OLD TOWN – State officials and the Penobscot Nation are moving forward with a plan to encourage more Mainers to purchase their medications over the Internet from a warehouse on Indian Island.

Even without the bulk-purchased Canadian drugs the state hopes to reimport, the initiative promises to save the Department of Health and Human Services $5 million annually, as well as provide jobs and other benefits to the Penobscots.

But the project is being met with strong opposition from pharmacists across the state, who say the stepped-up mail-order campaign through MaineCare will compete with private pharmacies and may put community drug stores out of business altogether.

Gov. John Baldacci last year awarded a $400,000 economic development grant to the Penobscot Nation to renovate an existing facility on Indian Island for use as a pharmaceutical storage and shipping facility. The tribe said it would use the money to attract other funding for the project, which is expected to cost a total of about $1.5 million to get up and running. By filling 90-day supplies of “maintenance medications” – those drugs a consumer uses on a continuing basis, such as blood pressure medication – the Indian Island warehouse will offer lower prices to the MaineCare program.

MaineCare is the state’s name for the state and federal low-income health program known nationally as Medicaid.

Tim Love, an economic consultant to the tribe now residing in Connecticut, said the project is “on the fast track to open May first.” Medications will be purchased wholesale from American distributors and shipped directly to MaineCare members who request the service. The no-frills operation will charge the state less than retail pharmacies do. Love estimated an average savings of about 30 percent per prescription. The facility will not stock any narcotics, he said.

About 14 full-time positions would be created in the first year, Love said, and as many as 40 within the next few years. The project is modeled after a similar business successfully run by the Pequot tribe in Connecticut since 1992, he said. Love has been a consultant in developing that project as well.

In time, the Penobscots may bid for more business, such as the mail-order contract for state employees currently held by Anthem Blue Cross and Blue Shield, Love said.

The plan may be good for the state and the tribe, but pharmacists say the Indian Island mail-order drug plan may put them out of business.

“The state is OK with our stores closing because they think [the plan] will save them money,” said Bill Miller, owner of Miller Drug in Bangor. Miller does a land-office business out of his innocuous State Street storefront: about $28 million a year in sales of prescription medicines to individuals, group homes and long-term care facilities, close to half of it through MaineCare. He employs about 60 full-time workers and another 40 part-timers.

In a recent conversation, Miller said community pharmacies provide many amenities no mail-order facility can offer, including late night hours, on-the-spot home delivery, comprehensive crosschecks for drug interactions and other personal services. They also fill short-term drug orders, trial prescriptions and emergency medicine supplies, and they often use sealed “blister packs” so unused drugs can be returned and refunded if they are not needed.

Miller said the state saves money when local pharmacies safeguard the well-being of their customers and should not offer those customers incentives to take their business elsewhere.

“[The state thinks] we’ll be here when they need us. But if they take our business away, we won’t be here,” he said.

There are about 262,000 Mainers enrolled in MaineCare. According to Jude Walsh – formerly of the state’s Bureau of Medical Services but now an adviser in the Governor’s Office of Health Policy and Finance – the program costs the state about $300 million a year in drug costs alone. By switching a third of this business to a mail-order supplier, she said earlier this week, the Department of Health and Human Services will save about $5 million a year.

Currently, the only mail-order supplier for MaineCare members is a Wal-Mart affiliate in Texas. Only about 2,000 Mainers presently take advantage of this option. As an incentive to make the switch from their local pharmacy, MaineCare members who elect to use the mail-order system aren’t required to pay their modest drug co-payment of $2.50 per prescription.

Walsh said the state will step up its campaign to woo MaineCare members to mail order once the Indian Island project is on line. Drugs ordered from the Old Town facility will be delivered more quickly than those coming from Texas, she noted, while keeping taxpayer dollars circulating in the Maine economy and supporting much-needed economic development for the Penobscot Nation.

Walsh said she has “a commitment to keeping Maine pharmacies open” and doesn’t expect they will experience a sudden loss of business to the mail-order plan. She said the option will be most attractive to a specific group of MaineCare members: those who are taking a number of maintenance medications, those who have unreliable access to transportation and those who are on an extremely tight budget.

“We could never replace our acute-care pharmacies,” Walsh said.

None of this makes Bill Miller feel any better. He has been contacting lawmakers and members of the press to alert them to what seems to him like flawed public policy. Pharmacies have already been hard-hit by reductions in state reimbursements and dispensing fees, and, he pointed out, some smaller stores in remote areas have been forced to close as a result.

While Walsh expresses her commitment to keeping stores open, Miller said the state continues to threaten the viability of community pharmacies and jeopardize the safety net it will rely on as it woos MaineCare customers to mail-order sales.

“We’re the ones who let people charge when they can’t pay, we open up at midnight, we deliver to your door,” he said. “If the stores close, no one else will do what we do.”

At the time he announced the economic development award to the Penobscot Nation in October 2004, Baldacci made public his intention to request a waiver from the federal Department of Health and Human Services allowing the Indian Island project to be used as a pilot program for safe drug reimportaion from Canada.

But reimportation appears to be stalled on both sides of the Canadian border. There has been no official response to Baldacci’s request, Walsh said, and the practice remains illegal despite pressure at the congressional level to allow it.