Why are pharmacies closing? Hundreds have disappeared since PBM reform was abandoned

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For several years now, pharmacies have faced economic challenges, from falling foot traffic to increased online competition. This has led many major pharmacy chains, including Walgreens, CVS, and Rite Aid, to shutter locations and reduce their footprint.

As a matter of fact, over the past decade, the United States has lost nearly 30% of its drugstores.

But falling foot traffic and increased online competition aren’t the only things leading to a swath of drug store closures across America.

New research from the nonprofit American Economic Liberties Project (AELP) shows that in the past three months alone, the United States has seen another 326 pharmacies close. And the report argues that the reason for those closures comes down to Congress’s abandonment of pharmacy benefit manager (PBM) reform.

What is a pharmacy benefit manager?

The term “pharmacy benefit manager,” better known by its acronym PBM, was little known outside of industry circles until last year, despite PBMs being a major part of America’s privatized healthcare system.

A PBM is an entity that acts as a middleman between insurance companies and drugmakers. There are three major PBMs in America, run by UnitedHealth Group, Cigna Group, and CVS Health Corporation.

PBMs help negotiate drug rebates from manufacturers, which PBM companies argue helps lower the cost of drugs for consumers.

But this is often disputed. As Fast Company previously reported, the Center for American Progress (CAP) has noted that because PBMs may retain a portion of the rebate they negotiate and also may receive more money from an insurer than the drug is worth, the involvement of PBMs in the American healthcare system may be actually leading to higher drug costs overall.

Fast Company reached out to all three major PBMs for comment on AELP’s report. We’ll update this post if we hear back.

Report says PBMs are harming pharmacies

PBMs also have a negative impact on pharmacies themselves, according to AELP. The report says that since the three major PBMs control 80% of U.S. prescription drug claims, they are able “to demand untenably lower reimbursement rates from independent pharmacies in exchange for inclusion in their networks.”

AELP says many pharmacies choose to accept the lower reimbursement rates “for fear of losing access to a large share of their customer base.”

The untenable rates, the nonprofit continues, “are accelerating the pharmacy closure epidemic.”

It supports its arguments by providing a list of 326 pharmacies across America that have closed since December 19, when lawmakers effectively abandoned plans for PBM reform.

Between December 19, 2024, and February 28, 2025, at least 237 independent pharmacies and 89 chain pharmacies have shut their doors. And since January 1, 2024, when AELP began tracking closures, at least 3,179 pharmacies have closed for good.

AELP says that the closures, which it attributes to PBM practices, don’t just impact the pharmacy store owners and workers but the local community as a whole.

“As predicted, without Congressional intervention, the Big Three PBMs have continued to abuse their market power, squeezing at least 326 pharmacies—237 of them independent—out of business in fewer than 10 weeks and stranding their most vulnerable patients in pharmacy deserts without access to lifesaving care,” said Emma Freer, AELP’s senior policy analyst for healthcare.

PBM reform abandoned

The December 19, 2024, date that AELP is using as a starting point for tracking the latest pharmacy closures is a significant one.

In 2024, PBMs started coming under increased scrutiny as drug costs in America continued to rise. This scrutiny had bipartisan support, with both Democratic and Republican lawmakers introducing legislation to rein in the unchecked operations of PBMs.

But then, any bipartisan legislation that was being worked on fell through when, on December 19, “Congress abandoned bipartisan, bicameral PBM reforms as part of a stopgap spending bill,” AELP notes.

In the lead-up to December 19, Elon Musk suddenly began tweeting his opposition to PBM reform. As AELP’s Freer notes, “Despite later admitting that he does not know what a pharmacy benefit manager (PBM) is, Elon Musk successfully tanked PBM reforms with nearly unanimous House support late last year.”

The American Economic Liberties Project is releasing its report about the pharmacy closures in the wake of the abandonment of PBM reform to highlight just how needed such reform is for the survival of independent pharmacies and the ability for Americans to access the drugs they need at a price that is both fair and affordable.

As Freer states, “it is critical that Congress stand up to these healthcare monopolist middlemen and pass structural PBM reforms that will save their constituents’ time, money, and lives.”

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