Mr. POTVIN. Mr. Shrage, have you filled any medicaid prescriptions? Mr. SHRAGE. I have, sir. Mr. POTVIN. And approximately when did you fill your first one? Mr. SHRAGE. Oh, I should say December or January. That is medicaid plus relief prescriptions. Mr. POTVIN. Have you been paid for any of the medicaid prescriptions? Mr. SHRAGE. I haven't been paid a penny. Mr. POTVIN. And could you give us a general estimate of how much money is tied up in them? Mr. SHRAGE. To be frank I am so disgusted I haven't even gone over any figures, just letting it lay, hoping. You don't know when you are in this type of business and neighborhood and all how depressed you are, what you are going through. Particularly you waited and you are not paid, you can use every penny you can get a hold of, and you are the type that you want to pay your wholesalers and all and I have trouble paying them. They tell you you have to wait 8 months, 12 months. However, I hear recently we will be paid soon something on that. It is in the hundreds of dollars but I don't know. I won't give you an exact figure. I'll be honest with you, I don't know. Mr. POTVIN. Mr. Shrage, I think that one of the most important matters in a hearing of this nature is to realize that we are not dealing with data or statistics. We are dealing with people. I was, I must say, somewhat impressed by your reaction in my office a few minutes ago when you were telling me how it feels to have to confront people in your neighborhood with a price that they feel is out of line. I think the word you used was "outrageous." Mr. SHRAGE. That is right. Mr. POTVIN. Could you repeat that for the Chair's benefit? Mr. SHRAGE. Yes. You see formerly they looked up to me with confidence in the community. But within this particular recent year, they actually look down on me. They feel that I am a robber because of the prices that I am charging, and I try to explain to them, after all, I am not overcharging. I am trying to get a fair price-as low as a third I make on some items now in order to meet the competition. But they don't want to understand it. They call me robber. In fact, I'll be honest with you, there is one item that went up 10 cents. It was 25 cents to 35 cents. A customer came in for it. It was a Dixie peach. I said to him 35 cents. He looked at me. He said, "I feel like cutting your throat," just those words. He said, "What do you mean? I'll go in the discount store and still get it for 19 cents." And they raised it so I can't afford to give it for less than 35 cents now. It was a 25-cent item. Mr. POTVIN. You have undergone a 40-percent price increase yourself in recent weeks? Mr. SHRAGE. That is correct. Now, what am I to do? I am not here to hurt anybody, because the manufacturers have done something good, too. But the thing is to try to save the small businessman, to try something, because in the long run we will all be out of business. We can't last under this situation. Mr. POTVIN. How do you feel about the future of your own small business, Mr. Shrage? Mr. SHRAGE. To be honest, if this continues, I can't stay there any more. Mr. POTVIN. But you have signed a lease, haven't you? Mr. SHRAGE. Here is another thing. Let me tell you. I signed a lease not like others because I am an honest person. I am not a corporation but an individual, and I am stuck now. I have got another year and a half to run on this lease, and I can't figure out what am I supposed to do. Believe me, I draw little enough as it is. As a clerk, I can draw a lot more. Not to praise myself, but I can do a job, and a lot of big stores know it and they ask me to come to work for them. But I am just choked here because I still have about a year and a half lease, and the landlord won't let go. What am I supposed to do? Mr. PorVIN. Mr. Shrage, I would have to agree with you that your future certainly looks less than bright. Do you feel that the various manufacturers' pricing policies that you have discussed here this afternoon and that Mr. Fisher discussed here this morning, made a major contribution to your problem? Mr. SHRAGE. Yes. Mr. PorvIN. And, further, do you feel that the pricing practices of these apparent below-cost sales by the so-called discounters have also made a major contribution to your problem? Mr. SHRAGE. Definitely. Mr. POTVIN. And if these were to be corrected, do you think that it would perceptively improve the outlook for your business? Mr. SHRAGE. Definitely, particularly among these poor people. Every penny counts to them, and this is the situation. Mr. DINGELL. Mr. Williams? Mr. WILLIAMS Is McKesson & Robbins a full-line wholesaler? Mr. SHRAGE. That is correct. Mr. WILLIAMS. Is there no other full-line wholesaler available in your area with which you could trade? Mr. SHRAGE. Oh, I imagine I could, but I couldn't give them that amount of money. I mean they require a certain amount of business, and I couldn't give them so they say, "Look, this is the