As I look back over my 35 years as a pharmacist, I am astounded to realize the changes that have taken place during that timeframe. If I had had any idea that these things would occur in my lifetime, I would not have even bothered to consider pharmacy as a career.
Upon graduating from Northeast Louisiana State College in 1967, I began my career by working for Remy Guidry at Jefferson Drugs in Lafayette, Louisiana and for Charlie Aprill at Aprill's Pharmacy in Franklin, Louisiana. Remy tried his best to sell his store to me so that he could retire, and Charlie promised me that I would have a chance to buy into his pharmacy at some time in the near future.
I did not like working at Jefferson Drugs because most of the old "Cajun Clientele" only spoke fluent French and broken English. Working at Aprill's was quite different however, because I was home, and I already knew nearly all of the people who did business there.
I finally told Remy that I was not interested in his store, and I moved to work for Charlie full time. The promise of part ownership was only a myth however, and after a couple of years, I was ready to start my own business from scratch in Centerville.
To think that I could have opened a pharmacy with less than $1,000.00 of my own money is unthinkable today. Corner drug stores were as common as corner grocery stores in those days, but the days of each institution were beginning to see the sun setting on their very lifestyles. The grocery stores were the first to begin biting the dust as large supermarkets were beginning to replace them on the landscape of American communities. Small drug stores were also beginning to see the influx of large chain stores and the advent of discount stores and supermarkets which contained prescription departments whose sole purpose was to attract more traffic, if they broke even that was fine, and if they made a profit that was a remarkable by product of their business.
In the sixties and the early seventies the mere though of a prescription card, other than Medicaid, was laughable, but as time elapsed, that method of making prescription purchases became more and more commonplace. I now recall that the first of my customers to obtain a prescription card was Captain Thoville Smith. A company in New Jersey was administering the insurance benefits he had earned, so I held out hope that his would be a rare and isolated case. However, time would reveal that more and more people who were employed in various corporate industries would also become card carriers.
The early years of this "Card Carrying" phase was really pretty good. The companies paid very fair costs plus dispensing fees, and the consumer had a very modest co-pay to pay out of pocket. Another advantage to the early "Card Carrying" days was better cash flow management, and fewer charge accounts. However, as more time elapsed, the fees began tightening and profit margins started to erode. Drug prices began to escalate, and operating expenses were increasing. The "good old days" were rapidly coming to an end as third parties wrestled control away from the independent pharmacy. This is when the insurance industry made the commitment that it was going to get drug prices under control; however, it had been successful in convincing Pharmaceutical Manufacturers that they needed to inflate their prices. Consumers began screaming for relief, and rightly so as prices were skyrocketing at a rate three times faster than inflation.
In the early days, pharmacies and pharmacists enjoyed good relationships with the representatives of the drug companies, and this relationship transcended to the companies themselves. However, as patient utilization data switched over from paper claims to computer-generated claims, relationships became strained. The drug companies became very interested in the data, and they became eager to purchase the data that was transmitted from each and every pharmacy.
The first shockwave to hit the industry came when Merck bought out a mail-order firm called Medco. Now, anyone carrying a card with a logo and the word "PAID" on the card is covered under a plan that utilizes Merck-Medco as their PBM. Merck began to hire pharmacists to make calls to doctors asking them to make therapeutic substitutions. In other words, when they saw a claim being paid for, say, Zestril a pharmacist would get on the phone and ask the doctor to authorize a change to Prinivil. The reason, of course, is that Prinivil (lisinopril) is a product manufactured by Merck and Zestril (lisinopril) is manufactured by Astra-Zeneca. Now you can see how valuable this data had become to the competing companies.
The first PBM to operate in the United States was a company called PCS (Pharmaceutical Card Systems) in Scottsdale, Arizona. PCS was a division of McKesson, the largest wholesale drug company in the world at the time, and the most reprehensible by anyone's standards. PCS was the first PBM to usher in electronic transmission of prescription claims. This was done by installing a "Recap-Machine" right on the pharmacy counter, and all the pharmacist needed to do was swipe the card through a slot on the machine and enter the data that was to be dialed through the telephone. The machine was very similar to a credit card machine, but it was new and innovative to utilize this technology in a pharmacy to transmit prescription data.
Since I was doing a fair amount of PCS claims, I thought it would be prudent to purchase one of their machines in order to expedite the transmission of claims. The cost was a modest 3 or 4 hundred dollars, and the time that it would save would easily offset the cost.
I guess I had had the machine for a couple of weeks before it actually got hooked up to the telephone line. I was a bit intimidated by the technology, so I was in no great hurry to utilize its capabilities. One Friday afternoon, while I was quite busy, I received a call from a technician from PCS. He wanted me to try transmitting a claim over the machine and thus discontinue the use of paper. I remember exclaiming, "Right Now?" He said, "Yes right now!" I made a couple of weak excuses and this is when he made the remark, "Hey we are doing you guys a favor, it would be very easy to channel ALL of the business to the 'Big Boys!" I was too involved in getting the process correct to pay any attention to his remark. We made one successful transmission of a claim, and he hung up. I did not use the machine again that day, and it was not until the Saturday afternoon while out fishing that I thought back on the remark that he had made. I got so upset that I pulled my boat out of the water and went to my store and wrote a letter to Mr. Charlie Polido. He was the Executive Vice President of PCS, and I had met him once when PCS was administering the Medicaid program in Louisiana. I described the events of the Friday afternoon, and I also expressed the displeasure that I was feeling as a result of that conversation. The letter got to Arizona about Wednesday of the following week, and I received a conference call from three of the people employed in the "Recap" department at PCS. They wanted to know who the individual was and they wanted me to accept the machine as a gift. I emphasized that the money had nothing to do with what the boy had told me, and I insisted that I did not want to accept their purported "gift!" However, they insisted that I not pay a dime for the machine, but they would appreciate it if I would, in the future, not go over their heads. A week or so later I received a very nice letter from Charlie Polido explaining that the individual had been identified and retrained, and he expressed his sincere regret and apology. This young technician had obviously overheard someone say exactly what he had said; he just did not have enough sense to realize that it was not to be repeated!
