Just what the doctor ordered

WOODLAND PARK - One of the area’s few independent pharmacies will close after an acquisition by one of the nation’s largest retail grocery chains.

Facing increasing competition and changes in federal government reimbursements, George Drake said he couldn’t refuse the offer to sell his 24-year-old Drake’s Prescriptions in Woodland Park to The Kroger Co., which in Colorado operates King Soopers and City Market grocery stores.

“I’ve had four offers over the years, from just about everybody. This was a serious one,” he said. “But it should be relatively painless for our customers.”

He would not disclose terms of the deal.

The pharmacy, located inside the Ben Franklin store Drake also owns, will move by Labor Day into the City Market next door. On Aug. 1, the pharmacy will convert to the City Market name. The Ben Franklin store will remain the same.

Drake has been hired as the pharmacy manager and will become a City Market employee. It will be the first time for Drake to work for a pharmacy chain in his 36-year career.

Drake said most of his five pharmacy staff members have accepted offers to work for City Market.

“So the people this community has trusted for all these years won’t change,” Drake said. “City Market’s philosophy is to focus on customer service — which has been our focus — so it should be a good marriage. It’ll still be a small-town philosophy, which is refreshing today.”

The mail-order prescription drug business has become Drake’s largest competitor, even though the town of about 7,000 has a Safeway pharmacy, a Walgreens pharmacy that opened in late 2005 and a Wal-Mart with a pharmacy to open in a few months. “That really takes a bigger bite out of the bottom line, along with changes in Medicare Part D,” he said of the mailorder business.

Medicare Prescription Drug Program Part D, which took effect Jan. 1, 2006, provides prescription drug coverage to anyone on Medicare. The National Community Pharmacists Association blames the program’s reimbursement system on last year’s decline in independent pharmacies.

The number of independent pharmacies had been growing at a slow but steady rate nationwide until 2006, when 1,152 stores closed, said John Norton, spokesman for the Alexandria, Va.-based association.

That left 23,348 independent pharmacies in the nation, representing 42 percent of all retail pharmacies. But more casualties, such as Drake’s, are mounting this year, he said.

The Pikes Peak region has a handful of independent pharmacies, including Ivywild Pharmacy, College Pharmacy, four independently owned Medicine Shoppes and several run by hospitals and doctors’ groups.

“Extremely slow” reimbursements for Medicare drugs have hurt pharmacies’ cash flow, Norton said, and store budgets will take another hit from Medicaid reimbursement cuts on generic drugs. The change, which Norton said slashes pharmacy reimbursements to 36 percent of cost, starts Sept. 1.

“Both are government-run programs, and they’re being run in a fashion that just hurts independent pharmacies,” Norton said. “Many are deciding it’s not worth it and are getting out.”

Woodland Park City Manager Dave Buttery calls the sale of Drake’s Prescriptions a move “driven by the market.”

“George has been a valued member of the community, and the good news is that he will still be providing the same customer service he’s famous for,” Buttery said.

Drake said the addition of a pharmacy to City Market, which had a non-compete clause in its lease until the buyout, will strengthen the grocery store and the Gold Hill Square South shopping center.

Drake will continue to own and operate the Ben Franklin store until “customers dictate otherwise.” After the pharmacy closes, he said he may expand the fabric and quilting department. Since adding quilting classes a year and a half ago, about 500 quilters frequent the store, said Marybeth Wujcik, who runs the department.

“We’re growing by leaps and bounds,” she said.

Quilts made in classes are on display today from 10 a.m. to 2 p.m. at four locations in Woodland Park, including Ben Franklin and Charitable Treasures.