Almost 30% of all pharmacies across the nation operating in the last decade had shut down by 2021, culminating in a plethora of "pharmacy deserts." Black and Latino neighborhoods took the brunt of it, leaving them with dwindling healthcare options, a study published on Tuesday in Health Affairs shows.
As for the last three years, the remaining drugstores have been struggling, including giants like Walgreens, Rite Aid, and CVS. Said changes can be attributed to the ever-shifting consumer habits, competition, rising costs, and reimbursement for prescriptions that keep lessening with time. To cope, chains have been closing stores that incur the most losses and transfer prescription files to what's remaining.
What is happening to every pharmacy in America and who is to blame? Here's what we know
As reported by CNN this October, CVS shut down 900 stores, while Rite-Aid lost 500. Walgreens slashed 1,200, or about 1 in seven. Per the outlet, all of these giants set up shop on a massive scale in the 1990s and 2000s in an attempt to squash competition and gain customers. However, they are now forced to close down operations, citing the volatile market.
During an interview with the Wall Street Journal in June, CEO Tim Wentworth revealed that about 25% of Walgreens' outlets are running in losses, clocking in at an $8 billion hit just last year, CBS News has reported. He said:
"We are at a point where the current pharmacy model is not sustainable."
Marianne McElveen, the owner and pharmacist of Kempson Rexall drugstore located in Inman, South Carolina, shared how she struggles to keep the shop afloat:
"We've had to make some adjustments, some changes. We've had to cut some hours, just doing anything we can to stay alive and to keep the doors open. There have been many sleepless nights," she told CBS News.
She also revealed that her own pharmacy is raking in a mere 3-5% in profits.
"Especially expensive brand name medications, we fill those and may not be reimbursed even at our cost for those drugs," McElveen said.
Most of the profits drugstores make can be traced back to prescriptions filed. However, reimbursement rates for these prescription drugs are shrinking while the fees are skyrocketing. The rates owed to the pharmacies as well as what the customers will be paying for it are all determined by pharmacy benefit managers, or PBMs.
However, as reported by ABC7 News, Elizabeth Anderson, an analyst at Evercore IRI, told CNN that these PBMs have been slashing reimbursement rates to fill their own pockets with profits. Pharmacies across the nation have been unhappy with the power PBMs have, and here's what Anderson said:
"If reimbursement rates start to come down and drug stores can't offset it with other growth, then it has a negative impact on their profitability."
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Data drawn from the National Council for Prescription Drug Programs reveals that while the number of pharmacies in the nation increased from 2010 to 2017, it began declining by 2018.
As for which pharmacy is more likely to close down, independent drugstores will be taking the hit as they are more likely to be found in Black, Latino, and low-income neighborhoods.
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