ND protects small pharmacies from big box stores

By Dale Wetzel, Associated Press Writer

New Rockford, N.D. (AP) - Shane Wendel fits his diabetic customers for shoes, is starting flu-shot clinics next month and spends hours in his pharmacy counseling people about which Medicare insurance plan will pay the most for their medicines.

As a pharmacist and owner of Central Pharmacy Inc., the only drugstore in this rural town in central North Dakota, Wendel says his job goes beyond selling prescription drugs and making sure his customers use them correctly.

Offering extra services is "good for our patients and it's something that we want to do to provide health care," Wendel said. "If you're an independent pharmacist, it's something you can control. At a big-box store, I don't decide that, the corporate office does."

As national competitors such as Wal-Mart Stores Inc., Target Corp. and Walgreen Co. fight to dominate the pharmacy market, North Dakota businesses like Wendel's are largely protected from that struggle. For almost five decades, a unique state law has required that pharmacists own or control most of the state's pharmacies.

Because of the law, those retail giants don't operate drugstores in North Dakota. Walgreen's Fargo store is the only one in the nation that was built to host a pharmacy but does not, company spokesman Robert Elfinger said. The space is used for storage.

North Dakota is the only state in which Wal-Mart Stores Inc. does not offer $4 prescriptions for dozens of generic drugs, a program the company began four years ago.

"People shouldn't be required to spend so much more than they have to for the simple act of trying to keep themselves healthier," said Ryan Horn, a Wal-Mart spokesman. "That is what this law is doing, and it shouldn't stand."

The law has survived a number of challenges. In 1973, it was upheld by the U.S. Supreme Court, which ruled that states had authority to legislate against "injurious" business practices as long as they didn't violate federal law or the U.S. Constitution. The latest attempt to repeal it failed this month when the North Dakota Supreme Court ruled a voter initiative on the issue didn't meet state constitutional requirements.

Both sides of the issue expect it to resurface soon, either during the 2011 Legislature, which begins in January, or as part of a new initiative campaign.

Small pharmacies argue the big-box stores' entry into the North Dakota market could take 15 percent or more of their prescription drug business if customers buy medicines on their regular shopping trips. That would make it difficult for them to survive, they say.

"There's no way a pharmacy can make a sustainable business filling $4 prescriptions all day long. But Walmart doesn't care because they want traffic," Wendel says. "They want to sell you other stuff besides prescriptions."

North Dakota lawmakers endorsed the ownership restrictions in 1963, in part because of fears that the state's doctors were buying up pharmacies, said former Gov. George Sinner, who sponsored the measure as a member of the North Dakota House.

"In many smaller cities in North Dakota, one of the few people who has any medical knowledge and ability is the local pharmacist. Seniors look to the pharmacist for a whole lot of advice," said state Rep. Jim Kasper, who supports the law. "Losing them would be like the school closing or the post office closing. You just lose the heart of your town."

The law's critics believe the potential effects on rural drugstores are exaggerated. In any case, other businesses are not protected from competition, said Darwin Reinhardt, who buys prescription drugs in the town of Beulah and about 50 miles away in Bismarck.

Reinhardt said his own buying habits would not change much if Bismarck's two Walmart stores began selling prescriptions.

"I don't have any loyalty to Walmart," he said. "It just irritates me when you have the government being intrusive upon the individual rights of the people ... Nowhere else in economics do you see a trade being suppressed like you see in the pharmacy."

Larry Gauper, a retired Blue Cross Blue Shield of North Dakota executive who has long been a vocal opponent of the ownership law, said pharmacists who own several stores in North Dakota's larger cities "do not want to give up the hold that they have on this market."

"This is for the self-interest of the people blocking it. It is not for the public interest," he said.

The argument that repeal would help make lower-cost prescription drugs available "is part of the issue, but it is not everything," Gauper said. "To me it is about freedom of choice."

North Dakota's independent drugstores have not been threatened by two large companies that continued to do business when the law was adopted, advocates of abolishing the pharmacy restrictions say.

Thrifty White Pharmacy, a Maple Grove, Minn.-based company that has 26 North Dakota stores, complies with the law because North Dakota-licensed pharmacists are trustees of the employee stock ownership plan that controls the business, said Howard Anderson, director of the state pharmacy board.

CVS Caremark Corp., of Woonsocket, R.I., which has six North Dakota locations, did business in the state under the Osco Drug name when the ownership law was originally approved. Mike DeAngelis, a company spokesman, said Friday the law does not allow CVS to open additional stores in North Dakota, although existing ones may be moved to other locations within the state.

While the debate plays out, Wendel is focused on his customers.

One regular is Marvel Ebenhahn, the longtime manager of a New Rockford credit union, who visited the pharmacy recently to pick up some diabetes medication. Wendel, Ebenhahn said, "has always answered every question I've ever had."

"I'm going to do business here anyhow. I don't care what Wal-Mart does," she said. "As far as I'm concerned, we need a drugstore in this town."

(Copyright 2010 by The Associated Press. All Rights Reserved.)

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