Competition and pandemic slowdown
Even before the pandemic, pharmacies were facing challenges, including shrinking reimbursements and below-cost prescription rates. When the pandemic hit, pharmacies saw reduced foot traffic due to stay-at-home orders, the delay of elective procedures and COVID-19-related job losses that caused millions to lose health insurance.
Then there are the competitive threats: a US e-commerce giant entering the pharmacy business, a large warehouse club retailer offering same-day pharmacy delivery and large chain pharmacies consolidating, increasing their footprint and market power.
Faced with all these challenges, many community pharmacy owners looked for exit strategies, leading to more consolidation.
Geographic restrictions on providing telehealth services as well as federal proposals for lowering prices are threatening the margins of many pharmacies. Although COVID-19 spurred the loosening of some digital pharmacy regulations — and telehealth itself is permitted in some form in all 50 states — 32 states are considered “restrictive” when it comes to pharmacy e-commerce services, with 26 states not allowing the practice at all, according to analysis by TelePharm.
In addition, public outcry for lower prescription costs and disparities in pricing between the US and other industrialized countries have spurred regulatory interest in price controls. However, regulations that may lower the prices for consumers don’t necessarily translate to lower costs for pharmacies.