Long before the coronavirus pandemic struck, the health of independent pharmacies was suffering.
A survey by the National Community Pharmacists Association last fall found the number of independent pharmacies fell by nearly 20 percent to 18,478 stores last year, down from 23,029 in 2012.
As a result, 10 million consumers lost access to the pharmacy of their choice. The closures represent a loss of nearly $17 billion in annual revenue, 15,000 jobs and millions in tax revenue.
For those retailers that remained open, owners told researchers their store’s financial health was poor.
They blamed pharmacy benefit managers (PBMs), companies that manage prescription drug benefits on behalf of health insurers and large employers, and negotiate with drug manufacturers and pharmacies to control costs; and direct and indirect remuneration (DIR) fees that cover money a Medicare Part D plan may collect to offset member costs.
PBMs and DIR fees all contribute to what these pharmacies say is low prescription reimbursement and putting them under severe economic pressure.
While the survey didn’t note it, perhaps the other major reason for the shutting of local pharmacies is competition for the nation’s largest chains and the growth of online prescription services.
Among the largest are CVS, Walmart and Express Scripts.
The loss of local pharmacies comes as baby boomers and their parents, typically the most frequent consumer of prescription medications, continue to be one of the fastest growing population segments in the U.S.
While that demographic would appear to make conditions ripe for pharmacy growth, DIR fees, low prescription reimbursement and competition are resulting in fewer pharmacy choices for consumers not more, researchers found.
Nearly 60 percent of respondents still in business say based on current prescription reimbursement, they are likely to close shop by 2021 while another 19 percent said they face an uncertain future.
Thomas Goetz, chief of research at GoodRx, a Santa Monica, California startup that tracks prescription drug prices, said its app has saved American consumers $10 billion.
“We try to make it simple for consumers,” Goetz told PYMNTS one year ago. “We want to make it as straightforward and clear as possible. We literally have billions of prices in our database. The idea is to optimize the best prices for a given drug, depending on the location of the user.”