Drug Store News: On-site pharmacies pose threat and opportunity

There's not enough competition among drug chains that the nation's fourth-largest auto maker, which now produces more than 1 million cars in the United States and also is opening two new plants in Texas and Tennessee, has entered the pharmacy business. Or that one of the Northeast's most popular gaming resorts is entering the pharmacy business, too.

So as the retail pharmacy industry said sayonara to a year that will be remembered for the sale of Eckerd to Brooks and CVS, as well as the launch of the prescription drug card, 2005 began with this harsh reminder of just one of the many challenges that lie ahead for an industry facing competition at every corner.

These are only two of the most recent examples of the growing trend of the on-site pharmacy as the nation's corporations explore ways to combat rising health care costs.

Toyota Motor Manufacturing, with headquarters in Erlanger, Ky., announced that it would open additional pharmacies servicing its more than 40,000 U.S. employees as part of a revamped pharmacy benefit plan that went into effect Jan. 1.

According to published reports, Toyota, which opened a pharmacy two years ago in its Georgetown, Ky., facility, plans to reduce retail pharmacy use to 25 percent from its current 88 percent, with 40 percent of prescriptions filled through company-run pharmacies and 35 percent filled through mail order.

CHD Meridian Healthcare will run Toyota's pharmacies. The Nashville-based company currently has more than 150 sites in more than 30 states.

Mohegan Sun, a destination resort and casino located in northeastern Connecticut, opened a full-service pharmacy last month to serve its 10,000 employees. It is being run by Drug-Max, which operates 80 on-site pharmacies in 13 states.

It's likely that this trend will continue to gain momentum as increasingly more companies--especially those in centralized locations--will adapt similar strategies to control rising health care costs.

On the one hand, it's a serious threat to the viability of the chain drug industry, as consumers' choice is eliminated, and they are mandated by corporate policy to use company-owned pharmacy or mail order. Every citizen should have the right to make his or her own decision about where to shop and where to fill prescriptions.

On the other hand, it's a free-enterprise system creating new competition that the chain drug industry either can accept or be more proactive against. Similar scenarios have occurred in other industries, and the retailers must think beyond the next neighborhood drug store and outside the traditional box. There are fast food restaurants in many nontraditional locations, there are office supply stores in major office buildings, and there are banks in almost every imaginable location.

If the nation's corporations continue to move in this direction to provide employees with prescription medications, then retail pharmacy should be the provider.

Why not have stores within the corporate headquarters? If a company is preventing customers from going to the traditional drug store, then why not bring the traditional drug store to the customers? Who better to provide such service?