Independent Pharmacies Under Pressure As Networks Narrow

Dec. 30--Entering Adzema Pharmacy on Perry Highway in McCandless is like stepping back in time.

On the right is the pharmacy, where four generations of customers have had their prescriptions filled at the family-owned business opened in 1959. In the middle is a small retail area for snacks, gift cards and cleaning products. To the left, a 47-seat diner-style counter where locals can get breakfast for $2.49 or a full lunch including homemade cherry walnut crisp for $5.99.

"It's just one of those places that people really enjoy going to because of the personal contact, the relationship you develop with Jay and his whole staff, whether it be the cashier behind the desk or the people to go there for breakfast," said Franklin Park Borough Mayor and long-time customer Dennis O'Keefe.

The Rev. Robert Vular, priest at St. Teresa of Avila in Ross, said he drives past other pharmacies to get to Adzema, which he calls "a gathering place, a meeting place." If he stops by after 8 a.m. Mass, he said, "I would see all my parishioners there having breakfast.

"With these small pharmacies, it's about people, not profit."

Until a few days ago, though, owner and lead pharmacist Jay Adzema thought he could see that all disappearing.

Nearly left out

In another sign of the changing health insurance landscape, Highmark has introduced a much narrower prescription program that, beginning Friday, will exclude many smaller independent pharmacies. For a while, Mr. Adzema thought he would be one of those left out.

Starting the Friday before Christmas, he said about 50 long-time customers were calling about a letter they'd received that said Adzema Pharmacy was no longer in their network.

"They were asking, 'What's going on?' " he said. "I told them, 'It means you can't come to me anymore.' "

Then, on Monday, he received a last-minute faxed invitation to join the network, an offer he believes was prompted by customer complaints. But it is an offer that comes with steeply discounted payments to the pharmacy.

"The reimbursement is just about unbearable, but we're in," he said. "I will be selling prescriptions below cost, that's for sure." At age 52, he's hoping to have the shop his father started for many years to come, but with flat or declining reimbursements, both from government and commercial payers, he's not sure that will happen.

"With this kind of stuff going on, there is no future."

Networks are getting more narrow

The Highmark program, formerly called Focus and now named Advantage, is one of three commercial prescription plans Highmark offers, albeit the most restrictive of the three. In addition to most independent pharmacies, the network includes Rite Aid, Giant Eagle, Target, Walmart, Kmart, Costco, Sam's Club and Weis Markets. Excluded are CVS, Walgreens, Wegmans, The Medicine Shoppe and Sav-On Drugs.

The other two Highmark plans, National Plus and National, are more inclusive, with Advantage being the smallest of the three, said Sarah Marche, vice president/pharmacy for Highmark. But make no mistake; as employers look for ways to control costs, the trend is toward lower-cost, narrower networks.

"The reality is that health care costs are increasing and pharmacy is a huge component of driving our health care costs," Ms. Marche said. With pharmacy costs comprising more than 20 percent of employers' spending on health care, more and more "are trying to find any way to manage those costs."

Her point is backed by a top official at one of the larger groups that will be in the Highmark Advantage program, the Allegheny County Schools Health Insurance Consortium.

ACSHIC provides coverage for some 41,000 teachers, administrators and staff and dependents at all Allegheny County school districts, except Pittsburgh city schools and North Allegheny, as well as community colleges in Allegheny, Beaver and Butler counties.

While the consortium is always looking at quality and access issues when choosing plans, "in this instance, it was based on who gave the best discounts," said Jan Klein, consortium secretary and trustee and director of business for the Mt. Lebanon School District.

"Health care is becoming so expensive we need to look at where we can save money. We have to put our dollars where they're going to get the biggest bang for the buck."

A narrower network will mean members may face the inconvenience of switching pharmacies or traveling a little further to pick up a prescription, but "it is preferable to paying way more for prescriptions and coverage," Ms. Klein said.

She also noted that networks can change every year: This year, Rite Aid was not in the Focus/Advantage network but next year it is. CVS has been in the network but won't be in 2016. Giant Eagle, meanwhile, will continue to be in the network.

Independent pharmacies under pressure

As networks continue to narrow, however, some already struggling independent pharmacies could find themselves on the ropes.

John Norton, spokesman for the National Community Pharmacists Association in Alexandria, Va., says local independent pharmacies are being squeezed out by preferred pharmacy plans, including some Medicare Part D plans. "While patients can still use the independent, the patient pays more for not going to a preferred pharmacy, which are always large chains."

Mr. Adzema, for example, said his customers might have still come to fill a prescription for a blood pressure medication that costs $10 for a 30-day supply. But he also recently dispensed a script for eye drops that cost $250. "If I say, 'You can go down to the Giant Eagle and get it for $10,' what are they going to do?"

If Highmark had not made the last-minute in-network offer to Adzema, he estimated that nearly 15 percent of his prescription revenue would have disappeared, endangering not only his livelihood but those of his 35 employees.

"It could have put me out of business."

Steve Twedt: [email protected] or 412-263-1963.

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