requirement. If you can't give it to us, we can't keep you as an account." Mr. WILLIAMS. In other words, the requirements of McKesson & Robbins are as low as any other full-line wholesaler in the area? Mr. SHRAGE. That is correct. I have nothing against them but this is their policy. It is bad for a small businessman whose business has dropped to such an extent within the last year. We are up against a situation where even with prescriptions I am not doing well because most of these people go to the hospital. They sit for hours and hours in the hospital. You would be surprised what a drop in the prescription business I have taken. As a small store you depend on that quite a good deal. Mr. WILLIAMS. Did you hear the testimony this morning of Mr. Fisher? Mr. SHRAGE. I certainly did. Mr. WILLIAMS. Have you had the problem in your area of hospital pharmacies dispensing to outpatients? Did you discuss this with him? Mr. SHRAGE. I have near me a city hospital. They give people everything free. They get the doctors free, and they get all the medication they need free. There is no problem there with them. Of course, they will sit for 4 or 5 hours there. Mr. WILLIAMS. As your neighborhood is changing, a higher percentage of your people then are going to the city hospital nearby and getting prescriptions and treatment free? Mr. SHRAGE. That is correct. Mr. WILLIAMS. So, they are lost to you as customers? Mr. SHRAGE. That is correct. Mr. WILLIAMS. And, if your area economy decreases to the lowest ebb, you will have no customers. They will all be serviced by the city hospital? Mr. SHRAGE. I am finished, because a lot of them are used to going to the hospital, I mean from where they come they always go to hospitals, you see, and they are not even used to going to a physician even if they get it free. They are used to going to hospitals. They sit there, have their meals there, they stay for 4, 5, 6 hours at a time. Mr. WILLIAMS. Thank you, Mr. Chairman. Mr. DINGELL. According to this flier that you presented to the committee from McKesson & Robbins, you have to buy $1,250 worth of merchandise every 15 days to get the discounts listed? Mr. SHRAGE. Yes, sir. Mr. DINGELL. With payment in 15 days? Mr. SHRAGE. Yes, sir; that is right. Mr. DINGELL. Now, Mr. Shrage, what is your monthly requirement of pharmaceuticals? Mr. SHRAGE. That I deal with the wholesalers? About $1,800 to $2,000 that includes pharmaceutical and front items and here and there I deal with Upjohn. I give a small amount a few hundred dollars to a few direct accounts that I have left. Mr. DINGELL. Does this kind of arrangement interfere with your direct account sales? Mr. SHRAGE. Very little, because I give very little direct now. Mr. DINGELL. What would be an average month's sales with your full-line and with your short-line wholesaler? Mr. SHRAGE. Well, I give Sobol about $1,100; approximately $800 to McKesson. Mr. DINGELL. $800 to McKesson? $800 being their minimum figure for doing business with you? Mr. SHRAGE. That is correct. Mr. DINGELL. So you have to give them a minimum of $800 or they just shut you off? Mr. SHRAGE. That is right. Mr. POTVIN. If they shut you off? Mr. SHRAGE. Then I am finished. I might as well close up. Mr. DINGELL. Are there pharmacists who do less business than $800 a month? Mr. SHRAGE. To be honest with you, I wouldn't know. I know some are even worse off than I am; in fact, they are out now. That is another part of the Bronx where the change took place before it happened to me, where pharmacies are going out every day. I believe you heard Mr. Fisher's testimony of how many stores went out in the Bronx within the last year. If this continues, it will empty out completely. The small man has no chance. We are all finished. Mr. DINGELL. A pretty grim future for you. Mr. SHRAGE. It is very grim, and I have been a pharmacist for a good many years. I have been registered since 1928. Mr. DINGELL. Do you feel the impact of hospital competition and of sales through the hospital directly? Mr. SHRAGE. Well, I feel that they can go to the hospital and get everything for nothing. I mean they don't have to pay anything. Mr. DINGELL. Do you have experience with the pricing structure of sales by the manufacturers to hospitals? Mr. SHRAGE. No, I haven't anything as far as the hospital pricing is concerned. I don't come across that, because these people just go to the city hospital. Mr. DINGELL. I see. Mr. Shrage, the committee is indeed grateful to you for your presence today. Mr. SHRAGE. Thank you. Mr. DINGELL. Without objection the flier from McKesson & Robbins will be entered in the record at the appropriate point by counsel. Mr. SHRAGE. Thank you. Mr. DINGELL. Thank you for coming. If there is no further business to come before the committee, we will stand adjourned until 10 o'clock on Wednesday next. (Whereupon, at 3:20 p.m. April 10, 1967, the subcommittee was recessed, to reconvene at 10 a.m. on April 12). |