Closing drugstores leave pharmacy void

After decades of expansion, the nation’s largest drugstore chains are closing hundreds of stores as they reorient their operations against rising competition, a crush of opioid lawsuits and other forces — relegating many already-vulnerable communities into pharmacy deserts.

Rite Aid, which filed for Chapter 11 bankruptcy protection last week, CVS and Walgreens have signaled plans to collectively shutter more than 1,500 stores in the past two years. Public health experts have already seen the fallout, noting that the first neighborhoods to lose their pharmacies are often predominantly Black, Latinx and low-income.

“According to our estimates, about one in four neighborhoods are pharmacy deserts across the country,” said Dima Qato, an associate professor at the University of Southern California who studies pharmacy access and health equity. “These closures are disproportionately affecting communities that need pharmacies most.”

Pharmacies can be lifelines in rural or low-income areas, particularly in food deserts — areas that have limited access to healthy and affordable food. Pharmacists are often the most accessible health care professional for these communities, said Lorece

Edwards, a professor of public health at Morgan State University who focuses on health disparities.

But for national pharmacy chains, retrenchment has been a long time coming, retail analysts say, as increased competition, changing consumer behaviors, retail crime, staffing shortages and minimal store investment come to a head. They’re also feeling a comedown from pandemic-era sales of coronavirus vaccines, at-home test kits and other products.

“The economics of running those stores have just unraveled, and they’re not as profitable as they once were,” said Neil Saunders, managing director of the analytics company GlobalData Retail. “Retailers are looking to offload them.”

Pharmacies facing whiplash

In a different era, the corner drugstore was the model of convenience, the place to not only fill prescriptions but also buy snacks, birthday cards and household staples. In the 1990s and early 2000s, CVS and Walgreens started putting down roots across the country, edging out the independents. Today, the nation’s two largest pharmacy chains have more than 9,000 and 8,700 locations, respectively, and a combined $455.2 billion in sales in 2022.

But now consumers have more options, analysts say, many of which are cheaper and more convenient. They’re also more cautious as inflation — which shot up to 40-year highs in 2022 and remains elevated — weighs on discretionary spending.

“Now we’ve got players like Dollar General that’s moved in, we’ve got expansion of supermarkets, and Walmart is more of a destination in many of these areas. So that’s really cleaned off some of the trade of these stores,” Saunders said.

And moving more merchandise behind plexiglass barriers to discourage theft and violence has lent a dystopian feel to some locations. Front-of-store sales at Rite Aid fell 4.4 percent in the latest quarter. CVS saw a nearly 2 percent sales decline.

Meanwhile, retail giants like Amazon and Walmart have beefed up their pharmacy and medical treatment offerings, and typically offer more competitive pricing on such household essentials as toothpaste, paper towels and laundry detergent. (Amazon founder Jeff Bezos owns The Washington Post, whose interim chief executive, Patty Stonesifer, sits on Amazon’s board.)

Nor has the sector been immune to the labor unrest that set off a frenzy of activism from Hollywood writers to Detroit autoworkers. Pharmacy employees at CVS and Walgreens have staged walkouts, alleging that poor working conditions are putting them and patients at risk. Pharmacists, technicians and support staff claim that increased demands on understaffed teams — such as administering vaccines while battling hundreds of backlogged prescriptions — have become untenable and are impeding their ability to do their jobs responsibly.

Drugstore chains are “shooting themselves in the foot” by failing to invest in pharmacy staffing, Saunders said, because the pharmacy is the one thing about these chains that set them apart from other retail competitors. If service is bad or prescriptions are delayed, it will put customers off even further, he said.

The pharmacy giants have sought to shore up their positions through consolidation and by syncing up with insurance companies in ways that steer patients back to them. Aetna patients can go to any pharmacy, but they’ll get a better deal at CVS, which acquired the insurer in 2018. Blue Cross Blue Shield clients have a similar setup with Walgreens. Rite Aid, has no such relationship with an insurer.