Pharmacy closures have surged over the past decade, leaving low-income and rural communities grappling with dwindling access to essential medications. From 2011 to 2021, nearly 30% of U.S. pharmacies shut their doors, with independent stores disproportionately affected, according to a recent report published in Health Affairs.
The data highlights a stark divide: counties with high poverty levels experienced a net loss of 34.3% of pharmacies, compared to a 28% decline in wealthier areas. Independent pharmacies fared worse than chain stores, shuttering at nearly double the rate, with 38.9% closing over the decade.
“Of the 88,930 retail pharmacies operating between 2010 and 2020, 29.4% had closed by 2021,” said the report’s authors, Jenny Guadamuz, Caleb Alexander, Genevieve Kanter, and Dima Mazen Qato. “The risk for closure for pharmacies in predominantly Black and Latinx neighborhoods was higher than in White neighborhoods.”
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Rural areas bore the brunt of the closures, with some counties losing every pharmacy. New York saw the sharpest decline, with 43.6% of its pharmacies closing, followed by Mississippi (43.3%) and Rhode Island (42.8%). States like Texas and Florida, however, managed net gains, with both states seeing slight increases in total pharmacy locations during the same period.
The authors of the report found that mounting economic pressures were the main causes of closures in the last decade. Consolidation among pharmacy benefit managers, restrictive reimbursement policies, and rising operational costs hit smaller pharmacies particularly hard. Preferred pharmacy networks—often excluding independents—further exacerbated the problem, forcing many to close their doors.
To address these challenges, the researchers urged policymakers to implement measures to increase the participation of independent pharmacies in Medicare and Medicaid preferred networks and raise public insurance reimbursement rates for at-risk pharmacies. These steps, they argued, could help sustain struggling businesses in underserved areas.
The Health Affairs report coincides with announcements from retail giants CVS and Walgreens that they plan to close more than 2,100 locations by the end of 2025. Walgreens, which is also considering the closure of an additional 800 stores, attributed the move to declining prescription reimbursements and rising competition—an issue also noted by CVS executives.
For real estate stakeholders, the contraction of pharmacy networks highlights not only the challenges of maintaining local health infrastructure but also the potential to repurpose spaces. The future of the sector hinges on how both chain and independent operators adapt to declining brick-and-mortar revenues and increasing competition from e-commerce players like Amazon, which is now a growing force in the pharmacy industry.
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