The Ford City-based Klingensmith’s chain of pharmacies is closing its Shelocta store effective Thursday.
“It is just one of those things where we had no choice,” company CEO David Cippel said Friday. “It is not going to get any better unless we get some legislative relief.”
The Shelocta outlet had been in business for the past 25 years near the juncture of Routes 156 and 422, eight miles west of downtown Indiana.
“It had home delivery,” Cippel said. “It had a drive-thru (window).”
But it and other pharmacies have a problem, he said: A lot of the cost of prescriptions is not being covered by the state’s Medicaid program.
“Twenty percent of our Medicaid prescriptions are paid below acquisition cost,” he said.
“Twenty percent are below $2 or less (above) acquisition cost.”
Cippel said he has received feedback from customers who believe the company is making money and should not close. He said that is not the case.
“Revenues are down 30 percent since 2017,” he said. “That is not sustainable.”
Seven employees are affected.
“As I told the employees (on Nov. 22), it was not their fault,” Cippel said. “It was a very somber and difficult meeting.”
Klingensmith’s found the Shelocta store was the “most marketable” of its eight locations, the chain CEO said — and CVS made an offer to acquire its patient files, but chose to close the store anyway.
It’s not an uncommon decision for the Woonsocket, R.I.-based CVS, which has a pharmacy at 2501 Warren Road in White Township. In January of this year, CVS purchased the Ritzman Pharmacy chain of 20 stores in northeastern Ohio and closed all but three of them.
Critics of the deal told the Columbus Dispatch that it was more evidence that CVS used its clout in the pharmacy middleman business to drive out competition in the retail pharmacy business. CVS officials could not be reached for comment.
“If the community pharmacy payment model does not change in 2020, there will be hundreds more rural pharmacies closing,” Cippel said.
Those losing their jobs in Shelocta could find jobs elsewhere in the chain. Cippel said there were “a couple open positions” in other stores.
“We’ll be offering potential transfers.”
The pharmacy chain dates to the original store opening in 1940. Original owner J.H. Klingensmith sold that store upon his retirement in 1972 to Cippel.
He later opened outlets in Leechburg, Rimersburg, Kittanning, Numine, West Kittanning and New Bethlehem, as well as Clarion, Homer City and Shelocta.
The Homer City and Clarion stores closed in 2011.