Medicare Part D having big impact on pharmacies

Small pharmacies selling more prescriptions for less money

By Kate Turnbow
Capital Journal Staff


PIERRE - The South Dakota Health Care Commission recently took a look at the impact of Medicare Part D on pharmacies in South Dakota.

"What it all means is that independent pharmacies will be out of business," said Dana Darger, director of pharmacy at Rapid City Regional Hospital, and presenter at the commission meeting.

Medicare Part D has been in effect for 10 months, and according to Louie Van Roekel, pharmacist and owner of the Medicine Shoppe in Pierre, while about 80 percent of patients have most likely benefited from it, he calculated that his pharmacy has needed 17 percent more volume to make up for its losses.

"People are able to get more prescriptions now, but we still are not getting near the volume that we need. So it is really hurting us," said Van Roekel. "We're lucky that we have the state capitol so that I'm not strictly relying on the older people like in the smaller towns, those pharmacies are in a lot of trouble."

Milo Zeeb, owner of Zeeb Pharmacy in Philip, said that basically he is selling more prescriptions for less money.

"People are saving more money on their prescriptions, but a lot of that is at the cost of retail pharmacies, and our profits have been substantially lower," said Zeeb.

Darger said when pharmacies work with patients who have Medicare Part D, the actual cost of filling the prescriptions is more than the rate at which they are reimbursed.

"So for a lot of those stores filling maybe 100 scrips a day, like those out in White River, Faith or Lemon, it's going to be impossible to make it," said Darger.

Zeeb said that from his perspective, for someone just starting out in the pharmacy business, it will be hard to make the business work and keep the checkbook in the black.

"And here in South Dakota the population is getting older, especially in these smaller towns, so most of your customer base is Part D patients," said Zeeb.

Not only are pharmacies getting reimbursed less for dispensing prescriptions, they are also receiving less timely reimbursements.

Darger explained that while most insurance companies pay within at least 60 days, sometimes even within 30 days, Medicare Part D pays at 90 days, and there is no penalty for not paying promptly.

According to a nationwide survey of the Pharmacy Society of Wisconsin on behalf of the National Alliance of State Pharmacy Associations, the average balance owed to pharmacies by Part D plans is just under $70,000 each.

And in the midst of the economic impact of Medicare Part D, Darger explained that the salaries of pharmacists also take their toll on small town pharmacies.

"For those trying to get out of the business, they are going to have a heck of a time trying to get rid of their store because the profit margins aren't going to maintain, and the salaries for senior pharmacists are pushing upwards of $60 an hour. So trying to make that kind of money in small town South Dakota, when gross margins are terrible, it's just not going to happen. Right out of pharmacy school they can go to Minnesota and make more than a senior pharmacist can here."

Darger has told the commission that to save small town pharmacies, South Dakota needs to take steps toward things like telepharmacy and coordination of traveling pharmacists.

Telepharmacy, Darger explained, would mean having a machine and a pharmacy technician in one town and a pharmacist in another, running the machine.

"But right now the board of pharmacists is not really in favor of this technology because there wouldn't be a pharmacist there," said Darger, which is a response he did not feel was sufficient.

"We can do (prescription counseling) remotely by Web cam or over the phone like they do with mail order," Darger said.

He continued, "We need to change some of the board rules to be able to provide service to small towns; we need (the board) to get out of their box to see what we need to do differently now to be able to serve patients."

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