Mr. Polido went even farther than a letter, a week later he called me on the phone to apologize once again. We had a nice conversation, and we even digressed to a more general conversation that resulted in his telling me that PCS had been conceived when the United Auto Workers went on strike in the late '50's, and they wanted prescription drug coverage to be one of their benefits. He told me that PCS saw an opportunity in this decision because it would be necessary for someone to pay all of the claims that would be transmitted each day. I asked why we were being forced to accept smaller fees, and he explained that he thought that we would all need to sacrifice for a little while. I then asked him if PCS was being forced to accept any sacrifices, this is when he said that they only dealt in pennies!
A couple of years later McKesson sold PCS to Eli Lilly and Co. for four billion dollars worth of pennies!
As Pharmaceutical Manufacturers began to control PBMs, mail-order companies began to dot the landscape, and armed with the data that had been collected from the community pharmacies, they allowed the Insurance Companies to go to the employers, show them what they were paying, and then show them how much they could save by the utilization of mail-order facilities. And, to once again paraphrase George W. Bush, "it was a no-brainer!"
I had one more encounter with McKesson, this time it was a division called 3PM McKesson. I had received countless solicitations from various computer vendors about purchasing a computer system for my pharmacy, but these solicitations always seemed to wind up in the trashcan. The one that really caught my attention was the one from 3PM McKesson; they offered two free round-trip tickets to Dallas for a week of training, financing, the whole works! They even had a salesman follow it up with a phone call and an appointment to demonstrate their system. This is one time I should have thought back on one of Charlie Aprill's old sayings, "The Cheese in the Trap is Always Free!"
So, I fell for their pitch and Joan and I flew to Dallas for a week. The terms of the lease-purchase were very straightforward and on computer-generated paper with no signature. The contract really needed to be signed before the end of 1989 for tax purposes, and the salesman began to apply pressure to get it done before the first of the year. Well, it snowed on the coast in 1989, and it even stayed around for two or three days, but Fed-Ex was able to get in and out with my signature on the contract before January 1, 1990. My thinking at the time was that I would just sign the contract, go through the training, and when the dust had settled, I would take it to my bank and simply transfer the lease. When that time came, I found out that I had signed a "Non Cancelable Lease", and rather than the simple interest that the computer generated paper had stated, the contract was based on the Rule of 78 where all of the interest was collected up front before the principle could be paid.
I called the Vice President of Bankers Leasing Company and told him that I had the terms in writing and it clearly stated that the lease would incur simple interest. He said, "I would like to see that." I asked him if he would like for me to fax it to him and he said "yes." When he received the fax he called me back and said that meant nothing! The computer generated and unsigned terms laid out by 3PM McKesson was nothing more than that, a piece of paper. What I had signed was a legal document and the fine print was what counted, and I was stuck. I called 3PM McKesson about the situation, but they said they had never even heard of such an arrangement as a "Non Cancelable Lease!" The bastards were lying through their teeth, but there was little that I could do about the situation. I even retained the services of two different attorneys to try to resolve the problem, but neither could accomplish anything.
I had the only pharmacy in that particular Zip Code, and prior to that they had no real way to track the data emanating from my store. Once I used the computer, 3PM McKesson dialed into the system every Friday night to update prices, pull all of my Medicaid claims, and assimilate all of the data so that they could sell it!
I was doing well in 1990 but by mid 1993 I was forced to close. To add insult to injury, I paid on that useless computer for an additional year and a half before it was paid off.
Anytime I have an opportunity to blast McKesson I do so, and I do it with all of my heart! I had the opportunity to purchase one share of stock in Louisiana Wholesale Drug Company in Louisiana, and if I had not done that, I would have been forced to close sooner.
The move to Arkansas found pharmacies about ten years behind the ones in Louisiana. Arkansas has a very strong state association, and they have been very successful in keeping community pharmacy healthy. The biggest problem for Arkansas pharmacies was Wal-Mart, but I had already competed with them, and they weren't selling $300.00 prescriptions for $3.00. They have an image here, but when people really get out and check things out properly, they are surprised to find out that Wal-Mart is not nearly as cheap as they initially thought.
Arkansas is somewhat unique in its rural nature, and the lack of adequate transportation and communication dates back many decades. This reminds me of a story that was told to me when we moved here. We have a Violet Hill mailing address and a Franklin telephone number. That is because Violet Hill has a post office, but the closest telephone exchange is six miles to the east in Franklin, Arkansas. On March 5, 1933, FDR ordered all of the banks in the country to close for one day; because he was afraid that the economy was so unstable there would be a run on the banks. Every bank in the country closed with the exception of the bank in Franklin, Arkansas; they never received the word!
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