Pharmacist 'unretires' to tout all-cash Rx model

When Louisiana pharmacist Michael Hebert retired a year ago, he bought a pricey motorcycle and racked up more than 100,000 miles on his dream machine. Then a funny thing happened; he got bored, so he got back in the pharmacy game by starting up his third store and touting the business benefits of his cash-only business model.

Hebert recently signed a lease for a store in Metaire, which joins his pharmacies in Slidell and Kenner in the vicinity of New Orleans. All three stores fill prescriptions on a cash-only basis. He's installed ATM machines and stopped taking checks and credit cards in one store. He has no front end, only some chairs and a counter where patients get their scripts filled in less than five minutes. His inventory is 95% to 99% generics, he fills between 300 and 400 scripts a day on average, and his gross profit margin is over 60%. Annual sales at his Kenner store topped $2.5 million, with a lean monthly inventory of $40,000.

Rising co-pays are bringing a new patient cohort to Hebert's doors. Folks who have insurance are also beginning to price check. "I talked to a lady the other day who wanted a price for hydrochlorothiazide," he said. "Her co-pay for a generic was $20 for 30 pills. I told her that was absurd and that I could sell her a year's supply for $22. Her mouth dropped open. What's happening is that people are starting to question whether they need to price generics and see if they'd pay less with cash than with their insurance. So we're marketing that even if you've got insurance, check us out. We're going after the generic market, where all the gravy is."

"We'll soon start advertising the seminars, but we want to keep it low key so it doesn't blow up in our faces by growing too quickly," Hebert said. "It's not about the money. I've got plenty. It's about independents making money. The big guys have shafted us for years. It's time for us to tug on the string."

The Medicare Rx benefit may be the 800-lb. gorilla camped behind the counter in most other pharmacies, but Hebert doesn't anticipate much impact on his stores. Not only does his clientele extend beyond the senior set, he figures the program will just be another chance for the pharmacy benefit managers to stick it to retail pharmacy.

"Although it's a benefit for seniors, it's just like another PBM, and they'll be running it and pricing it," Hebert said. "We'll get paid on their terms, so I just won't fool with it. So many people out there need affordable drugs, not just the geriatric population. It's amazing that a lot of young people don't have coverage. The other day a woman who runs a clinic at a college two hours away phoned to say that it's cheaper for students to drive to my store for what they're saving. She posted a map in the clinic on how to get to my store."