Assessment of Pharmacy Closures in the United States From 2009 Through 2015 | Clinical Pharmacy and Pharmacology | JAMA Internal Medicine | JAMA Network
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Figure.  Trends in Pharmacies in Operation, Closures, and Openings in the United States From 2009 Through 2015
Trends in Pharmacies in Operation, Closures, and Openings in the United States From 2009 Through 2015

Trends in the number of pharmacies in operation and pharmacy openings and closures are statistically significant at P < .01 using Poisson regression. A total of 77 510 pharmacies were in operation between 2009 and 2015, of which 9568 pharmacies closed and 14 614 were newly opened. Aggregate closure rates were estimated among all pharmacies that were in operation at some point during 2009 through 2015, excluding pharmacies newly opened in 2015 (n = 74 883 pharmacies). Closure rates are defined as the number of pharmacies that closed divided by the number of pharmacies in operation during 2009 through 2015. Annualized mean closure rates were 2.5% (95% CI, 2.1%-3.0%).

Table.  Proportional Hazard Model of Pharmacy Closures in the United States, 2009 Through 2015a
Proportional Hazard Model of Pharmacy Closures in the United States, 2009 Through 2015a
1.
Qato  DM, Alexander  GC, Chakraborty  A, Guadamuz  JS, Jackson  JW.  Association between pharmacy closures and adherence to cardiovascular medications among older US adults.  JAMA Netw Open. 2019;2(4):e192606. doi:10.1001/jamanetworkopen.2019.2606PubMedGoogle Scholar
2.
National Community Pharmacists Association. The impact of recent Medicare and Medicaid cuts on patients’ access to independent community pharmacies. https://www.ncpanet.org/pdf/leg/oct11/pharmacycutsfinal.pdf. Published October 2011. Accessed September 16, 2019.
3.
Centers for Medicare & Medicaid Services. Analysis of Part D beneficiary access to preferred cost sharing pharmacies (PCSPs). https://www.cms.gov/Medicare/Prescription-Drug-Coverage/PrescriptionDrugCovContra/Downloads/PCSP-Key-Results-Report-Final-v04302015.pdf. Published April 28, 2015. Accessed September 16, 2019.
4.
Qato  DM, Zenk  S, Wilder  J, Harrington  R, Gaskin  D, Alexander  GC.  The availability of pharmacies in the United States: 2007-2015.  PLoS One. 2017;12(8):e0183172. doi:10.1371/journal.pone.0183172PubMedGoogle Scholar
5.
Medicaid covered outpatient prescription drug reimbursement information by state quarter ending December 2018. https://www.medicaid.gov/medicaid/prescription-drugs/state-prescription-drug-resources/index.html. Updated August 15, 2019. Accessed September 16, 2019.
6.
Salako  A, Ullrich  F, Mueller  KJ. Update: independently owned pharmacy closures in rural America, 2003-2018. https://rupri.public-health.uiowa.edu/publications/policybriefs/2018/2018%20Pharmacy%20Closures.pdf. Published July 2018. Accessed September 16, 2019.
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    1 Comment for this article
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    The real reason retail pharmacies are failing.
    Dana Cover, B.S. Pharmacy | Independent Pharmacy
    The number one reason retail pharmacies are failing is because pharmacy benefit managers (PBMs) have a stranglehold on payment models of the industry and which are outdated and impossible to understand. The continuing push and acceptance for socialized medicine, coupled with the consolidation of the pharmaceutical distribution industry toward a virtual monopoly means it is time to rethink pricing structures in the industry.

    When Medicare-D plans were introduced it was unheard of for a pharmacy to lose money on a claim. As of 2019, about 20% of our claims were losses and reimbursement from the remaining 80%
    doesn't make up for the claims that are losses. For independent pharmacies that have survived thus far, this has become the norm.

    Now that most of the major PBMs own their own wholesale distribution networks and operate their own retail and mail order pharmacies, they are actively working to reroute prescriptions to their own pharmacies and away from the competition. One method they use to accomplish this is to pay independent and competing pharmacies less than they pay their own pharmacies. Since they own their own distribution networks, or have financial interests in independent wholesalers, they also charge competing pharmacies more for drugs they purchase from these wholesalers than they do their own pharmacies. Since these PBM's also control the majority of the Medicare-D plan contracts, they also control which pharmacies can be in their "preferred networks". This practice is manipulated to steer customers toward their own pharmacies where patients receive lower copays than pharmacies not in their "preferred networks", a practice which is supposed to be prohibited by Medicare since it offers incentives to Medicare recipients to use a particular pharmacy (or chain of pharmacies). And since Medicare is paid for by American tax dollars, they are using our own money to increase their own market share.

    They accomplish all of this by using payment models and pricing structures that no one can understand. PBM plans (and other third party payors) base their payment models on a variety of payment models including wholesale acquisition cost (WAC), average wholesale price (AWP), maximum allowable cost (MAC), as well as others. Some of these models are even set by the plans themselves with no identifiable logic other than to decrease what the plan has to pay a pharmacy.

