Brick-and-Mortar Pharmacies in the Cross Hairs

If you have a building with drug store that’s only making money in its pharmacy, your years of collecting fat rent checks are likely numbered.

By John E. McNellis, Principal at real estate developer McNellis Partners, for WOLF STREET:

A couple months ago, I called my doctor to renew a prescription at Walgreen’s.  She suggested trying NowRx, a Silicon Valley pharmaceutical start-up offering home delivery. It turned out that with no insurance required, NowRx would deliver 90 days’ worth of a generic heartburn medication — if you’re in real estate and don’t have heartburn, you’re not trying hard enough — for $14.50. Factor in the delivery cost, and this start-up is giving away its drugs.

Walgreen’s charge for the identical drug? $254 without insurance, an $18 co-pay if insured. Hence, you pay an additional $3.50 for the privilege of fetching your prescription yourself.  This comparison suggests that one — or both — of these business models is fatally flawed.

NowRx feels like pharma’s Uber, that is, brilliant for consumers, but unlikely to ever make a buck. One knowledgeable source said the company’s only real play is to sell itself to Amazon after amassing a sufficiently impressive customer list. This makes sense. Since it acquired PillPack, Amazon has been cutting its usual swath through the prescription delivery business.  Along with 3,000 other drugs, Amazon Pharmacy sells that heartburn med for $32.10.

And guess who’s joined the fray with the Mark Cuban Cost Plus Drug Company? A smart guy, Cuban avoids the last mile delivery cost conundrum by mailing you the drugs. He sells this same med for $13.50.

It’s worth pointing out, however, that home delivery and mail order have been around over twenty years, and that CVS, Walgreens and Rite-Aid are still standing. Even with Amazon pounding on their doors, the net won’t be fatal to the big three; rather, it will likely prove a chronic condition depriving them of vigor. Perhaps more troubling to the nation’s biggest pharmacy chains are the ever declining rates of reimbursement they receive from the medical insurers.

How are the drug retailers combating these multiple headwinds? CVS, the leader of the pack, has become the nation’s biggest “pharmacy benefit manager.” What’s that? Simplistically, a middle-man who negotiates volume discounts with drug manufacturers, marks up the product to its retailers…and then pockets the spread. Think mid-level cocaine dealer. Still, CVS has announced it will close 900 stores (from a total of 9600) over the next three years.

Walgreens has been closing stores since 2015, and has 300 plus shuttered stores available for sublease. Rite Aid announced the closure of another 63 stores in December. The company has been trying for years to return to profitability by slashing operating expenses, the retailer’s version of the Hail Mary.

Surprisingly, inside sources confided that neither Walgreens nor Rite Aid make any real money in the “front end”, that is, the vast bulk of their stores’ sales area where they hawk everything from sunblock to tortilla chips. While the front ends in individual stores may be quite profitable, the chains as a whole make their profits from pharmacy operations alone.

In line with the insiders’ observation, CVS is adding primary care centers (formerly doctors’ offices) in a couple hundred of its stores. To do so, it must reduce its sales areas by several thousand feet, then partition off and fully equip the doctor’s offices. This will cost at least a million a store.  Thus, in order to make that downsizing profitable, the new doctor’s office would have to gross enough to repay that million with interest and handle the vastly increased overhead the office would entail (doctors are expensive). Would you take this risk if your sales areas were actually profitable?

Brick & mortar pharmacies aren’t going away. For every bucket-full of cheap generic meds with instructions no more complicated than “take one a day after eating”, there are drugs that cost more than a used car or require detailed instructions from a very patient pharmacist. For every recurring prescription, there are emergency meds like antibiotics and antivirals that patients need immediately. Drug stores aren’t going away, but little imagination is required to envision the nationals shrinking thousands of their stores to the size of the mom & pop pharmacies of yesteryear.

If you have a drug store in a fourteen thousand foot building—roughly the industry’s standard size—that’s only making money in its pharmacy, your years of collecting fat rent checks are likely numbered. If you own, say, a Walgreens, or are thinking of buying one, you must somehow ascertain whether it’s one of the chain’s winners. (This, by the way, is far easier said than done.)  If the store’s a loser paying anywhere close to market rent, you’d better have a brilliant alternative use for it when it goes dark. By John E. McNellis, author of Making it in Real Estate: Starting Out as a Developer.

