Drug Sellers Rush to Enter Crowded Mail Order Market

Article excerpt

By Mariann Caprino

Associated Press

NEW YORK _ The race is on to sell drugs by mail.

A sleepy, back-office operation just a decade ago, the mail-order drug business suddenly is crowded with new players, each vying for a piece of a mushrooming $4 billion market.

It doesn't mean the postman is about to replace your neighborhood pharmacist, but it is changing the way millions of Americans on health plans get prescription medicines.

Seventy percent of all prescriptions are for so-called "maintenance drugs," taken regularly for chronic ailments like arthritis and high blood pressure.

It is this business mail-order pharmacies seek to capture. They sign up big corporate clients _ like General Electric, Alcoa and Mobil _ with the promise of cutting companies' health-care benefit drug bills by up to 20 percent.

Savings come in many ways. Mail-order pharmacies buy in bulk and therefore can muscle significant discounts from drug manufacturers. They work to substitute cheaper brand-name equivalents or generic drugs. Even large mail-order pharmacies with geographically dispersed clients can operate out of just a few facilities, minimizing overhead.

These centralized pharmacies aren't mere store rooms crowded with jar-filled shelves. They are state-of-the-art facilities that use computers to monitor patients, robots to retrieve pills and machines to count them.

Mail-order pharmacists don't have to walk over garden hoses or point customers in the direction of the deodorant counter. Instead, they oversee quality control.

Sophisticated computer technology allows them to retrieve a patient's file, track allergies to medication and check whether the patient is taking other drugs that may not be compatible.

Medco Containment Systems Inc. of Montvale, N.J., is the industry's leader with a 50 percent share of the market. Plans to expand further were cut short this month when a $411 million merger with rival Diagnostek Inc. collapsed.

Other leaders include Baxter International and Express Pharmacy Services, owned by the Thrift Drug chain, a division of J.C. Penney Co.

In recent months a rash of new players has appeared, including: Walgreen Co., which operates 1,700 drug stores nationwide, decided to put a new and concentrated emphasis on mail-order sales. The company, which has a dispensing facility in Phoenix, opened a high-tech pharmacy in Orlando, Fla., in September. Fay's Inc., which owns 300 drug stores in the Northeast, in October created Postscript, a mail-order division that will begin operating in April from a Pennsylvania facility. Value Health Inc., an Avon, Conn.-based managed care company, acquired the Iowa mail-order drug concern Stokeld Health Services Corp. …