Private Druggists Protest HMO, Insurance Practices : Health: They say reimbursements are inadequate and mourn closing of independent pharmacies.

No relative had died, but pharmacist Milt Fish came to work Wednesday dressed all in black.

The owner of All-Med Drugs in Thousand Oaks spent the day mourning last month’s deaths of two privately owned pharmacies in Oxnard.

And at noon, like many independent druggists in Ventura County and across the country, Fish dimmed his store lights to protest health maintenance organization and insurance company practices he says are slowly killing small pharmacies everywhere.

“There’s no retail profession that can survive on the profit margin that the insurance companies are paying [pharmacies],” said Fish, a pharmacist for 25 years. “I may be forced to go into a new career. It’s getting really tough.”

So tough, pharmacists say, that since 1990, Ventura County’s independently owned pharmacies have been closing down at a rate of three per year. Robert Blomquist, president of the Ventura County Chapter of the California Pharmacists Assn., said about 46 of the county’s pharmacies are now chain stores. Another 46 are privately owned.

Nationally, the association figures that 40 independent pharmacies close every week.

“They are closing because of the low reimbursement rates from insurance companies,” said Debra Tomajic, the association’s vice president of membership and marketing in Sacramento.

Insurance company and managed care representatives say the rates at which they reimburse pharmacies for drug prescriptions are being pushed down by the chronic demand for lower health care costs.

When their companies contract with drugstores for customer prescriptions, industry officials say, they must control reimbursement rates to save their clients money.

“We are responding to the needs of the consumers and the employers who are paying health care bills,” said Jeff Herzfeld, a pharmacist and vice president of Prescription Solutions, a Cypress-based company that manages prescription drug benefits for employers and HMOs. “We are in a very competitive environment ourselves. If a pharmacy chooses that they can’t provide a service at [the reimbursement rate], then it is their choice not to participate in the network.”

But independent druggists claim they have been robbed of that choice. According to Curtis Davison Jr., owner-pharmacist of Brand’s Buena Pharmacy in Ventura, the “take-it-or-leave-it” proposition means druggists must accept the reimbursement rates--which are sometimes below the wholesale cost of the drugs.

“You don’t have to take it,” said Davison. “But then you don’t have any customers.”

Davison, who has been in business for 13 years, said he has watched his store’s daily prescription rate fall from about 140 shortly after opening to below 100.

“The only way we can stay in business is that we don’t pay the wholesale price,” Davison said. “Most of us try to get a break on the wholesale price by buying in bulk or paying our bills early.”

On a typical $26 prescription, Davison said, the insurance company will reimburse him about $15. The wholesale cost of the drug averages $18.

Mike Nichol, an associate professor at USC’s Department of Pharmaceutical Economics and Policy, said this type of calculus explains why chain drug stores are buying out privately owned pharmacies.

“Independents are definitely strapped because they don’t have the ability to purchase things at discount rates that chains can afford,” Nichol said. “They are definitely an endangered species.”

Jack Beebe, owner-pharmacist of Central Pharmacy in Ventura, was one of about 11 local pharmacists who posted signs, covered windows, lighted candles or handed out pamphlets to draw attention to the “showdown” they say they are facing with the insurance industry and HMOs.

At noon, Beebe flicked off the overhead lights at his Telephone Road pharmacy and offered his reasons that independent pharmacies must survive.

“We’re on the firing line,” said Beebe, who has run Central Pharmacy since 1976. “We are the first spot of reference for medical advice. Our services, for the most part, are provided free of charge.”

Beebe’s customers said they like the service they get at a small, privately owned pharmacy.

“If I have a question, I know it’s going to be answered correctly here,” said Gloria Imor, a 51-year-old Ventura resident who lives only a few blocks from the store. “It’s so convenient.”

Beebe said he lost 200 customers in one fell swoop in 1993 when the Woodland Hills-based HMO Health Net decided not to renew the contract with his pharmacy.

Don Prial, a Health Net spokesman, admits the advent of managed care has been tough on independents.

“There are business decisions that get made from time to time that a local drugstore may not agree with, but which are inevitable,” Prial said. “We need to provide the best possible pharmaceutical service that we can provide for our members.”

Nichol said independent pharmacies will have to educate consumers about the many services they provide in order to stay in business. But he predicts a gloomy future for many of the nation’s remaining privately owned drugstores.

“What is the value of their services?” Nichol said. “They have done a very poor job of demonstrating that. Now that they are behind the eight ball, it may be too late.”

*

Eric Wahlgren is a Times correspondent and Joanna M. Miller is a Times staff writer.

* RELATED STORY: D2