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  108 comments for “Brick-and-Mortar Pharmacies in the Cross Hairs

  1. Marcus Aurelius says:

    If Walgreens, and the rest, would eliminate the “front of the store”, they could easily be located in high crime, high theft areas.

    The far smaller Pharmacy could be a return to the stores of yester-year. (Lone Ranger TV reference).

    One walks in and remains in a nice, A/C, foyer and the Pharmacist, and all meds, are behind clear, clean, transparent walls. Since the “patient” has never picked out their own Rx, this is the same procedure as in the present stores. You are on one side of the counter, the staff on the other.

    Hand the Rx to the professional trained Pharmacist, who in turns does their thing (count out the pills). The customer is prevented from Covids 19 -27, etc., or any other transmissible disease, (todays and tomorrows), from the Pharmacy staff since the customer-patient is protected by the awesome Wall.

    We are all conditioned to have this transparent Polycarbonate Health Safety Screen between us and the staff. We just need to make it 100% effective, from floor to ceiling, and the customers will appreciated this Health Safety Precaution recommended by the CDC and NHI and AMA.

    This will destroy the unkind argument of those saying the Walgreens are closing due to “the community”. Everybody will be treated with the same courtesy and respect with this system.

    • Anthony A. says:

      Polycarbonate wall should be bulletproof too.

    • CommercialRECap says:

      This is really terrific analysis. That’s for posting this. Several comments to add. The US is over retailed (which everyone knows) but perhaps nowhere more than in the Rx space. The era of big retail store closing announcements is largely over. The likes of desperate, undercapitalized retailers, big boxers, and department store chains have squeezed out most of their poor performing stores. The days of JCP saying “we are closing another 150 stores” is ending. (They will continue to close stores, just not in such vast quantities). The exception is with big drug store chains. We will see their numbers shrink in large chunks. The good news for landlords is that many of these leases are in place for 10+ years. So there will be time to prepare and pivot in most cases.

      • Wolf Richter says:

        CommercialRECap,

        As you know, I deleted the last line.

        Tip: When you post a comment, you can insert your twitter URL into the box that says “website” in it. This turns your screen name into a blue clickable link. But don’t tell people to click on that link. They’ll see it, and if they’re interested, they’ll click on it.

        • John Bergin says:

          Being in the commercial real estate biz….I have always wondered why small vacant bank buildings with a couple of drive thru’s haven’t been converted to pharma dispensers for the big 3. Just drop the script in the box and have your script sent as you wait. They have a vault for the addictive drugs (in case of break in/robberies) and usually have high value locations.

        • NBay says:

          Thanks. Always wondered about the Blue screen names. I figured they all had some kind of blogs or maybe websites, but I guess that’s what twitter is.
          The organization of the net doesn’t interest me at all….too fluid, like electronic gizmos on cars.
          But I’m glad you took the time to hassle thru it.
          This guy ought to change his diet and exercise, then he can MAYBE still screw people in his RE game without “heartburn”.
          But he’s probably one of those unfortunates who has run to pills for every discomfort all his life..maybe even taught to by parents…..so….his guts and many related organs are now hopelessly FD up…..so saving on even more on meds yet to come is probably worth his time.

        • Wolf Richter says:

          NBay,

          “This guy ought to change his diet and exercise, then he can MAYBE still screw people in his RE game without “heartburn”.”

          I should delete your BS because it’s BS and because it insults the author:

          If you read the article, you would have known that John is in commercial real estate. His clients are mostly big corporations, such as Albertsons, Walgreens, Trader Joe’s, etc. He doesn’t sell houses to “people.”

        • NBay says:

          Oh, and Gorback’s pals “procedures”. I figure he was a gastroenterologist…..max money, max free time to study the stock market.

        • NBay says:

          Thanks for leaving up the truth about health and pill popping, especially OTC. My apologies to author, I figured he accumulated people’s SHELTER, which really bothers me.
          Did not read thoroughly, sorry to you and him.

  2. Alfonso Larriva says:

    Not that you should try it, but someone in Tempe converted a drugstore into a pool hall. Spent MILLIONS on it. It’s not earning like it needs to — Just saying, those conversions are complex. Most turn into something more like a dollar store.

    • stan6565 says:

      Main contractor: Tony Soprano

    • Javert Chip says:

      Bar 8′ pool tables are about $8k/ea; 20 (at retail!) would be $160k; throw in another $2000k to install a beer bar + $250k for incidentals, and it’s up to $610k.

