(MONEY Magazine) – Gabrielle Hundley took the first of two pills that would change her life at breakfast on Feb. 21, 1995, right before she rushed off to first grade at Trinity Christian School in Rock Hill, S.C. The new prescription that her mother Peggie had gotten filled at the local Rite Aid pharmacy the night before was for Ritalin, a drug commonly used to treat hyperactivity and attention deficit disorder in children.

But later that day, in a nearby emergency room, doctors discovered that what the little girl had taken was not Ritalin at all but rather a high dosage of Glynase, a medication used to lower diabetics' blood sugar, according to the Hundleys' attorney, James C. Anders. In a court case last year, Anders argued that the pills in the bottle contained 16 times the normal starting dose for adult diabetics, causing Gabrielle's blood sugar level to plummet so severely that she suffered permanent brain damage. The jury in that case awarded $16 million to the little girl and her family. (Rite Aid is appealing the verdict and intends to question the extent of Gabrielle's injuries and whether they were caused by the alleged misfill.)

At first blush, it's tempting to minimize the story of Gabrielle Hundley--this incident was just one in a million, right? Pharmacy transactions certainly seem easy: Someone in a white coat counts out the pills your doctor ordered, puts them in a vial with the instructions on the label and hands them over. How often can such a straightforward process go awry?

Many state regulators, consumer advocates and even pharmacists contend that an ongoing revolution in the retail drug business--with the number of prescriptions filled swelling even as pharmacy economics tighten--is making dispensing errors a bigger problem than you think. And while there are no definitive national statistics on how many such errors occur each year, there is evidence strongly suggesting that those critics are right.

In a 1997 nationwide survey of pharmacists conducted by Drug Topics, a trade publication, 53% admitted having made drug errors in the preceding two months, with the typical respondent making 2.5 errors in that period and one admitting to 15 mistakes. Work overload was the main reason cited by the majority of these respondents. And a June 1996 survey of 3,361 pharmacists in California and Oregon revealed that dispensing errors were occurring at a rate of 324 per pharmacy annually--nearly one per day.

"Ten years ago, an acceptable error rate was considered one per year per pharmacy," asserts Ralph Vogel, president of the Guild for Professional Pharmacists, a union representing 2,000 pharmacists in four states. "What we're seeing today is chaos that comes from understaffing and other new stresses in the pharmacy."

To be sure, many of these errors are not disastrous. And the pharmacy industry insists that worries over error rates are overblown. Phillip Schneider, spokesman for the National Association of Chain Drug Stores, dismisses the contention that understaffing and high prescription volume are leading to more mistakes as "the viewpoint of [pharmacy workers] wanting to unionize."

Nevertheless, that same contention is echoed by some of the state regulators who monitor pharmacies. "Consumer complaints about dispensing errors last year increased nearly 40%," maintains Rick Allen, deputy director of Georgia's Drugs and Narcotics Agency, which conducts regulatory and investigative work for the state's pharmacy licensing board. "We've talked to pharmacists who go home with nightmares, wondering if they misfilled a prescription that day--which is no wonder when they're trying to fill a prescription every one or two minutes."

From your side of the pharmacy counter, such concerns hardly seem warranted. But when MONEY got behind the counter, interviewing dozens of pharmacists, regulators and other experts, we found that there are many points at which the prescription process can go awry. We'll look at each of them, against the backdrop of the current sea change in the prescription business. That includes the role played by the most complacent actor in this story--you, the consumer. (For what you can do to catch a pharmacy error, see the box on page 120.) Too many people take the mechanics of the prescription transaction for granted. In fact, for the past nine years, Americans responding to Gallup polls have ranked pharmacists as the most trustworthy professionals in the country--ahead, even, of clergy members. No wonder so many people--people like Peggie Hundley--simply assume that nothing can go wrong.

"When I got [my daughter's] prescription, I could see that the pharmacist was working by himself, filling prescriptions, answering the phone and running the cash register," Hundley recalls now. "But I had blind faith."

YOU CAN'T SIMPLY RELY ON YOUR DOCTOR

For many, that blind faith starts outside the pharmacy. You might think your pharmacist is little more than a pill counter who follows orders from your doctor. Truth is, a pharmacist receives more information about prescription drugs than a doctor does. Doctors get one year of formal training on the use of prescription drugs in medical school but generally are not required to obtain continuing education on medications. In contrast, many states require pharmacists to complete an average 15 hours of continuing education each year to keep up with the new drug information.

And there's no dearth of homework: New drugs are pouring into the market, stimulated by a program launched in 1992 under which the FDA shortened its drug-approval times. In the past two years alone, a record-setting 92 new drugs hit the market--compared with 131 new drugs approved for the previous five years.

So don't assume you'd never walk out of your doctor's office with a dangerous prescription. That's what Ruth Paxton, 44, of Carson City, Nev. believed in July 1992, when she sought treatment for a sinus infection. Paxton previously had severe allergic reactions to penicillin and to Keflex, an antibiotic. Her doctor, unaware of the severity of her reactions, prescribed an antibiotic called Ceftin, which can cause potentially life-threatening allergic responses in people with extreme sensitivities to either of the other two drugs.

