Millions Left Without Pharmacies As Closures Surge

Recent chain store closures have led to an “unprecedented decline” in pharmacies, according to researchers from USC and UC Berkeley.

• The rate of pharmacy closures has more than doubled in recent years, with approximately 1 in 3 pharmacies shutting down between 2010 and 2021, resulting in a significant reduction in pharmacy availability nationwide.
• About one-third of U.S. counties saw a net decline in pharmacies, with predominantly Black and Latino neighborhoods facing higher risks of closures.
• Independent pharmacies, often excluded from pharmacy benefit manager networks, were more than twice as likely to close compared to chain pharmacies.
• Policymakers should explore strategies to expand pharmacy participation in preferred networks, especially for Medicaid and Medicare Part D plans.

Pharmacy Closures Across the U.S.

Nearly one-third of U.S. retail pharmacies have shut down since 2010, with most states experiencing a significant decline in drugstores in recent years, according to a new study by researchers from USC and the University of California, Berkeley. These closures pose a serious threat to public health, making it increasingly difficult for people to access prescriptions and critical health services.

Published today (December 3) in the journal Health Affairs, the study examines the local and market factors driving pharmacy closures between 2010 and 2021. With thousands more closures anticipated in the future, the researchers provide insights to identify communities most at risk and suggest policies to help preserve access to essential pharmacy services.

“At the same time many states are making efforts to expand the scope of pharmacy services beyond dispensing drugs to include the provision of preventive and emergency care, we found that there are—for the first time for at least a decade—fewer pharmacies available to provide them,” said senior author Dima Mazen Qato, a senior scholar at the USC Schaeffer Center for Health Policy & Economics and the Hygeia Centennial Chair and associate professor at the USC Mann School of Pharmacy and Pharmaceutical Sciences.

Accelerating Closures and Industry Consolidation

For most of the 2010s, pharmacy openings in the U.S. outpaced closures. And in previous work, the researchers found that pharmacies closed at a much slower rate during the first half of the decade, with 1 in 8 drugstores shuttered between 2009 and 2015.

Their new study finds an unprecedented decline in the number of pharmacies began in 2018, primarily driven by closures of chain pharmacies during an active period for industry consolidation. This included the merging of large pharmacy chains with dominant pharmacy benefit managers (PBMs), which negotiate prescription drug benefits and steer patients to preferred pharmacies.

Disparities in Pharmacy Closures

Researchers identified pharmacies using a registry maintained by a national nonprofit and linked the data to county- and neighborhood-level data from the U.S. Census Bureau and the National Center for Health Statistics. Among their findings:

• Between 2018 and 2021, the number of pharmacies declined in 41 states. During the entire study period (2010-2021), nearly one-third of counties experienced a net decline in pharmacies, affecting 91.6 million people.
• In seven states, more than half of counties experienced a net decline in pharmacies: Illinois, Maine, Mississippi, New York, Pennsylvania, Rhode Island, and Vermont.
• At the community level, pharmacy closure rates were higher in predominately Black and Latino neighborhoods—37.5% and 35.6%, respectively—than predominately White ones (27.7%).

The last finding is partly explained by the struggles of independent pharmacies, which were more than twice as likely to close as chain stores. They were also much more likely to be in Black, Latino, and low-income neighborhoods, as well as those with disproportionate rates of people with Medicare or Medicaid coverage.

Impact on Marginalized Communities

“Our findings suggest that closures may widen health disparities in access to prescription and other essential pharmacy services, such as vaccinations and pharmacist-prescribed regimens, including contraceptives, medications for HIV prevention, and treatments for opioid use disorder,” said first author Jenny Guadamuz, an Assistant Professor at the UC Berkeley School of Public Health and the Health Equity Program Director for the UC-Berkeley Center for Health Management & Policy Research.

“Without safeguarding pharmacies in marginalized neighborhoods, expanding health care services at pharmacies may enhance convenience for more affluent populations while failing to address the health needs of communities disproportionately affected by pharmacy closures, particularly Black and Brown populations in low-income urban areas,” added Guadamuz.

Addressing the Closure Crisis

“As highlighted in a recent FTC report, a key factor contributing to the higher risk of closure for independent pharmacies may be their frequent exclusion from preferred pharmacy networks,” said Guadamuz. PBMs use preferred pharmacy networks to encourage patients to visit certain locations by offering lower cost-sharing or out-of-pocket costs. The recent mergers of large pharmacy chains and PBMs also likely contributed to low reimbursements from PBMs at these combined companies to independent pharmacies and rival chain pharmacies, the researchers added.

The researchers said federal and state policymakers should consider policies that would increase the participation of independent pharmacies in preferred networks. This could include mandating Medicare and Medicaid plans to give preferred status to pharmacies at heightened risk of closure or those serving “pharmacy deserts” with reduced access to pharmacy services.

In the commercial market, federal and state regulators should also consider requiring that PBMs’ preferred networks do not disproportionately favor pharmacy chains, including those part of the same company, the researchers said.

“Federal, state, and local policies and programs should consider targeted strategies, including increases in Medicare Part D and Medicaid pharmacy reimbursement rates, to protect critical access pharmacies most at-risk for closure, particularly those serving neighborhoods that are or are at risk of becoming pharmacy deserts,” Qato said.

Reference: “More US Pharmacies Closed Than Opened In 2018–21; Independent Pharmacies, Those In Black, Latinx Communities Most At Risk” by Jenny S. Guadamuz, G. Caleb Alexander, Genevieve P. Kanter and Dima Mazen Qato3 December 2024, Health Affairs.
DOI: 10.1377/hlthaff.2024.00192

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