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Alle-Kiski Valley independent pharmacies survive despite big chains

| Monday, June 21, 2010

While the Alle-Kiski Valley is home to dozens of corporate-owned drugstores, local independent pharmacists aren't too worried.

Alexander Micklow, managing partner at Heights Prescription Pharmacy Inc., said independent pharmacies can compete as long as they're savvy enough.

Heights Prescription Pharmacy Inc. has four retail stores -- Health Mart Pharmacies in Harrison, Lower Burrell, Leechburg and Vandergrift -- a pharmacy that exclusively services nursing homes and personal care homes and a compounding pharmacy, in which drugs that are not commercially available can be mixed for people and for animals.

Micklow said he's never been too concerned about competition from chains.

"Our focus has always been on personal relationships and customer service," he said.

Micklow calls customers by name, and he remembers their situations. For the local pharmacy, differentiation and finding niches are key, he said.

John Norton, spokesman for The National Community Pharmacists Association, said independent pharmacies have different business models than larger pharmaceutical chains.

"In a lot of ways, independent pharmacies don't compete directly with chains," Norton said.

The association represents independent community pharmacies. It offers them business tips and lobbies federal officials to promote their interests.

October 2009 numbers from the association show 1,000 independent community pharmacies in Pennsylvania, and 1,086 chain pharmacies. Drugstores owned by chains are springing up all over the place -- statewide, there are 568 Rite Aid, 376 CVS and 111 Walgreens storefronts.

The association defines independent pharmacies as privately owned. Two other categories are a part of the state's pharmaceutical landscape -- supermarket chains, such as Giant Eagle, and mass merchant chains, such as Walmart and Target. The state holds 375 supermarket chains and 267 mass merchant chains, according to the association.

The number of independent community pharmacies has remained steady recently, Norton said. In 2006, 5 percent of independent pharmacies closed, Norton said, mostly due to problems with Medicare reimbursements. Since then, he said, the number has stabilized.

"There's not really the dynamic where a chain opens and an independent closes," Norton said, "because the independent is offering something different."

Customers will go check out the new pharmacy chains built in the area, said Joe Dancsecs, a pharmacist at Town & Country Pharmacy, 2209 Freeport Road, New Kensington, but he said they come back to the local store.

Dave Cippel, president of Klingensmith's Drug Stores, said chain drugstores have "absolutely" created competition.

"We're doing OK," he said. "We're certainly not on the level of Walgreens or CVS, but we're paying our bills, and we're paying our employees."

Klingensmith's operates 11 drugstores, including stores in Ford City, Leechburg, Kittanning and West Kittanning. A Klingensmith's Pharmacy in Freeport closed in May because the prescription volume was too low to stay open.

While chains have additional revenue sources from front-end merchandise like toiletries and magazines in addition to the pharmacy, Norton said, independent pharmacies derive more than 90 percent of their revenue solely from drug sales.

Independent pharmacies focus on patient care and customer service -- things like compounding drugs, specially tailored to fit patient needs, Norton said.

Advantages of chains

Cheryl Slavinsky, director of public relations at Rite Aid, said the network that connects pharmacies is an advantage of chains. Other advantages are national support programs like savings programs, weekly specials, 24/7 pharmacist access and programs about things like allergies and heart health, Slavinsky said.

Personalized care from "consistent and dedicated health professionals" is coupled with the other advantages, she said.

Pittsburgh is an important market for drugstores, CVS Pharmacy spokesman Mike DeAngelis said.

Most pharmacies are selling the same products, DeAngelis said. To distinguish itself, CVS touts convenient locations in high traffic and highly visible intersections, drive-thru pharmacy window service, a comprehensive line of health and beauty products, he said.

Independent pharmacies as well as supermarket and mass merchant pharmacies are viable competitors, DeAngelis said.

CVS allows customers to order their prescriptions online for pick up at CVS or delivery via mail. Although it's not a part of CVS's retail business, CVS Caremark operates a pharmacy benefit manager (PBM) allowing health plans to choose mail-order prescriptions, DeAngelis said.

Local pharmacists say it's mail-order programs that are the most formidable competitor to the local pharmacy.

Some health insurance plans require their subscribers to use them, Dancsecs said. Other plans allow patients three fills at a pharmacy before requiring mail order.

Despite its convenience, mail order can cause problems when delivery is delayed or when a prescription is sensitive to temperatures and is left in a mailbox, Norton said. And, Norton adds, "it's a proven fact that you want to have that face-to-face interaction with the pharmacist."

Despite the difficulties faced by competition, Cippel of Klingensmith's believes there's a strong future for the independent community.

"If you're willing to make the effort and take the financial risk," he said, "you can make a good living and operate a nice business."

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