From CNBC: 2024-08-18 08:00:01

Consumers are growing frustrated with long wait times and lack of accessibility at Walgreens and CVS stores, impacting profits and stock prices. Reimbursement rates for prescription drugs have fallen, along with consumer spending. Burnout among pharmacy staff and competition from online services like Amazon also add to the challenges faced by these retail pharmacy chains.

Walgreens and CVS stocks have plummeted over the past decade due to declining profit margins, increased competition, and lower reimbursement rates for prescription drugs. Both chains are grappling with shifting consumer habits, inflation, and an overall challenging retail environment. Rite Aid declared bankruptcy last year, signaling trouble for traditional pharmacy retailers.

Pharmacies are struggling with lower reimbursement rates imposed by pharmacy benefit managers, impacting their bottom lines. The three largest PBMs control almost 80% of all prescriptions in the U.S., leaving pharmacies with little negotiating power. Walgreens’ operating margin for its U.S. retail pharmacy unit was -5% last year, while CVS’ margin was 4.6%.

CVS has introduced a new reimbursement model called CostVantage to address pricing transparency, while Walgreens has increased its focus on private-label products to boost sales. The chains are also battling competition from e-commerce rivals like Amazon, discount stores, and big-box retailers. Inflation and consumer spending habits are further straining their retail business models.



Read more at CNBC: Why Walgreens, CVS retail pharmacies are struggling