Small pharmacies in Boro Park and Flatbush have seen a influx of customers since mega chain stores Duane Reade and Rite Aid stopped accepting United Health Care’s (UHC) Medicaid-Medicare community plan.
For a long time, independent drug stores have been struggling nationwide to survive in the face of the increasing onslaught of large chains. However, the move seems to have sent a significant number of customers back to smaller providers.
“It’s made a big difference; every day people are coming into the store who used to shop there [chain stores],” a Boro Park pharmacist who asked not to be named told Hamodia. He said that the flow of UHC subscribers not only increased prescription orders, but has helped to win over many, who had once been loyal to chains, as steady customers to smaller stores.
“It’s been great for the small pharmacies. People see the advantages; personal service, a pharmacy that knows you,” said the pharmacist.
“People have it in their heads that a big chain store has everything and knows everything about the products, but they are all controlled by back offices; they don’t know the first thing about the neighborhoods they’re in and what they need.”
Duane Reade and Rite Aid’s decision officially took effect in the beginning of December, but a few weeks prior to that, UHC sent a letter to its members informing them of the change, together with a list of pharmacies in their area that would accept the insurance. UHC said that subscribers can still use 3,500 “community-based pharmacies” and pledged to ensure that members “can easily fill their prescriptions at their new pharmacies.”
Pharmacists said that customers who had long used the two chains were frustrated by the sudden change.
One UHC member admitted the inconvenience involved in changing pharmacies, but was happy with his experience at independent drug stores.
“Changing pharmacies was a hassle,” said a Boro Park resident who asked to be identified only as Shia. “It means bringing all the insurance cards over to the new pharmacy, bringing in all the bottles that need refills to the new place. But I must say that the smaller drug stores are going out of their way to give personal service. When I walk in they greet me by name and are very proactive about calling the doctor to get refills.”
Sources familiar with the details of the situation said that Rite Aid and Duane Reade’s decisions were based on contract negotiations, which groups of large chain stores conduct with insurers as a team.
“Their [UHC’s community plan] reimbursement rates are very low. If the big companies don’t get what they want, they will drop them. It doesn’t pay for them to fill prescriptions without making a decent amount of profit,” said another pharmacist who also asked not to be named. He added that while in the Boro Park and Flatbush communities UHC’s managed care plan is very popular, it is not widely used in other areas of the state and the decision would not have a major impact on either chain’s consumer base.
The pharmacist added that a similar event had occurred in the past year when Walgreens stopped accepting Express Script.
“We were busier for three months, but then they negotiated a new contract,” he said. “The big chains can play tough because they know that they have negotiating power. They know that eventually they will get enough complaints from subscribers who can’t shop where they want and will come back with better terms.”
Walgreens, which owns Duane Reade, did not return a request for comment and Rite Aid said that they could not “discuss any details of any particular plan participation.”
Despite the windfall of new customers, one Brooklyn pharmacist said that due to the low reimbursement rates offered by UHC’s managed care plan, the additional traffic had little financial advantage.
“We are busier, but in terms of net profit, it has not made a big difference. Their rates are really horrible, which is why the big chains chose not to participate in the first place.”