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Healthcare Insights: America’s Retail Pharmacies - Patients and Pharmacists in Crisis

John August

I have been following developments in the retail pharmacy sector of healthcare since pharmacists and pharmacy techs walked off the job in November of 2023 in protest of dangerous and debilitating working conditions.

In the following video, I want to introduce you to the situation from the perspective of frontline pharmacists and their increasingly demanding working conditions. You will also hear from the President of the National Association of Pharmacists who supports the walkouts.

This month’s Healthcare Insights, will explore what is yet another development in labor activism based on profound and unresolved deteriorating working conditions: in this case in the retail pharmacy industry.

Last fall, hundreds of pharmacists and pharmacy technicians walked off the job. They engaged in these actions without belonging to a union, which makes the actions even more remarkable.

And just earlier this month, the following appeared in USA Today, detailing the stress among pharmacists that led to the death of registered pharmacist, Ashleigh Anderson while working behind the counter of a CVS 24-hour pharmacy.

This USA Today article provides a deep inside look at the life of pharmacists in the current environment. “It was Sept. 10, 2021. Retail pharmacy was reeling from the pressures of the pandemic, and frontline workers like Anderson were dangerously burned out. For months, they had been filling prescriptions and vaccinating patients without bathroom breaks or a bite to eat.”

Sadly, these conditions like so many types of deteriorating working conditions across many industries have been developing pre-pandemic… and continue post-pandemic.

I want to examine some of the root causes of the deterioration in working conditions and the careers of pharmacists, leading to the rising incidents of prescription errors related to understaffing and workplace stress. Such prescription errors are very dangerous and, in many cases, life-threatening to patients. It’s necessary to understand how many of the thousands of healthcare workers are thinking about changing the state of their profession for themselves and for all of us who depend on retail pharmacies for our prescriptions.

In brief: What is a retail pharmacy?

It is where most of us go to pick up prescriptions ordered by our physician. Historically, most of us picked up our prescriptions at a locally owned and operated retail pharmacy, most often owned and operated by a registered pharmacist who both oversaw the quality and accuracy of the prescriptions being filled as well as operating a small business where consumers bought over the counter medications and very often other health and beauty products.

Our local pharmacists are essential sources of knowledge and consultation for patients and consumers. An important part of their job is to listen to patients’ questions and provide understanding and confidence in the medications. This has been the primary business model for most registered pharmacists for many decades who graduate from rigorous post-graduate programs in pharmacy, pass state administered examinations, and receive a license to practice.

Retail pharmacy is most often associated with the local independent family-run store, as well as retail pharmacies in large grocery stores. Retail pharmacists also work in hospitals, but most of their work is providing medications for in-patients in the hospital.

Today, however, the number of locally-owned independent pharmacies has dropped precipitously, crowded out by the giants, CVS and Walgreens. Since 1980, the number of independent pharmacies has dropped by 50%.

Even Rite-Aid, a huge national pharmacy recently declared bankruptcy. And even CVS and Walgreens are closing stores.

What is going on?

There are 320,000 licensed pharmacists in the country: half work in retail, and the other half work in hospitals, research, and education of students of pharmacy.

Among other things, enrollment in schools of pharmacy is dropping, along with other major indicators of burnout, undue stress, and a deterioration of one of the nation’s proudest and most essential professions.

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Let’s look at the major trends that have created the multi-faceted crises in retail pharmacy and the impact on working conditions and on the reduced safety and quality for consumers. For a comprehensive look at the detail and data, is this report from the Commonwealth Fund.

Over the past 25 years, there has been consolidation of the pharmacy industry in all aspects:

  • Independent and local owned pharmacies giving way to the large chains (CVS and Walgreens) and large “big box” stores like WalMart, and large grocery chains.
  • Consolidation of the financial reimbursements to pharmacies, greatly reducing the funds pharmacies receives.
  • Consolidation of the wholesalers who provide medications to retail outlets.

Most observers agree that the development of several large Pharmacy Benefit Managers (PBMs) are central to the transformation of the industry. Three PBMs dominate: United Health’s Optum; Cigna’s Express Scrips, and CVS’s Caremark.