Within 20 minutes of taking Ceftin, Paxton experienced a frightening allergic reaction; her throat began to swell, making it difficult to breathe or swallow. Swift treatment with Benadryl and a trip to the emergency room solved the problem. Nevada's board of pharmacy reprimanded Paxton's pharmacist, saying he should not have allowed her to leave the pharmacy with a prescription for Ceftin without calling her doctor and warning Paxton of the potential for an allergic reaction.

The incident prompted Paxton to make a career change she'd long been contemplating: She went back to school for her nursing degree, which she now uses to safeguard herself and others. Says Paxton: "You've got to protect yourself now more than ever before."

A WHITE COAT DOES NOT MAKE A PHARMACIST

The burden of knowing about potentially dangerous drug reactions is one reason pharmacists must complete five or six years of academic training. Yet increasingly the white-coated person who types your prescription into the computer system, pulls medicine from the shelf and places it in a vial with a label on it is not a pharmacist at all. Instead it's often a pharmacy technician, who may have nothing more than a high school degree and on-the-job training.

There is little question that the use of these techs is growing and that this is happening as pharmacy chains face a major squeeze on profit margins; techs typically earn $5 to $12 an hour--compared with the average of $30 to $39 for pharmacists.

Pharmacists, of course, are supposed to check their technicians' work. And CVS spokesperson Fred McGrail points out that properly trained, well-supervised technicians enhance safety by providing two sets of eyes on every prescription and freeing the pharmacist to focus on counseling customers.

What concerns some regulators and pharmacists is whether the training and supervision are truly adequate. "Last night I filled 200 prescriptions in an eight-hour shift, and I corrected six errors made by techs," says Rose DeLeonardis, who works as a relief pharmacist rotating among several stores in California for a chain (not CVS). She also claims she's worked in pharmacies where the number of techs exceeded the maximum allowed by state law.

Most states impose a 1-to-1 ratio between pharmacists and technicians, but some drugstore chains are pressuring states to change that. Both Florida and Arizona are now considering allowing up to three techs per pharmacist. The rules governing techs' qualifications also vary dramatically. Illinois requires only that techs be at least 16 years old and preparing for their high school equivalency exam; Virginia imposes no minimum requirements at all. Wyoming's standard is about as strict as it gets: Techs must pass a state board exam to become certified after up to two years' training on the job or at a community college.

Also, failure to check techs' work was cited as a major cause of dispensing errors by nearly a third of pharmacists in the 1997 Drug Topics nationwide survey.

As Carmen Catizone, executive director of the National Association of Boards of Pharmacy, which represents state licensing boards across the U.S, sees it, the bottom line is this: "If the corporation puts in more techs than the pharmacist is comfortable supervising, errors are going to get out."

RIGHT DRUG, WRONG DOSAGE

One of the most common pharmacy dispensing errors is giving out the wrong drug. The other is giving out the wrong dosage of the right drug. That's what Hazel Van Hattem of Crete, Ill. says happened in her family.

The way Van Hattem, now 80, remembers it, there were three technicians and two pharmacists on duty on May 30, 1995, when she picked up a refill of Coumadin, a powerful blood-thinning medication her husband Ernest, then 76, had been taking. "At the trial, they said they couldn't really be sure who filled the prescription," Hazel says, referring to the lawsuit she filed against K Mart. Her attorney argued that whoever filled the vial mistakenly did so with pills that contained 5mg of Coumadin rather than Ernest's usual dose of 2mg--an overdose that the attorney said caused massive bleeding that led to Ernest's death two weeks later. A Chicago jury levied an $810,000 judgment against K Mart in January. (According to court documents, K Mart attorneys questioned whether a misfill actually caused Ernest's death; K Mart spokeswoman Mary Lorencz says the company is considering its legal options.)

Some pharmacists and state regulators contend that dispensing errors made by pharmacists are at least partly attributable to increasing workloads. They point to two factors. First, overall prescription volume keeps rising--up 30% over the past five years, according to IMS America.

The second factor is economics. The percentage of prescriptions paid for by insurance or HMOs has risen from less than 50% to 80%; those third-party payers are imposing ever-lower reimbursement rates on pharmacies, which must churn out a high volume of prescriptions to keep margins up. That reality has helped force mom-and-pop local pharmacies out of business at the rate of three a day in the past five years, according to the National Community Pharmacists Association. Even the Big Four chains--Rite Aid, CVS, Eckerd and Walgreens--must control costs and fill as many prescriptions as possible to stay ahead. For example, two Rite Aid pharmacists interviewed by MONEY say the chain has scheduled single pharmacists to work 12-hour shifts rather than have two pharmacists overlap for part of the day as it had in the past. (Rite Aid spokeswoman Suzanne Mead says pharmacy managers schedule such shifts based on prescription volume, pharmacists' preferences and other variables.)

