How will cross-state regulations, medical marijuana and transparency laws affect local pharmacists? To find out, Springfield Business Journal Editor Eric Olson sat down with Grove Pharmacies Ltd. owner Gary Grove, Downtown Pharmacy Inc. owner Charles David Kerr and Family Pharmacy Inc. owner Rep. Lynn Morris, R-Nixa.
Eric Olson: If you could describe your industry in one word, what would it be?
Lynn Morris: Changing.
Gary Grove: Promising.
Charles David Kerr: Expensive.
Olson: Has it always been in your opinion?
Kerr: No, I think we’ve seen a really dramatic rise in drug prices the past five or six years and with that, we’ve seen lower reimbursement from third parties.
Olson: Do you guys agree on the expense side?
Morris: Yes. The reason why I said changing was that back in 1977 when I started, 95 percent of our business was cash, but now 5 percent of our business is cash and 95 percent is third party. The problem with a third party we’ve seen over the past five years is we’re getting paid below cost on so many medications that we can’t continue. I listen to pharmacists all over the state and some are filling 15 percent of their prescriptions below cost. Generics have risen so high. They used to be the thing that helped the price down, but nowadays companies play both sides so they don’t care if you buy generic or brand name. A generic good that used to be 10 cents is now $2.
Olson: So where is the profitability?
Grove: Retail helps. I know the average customer doesn’t really believe that. People don’t believe when the guy at the car lot says he’s selling you a car for 15 percent below cost, but in pharmacy it’s really happening. (Pharmacy benefit managers) report to no one. And if a drug costs us three all the same, let’s say $100, they can reimburse us $50 if they can find some drug somewhere in the United States at that price. Maybe it’s a wholesaler with only two products, we don’t know. We file an appeal; they turn down all our appeals. We are losing money, and it’s a very horrible situation. Hopefully having these pharmacists, like Lynn, in government, they can convince people that these PBMs have politicians in their back pocket. They are driving independents out of business. Under this transparency law they have to update and pay what current price is, not what was five years ago.
Olson: Hasn’t a transparency law been proposed at the state level?
Morris: It’s not good enough yet, but we passed a transparency bill. It’s a great step because exactly what Gary is talking about is exactly what the problem is. Before we passed that bill, insurance companies wouldn’t update their price for 30 to 60 days. We’re filling prescriptions every day below costs.
Olson: Sixty days?
Morris: Well, that’s an average. Sometimes it’d be 90 days, but insurance companies wouldn’t change their price. This new law is seven days. Not seven business days, seven total days to update prices. The other thing that they had to do is give that location to every pharmacy in Missouri. And when we go to appeal, if they can’t buy that drug at that price the day of the appeal, they can’t deny your appeal. We’re going to start winning appeals with this bill unless they just don’t want to follow the law. We will fill $3,000 prescriptions and we are lucky to get $7. I saw one the other day that was $1,995, and I sold that for $2,001. I made $6 on $2,000.
Kerr: That’s a terrible investment.
Morris: And I may lose $5.
Grove: For him to get that $5, it might be 45 days.
Morris: It’s a tough market. Now that we’ve tasted a little bit of victory, we’ll have some key bills. The state of Mississippi actually passed a bill last year where you can’t be paid below cost.
Grove: It’s especially bad here because people think we’re just talking the cost of the drug. That’s not our salary, that’s not our technician’s salary, our staff, our building, our delivery. We are losing big time and the only control we have over our industry is to work harder and longer hours or do more prescriptions for less reimbursement. It’s tough to make people understand that.
Olson: Are the retail sales at the pharmacies intended to make up for that low profit margin on the prescription drugs?
Morris: Well there’s certainly a better margin on the (over the counter) side – greeting cards, gifts, snacks – but most of the independent pharmacies can’t generate enough sales to make up for the Rx side. Our company for example, 90 percent of my business is Rx. I mean we have great front-end retail, lots of selections at our locations, and we sell stuff every day, but we just don’t sell enough to make that big of a difference.
Olson: Is part of the expense side caused by the shortage of pharmacists here in Missouri? Thanks to programs like (University of Missouri Kansas City’s) it’s improved.
Grove: Springfield has only had a pharmacy school for a few years, so until the first class graduates in two more years, that’s only 30 students. The national average of 70 percent returning home after pharmacy school, that would put 21 new pharmacists in southwest Missouri which is just not a great impact.
Olson: So, maybe that’s not the solution, but doesn’t it help?
Morris: What I see, because I have a small-town pharmacy, is we have a health care shortage and crisis in small towns. Everyone seems to want to work in Springfield or close to Springfield.
Kerr: I think that has a lot to do with the expansion of chains coming into the areas. CVS, Walgreens, but CVS has been hitting pretty hard the past few years and they’ve been gobbling up a lot of pharmacists in our area. The amount they expand is going to have an effect.
Olson: What is the average salary for a first-year pharmacist out of school?
Kerr: Hourly, the range is from $55 to $75, you know, depending on if you have them working 40 hours. What the chains do is bring them on salaried and they don’t have to pay overtime. We probably pay them about $2 more an hour, but it’s all supply and demand. Most pharmacists (go) through a stage of disillusionment when they get out of school.
