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Tribe launches mail-order drug trade

Penobscots aided by Maine governor after casino fight

INDIAN ISLAND, Maine -- A Maine Indian tribe looking to promote economic development has turned from gambling to the prescription drug business.

In a remodeled section of a vacant industrial building near the Penobscot Nation's high-stakes bingo parlor, Maine's only mail-order pharmacy is taking shape -- supplying prescription medicines to the state's neediest residents and, according to state officials, saving taxpayer dollars.

PIN Rx, which filled its first prescription in mid-October, eventually hopes to expand beyond the state's borders and serve additional Medicaid clients in New Hampshire, Vermont, and perhaps beyond.

Two years after voters rejected Maine Indians' attempt to create a $600 million casino, the Penobscots are placing their chips on the pharmacy business as a way to provide jobs, boost the local economy, and fund tribal programs.

A staff of 13, including eight tribal members, processes phone and mail orders, fills prescriptions with the help of high-speed robotic dispensing machines, and ships the packages to customers, usually the same day. Employees work behind locked doors in a high-security setting equipped with video cameras and motion detectors.

''Medicaid programs are looking at ways to save money, and they're looking to mail order. The private sector went to mail order years ago," said Reggie Gracie, who left his job as pharmacy operations manager for the Hannaford Bros. supermarket chain to become chief executive officer of PIN Rx.

PIN Rx -- for Penobscot Indian Nation -- was created with the help of Governor John Baldacci, who caused hard feelings among the Penobscots and the Passamaquoddy Tribe in 2003 when he played a high-profile role in opposing their casino propoal.

The Penobscots are not the first tribe to enter the mail-order drug business. Through its Pequot Pharmaceutical Network, the Mashantucket Pequot Tribal Nation in Connecticut provides discount medicines to Indian tribes nationwide and to self-funded employer groups.

A member of western New York's Seneca tribe who ran a mail-order cigarette business expanded last summer into the online prescription drug business. Ross John has said his Native Pharmaceuticals RX can offer cut-rate prices through high-volume purchasing and tax benefits available to Indians.

Various tribes, including Maine's Penobscots, have explored the possibility of using their legal status as Indians to serve as distribution points for cheaper drugs imported in bulk from Canada. Those ideas were put on hold after the Bush administration declined to grant a waiver to allow the importation.

Reimportation was the original goal when Baldacci announced in September 2004 that the state was teaming up with the Penobscot Nation on such a project. Under the partnership, the state provided a $400,000 grant to upgrade the 36,000-square foot steel building, which was used to manufacture audio cassettes before becoming vacant five years ago.

The Baldacci administration modified the plan the following year and assisted the tribe in setting up PIN Rx, a private business that does not afford any special benefits to the Penobscots because of their tribal status. PIN Rx supplies drugs by mail to clients of the state Medicaid program, known as MaineCare, as well as the smaller programs Drugs for the Elderly and Maine Rx Plus.

The pharmacy provides 90 days' worth of drugs for chronic conditions such as high cholesterol, hypertension, diabetes, depression, and thyroid problems. Clients save money because PIN Rx waives the standard co-pay of $2.50 on 30-day supplies or $7.50 for each 90-day order. Antibiotics, drugs for acute pain, or other prescriptions that need to be filled immediately are to be purchased at local pharmacies.

The state, according to Gracie, shares in the savings because it reimburses mail-order pharmacies at lower rates than their brick-and-mortar counterparts.

Jude Walsh of the governor's Office of Health Policy and Finance pegs the savings at roughly 9 percent. She said PIN Rx was expected to save $5 million for MaineCare during its first year, but that figure will be lower because some clients are moved to the new Medicare Part D.

While Baldacci's stance on the mail-order pharmacy appears to have raised his stock among the Indians, it has angered a different constituency: the state's community pharmacies.

The Maine Pharmacy Association questions state projections of savings, asserting that they will be offset by waste and other additional costs.

The group's president, Christopher Gauthier, said the association has no complaint about the Penobscots going into the mail-order drug business but is angry about the way the Baldacci administration has shepherded PIN Rx every step of the way.

Sixteen community pharmacies in Maine, most of them in rural communities like Lubec, Oakland, and Caribou, have closed in the past 2 1/2 years, according to Gauthier, who blames state policies that he says have squeezed profits. Large drug and supermarket chains have responded by trimming hours of operation, he said.

Mark Chavaree, an attorney for the Penobscot Nation, said he can understand why retail pharmacies oppose the new competition but the tribal business simply reflects what is happening nationwide.

''Whether it's us or another mail-order pharmacy, I think the trend in the industry is toward mail-order. So they can blame us to a certain extent, but we are just a business entity."

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