Community pharmacies struggle with big-box competition
by Laura Gaddy
lbjohnson@annistonstar.com
Jun 28, 2013 | 7010 views |  0 comments | 257 257 recommendations | email to a friend | print
Anniston pharmacist Donnie Calhoun, is closing the local business, Golden Springs Pharmacy, which he owned for 22 years. Photo by Stephen Gross.
Anniston pharmacist Donnie Calhoun, is closing the local business, Golden Springs Pharmacy, which he owned for 22 years. Photo by Stephen Gross.
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The leader of a national organization that represents independent pharmacies sold one of Calhoun County’s local pharmacies to a big box chain store Thursday.

That leader, Anniston pharmacist Donnie Calhoun, is closing the local business, Golden Springs Pharmacy, which first opened about 50 years ago and which he has owned for 22 years. He said his customers’ records will be transferred to a local CVS Pharmacy, and he will focus his efforts on operating a local compound pharmacy on Greenbrier Road, where Calhoun makes medicines to order for customers with unique needs.

“CVS made me an offer probably over six months ago and I just continued to think about it,” said Calhoun, who is the president of the National Community Pharmacists Association. “Things change.”

CVS also recently purchased Watson Drug Store in Piedmont from pharmacist John Roberts in May, prompting that store to close after 67 years.

A CVS spokesman did not comment on whether the chain plans to purchase other local independent stores, but did confirm the sale of the Golden Springs and Piedmont locations.

Deciding to sell

Calhoun said decreasing profit margins and increased competition were among the reasons that prompted him to sell the retail store to focus on compound pharmacy.

Calhoun said he remains an advocate of independent pharmacy and added that he still thinks of himself as a community pharmacist because of his work at the compound pharmacy.

“It’s not that I sold independant pharmacy down the river,” Calhoun said. “I am very, very sad that this chapter of my life has ended, but I’m really excited that this new chapter is about to begin.”

Like Calhoun, Roberts said decreasing profit margins made owning the pharmacy increasingly difficult. That, coupled with overhead and mounting personal expenses — his late wife dealt with kidney failure in recent years and until recently he had two sons in college — made selling the business the only practical option.

Roberts said that for the last three years he poured his own money back into the business and took out loans to pay employees Christmas bonuses.

“You have to sell a lot of prescriptions to make enough to pay 10 employees,” Roberts said.

After selling the business, his former employees were interviewed by CVS and some now work for the company, where Roberts is now employed as a pharmacist. He said he’s happy to be working and still sees his old patients at the CVS location in Piedmont.

“This is just a new stage in my life,” Roberts said. “All I want to do is work.”

Moving on

Like Calhoun’s patients, Robert’s patients’ information was transferred to a nearby CVS. Now his old customers can visit the store on U.S. 278 to have their prescriptions filled.

In Piedmont, the storefront that housed Watson Drug Store is dark and a few signs, including one with “CVS” in big, block letters, hung on the window display this week. Behind the glass, metal shelves sat empty and a large sign reading “prescriptions” hung above them.

Thursday a black pickup truck towing a trailer was positioned directly in front of the Golden Springs Pharmacy. Plastic totes were stacked nearby, the lights were on and a CVS sign, like the one in Piedmont, hung in the window.

The impact

While the closures make good business sense for the local pharmacists, both of whom also said their new work allows them to focus on what they enjoy, the change is tough for some customers.

“I’ve had people come in crying,” Calhoun said. “I’ve had people come by to take photos.”

“We were really sad to see it go,” said John Strickland, owner of Strickland’s Hardware, across the street from the old pharmacy. “It was one of the last locally owned businesses.”

Lindsey Elmore is an assistant professor at the McWhorter School of Pharmacy at Samford University in Birmingham who specializes in community pharmacy. She said patients stand to lose when independent pharmacists go out of business.

According to Elmore, independent pharmacies, like those in Golden Springs and Piedmont are fixtures in many communities. People become attached to the local stores, where she said customers receive more personal service.

“When the pharmacist is really familiar with the patient ... it makes it so much easier to go through a medicine list and say, ‘You know, I’m concerned about this one thing,’” Elmore said.

Elmore added that independent pharmacists still have a lot of opportunities to do good work in Alabama.

“Alabama is still a great place for independent pharmacy,” Elmore said. “An independent pharmacist really becomes a part of the community.”

According to Elmore, more than half of the pharmacists in Alabama practice community pharmacy.

Arkansas-based pharmacist Mark Riley heads the Arkansas Pharmacists Association and is president-elect for National Community Pharmacists Association. He said Alabama and Arkansas are among four states where there are more independent pharmacies than chain pharmacies.

Independent challenges

Riley said changes in the pharmacy business have been particularly hard on independent pharmacies. He laid out three ways industry changes have hurt the independents.

First, Riley said, pharmacy benefit managers, the “middlemen of pharmacy,” set the prices for drugs, making it more difficult to profit. In addition, those pharmacy benefit managers have consolidated, decreasing the amount of competition between them.

“Bigger doesn’t always mean lower cost,” Riley said.

Second, insurance reimbursements have been shrinking for two decades, Riley said. As a result pharmacists receive less money per-prescription, and profit margins are shrinking.

“That’s why you’re seeing some pharmacies close,” Riley said. “Their margins just won’t support the business.”

Third, he said, federal regulations have been increasing, ramping up demands on individual pharmacists.

“Some of the smaller pharmacies are just getting overwhelmed trying to keep up,” Riley said. “If you're a big chain store, you have a whole department to take care of it.”

He said independent pharmacies are advocating for changes to state and federal laws to help them maintain their businesses.

“There is not a level playing field,” Riley said. “We do not have the ability to protect ourselves.”

Local pharmacist Chris Martin owns three Martin’s Pharmacies in Calhoun County. He said big-box chains often call to try to buy local pharmacies and pointed to a reason they able to expand.

It’s more difficult for local pharmacists to take over stores like Golden Springs Pharmacy and Watson Drug Store because while banks will finance buildings, they won’t finance pharmacy inventory. Martin said that means buyers need at least $200,000 to purchase an existing pharmacy and, he added, it’s easier for the chain stores to come up with the funds for the purchase.

“They’re just the ones with the money,” Martin said.

Staff writer Laura Gaddy: 256-235-3544. On Twitter @LJohnson_Star.



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