As retail pharmacy giants such as CVS, Walgreens and Rite Aid close stores across the U.S., the consequences for patient care and the impact on the pharmacy industry are becoming more apparent.
In August, Walgreens announced plans to close around 1,200 stores over the next three years, including 500 in the 2025 fiscal year. Despite a 6% increase in sales in 2024, the company has faced significant financial setbacks, reporting a net loss of $8.6 billion, a sharp contrast to the previous year's $180 million loss.
The trend of pharmacy closures is not isolated to Walgreens. In the last year, Rite Aid filed for bankruptcy and shut down about 500 stores, while CVS is in the process of closing 900 locations as part of a phased approach that began in 2021.
Jess de Jesus, PharmD, president and chief pharmacy officer of Cambridge, Mass.-based Beth Israel Lahey Health, and Martin Torres, PharmD, director of pharmacy for Orange, Calif.-based UCI Health, spoke on the forces behind the pharmacy closures and the implications for patient access and the pharmaceutical industry.
Factors driving closures
Financial pressures are one of the leading reasons behind the mass retail pharmacy closures. As pharmacy benefit managers and insurance companies continue to reduce reimbursements for prescriptions, many pharmacies are finding it difficult to maintain profitability.
Both Dr. de Jesus and Dr. Torres said drugs are reimbursed at rates lower than the cost of dispensing them, resulting in pharmacies being forced to sell medications at a loss.
A recent survey by the National Community Pharmacists Association found that 99% of independent pharmacies have seen reductions in reimbursements at the point of sale.
The NCPA also highlighted the severity of the issue: 93% of independent pharmacies are becoming less willing to participate in Medicare Part D networks due to lower reimbursement rates and 92% are taking drastic steps, such as cutting back inventory or tapping into personal savings to avoid closure.
Additionally, Dr. de Jesus emphasized there has been an increase of competition from models such as Amazon Pharmacy, Mark Cuban's Cost Plus Drug Co. and others that offer more transparent drug pricing and cheaper cash prices than many prescription copays.
Another factor at play is health system pharmacies are more likely to capture high-cost, high-reimbursement medications that are more profitable than the typical retail prescription, Dr. Torres said.
"More health systems are investing in specialty pharmacy models to manage higher-cost medications, a sector that's far more profitable for hospitals," he said.
Impact on patient access
One of the most immediate concerns with the pharmacy closures is the impact on patient access to critical medications. While large urban areas may feel less of an immediate impact, the closures are expected to hit underserved areas, or "pharmacy deserts," more dramatically.
Dr. de Jesus said the biggest impact will be on access to acute medications such as antibiotics.
While health systems such as Beth Israel Lahey are developing strategies to minimize disruption, he acknowledged the challenges.
"We are developing a strategy on how this can have the least impact on our patients," he said. This includes expanding the hospital ambulatory pharmacy footprint.
UCI Health has not yet seen a significant effect in its geographic area, but it is monitoring how CVS and Walgreens closures might affect patients.
The loss of retail pharmacies in rural or underserved areas could also exacerbate existing disparities in healthcare access; Dr. Torres stressed the risk that patients in these areas will struggle to access essential medication in a timely manner.
"If patients can't access medications like antibiotics in a timely way, it could lead to severe healthcare complications," he said. "This could be harmful for patients who don't have transportation options or live in areas with limited healthcare services to begin with."
Impact on pharmacy jobs
The closures of retail pharmacies also have the potential to disrupt employment within the pharmacy sector. According to Dr. de Jesus, these shifts in the workforce could present a valuable pipeline opportunity for health systems currently competing for pharmacy staff.
Data from the American Association of Colleges of Pharmacy shows a significant surge in demand for pharmacy positions in 2024, with a 144% increase in demand for pharmacy technicians and a 14% increase for pharmacy directors compared to the previous year.
"It will definitely impact pharmacy job opportunities," he said. "There are also shifts from traditional retail into health system outpatient pharmacy settings. Many pharmacists that have historically worked in the retail chain setting are transitioning to roles in hospital outpatient pharmacies."
Dr. de Jesus also highlighted that this shift may push some pharmacists to alter their career paths: "Pharmacists may need to pivot their career and find other opportunities in other healthcare-related fields and areas, including hospitals, ambulatory, clinical, research and industry."