STATES OF CONTENTION

Howard Riell

For supermarket retailers, it is a matter of a few bad apples spoiling a barrel of considerable size.

That barrel amounts to $2.4 billion in cough/allergy/sinus sales [in food, drug, and mass excluding Wal-Mart], according to the most recent figures from Chicago-based Information Resources Inc. Of that total, supermarkets sold $914.8 million in cough and cold remedies for the year ended March 20.

Those sales are being threatened by legislative proposals at the state and national levels that would restrict cough and cold sales to pharmacies in an effort to curtail the production of the illegal drug methamphetamine, also known as speed, crank, crystal or ice. At the heart of meth production is pseudoephedrine, an otherwise safe decongestant that is a basic ingredient in about eight out of 10 cold medicines and some allergy products.

Such legislation has the potential of eliminating a large part of the cough and cold category from nearly two-thirds of the supermarkets in the country that don't have a pharmacy.

"The impact on many grocers is going to be significant," predicted Joseph Heerens, senior vice president of government affairs, Marsh Supermarkets, Indianapolis. An overwhelming percentage of the grocery stores around the country do not have a pharmacy, he noted, "which means they would essentially be put out of the cough-and-cold business. Obviously, that would represent a significant amount of sales to a chain our size."

Law enforcement estimates say small-time abusers obtain pseudoephedrine products from retailers to produce about 20% of the meth available in the United States. The remaining 80% is made in large quantities by "superlabs" in Mexico, Canada and elsewhere, and they purchase ingredients in bulk.

About 250 products on the market today contain pseudoephedrine, according to the Washington-based Food Marketing Institute. Few cough and cold products don't list pseudoephedrine among their ingredients, although Pfizer's Sudafed -- a prominent pseudoephedrine brand -- recently came out in a new formulation containing phenylephrine. Pfizer expects to reformulate its entire Sudafed line by the end of the year and, in a turnabout, is now supporting legislation that restricts pseudoephedrine, the Wall Street Journal reported last week.

Retailers who understandably don't want to appear to be putting profits ahead of the public good are working to minimize the damage, but thus far have been largely unsuccessful. All but one of the half-dozen states that have passed such legislation to date have called for Schedule V rules from the Controlled Substances Act. This limits the sale of such medications to pharmacy counters, with a host of interrelated restrictions. Arkansas, Iowa, Kentucky, Oklahoma and Tennessee have enacted laws that restrict the sales of some or all of these products to pharmacies, in some cases exempting gel caps and liquids.

The U.S. Congress is considering the Combat Meth Act (S. 103, H.R. 314), which would place such products on Schedule V nationally, triggering a requirement in 17 states that these common over-the-counter drugs be dispensed only with a doctor's prescription.

'Significant' Impact

FMI's president and chief executive officer, Tim Hammonds, told a recent press briefing that only 9,900 of the nation's 33,800 supermarkets have in-store pharmacies.

Under Schedule V, Marsh Supermarkets would only be able to sell cough and cold medicines at 46 of its total 300 retail establishments, which includes the 170-unit Village Pantry convenience-store chain. "We're talking about a loss of sales that is more than just minimal," Heerens said.

"I think it's fairly bad news, particularly for that segment of the industry that doesn't have pharmacy departments," said Ty Kelley, director of government relations for FMI.

While problems related to cough and cold products and methamphetamine have been around for at least 10 years, legislatures didn't really get around to addressing it until just under a year ago, he noted. The first state to enact a law of that kind was Oklahoma. To date, he said, about a half-dozen others, including Oregon, Arkansas, Tennessee and Iowa, have followed suit. "There are several other states that probably will enact Schedule V laws before they conclude their legislative sessions."

FMI has been advocating taking such medications off shelves, but not putting them behind pharmacy counters. "Illinois, I believe, has several options as to where these products must be kept. None of them is behind the counter. One choice is under a display case with lock and key."

