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CONCORD, N.H. (AP) — When one of his elderly customers shared her worries about her cat's high blood pressure, pharmacist Rich Rochefort made up some special capsules to treat the animal.

But small, independent pharmacies — imperiled for years by the growth of chains and government efforts to cut rising health care costs — are facing new financial pressures in New Hampshire.

One new threat is a recent court decision letting the state reduce what it pays pharmacies for Medicaid prescriptions. Additionally, Republicans in Congress are proposing cuts in Medicaid payments to pharmacies to take into account rebates and discounts.

Rochefort figures he has lost about $2 per Medicaid prescription since the state reduced its reimbursements two years ago. Pharmacists sued, but recently lost the case.

Some independent pharmacies are squeezed more than others. At the Pillbox Pharmacy in Hampstead, for example, few customers are on Medicaid, a federal-state program for the poor and disabled. But for a North Country pharmacist like Rochefort, it's had a major effect.

Roger Hebert, who took over Rice's Pharmacy in Nashua from his father in 1995, says lower reimbursements aren't the only problem with Medicaid. He said the paperwork required to serve Medicaid patients is time-consuming.

Small, independent pharmacies also are being squeezed by lower reimbursements from insurance companies, more insurers requiring the use of designated mail-order services, and, in the North Country, more people going to Canada for their medicine.

Rochefort, who hopes to pass his business on to his pharmacist son in a few years, has reduced the number of people he employs and eliminated services like home delivery.

Despite the efficiencies, covering overhead is getting tougher. Unlike many chain pharmacies or megastores, small drugstores have space to sell only a limited number of other products to offset losses from the pharmacy.

Mike Smith, executive director of the New Hampshire Independent Pharmacy Association, said Rochefort is not alone. "The stores are just trying to keep their heads above water," he said.

Spokesman Greg Moore says the state Department of Health and Human Services is aware that reduced Medicaid reimbursements have hurt pharmacies, especially small, family-run businesses. But reducing rates was a matter of following the law — the state is legally entitled to receive the best prices, and an audit discovered that some pharmacies were accepting lower payments from insurance companies, he said.

The change has saved the state about $2 million per year. Along with steps such as creating purchasing pools and a preferred drug list, the cut in reimbursements has cut the rate of increase in the department's drug costs from 17 percent a year to 8 percent.

State Rep. Fran Wendelboe, R-New Hampton, is head of a committee studying ways to help pharmacies that are being squeezed by reduced Medicaid reimbursements.

That may mean changing the way reimbursements are calculated or paying more to pharmacies that serve more Medicaid clients. New Hampshire's reimbursements are among the lowest of any state, she said.

That's triggered fears that some pharmacists might stop filling Medicaid prescriptions, much as some doctors refuse to take Medicaid patients. No pharmacist interviewed here wants that to happen.

Hebert, who has followed the committee's work, said he's not hopeful that state reimbursement rates will change. But he said it would help if the state reduced the paperwork and reimbursed pharmacies faster.

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