TEXAS "I believe that clinic ownership of pharmacies makes it possible to achieve lower costs to the patient for drugs by operating a pharmacopoeia so that such a drugstore does not have to carry large duplications of drugs which sit on the shelves unused. In our case, even though we charge the usual prices in the community when we do delivery and other full drugstore services, we have many patients of limited means for whom we provide drugs at lower prices or at cost. Many of our patients would rather pay a full price and have prompt service while those of limited means or those who are more frugal with their money prefer to get cash and carry drugs, an arrangement we have made with many patients, particularly those who have trouble meeting their bills. Since the doctor in the clinic is well aware of the need for expensive drugs and the limited means of some patients he can make recommendations for special charges. We make this approach even though we do not recommend our drugstore to any patient. We recommend that they compare prices with any other drugstore in the community and strongly urge that they get their drugs somewhere else if they find it less expensive and if price is a consideration. Futhermore, our clinic owns only 80 per cent of our drugstore and the pharmacist owns 20 per cent." HAWAII "We have had a pharmacy incorporated into the framework of our clinic ever since its inception in 1921. When I started the practice of medicine in Honolulu in 1935 it was the general practice for physicians to prescribe medicines directly from their office. This was a hangover from the days when there were no pharmacies in the islands except in Honolulu, and since at that time the large majority of physicians in Honolulu had first practiced on the plantations and other rural areas, they brought the custom of office prescribing with them when they moved to the city. Even now, a large proportion of solo practitioners prescribe most of their medications directly from their offices. We have never looked upon our pharmacy as a "money maker" but instead as a definite service to our patients. Of course, we make some money from it, but not as much as some might think considering the fact that we sell only prescription items. Our building is open 24 hours a day with a nurse and doctor in attendance to 11 P.M. and we also have "emergency" office hours on Sundays and holidays. We do not fill prescriptions between 5 P.M. and 8 P.M. because we lack personnel for this, but we do fill prescriptions between 8 and 11 P.M. because at this time most of the pharmacies in town are closed. In other words, we are providing an afterhours service. This service we also provide on Sundays and holidays. We made a recent check with 23 local pharmacies and discount stores and found that our prices, except in the case of 'loss leaders' such as birth control pills, etc., were lower. This is especially true when medications are prescribed in small quantities, since we do not charge a 'professional fee' as is done by outside pharmacies. All of our prescriptions are labeled in large letters in red, 'This may be filled at any pharmacy of your choice'. However, 90% of our patients choose to have their prescriptions filled at the Clinic. I know it would be a great disservice to our patients if the pharmacy were done away with. Also, if a separate commercial venture operated it, I am sure that it would find that they were not very enthusiastic about the after-hours, week-ends and holidays service which we now furnish at a loss." OHIO "Perhaps there is a question of unfair competition, that some way we hold our patients as captive customers of the Clinic Pharmacy. Certainly, this is in no wise true of our operation. All of our Clinic prescriptions are fillable in any pharmacy of the patient's choice. There is no direction of patients to the Clinic Pharmacy. Indeed, out of town patients are expected to take their prescriptions home so that refilling can be done more easily. Many patients have a strong preference for a neighborhood pharmacy. Phoned prescriptions go to whatever pharmacy the patient directs. Our prices are competitive. Some prescriptions are as low in cost as any pharmacy. Many are slightly higher than commercial pharmacies charge, particularly the cut-rate. Our pricing structure is based on the best buying that the pharmacist can accomplish with the volume of sales which he has. The pharmacists are well paid and the Medical Center, Inc. derives a reasonable profit on its sales. Those profits go to improve the facilities for health care which we provide. It is doubtful if the chains would put the profits to better use. The Medical Center Pharmacy cannot buy in the quantities and at prices which obtain for the large drug chains. Nevertheless, the Medical Center Pharmacy does fill about 50% of Clinic prescriptions. Why? The most likely reasons are convenience, service, and the fact that the price differential is so small as to render it unprofitable to drive to another pharmacy. This constitutes our competitive force in the market place. Our pharmacy can only survive by keeping its prices low and rendering the best possible service. And mark this, the competition which we provide can only be met by better service and still lower prices on the part of every commercial pharmacy in the area. In the market place we make a significant competitive contribution to keeping cost of medical care low for all patients in the community-not just Clinic patients!" WISCONSIN "We compare our costs, expenses and sales against reliable area and national surveys and make a continuing analysis. We try to give the customer the best possible service for his dollar. I feel that this is a legitimate method of operating on our part. I would see no more criticism to this than to any other business enterprise.' CALIFORNIA "It is a business activity and can be run efficiently, providing the patients with a great deal of added service, and it should function competitively with other pharmacies in the area. I believe the prime safeguard to provide is that there shall be no direct or indirect pressure on the patient to utilize the clinic pharmacy in preference to other pharmacies available in his community. The argument that there is no need for the service of a pharmacy if there is a drugstore in the vicinity would not apply to a pharmacy undertaken by anyone else in the community, and I see no reason why it should be permitted to apply to the clinic. If the clinic pharmacy is unable to compete, then it shouldn't exist." CONNECTICUT "I would expect these arguments to be based upon evidence that the group had made an unfair profit from the operation of their pharmacy or that they had shown some cases of pressure requiring their patients to purchase pharmaceuticals in their own pharmacy. In the absence of such evidence, I would feel that there was no other basis for disapproving of the ownership of a pharmacy by a clinic. I imagine that the competition of the clinic pharmacy is somewhat of a threat to them, but that does not mean that it is half as much of a threat as some of the chain store pharmacies. I can not believe that any of the clinic pharmacies will be trying to greatly under bid other pharmacies. They have nothing to gain by doing so." SOUTH DAKOTA "It certainly is true in our situation that we can control the quality of the drugs, dispensing of them and control the profit that is made on these preparations. It