When I was a new student in political economy we learned about the tragedy of the commons. The example often used is communal pastureland that herdsmen use to feed their livestock. If pasture is overgrazed the grass dies, but if short grass stems are left to regrow someone else may let their sheep overgraze and the same result occurs. The tragedy of the commons is often taught alongside the concept in development economics of desertification. A pasture in a hot, arid region runs the risk of becoming a desert if abused.
There are other types of deserts talked about in public policy besides actual deserts. There are food deserts, where fresh, healthy foods are unavailable nearby. A more recent addition to the debate is the term pharmacy deserts. A pharmacy desert is an area where a pharmacy is not available within 10 miles in a rural area, two miles in suburban city or one mile in an urban area. Of course, it makes little sense that a rural farm nine miles from a pharmacy is not in a pharmacy desert but an intercity resident 1.1 miles from a pharmacy is, but that is beside the point.
The New York Times wrote about a small pharmacy in the California town of Kernville closing after 45 years. It was the only pharmacy in town and the next closest pharmacy is in a town 12 miles away.
Nearly 30 percent of pharmacies in the United States closed between 2010 and 2021, according to a new study in the journal Health Affairs. After initial years of growth, the number of closures outpaced that of openings from 2018 to 2021.Like many health disparities, reduced access to pharmacies affects some communities more than others. Closings “happen more in low-income Black and Latinx neighborhoods than any other, and in neighborhoods that are more heavily dependent on Medicare and Medicaid,” Dr. Qato said.
The New York Times reports that pharmacy closures disproportionately affect older adults. Nine-in-ten senior adults take at least one prescription drug, while nearly 60% of seniors take four or more prescription drugs. Pharmacies dispense more than pills. They also provide advice along with vaccinations and OTC drug products.
Business analysts point out that vertical integration by corporate chains has resulted in thousands of pharmacies closing with new ones opening, still resulting in a small net loss of drugstores (mostly in poorer areas). As rural areas depopulate, and more people move to the cities, fewer pharmacies are needed. What often happens is that young people go away to college never to return. Those left behind are often older and poorer. The local drugstores often cannot sustain themselves on only those who remain.
Some of the other reasons pharmacies shutting down include low reimbursements from Medicare Part D plans and Medicaid managed care. Mail-order pharmacies are growing from the likes of Amazon and pharmacy benefit managers (PBMs) that compete with brick & mortar pharmacies. PBMs are capturing a larger portion of the pharmacy sales dollar than in years past. Another reason could be that pharmacies are being used like communal pastures. For example, the opioid lawsuits that state attorneys general used as a tobacco-style money grab. Drugstores cannot dispense drugs without a doctor’s prescription, but they are somehow bearing responsibility for the opioid crisis. Another way drugstores are being used like a communal pasture is organized retail theft.
Pharmacies earn a significant amount of their revenue from OTC drug products. OTC drug products and toiletries are sought after because they are relatively high-priced items in small packages, making them ideal to steal and resell. In New York City there were 22,000 shoplifting arrests in 2022, one-third of which were in pharmacies. Bail reform laws (no bail required for release) in New York State and elsewhere across the country made it easier for shoplifters to reoffend. New laws on the West Coast created a threshold of $1,000 before shoplifters are prosecuted, giving thieves little to fear. The rise of organized retail theft is jeopardizing access to pharmacists, especially in areas of high crime.
Some of these changes were inevitable, like rural depopulation, corporate consolidation, mail-order pharmacies and competition with PBMs. Other causes like turning a blind eye towards organized retail theft and tobacco-style lawsuits are abusing a resource that public health advocates claim Americans need.
The concept of a “pharmacy desert,” like a “food desert,” is simply an excuse for government to intervene in normal market forces. If you live in a rural area, you will definitely have to drive further to find a drugstore. If you live in an urban area with high crime, you will probably have to travel further, too. It may even make sense to order drugs by mail order.
We don’t need taxpayers subsidizing pharmacies and supermarkets. The best thing government can do is create conditions that encourage retailers to do business across many geographies – e.g., by minimizing taxes and keeping crime low.
Many state medicaid programs subsidize local pharmacies by paying dispensing fees far above what private health plans would otherwise reimburse. Walmart will sell many generic prescriptions for $4 dollars for a 30 day supply. The same prescription may cost four times that if paid by Medicaid. In Alabama one year Walmart even proposed to take over the state Medicaid drug program at a substantial savings. The state did not have the political will to take Walmart up on its offer.