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Small pharmacies find life saver in making medicines

Posted at 3:58 p.m. PDT Friday, April 20, 2001

BY SHAWN NEIDORF, Mercury News

Chuck Leiter makes drugs by hand in his narrow San Jose lab under a photo of his pharmacist grandfather taken in his Pismo Beach drug store 76 years ago.

Longtimers in the pharmacy business, the Leiter family is now down from three pharmacies to one, as consolidation put thousands of independents out of business nationwide over the last decade. But some independents, including Leiter's Park Avenue Pharmacy, are banking their survival on a new -- but very old-fashioned -- niche: compounding, or making medicines from scratch out of raw materials.

``This is my life saver,'' said Leiter. ``This is why I'm still in business.''

In the last 10 years or so, compounding has made a comeback, serving doctors and patients who can't -- or prefer not to -- use standard manufactured drugs. That includes patients allergic to dyes in capsules or eye drops, those who need non-standard dosages and those whose drugs were pulled from the market because they weren't sufficiently profitable.

Altogether, compounded drugs make up about 1 percent of all prescriptions in the United States -- small potatoes overall, but big business for the few thousand shops in the United States that compound extensively. Forty percent of Leiter's prescription business -- it's most profitable 40 percent -- is in the compounding lab. The shop specializes in making custom eye drops.

Compounding has been done for thousands of years, but it began waning in the United States during the Industrial Revolution, when large drug manufacturers absorbed the practice of drug making. By the middle of the 20th century, compounding had become rare.

The practice now is largely left to independent pharmacies because it takes too much time, equipment and expertise to make sense in a high-volume chain setting. Independent pharmacists do it for two reasons: because they like the more hands-on, involved approach, and because they need the higher margins to stay in business.

``If it wasn't for compounding, we wouldn't be there,'' said Lionel Jara, a compounding pharmacist at Santa Clara Drug.

With manufactured drugs, the bulk of the money made off sales goes to the drug company, and the reimbursement rates from the insurance companies give pharmacists only about $2 for every $100 in drugs they sell. ``You can make more money selling candy bars,'' Jara lamented.

Chain pharmacies compensate for the low insurance rates by making money off non-prescription items. But with smaller stores and less merchandising expertise, that's difficult for independent shops.

In compounding, there are few insurance companies to deal with -- most of the business is cash. The resurgence in compounding has been driven in part by middle-aged patients who wanted to help direct their own hormone-replacement treatments. They began asking their doctors for products in which the hormones were chemically identical to those in the human body, rather than commercially available products such as Premarin, which is made from horse urine.

Hormone replacement therapy is still a big part of many compounding shops' business -- largely for menopause, but also for fertility. However, compounders also make pain medications, including drug creams or lozenges for patients who can't swallow pills and intense pain mediations that get injected into the patient. The pharmacists also formulate veterinary medicines, cutting the human dosages to dog- or cat-appropriate levels -- and flavoring the medicines so the animals will eat them.

John Garcia has made compounded medications for all kinds of animals -- even a TB-infected elephant. His Berkeley pharmacy, Abbott's Compounding Pharmacy, makes drugs for both people and pets. But much of his business is still in hormones, and at least 500 women come to his shop just for that.

One of them is Michele Mills, a 52 year-old body worker from Albany. She was referred to Abbott's by her endocrinologist after suffering intense menopause-related problems. She had not planned on using hormones, but once she accepted that she had to, she chose the compounded product. She gets her monthly cream supply from Garcia for $49.50 a month, for which she pays cash.

But Mills ran into a problem with hand-made drugs. When she tried another pharmacy -- a compounder covered by her insurance -- there were bubbles in the cream, making it difficult for her to use a correct dosage.

``I never dreamed I'd be in trouble switching pharmacies,'' she said. In the end, she returned to Abbott's, even though that means paying for her medicine herself. ``I have to make it manageable. There's no choice. It's expensive for me.''

As critics note, having your drugs made from scratch comes with some risks. In the interest of timely delivery and low costs, most compounded drugs aren't tested for potency or sterility. Furthermore, compounders are not required to have any special training or certification beyond pharmacy school and a state pharmacy license -- and many pharmacy programs no longer teach much compounding.

Compounders' regulatory status with the Food and Drug Administration is in limbo, owing to an ongoing court fight over 1997 legislation that was supposed to clarify what compounders could -- and could not -- do.

That said, serious complications appear to be uncommon. Patty Harris, executive officer of the California Board of Pharmacy, can recall only one or two compounding-related complaints in the last 10 years.``My family's been doing this since 1925. I'm a third-generation, and I've got a certain reputation to keep up,'' said Chuck Leiter.

Leiter is planning to stake even more of his reputation on compounding. In the next few months, Leiter's will build a new facility on the same site, a 4,000 square foot store slated to open next January. Half the space will be devoted to a compounding lab, reflecting its growing role in the pharmacy. ``That's where I'm putting my eggs,'' said Leiter.

Contact Shawn Neidorf at sneidorf@sjmercury.com or (408) 920-5916.

-- Swissrose (cellier3@mindspring.com), April 23, 2001

Answers

Vets make use of these special medicines too. I have had to drive out of my way to a special pharmacy to get medicine for my pets, formulated with special doses and flavors.

-- K (infosurf@yahoo.com), April 23, 2001.