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Independent pharmacies battle big chains, mail order services

Nidhin Mohan, at New Island Pharmacy, a small

Nidhin Mohan, at New Island Pharmacy, a small independent pharmacy in Deer Park that he runs. The photo is from Feb. 22, 2017. Credit: Johnny Milano

Long Island’s independent pharmacies have been shrinking in number as chain drugstores, and mail-order and online prescription services, cut into their business.

Independent pharmacies are responding by doubling down on the customer services they have long provided, such as home delivery and in-depth, face-to-face interaction with their patients.

There are 250 to 300 independent pharmacies in Nassau and Suffolk counties, about half the number that existed 20 years ago, according to the Long Island Pharmacists Society, a chapter of the Pharmacists Society of the State of New York.

“We used to have 12 independents in Rockville Centre,” said Howard Jacobson, the owner of three Nassau pharmacies, including his largest store, Rockville Centre Pharmacy on Hempstead Avenue. “Now we have three — and I own two of them.”

Bookstores and travel agencies have also been devastated by the combination of chains and internet commerce, said Herman A. Berliner, an economist and dean of Hofstra University’s Frank G. Zarb School of Business.

“Those two industries also went through a cycle, from independents to chains to the internet,” Berliner said. “But it’s a little different with pharmacies, which is why many are still around. It’s the medicine you take. You still have confidence in the independent pharmacist.”

Brick-and-mortar retailers of all types are struggling to win back customers because of the convenience of online shopping, said Marshal Cohen, retail analyst with The NPD Group, a Port Washington-based market research company.

“Unless there is a substantial difference in price, convenience trumps price,” Cohen said.

All retailers, including chains, have placed a greater focus on customer service to deal with the online threat.

“Over the last four or five years, even the big chains are more focused on the consumers and quality of service,” Cohen said.

Long Island still supports a large number of chain and independent pharmacies, according to state data. Nassau and Suffolk each have more than 300 drugstores. Only New York City has more in the state.

There are 141 CVS locations, 67 Rite Aids and 44 Walgreens stores on Long Island, according to those companies. Walgreens also owns 12 Duane Reade pharmacies here. Stop & Shop has pharmacies at 40 of its 49 Long Island stores. Walmart also operates pharmacies here.

“The wealth present on Long Island and the aging population create an environment where pharmacies can continue to flourish,” Berliner said.

Chain pharmacies can earn higher profit margins on prescriptions due, in part, to their buying power, which allows them to negotiate lower prices. They also attract customers with their extensive non-pharmaceutical retail inventory.

Despite the diminishing number of independents, their longtime customers are deeply loyal.

Joann Cornick, 80, of Hempstead, who has been a customer at Rockville Centre Pharmacy for 15 years, said that she wouldn’t trade the service she gets from Jacobson “for love nor money.”

“I needed a nebulizer, and Medicare wouldn’t pay for it,” Cornick said. Jacobson, the owner, “spent hours on the phone, and directed me to a place I could get it. He did not have to do that. It was nothing in his pocket. Who does that? He does.”

Kathleen Batkiewicz, 55, of Deer Park, goes to New Island Pharmacy in Deer Park to fill prescriptions for the 10 to 15 pills her 26-year-old son takes per day. She said Nidhin Mohan, the pharmacy’s owner, has met her in the parking lot to deliver drugs so that her son, who uses a wheelchair, doesn’t have to get out of the car.

“He comes out, talks to my son and knows his history,” she said. “He will bring medicine to my house. This isn’t service you’re getting anywhere else.”

The delivery services that many independent pharmacies provide surprise first-time customers, said Saira Kahn, a pharmacist at Lee’s Drugs in Floral Park and Sun Ray Pharmacy in Bay Shore.

“In a place like Floral Park, which is an older community, deliveries are a big deal,” Kahn said. “But when it’s me at the door, they’re surprised. They’re like, ‘Wait, why are you delivering the medicine?’ But why wouldn’t I?”

Shore Drug in Bay Shore has eight drivers that deliver daily, said Larry Leon, the pharmacy’s owner since 1990.

He added that staff familiarity is also a key to keeping customers.

“We have three pharmacists on staff that have been here for at least 14 years,” Leon said. “We’ve had people here forever, and that creates a comfort zone for our customers.”

Belle Mead Pharmacy in East Setauket offers “adherence packaging” — a tailored package that breaks down exactly when a patient should take drugs each day — said pharmacy owner Ruby Masson.

“It’s a lot more work than dispensing drugs into a bottle, but it’s very helpful for people who aren’t sure if certain drugs should be taken together,” Masson said.

At Chubbuck’s Pharmacy in Freeport, “About 90 percent of our customers speak Spanish, so we speak Spanish,” owner Frank Espinosa said.