Three of four medical studies on the subject published between 1983 to 1994 found a correlation between pharmacists' workload and error rates. "There does appear to be a greater risk of errors when a pharmacist is expected to fill more than 24 prescriptions per hour," says Elizabeth Allan Flynn, research associate at Auburn University's School of Pharmacy and author of one of those studies.

Large-chain drugstores counter that this isn't so. "We question the validity of those studies as being too narrow and not looking at the practical variables in the pharmacy workplace," says Rite Aid's Mead. What's more, the chains say their own data on dispensing-error reports--which they decline to share--show no link between pharmacists' workload and error rates. Walgreens spokesman Michael Polzin maintains that the actual percentage of errors per prescription filled at his chain is lower now that it was 10 years ago (though, again, he will not give precise figures).

Some pharmacists say that pushing beyond that 24-per-hour benchmark is not unusual these days. At a September 1996 hearing on work overload held by the Wyoming Board of Pharmacy, one pharmacist testified: "On a Tuesday after the recent holiday I filled more than one prescription every two minutes for 12 hours straight. And quite honestly, that day I did make a few errors that were caught by the customer or myself. But how many weren't caught?"

THE SAFETY NET? IT HAS HOLES

Wrong drugs, wrong dosages, missed drug conflicts--surely you are protected from such understandably human missteps when your pharmacist taps into a computer terminal, or when you pore over the information that comes with your prescription. Not necessarily.

Most pharmacies do rely on computer setups to compensate for any gaps in a pharmacist's knowledge. These run programs marketed by third-party vendors and are supposed to be updated regularly with information about new drugs or new risks for existing drugs. But in practice, these systems don't always provide the protection they should. In a study reported in the Journal of the American Medical Association in April 1996, Raymond Woosley, chairman of the department of pharmacology at Georgetown University Medical Center, and his colleagues presented two prescriptions to be filled for the same patient to 50 pharmacists in the Washington, D.C. area. One was for the antihistamine Seldane and one for the antibiotic erythromycin. Although the FDA and manufacturers had issued warnings since 1992 that mixing the two drugs could cause fatal cardiac problems, 32% of the pharmacies filled the prescriptions without comment. Of those, 29% had computer programs that should have warned them not to. In some cases, Woosley says, pharmacists had simply shut down the systems or gotten used to overriding them.

And what about the patient information leaflets stapled to your prescription bag at most pharmacies? These are also designed to give added protection against drug interactions or side effects. They usually aren't prepared by your pharmacist or physician, however, but by one of several commercial vendors. And, as MONEY found when we sent reporters to 15 pharmacies in six cities to check the quality of this material, much of it is out of date or vague.

We asked for patient information about the antihistamine Hismanal, which can cause heart rhythm disturbances, potentially fatal, when combined with erythromycin and several other antibiotics; the FDA first warned of that risk five years ago. Only seven of the pharmacies we visited gave an explicit warning stating that the drug should not be taken with a specfic list of antibiotics. Six others offered only a vague warning: "Inform your doctor if you are taking erythromycin or drugs related to it." And two pharmacies gave us leaflets that included no mention of this potentially fatal risk at all.

WHO'S MINDING THE STORE?

One of the most embarrassing aspects of the drug safety system in this country is that we can't tell you how many people are injured or die each year as a result of the wrong drug being dispensed or prescribed," says Larry Sasich, pharmacist at Public Citizen, a consumer advocacy group in Washington, D.C.

In fact, most state boards do not require pharmacies to report dispensing errors, and national error reporting programs run by the Food and Drug Administration and the U.S. Pharmacopeia, a nonprofit group that sets drug manufacturing quality standards, are both voluntary.

Drug chains usually require pharmacists to submit error reports to management. But even those internal reports do not always prevent future errors. Case in point: Malvina Holloway, 59, of Mobile received a vial filled with Tambocor, a dangerous heart rhythm-altering medication, rather than the Tamoxifen her oncologist had prescribed. When Holloway sued Harco Drug, the regional chain where the mistake was made, her attorney presented 233 incident reports that had been submitted to Harco management, the majority of which involved dispensing errors at stores throughout the chain over the preceding three years. Her attorney, Davis Carr, argued that both the pharmacist and Harco were at fault for the misfill, and won a $255,000 jury award for Holloway. (The verdict was upheld by the Supreme Court of Alabama in 1995.)

Such awards have motivated chains to improve internal procedures on error reports, notes Richard Abood, a professor of pharmacy practice at University of the Pacific in Stockton, Calif. But Catizone of the National Association of Boards of Pharmacy argues for greater oversight. "We are proposing that each individual pharmacy be required to report serious dispensing errors to the state board," he says.

Of course, while reporting problems after the fact would be useful in the long term, it's of little comfort to those who are victims of prescription errors. And in the short term, certainly, the burden will rest on consumers. Says Neil Davis, a former Temple University pharmacy professor: "Unfortunately, this is a problem that will continue until enough people are getting hurt that pharmacy management can no longer afford to ignore it."