Q&A: Pharmacy Closures, Openings Persist Despite PBM Influence

The general knowledge regarding pharmacy benefit managers (PBMs) and their influence on prescription drug benefits has been increasingly available in recent years due to scrutiny from independent pharmacists and industry advocates. However, amid increasing drug prices and PBM control, billions of patients worldwide are still able to access their local pharmacy and the medications they dispense.

“I fundamentally disagree that there's this [pharmacy] decline, because there's 4 billion prescriptions dispensed annually in the United States, and people are able to get medications,” Joey Mattingly, PharmD, MBA, PhD, told Drug Topics. “I've not seen evidence to show that individuals across the US do not have access to pharmacy services.”

Mattingly is an associate professor and vice chair of research at the University of Utah College of Pharmacy, and he recently joined us to discuss a recent study he co-authored titled “Community Pharmacy Turnover and Context of Openings and Closings by Ownership Type.” The article explored pharmacy turnover rates by independent and chain locations and discussed the market trends that contributed to closures or openings since 2010.

"I don't know what the right answer is—I just know if you got rid of the PBMs tomorrow, pharmacies would still open and close for different reasons," said Mattingly. | image credit: volody10 / stock.adobe.com

He joined us to dive deeper into results of the study and explained where PBMs fall within pharmacy turnover trends, tapping into both his pharmacy- and business-related acumen to highlight the ongoing, community-impacting trends behind retail pharmacy.

READ MORE: Independent Pharmacies Opening, Closing More Than Chain Storefronts

Drug Topics: How have trends between independent and chain pharmacies differed in regard to openings and closures, and what are the underlying market mechanisms that perpetuate these differences?

Joey Mattingly: It can be good and bad. When we think about treating these businesses as retail businesses, that may sound all well and good for grocery or for a clothing store or a general supply store. But in the case of pharmacy, we are health care providers as well. There's evidence. We've led studies that look at things like medication adherence after a closure actually can drop and it can hurt patients. It's hard for us to look at this as a retail market, because the closing can actually lead to bad patient outcomes. It's not the same as a general store, sporting goods store closing.

When we look at independents versus chains, you can probably go into a few things. A chain pharmacy, as it opens a location, likely will give that location several years. Because they have so many other locations, they could maybe stand to lose money until it eventually becomes profitable, and maybe weather the storm, if you will. Whereas an independent pharmacy, if it's a single location, an owner taking a risk on a new business, they may not have the capital to weather a storm those first 3, 4, or 5 years. Maybe they planned out 3 years and thought they'd be profitable, and they weren't, so then they had to make the decision by year 4 or 5 to close. That's one hypothesis.

Another hypothesis may just be, you know, a small business. Say I started a small business and it was successful, one of my options is to sell to another chain or sell those files, to build it up to a place where, maybe I invested $500,000 into it, and now the pharmacy is worth $2 million. It's not crazy for me to sell that asset and start another business. It's not a crazy thing to do from a business perspective. There could also be strategies where you buy and sell, whereas a chain location may not have that same focus. Those are just a couple hypotheses.

Obviously, from the closure perspective, independent pharmacies, I think, are going to face more pressures in terms of not having the size and scale of the bigger chains; not having an affiliation, like one of the largest chains, CVS, is affiliated with a PBM. I think those are difficult competitors for an independent pharmacy that doesn't have those same relationships.

Drug Topics: Where do PBMs fall in line amid these pharmacy churn rates and trends? Do results from your study support sentiments of PBMs being the main catalyst of a declining pharmacy industry?

Joey Mattingly: There's a lot to unpack there. I fundamentally disagree that there's this decline, because there's 4 billion prescriptions dispensed annually in the United States, and people are able to get medications. I've not seen evidence to show that individuals across the US do not have access to pharmacy services. If you go across the seas, if you go into the United Kingdom or France, as two examples, in very recent years, have had major issues on the community pharmacy side. Pharmacies have been very frustrated with their payments, their inventory, drug shortages, and that sort of thing—similar complaints that we have in the United States. What does the UK and France not have? They do not have PBMs. The idea that the PBM is the causal, the only thing, is crazy. The evidence just doesn't support it.

Now, does a PBM have major influence? Absolutely. They are the ones administering, creating the pharmacy network. They are creating the formularies and offering those to employers into Medicare Part D. Then, in several states, you have PBMs involved in Medicaid benefits management as well. So, are PBMs influential? Absolutely. Do they own their own pharmacies, like from the case of CVS owning 8000 to 9000 locations, plus mail order? Then, if you go outside of that, every PBM seems to at least own a mail-order pharmacy. They inherently are looking to capture and have that market share, and they have a lot of influence.

If I, Joey Mattingly, decided to put up a pharmacy in Park City, Utah, in order for the patients around me in this county to come to my pharmacy and use their insurance, then I would have to agree to the terms of that insurance company. That is no different than the auto industry. If you've had a car accident, your auto insurance will steer you to certain locations that have accepted their terms. It could be good and bad. I don't know what the right answer is. I just know if you got rid of the PBMs tomorrow, if you just magically wiped them off the Earth, pharmacies would still open and close for different reasons.

When I talk to independent pharmacy owners and I ask, ‘Okay, let's get rid of PBMs tomorrow. Will you make more money?’ Many savvy business people understand that the employer that employs 10,000 people in my area, they're not going to be willing to pay more. If you go to a major employer and say, ‘Are you wanting to pay more for amoxicillin and lisinopril?’ They're going to be like, ‘No, I can get it cheaper.’ You’ve got Walmart offering, low-cost generics. You've got Amazon now offering what they're offering, Mark Cuban offering a cash-only model for several products. So, there's a lot of competition, and it's crazy to think that those buying the drugs would just accept higher prices.

READ MORE: Independent Pharmacy Turnover Significantly Impacts Patient Outcomes

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Reference

Mattingly TJ, Sahu M, Anderson KE. Community pharmacy turnover and context of openings and closings by ownership type. JAMA Health Forum. 2025;6(8):e251988. doi:10.1001/jamahealthforum.2025.1988