Rick Olson: If We Can’t Eliminate North Dakota’s Pharmacy Ownership Law, How About Modifying It?

This guest post was submitted by Clarence “Rick” Olson, of Fargo, an occasional contributor to the Say Anything Blog. E-mail rickolson@midco.net.

I write this column as a concerned North Dakota resident. I have been studying the unique pharmacy ownership law of this state for many years. For the record, I am representing no one but myself in sharing these comments.

North Dakota has this unique law, which most folks in these parts refer to as the Pharmacy Ownership Law. This law was first enacted by the North Dakota Legislature in 1963. The initial thought towards creating this law was that it was intended to prohibit medical practitioners from dispensing prescription medications directly to their patients, and thus avoiding the middle-man of having the prescription filled at a pharmacy.

[mks_pullquote align=”right” width=”300″ size=”24″ bg_color=”#ffffff” txt_color=”#000000″]In other words, CVS and Thrifty White Drug are allowed to operate pharmacies in the state. Meanwhile, national retailers like Walgreens, Walmart, Costco and the others cannot, because of the simple fact that those companies are not majority controlled by pharmacists.[/mks_pullquote]

However, in actuality, this law has created a huge shield of government-sanctioned protection over the pharmacy business in our state. The reason why you see more independently-owned drug stores across the state is because of the law as it stands, these pharmacies have little if any meaningful competition. The law requires that a pharmacy must be at least 51 percent majority owned by a licensed pharmacist in good standing. This essentially precludes any meaningful competition, with few exceptions that I will explain in a moment.

CVS Pharmacy has six locations across the state. CVS acquired these stores from Osco Drug, which was in business in 1963 when the pharmacy ownership law was first enacted. Osco Drug, then CVS were grandfathered into the law. Thrifty White Drug operates numerous locations across the state. Thrifty White takes advantage of the law by claiming that their company is majority owned by pharmacists by virtue of an employee stock ownership plan.

In other words, CVS and Thrifty White Drug are allowed to operate pharmacies in the state. Meanwhile, national retailers like Walgreens, Walmart, Costco and the others cannot, because of the simple fact that those companies are not majority controlled by pharmacists.

I am proposing changes in the pharmacy ownership law, which would drop the 51 percent majority ownership requirement down to a 25 percent minority ownership requirement of a pharmacy by a pharmacist. This should enable some additional competition, but it also will give current pharmacy owners a few other options as they reach retirement age. Right now, a pharmacy can only be sold to another pharmacist. If the changes I am proposing here should ever become law in North Dakota, a pharmacist could sell his or her business to a non-pharmacist, as long as the new owner employs a pharmacist who owns a 25 percent ownership share of the pharmacy.

I understand that a number of lawmakers are looking into this issue as we speak, and that legislation to amend the pharmacy ownership law may be introduced in the current North Dakota legislative session. I realize this is an uphill battle and opponents are more than willing to sling mud at me and other people who support loosening these unnecessary pharmacy ownership restrictions. I am merely pointing out things that those who are opposed to any changes in the law just don’t want to hear.