More grocery store pharmacies are closing as the healthcare industry consolidates, and retail pharmacy giants like CVS and Walgreens continue to dominate, The Wall Street Journal reported.
Grocery store pharmacies gained popularity in the 1980s and 1990s as they showed easy profits and had relatively low startup costs.
But pharmacies in grocery stores are typically too small to negotiate competitive reimbursement rates on drugs, aren't connected to big medical networks or payers and typically don't have walk-in clinics and other services that big retail chains offer.
The number of grocery pharmacies fell in 2017 for the first time in years, going from 9,344 in 2016 to 9.026 in 2017, according to data cited by the Journal.
Big grocery store chains like Target are even finding it hard to stay in business, as Target sold its pharmacy business to CVS Health five years ago.
Customers are more likely to get 90-day supplies of their prescriptions now or to get their prescriptions delivered in the mail, which may bring less foot traffic to the grocery store.
Big retail chains such as CVS and Walgreens now also offer blood testing and chronic disease management, which grocery stores typically cannot afford.
CVS and Walgreens accounted for more than 40 percent of prescription revenue in the U.S. 2018, according to the Journal. They also either own or have partnerships with the country's biggest insurers and pharmacy benefit managers, so they're able to negotiate better drug prices.
One benefit for grocery stores is that customers who use the pharmacies tend to spend more money at the store overall. Kroger finance chief Gary Millerchip told the Journal that its pharmacy shoppers tend to be more loyal and spend three times as much as customers who don't use the pharmacy.
Read the full article here.