For decades, drug store chains have been a ubiquitous presence in US cities, suburbs, and small towns, but a recent trend of closures is leaving communities with gaps in essential services. Rite Aid, the third-largest standalone pharmacy chain, recently filed for bankruptcy and plans to close around 400 to 500 of its approximately 2,200 stores. This move is attributed to competition from larger rivals, a significant debt load of $3.3 billion, and expensive legal battles related to its alleged role in the opioid crisis.

The struggle in the retail pharmacy industry is not isolated to Rite Aid, as CVS, Walgreens, and other chains are also facing challenges. The majority of drug stores’ sales come from filling prescriptions, but profits from this segment have declined due to lower reimbursement rates for prescription drugs. The front end of drug stores, where snacks and household staples are sold, is also under pressure from competition with online retailers like Amazon, big-box stores with pharmacies such as Walmart, and Dollar General in rural areas.

While drug stores saw increased business during the pandemic with the distribution of COVID-19 vaccines, fewer consumers visited stores for shopping, and prescription volumes decreased as elective procedures declined. Theft has become a notable issue for drug stores in some locations, leading to the locking up of products to prevent theft, which has negatively impacted the customer experience.

In an effort to adapt to changing market dynamics, drug stores have been attempting to pivot into the more lucrative healthcare industry and become primary care providers. CVS acquired health insurer Aetna, while Walgreens took a majority stake in primary care network VillageMD. However, this strategy requires fewer physical retail stores.

The closure of retail pharmacy chains has contributed to the emergence of “pharmacy deserts,” leaving voids in communities, particularly affecting lower-income households. The closure of pharmacies disproportionately impacts independent pharmacies and low-income neighborhoods, as revealed in a study published in the Journal of the American Medical Association. The study found that pharmacies at the greatest risk for closure are those with a large customer base on public insurance, which has lower reimbursement rates than private plans, as well as independent pharmacies.