      HOW THE HELL DO YOU SPEND “MILLIONS” CONVERTING A DRUG STORE TO A POOL HALL?

      IS THIS A US GOVERNMENT POOL HALL?

    • Arizona Slim says:

      Walgreens had a store that was within easy walking distance of the Arizona Slim Ranch. Right before the pandemic lockdowns of 2020, it closed.

      The ever-efficient neighborhood grapevine told me that the closure was due to shoplifting and high rents.

      I suppose so, but what really bopped me over the head was the lack of customers in the store and the ghost town of a parking lot out front. Even the homeless avoided it because there just weren’t enough panhandling opportunities.

      Well, you probably heard those stories about the miles-long lines at drive-up testing centers for you-know-what. Not at this former Walgreens, which remained closed.

      At most, the parking lot had two or three cars in it, and that was over the course of many months. A lot of times, the testing staff was there by themselves, and they looked bored.

      After that testing center was removed, the place underwent conversion and it’s now a Dollar Tree. Parking lot’s full and the place looks to be thriving.

  3. Motorcycle guy says:

    How does GoodRx impact the pharmacy side. Not positively I’m sure.

    Also, as someone who uses the CVS brand of blood glucose test strips at $40 for 200, that should be an area that is profitable.
    Is that considered “front end” or pharmacy?

  4. Anthony A. says:

    My wife needs a dozen drugs monthly, two of which are quite expensive. She has advanced COPD and few other bad things. I pick up her drugs at Walmart Pharmacy. No mail order for us as our mail service stinks and I have received other people’s drugs in my box and then delivered them in person. Our mail person is not at all bothered by my complaints of her mis-deliveries when I have confronted her.

    We used to use CVS years ago, but for a few reasons, they were difficult to deal with and it became more convenient to deal with WM. No mail order prescriptions for us.

    • SpencerG says:

      Good points all. The pharmacies in a Walmart have small footprints… and no one thinks that Walmart is losing money on its “front end” operations.

      As to mail… I like and use the USPS far more than most people for my business. But I doubt I would trust them for delivering critical pharmaceuticals.

    • a says:

      if you report it to the USPS, i believe they have to investigate and take it seriously.

  5. Ben Sargent says:

    Margin compression both retail and drug company wholesale prices. But will consumer win i doubt it.

    • Wisdom Seeker says:

      No one anywhere in the chain works for free, so the consumers pay for it all: either up-front, via insurance premiums, or via taxes.

      We need a Great Simplification of these crazy systems with all their needless middlemen.

      Maybe, just maybe, with the current labor shortage, some of the entranced bureaucratic fat can be trimmed and hired into more productive jobs?

  6. Jeff says:

    Are any of these kinds of store+pharmacies franchised? I’m assuming they’re all corporate owned.

    • Wolf Richter says:

      Jeff,

      When John McNellis, a real estate developer and commercial landlord, talks about owning a “pharmacy” it’s the building he’s talking about not the tenant’s business. The actual pharmacy (Walgreens, etc.) is renting the space. If the Walgreens shuts down, the rent income is gone, and it’s hard to fill retail spaces these days. That’s what the story is sort of about.

  7. The Bob who cried Wolf says:

    Everything brick and mortar is doomed with all of the organized gangs running in and out of stores taking what they want without repercussions. It’s not just a San Francisco problem anymore. I’ve seen it first hand in San Diego at our pharmacies and every store. They walk in empty and walk out full and the employees and owners are helpless to do anything. It’s a big issue in New York now and is going nationwide. If brick and mortar wants to succeed in anything other than selling boba drinks and pizza they need to hire a bunch of security. Or, if we were a sane society run by sane people we’d lock up all of these losers. Funny how election year politics has now brought the defund the police crowd around and now they want to fund them.

    • MarMar says:

      This is a non-story, as Wolf has pointed out repeatedly.

    • Apple says:

      CVS knows a thing or two about theft. CVS stole millions of dollars from employee paychecks.

    • Wolf Richter says:

      The Bob who cried Wolf

      Brick and mortar retail started dying in 2017, with numerous retailers going bankrupt, from the once biggest to the smallest. I have a whole huge series of articles on this, documenting since 2017 the brick-and-mortar meltdown.

