A pill on time seems to help the bottom line

Area company uses `disarmingly simple idea'

`Why didn't I think of that?

September 09, 2002|By M. William Salganik | M. William Salganik,SUN STAFF

Is Medicine-On-Time ahead of its time?

The small company in Owings Mills produces systems that allow pharmacies to sort pills into small plastic packages in a calendar-like holder so that patients remember what medications to take and when to take them.

For a monthly fee, pharmacies get supplies for the packaging, a trap-door device to measure the pill doses and a computer with software to keep track of patient prescriptions.

"It's a disarmingly simple idea," said Chief Executive Officer Ian Salditch, who has run the company for 10 years. "Everybody who sees it smacks their forehead and says, `Why didn't I think of that?'"

In many ways, the company has been doing nicely. When it moved to the Baltimore area a decade ago, "we needed $800 for the moving van, and we didn't have $800 in our business checking account," Salditch said.

Now, Medicine-On-Time has several million dollars in annual revenue and, although the privately held company doesn't publish financial results, it is "extremely profitable," Salditch said.

However, though it has slightly more than 300 pharmacies around the country signed up for its system, that's only a small dent in the 18,000 or so independent pharmacies that make up its target market. For the moment, the CEO said, Medicine-On-Time occupies "a funny little niche."

He sees two possibilities that could mean rapid growth: Medicare prescription coverage and insurers - who pay for many of the pills - deciding it's worth paying for a system to organize them.

There is also, Salditch said, a growing recognition of the importance of "compliance" or "adherence" - getting people to take the right medications at the right time.

Variations on the "blister pack" - also sometimes called the "bubble pack" or "bingo card" - have been around for decades.

A 1987 study published in Journal of the American Geriatric Society found that the percentage of pills not taken dropped from about 9 percent with typical pill bottles to about 2 percent with packaging similar to that used in the Medicine-On-Time system.

Milton Moscowitz, a founder of ASCO Healthcare, a pharmacy service and medical equipment company that made the blister packs for the 1987 study, said his company started using blister packs in the early 1970s.

ASCO found the packs generally uneconomical, he said, especially if a patient had one medication changed and "you have 30 blisters you have to throw away." Moscowitz, who has been an executive at Genesis Health Ventures since it acquired ASCO in 1989, said, "We discontinued it because of the hassle."

As the focus on compliance grows, newer, higher-tech memory aids are being tried. Dr. Adriana Andrade, an assistant professor at Johns Hopkins School of Medicine, has done a study on a pocket-size device that speaks to HIV patients, reminding them to take their pills. (It increased compliance from 83 percent to 90 percent, according to preliminary results.)

Then there are "smart bottles," that tell patients how long it has been since they were last opened, and enough automatic dispensers, handy organizers and PharmAlarms to fill several medicine cabinets.

With all this, Andrade said, "There's no gold standard," identifying the best device. And, she and other experts say, there are many reasons for noncompliance besides forgetfulness or confusion, including cost, dislike of side effects, a feeling that the medication isn't needed and what she called "pill fatigue."

Medicine-On-Time began nearly 20 years ago, with the basic product developed by John Kalvelage, a Virginian who sold prescription packages and labels. About 30 pharmacies were participating when Salditch joined the company a decade ago. He moved the company to Baltimore, where he lived.

Kalvelage remains as president. Salditch, working from a small office in a medical building near Owings Mills Mall, constitutes half of the "headquarters work force." It is, he said, a "virtual company," with all manufacturing, shipping, installation and other functions contracted out.

Over the past decade, the pharmacy world has changed drastically. Ten years ago, about three-quarters of prescriptions were paid for out-of-pocket. Now, about three-quarters are covered by insurance, and the insurers have squeezed the profit margin on prescriptions.

At the same time, big chains have grown aggressively, which has been both good and bad for Medicine-On-Time.

Independent pharmacies look for "a value-added service" that can provide "an edge any independent has over the chains," said Mark Levi, executive director of EPIC Pharmacies, an alliance of independents.

Independents "are not going to have the ad budget of CVS and Rite Aid, or 20,000 square feet of shampoos," Salditch said, but they find Medicine-On-Time a way to "capture and maintain the most heavily medicated segment of the population."

Deborah Disney, pharmacist at the NeighborCare 40 West Pharmacy in Catonsville, said her pharmacy provides Medicine-On-Time service to about 400 patients, up from 200 to 300 three years ago.

NeighborCare 40 West doesn't charge for the service. Most pharmacies charge a few dollars extra a month, Salditch said.

The pharmacies pay Medicine-On-Time $395 a month to get the software and use the system, and also pay for the materials, at a cost of a few dollars a month per patient.

While industry trends have led independent pharmacists to look for extra services (and extra revenue), the same trends have created some churn in customers because of store closings and consolidations.

Others, Salditch said, are so stressed by the competitive environment that they don't want to spend time and money on a new system. He said pharmacists have told him, "I'm working so fast I can't talk to you about changing my business model."

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