    None of these payment models take into account what a pharmacy actually pays for a given drug. And since the major PBM's control the prices pharmacies have pay for drugs, as well as what these pharmacies are reimbursed when a prescription is dispensed, this creates the opportunity to control and divert the flow of medications, patients' access to medications, and the cost we all pay for medications. This is a conflict of interest that needs to be eliminated.

    The only way to accomplish this is to regulate prescription drug prices from top to bottom. That is to force manufacturers to sell drugs to every wholesaler for the same price, force all wholesalers to sell drugs to every pharmacy for the same price, and force all pharmacies to sell drugs to patients for the same price. It can't work unless all steps in the chain are regulated and fair prices are set at each level. This may sound like socialized medicine (it is), but this is the ONLY way to decrease our healthcare spending on drugs and maintain a fair and adequate distribution network.
    CONFLICT OF INTEREST: None Reported
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    Research Letter
    October 21, 2019

    Assessment of Pharmacy Closures in the United States From 2009 Through 2015

    Author Affiliations
    • 1Department of Pharmacy Systems, Outcomes and Policy, College of Pharmacy, University of Illinois at Chicago
    • 2Department of Epidemiology, Johns Hopkins Bloomberg School of Public Health, Johns Hopkins University, Baltimore, Maryland
    • 3Center for Drug Safety and Effectiveness, Johns Hopkins Bloomberg School of Public Health, Johns Hopkins University, Baltimore, Maryland
    • 4Department of Health Systems Science, College of Nursing, University of Illinois at Chicago
    • 5Division of Epidemiology and Biostatistics, School of Public Health, University of Illinois at Chicago
    JAMA Intern Med. 2020;180(1):157-160. doi:10.1001/jamainternmed.2019.4588

    Despite the critical role of pharmacies in the pharmaceutical supply chain and evidence that pharmacy closures contribute to nonadherence of prescription medications,1 there is limited information on the prevalence and risk factors for pharmacy closure. In this study, we examined trends in pharmacy closures in the United States between 2009 and 2015, and analyzed pharmacy, community, and market factors that might be associated with such closures. We hypothesized that pharmacies disproportionately serving publicly insured populations were at increased risk for closure owing to lower pharmacy reimbursement rates from Medicaid and Medicare.2 We also hypothesized that independent pharmacies were more likely to close because they often do not participate in preferred pharmacy networks.3

    Methods

    We used several data sources to conduct these analyses. National Council for Prescription Drug Programs data was used to determine the number and type of pharmacies (ie, chain, independent, mass merchandise, grocery, government, and/or clinic based) in operation that closed in the United States from 2009 through 2015.4 Pharmacy addresses were geocoded using ArcGIS, version 10.4 and linked to the American Community Survey 5-year data (2011-2015), Health Resources and Service Administration (HRSA) data, and US Census data to derive community (ie, urbanity, percentage minority, percentage living in poverty, medically underserved area status) and market (ie, ratio of public vs privately insured individuals, percentage uninsured, number of pharmacies per 10 000 persons) characteristics for each pharmacy at the county level.

    This analysis included pharmacies in operation at any point during the study period except those that newly opened in 2015. First, we quantified the prevalence of our primary outcome of interest, pharmacy closure, over time at the national level. Second, we used Kaplan-Meier survival curves and discrete-time proportional hazard models to identify risk factors for pharmacy closure stratified by urbanity. We stratified by urbanity because pharmacies located in rural areas may operate under different financial incentives, including tiered pharmacy reimbursement rates for Medicaid prescriptions.5 Pharmacies that opened prior to 2009 entered the models that year; pharmacies that newly opened between 2009 and 2014 entered the models in the year of the opening. This study design provided six 1-year intervals during which a pharmacy closure could occur. We used a significance value of 5% in all testing; P values reported are 2-sided. Statistical analyses were performed with Stata, version 14. The institutional review board at the University of Illinois at Chicago determined that this study did not need approval because it was not considered human-subject research.

    Results

    From 2009 to 2015, the total number of US pharmacies increased by 7.8% from 62 815 to 67 721. Of the 74 883 pharmacies in operation at any point during this period, 9564 (12.8%) had closed by 2015 (Figure). The risk of closure was significantly greater in urban compared with nonurban areas (cumulative hazard rate from bivariate analyses: 16.2% vs 13.2%; multivariate hazard ratio [HR], 1.10; 95% CI, 1.04-1.17) (Table). In both urban (27.2%; HR, 3.15; 95% CI, 2.89-3.43) and nonurban (23%; HR, 2.90; 95% CI, 2.72-3.08) areas, independent pharmacies were more likely to close than their counterparts. In urban areas, pharmacies serving disproportionately low-income (HR, 1.9; 95% CI, 1.13-1.47), uninsured (HR, 2.11; 95% CI, 1.90-2.33), and publicly insured (HR, 2.29; 95% CI, 1.82-2.88) populations were at increased risk of closure. These factors were not associated with closure in nonurban areas.

