New JAMA Research Finds Healthy Churn in the Pharmacy Market

Academic Analysis Finds Independent Pharmacies Open as Frequently As They Close

New research in JAMA Health Forum from University of Utah Professor Joey Mattingly, Maitreyi Sahu at University of Washington, Seattle, and University of Colorado Skaggs School of Pharmaceutical Sciences Professor Kelly Anderson finds that independent pharmacies, similar to other businesses, are both opening and closings across the country, representing a healthy "churn" in the pharmacy market. The researchers analyzed pharmacy openings and closing from 2010 to 2023 and found that 9,098 independent pharmacies closed during this time and 10,974 new independent pharmacies opened - concluding that "independent pharmacies open as frequently as they close."

Professors Mattingly and Anderson highlight that while the independent pharmacy market trend has remained fairly flat during this time, chain pharmacies have had more net closures than openings during this time:

"We found that during 2010 to 2023, the total retail pharmacy churn rate was 86.8% (6.2% annually), which is in line with prior research of other industries, eg, the 7.0% of grocery retailers that either open or close annually in the US. In particular, we find the highest churn rate among independent pharmacies (152.7% [10.9% annually]), which have had more net openings than closings since 2010, and lower churn rate among chain pharmacies (49.9% [3.6% annually]), which have had more net closures than openings during this time."

This type of churn at the business level can represent normal dynamics with new businesses opening or existing businesses expanding. The researchers go on to note that healthy churn in the market can lead to more pharmacies in a community and the pharmacy market is generally more stable than other industries across the country:

"Counties with higher rates of churn actually had net increases in total pharmacies over the period, whereas low-churn counties experienced net decreases. Additionally, total firm churn rates for all businesses were higher in both the pharmacy low- and high-churn counties, even when adjusting for population size."

The paper closes with a caution against pursuing policies that stifle innovation in the market and ultimately can harm patient access:

"Policies that protect existing pharmacies from closure may prevent new businesses with more innovative pharmacy services offerings from opening."

PBMs recognize the critical importance of a healthy pharmacy market and having multiple pharmacy channels - retail, mail, specialty - to serve patients. That is why PBMs work to support pharmacies of all sizes across the country and help patients access their medications by building diverse pharmacy networks with affordable and convenient options. The industry has launched innovative pharmacy programs in response to evolving changes in the market, including those that help independent and rural pharmacies better serve their patient populations. PBMs are also calling for action to allow pharmacists to practice at the top of their licenses, providing additional services to patients that can improve health care outcomes while developing new business pathways for pharmacies.

Read the full research paper on pharmacy churn HERE.

Learn more about how PBMs and pharmacies are providing patients with a higher quality, lower cost pharmacy experience HERE.

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PCMA is the national association representing America's pharmacy benefit companies. Pharmacy benefit companies are working every day to secure savings, enable better health outcomes, and support access to quality prescription drug coverage for more than 289 million patients.