The North Carolina Mutual Drug Wholesale Co., an association of independent pharmacies, is speaking out, saying that health insurance companies are not paying pharmacies enough to cover basic costs.

“Insurance companies are deciding what the medications should cost, regardless of what pharmacists pay for it. And a lot of times, the pharmacists are losing money in the process,” said Mike James, a Raleigh pharmacist and governmental affairs director for N.C. Mutual Wholesale Drug Company.

In the past several years, nearly 300 independent pharmacies have closed their doors in North Carolina, according to information provided by the pharmacy group. They attribute the problem to managed care — because pharmacies must accept contracts dictating their drug charges through non-negotiated contracts.

“A pharmacy needs 25-28 percent (profit) to pay their overhead, like utilities and rent. HMOs are not willing to pay any money for overhead. How does a pharmacy stay in business if they’re not even getting paid to cover the cost of the product their dispensing?” asked James, who owns a Raleigh pharmacy.

Mutual Wholesale is running advertisements in newspapers across the state speaking out on changes in co-pay prescription plans. In one ad, a pharmacist is shown with his wrists bound by ropes. The caption reads: “We’ve been put into a bad position. We don’t like it. You won’t like it.”

The ad explains that many of the Mutual Drug pharmacies will be unable to accept certain cards after Sept. 1 because of the change in co-pay prescription plans.

Some local pharmacists are forced to sell more than prescriptions to stay afloat, rather than be driven out of business.

Now, some drug store shelves are lined not only with basic health products but also with novelty and collector’s items, like Beenie Babies, jewelry and other items unrelated to health care.

Why?

“So that pharmacists can stay in business, and pay their bills,’’ says James. “Pharmacists get involved in ‘niche marketing’ to compensate the loss and to pay their overhead and expenses for operating.”

Steve Fuller, pharmacist and co-owner of Innes Street Drug Company, agrees.

“We make more on Hallmark cards than most prescriptions,” said Fuller, whose pharmacy is a member of the Mutual group. “Insurance companies are dictating to us what they’ll pay us, and it doesn’t include the cost of our time or the overhead.”

On Tuesday, Fuller said about 70 percent of prescriptions filled in his pharmacy at the Ketner Center were paid with insurance cards, which means Fuller will have to wait on that money.

“I believe all pharmacists here are very professional and take time with customers,” said Fuller, who added he almost didn’t renew a contract with one of the larger insurance companies. “And what hurts is for years and years, we have done things free for our customers, but now we almost have to charge for things.”

Some pharmacists say the basic concept is managed care companies — third party providers — are telling pharmacies what they are willing to pay them for filling prescriptions.

James says insurance companies send a contract to pharmacies, which basically says “here’s what we will pay you,” and pharmacists basically can’t negotiate, for fear their name will not appear on certain providers lists, which will force consumers to go elsewhere.

But insurance companies, like Blue Cross/Blue Shield of North Carolina, say “Not true.” Contracts are always negotiable, said Fred Hartman, a spokesperson for Blue Cross/Blue Shield.

“Pharmacies always have the opportunity to negotiate their contracts. It’s their right,” said Hartman, who represents the largest health insurer in the state, serving 1.8 million residents in all 100 counties.

Not enough clout

Hartman says he understands it’s probably tougher for independent pharmacists to negotiate good prices on the drugs they buy from pharmaceutical companies, but all pharmacies whether larger or small have to be paid uniformly.

“Legislation passed in 1993 requires us to offer all pharmacies the option to participate in our pharmacy program as long as they agree to the terms of the contract. We cannot offer different arrangements for different pharmacies. If we gave a better deal to one pharmacy, we would have to give it to all pharmacies. Without this bill, we would have more flexibility to work with individual pharmacies.”

Cost increasing

Hartman says the costs of prescription drugs are increasing for a number of reasons including: aging population and more drugs coming into the market quicker than ever before. Hartman also says direct consumer advertising drives up the demand.

By Sept. 1, Blue Cross will officially turn over its management of prescription card benefits to an outside firm, Merck-Medco PAID.

“To help assure that our customers are get the highest quality drug benefits and a price they can afford, we work with an outside company who oversees our pharmacy benefits,” Hartman explained.

James said community pharmacies are particularly concerned about how this will affect patients in rural areas, who already may have limited access to pharmacy services.

“If you look in the phone book from 10 years ago,” Fuller said. ”You can see for yourself that several locally owned pharmacies just aren’t around anymore. Salisbury five or six years ago had so many local drug stores and good pharmacists, but now we have lost a lot of independent stores and it’s just hurting us more and more. Many have closed for various reasons,” including the drastic reduction in reimbursement rates for filling prescription.

Innes Street Drugs has served the Salisbury community since 1947. The Medicine Shoppe opened its doors to customers 18 years ago. The drug stores are only two of a few community owned drug stores left in Salisbury. A third local pharmacist told the Post he was very angry about the way insurance companies are strong-arming his industry, but he did not want to be quoted by name.

“The real problem with retail pharmacy is that you’ve got a third party administrator setting a price they want to set, wether they pay that or not,” he said. “Hence, they (the pharmacies) wind up signing the contract because they feel threatened their customers will be forced to go elsewhere.

“If these pharmacies can’t get enough for the money and the cost to do business, they’ll be forced to close. More importantly, the citizens of North Carolina will be forced to do what the insurance companies want them to do. There will be very few choices in pharmacies for us to make, and people of North Carolina should not be forced by any outside entity like insurance companies” to go somewhere else for prescriptions.