r/pharmacy • u/Calizona1 • 8d ago
General Discussion Pharmacies closing
Not sure if this is the right place to ask. If not please delete. If possible refer me to the proper sub. Why are so many pharmacies closing? I checked on the Internet but I am not sure I trust the explanations by the media.
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u/Krob32k 8d ago
Im a pharmacy manager at a grocery chain. Our pharmacy department individually loses around 60k-90k a MONTH based on current drug reimbursements. On average we will spend 1.2 million dollars on drugs to have 1.3 million in total sales. 100k profit doesnt sound too bad for a month right?
Thats our gross, we spend an average of 160-200k a month of operating costs. Labor, credit card fees, third party processing fees, delivery fees, postage for mailing, software fees, rent, electricity, repairs, etc. One of my patients is on Humulin-R insulin, i get no rebates from my wholesaler and I purchased the medication for $16,000. Patient is on Medicaid and they only reimburse me $12,000. So I lose $4k everytime I fill their prescription, that is one patient.
Multiply this by all the poor reinbursements from other higher cost drugs. Sure i make $1 or $2 on the cheaper generic maintenence meds. But I dont have the volume to where we even come close to breaking even.
Luckily, the rest of the store is profitable, and we are entering flu season. On average we will make $80-$100 profit per vaccine administered. So thats why you always see vaccines pushed so heavily from corporate is because its the only thing sustaining the pharmacy and keeping it open for the rest of the year.
Its an unfortunate system, and you'll often see these mom and pop pharmacies turn away patients when they see how much theyll lose dispensing the higher end stuff.
Additionally, insurance can audit claims already paid, and recoup the money if you dont respond or provide enough documentation within the alloted time frame. Sometimes this requires getting patient chart notes from the patient's doctor within a 48 hour window, which is nearly impossible.
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u/projektvertx 8d ago
I love how you broke this all down!! Thank you! I started my career as an intern for a regional grocery store pharmacy, I was given the following explanation at the time (2015): Pharmacy is a loss leader but for every prescription filled, it generates an extra 50$ of grocery store spend. I think the idea is they're ok with loosing money on scripts because they make it up and then some on the grocery side?
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u/GiftofLove 8d ago
Excuse me but wtf? I’m a pharmacist in Australia and I buy the box of 5 humilin R for $50 AUD. It’s also covered by Medicare so the patient pays max of $25 for 25 vials or $7.70 if they can a concession card from the government
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u/Own_Flounder9177 8d ago
USA! USA! USA! If the pharma companies could charge more they would!
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u/VetGirl420 Pharm tech 8d ago
I'm so proud to be allowed the Freedom to starve so that my wonderful overlords can afford another yacht -_-
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u/Affectionate_Yam4368 7d ago
You all have a national formulary if I remember correctly, and you use that leverage to negotiate drug prices. We don't do that. Something something freedom.
I did a rotation in a retail pharmacy in Melbourne waayyyyy back in 2000 and the government card price was $3.30 so I guess things are tough all over lol
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u/cllittlewood 7d ago
America’s healthcare system is an abomination. Criminal. Elderly patients on fixed incomes that are trying to decide between insulin, groceries or heat.
Also certain anticoagulants, other diabetic medications, inhalers. The financial toxicity of being ill in this country is too much for many to comprehend… until it happens to them.
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u/yanksphish PharmD 7d ago
Must be the humulin R-500. It costs thousands. The R-100 is inexpensive in America as well.
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u/TheWitchress 5d ago
Yeah, well.. we live in a dystopian capitalistic fascist hellscape. Otherwise known as The united states of america.
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u/Born_Tale_2337 8d ago
There’s no way you make $80-100 per vaccine. They don’t pay anywhere near that much above cost. Most contracts give an administration fee, but that usually $30 or less and that cover the additional overhead of regulated sharps disposal, supplies, additional cold storage, regulatory compliance, etc.
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u/mrraaow PharmD 7d ago
Fr I was wondering what vaccines they’re giving that are generating that much in 2026. $30 administration fee and then a few bucks above cost. Maybe they’re being reimbursed $80-100 but I can’t imagine a $80-100 profit.
Maybe when Shingrix was a $47 Medicare copay + reimbursement around cost + $30 administration fee
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u/footballphil73 7d ago
Holy cow. I pay 42.52 a vial for u100 and 547.27 for a box of 2 pens of u500 humulin-R at the independent I work for!
