Why Your Drugstore Is Closing

Swathes of drug stores across the U.S. are shuttering branches, with CVS, Walgreens, Rite Aid and independent pharmacies all announcing closures over the last two years.

The two largest pharmacy chains, Walgreens and CVS, have more than 8,700 and 9,000 locations across the country respectively. Rite Aid, while not as widespread, has 1,777 stores across 16 states. Immensely well known by the American consumer, all have been entrenched parts of the retail landscape in recent decades.

But the tide appears to be turning. In June, Walgreens announced the closure of 450 of its nationwide locations by August 2024, while a bankruptcy filing by Rite Aid includes plans to close nearly 200 stores.

CVS, which announced in early January that an unspecified number of closures at their Target locations will be complete by the end of April, revealed in 2021 that it had intentions to shut down 900 stores over three years. The retail giant has put the closures down to “realignment” that is “based on our ongoing evaluation of changes in population, consumer buying patterns and future health needs,” according to a statement seen by Newsweek, which has contacted all three chains for an up-to-date figure on branch closures.

Store closures in any retail sector are often put down to poor business or market health. But experts and analysts have painted a more complex picture of what’s happening in pharmacies across the U.S.

Why are Drug Stores closing?

Among the reasons for store closures are rising drug prices, lower staff enrollment, and historic opioid lawsuits, which have impacted each company’s financial standing.

Pharmaceutical industry giants announced they would push prices up starting this month in December. Pfizer, Sanofi, and Takeda Pharmaceutical are raising prices on 500 medications across 140 brands, according to a report by Reuters.

Brandon Newman, CEO of data analysis company Xevant, told Newsweek: “First and foremost, rising drug costs are a central concern. As prices escalate, both pharmacies and patients are increasingly burdened. This not only affects pharmacies’ ability to manage inventory efficiently but also places a significant financial strain on patients. The impact on the business health of pharmacies is undeniable.”

Newman describes the impact higher prices are having on citizens too, resulting in some unhealthy choices being made that naturally impact company profits.

“Moreover, these high prices are leading to decreased medical adherence, with many patients opting to reduce their dosage frequency or foregoing their prescriptions altogether,” he said. “This trend is deeply concerning, as it directly impacts patient health and outcomes.”

Unfortunately, this looks set to get worse, particularly in light of mass store closures. An August 2023 study in the Journal of the American Medical Association reported that those who face challenges in accessing pharmacies are prone to medication non-adherence and an increased likelihood of experiencing medical issues compared with those with more equitable access, which the study says adds “costs to the already overwhelmed health care system.”

The pharmacy sector is not immune to the challenges faced by other U.S. sectors in recent years, some of which have seen record breaking walk-outs and strike action due to complaints about working conditions and pay, most notably in the arts and motor sectors in 2023. Both CVS and Walgreens staff have protested harsh working conditions in the last six months.

“Another critical factor is the increasing incidence of overwork and burnout among pharmacists,” Newman said. “Pharmacists are on the front lines of healthcare, providing essential services, from dispensing medications to offering vital health consultations and vaccinations.

“However, the expanding scope of their responsibilities, coupled with the demands of an aging population, has led to heightened stress levels and burnout. This not only affects the quality of care provided but also contributes to operational challenges within pharmacies.”

Newman’s comments are backed by a new report from CVS Health regarding the future of community pharmacies. The report reads: “Despite increasing demand for services and opportunities for growth in community pharmacy, fewer people are drawn to the profession. Although 15,000 PharmDs graduate from pharmacy schools each year, enrollment has declined significantly over the years, and the industry is grappling with high levels of burnout.”

In terms of financial confidence, across Walgreens, CVS and Rite Aid, statements from the top brass differ in tone. A combined $455.2 billion in sales was made in 2022 between CVS and Walgreens, according to the Washington Post.

“Our performance this year has not reflected WBA’s (Walgreens Boots Alliance) strong assets, brand legacy, or our commitment to our customers and patients,” former interim CEO Ginger Graham said in a statement from October 2023.

A more optimistic statement came from Karen S. Lynch, CVS Health president and CEO, who said in November: “Our colleagues helped us deliver another quarter of positive results across our business areas. Despite a challenging business environment, we continue adapting to the changing needs of our consumers by connecting our care delivery capabilities in communities across the country, broadening access to care and lowering costs.”

In August, CVS cautioned its investors that increasing expenses in its pharmacy and insurance business would dent profit during the next couple of years. CVS underwent a restructure in 2023, leading to the elimination of 5,000 positions.

In October 2023, Rite Aid secured $3.5 billion in new financing to ensure liquidity throughout its bankruptcy proceedings. “With the support of our lenders, we look forward to strengthening our financial foundation, advancing our transformation initiatives and accelerating the execution of our turnaround strategy,” CEO Jeffrey Stein said.

Following widespread changes in consumer behavior during and following the coronavirus pandemic, bricks and mortar drug stores are also contending with innovative competition. As previously reported by Newsweek, Amazon Pharmacy is trialing one-hour prescription deliveries via drones.

“The economics of running those stores have just unraveled, and they’re not as profitable as they once were,” Neil Saunders, managing director of the analytics company GlobalData Retail, told the Washington Post. “Retailers are looking to offload them.”

On top of this, each of the three chains are currently dealing with payouts for opioid-related lawsuits. CVS and Walgreens, along with Walmart, paid $13 billion in a settlement to resolve lawsuits claiming they contributed to the opioid epidemic by dispensing opioid drugs despite obvious warning signs.

Similarly, Rite Aid’s bankruptcy filing comes amid a deluge of lawsuits, including one which involves the Department of Justice, related to selling prescription opioids.