"More and more states are making it a Schedule V, sold only behind a pharmacy counter," said Mary Ann Wagner, vice president of pharmacy regulatory affairs for the National Association of Chain Drug Stores, Alexandria, Va. "There are bills pending in over 25 states to do that or something very similar."

The obligatory logbook will prove a major hassle for retailers and consumers alike, said Wagner. In it, employees must record things like customer identification and home address, the product purchased, how many grams of pseudoephedrine it contains, the number of tablets and more.

"You have to monitor that logbook, and each time a person comes in to buy something you have to go back for the last 30 or 90 days and see if they bought any other products, how many grams were in each of those products, to know if you can make the sale that day to them for that many grams. That's the piece of it that is extremely burdensome," she said.

The problems for consumers go deeper in some cases than mere inconvenience. "We're an agricultural state, and in many farming communities there may not be a pharmacy, [just] a grocery and a convenience store. These folks now are going to have to drive to the next town to buy their Vicks NyQuil or Sudafed," Heerens said.

"Here in Iowa we have a law going into effect on May 22 that they're billing as the toughest pseudoephedrine law in the country," said Ruth Comer, assistant vice president of communications, Hy-Vee, West Des Moines, Iowa. "It's going to put virtually all products containing pseudoephedrine into pharmacies and make them Schedule V drugs." About 90% of Hy-Vee stores have pharmacies.

Hy-Vee stores are preparing to comply with the law in Iowa, where it operates over 100 supermarkets and drug stores. The company also operates in six other states.

"We understand the concern. Methamphetamine manufacture is a big problem here in the Midwest. Iowa and Missouri are two states in which we operate, are kind of at the epicenter of the manufacture problems," she added.

Hy-Vee addressed the problem a year and a half ago when it voluntarily took single-active-ingredient pseudoephedrine products off shelves and behind counters, Comer said. The law, she explained, is "something that we did not lobby against as a company. We recognize that it is a problem in the state, and is costing the state a lot of money to root out and clean up these meth labs, so it's costing us on the other end. Second, this is a measure that has huge public support, overwhelming legislative support and tremendous media support. There really is no sense fighting it."

Proposing Solutions

Heerens and his colleagues at Marsh feel state and local legislatures should explore other, "less severe" approaches before going to Schedule V. "There are reasonable alternatives. I think communities ought to try those first before causing the kind of harm to retailing and the inconvenience to customers that I think is going to result from Schedule V."

Albertsons Drug Division, which is based in Scottsdale, Ariz., supports limiting the products and controlling them, said spokeswoman Susan Ramos. "But we also hope to reach a compromise so we can keep it in the hands of our consumers who need it."

Products with pseudoephedrine "have valid therapeutic uses to treat colds and allergy symptoms," she pointed out. "There really are not other effective products on the market that do the same thing that pseudoephedrine does." Albertsons, with its corporate base in Boise, Idaho, operates stores in 37 states.

Albertsons Drug Division supports putting the products behind a counter, if necessary. Ramos said the company "totally agrees that the meth problem needs to be addressed. Our hope is that by working with the legislators and other retailers, we can keep these products in the hands of the legitimate users -- customers who buy these products to fight colds and flu."

The industry's message, FMI's Kelley fears, "is not resonating at the state level because law enforcement is very adamant that [Schedule V] is the way they want to go. The issue has become very emotional, and at this point in time they're just not listening to us. I just don't know how we can change the dialogue at the state level."

But there may be a way around it. FMI is talking to the authors of the two bills in Congress -- Sen. Jim Talent, R-Mo., and Rep. Roy Blunt, R-Mo. -- about drafting federal legislation. Such a federal law could conceivably be written so as to be less stringent than the states' Schedule V approach. "If we can get a national standard that would pre-empt the state law," said Kelley, "we'd be in a much better position.

"The takeaway thought is that Schedule V is not the only solution to the methamphetamine problem," Kelley said, "and that Schedule V in terms of cough and cold products only addresses 20% of the meth problem in the U.S."