Morris: I don’t think the pay is that much different. All pharmacies are going to be competitive or they’re not going hire someone. Especially these young people, they do want higher pay; but that’s not the only thing young people are looking for. They’re looking for quality of life.
Kerr: You may have a student debt of $100,000 to $200,000 and when somebody offers you a few dollars more, you might take that. But once they see the kind of job they have, they leave.
Olson: Are there any other laws that you’d like to see changed? I know the statewide prescription monitoring program didn’t get passed.
Grove: I’m for that because I don’t think that’s an infringement on anybody’s rights. If you’re doctor-shopping and you come in with a prescription for oxycodone or hydrocodone, but you’ve been everywhere across the state, that comes up on the screen. It enables us to shut down and say, “You’ve just been down the street yesterday and got 80 pills and now you’ve got a doctor to give you another prescription for 100 more. That doesn’t make any sense.” If anybody is opposed to it as a patient, they have something to hide. And if you’re not abusing your narcotics, then why would you care if they saw you got it 30 days ago? We’re the only state in the nation that doesn’t have it.
Morris: Now, I don’t disagree with Gary, but let me tell you that it won’t pass. The bill is flawed. I’ve tried to help (Rep. Holly Rehder, R-Sikeston), she keeps bringing up this bill the same way four years in a row, and if a bill doesn’t pass you have to make it better. You’ve got to compromise. Here’s the problem: It’s not real-time. So it’s 72 hours after the fact. We have to do it real-time and she says it’s too expensive, but it’s too expensive not to do it. The other reason why the doctors and senators don’t want the bill is that it’s ludicrous to take every controlled drug and give it to the government. I don’t trust the government.
Olson: Is the Narcotics Control Act what this database stems from?
Morris: Yeah. What people fear is that they may be taking some type of sedative or narcotic tranquilizer that their employer or the government will find out.
Grove: The other thing that bill exposes are the doctors that are writing these. If you get rid of them, it decreases the pill mills and pill mill doctors.
Morris: I have 50,000 constituents and so many have told me they don’t want to be in the database. I’m not just working with pharmacists, I’m working with a lot of constituents that don’t trust the government. I’m working on a compromise.
Olson: With this being an election year, is there anything at the presidential level you see affecting the pharmacy business?
Morris: The thing that’s really hurting pharmacists is preferred networks. We are getting locked out because each big-box chain has their own PBM company. Everybody owns one or is affiliated with one. The federal government has allowed Medicare Part B to go through these closed networks so we’re pushing for any willing provider legislation. But unfortunately down here in southwest Missouri our insurance cards are just for one hospital and one place.
Grove: Why should somebody not be able to go to any other chain when everybody is paying the same price? You wouldn’t like it if you couldn’t loan money to every person in Springfield or because of where they worked they couldn’t come to your bank. When other professions would be locked out like we are, they would understand that we’re offering better service at the same price.
Olson: Any recent improvements helping your companies grow?
Morris: Well, one thing we’re finally doing is, after Labor Day, we’re opening up our specialty pharmacy. I know Gary has a great compounding pharmacy, but our pharmacy has four components, it’s a compounding pharmacy, sterile and nonsterile pharmacy. We also have robotics. So we have a robot from Japan, one from Canada, that will be doing special multipacking for home packaging.
Grove: I wonder if those robots can communicate with each other?
Group laughter
Morris: And the fourth piece is an oral vaccine travel center. We’ve got software where you can come in, no appointment, and tell me you’re going to India or going to South Africa and print out what vaccines you need and contact your doctor while you’re in the waiting room. We’ll give you the vaccines and the paperwork needed to get in and out of the country and tell you what you need to do to stay safe. We’ve already had Assemblies of God, Missouri State (University) and other big travel groups use our service, and we think it’s going to be big. Most of the drugs we fill there will be in the $1,000 to $10,000 range.
Kerr: It’s amazing the cost of some of these drugs. One of my first patients when I opened up was a (hepatitis) C patient. It was $50,000 a month for his treatment.
Morris: What do you all think about medical marijuana?
Grove: I think it’s wonderful. We’ve got medication that’s for children and infants that cuts down their seizures from 20 an hour to one an hour or maybe a couple of hours. These children can go live outside. They can go to a playground. I think people hear pot reform and they get scared. We need to explore all avenues of health. It’s sad that people have to uproot and move to a state like Colorado to help their child.
Olson: Has the Missouri pharmacy board taken a position?
Morris: I don’t think so. What I think’s going to happen in the next six months, I really believe the (Drug Enforcement Agency) is going to make it a Class 2 instead of (keeping) it illegal. That’ll be all across the country, and that’s going to help a lot. Right now, there’s just no regulations on how it’s made. I agree, I’m not against medical marijuana at all. When my family went to Breckenridge, Colo., I went to a factory. I told them who I was and she said she wanted to show me around. She showed me the recreational side. It was like a big old factory; it wasn’t real clean or anything like that. I said I’m more interested in the medical marijuana side, and she said go through this door. So, I go to the other side and it’s almost identical to the first side. I asked her what the difference between the two sides was, and she said that honestly there was no difference, but that she could charge two or three times more for medical marijuana. That really hacked me off. It’s really hard to pass in Missouri since we’re a very conservative group. One day, the government’s going have to legalize it.
Interview excerpts by Features Editor Emily Letterman, eletterman@sbj.net and editorial assistant Barrett Young.