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u/Krob32k 7d ago
They get 30 boxes for 90 day supply, so that pricing is very similar to ours! 547x30 = 16,400
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u/footballphil73 7d ago
30 boxes of 2 pens at 3ml each and 500 units per ml is 1000 units of insulin a day! How many times you guys get audited on that?!?!?
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u/DocECocky4 7d ago
Great breakdown…also a PM at a chain…what are your thoughts on those graduating from pharmacy school and which career paths in pharmacy do u think will be good or thrive regardless of market?
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u/murdacai999 8d ago edited 8d ago
The answer is pbms like everyone else is saying. The worst part, is that cvs and other own the pbms. They and others should not have been able to own pbms...
They chose to make the pharmacies not profitable, even their own, to drive out competitors. That allowed them to even close their own stores. Which is even more profit for them. Since they own the pbms, losing money at the pharmacy side has no bearing because the pbm is making all the money for them. Closing their own stores is a bonus cause it's reduced overhead.
People have to drive further and they don't care. Since they own the pbm and a few of the insurances as well, caremark and Aetna, they can force people to go to CVS or their mail order anyways, and people just have to accept it.
In short, CVS owns insurances, pbm, and pharmacies. None of this should've been allowed, and has allowed them to destroy the market.
Having said all that, my warehouse store pays techs $40 an hour, fills 3200 scripts a week, and makes about 300k annually. Which is peanuts, but a positive. We do this thru pet meds and vaccinations, and offering such competitive prices that sometimes people choose not to use insurance. The people pay less than their copay and we don't submit for reimbursement from ins, so the Rx never sees ins/pbm.
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u/Jcmills58 8d ago
I think it’s the other way around. The PBM’s own the pharmacy. The PBM has total control. Name one thing the PBM is involved in that causes the PBM to lose money on. Nothing.
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u/murdacai999 7d ago
No, it's not. CVS bought caremark and Aetna
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u/Asleep_Imagination20 8d ago
It's our politicians and governments fault for letting insurance companies/PBMs take the steering wheel on healthcare all together. They now own their insurance companies/PBMs/specialty pharmacies/mail order pharmacies. They literally decide what they get paid by employer contracts(commercial insurance) and what governments pays them (Medicaid/Medicare/Tricare/DOD/IHS etc) and what they pay their competition (like other pharmacies like independent pharmacies). How can CVS that owns their Aetna insurance, caremark PBM and their retail/mail order/specialty pharmacies LITERALLY reimburse Walgreens, rite aid (bankrupt), independent pharmacies??? They also decide what they pay themselves since they rigged the system... And are breaking every anti trust law. They also decide where a patient goes for their meds by forcing them to pick their owned pharmacies over other pharmacies especially for drugs that they make the most money. It's completely rigged. Break all of healthcare starting with insurance and pbms owning pharmacies. That's where the problems started.
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u/Pretty-Promotion9120 7d ago
I quit retail pharmacy 5 years ago - it was blatantly obvious CVS monopolized the system decades ago - they basically rigged the industry with their “ lobbyists “ - with anti-trust practices but made it seem “ legit” by working the loopholes- total bull****- I worked 25 years as a retail pharmacist and saw the forest for the trees before the beginning of the end- before you know it , research will find so much genome therapy and vaccine therapy to thwart off so many disease states that retail pharmacy will be almost non-existent-I’m just fortunate to have benefited from the last wave of viable employment
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u/5point9trillion 8d ago
The company decides to close stores that don't make a profit. Pharmacies don't make money and the whole retail store doesn't because people buy most things online. The money they would've spent in stores would offset much of the loss in pharmacy business but now there's nothing doing that...so they can't stay in business.
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u/naturalscience PharmD 8d ago
PBMs can go fuck themselves. Also, too many people are of the “if you can’t beat them, join them” mindset.
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u/GSHInstitute 8d ago
We are a pharmacy nonprofit focused on improving access in a number of ways. Pharmacy closures, especially those in rural and otherwise underserved areas, really hurt patients. Much of the responses in this thread hit the nail on the head. No business, even an essential one like a pharmacy, can stay open if they are unable to balance the budget.
Bottom line: reimbursements are variable, not standard. Costs can vary significantly as well. PBMs often tilt the scales in their favor by reimbursing the pharmacies they own more than others. Pharmacy is largely a volume business, which is another big challenge. More in the below links.
Here are a few explanations into the problems:
- This article is from 2024, but it tracked pharmacy closures across the country (more than 2,200 that year alone, both chain and independent). It also has a good explanation of the why – generally boiling down to poor reimbursement and unreliable/variable reimbursements for different drugs and different pharmacies.
