Drug store closures are contributing to the emergence of pharmacy deserts across the United States.

• Rite Aid pharmacy closures have hit Midwest cities particularly hard.
• Up to 2,050 Walgreens stores could be shut down, the company has revealed.
• The decline in reimbursements is putting pressure on drug retailers, and some blame pharmacy benefit managers, who are the subject of a new FTC lawsuit, but PBMs are not the only reason for their difficulties.

New Lebanon, Ohio, with a population of 3,756, has three dollar stores, a Groceryland grocery store, a few fast-food restaurants, a public library branch, and a spirit-filled school system. However, it lacks a pharmacy.

In October 2023, Rite Aid announced it would close 800 stores, with Ohio being hit the hardest, with 180 closures planned, mostly in small towns or Rust Belt cities. Currently, Rite Aid has 1,700 locations, down from the 2,111 reported at the time of bankruptcy. The company stated it will emerge from bankruptcy with approximately 1,300 stores.

New Lebanon's Rite Aid closed in September.

"The absence of a pharmacist in my community is a cause for concern, as stated by New Lebanon Mayor David Nickerson," said the mayor.

Rite Aid prescriptions in New Lebanon were transferred to a pharmacy 30 minutes away in Dayton.

Nickerson, a newly elected official with a military background, recently conducted a thorough inspection of the Walgreens parking lot in Dayton, including strolling around the back of the building at night. Despite his conviction that the store was safe and clean, some residents of New Lebanon remain unconvinced.

Nickerson stated that many of our elderly residents feel uncomfortable venturing that far due to heavy traffic and unfamiliar surroundings.

Filling a prescription in New Lebanon, located on a busy road leading to Dayton, was never challenging.

"Joyce Dingman stated that there were three pharmacies in New Lebanon two years ago. However, last year CVS closed, and now Rite Aid is shutting down, leaving no pharmacies in the area."

They will travel to a nearby town to fill prescriptions at a Kroger pharmacy.

The outsized impact of the closings on Ohio was confirmed by a spokesman for Rite Aid.

Our spokesman announced that nearly all our stores in Ohio will close by the end of September as part of our Chapter 11 process to strengthen our company. There will be only four Rite Aids remaining in Ohio, down from over 140 before the latest round of closures.

While New Lebanon faces challenges in maintaining a pharmacy, it is not the only one. Experts suggest that the retail pharmacy industry is under pressure due to complex and lower reimbursement rates for medications, as well as increased competition for sales of items like candy and paper towels, which used to boost profits.

The pharmacy squeeze

The pharmacy benefit managers (PBMs) are being accused by some of causing pharmacy deserts, as the federal government sues the primary drug market's middlemen and the Federal Trade Commission alleges inflated prices on drugs like insulin.

Miranda Rochol, senior vice president of provider solutions at healthcare technology company Prescryptive Health, believes that pharmacy benefit managers (PBMs) are largely responsible for the current issues in the industry. According to her, PBMs have the ability to influence patient behavior by steering them towards their own pharmacies, increase their profits by doing so, and underpay community pharmacies.

In June, the FTC released a critical report on PBMs and their impact on Main Street pharmacies, which have been struggling due to decades of mergers and acquisitions. The report revealed that the three largest PBMs control almost 80% of all prescriptions filled in the US, setting the terms and conditions for access to prescription drugs for over 300 million Americans. The FTC found that falling reimbursement rates from PBMs were a significant factor in the financial difficulties of smaller pharmacies.

If the big three PBMs are not monitored, more pharmacy deserts will emerge, according to Rochol.

The three largest Pharmacy Benefit Managers (PBMs) are Caremark, OptumRX (a subsidiary of ), and Express Scripts, which is owned by .

Express Scripts' lawsuit against the FTC, filed in response to a report, was described by a spokesperson as unfair, biased, erroneous, and defamatory. The report, according to the spokesperson, wrongly concluded that PBMs inflate drug costs and harm independent pharmacies.

In the third quarter earnings call, Walgreens Boots Alliance CEO Tim Wentworth, who was previously CEO of Express Scripts from 2016-2021, discussed PBMs and stated that the company is actively engaged in discussions with its PBM and payer partners to align incentives and ensure fair payment.

