For many years, drugstore chains dominated the country's market. Now, thousands of establishments will be closing, leaving people without access to medical necessities.
The third-biggest independent drugstore company, Rite Aid, filed for bankruptcy on October 15 and is expected to liquidate 400 to 500 of its 2,200 locations throughout 17 states. Larger competitors, Rite Aid's $3.3 billion debt burden, and costly legal fights over its purported role in contributing to the opioid crisis ultimately brought the company to its knees.
Other drugstores hopping on the bandwagon
This coincides with nationwide walkouts by Walgreens technicians and pharmacists due to poor pay and understaffed locations, as well as in Kansas City CVS stores. Rite Aid's bankruptcy indicates the retail pharmacy sector's ongoing challenges.
Prescription filling accounts for the majority of pharmacy sales. However, because prescription medication reimbursement rates have decreased recently, their revenues from that market have also reduced. There is also pressure on the front of drugstores, where they offer home essentials and snacks.
In response to growing competition for these products from Amazon, big-box retailers with pharmacies like Walmart, CVS, Walgreens, and Rite Aid are closing some of their sites, pharmacies like Walmart, CVS, Walgreens, and Rite Aid are closing some of their sites.
Although the COVID-19 vaccine helped drugstores during the pandemic, fewer individuals went in to shop there, and the number of prescriptions written decreased as fewer people underwent elective tasks.
"The pandemic was not a strong time for drugstores."-David Silverman, a senior director at Fitch Ratings
He continues by saying that theft has been an issue for pharmacies in some areas and that some establishments have locked up their merchandise to deter theft. However, this has deteriorated the clientele's experience.
In recent years, pharmacies have attempted to change their business model to become primary care providers by entering the more profitable healthcare sector. CVS purchased health insurer Aetna, while VillageMD, a primary care network, was bought mainly by Walgreens.
However, this tactic calls for fewer physical shop locations and creates drugstore deserts In the past, small pharmacists were frequently forced out of business by the overexpansion of retail pharmacy chains.
According to McKinsey, the number of independent pharmacies fell by about 50% between 1980 and 2022. Rite Aid, CVS, and Walgreens have been closing their locations for years.
The biggest chain in the United States, CVS, shuttered 244 locations between 2018 and 2020. It declared in 2021 that it will shut 900 outlets by 2024. In June, Walgreens announced the closure of an additional 150 shops on top of the stated 200 store closures for 2019.
Nick Fabrizio, senior lecturer in health policy at Cornell University, says pharmacy deserts will follow from the closures, and individuals in both urban and rural populations will suffer.
He concludes there are few choices for accessing prescription drugs in rural America. In addition to having a lower selection of pharmaceuticals and medical supplies, independent pharmacies are open for fewer hours than significant chain pharmacies.
- Cornell University. Rite Aid closures will harm those who need pharmacies most.
- CBS News. Why so many drug stores are closing.
- McKinsey & Company. Meeting changing consumer needs: The US retail pharmacy of the future.