The PBM has contracts with health plan sponsors which patients carry for prescription coverage. The PBMs are able to aggregate these covered lives under the health plans that they have contracts with. This means that they “corner the markets” for sales of drugs. In so doing, the PBMs offer larger and larger discounts to suppliers, thus driving down the cost. By driving down the cost of the drugs they offer lower and lower reimbursement to the retail outlet. In time this has created a race to the bottom, as the reimbursement for drugs is so low that the margins are too low for the pharmacy to operate. The PBMs make large profits in these transactions, while the retail pharmacy receives less and less reimbursement for the drugs sold.

This “race-to-the bottom” has both driven independents out of business, while also lowering operating margins for even the large pharmacy chains.

This race-to-the bottom on reimbursements to retail pharmacies has contributed directly to the understaffing of pharmacies, the flat wages for pharmacists and pharmacy techs, and the increased stresses that came with increases in the volume of prescriptions, and administering vaccinations, while performing all the important requirements to ensure safety and quality of administration of the prescriptions before the consumer receives it.

All of these trends were in place pre-pandemic. The pandemic created an extreme crisis in stress in the workplaces as pharmacists and pharmacy techs scrambled with burnout, understaffing, and higher and higher demand.

Safety and quality have deteriorated significantly in this period of industry consolidation. This article from the Los Angeles Times highlights this crisis.

The article highlights 5 million medication errors in just one year in Los Angeles and that 9,000 Americans die each year from these type of mistakes!

Patients are at great risk as a result of the understaffing and speed up of work in retail pharmacy.

These working conditions and the experience of pharmacists and pharmacy workers living in increased fear of causing harm to patients due to understaffing and burnout sparked the walkouts last fall.

Where will this set of actions go? What may happen?

In the current atmosphere of heightened attention to labor organizing, strikes, and other labor actions, the walkouts by pharmacists and pharmacy techs raises important strategic questions about the central issue in all labor relations and labor action: POWER.

How will pharmacists and pharmacy workers who work in small groups in tens of thousands of retail outlets gain enough power to confront the consolidated industry and the consolidated PBMs that are the source of reimbursement and revenue for the pharmacies to operate?

It would seem that traditional store by store organizing through the NLRB organizing model would take a very long time. Aggregation of power is certainly possible if enough workers in stores were able to win representation rights and consolidate their efforts to bargain with the large chains that own the retail stores. This would also take a very long time. Walgreens owns 8,602 retail stores and CVS owns 9,406.

A recent NY Times article suggests another strategy: the creation of Standards Boards.

In today’s economy, more and more workers work in small and isolated workplaces, often owned by large corporations. The NY Times story documents how workers in situations not so different from the small workforces in retail pharmacies were able to create safer and better paying conditions not through traditional organizing, but through the attention brought to their plight by public education and political action. The workers’ voices and actions were at the center of the organizing no different than in traditional organizing. However, solutions were established through government oversight and the creation of publicly supported boards to oversee the establishment and enforcement of working standards and worker protections.

This may be just one strategy that is possible. It is very important that the pharmacy workers develop innovative strategies, and soon.

In conversation with a national academic leader in pharmacy education, I learned that the traditional and successful model for graduating pharmacists to own and operate their own community-based pharmacy has so degraded that there is deep concern about how to attract students to the profession. After all, every community needs retail pharmacy. What was historically a great opportunity for young people to develop a career and a business in communities is now extremely difficult and possibly out of reach.

The recent activism among pharmacists and pharmacy workers who are confronting their poor working conditions is based in the need to educate consumers and policy makers that if we want safe, high quality control of the dispensing of medicine to our communities, the industry itself must be transformed to accomplish that essential need.

And most would welcome the return of the neighborhood, locally owned pharmacy, too!

John August is the Scheinman Institute’s Director of Healthcare and Partner Programs. His expertise in healthcare and labor relations spans 40 years. John previously served as the Executive Director of the Coalition of Kaiser Permanente Unions from April 2006 until July 2013. With revenues of 88 billion dollars and over 300,000 employees, Kaiser is one of the largest healthcare plans in the US. While serving as Executive Director of the Coalition, John was the co-chair of the Labor-Management Partnership at Kaiser Permanente, the largest, most complex, and most successful labor-management partnership in U.S. history. He also led the Coalition as chief negotiator in three successful rounds of National Bargaining in 2008, 2010, and 2012 on behalf of 100,000 members of the Coalition.