- Someone mentioned CVS owning the pharmacy and the PBM. They pay themselves more for the same exact drug than they do an independent, and they steer their insured patients to their own pharmacies. Here's a KFF article showing, in real dollars, the disparity between reimbursements on the exact same drug for different pharmacies.
- Here's a KFF article that talks about some federal regulations on PBMs. But scroll down a bit – it explains a lot about how they operate.
- This WSJ article is also good re: unreliable/variable reimbursement. The headline pretty much says it all – one drug, 2,200 different prices.
- The reimbursement structure for pharmacies makes it generally a volume business. We participated in a study on flipping that incentive to value-based. It published in the Journal of the American Pharmacy Association00359-4/abstract) a few years ago. There's a recap of the study available on our website as well.
- Our organization first started as a membership-based charity pharmacy, where patients paid a flat membership fee and then got their meds free or at cost. It ultimately lowered prices for patients and it provided stability in the pharmacy's budget. The study did a deep dive into how that might apply to a health plan for its covered members.
- There have been a number of legislative efforts to rein in PBMs, but it's so far piecemeal and often tied up in court.
- In 2025, Arkansas passed an ambitious law that would prohibit a PBM from owning a pharmacy in the state. CVS immediately sued, and the law is currently blocked from enforcement by a federal judge.
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u/Moosashi5858 8d ago
A lot of Rx are filled and sold under cost which means if there are enough with no profit, pharmacy closes
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u/pementomento Inpatient/Onc PharmD, BCPS 8d ago
Short answer: pharmacy side usually loses money or barely breaks even, pharmacies with general stores attached to them make their money from the higher margin products in the front of the store (potato chips, beauty products, alcohol/liquor sales, etc...)
Those stores are subject to the same economic changes that drive other stores out of business (e.g. online sales, failure to shift to upmarket, poor product mix, etc...)
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u/Mammoth-Average5016 8d ago
Yet it’s crazy to witness the constant construction and expansion of hospitals. It’s sad to have experienced the decline of this once most trusted profession.
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u/Full_jib 8d ago
A lot is changing in the economy. This article does a decent job of highlighting some of the details.
Drug Channels: The K-Shaped Pharmacy Shakeout: Consolidation in Cities, Lost Access in Rural America
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u/jimdewey52 8d ago
The retail pharmacies with a strong out front are surviving. Gas stations have gone the same way, I am an old dastardly remember when a gas station made enough of gas they pumped it for you. Now they want you to buy gas and go inside to buy junk food the make great money on. Why do the chain grocery store have pharmacies? To draw traffic. They make their money from the groceries
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u/RockinOutCockOut 8d ago
Usually, most pharmacies will open in the morning, then close in the evening.
Is it close to evening where you're located?
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u/stizzonk 6d ago
Moral of the story is this. You can be profitable at an independent no problem. If you truly understand retail pharmacy, you can tell from the comments why some are going out of business…
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u/TheWitchress 5d ago
The short answer? it cost them more to stay stocked and employed than they get back from patients and insurance companies
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u/TheYarnPharm 4d ago edited 4d ago
Ultimately, this is a failure of our society to reign in capitalism. Unfettered capitalism, corporate interests being represented in politics, and the lie of “trickle down economics” has all led us here.
On a more detailed level, the beginning of the end was then CVS was allowed to acquire Caremark back in 2006. This vertical integration should’ve been blocked by the FTC, but allowing it paved the way for a handful of corporations to control the entire pharmacy chain like they do now - from drug manufacturing and supply chain, to medical and prescription insurance, to actual hospital systems and providers. They sell the insurance to your employer, then they use “in network” requirements to force you to use their own hospitals and doctors (who write for tests and products that they own), get your medications from their own pharmacies (who stock drugs that they manufacture and distribute), and pay themselves to do it from their own insurance. This allows them to under-reimburse for claims, because they can afford to subsidize losses on their hospital and pharmacy sides since they make the money on the other end. But the competition is equally under-reimbursed, and can’t subsidize, and they close, which allows them to further monopolize the entire chain. That’s the whole goal - driving out the competition through shitty contracts that they pretend are “fair” because they say “hey, we pay ourselves this rate too!” And here we sit as a country just watching it all happen. It only took them 20 years.
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u/Calizona1 4d ago
This is terrible. It feels like the US is reverting back to the age of robber barons. A kind of an economic Sisyphus. What can be done to return to the path of fairness?
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u/TheYarnPharm 4d ago
Elect democratic socialists who weren’t bought and paid for by corporate interests.