    Discussion

    Despite the growing number of pharmacies in the United States, findings from this study indicate that 1 in 8 pharmacies had closed between 2009 and 2015, which disproportionately affected independent pharmacies and low-income neighborhoods. Although efforts to promote pharmacy access have focused on addressing pharmacy closures in rural areas,6 we found that pharmacies located in low-income, urban areas are at greater risk of closing. These findings suggest that policies aimed at reducing pharmacy closures should consider payment reforms, including increases in pharmacy reimbursement rates for Medicaid and Medicare prescriptions. The findings also suggest the importance of understanding the influence of preferred pharmacy networks in order to protect independent pharmacies most at risk for closure, especially in urban areas. Such efforts are important because pharmacy closures are associated with nonadherence to prescription medications, and declines in adherence are worse in patients using independent pharmacies that subsequently closed.1

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    Article Information

    Accepted for Publication: August 20, 2019.

    Corresponding Author: Dima M. Qato, PharmD, MPH, PhD, Department of Pharmacy Systems, Outcomes and Policy, College of Pharmacy, University of Illinois at Chicago, 833 S Wood St, Ste 266, Chicago, IL 60612 (dimaqato@uic.edu).

    Published Online: October 21, 2019. doi:10.1001/jamainternmed.2019.4588

    Author Contributions: Dr Qato had full access to all of the data in the study and takes responsibility for the integrity of the data and the accuracy of the data analysis.

    Study concept and design: All authors.

    Acquisition, analysis, or interpretation of data: All authors.

    Drafting of the manuscript: Guadamuz, Qato.

    Critical revision of the manuscript for important intellectual content: All authors.

    Statistical analysis: Guadamuz, Qato.

    Obtained funding: Qato.

    Administrative, technical, or material support: Qato.

    Study supervision: Qato.

    Conflict of Interest Disclosures: Ms Guadamuz reports receiving grants from the Robert Wood Johnson Foundation Health Policy Research Scholar program and grants from the National Heart, Lung, and Blood Institute (T32-HL125294). Dr Alexander reports being the former chair of the US Food and Drug Administration’s Peripheral and Central Nervous System Advisory Committee; serving as a paid advisor to IQVIA; holding equity in Monument Analytics, a health care consultancy whose clients include the life sciences industry and plaintiffs in opioid litigation; and being a member of OptumRx’s National P&T Committee. This arrangement has been reviewed and approved by Johns Hopkins University in accordance with its conflict of interest policies. Dr Qato reports being a paid consultant for Public Citizen’s Health Research Group, has received funding from Blue Cross Blue Shield and Cardinal Health, is supported in part by grants from the Robert Wood Johnson Foundation as part of the Clinical Scholars Leadership program, and is a fellow of the National Academy of Medicine. No other disclosures are reported.

    Funding/Support: This work was supported by the National Institutes of Health’s National Institute on Aging (R21AG04923).

    Role of the Funder/Sponsor: The funder had no role in the design and conduct of the study; collection, management, analysis, and interpretation of the data; preparation, review, or approval of the manuscript; and decision to submit the manuscript for publication.

    References
    1.
    Qato  DM, Alexander  GC, Chakraborty  A, Guadamuz  JS, Jackson  JW.  Association between pharmacy closures and adherence to cardiovascular medications among older US adults.  JAMA Netw Open. 2019;2(4):e192606. doi:10.1001/jamanetworkopen.2019.2606PubMedGoogle Scholar
    2.
    National Community Pharmacists Association. The impact of recent Medicare and Medicaid cuts on patients’ access to independent community pharmacies. https://www.ncpanet.org/pdf/leg/oct11/pharmacycutsfinal.pdf. Published October 2011. Accessed September 16, 2019.
    3.
    Centers for Medicare & Medicaid Services. Analysis of Part D beneficiary access to preferred cost sharing pharmacies (PCSPs). https://www.cms.gov/Medicare/Prescription-Drug-Coverage/PrescriptionDrugCovContra/Downloads/PCSP-Key-Results-Report-Final-v04302015.pdf. Published April 28, 2015. Accessed September 16, 2019.
    4.
    Qato  DM, Zenk  S, Wilder  J, Harrington  R, Gaskin  D, Alexander  GC.  The availability of pharmacies in the United States: 2007-2015.  PLoS One. 2017;12(8):e0183172. doi:10.1371/journal.pone.0183172PubMedGoogle Scholar
    5.
    Medicaid covered outpatient prescription drug reimbursement information by state quarter ending December 2018. https://www.medicaid.gov/medicaid/prescription-drugs/state-prescription-drug-resources/index.html. Updated August 15, 2019. Accessed September 16, 2019.
    6.
    Salako  A, Ullrich  F, Mueller  KJ. Update: independently owned pharmacy closures in rural America, 2003-2018. https://rupri.public-health.uiowa.edu/publications/policybriefs/2018/2018%20Pharmacy%20Closures.pdf. Published July 2018. Accessed September 16, 2019.
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