Comment on this storyCommentAdd to your saved storiesSave
After decades of expansion, the nation’s largest drugstore chains are closing hundreds of stores as they recalibrate their operations in the face of increasing competition, a wave of opioid lawsuits and other forces – sending many already vulnerable communities into the pharmacy desert.
Rite Aid, which filed for Chapter 11 bankruptcy protection last week, CVS and Walgreens have announced plans to collectively close more than 1,500 stores over the past two years. Public health experts have already seen the consequences, noting that the first neighborhoods to lose their pharmacies are often predominantly Black, Latinx and low-income.
“Our estimates are that about one in four neighborhoods across the country is a pharmacy desert,” said Dima Qato, an associate professor at the University of Southern California who studies pharmacy access and health equity. “These closures disproportionately impact communities that need pharmacies most.”
Pharmacies can be a lifeline in rural or low-income areas, especially in food deserts – areas where access to healthy, affordable food is limited. Pharmacists are often the most accessible health professionals for these communities, said Lorece Edwards, a public health professor at Morgan State University who focuses on health disparities.
Rite Aid files for bankruptcy amid opioid lawsuits and mounting debt
But for national pharmacy chains, the cutback has been a long time coming, retail analysts say, as increasing competition, changing consumer behavior, retail crime, staffing shortages and minimal investment in stores come to a head. They are also feeling a decline from sales of coronavirus vaccines, at-home testing kits and other pandemic-era products.
“The economics of operating these stores have just deteriorated and they are no longer as profitable as they once were,” said Neil Saunders, managing director of analytics firm GlobalData Retail. “Retailers want to get rid of them.”
Pharmacies from whiplash
In another time, the corner drugstore was the model of convenience, the place where one could not only fill prescriptions but also purchase snacks, birthday cards, and household staples. In the 1990s and early 2000s, CVS and Walgreens began to gain traction across the country, displacing the independents. Today the second largest pharmacy in the country Chains have more than 9,000 and 8,700 locations, respectively, and total sales of $455.2 billion in 2022.
But now, analysts say, consumers have more options, many of which are cheaper and more comfortable. They are also more cautious as inflation – which shot to a 40-year high in 2022 and remains elevated – weighs on discretionary spending.
“Now we have players like Dollar General that have moved in, we have supermarket expansion and Walmart is more of a destination in a lot of these areas. So that really took some of the pressure off of those stores,” Saunders said.
And putting more goods behind plexiglass barriers to prevent theft and violence has given some places a dystopian atmosphere. Storefront sales at Rite Aid fell 4.4 percent last quarter. CVS reported a nearly 2 percent decline in sales.
Meanwhile, retail giants like Amazon and Walmart have expanded their pharmacy and medical treatment offerings and typically offer more competitive prices on household items like toothpaste, paper towels and laundry detergent. (Amazon founder Jeff Bezos owns the Washington Post, whose interim CEO Patty Stonesifer sits on Amazon’s board.)
The sector was also not immune to the labor unrest that sparked frenzied activism from Hollywood writers to Detroit autoworkers. Pharmacy workers at CVS and Walgreens have staged walkouts, claiming poor working conditions put them and patients at risk. Pharmacists, technicians and support staff say increased demands on understaffed teams – such as administering vaccines while tackling hundreds of prescription backlogs – have become unsustainable and are preventing them from doing their jobs responsibly.
Drugstore chains are “shooting themselves in the foot” by not investing in pharmacy staff, Saunders said, because the pharmacy is the only thing about these chains that differentiates them from other retail competitors. If service is poor or prescriptions are delayed, that will deter customers even more, he said.
The pharmacy giants have tried to strengthen their position through consolidation and by partnering with insurance companies to lure patients back to them. Aetna patients can go to any pharmacy, but they get a better deal at CVS. which took over the insurer in 2018. Blue Cross Blue Shield customers have a similar situation with Walgreens. Rite Aid has no such relationship with an insurer.
Independent pharmacies without a corporate umbrella, which accounted for 19,432 locations nationwide as of Oct. 15 — more locations than any other branded pharmacy chain — are also being left out, industry officials say.
“This landscape of vertical integration of companies across different services has put pharmacies that cannot participate at a tremendous disadvantage,” said Mariana Socal, an associate research scientist at the Johns Hopkins University Bloomberg School of Public Health.
The “urban health penalty”
For Patrice La Vigne, a freelance journalist in rural Healy, Alaska, filling a prescription means a two-hour drive.
The city has no year-round clinic, hospital or drugstore, she says. That means her husband, who has a chronic illness, has to drive north to Fairbanks for personal treatments. It’s a familiar journey for most of Healy’s roughly 1,000 year-round residents. They use Facebook to coordinate trips to Walgreens, Safeway, Fred Meyer or Costco.
