North Dakota pharmacy ownership rules under fire from ballot initiative

Key Points

A ballot initiative moving toward approval in North Dakota could open the doors to chain pharmacy in the state. The initiative follows a resounding defeat of similar legislation in the state House of Representatives earlier this year. Current laws require that pharmacies be owned at least 51% by pharmacists. That has largely kept corporate owners, including national chains and hospitals, out of the community pharmacy market.

"Chain stores and hospitals made a valiant effort to get the law changed in the legislature and failed, so they are trying again with an initiative on the November ballot," said Michael Schwab, executive vice president of the North Dakota Pharmacists Association. "It's a challenge, but it also gives us a chance to compare ourselves favorably to the other 49 states."

The initiative is sponsored by North Dakotans for Affordable Health Care, an organization largely funded by Walgreens and the North Dakota Health Care Consortium, a statewide hospital group, said NDAHC spokeswoman Tammy Iban.

Prior challenges of pharmacy ownership

The current ownership provisions date back to 1963, Schwab said, and were designed to keep pharmacy local and responsive to local patients. Chain and hospital groups have repeatedly challenged the law, including a battle that went to the U.S. Supreme Court in 1974. In 2009, the state legislature turned back a move to repeal pharmacist-only ownership on a 57 to 35 vote that largely followed rural-urban lines. The state population is about 52% rural and 48% urban, Schwab said.

"This initiative is going to be a battle, no question about it," Schwab added. "It comes down to what North Dakota wants. Voter education is going to be the key."

The public face of the initiative is Eric Thompson, MD, a primary care physician in Bismarck.

"I remember writing one of my first prescriptions when I moved back to North Dakota after practicing in another state and telling my patient that he could get all this for $20 at Wal-Mart," Dr. Thompson said. "I was shocked when I learned we don't have those kinds of pharmacies in North Dakota. Those old pharmacy ownership laws have created a monopoly for pharmacists and higher drug prices for my patients."

The $4 generic prescription is a red herring, Schwab said. Pharmacies in the state's four urban areas of Bismarck, Fargo, Grand Forks, and Minot offer the same kinds of $4 generic programs found in other states.

The reality is that $4 prescriptions are a marketing ploy, he said, one designed to get customers into the store and buying nonprescription products while they wait. Fewer than 1% of all prescriptions are covered by the $4 programs.

Both sides are still designing their ballot campaigns. NDAHC will be focusing on cost, Iban said. Pharmacists will be focusing on cost, access, and quality of care.

"The big boxes and chains have done a wonderful job of marketing the $4 script," said Norm Robinson, president of Advertising Marketing, which is creating the pro-pharmacy campaign.

"People believe that all prescriptions are $4, which isn't true by a mile," he said. "Our job is to market the truth about community-owned pharmacies. NACDS reports that North Dakota script prices are almost $5 cheaper than the national average, and Novartis says our prices are more than $10 below the national average."