The Penobscot Indian Nation, with the state’s help, officially opened a mail-order pharmacy earlier this month – prompting independent drug store owners to claim the government is subsidizing a business that will force some of them to shut their doors.

Called PIN Rx, the mail-order business on Indian Island has received $900,000 in combined state and federal economic development grants, and consulting help from the governor’s Office of Health Policy and Finance.

The state also is sending out letters to all of its Medicaid recipients telling them that using mail-order, versus getting their drugs at a regular pharmacy, will save them money. Those Medicaid recipients who now pay a co-pay when they buy their drugs at regular drugstores will not be required to pay it with mail-order, saving up to $25 a month.

The state also had hoped to save $5 million annually in reimbursement costs with more people getting less expensive drugs in the mail, but those estimates are now being lowered.

Statewide, 14 local drug stores – including seven Community Pharmacies sold to Rite Aide – have closed their doors in Maine in the last two years, and two more have announced plans to close.

“With the opening of PIN Rx and the aggressive push to mail order… there are going to be more closings and more people going out of business,” said Chris Gauthier, a pharmacist with Miller Drug of Bangor and president of the Maine Pharmacy Association based in Scarborough.

Gauthier has gone on a crusade, of sorts, to get Gov. John Baldacci out of office, saying “everything that he’s touched with respect to community pharmacy has been bad.”

Three years ago the state decreased its reimbursement rate for drugs sold as part of the regular Medicaid and Drugs for the Elderly program, and stores started closing, he said. Last week, Waltz Pharmacy Inc. of Damariscotta announced it was closing its Searsport store at the end of the month and its Wiscasset store in November.

“That rash of closings was round one,” Gauthier said, and PIN Rx will bring on “round two.”

Jude Walsh, who handles drug and pharmacy initiatives in the governor’s Office of Health Policy and Finance, said the administration is trying to manage its Medicaid drug costs by encouraging the use of less-expensive mail-order drugs. Private insurers are doing the same thing, she said, offering financial incentives to use mail-order because it saves the patient and the insurer money.

Helping the Penobscots set up the mail-order business was an economic development decision, she said, because the mail-order money up until now has been going out of state, in part to a mail house run by Wal-Mart.

“I know that they’re concerned. I know they’re angry,” Walsh said of the pharmacists, with whom she meets every month. “I really truly believe there is enough business in the state of Maine to have retail and mail-order pharmacies co-exist. Quite honestly they do now.”

Joe Bruno of Raymond, the former minority leader in the House who runs the pared-down Community Pharmacy company, said the stores that will be hurt by mail-order are the ones heavily reliant on Medicaid business.

“Any pharmacy that’s marginal right now will go out of business because of the mail-order,” he said. “If you have a high percentage of Medicaid right now…it’s going to kill you. If you’re in the suburbs, it’s not going to bother you at all.”

At the same time, Bruno questions whether the state is going to save much money by pushing people into mail-order.

“I think the state is relying on that PIN Rx for a lot of savings they’re not going to realize,” he said. Waiving the co-pay is not that much of an incentive because state law doesn’t force recipients to pay it now.

Bruno could be in a position to know. Up until a year ago he also ran Goold Health Systems, a healthcare claims processing firm that has a multi-million contract with the state’s Medicaid office. Goold is the liaison with pharmacists when Medicaid recipients are tying to get authorization to buy drugs not on the state’s recommended or preferred drug list.

“We helped the state achieve a lot of savings in prior authorizations,” where patients have to get approval for more expensive drugs not on the state list, Bruno said. “Everything was rationale,” under that system, he said, but the mail-order savings are not.

“It’s a department trying to look like their going to save money…and it’s a lie,” Bruno said.

Walsh said the original estimates of the state saving $5 million a year because of the reduced cost of mail-order drugs is being revised. The main reason, she said, is “40 percent of the drug dollars we manage is moving” to the federal government when Medicare Part D kicks in next year and takes over those now being served by the state’s Drugs for the Elderly program.

“There will be 16 plans” under Part D, she said, and “pharmacists won’t have the luxury of calling Goold anymore or our health desk” to see what drugs are covered for which patient under the myriad of plans. “It’s going to be a much bigger issue for them,” than the mail-order, she said.