Around the same time that the killing of UnitedHealthcare’s CEO put a spotlight on healthcare-related issues in the U.S., new research revealed that access to pharmacies has been on the decline.
In a study published Dec. 3 (the day before Luigi Mangione allegedly shot UnitedHealthcare CEO Brian Thompson) in the Health Affairs journal, researchers at UC Berkeley School of Public Health and the University of Southern California said that one in three retail pharmacies in the U.S. have closed since 2010. Closure rates were higher in Black and Latinx communities.
That’s significant because, as John August of the Scheinman Institute of Conflict Resolution at Cornell University explained, pharmacists are supposed to be “essential sources of knowledge and consultation for patients and consumers.”
“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 the new study’s 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.
Guadamuz and her fellow researchers found that a decline in pharmacies began in 2018, following a period in the 2010s when pharmacy openings outpaced closures. From 2008 to 2015, one in eight drugstores shuttered.
Per the McCourt School of Public Policy at Georgetown University, more than 131 million people – 66% of the U.S. adult population – use prescription drugs. Data from the U.S. Centers for Disease Control and Prevention indicates that the percentage of people in the country taking one or more prescription drugs stayed steady from 2001 through 2020. During that timeframe, the percentage of people taking five or more prescription drugs increased from 9.2% to 11.7%.
If more than half of the country is taking prescription drugs and rates of prescription drug use have stayed stable or increased, why have the places where they get those drugs been closing?
According to the new study, the decline has been “primarily driven by closures of chain pharmacies during an active period for industry consolidation,” that has “included the merging of large pharmacy chains with dominant pharmacy benefit managers (PBMs), which negotiate prescription drug benefits and steer patients to preferred pharmacies.”
Earlier this year, August of the Scheinman Institute said that consolidation in the pharmacy industry has been going on for the past 25 years. He said that the number of independent pharmacies has dropped by 50% since 1980 and that those have been replaced by pharmacies in large chains such as CVS and Walgreens, as well as big box stores like WalMart and grocery chains.
August also said that “most observers agree that the development of several large Pharmacy Benefit Managers (PBMs) are central to the transformation of the industry,” and added that the three dominant PBMs are UnitedHealthcare-affiliated Optum, Cigna’s Express Scrips, and CVS’s Caremark.
“The PBM has contracts with health plan sponsors which patients carry for prescription coverage. The PBMs are able to aggregate these covered lives under the health plans that they have contracts with,” August explained. “This means that they ‘corner the markets’ for sales of drugs. In so doing, the PBMs offer larger and larger discounts to suppliers, thus driving down the cost. By driving down the cost of the drugs they offer lower and lower reimbursement to the retail outlet. In time this has created a race to the bottom, as the reimbursement for drugs is so low that the margins are too low for the pharmacy to operate.”
While the PBMs make large profits in this system, it leaves retail pharmacies in a tough position and working conditions have suffered, August said. He noted that stress in the retail pharmacy field has resulted in pharmacists dealing with burnout and even walking out of their jobs.
“The call for increased regulatory oversight of PBM business practices is overwhelmingly welcomed by physicians as a check against possible anticompetitive harm resulting from low competition and high vertical integration in the PBM industry,” said American Medical Association President Bruce A. Scott, M.D., this September. He added that a recent AMA analysis warrants attention from Congress.
Researchers who worked on the study published this month in Health Affairs 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. They found that from 2018 to 2021 alone, the number of pharmacies declined in 41 states.
Nearly one third of counties in the U.S. experienced a net decline in pharmacies from 2010 to 2021. Those closures impact an estimated 91.6 million people. In seven states (Illinois, Maine, Mississippi, New York, Pennsylvania, Rhode Island, and Vermont) more than half the counties experienced a net decline.
“At the community level, pharmacy closure rates were higher in predominately Black and Latinx neighborhoods – 37.5% and 35.6%, respectively – than predominately white ones (27.7%),” said UC Berkeley. It added that “struggles of independent pharmacies, which were more than twice as likely to close as chain stores,” may have especially impacted those communities.
Looking to the future, the study authors said that thousands of pharmacy closures are expected in the coming years. However, they said their research provides a roadmap for crafting policies to mitigate the potential harm of these closures.
“As highlighted in a recent Federal Trade Commission 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 these preferred pharmacy networks to encourage patients to visit certain locations, UC Berkeley explained. Going forward, the researchers suggest that federal and state policymakers consider policies that would increase participation of independent pharmacies in preferred networks, including a mandate that Medicare and Medicaid plans give preferred status to pharmacies at heightened risk of closure or those in “pharmacy deserts” where closures have already taken a toll.