Up to 25 percent of Walgreens' 8,200 stores may be closed, putting additional strain on communities without pharmacies. A Walgreens spokesperson stated that, despite their size, they are "independent" and face similar price pressures as smaller stores.

In Georgia, independent pharmacies in the CVS Caremark pharmacy network were reimbursed 67.5% higher on average than CVS Pharmacy locations and 51.9% higher than other chain pharmacies between 2023 and 2024, disputing claims that CVS is economically squeezing smaller pharmacies.

"Independent pharmacies are crucial partners in CVS Caremark's pharmacy networks, accounting for over 40% of in-network pharmacies, and CVS Caremark pays independent pharmacies more in total than chain pharmacies."

The CVS spokesman stated that CVS pharmacies are not serviced by Caremark and work with over 70 different PBMs. The spokesman also clarified that none of CVS's closings were related to PBM issues, but rather due to changes in consumer buying patterns and population shifts.

"According to Greg Lopes, spokesman for the Pharmaceutical Care Management Association, PBMs are reimbursing independent pharmacies at higher amounts than chain pharmacies, contrary to the claim that they are under-reimbursing them. However, he acknowledged that there are several factors contributing to pharmacy closures in rural areas, such as population declines and the increasing popularity of online pharmacies."

Data from the National Community Pharmacists Association illustrates the concern over PBM pricing.

Over 99% of pharmacies have experienced a reduction in the reimbursed dollar amount of prescribed medications at the point of sale. More than half of these pharmacies claim that insurance plans and their PBMs are reimbursing them less than the cost to purchase the drug for at least three out of every 10 prescriptions they fill.

The National Association of Chain Drug Stores is advocating for PBM reform legislation.

In 2022, NACDS' support for PBM reform led to CVS withdrawing from the trade association.

The vital role of the local pharmacist in Amazon era

Experts suggest that PBMs are not the only reason retail pharmacies are facing challenges.

If a neighborhood pharmacy closes, patients can explore alternative methods to obtain their medications, according to Dr. Colin Banas, the chief medical officer of health-care solutions company DrFirst.

If patients are unable to drive to a nearby pharmacy for urgent medications, they can consider utilizing prescription pickup and delivery services provided by ride-share companies such as Uber and Lyft, according to Banas.

Banas suggested that it's worth checking with local hospitals to see if they have in-house pharmacies that can dispense prescriptions, as some doctors' offices and urgent care centers stock certain medications.

Banas predicts that pharmacy deserts will increase, resulting in more apps and digitization.

Pharmacy deserts are becoming more frequent, so patients should monitor new digital tools and apps that will gradually fill some of the void, according to Banas.

Next year, Amazon will expand its same-day prescription delivery service to about half of the US.

Patient advocates say that technology can't replace humanity.

Dr. Tamera Hughes, an assistant professor at High Point University's School of Pharmacy, believes that the emphasis on PBMs, reimbursements, and profits overlooks the human aspects of the profession. She spent several years working at a community pharmacy in Georgia before entering academia.

Hughes argues that while PBM business models prioritize mailing medications to patients, the short-term savings may not outweigh the importance of the pharmacist-patient relationship.

Hughes stated that medication delivery diminishes the connection and relationship that pharmacists establish with the communities they serve.

Pharmacists have historically been great at holistically looking at someone else's health by getting to know their regulars, their needs, and their ailments. However, by removing one-on-one upfront engagement with the communities they serve, pharmacists are no longer able to provide a holistic approach to healthcare.

According to Hughes, a pharmacist frequently acts as a substitute doctor for individuals who cannot afford a medical consultation.

Hughes stated that at least five times an hour, he would walk from behind the counter to assist someone in picking out medication for their children, and they would ask questions to get the best over-the-counter medicine.

Neighborhood pharmacists can save greater strain on the larger health system by serving as a first defense against illness, but this line of defense is being lost as drug store chains like Rite-Aid close hundreds of retail locations.

The closings were aimed at making the company "more efficient," according to a Rite Aid spokesman.

The closure of Rite Aid pharmacy in New Lebanon has caused inconvenience for some residents and is a blow to the town, according to acting village manager Rob Anderson.

"Anderson stated that the departure of Rite Aid from New Lebanon gives the impression that the town is heading in a negative direction, even though its actions are not necessarily negative. However, it suggests that big corporations no longer value the town as much as they used to."