There’s a CVS drugstore four minutes from Anita Morena’s apartment in Clementon, New Jersey. She used to fill her prescriptions there. But on a Tuesday morning this spring, Morena pumped her old gray Buick full of nearly-$3-a-gallon gas, paid the $3 toll on the Walt Whitman Bridge, and fought the red lights up Broad Street for an hour, all because she’d seen a little story on the news about a pharmacy in Glenside that saves people like her lots of money.
Eight years ago, when she was just 21, Morena was diagnosed with a disease that eats the bones of her spine. The pain in her back is so severe that it sometimes brings her to tears. It’s especially bad at work, where she spends countless hours on her feet. Worse, she doesn’t have health insurance. To numb the pain, she takes the big boys — OxyContin and Percocet. CVS charges her $570 for a month’s supply. Lately, to save money, she’s been hoarding pills, taking them only when the disks in her back feel like boulders crashing against each other in a rock slide.
But when the pharmacist at Adams Discount Pharmacy in Glenside rings up her order, the total is $180 — $390 cheaper for similar drugs that relieve her pain just as well. No drugstore in Pennsylvania, possibly even the country, can beat the prices at Adams. And the generics are less expensive than in Canada. “I don’t know how they do it,” says Morena. (All patient names have been changed.) “But it’s worth the gas.”
The owners of the pharmacy, Adam Shubbar and Howard Brooker, know exactly how they do it. They don’t take insurance, and they only take cash. In today’s pharmaceutical world, that’s like a car dealer demanding payment in gold bullion. Even stranger, they opened up shop last September, while other independent pharmacies in the region were closing down due to rising drug costs and falling profits. Some major chains have warned they might have to shut their doors in neighborhoods where too many customers rely on Medicare. “I don’t understand how these fellas plan to stay in business,” says Sam Marshall, president of the Insurance Federation of Pennsylvania. Even Shubbar’s brother, who’s also a pharmacist, thinks they’re crazy.
And yet folks are driving from as far away as Delaware, the Poconos and Cape May to this little storefront on Keswick Avenue, with its seven chairs, one rack of vitamins, and radio alarm clock tuned to classic rock, owned by two regular guys who invested their entire life savings in the place because they thought Anita Morena was getting a raw deal.
Of course, Adams Discount Pharmacy doesn’t actually earn a profit. “We’re basically volunteers,” says Shubbar.
Good thing he and Brooker kept their night jobs.
Standing next to each other behind the counter, Adam Shubbar and Howard Brooker make a funny pair. Brooker is five-foot-seven, compact and trim, his head shaved and shiny. When customers walk in, he spins a tight circle in his stylish black leather shoes and barks, “HELLO! How can I HELP you?”
Shubbar, 37, usually leaves the talking to Brooker. He’s a year older, and taller, about six foot — he claims he’s six-two when Brooker isn’t around — and looks like someone stuffed him into his lab coat, with its sleeves permanently shoved halfway up his arms. “We never fight, because I know he’d beat me up,” Brooker says.
If these guys had met decades ago, instead of just last year, they would have become lifelong friends. Born 12 months apart, they both grew up in Holmesburg, went to Lincoln High, studied pharmacy at Temple. And both worked at pharmacy chains — Shubbar managed CVS stores for eight years, and Brooker helmed a Thrift Drug — where they learned the system all too well. Like virtually every pharmacy, theirs had contracts with insurance companies, who essentially set the prices. When the wholesale prices of drugs went up — sometimes every year, sometimes every week — insurance companies often refused to pay the difference, reducing the pharmacies’ take.
As profits from insured customers grew thinner, the pharmacies had to charge uninsured patients more. “The big chains see uninsured patients as a profit center,” Shubbar says, “which is crazy, since they’re the ones least able to pay.” Still, corporate always responded with the same message: Sell, sell, sell.
As much as Shubbar and Brooker hated what was going on behind the scenes, the hardest part was dealing with customers, who would often come in to discover that their insurance companies had suddenly decided to stop covering certain drugs. Customers who for 15 years bought the same medication with a $20 co-pay were abruptly charged full price, which might be $200, even $500. “I got screamed at every day for stuff that wasn’t my fault,” Brooker says. But he knew the customers were justified. As a result, both men spent most of their time on the phone, fighting with insurance companies, or filling out paperwork. (Now, most pharmacies hire someone just to deal with insurance companies.) This is not what they’d expected from their careers.
After eight years of this, Shubbar took a pay cut to work at the pharmacy at Lankenau Hospital, where he wouldn’t have to deal with the insurance, or the outraged public, for that matter. A month later, Brooker made the same move. On their second night shift together, Shubbar and Brooker got to talking. They both wanted to go into business for themselves. They both swore they would never again work at chain drugstores. Then, Shubbar’s mother lost her insurance. She needed costly cholesterol-control medication. And she was thinking about taking a trip to Mexico to buy the drug illegally.
“This is America, and I’m a pharmacist,” Shubbar thought to himself. “There has to be a better way.”
And there it was.
Why not open a pharmacy? On their night shifts at Lankenau, he and Brooker puzzled it out: By never signing contracts with insurance companies and saving on overhead, paperwork and personnel, they could undercut everyone else’s price. They could sell cheap generic drugs to the uninsured — of whom there are 1.5 million in Pennsylvania alone. They could sell generics for less than some insured customers spent on co-pays, by only marking drugs up eight to 10 percent. They could sell, say, three albuterol inhalers for $25, where CVS charged $28 for just one. And if they didn’t have to spend all day arguing with insurance companies, or stocking mascara and cereal and issues of People magazine, they’d have time to give great customer service.