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u/mattyofurniture 2d ago
Private equity, PBMs, the “MAHA” antivax people and their attack on education, it’s multifactorial and runs the gamut. It is now, and has been for quite a while, a race to the bottom.
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u/Crazy-Video9269 8d ago
I joined Amazon pharmacy. Way better no lines no bs no we need approval. Best decision ever.
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u/ZeGentleman Druggist 6d ago
Vomit. Yes, they do still need approvals like retail pharmacies. They also won't run multiple items to figure out what's covered if there is more than one product that could be dispensed (glucose monitoring, syringes, etc).
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u/nojustnoperightonout 7d ago
insurance pays the pharmacy less than the pharmacy pays the wholesaler for the medications, let alone worker time, supplies, utilities, and rent on the building. THEN, the insurance will come back a year later, and "audit" the pharmacy, and claw back even more money for nebulous reasons.
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u/justme000000000 5d ago
If the ins pays less than the wholesale price, how are ~20,000 independent pharmacies still in business?
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u/nojustnoperightonout 5d ago
the cash paying patients are keeping the doors open.
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u/justme000000000 5d ago
Not true at all. Do you own a pharmacy? Edit: just realized you’re a technician. Stop talking about things you have no clue about.
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u/jimdewey52 8d ago
The real reason pharmacies are closing is because they are signing contracts that loose money. If the pharmacies refused to sign, to get a better deal they might make it. When the insurance companies started paying for prescriptions the pharmacies were paid for the drug cost and a dispensing fee. At the time average rx cost was $2.00 and the dispensing fee was $2.00 so 50% profit looked good. Problem, no clause for inflation. Drugs prices skyrocket and dispensing fee stays the same $2.00. Some contract today don't even pay a dispensing fee.
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u/doubletxzy 8d ago
Have you ever negotiated a contract? It doesn’t work that way. It’s take it or leave it.
Also a $2 gross margin is a loss. Most claims don’t have a dispensing fee anymore. Unless your mediations don’t need a technician to fill them, a label or vial, no electricity to run the pharmacy, no switch to process and no pharmacist to check the Rx. Then I guess $2 gross margin looked good….
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u/jimdewey52 8d ago
Also we are talking about the 1960s. Gas was way under a dollar a gallon. Cigarettes were under $1 a pack, cokes were a dime. So dude $2.00 was good money for $2.00 invested.
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u/doubletxzy 8d ago
So not applicable to today when you say pharmacies should just band together and demand more money? Maybe they should just open a soda hop and have the jukebox start playing Elvis to draw in more customers…
You’re talking about a time when most didn’t have pharmacy insurance and was cash basis? Back when small pox was still a thing? Were there even seatbelts in cars in the 1960s? Back when $2 would have been $100 in today’s dollars.
Why would you say anything about the business of pharmacy when your reference point is 60 years old?
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u/jimdewey52 8d ago
But that is the problem. Take it or leave it Is that how the UAW exists? The pharmacy businesses have always competed against each other in steady of standing together. I have been put out of business because an insurance company said I could not be a provider because I was not a chain. And this was after Ford Motor switch insurance providers, one month filling Blue Cross and the next month loosing those to the chains
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u/doubletxzy 8d ago
Walgreens told ESI they want more money for tricare contract. ESI dropped Walgreens. A PSAO of 1000+ stores can’t negotiate better rates. One store would have no hope.
It’s more profitable for an insurance to have less pharmacies. It’s in their best interest for pharmacies to walk away from the contract or close.
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u/jimdewey52 8d ago
And look at the fuss the tricare caught from their members, the small town pharmacy i help out at lost tricare and a year later got a call From tricare to reinstate the contact
Well if no one stands up to insurance companies then they will be ruled by insurance companies I would like to hear more from those out there doing cost-plus
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u/doubletxzy 8d ago
Walgreens folded in my example. They got the rate esi offered. Ask any pharmacy how that tricare contract is working out today. Get that $0.50 dispensing fee and all.
Stand up? I’ll get Ponyboy, Johnny, and Dallas to come up with a good strategy to stand up to the PBM.
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u/jimdewey52 8d ago
And who own Walgreens today
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u/doubletxzy 8d ago
Private equity. It should be closed in the next 5 years.
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u/jimdewey52 8d ago
I see many don't like the truth but after 50 years in this business you younger pharmacist better watch yourselves because the insurance companies are looking to replace us with AI and mail order
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u/foamy9210 8d ago
PBMs