County-owned competitor irks local pharmacists

County-owned competitor irks local pharmacists

July 25th, 2010 by Dan Whisenhunt in Politics

First the city of Chattanooga opened its pharmacy. Now Hamilton County is following its lead, and that has some local pharmacists worried, saying it will draw customers away.

County Mayor Claude Ramsey said the county's employees don't have to use the pharmacy planned for the McDaniel Building on North Highland Park Avenue.

"(Employees) still have a choice to go where they want to go," Mr. Ramsey said. "We think it will be more economical for employees to use the county pharmacy, but if they choose to go somewhere else, it's up to them."

The overall goal of the pharmacy plan is to save taxpayers money by lowering the county's drug costs, officials said. The county anticipates it will save $2.3 million over the next three years.

The pharmacy would be available only to county employees and their families and county retirees under the plan, Mr. Ramsey said. Elected officials also could use it, he said.

Fred Ross thinks it's a prescription for disaster for his fledgling drugstore. The owner of Ross Pharmacy on East Third Street is less than one mile away from the planned site of the county's pharmacy.

He said he has several county employees who are regular customers, and he also lost city employee customers when the city's pharmacy opened in 2009.

"My concern is not so much what I lost," he said. "It's what I would not be able to win."

Mr. Ross also has another beef with the plan - he pays city and county taxes, yet the county is opening up another pharmacy not far from his business.

"I view them as a competitor," he said.

Nancy Reed, owner of Medical Arts Pharmacy on McCallie Avenue, also feels like she's financing one of her competitors.

"It seems to me like if you're going to help anybody, you should help someone who's paid taxes here for all these years," she said.

Mr. Ross said the county could have easily contracted with local pharmacists and achieved the same savings by hiring one company to manage its pharmacy.

"I feel like they're doing the business side of it for profit," he said.

That's not the case, according to County Director of Human Resources Rebecca Hunter.

She said the county will purchase the drugs at cost, with no markup. Under the plan, she said, the county will pay $8.76 for each one of the plan's 1,900 subscribers to On-Site RX, the company hired to manage the pharmacy, the same company managing the city's pharmacy.

The county also will pay an additional $175,000 annually for pharmacy employees, though they will not be considered county employees, she said.

The county is required to pay a $65,000 development fee to On-Site up front, according to the contract, Ms. Hunter said, which covers the licensing and other costs associated with starting up the pharmacy.

The county's analysis shows the effect of drawing customers away from independent pharmacies would be minimal, she said, since most county employees shop at big-box pharmacies such as Walgreens and CVS.

Ms. Hunter said it would not be to the county's advantage to contract with individual pharmacists because they run a for-profit business.

"It will not generate any profit," Ms. Hunter said. "We're buying the drugs at cost. We're not marking them up. We're not in this to make a profit. We're in it to reduce costs."