When it comes to pharmacies, Zac Gilley has been around the block.
The 48-year-old East Toledo resident has been a customer of four pharmacies in as many years.
“I used Lifecare Pharmacy at Starr and Dearborn for years,” he said. “It was run by two brothers from Michigan. A lot of people went there, but they had to close because they said their expenses were higher than what they were taking in. They were never out of anything. They could fill anything in 10 minutes — very different from the mass market pharmacies. I was with them until they closed in 2021 or 2022 and sent all their scripts to Walgreens.”
That was the beginning of Mr. Gilley’s unexpected tour of the Toledo pharmacy scene.
He quickly became disenchanted with Walgreens because the pharmacy at his nearby store wasn’t always open during posted hours because of staffing problems. He was occasionally sent across town to a different Walgreens to fill a prescription.
Mr. Gilley then began getting his prescriptions filled at Meijer, but quickly became frustrated by their inability to fill his prescriptions promptly.
“I’d have to wait days for my meds,” he said. “Sometimes it would take up to a week.”
Mr. Gilley switched to the Walmart pharmacy less than a year ago and has been happy with the service he receives there.
“I’ve never had to wait more than a day for a prescription there,” he said. “And they’re very willing to work with you if there’s a problem with the doctor’s office in the way the prescription was written.”
Consumers becoming frustrated with the pharmacy business
Mr. Gilley’s experience is not unusual. Until recently, most Americans took for granted their ability to have prescriptions filled accurately, completely, conveniently, and on time. But both anecdotal commentary and consumer satisfaction studies show that the pharmacy industry is increasingly a source of consumer frustration.
Just ask Jennifer Rogers, a 46-year-old Toledo woman who works in the financial services industry.
“I was going to Walgreens locally, but they got so busy due to Rite Aid closing — customers from three Rite Aid stores all converged there,” she said. “One time they were out of stock on one of my meds and had no idea when it could be available.”
Rite Aid, which in 2023 was the seventh-largest provider of prescriptions in the country, closed all but four of its Ohio stores in 2024 as part of its bankruptcy liquidation. None of the remaining stores is in or near Toledo.
The closures sent many former Rite Aid customers like Ms. Rogers to CVS, Walgreens, supermarkets, and big-box pharmacies. But the sudden influx of customers at those outlets caused some to pursue other options, such as independent and online pharmacies.
Around the same time, upstart online providers of generic drugs were offering medications at prices lower than those of many brick-and-mortar locations and were expanding their foothold in the pharmaceutical market.
Ms. Rogers searched around and found that her medication was available through Amazon Pharmacy. Her refrigerated prescription is now delivered to her door in cold packs.
“You can set it for automatic refills, and it will automatically be shipped to you,” she said. “They bill your insurance.”
“I think this is the way the future may go,” she said. “The only thing I would use a local pharmacy for is if I needed something immediately, especially if I was very sick, but if I can wait a few days, I’ll use Amazon.”
Consumers sour on drugstores but sweet on online options
Mr. Gilley’s and Ms. Rogers’ experiences are part of a national trend. According to J.D. Power’s 2024 U.S. Pharmacy Study, overall satisfaction with online pharmacies is rising steadily, while chain drugstores have seen their satisfaction scores slip. The report cites long wait times, lower levels of trust in pharmacists, and difficulty in ordering prescriptions as key problems.
Another Toledo resident, 84-year-old Ray Erickson, took a different approach to dealing with Rite Aid’s disappearance from the local pharmacy scene.
“I used to go to Rite Aid on Monroe Street in Sylvania,” he said. “When they closed, I went to a few different places and now I’m at Costco. If anybody’s going to do a better job of stacking people up in a line, it’s them. But it’s not a personal service.”
The J.D. Power study ranks Costco second-highest in overall customer satisfaction among brick-and-mortar mass merchandisers. But not everyone is singing their praises.
Mary Pat Peltier, 68, who is retired from retail work and now works as a part-time artist, switched her prescriptions to Costco years ago because they were cheaper than at Rite Aid, but she’s not entirely happy.
“I can’t stand Costco,” she said. “It’s too big. I make my husband go for me. If he were to leave me, I’d look for a neighborhood pharmacy — I like having the personal touch. I like being able to walk in and ask a question. When the boys were young, we would talk to our pharmacist more than our doctor. But you can’t do that with an online pharmacy.”
Jan Florian, 73, a retired school nurse, has her prescriptions filled at Meijer, but she’s leaning toward transferring them to a community or independent pharmacy.
“People want to go to their pharmacist, not their pharmacy,” she said. “You get a personal touch at a community pharmacy. At a bigger place, you don’t always get to see the pharmacist.”
There are about a dozen independent pharmacies in the Toledo area, but they hold a very small portion of the overall pharmacy market.
Pharmacy benefit managers disrupt an industry
Part of the turmoil in the retail pharmacy industry is being driven by pharmacy benefit managers — companies that purportedly act as middlemen between insurance companies and pharmacies, but in reality are often owned by health-care conglomerates that include insurers and pharmacies.
These firms, known as PBMs, contract with employers and medical insurance companies to dictate how much a pharmacy can sell a prescription for and how much they will pay for it. PBMs get paid based in part on how much they save insurers in prescription benefit payouts. This gives them a powerful incentive to continually cut the amount that insurers will pay for a prescription to the point where pharmacies are forced to sell prescription medications at a loss or at an unsustainably low profit margin.
PBMs have come in for withering criticism by members of Congress, the Federal Trade Commission, consumer advocates, and pharmacists and pharmacy associations.
