Dipak Patel, PharmD, a pharmacist and owner of the Medicine Shoppe in Shillington, Pennsylvania, fills prescriptions in February 2021. Almost 90,000 pharmacies shuttered across the U.S. from 2010 to 2021 and more closings are expected as stores struggle to make a profit.
Photo by Ben Hasty, courtesy MediaNews Group/Reading Eagle/Getty Images
“If you buy products and you dispense it below what it costs you to acquire from the wholesaler, you’re not going to be in business for very long.”
— Michael Baxter
Two years ago, Craig Clark, RPh, was ready to hand over the keys of his independent pharmacy, a business he had run for over 30 years. Clark had long planned for an employee to take over after his retirement. But troubling market trends ultimately prompted his successor to step away from the deal.
“It’s not profitable anymore,” Clark told The Nation’s Health. “I thought I would be retired by now, and I’m still here working because it just eliminated options for us.”
Clark’s Pharmacy in Cedar Rapids, Iowa, is one of the few remaining independent pharmacies in the city. Retail pharmacies, both chain and independent, are increasingly finding it difficult to stay open, limiting access for patients.
By 2021, 30% of all U.S. retail pharmacies that had been open in 2010 had closed, a December study in Health Affairs found. Almost 90,000 pharmacies closed during the study period. The trend has continued, as Walgreens and CVS announced closures of 1,500 more pharmacies last year.
In south St. Louis, the hometown of Jenny Guadamuz, PhD, MSPH, lead author of the study, three chain pharmacies have closed over the past five years, she noted. The issue has created barriers for her mother.
“She has had to move around from pharmacy to pharmacy to pharmacy to try to maintain her adherence to her medications,” Guadamuz, an assistant professor at the University of California-Berkeley School of Public Health, told The Nation’s Health.
An August study in JAMA Network Open found that in 2020, about 45% of the nation’s more than 3,100 counties had “pharmacy deserts” — areas with a low density of the vital retail stores. Those areas also tended to have more socially vulnerable people, such as residents without cars, who were seniors or had low incomes.
While closures of big chain pharmacies make headlines, the risk of closure is notably higher for independent pharmacies, which face a 39% risk of shutting down, compared to a 22% risk for chain pharmacies. Independent pharmacy closures are especially troubling because they often serve as the only option in small communities.
Phuc Tran, left, receives a vaccine from Heidi Johnson, a pediatric nurse practitioner, at Grubb’s Pharmacy in Washington, D.C., in 2021. Many U.S. neighborhoods now lack pharmacies
Photo by Tom Williams, courtesy CQ-Roll Call/ Getty Images
Independent pharmacies also play a crucial role in supporting communities of color and those with low incomes. The pharmacies are more likely to be located in majority Black and Hispanic neighborhoods and are more than twice as likely to serve higher numbers of people covered by public insurance such as Medicaid. Unfortunately, they are also more likely to close.
Pharmacies in neighborhoods with a majority of white residents have a 28% closure rate, compared to about 38% and 36%, respectively, in Black and Hispanic neighborhoods.
Nearly 1 in 4 neighborhoods nationwide now have no pharmacy, according to a recent mapping project from the National Community Pharmacists Association and the University of Southern California.
“Pharmacists are the most accessible health care professionals,” Katie Leslie, PhD, chair of APHA’s Pharmacy Section and an assistant professor at Sullivan University College of Pharmacy and Health Sciences, told The Nation’s Health. “In community pharmacy, there’s a lot of different opportunities for different clinical services.”
Aside from dispensing medication, pharmacies provide direct patient care with services such as medication management, diabetes prevention programming, hypertension screenings and vaccinations. Pharmacies played a vital role in administering COVID-19 vaccines during the early years of the pandemic, giving millions of doses. In 30 states and the District of Columbia, pharmacists are now authorized to prescribe contraceptives.
But as more pharmacies close, those opportunities are shrinking, with potentially dangerous implications for health. A 2019 study in JAMA Network Open found adults with cardiovascular disease were significantly less likely to adhere to their prescription medications when their pharmacy closed. Risk was greatest among older adults living in neighborhoods with fewer pharmacies.
“If the trend continues, it’s making access to these services more convenient for affluent areas, leaving behind all these other communities that now have fewer and fewer pharmacies,” Guadamuz said.
Phuc Tran, left, receives a vaccine from Heidi Johnson, a pediatric nurse practitioner, at Grubb’s Pharmacy in Washington, D.C., in 2021. Many U.S. neighborhoods now lack pharmacies
Photo by Tom Williams, courtesy CQ-Roll Call/ Getty Images
Although millions of Americans rely on mail-order pharmacies for their medications, many customers say the service falls short compared to the personal care provided by a pharmacist. Mail-order prescriptions can also face delays in shipping, damage, tampered packaging and other technical issues.
“There’s really just that human aspect of that pharmacist-patient relationship,” Leslie said. “It’s not the same thing necessarily as being face to face or having that trust with the pharmacist.”
Benefit companies hurting small stores
The unprecedented rate of pharmacy closures is driven in part by declining reimbursement rates, according to Michael Baxter, head of government affairs at the American Pharmacists Association.
“You couldn’t run a lemonade stand like this,” Baxter told The Nation’s Health. “If you buy products and you dispense it below what it costs you to acquire from the wholesaler, you’re not going to be in business for very long.”
Pharmacies are reimbursed at rates determined by pharmacy benefit managers, companies that are hired by health insurers to manage prescription drug benefits and negotiate with drug manufacturers. In 2023, nearly 80% of all prescription drug claims were processed by the three largest management companies, according to the Drug Channels Institute.
Pharmacy benefit managers wield significant influence over where beneficiaries can purchase their medications for the lowest cost. A July report from the U.S. Federal Trade Commission report found management companies steer patients to their affiliated pharmacies by leaving independent pharmacies out of preferred pharmacy networks and pressuring businesses into unfair contracts.
The practices not only push retail pharmacies out of business, they also contribute to rising health care costs for beneficiaries. A follow-up report from the FTC in January found the management companies inflate prices on specialty generic medications at their affiliated pharmacies. The medications, which include treatments for HIV, cancer and other serious conditions, generated over $7 billion in excess revenue for the companies from 2017 to 2022.
“The PBMs look like the bad guys right now, and they aren’t our friends at this point,” Clark said. “They could do a better job if they just paid enough to keep the pharmacies open. And then the pharmacies can figure out a way to make profit.”
U.S. legislators have their eye on reforming pharmacy benefit manager practices. Legal language under consideration in Congress last year would have required the companies to reimburse all pharmacies that serve Medicaid patients at the same level, but was rejected by House Republicans. While supporters have vowed not to give up, reforms may face an uphill battle in the new Republican-controlled Congress and administration.
Guadamuz encouraged public health professionals to speak up for measures that can help keep pharmacies operational and accessible.
“From a public health side, advocating for these policies that ensure pharmacies don’t close, especially not disproportionality in marginalized neighborhoods, is the No. 1 thing that public health practitioners can think about doing.”
Chichi Ilonzo Moma, PharmD, RPh, a pharmacist and CEO of Springfield Pharmacy in Springfield, Pennsylvania, talks to a young patient about COVID-19 vaccination in November 2021.
Photo by Pete Bannan, courtesy MediaNews Group/Daily Times/Getty Images
For more information, visit www.ftc.gov.
- Copyright The Nation’s Health, American Public Health Association