has always been our policy to supply the drugs to the patient with a normal profit. The profit being the one suggested by the manufacturer or below this, which we feel many times is advisable because of the cost of the drug and the amount of profit that would be realized. We feel that our prices aid to control the prices of the surrounding drug stores since we are well aware that any of the pharmacies that are more than 40 miles away, universally carry a higher retail price on their drugs than the clinic dispenses theirs for." MISSOURI "We make no restriction on the prescription given our patients. They may get them filled at our pharmacy, or any of the other pharmacies in our city or surrounding area. For some of our referred or out of town patients we suggest they get their prescription filled in their locality for convenience, particularly if refills may be necessary." NEW HAMPSHIRE "Early in 1947, long before many of us were members of the clinic, the group at that time decided to establish a pharmacy adjacent to the clinic building in the downtown area, primarily for the convenience of its patients many of whom were from out of town and also as a convenience to the doctors themselves. This pharmacy has existed from that time until this. It has had either two or three pharmacists in it at all times. It has run in what I would consider as perfectly good harmony with three or four other pharmacies in town. There is a good relationship among the pharmacists. There has been no gouging, no price fixing and no directing on the part of the physicians that patients should buy at a given place. There have been no coded, or numbered, or tricky or special prescriptions given to patients that could be only obtained at our pharmacy. We have recently remodeled this building for the future convenience of our patients and feel that we are rendering a perfectly justifiable service in the community. A little over two years ago, at a time when we were re-assessing our entire operation, we seriously asked the pharmacists if they would like to purchase this pharmacy from us and rent space and run it as their own and all three declined to do this, preferring to receive their salary rather than get involved in the funding of the operation." CALIFORNIA "As you know, the California Pharmacy Association lobbied and passed a bill in California for restriction of ownership of all pharmacies to licensed pharmacists. This passed in spite of our concerted efforts to prevent it and was upheld in spite of continued opposition on the part of the clinics in California. It became necessary for the clinics to divest themselves of the pharmacy and sell them to a pharmacist except in certain cases in which the ownership was a corporation. I might add that in our experience the cost of drugs to the patient has not decreased but rather has increased with the pharmacist owning the clinic pharmacy. "Our Association should make a concerted effort to appear before the Commerce Committee and testify against the Hart Bill. I anticipate that if this is passed, it will be quickly spread to include the dispensing of glasses and might even involve the ownership of the clinical laboratory and x-ray department in each clinic." KANSAS "Although there are numerous valid objections to proposed legislation of this character, I shall limit my comment to the following: 1. In Section 2, the Bill is premised, in part, upon the erroneous assumption that the dispensing of drugs and devices by medical practitioners, directly or indirectly through ownership of pharmacies or interests therein, is inconsistent with the best interest of public health, and denies 'consumers free access in an open market and tends to induce unfair trade practices The fact is that pharmacies owned by medical groups, or which occupy space leased from medical groups are numerically infinitesimal. Less than 1% of the estimated 70,000 retail pharmacy outlets in the United States fall into such category or classification. Although a purpose and objective of the Bill is purportedly to free and broaden the market for drugs and devices and to curtail alleged unfair trade practices, the obvious result of its enactment would be the reverse. It could only serve or tend to limit or restrict the ownership of pharmacies, thereby reducing the market opportunities of the consumer, at this ultimate expense. Except in very limited and unusual cases, the patient is free to buy and does buy his drugs from the pharmacy of his choice, and customarily he does his buying after taking into account the factors of convenience, price, service, confidence, and reliability." ILLINOIS "We have a small prescription pharmacy whose main function is to serve our patients and has a very limited clientele outside our own clinic patients. Our prices are extremely competitive with those in the area particularly those of the other prescription pharmacies. We cannot compete with discount houses because we give credit and have a delivery service. We do not in any way attempt to use code prescriptions or any other devious means. The patient is never forced or coerced to use our pharmacy. Our drug store has not been a particular success from the profit margin point of view, inasmuch as we have paid good wages to the pharmacists and have kept the prices at a very competitive level. If one of the business men on the Senate Committee would investigate our books, he wouldn't feel very happy about it from the point of view of the tax point. I believe the important points that we could make is that the patient is entirely free to go to our pharmacy or any other one he wishes. His prescription is given to him in the office or a call to another pharmacy whichever the patient wishes. Many of them use the discount pharmacies or have charge accounts with other pharmacies. Our prices are reasonable and in line with those of the community. It has been our policy to use this pharmacy more as a convenience to the patient more than any other thing. The profit we make is legitimate, modest and is a normal, though not outstanding, return on our investment." SOUTH DAKOTA "I recognize that there may well be some pharmacies operating within doctors' offices and clinic practices that are unethical with respect to the prices charged and the medicines prescribed, but I am also confident that this represents a very small minority of those clinics and doctors prescribing medications from their offices and clinics. I see no reason at all for an individual doctor or a clinic to prescribe medication and to sell the medicines at a cost less than that price which is generally adhered to in the comparable community. I could not condone, however, a cost factor greater than offered in generally accepted, comparable communities." Copied below is the section on pharmacies which is part of the preliminary questionnaire submitted by group members requesting accreditation surveys by this Association. Pharmacy: 1. Is there a pharmacy in the clinic building? 2. If the answer to question #1 is yes, is it owned by the clinic? 3. If the answer to question #1 is no, explain. 4. What space is allocated to pharmacy? 5. How many registered pharmacists are employed? 6. How many prescriptions filled in last year of record? sq. ft. 7. Is the pharmacy under the direction of a clinic pharmacy committee? 8. Indicate method of assuring that patient has free choice of pharmacist and is under no pressure to patronize the clinic pharmacy. |