Ailing US drugstore chains close many locations

US drugstore chains are closing hundreds of key locations due to slowing sales, fewer prescriptions being filled, and rising thefts, leaving some small communities without nearby access to essential medicine.

Rite Aid, one of the country's biggest pharmacy chains, with approximately 2,200 stores in 17 states, filed for Chapter 11 bankruptcy on Oct 15. It will close 154 stores in more than 10 states, it announced on Oct 18.

The 61-year-old company has nearly $4 billion of debt and pays $200 million in interest a year, according to court documents. But it has secured $3.45 billion in new financing from some of its lenders. 

Rite Aid had more losses from this June to Sept 2 than it did during its previous fiscal year. It posted $5.65 billion revenue and a net loss of $1.02 billion. In 2022, it had $5.9 billion in sales and a net loss of $331 million.

It has also faced stiff competition from rivals CVS pharmacy, the largest US chain, and Walgreens, which are expanding their healthcare services. 

Rite Aid faced lawsuits that alleged it played a key role in fueling the opioid epidemic that swept through America, killing 645,000 people from 1999 to 2021, according to the Centers for Disease Control and Prevention. 

The drugstore closures mark a difficult time in retail for pharmacies as prescriptions make the stores most of their money, but drug and prescription prices have been lower in recent years, cutting into profits.

Walgreens announced that it will shut 150 stores in the US and 300 in the UK this year. It has already reduced store hours and cut corporate jobs in a first round of cuts aimed at reducing $800 million by 2024. 

Between 2018 and 2020, CVS closed 244 stores. In 2021, the company said it would close 900 stores by 2024.

When drugstores close in small towns or cities, it can be detrimental to older people's health if they can't get access to medicine and fail to take their pills, a 2019 study published in the Journal of the American Medical Association found.

The research noted that 1 of every 8 pharmacies that closed between 2009 and 2015 were in low-income neighborhoods or were independent.

Pharmacies that dealt with consumers on public insurance — which does not raise as much funds as private plans — were most likely to shut.

From 1980 to 2022, the number of independent pharmacies has fallen by nearly 50 percent, according to data from McKinsey and Co, a consultancy firm.

Amid the COVID-19 pandemic, drugstores were able to rake in cash by supplying vaccines and drugs associated with strengthening the immune system and warding off the virus. But the pandemic also caused foot traffic to drop, as customers stayed at home and didn't shop. 

After the pandemic, many drugstores have been battling large-scale theft — dubbed "retail shrink" by the industry. Those losses cost retail stores $94.5 billion in 2021 —  up from $90.8 billion in 2020 — according to the National Retail Federation. 

Carol Spieckerman, a global retail analyst and president of consultancy firm Spieckerman Retail, told China Daily that "retail theft" is rife. 

Most of the country's largest pharmacies sell health aids and household items like shampoo and toothpaste, putting them in direct competition with Walmart, Target, Dollar Tree and Amazon, which often have lower prices.

To stay afloat, at least two pharmacies have started to offer primary care services in locations where consumers lack access to a doctor or pharmacy, according to CNN.

CVS acquired health insurer Aetna in 2018 in a $69 billion deal. Its in-store "Minute Clinics" offer urgent care; its "HealthHubs" provide medical care. 

In 2021, Walgreens took a majority stake in primary care network VillageMD, which provides healthcare services and access to a doctor. 

As of January, VillageMD had more than 680 locations across the United States,  including 200 next to Walgreens' drugstores. 

John Driscoll, executive vice-president and president of US Healthcare, Walgreens Boots Alliance said in a statement: "With Walgreens and VillageMD's combined expertise in pharmacy and primary care, patients have a convenient location in their community."

Agencies contributed to this story.