“For us, it’s a compromise living in a remote area of Alaska,” said La Vigne, 45. “I think most people in the community … would prefer to have a pharmacy here.”
A rural area can be considered a pharmacy desert if residents travel more than five miles from the nearest pharmacy, Qato said. But in urban centers, where residents may rely on public transportation, the radius shrinks to half a mile.
Although the number of pharmacies in the United States has remained close to 64,000 since 2014, there has been a “distribution shift,” according to Jenny Guadamuz, an assistant professor of public health at the University of California, Berkeley. Pharmacies are leaving low-income businesses and majority Black and Latinx neighborhoods and expanding into predominantly white and middle- to upper-income areas, she said.
Public health experts worry that this redistribution could also worsen long-standing racial and economic disparities in health care outcomes. It’s what Edwards calls the “urban health disadvantage.”
“This has happened in the past, and it basically just exacerbates the health disparities that already exist,” she said. “It cuts off supplies and cuts off all access to medical advice, access to vaccines, access to food, access to essentials.”
Racial minorities in the United States, for example, are already at higher risk of developing diabetes and high blood pressure. Children in low-income areas are more likely to suffer from asthma and mental health problems, Edwards said.
And studies have shown that access to pharmacies has a direct impact on how closely people adhere to medication regimens set by their doctors. Guadamuz said. Seniors with complicated health issues are more likely to become dependent on a pharmacist with whom they have a personal relationship.
“Patients have long-term relationships with their pharmacies,” Guadamuz said. “When a pharmacy closes, they have to find a new one that meets all their needs, that covers their insurance and is affordable, but in neighborhoods with people of color and in rural areas … they are less likely to exist.”
Pharmacies also offer needed medical equipment, over-the-counter medications and groceries, Edwards said, and many also have self-service blood pressure monitors.
“All of these things are coming from communities that are already in need,” Edwards said.
Retailers are also grappling with a wave of lawsuits related to the opioid epidemic, which has killed more than 300,000 people in the United States since 2000.
Walgreens and CVS agreed to $10 billion in settlements with several states, and Kroger agreed to pay $1.2 billion. Rite Aid reached a $30 million opioid settlement with the West Virginia Attorney General’s Office in 2022, but faces numerous consolidated cases in the U.S. District Court for the Northern District of Ohio and the Justice Department.
Overdoses skyrocketed while the number of prescription painkillers fell sharply
Rite Aid said it lost $1 billion in the months leading up to its Oct. 15 closing The company, which has filed for bankruptcy protection, is closing 154 locations of its remaining 2,100 stores, according to a filing Thursday in U.S. Bankruptcy Court in New Jersey. These include 39 locations in Pennsylvania, 31 in California, 20 in New York, 19 in Michigan and six in Maryland. Many of the initial closures are taking place in suburban outposts of large metropolitan areas, including Detroit, Los Angeles and Philadelphia. This is in addition to the more than 200 stores the Philadelphia-based retailer has closed in the past two years.
In a statement to The Post, Rite Aid said it is committed to improving access to essential health services in its markets. “Our small format store pilot is specifically designed to provide access to pharmacy services in ‘pharmacy deserts’ and underserved communities.”
As part of its store closures overseen by the bankruptcy court, the company “conducted additional research to ensure we are not creating a pharmacy desert in the communities in which we operate.”
Walgreens, which announced in June that it would close 150 locations in the U.S. by the end of next summer, said in a statement that it is committed to equitable access to its pharmacy care and is using targeted pharmacy services such as same-day prescription delivery to help underserved areas.
“We are also engaged in key alliances to reach vulnerable populations, as we have long partnered with local churches, civic groups and national public service organizations to deliver life-saving vaccines to medically underserved populations.”
In 2021, CVS announced it would close approximately 900 stores over the next three years. From 2018 to 2020, 244 locations were closed. CVS did not respond to The Post’s request for comment.
Independent pharmacies are also under pressure, as many of the same forces are putting pressure on their corporate competitors. A recent survey from the National Community Pharmacists Association shows that independent pharmacies reported the lowest profit margins since the organization began collecting data a decade ago.
Pending changes to the way the government handles Medicare payments could make matters worse, says Ronna Hauser, senior vice president of the trade group. A rule that takes effect Jan. 1 should reduce pharmacy payments, she said.
“Cash flow is going to be a real issue,” Hauser said, in the first three to six months of 2024. “We’re concerned that there could be closures because of that cash flow crunch… and we’re very concerned about patient access points .”
David Ovalle contributed to this report.