PHOTO: via Lakesnwoods.com
Aurora isn’t a very big town, but it’s a sweet little place on the eastern Mesabi Iron Range. It was among the towns most brutally hit by the closure of LTV Steel 14 years ago. While Aurora has carried on since it has also seen the gradual decay of its economy and population, as have most Iron Range towns.
This weekend, we learned that the Aurora Drug and Variety, a pillar of Aurora’s business community, would be closing soon.
Bill Hanna of the Mesabi Daily News reported on the story. The middle section of the story is an almost unreadable stretch of propaganda for the yet-to-be-permitted nonferrous mining project PolyMet. Nevertheless, the sentiment of the town’s sense of loss is real. And it also shows that there are multiple reasons for the store’s demise. Some of the reasons are specific to the pharmacy industry, others are purely the struggles of a contracting Iron Range economy.
As Hanna’s article shows, there is a temptation to say that every business that closes on the Iron Range is a victim of the delay of prospective projects like PolyMet or even the more developed Essar Steel project near Nashwauk on the western Mesabi. (Businesses here have closed waiting for the next mining boom to come as well, even though the project was permitted almost a decade ago).
PolyMet’s promise of 350 employees, who would likely disperse among the towns and townships of the eastern Mesabi, would be enough to positively affect the area economy, but probably not enough to counteract the negative effects of the loss of several thousand Range mining jobs over the past 30 years. That’s not a knock on PolyMet; that’s just an economic reality.
Every time we hear about a story like the closure of Aurora Drug and Variety, the region suffers a blow. We feel it. We know the people. We know the place. We know the story. It hurts.
For me it’s evidence that we on the Iron Range have no time to wait for anything, certainly for things we don’t control. A better question than “When will PolyMet save us?” is “What kind of community can we make for ourselves right now?”
Now is the time for Iron Range entrepreneurship and community pride. We can’t render a permit or finance a billion-dollar project, but we can muster to fight for the places we love. We can build with hands, pay with paper thousands. If we really love our communities we must act independently and accept the manna from mining heaven only when it’s real.
Below is from Bill Hanna’s article. The real reason the drugstore is closing (below) has nothing to do with whether or not PolyMet gets permitted.
Rules, Regulations, Requirements and a Closing
Troy Clarambeau was pharmacist and co-owner at the Aurora drug store for more than seven years. Then, on July 24, he had to call together his six employees and tell them the pharmacy would be shut down within a week and the variety store would have a clearance sale and be closed.
“It’s been a nightmare,” he said.
Clarambeau ticks off several reasons why Aurora is losing its pharmacy.
“Pharmacy benefit managers are contractors between the pharmacy and insurance companies. The contracts have been set up the past 20 years or so in such a way that is so severe toward pharmacies that they are trying to put small pharmacies out of business,” Clarambeau said, pointing out that he has had to sell 35 to 40 prescriptions at less than cost because of the benefit managers.
State health care taxes on drugs are another problem. “Minnesota can’t stand anyone making any money,” he said.
And then there’s the federal government. “Medicare requirements are so ridiculous. There are thousands of things a small pharmacy is forced to do,” Clarambeau said.
Local issues, including union members ordering prescriptions online, property taxes, big box competitors, and not enough local support tied in a big part to a lack of jobs, have also worked against the Aurora pharmacy.
“It all adds up,” he said.
But even with all those headwinds, Clarambeau believed he had found a buyer to keep Aurora’s pharmacy open. Jon’s Drug in Eveleth wanted to buy the business.
“Then he got an email from Essentia that they were moving forward with a retail pharmacy in Aurora. That basically was the bottom line and killed the Jon’s Drug deal.
“Thank goodness that Walgreen’s was there (in Virginia) for our business,” Clarambeau said.
But he said the pharmacy benefit managers were the worst thing that sealed the Aurora pharmacy’s fate.
“They were getting two pennies a claim in the 1990s. Now they get $10 a claim,” Clarambeau said.
Of course the delays in Polymet are not the only cause for the closing of the Aurora Drug Store or the sole cause for all of the other struggling businesses in this town. At the same time to say that moving forward with the Polymet project wouldn’t cause a great influx of revenue into the area is naive at best and would no doubt help a business like the Aurora Drug Store and fellow small business owners succeed.
People like Hanna are always complaining about the long years of controversy that haven’t produced permits for Polymet. Does he every wonder if the reason could be that there are fundamental, insoluble problems with the proposed project?
There always seems to be controversy over this permit, or this proposed facility, or this plant closing…. Are people thinking about the long-term trends and opportunities and inevitabilities? Seems to me that if they were, so much effort and money would not have been wasted on something like the proposed Excelsior Energy (“Mesaba Project”) coal burner.
Aaron Brown seems to have a sense of the bigger picture.
This is a delayed comment that may be useless, but in the time since this entry went up, there have been a series of developments in the pharmacy industry.
Target has decided to get out of the pharmacy business, leasing its pharmacies to CVS for operation. WalMart has posted corporate reports showing that it is losing money in the pharmacy business. As in Aurora, the last few years have seen many locally owned pharmacies close –the Falk’s chain in Duluth being one other local example.
In the current environment, private insurance companies running both employer provided programs and the Medicare part D program have increasingly put pressure on pharmacies to reduce prices, essentially forcing their customers to buy drugs only at pharmacies offering the companies deep discounts. Pharmacy benefit management companies have joined in this trend. My own insurance requires me to buy drugs from one of a few approved sources that have deep discount agreements with the insurance company.
All this is because of the rapidly increasing price of prescription drugs being charged by the pharmaceutical companies, prices that are often several times higher in the US than anywhere else in the world — and than buyers like our own VA pay. This situation exists partly because the combination of anti-trust laws blocking group action by the insurance companies to try to bring down the price of drugs and the fact that the Congress and President Bush forbids Medicare from using bidding and aggressive bargaining in setting drug prices for Part D prevent anyone from using market forces effectively to control prices.
This situation is nonsense. Drug companies are among the most profitable financial sectors in the US, as anyone familiar with corporate reports can tell you. The drug companies always argue that they need the high prices to finance important research, but that ignores three important facts. First, most of the important developmental research done on drugs in the world is done at government expense, by government agencies like the National Institutes of Health or by universities funded from public sources, with drug companies becoming involved only in late phase testing of new products. Second, the drug companies actually spend less on research than they do on advertising that is primarily used to mislead doctors and patients into using expensive proprietary drugs — another fact that can quickly be established by reading their own corporate reports. Third, pharmaceutical companies devote a very large share of their own research to developing “clone” drugs that mimic successful products of their competitors or make tiny changes in their own drugs to allow patents to be extended.
This situation is the reason that insurers are squeezing pharmacies out of business. Perhaps when it becomes impossible to buy drugs anywhere except from large on-line mail order companies it will become clear that we need to begin the process of reigning in the pharmaceutical industry before life saving drugs become unavailable to many people or become so expensive that they bankrupt both public and private health insurers.