Much has changed in the past 100 years for Andrew Brown’s Drug Store in South Scranton.
When Michael Brown’s grandfather, Andrew, opened the store in 1912, about six independent pharmacies populated the neighborhood. Chain pharmacies were few and far between. There also was not the prospect of a merger between two pharmacy benefit managers that could drastically alter the industry. And worries about low reimbursements from insurance companies had yet to emerge.
The number of independent pharmacies in South Scranton has since dwindled to a handful. Shrinking margins, a decrease in reimbursements and mail order, meanwhile, have all emerged as threats to independent pharmacies as a larger issue looms with the likely purchase by pharmacy benefit manager Express Scripts of rival Medco Health Solutions.
Even under such threats, Mr. Brown and other local independent pharmacy owners have survived – and thrived – by finding niches in products and services.
“It’s really getting to know the customers,” Mr. Brown said, recently speaking at his Pittston Avenue store as workers filled prescriptions. “I think the main thing is knowing the customer and treating them right.”
Generations of customers have shopped at Andrew Brown’s Drug Store, while some employees have worked there for decades.
Mr. Brown, whose store employs 42 people, said they provide 24-hour emergency service, go out of their way to find things for customers and provide hard-to-find products such as special creams. The pharmacy reduces costs through group buying, provides niche products such as durable medical equipment, makes deliveries and has found efficiencies by using a robot to dispense certain medications.
The National Community Pharmacists Association counts the number of pharmacies on yearly basis and most recently determined there are 23,064 independent pharmacies and 20,804 chain pharmacies in the country. Pennsylvania has 1,004 independent pharmacies and 1,097 chain pharmacies.
“Independent pharmacies are often locations in underserved areas,” said association spokesman John Norton. “We are doing pretty good because in all honesty we don’t compete with chain pharmacies.”
He said the biggest problem for independent pharmacies are benefit managers because they “give us the tough terms and have a low reimbursement.”
The association’s website describes the proposed merger between Express Scripts and Medco as a “tipping point” in market concentration that will cause a “substantial reduction” in price and non-price competition among pharmacy benefit managers. Such a merger would create the largest mail-order pharmacy in the country and force more customers to use mail order, according to the association.
The proposed merger is under review by the Federal Trade Commission.
“The decision should be coming soon,” said Adam Welch, Wilkes University associate professor of pharmacy. “That would create a very large market share for Express Scripts and Medco. They control how much the end pharmacy will get compensated for the product and services.”
He said pharmacies that started out as independent stores and grew into pharmacies did so to gain a bigger market share, while existing chains make purchases of smaller pharmacies to strategically compete against each other.
The National Association of Chain Drug Stores, which represents chain stores, declined to comment.
Michael Mancuso, owner of Figliomeni Drug Store in Carbondale, said chain stores are not the competition.
“We compete against mail order,” he said, adding the state legislators and other officials have rallied against the possible acquisition of Medco by Express Scripts.
The state House is considering a bill, no. 511, to amend an existing state law to prevent a health insurer, government program or pharmacy benefit manager from requiring a covered individual to obtain any prescription medication from a mail order pharmacy.
U.S. Rep. Tom Marino, R-10, who has expressed concerned about the merger has introduced HR 1946, a bill that would allow independent pharmacies to join together to negotiate for better terms with pharmacy benefit managers.
Until such laws are passed, local independent pharmacy owners say they will continue to rely on customer service and other items to get by.
Some stores are doing better than just getting by, such as Figliomeni Drug Store. The company moved to a new location on Jan. 1, 2011.
It has been in Carbondale since 1952.
“Within a year now, we picked up 600 new customers at the retail site,” Mr. Mancuso said, adding the store is “almost like a brand name in Carbondale.”
Mr. Mancuso said the company’s service, including deliveries, attracts customers.
“We probably deliver 70 prescriptions a day,” he said.
In Pittston, Fino’s Pharmacy owner Vince Peck said they provide services that the community wants, including free delivery and 24-hour emergency service.
“We help people out if they are in need,” Mr. Peck said, adding it is challenging to keep going because of competition from mail order and low reimbursement rates.
Fino’s opened in 1951. Mr. Peck said his son would be the fourth generation in the family to own the store.
Dunmore native Tom DePietro recently opened DePietro’s Pharmacy on 3rd Street.
The 27-year-old worked at a CVS/pharmacy for three years before moving back home, renovating the old Riccardo’s Market and opening up his own pharmacy, where he hopes to regain the relationship he thinks is lost when customers use chain pharmacies.
“You’re kind of robotic, you don’t really interact with customers,” Mr. DePietro said.
He’s dedicated his new business to getting to know his customers by name, ease the burden rising health care costs are putting on families with small gestures, such as free vitamins and medicine flavoring for kids, free delivery, curb-side pick up and pill box organizers for patients.
Donato Iannielli, owner of Sheeley’s Drug Store Inc. in downtown Scranton, also plans for his business to continue in the family.
“In the downtown, we are the only independent left,” he said, adding they rely in part on personalized customer service and prescriptions in doses that are hard to find elsewhere such as Lovenox at 40, 60, 80, 100 and 120 milligrams.
He said they are not against mail order, but object to it being mandated.
In South Scranton, Mr. Brown said independent pharmacies are working closely to rally against mandated mail order.
Despite the challenges of owning a business, Mr. Brown could not imagine doing anything else. He said he enjoys catering to the community’s needs, which includes personal care and nursing homes, recalling that he and his siblings grew up above the current location on Pittston Avenue. “It’s always a challenge,” Mr. Brown said, adding he “very much so” enjoys what he does. “I certainly would like to keep it in the family.”
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