5 million in profits last year.

But the Virginia Pharmacy Board didn't have many options, according to Elizabeth Scott Russell, the board's executive director.

Russell said the agency had limited jurisdiction in Eckerd's case because it regulates only licensed pharmacies. And since Eckerd neglected to immediately apply for licenses, the board could only impose limited fines.

Eckerd got the maximum $1,000-a-day penalty at each drugstore for failing to apply for permits, Russell said. But the board was unable to fine the retailer for the following:

Failing to provide pharmacists with two years of store prescription records, as required by state law. Pharmacists accustomed to Revco's sophisticated network said they were asked to use four months' worth of microfiche records.

Allowing too many people behind the pharmacy counter. The extra traffic created scenes of ``chaos'' in many drugstores inspected by state regulators, the board said.

Creating an unsafe environment. The board said it had received ``multiple'' complaints about prescription errors, lost prescriptions and long waits. Some customers complained they missed doses because of the delays.

Russell said board members took those factors into account when deciding to impose the maximum penalty for the nonlicensed stores.

On Tuesday, Eckerd's Hannan signed a consent order agreeing to the punishment.

Hannan has apologized for the company's performance, saying it was uncharacteristic for Eckerd. But he added that the retailer has significantly improved its Virginia operations over the last several weeks.

``We are providing fine service now,'' he said.

Still, critics say there's no excuse for Eckerd's actions - or those of Woonsocket, R.I.-based CVS. Both companies share the blame for agreeing to the transfer of inadequate records, they said.

CVS also faces possible punishment for its involvement in the rapid-fire transfer. A meeting between CVS and the Pharmacy Board committee is scheduled for Sept. 11 in Richmond.

In the past, Eckerd officials have said they didn't anticipate the problems. But consumer advocate Larry Sasich of the Public Citizen's Health Research Group in Washington, D.C., said he doesn't buy that argument.

``They probably could have asked a few pharmacists: If we instantly change from (Revco) to Eckerd, and you don't have prescription records, how will this work out?'' ILLUSTRATION} Graphics LIMITED REACH

The board regulates only licensed pharmacies, and Eckerd didn't immediately apply for licenses for stores acquired from CVS. BUYOUT TIMELINE

Jan. 27: CVS Corp. announces plans to purchase Revco D.S. Inc. - a deal that would create the nation's second-largest drugstore chain. The Federal Trade Commission, however, warns CVS that it would have to address antitrust concerns, particularly in Virginia, where both chains operated.

May 30: CVS says it agreed to sell 113 of its 234 Revco stores (plus one unopened site) in Virginia to Clearwater, Fla.-based Eckerd. With the sale, CVS completes the Revco buyout the same day.

June 17: Eckerd, a division of J.C. Penney Co. Inc., begins taking over the Revco stores, including 79 in Hampton Roads.

June 23: The state agency that regulates pharmacies begins to get calls from pharmacists and customers complaining of insufficient records, long delays, prescription mistakes and general confusion.

Aug. 6: A pharmacy board committee recommends that Eckerd be placed on probation and fined $537,000 for violating state laws. The fine would be reduced to $100,000 if Eckerd installs more computer records within a certain time period.

Aug. 19: The full Virginia Pharmacy Board goes along with the committee's recommendation, and Eckerd agrees to comply.

Sept. 11: CVS officials are to meet with the same pharmacy board committee. CVS is accused of violating several state regulations.

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