INDIAN ISLAND – PIN Rx, the Penobscot Nation’s mail-order pharmacy that opened just one year ago, has run into financial difficulties. A spokesman said Thursday the troubles are temporary, but state officials were mum about a project they’ve supported as a cost-saving innovation for the state’s beleaguered Medicaid program.

Launched with considerable fanfare and support from the office of Gov. John Baldacci and anticipated to save millions of dollars each year in MaineCare, as Medicaid is called here, PIN Rx is an economic development project originally expected to provide as many as 100 jobs for tribe members and others.

The pharmacy laid off 10 workers last week in order to comply with its budget, according to operations director Reginald Gracie. There still are about 10 people employed at the facility, and Gracie said he hopes to be able to bring the others back to work at the beginning of next year. He said he doesn’t anticipate any additional layoffs.

“We’re just cutting back,” he said Thursday. “It’s the end-of-the-year cost cutting to make budget.”

In 2004 and 2005, staff from the Governor’s Office of Health Policy and Finance were instrumental in helping the Penobscots apply for state and federal grants to develop the pharmacy. The state also devoted resources to promoting the mail-order business to Mainers enrolled in MaineCare.

The state’s involvement didn’t sit well with Maine pharmacists, who complained that public dollars were being used to develop and advertise a private business that would compete with community pharmacies already struggling to stay afloat.

The state defended its actions, saying that in addition to providing economic development to the tribe, no-frills PIN Rx would fill MaineCare prescriptions for less money than a storefront pharmacy, saving the program for low-income Mainers an estimated $5 million each year.

On Thursday, plainspoken Bangor pharmacist Bill Miller predicted PIN Rx would close its doors permanently.

“They probably aren’t doing enough business,” he said, “in spite of the fact that the state spent all kinds of money advertising on TV and radio and the mail.” Miller said Mainers aren’t comfortable with the idea of getting their medications through the mail and prefer to do business with local pharmacies.

Gracie said he does not expect the facility will close its doors.

“We’re here to help the state and citizens to save money,” he said. “That’s been our mission from day one.”

He wouldn’t comment on any financial aspects of the operation or discuss sales.

“We don’t like to give that out because of competitors,” he said. Gracie did say that orders were “not really” down.

Jude Walsh of the state’s health office said she knew about the layoffs, but declined to comment further, referring questions back to Gracie.

“I do know that they’re going through some changes up there,” she said.

Gov. John Baldacci’s office also declined to comment, saying that PIN Rx is a private business.