Mohan of New Island Pharmacy said he is one of many independents who take on compounding, which can entail mixing multiple drugs to create a prescription tailored to a patient. He said he recently handled a compounding request for a child who needed seizure medicine.

“The medicine only comes in a tablet or capsule, and it was way too much of a dose,” Mohan said. “The parent could have crushed the pill, but it had an awful taste. So we took the tablet, broke it up and added flavoring that would work for a child.”

“It’s time-consuming, but if we get a request for compounding, we try and do it,” he said.

Mohan has even taken compounding assignments for patients at neighboring Deer Park Animal Hospital.

“I have four birds we make compounds for,” he said.

Lee’s Drugs expects to start offering compounding services soon, Kahn said.

“A lot of skin conditions need very specific ointments,” Kahn said. “It’s like a recipe, where the cooking is very specific to the patient.”

Chain drugstores also offer the more basic compounds.

The compounding services at drugstores operated by Woonsocket, Rhode Island-based CVS and Deerfield, Illinois-based Walgreens reflect how competitive the pharmacy landscape is, Berliner said.

“There is a fair amount of consistency between the independents and the chains, when it comes to pharmacy products,” Berliner said. “Independents differentiate themselves because you’re always going to see the same people. There is tremendous value there. There is less value in the product itself.”

Non-pharmacy sales at chains are a big threat to the independents, few of which have the space to compete with the wide range of products offered by the big retailers. In the last two years, CVS placed a greater focus on locking in repeat retail customers by rewarding customers who use store cards with discounts. The average CVS is between 11,000 and 15,000 square feet, according to a company spokeswoman.

Walgreens, on average, has 11,000 square feet of retail space in a store, said spokesman Michael Polzin.

Smaller independents, such as Belle Mead Pharmacy, can’t compete on retail sales, Masson said of her 1,500-square-foot pharmacy.

“I’m not going to get customers to come to me because of what I have retailwise,” Masson said. “I’m going to get them because of the personal service and the relationships I have.”

Independent pharmacies with more space are seeking ways of boosting their retail sales.

Shore Drug sells fashion accessories and products from popular boutique toymaker Melissa & Doug.

Lee’s in Floral Park has garden flags and kids’ toys.

East Hills Pharmacy in Roslyn Heights has makeup lines and high-end skin care products and shampoos, which are items a customer “would see at a Neiman Marcus,” said owner Vinny Rayano.

Rx Express Pharmacy depends greatly on its attached gift shop, The Corner, said owner Joanne Hoffman Beechko.

She opened it six years ago when she moved her pharmacy to its 4,000-square-foot location on East Jericho Turnpike in Huntington, near the East Northport border.

“I have the space, which is an advantage. Most community pharmacies don’t,” she said. “I needed something to sustain the pharmacy, and it has helped me.”

A successful gift store could ease the financial squeeze independent pharmacies face, said Onisis Stefas, the vice president of pharmacy operations at New Hyde Park-based health system Northwell Health, which operates Vivo Health Pharmacy at four Northwell facilities.

“Most of their revenue is coming from prescriptions, and only about 10 percent or so are from the front end,” Stefas said.

Most independents band together by joining purchasing groups, he said, “but it’s still not the same buying power as the larger chains.”

Rockville Centre pharmacist Jacobson said he is part of a buying group with 1,400 members nationwide.

“It helps, but then you look at Walgreens, which has 8,000 stores; we are a drop in the ocean,” Jacobson said. He is also the president of the Long Island Pharmacists Society, which has about 240 members, and is open to all pharmacists and pharmacy students.

Profit margins on prescriptions have been narrowing, said L. Douglas Ried, founding dean and professor at the Stony Brook School of Pharmacy and Pharmaceutical Sciences.

“Forty years ago I could fill 50 prescriptions per day and make a living wage,” Ried said. “Now to pay for a single pharmacist it’s getting closer to 150 to 200 prescriptions, because of the low margins.”

Mail-order pharmacies also have taken a bite out of the business, experts said.

The two biggest mail order providers — St. Louis-based Express Scripts and CVS’ mail-order service — controlled more than 19 percent of all 2016 prescription revenue in the United States, according to the Drug Channels Institute, a unit of Philadelphia-based Pembroke Consulting Inc.

Moreover, mail-order pharmacies captured about 46 percent of the industry’s prescription revenue growth in 2016, said Adam J. Fein, the president of Pembroke Consulting.

Jennifer Bee, 40, of Rockville Centre, said she receives pitches from her insurance company to save money by using a mail-order pharmacy. But they haven’t won her over.

“I’m going to keep going to the local pharmacy,” she said. “It’s good to be able to talk to someone about the medicine the family takes.”

Bee added, “I can’t stop using Rockville Centre Pharmacy. I mean, I send them a Christmas card.”


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