Getting Drugged Out

With pharmacy chain Rite Aid filing for bankruptcy this week, and the other big pharmacy chains in CVS and Walgreens expected to close hundreds of locations, it's looking like the pharmacy may go the way of the video store by the end of the decade.

 

Drugstore chains for decades saturated US cities, suburbs and small towns with new stores.

Now, they are closing thousands of stores, leaving gaps in communities for medicines and essentials. Researchers find pharmacy closures lead to health risks such as older adults failing to take medication.

Rite Aid, the third largest standalone pharmacy chain, filed for bankruptcy Sunday and will reportedly close roughly 400 to 500 of its approximately 2,200 stores.

Rite Aid was undone by competition from larger rivals, its $3.3 billion debt load, and expensive legal battles for its alleged role in fueling the opioid crisis.

It comes amid walkouts by Walgreens pharmacists and technicians around the country and at CVS stores in Kansas City over low pay and understaffed stores.
Drug store struggles

Rite Aid’s bankruptcy reflects long-term struggles in the retail pharmacy industry.

The majority of drugstores’ sales comes from filling prescriptions. But their profits from that segment have declined in recent years because of lower reimbursement rates for prescription drugs.

The front end of drugstores, where they sell snacks and household staples, also face pressure.

CVS, Walgreens and Rite Aid are eliminating some locations as they face rising competition for these items from Amazon, big-box stores with pharmacies like Walmart, and Dollar General in rural areas.

Although drugstores benefited during the pandemic from people getting Covid-19 vaccines, fewer consumers visited stores to shop and prescription volumes fell because people were getting fewer elective procedures.

“The pandemic was not a strong time for drugstores,” said David Silverman, a senior director at Fitch Ratings.

Theft has become a problem for drugstores in some locations, and some stores have resorted to locking up products to prevent theft. But this has made the customer experience worse.

“Theft appears to be hitting drug retailers more than other categories,” Silverman said.

Drugstores are trying to pivot into the more lucrative health care industry in recent years and become primary care providers. CVS acquired health insurer Aetna, and Walgreens took a majority stake in primary care network VillageMD.

But this strategy requires fewer brick-and-mortar retail stores.

 

Walmart and Target were always threats to drugstore chains, but Amazon is going to finish them off.  Cheap prescriptions that you don't have to pick up and the pharmacist doesn't run out of? Yeah, I can already see how this is going to go.

 

On the other hand, if the Supreme Court gets rid of by-mail abortion pills, I can certainly see brick-and-mortar pharmacy companies ganging up on Amazon.

 

On the gripping hand, if your local chain drugstore isn't careful, they may put themselves out of business too if Congress and/or SCOTUS decide pills by mail is too dangerous. I don't see that happening, but who knows with this Congress, and this SCOTUS?