As a young child in the mid-1940’s, it was a “big treat” for James “Hack” Gilliam to get a hand-dipped ice cream cone from Perkins Drugs in downtown Gallatin for a nickel.

It’s one of the earliest memories the 82-year-old has of the longtime independently owned and operated drug store.

“We’ve always been Perkins customers,” recalled Gilliam, who used the pharmacy for more than six decades. “We felt like we got what we paid for. We felt like we got value for our money. It wasn’t always the cheapest place, but it was the place we trusted.”

After serving Gallatin and its surrounding communities for 125 years, it came as a shock to many when Perkins Drugs & Gift Shop abruptly closed both of its locations on Hartsville Pike and GreenLea Boulevard for good last month.  

The shuttering of one of the city’s oldest businesses was not the result of the pandemic but was instead due to rising direct and indirect remuneration (DIR) fees associated with prescription drug claims, according to owner Andrew Finney.

Those increased expenses, he added, “severely impacted” the business’ ability to operate and pay down existing debt in recent years.

“This has been the most difficult decision of my professional career and it has been one that has been bathed in prayer by my family for many months,” Finney said about closing. “We’ve been cutting expenses and doing everything that we can for the last two years to help the business and to try to do everything that we could. It just became very obvious that was no longer going to be sustainable.”

History of service

Originally located on the square in downtown Gallatin, Perkins Drugs was opened by Claude Perkins in 1895. Perkins operated the store for more than three decades until he sold it in 1926 to Andrew Bolin Perkins of Hartsville, who was unrelated to the family.

After graduating from the University of Tennessee School of Pharmacy and returning home serving in the military during the Korean War, Tommy Perkins eventually took over the business from his father in the late 1950’s.

By 1964, property had been purchased and a second location for the drug store was built on Hartsville Pike near what is now Sumner Regional Medical Center.

“It was kind of like a landmark,” recalled Sam Rickman, a former partner in the business who was first hired as the original pharmacist at the new location. “It was special.”

The downtown store was eventually closed during the 1970’s and consolidated with the second location on Hartsville Pike.

Personal service is what helped keep the pharmacy successful for more than a century, outlasting countless other independent drug stores, according to Ferrell Haile who was a part owner of the business from 1988 until 2012.

“The employees bought into the idea of serving… and doing everything possible to take care of a patient,” Haile said. “It wasn’t just the owners that had that attitude.

“Those types of relationships are what caused Perkins to survive as long as it did.”

In 2005, Finney came to work as a pharmacist at Perkins Drugs after graduating from the University of Tennessee School of Pharmacy. He became a full partner in the business in 2009 before later becoming the full owner three years later.

Getting to know the community and becoming “engrained in all that Gallatin is” during the last 15 years is what Finney said he enjoyed most about the business.

Each morning before opening, the drug store’s staff would also gather to pray for customers and to be able to “minister and love on our community in a way that enriches their life and helps their healing” through their work, he added.   

“When you’re in that position you just get to see so many people and you get to impact their lives in ways that most businesses never do,” Finney said. “I’ve always looked at what I do as a ministry, so when someone comes in with a new diagnosis… many times I would ask if they would allow me to pray with them over this news and ask for the Lord’s hand over them for healing.

“We genuinely have loved and cared for our customers.”

Rising fees

Within the last several years, Finney said the landscape for retail pharmacy has become increasingly difficult due to pharmacy benefit managers (PBMs) and the “typically one-sided” contracts Perkins Drugs was able to acquire.

The companies are responsible for managing prescription drug benefits for health insurers and paying for prescription drug claims.

“We don’t get to negotiate those (contracts) and many times we’re left upside down on prescription claims,” Finney said. “It’s not uncommon for 25 percent to 30 percent of our prescription claims to be underwater, to be losing money on them.

“That’s been the case for quite a few years, but in the last couple of years specifically these pharmacy middlemen have extracted a tremendous amount of operating revenue in the form of DIR fees.”

According to the National Association of Chain Drug Stores, DIR fees are the result of a loophole in Medicare regulations that have led payers to take back money paid to pharmacies oftentimes more than half a year after a prescription is filled.

The fees have cost Perkins Drugs “hundreds of thousands of dollars” in recent years, according to Finney.

While Tennessee lawmakers have done “as much as we can do to try to turn this situation around,” at the federal level “nothing is taking place,” said Haile, who now serves as a state senator.

“When you sell a product, you don’t know what you’re going to get paid for it because (PBMs) are going to come back in and take the money back away from you,” Haile added. “It’s just absolutely insane and this industry is so complex that lawmakers get confused on it, which is part of the plan, to keep them confused because then they don’t act.”

Future plans

In addition to the sudden announcement that Perkins Drugs would close last month, it was also revealed that the business has been sold to Walgreens.

While the news “came as a shock to so many,” Finney said the secrecy had to do with legal requirements surrounding the deal.

“The option to sell to Walgreens provided me the ability to make good on the debt that I said I would pay but it also enabled us to transition our customers to a business that has much more of an ability to withstand these things than a smaller independent drugstore does,” Finney said. “Selling the businesses was the most difficult but also the most appropriate decision given the circumstances.”

As part of the sale, Walgreens committed to interviewing any of the 23 full-time and part-time Perkins Drugs employees who were interested in doing so,” he added. Finney also plans to work for the retailer locally.

Finney also continues to own the real estate that was home to both Perkins Drugs locations and plans to rent out the spaces in the future. 

As for the pharmacy’s legacy, former owners and customers say it will continue to live on in the relationships that were established during the business’ rich 125-year history.

“It has always been an honor to me to be associated with the name Perkins Drugs and for the reputation it had in the community,” Rickman said. “It was one-of-a-kind… It was family.”

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