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Shop NowYou may have noticed that finding a drug store gets harder every day. It’s no surprise that Walgreens, CVS and Rite Aid are closing stores by the hundreds. Most of us blame shoplifting. While that has a significant impact, it’s not the big reason pharmacies are going under. The real issue is “falling reimbursement rates for prescription drugs.” The scope of the problem is stunning. “We are at a point where the current pharmacy model is not sustainable,” Walgreens’ CEO Tim Wentworth recently announced.
America’s drug problem
We the People have a huge drug problem and it isn’t narcotics. Like we used to laugh back in the seventies, the only real problem with drugs is trying to find them. Things have changed a lot since then but we’re back to the same old problem.
Cannabis is pretty much legal now and cocaine is out of fashion. Meth and Opiods continue to have their fans but the demand gets smaller every day, one tainted dose at a time. Trying to get your hands on Lipitor or Albuterol is a different story. Finding a dealer is rough.
Drug stores are used to changing with the times. Back in the Leave it to Beaver 50’s, they were the local town hang out. The same pharmacist who compounded your medical prescriptions would also whip you up a soda.
This Is Not A Third World Country, This Is Democrat Run Oakland California
Residents Say Skyrocketing Crime Has Led To No Jobs & Business Including Starbucks, Walmart, Walgreens, In-N-Out, Dunkin' Donuts & Man More Have All Left
Where’s Nancy Pelosi & Gavin Newsom? pic.twitter.com/VJsXRaXdNT
— Wall Street Apes (@WallStreetApes) February 27, 2024
Since folks were there, they made it easy to go home with all sorts of miscellaneous dry goods of a medical and non-medical nature. Everything from tobacco to contraception to magazines. Back then, and until the liberal defunding of the police, the retailers made a comfortable profit above their income from dispensing legal drugs.
Lawlessness and anarchy of the new millennium put pharmacies on a razor’s edge of profitability. For years now the headlines have been full of stories about how “retailers have been hit by shoplifting and resorted to locking up items or closing high-theft stores.”
As Wentworth explains, the retail drug industry has much worse problems than that. Walgreens announced Thursday, June 27, that they plan to close a “significant” number of “its roughly 8,600 stores in the United States.” Competition and failed growth strategies hit them harder than looters.
Cried too much over shoplifting
Wentworth admits that their company executives “cried too much” over the business impact of shoplifting. They should have simply cut the non-pharmacy side of the business away totally and stuck to dealing drugs. Now, they can’t even rely on profit as a drug dispenser.
CVS has been closing stores by the hundreds and Rite Aid filed for bankruptcy. The whole industry is struggling “because of falling reimbursement rates for prescription drugs, according to analysts who cover the industry.”
Filling prescriptions has always been the bulk of the drug store business. Insurance companies are stiffing them on reimbursement, while higher fees are taking away the little profit they can still squeeze out.
San Francisco: A man robbed a Walgreens this week by going behind the counter where the staff were & stuffing items in his bag. A customer records him before being hit, leading to a scuffle. The robber then grabs bananas & throws it at the man. pic.twitter.com/le9txsrTbl
— Andy Ngô ????️???? (@MrAndyNgo) March 4, 2022
When the customer gets a receipt, it shows a price for the drugs. The customer doesn’t pay it, their insurance company does. What they don’t do is pay the price charged.
The retailer gets a check for whatever the insurer feels like paying. The reimbursement is “largely determined by pharmacy benefit managers, known as PBMs, which negotiate rebates from drug manufacturers to insurers.” The trouble is that they got greedy.
“PBMs have been cutting reimbursement rates to boost their own profits.” They’re about to learn another big lesson from the seventies. “Nothing from nothing leaves nothing.“
