Rx for Relief

Talk, Banter & Buzz

JIM WITT ISN’T HAPPY about the cost of prescription drugs. But unlike most people, the 37-year-old resident of Ashby, a town of about 500 in northwestern Minnesota, believes he can do something to mitigate the impact of the high cost of drugs on senior citizens and others living on a fixed income. After all, he’s a pharmacist—a pharmacist who has decided to sell drugs at rock-bottom prices.

Witt is the owner of Borg Drug, Ashby’s sole pharmacy. He bought the business in 1999, after working at hospital pharmacies in Duluth and in Minot, North Dakota. Like many small-town businesses, Borg Drug was struggling to retain its customers as Wal-Mart and other large discount chains set up shop in the area. But Witt saw a chance to be his own boss—and since he and his wife have family near Ashby, Witt says, “We decided this is where we need to be.”

Over the years, Witt kept an eye on drug prices in neighboring Alexandria and Fergus Falls; he needed to stay competitive. He also knew that some of his customers—friends and neighbors—didn’t have insurance and couldn’t afford to pay the full retail price for prescription drugs. “You feel for people,” he says. “We just tried to make it as affordable as possible.”

His low costs caught the attention of customers—and the media. In early 2005, Witt read a Star Tribune story comparing metro-area prescription costs and realized he had most of them beat. He called the reporter who wrote the piece—who then did an article on Borg Drug. That coverage generated considerable interest from customers outside Ashby, so last summer Witt decided to set up a website (www.borgdrug.com) and start a mail-order business. Online orders rapidly became 40 percent of his business.

Rather than selling drugs at the manufacturer’s suggested retail price, Witt eventually decided to add only a flat dispensing fee of $3.27 per prescription on top of his wholesale cost. The fee helps cover his overhead, including salary, but Witt adds nothing for profit. For the cholesterol-lowering medication lovastatin, Witt charges $28.97 for 90 20-milligram tablets. The Walgreens website recently quoted a price of $83.89 for 90 tablets. MedSave Discount Pharmacy, a mail-order pharmacy based in New Hope, charges $46.99 for 100 tablets, compared to Borg’s $31.82.

Witt’s cut-rate prices caught the attention of CBS Evening News last fall. In a report aired in November, a reporter described Witt as “almost single-handedly taking on the pharmaceutical industry.” Within a month, demand nearly doubled, to 165 orders a day. He hired another technician; his wife and sister volunteered to help process the orders.

Yet in spite of increased sales, Witt still operates on a thin margin. Last year, he set a salary target of $80,000 but missed it; he estimates that he made less than $60,000.

Sean Kacsir, president of MedSave, gives Witt credit for keeping prices low. “The more of us [discount pharmacies] out there, it keeps everybody in check,” he says.

But Stephen Schondelmeyer, PhD, a pharmacy professor and economics expert at the University of Minnesota, questions whether Witt can keep his prices low and still survive. “I wish him well. I hope he succeeds,” Schondelmeyer says. “And if he does, I would be curious to see how.”

Rural pharmacies will be hit particularly hard by the Medicare prescription-drug benefit changes, Schondelmeyer predicts. Many drug plans either own or have exclusive contracts with large mail-order firms, he says, and customers are given incentives to order from those preferred mail-order firms—essentially icing small-town pharmacies, like Borg Drug, out of the deal.

Given the financial pressures, does Witt expect to be in Ashby in 10 years?

“I hope so,” he says.