Pharmacist Matt Buderer, who operates a compounding pharmacy with locations in Perrysburg, Sandusky, and Avon, says that he does not fill traditional manufactured medications in great quantities because of low reimbursement from PBMs.
“You cannot pay a pharmacist $100,000 a year and technicians between $33,000 and $42,000 a year and lose 1 [percent] to 3 percent per year in the pharmacy department,” he said.
Jennifer Rodis, the president of the Ohio Pharmacists Association and associate dean for outreach and engagement at the Ohio State University college of pharmacy, concurs with Mr. Buderer’s assessment.
“PBMs have chipped away at profit margins for community pharmacies for a decade through administrative fees and limited contracts,“ she said. “The closings of more than half of independent pharmacies in Ohio and elsewhere through the 2010s served as the canary in the coal mine that no one paid attention to. The larger chain pharmacies survived during that time due to their larger retail offerings and by steadily reducing staffing hours to make ends meet. This led to overworked and burned out pharmacists and pharmacy staff.”
Ms. Rodis believes that the adverse impact PBMs are having on the retail pharmacy industry falls especially heavily on independent retailers.
“Without a sustainable business model to provide medications and care in our communities, the future of community pharmacy is bleak,” she said. “And the access for you, me, and our families to necessary medicine and care from a pharmacist is in jeopardy.”
Online shopping takes its toll
Another reason traditional drugstores are struggling has to do with the growing preference among consumers for online shopping, both for pharmaceuticals and other products.
Amazon Pharmacy, Mark Cuban Cost Plus Drugs, TelyRx, Optum, and similar companies offer the convenience of ordering and managing prescriptions online together with the ease of receiving home delivery.
At present, only 20 percent of the U.S. pharmacy customers get their prescriptions from online pharmacies, but that figure is expected to rise to 22.44 percent by 2029.
But focusing on these figures misses a key factor in drugstores’ business model.
Pharmacies are usually located in the back of drugstores, close to a stockroom or storage area. This makes restocking convenient. But another benefit of this layout, from the drugstore’s perspective, is that customers must walk past other merchandise to get to the pharmacy counter. The store hopes that customers will be tempted to buy cosmetics, health and beauty aids, snacks, vitamins, supplements, and so on.
Bur Mr. Buderer isn’t optimistic about that business model.
“Pharmacies could possibly survive by having the pharmacy department as a 'draw' so they could sell other out-front items, such as convenience store items, over-the-counter medicines and vitamins, or groceries. But now, you can get all that stuff delivered to your front door by Amazon or one-stop shops like Walmart.”
Declining drugstore revenues can start a vicious cycle in which drugstores are forced to lay off pharmacists and pharmacy techs, which in turn degrades the customer service experience, causing further declines in sales.
“I believe that the only retail pharmacies that will survive are those in hospitals, big-box stores, grocery stores, and department stores, those that exist in large municipalities, those with other profitable items to sell, and those that don’t take insurance and only sell for cash,” Mr. Buderer said. “Insurance companies have no incentive to have retail pharmacies exist because they have no skin in the game right now, or relatively little. By the time the government steps in, if they feel it's important to save retail pharmacy locations, it will be too late.”
Pharmacies explore offering testing and treatment
Some drugstore chains have sought to avoid their demise by promoting themselves as something between a pharmacy and a clinic.
“We have about 1,000 MinuteClinic locations inside select CVS Pharmacy stores, which offer acute and preventive care and chronic disease management,” said Amy Thibault, the lead director of external communications for the company. “In addition, we currently have more than 230 Oak Street Health centers, including about 20 combined format locations with an Oak Street Health and CVS Pharmacy under one roof.”
CVS also offers virtual care on demand seven days a week through its website or through an app.
Walmart is also expanding its business beyond the traditional ambit of pharmaceutical sales.
“In 21 states, including Michigan, our pharmacies offer testing and treatment services,” said Tyler Thompson, the company’s director of global communications. “Testing and treatment allows pharmacists to test customers for strep throat, the flu and COVID and then follow up any positive test by writing and administering a prescription for the appropriate treatment, all at the pharmacy inside the store.”
Pharmacist Anthony Pattin, who founded Toledo’s Junction Family Pharmacy and is an associate professor in the University of Toledo’s pharmacy program, traces the origin of pharmacy/clinic hybrids to the 1990s, when pharmacies in some western states began offering inoculations.
“The nurses didn’t want to allow that,” he said, “but the argument was that in places where vaccination rates were low, pharmacies could do the job because they’re so accessible. They started with flu shots and then expanded as people embraced it. Then COVID really blew the doors open in terms of people getting tested and vaxed at pharmacies.”
Mr. Pattin is keenly aware of the challenges independent pharmacies face. He concedes that it’s possible that online pharmacies will become more and more popular. But he is adamant that he and his business can surmount them.
“Almost every pharmacy will charge you the same amount of money for a given prescription,” he said. “The difference is in the level of service I can provide.”
In East Toledo, Mr. Gilley is hopeful that his good relationship with Walmart’s pharmacy will continue.
In a statement to The Blade, a spokesman for Meijer said that Mr. Gilley’s experience with their pharmacy “doesn’t accurately represent the experience most customers have with our pharmacies. Our pharmacists fill prescriptions as quickly as possible, often within a few hours, knowing there are sometimes outside factors that can make it challenging.”
Fraser Engerman, Walgreen’s senior director of media relations and issues management, said that “the long-term potential of our company will be shaped by offerings built around the core relationship that we’ve nurtured with our customers over time.”
First Published January 5, 2025, 1:00 p.m.