“It seemed pretty obvious to us,” Shubbar says. “Everybody else thought we were nuts.”
They are nuts. Nobody starts a pharmacy these days. Not when independent pharmacists are asking — practically begging! — for someone to bail them out. And even the chains are hurting. The federal government’s new prescription drug plan, Medicare Part D, means a 45-day wait before pharmacies are reimbursed, thanks to government bureaucracy. Just to restock their shelves, the chains are basically lending themselves millions of dollars for a month and a half. “It’s a tremendous challenge to our bottom line,” says Mary Ann Wagner, senior vice president of the National Association of Chain Drugstores. And if a small shop like Adams Discount actually started to make some money, a chain like CVS or Rite Aid has enough dough to buy all the buildings in the immediate vicinity, bulldoze them, and build a 24-hour retail megaplex.
This is the industry that Shubbar and Brooker decided to take on?
Last summer, Shubbar cashed in his life savings — $50,000. Brooker did the same, then sold his 401(k). They rented a former beauty salon in Glenside for $1,200 a month, ripped the mirrors off the walls, bought enough drugs to overdose a herd of cattle, suffered countless this-had-better-work-Buster glares from their wives. By September 2005, they were in business.
“We put all this together in a month,” Brooker says.
Sugar Snap was a very good dog. A mixed breed, mild as milk, she had a love for chin scratches and humans that was boundless. At age 11, she developed a persistent cough. Her vet prescribed an antibiotic. His price: $80 a dose.
Sugar Snap’s owner, Susan Frederick, read a story in the Chestnut Hill Local about Adams Discount Pharmacy. On her first visit, Brooker and Shubbar walked into the lobby and fussed over Sugar Snap like she was the cutest thing ever descended from wolves. They sold Frederick a drug for $12 a dose. Sugar Snap’s cough went away. Soon she developed other complications, though, and Frederick decided it was time to let Sugar Snap go.
She took the unused pills back to Adams, which refunded her money in cash. A week later, she opened her mailbox to find a sympathy card from Shubbar and Brooker. “I didn’t cry, but almost,” Frederick says.
And this, really, is the Adams business model. Lure them with cheap prices. Wow them with customer service. Get them to tell their friends. Like Sam Kowalsky.
“You go to a chain drugstore and say you don’t have insurance, they treat you like a criminal,” says Kowalsky, 59, a disabled truck driver from Northeast Philly. He burned through 10 years of retirement savings in two years paying for heart and pain medication. “I’m going broke,” he says.
Adams saves Kowalsky $40 a month on his blood pressure medicine. Roger Smith, 83, is a World War II veteran. He walks three blocks to Adams because it sells two prescriptions cheaper than even the Veterans Administration. Anna Garland strained her shoulder and back working at a diner. Wal-Mart sells the anti-inflammatory drug she needs for $55. She drove an hour from Jersey to save $23. “With this place,” Garland says, “I might actually be able to afford to take my medication when I need it.”
But can this be true? In this jaded age, can two men do well in a bad industry by doing good?
After 10 months in business, Adams makes enough money to cover basic expenses. It doesn’t earn enough, however, to pay Shubbar and Brooker a salary. So they run the store from 9 a.m. till 6 p.m, drive home, nap and shower. Then they return to Lankenau Hospital, where they work till 7:30 in the morning.
“We basically look at it as a form of charity,” says Shubbar.
“This would be a nightmare if we didn’t love our work,” Brooker says.
Okay, this is insane. Yet, in classic David v. Goliath fashion, they say they’ll eat the big guys’ lunch. And they see as their gravy train Medicare Part D, the main entrée of which is an obtusely worded section of federal law known as the Doughnut Hole. When President Bush introduced Part D, he promised it would help senior citizens afford the drugs they need. The program pays for 75 percent of the drugs seniors buy every year, up to $2,250. But from $2,251 through $5,100, when it kicks in again with 95 percent coverage, seniors are entirely on their own. This is the Doughnut Hole.
Of the 2.2 million Pennsylvanians on Medicare Part D, 45 percent will fall into the hole, says Jack Vogelsong, coordinator of APPRISE, the state program that counsels citizens about health-care choices. And these people will join the ranks of the uninsured. Which means that as soon the Doughnut Hole opens, Pennsylvania pharmacies will find themselves confronted by almost a million pissed-off senior citizens.
“It’s gonna be anarchy,” says Brooker. “Seniors are gonna freak.”
With their low prices for the uninsured, Brooker and Shubbar are the only pharmacists in the industry poised to use the Doughnut Hole to their advantage. Besides New Jersey, Pennsylvania and Delaware, Shubbar is licensed to practice in the senior-citizen meccas of Arizona and Nevada. This month, Adams will have a website up and running, to sell drugs over the Internet.
Still think these guys are just two soft-hearted suckers?
“We’re stealing so many customers from the big chains,” Brooker says. “Whoever wrote this new Medicare law was really naïve. People will flock to us,” Brooker says. At least, that’s what they’re counting on.
Christopher Maag is a freelance writer for the New York Times, Time magazine, Mother Jones and others.