There is Still a Significant Need for Community Pharmacies

Over 4 billion prescriptions were filled at local pharmacies across the US in 2019. Up against close to a billion outpatient visits and 26 million hospitalizations, pharmacy continues to be the most utilized service in healthcare, notwithstanding their largely untapped potential. However, a crisis is unfolding at local drugstores, and it’s not the kind associated with medications. For the past 30 years, and despite decades of expansion, community pharmacies have continually finished last in a race to the lowest common denominator value proposition, and it is the slow demise of locally owned independent pharmacy chains that comes as a warning sign for consumers everywhere.

For example, in Washington State, about 30 pharmacies closed each year, but over 13 months ending in early March 2024, a staggering 81 pharmacies — over 8% of the state’s total — shut their doors, according to the Washington State Pharmacy Association. Washington is not alone. Up to a third of independent pharmacies could close this year due to financial stress caused by lower prescription reimbursements by big insurance plans and pharmacy benefit managers, according to a recent survey by the National Community Pharmacists Association.

This wave of shutdowns underscores a growing national crisis. The U.S. has the highest healthcare costs in the world, and while big healthcare companies grow larger and more consolidated, the number of primary care doctors is dwindling. Pharmacies, which might have bridged some of these gaps, are disappearing as well.

Losing these retail medication outlets creates more than just pharmacy deserts. In many low-income and underserved areas, drugstores also serve as grocery stores and hubs for essential services, and hence their closures mean communities lose crucial access points for a variety of goods and services.

So, what’s going on?

The wave of pharmacy closures across the country is a multifaceted issue, driven by increased competition, changing consumer behaviors, and several systemic challenges within the retail sector. In many ways, the retrenchment of pharmacies has been a long time coming.

The industry faces a perfect storm of factors including increased competition from retail giants like Amazon and Walmart, changing consumer behaviors, retail crime, staffing shortages, and minimal investment in store infrastructure. The pandemic’s boom, fueled by sales of coronavirus vaccines, at-home test kits, and other related products, has waned, leaving pharmacies with a significant decline in revenue.

Consumers now have more options than ever, many of which are cheaper and more convenient. With inflation reaching 40-year highs in 2022 and remaining elevated, discretionary spending has decreased which has inadvertently led consumers to be more cautious and price-sensitive, favoring retailers that offer competitive pricing on household essentials.

The sector has also been impacted by labor unrest. Pharmacy employees at major chains like CVS and Walgreens have staged walkouts, citing poor working conditions that they claim endanger both staff and patients. Pharmacists, technicians, and support staff are overwhelmed by increased demands, such as administering vaccines while managing a backlog of prescriptions. These conditions have only made it more difficult for them to perform their duties responsibly.

As a consequence of the complex cocktail of inconveniences faced by community pharmacies, many are closing branches in low-income, majority Black and Latino neighborhoods to open in the already densely populated White and middle-income areas. However, increased competition doesn’t necessarily translate into increased income. These practices have been going on for years, the geographical shift has only led to interrupted care that exacerbates healthcare disparities, which may also be contributing to the larger burden felt across the US healthcare system.

What’s next for community pharmacies?

The future of community pharmacies hinges on several critical changes and initiatives. First and foremost, there is an apparent need for better payment models that recognize and compensate pharmacists for their comprehensive care. In Tennessee, legislation has been passed to allow pharmacists to offer additional health services, including smoking cessation programs and vaccine delivery — as has been successfully initiated in other countries such as the United Kingdom. This model should be considered nationwide to enable pharmacists to fully utilize their expertise in improving patient health outcomes.

Addressing PBM practices

Pharmacy Benefit Managers (PBMs) have posed significant challenges for community pharmacies. In 2021, Tennessee passed a reform law that stops PBM spread pricing, prevents patient steering, and ensures fair reimbursement for pharmacies. This legislation may act as the turning point for maintaining the financial viability of pharmacies and should serve as a blueprint for other states. The industry needs to be more assertive in negotiating better terms to protect its interests.

Empowering patients

A lack of transparency in healthcare costs can be detrimental to the patient, their families, and certain providers. Patients deserve to know their prescription costs upfront, both within and outside their health plans. While it is the physician who must abide by the Hippocratic Oath (aka do no harm), all clinicians must follow closely. But, by alienating those who need support to manage their finances to pay for their healthcare, we bypass the one fundamental law we should all be following.

By ensuring transparency, patients are empowered to make informed choices and manage their healthcare expenses more effectively. Legislation supporting this transparency has been a priority, aligning with the commitment to putting patients first.

We need a huge leap forward

Is this system resilient? For the most part, yes. That doesn’t mean the challenges aren’t coming, and when faced by pharmacies who struggle to get by because of the factors mentioned above, we will end up in an inevitable future where healthcare costs rise significantly, and the healthcare system starts crumbling under pressure. One study found that lack of access to pharmacies leads to poor medication adherence, worsening medical issues, and straining the healthcare system. This non-adherence, affecting 9 million Americans due to high costs and lack of insurance, costs the U.S. between $100 billion and $290 billion annually. These figures will only rise should practices not be followed.

Optimism for independent pharmacies

Despite the challenges, there is optimism about the future of independent pharmacies. New pharmacists have unique opportunities to serve patients with specific conditions and build thriving practices. The potential for growth and innovation in this field is immense, and new graduates are encouraged to embrace these opportunities.

Pharmacists should join their state pharmacy associations and build strong relationships with elected officials. Inviting legislators to visit pharmacies can help them understand the work and challenges faced by pharmacists. Building these relationships before policy needs arise is essential for effective advocacy. It is also important for pharmacists to become more comfortable sharing how public policy impacts their patients and to advocate for their needs consistently.

Photo: Ridofranz, Getty Images

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