Coming less than a week after the conclusion of the NACDS Annual Meeting, the demise of Rite Aid brought additional urgency to the task of addressing issues that, depending on their business mix, threaten all pharmacy operators. Rite Aid, the nation’s third-largest drug chain, entered Chapter 11 for the second time in less than two years on May 5, at the same time signaling its intention to sell all its assets.
To be sure, many of Rite Aid’s troubles were of its own making. Stretching back more than a quarter century, the accounting fraud on the part of then CEO Martin Grass and other members of the management team pushed the company to the brink of bankruptcy, a position from which it never fully recovered. “We have continued to face financial challenges, intensified by the rapidly evolving retail and health care landscapes in which we operate,” current CEO Matt Schroeder said while announcing Rite Aid’s latest Chapter 11 filing in federal bankruptcy court in New Jersey.
The broader problems that Schroeder alluded to pervade the pharmacy sector. They pose a particular danger to drug stores — both chain and independent — which derive 70% or more of their sales from prescription medications. The relentless downward pressure that pharmacy benefits managers have applied to profit margins on prescription medications — coupled with declining front-end traffic, increasing retail theft and heightened omnichannel competition — put drug chains in a precarious position, one that their questionable decisions over many years helped to create.
NACDS and the companies it represents (supermarkets and mass merchants with pharmacies as well as chain drug stores) are tackling those problems head-on, aggressively promoting policy changes that will mitigate the financial challenges facing the industry, while unlocking its potential to play a bigger part in the nation’s health care system. Is the glass half full or half empty?
“I’m an optimist at heart,” Kevin Host, senior vice president of pharmacy at Walmart and outgoing NACDS chairman, said at the Annual Meeting. “I believe our future is bright — but we need to match our optimism with advocacy, our potential with policy and our belief with bold action. So my challenge to you is this: go back to your teams and ask, ‘Are we doing enough?’ Because what’s at stake isn’t just the future of pharmacy — it’s how Americans access health, wellness and care.”
The moves championed by Host need to start with persuading Congress and President Trump to enact meaningful PBM reform and expand patient access to services provided by pharmacists. Industry advocates have pursued those goals for many years. NACDS president and CEO Steve Anderson told attendees at the Annual Meeting that the time is now to bring the campaign to a successful conclusion.
Referring to legislation intended to ameliorate PBM business practices that have proven especially onerous for pharmacies filing prescriptions under Medicare, he said, “My message to Congress and to the Trump administration is this: Just ‘call the vote.’ Vote on PBM reform now — with no distractions. Congress has done the work. Reforms are ready.”
The remarks came after last December’s failed bid to include PBM reform in the Continuing Resolution to fund the federal government. The provision appeared to have strong support in Congress, until a post on X by Elon Musk upended the consensus.
Anderson also pushed for funding for expanded scope of practice: “To show how ridiculous our nation’s health care system is, seniors in Medicare cannot access many pharmacist services allowed by state law — because there is no Medicare payment mechanism.”
Enactment of those measures would go a long way toward bringing about the vision outlined by Rick Gates, the association’s new chairman and senior vice president and chief pharmacy officer at Walgreens. “Pharmacies can no longer simply dispense drugs,” he said. “We must become comprehensive health and wellness destinations that balance offering personalized, in-person care and front-of-store needs while offering the convenience of digital-forward solutions. Together, we’ve got a real opportunity to reimagine the retail pharmacy model.”
If those bills stagnate, pharmacy will continue to struggle, and the pace of store closures, which has reached almost four per day, will accelerate. More than 5,800 prescription counters across the country have been shuttered since 2018, resulting in the proliferation of pharmacy deserts. While the industry waits for legislative relief, supermarkets and discounters are best positioned to weather the storm, balancing profit pressures in pharmacy with a broad range of product categories, as well as capitalizing on the burgeoning Food Is Medicine trend.
Without meaningful progress on PBM reform and funding for services beyond dispensing, there’s no end in sight to the problems now plaguing pharmacies in general and drug stores in particular.•
