June 22, 2006
Cure for pain? | Maine pharmacies complain that the state is putting too much hurt on them
By Michaela Cavallaro
As Jim Clair tells it, it hasn't been an easy few years for Maine's pharmacies. Clair, vice president for finance of Community Pharmacies, an Augusta-based chain of 15 pharmacies located mostly in rural towns across the state, says the state's pharmacies have been hit by a nearly continuous wave of state cutbacks over the last 18 months. The most recent proposal, a reduction in the amount pharmacies are reimbursed for prescriptions they fill for patients covered by MaineCare ˆ the state's Medicaid program ˆ was floated as part of Gov. John Baldacci's plan to balance the current state budget.
Though the cutbacks were still under negotiation in the State House as this issue of Mainebiz went to press, Clair says just about any measure that asks pharmacies to give up dollars is too much. "By my count, this is the eighth negative impact Maine state government has placed on pharmacies over the last 18 months," he says. "Some of them have had significant financial impacts, and some were more of an administrative burden, but the long and short of it is, as all seven [of the previous measures] went into effect, pharmacies weren't pleased, but we didn't fight them. This eighth impact is just crushing. It takes too many pharmacies and makes them not just break even, but lose money."
The reason? According to Clair, "There was a time when you could have a net margin in retail pharmacy of 2%, but that's not true anymore. If pharmacies are at 1% net margin these days, they're lucky."
Clair has worked for Community Pharmacies for about two-and-a-half years. The company, whose president is a frequent Baldacci critic, House Minority Leader Rep. Joe Bruno (R-Raymond), has been in business for five years, and Clair says it often operated at a loss during that time in order to get off the ground. "MaineCare represents about 40% of our business," Clair says. "So reducing the reimbursement as drastically as [Baldacci proposes] goes right to the bottom line."
Community Pharmacies recently opened its 15th location, a pharmacy in East Corinth. Clair says its locations, from Saco to Madawaska and Fort Kent, give it a niche identity, fitting in between chain stores with pharmacies like Wal-Mart, Rite Aid and CVS, and the small independent pharmacies that dot the state. Like many other pharmacies, including Rite Aid Corp., which has 80 stores in Maine, Community Pharmacies has said it may be forced to cut hours or even close locations if the budget cuts go through. And, says Clair, if the company had known six months ago what it does now about continued state cost-cutting, it might not have opened that East Corinth store.
In published responses to the industry's complaints, Trish Riley, director of the Governor's Office of Health Policy and Finance, has said that the administration is not happy about the pharmacy cuts, but that reductions in funding are a painful necessity to balance the state's finances. "Nobody likes these cuts," she told the Portland Press Herald. "We just have to make choices about the budget."
Exactly how the situation will be resolved remains to be determined. In mid-January, the Baldacci administration had proposed reducing the dispensing fee pharmacies are paid for MaineCare prescriptions from $3.35 a prescription to $2, a 40% cut. The reduction was scheduled to go into effect Jan. 20, but back-room negotiations postponed it. As of late January, Clair said he was "a little in the dark" on what the administration's next proposal would be, but he suspected it would have to do with a reduction in the amount pharmacies are reimbursed for brand-name drugs.
"Would we dramatically change our reduction plan at Community Pharmacies [as a result of the latest proposal]? Not dramatically," Clair says. "It will be like cutting off our left hand instead of our right."
Though the cutbacks were still under negotiation in the State House as this issue of Mainebiz went to press, Clair says just about any measure that asks pharmacies to give up dollars is too much. "By my count, this is the eighth negative impact Maine state government has placed on pharmacies over the last 18 months," he says. "Some of them have had significant financial impacts, and some were more of an administrative burden, but the long and short of it is, as all seven [of the previous measures] went into effect, pharmacies weren't pleased, but we didn't fight them. This eighth impact is just crushing. It takes too many pharmacies and makes them not just break even, but lose money."
The reason? According to Clair, "There was a time when you could have a net margin in retail pharmacy of 2%, but that's not true anymore. If pharmacies are at 1% net margin these days, they're lucky."
Clair has worked for Community Pharmacies for about two-and-a-half years. The company, whose president is a frequent Baldacci critic, House Minority Leader Rep. Joe Bruno (R-Raymond), has been in business for five years, and Clair says it often operated at a loss during that time in order to get off the ground. "MaineCare represents about 40% of our business," Clair says. "So reducing the reimbursement as drastically as [Baldacci proposes] goes right to the bottom line."
Community Pharmacies recently opened its 15th location, a pharmacy in East Corinth. Clair says its locations, from Saco to Madawaska and Fort Kent, give it a niche identity, fitting in between chain stores with pharmacies like Wal-Mart, Rite Aid and CVS, and the small independent pharmacies that dot the state. Like many other pharmacies, including Rite Aid Corp., which has 80 stores in Maine, Community Pharmacies has said it may be forced to cut hours or even close locations if the budget cuts go through. And, says Clair, if the company had known six months ago what it does now about continued state cost-cutting, it might not have opened that East Corinth store.
In published responses to the industry's complaints, Trish Riley, director of the Governor's Office of Health Policy and Finance, has said that the administration is not happy about the pharmacy cuts, but that reductions in funding are a painful necessity to balance the state's finances. "Nobody likes these cuts," she told the Portland Press Herald. "We just have to make choices about the budget."
Exactly how the situation will be resolved remains to be determined. In mid-January, the Baldacci administration had proposed reducing the dispensing fee pharmacies are paid for MaineCare prescriptions from $3.35 a prescription to $2, a 40% cut. The reduction was scheduled to go into effect Jan. 20, but back-room negotiations postponed it. As of late January, Clair said he was "a little in the dark" on what the administration's next proposal would be, but he suspected it would have to do with a reduction in the amount pharmacies are reimbursed for brand-name drugs.
"Would we dramatically change our reduction plan at Community Pharmacies [as a result of the latest proposal]? Not dramatically," Clair says. "It will be like cutting off our left hand instead of our right."
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