      This trend continues. I have no idea why anyone still buys drugs at a pharmacy. Obviously, some people still do, and I can see that here in the comments.

      But I get this stuff online, from my healthcare provider’s local pharmacy, delivered for free the next day. They come with clearly written instructions on two big pieces of paper, in big print so that even I can read them without my glasses on. Written instructions are FAR better than what someone tells me because by the time I walk out the door I already forgot.

      The only reason I go into a Walgreens is because they have a FedEx drop-off and pickup counter, which is very handy for sending out my beer mugs. While I’m there, I might buy some Ghirardelli 86% cacao chocolates for their anti-oxidants to keep me young, LOL.

      John and I have disagreed about the brick-and-mortar meltdown since we had our first cup of coffee together years ago. He has since then come around a little bit, but still not fully.

      But he and I totally agree that service establishments are the future for retail space. This includes healthcare services (such as VillageMD) offered in-store, instead of goods, such as John mentions in this article, and it includes the FedEx pickup counter, and it includes other services such as hair salons, nail salons, and of course cafes and restaurants.

      • Cold in the Midwest says:

        Case in point Wolf. Amazon recently announced they are closing all 68 of their physical bookstores, toy and household item locations (called 4-star) and convenience stores.

        Even their brand name could not make it work. Making money with brick and mortar these days is TOUGH. The migration to online shopping continues.

      • The Bob who cried Wolf says:

        I had a couple of replies yesterday that I don’t see now. I can’t think what I said that was in any way inflammatory or offensive. What happened?

        • Wolf Richter says:

          You hijacked the comments with this anecdotal stuff (I’ve seen…)that you then expanded this into a global BS theory. I replied to it. And then you plastered the same BS theory again and again in other comments, and I deleted those.

          Click on the 3 links I posted and RTGDFA

      • curiouscat says:

        Wolf – My Walgreens in Delaware has begun 2 hour home delivery.

    • roddy6667 says:

      Walgreens and CVS overexpanded. They closed a lot of stores and have lots more scheduled to be closed, all before the laws were changed about shoplifting. Of course the stores are going with the shoplifter meme because it sound better than “We fucked up”.

      • doug says:

        I agree. Way over expanded, trying to drive the other guy out or feed their ego. Not sure which, but they did FU.

    • Javert Chip says:

      Gee, here in (concealed carry & stand your ground) Florida, we don’t have this problem yea, maybe onesy twosy, but not like the CA plague.

      Just saying…

      • Wolf Richter says:

        Wait till someone tries to stop a platoon of shoplifters that are all concealed carry. That would make one heck of a video.

        And shoplifting is a massive problem in Florida. It’s just that the right-wing media doesn’t get aroused by it. They have to have San Francisco or California in the headline of their fantasies to get a hard-on.

        • Nemo 300 BLK says:

          You only need to drop one of them to leave an impression.

        • Wolf Richter says:

          Nemo 300 BLK,

          Re-read what I said. What I said was “…a platoon of shoplifters that are all concealed carry.” When someone tries to stop those shoplifters, the shoplifters are going to pull out THEIR guns and fire at everything that moves. That’s what will be in the video, and that will be the last time anyone will try to stop shoplifters to protect corporate profit margins, hahahaha

    • Paranoid says:

      Makes me laugh, thank GOD, or whatever I got out of CA 25 years ago. Left for the same pay, but got $1100 a month raise due to tax reduction. Now in Wyoming Get your ass shot if you tried that XXXX here

  8. john gurley says:

    NowRx has propriety software that manages everything from robotic pic n pak to insurance ..deliveries are by employees in NowRx signed vehicles ..you can review further at seed invest ..i invested as i think their model wins and they probably will get acquired

  9. Ted Waller says:

    Walgreens and CVS were built successfully on one model, but now must change. I think the Village MD and minute clinics are the answer. This is what will keep people coming in the stores and spending money. Telehealth is a poor substitute for personal contact; it’s like the proverbial “kissing your sister.” I don’t know anyone who has used telehealth and had a good experience.

    • Augustus Frost says:

      I have used telehealth for my mother who is 81 years old, when she doesn’t need lab work. She has limited mobility and getting her in and out of the car is enough of a challenge.

      I live about a quarter mile from a local hospital. The CVS pharmacy was so busy, I gave up and switched to Walgreens down the street. It has plenty of business too, just less. Walgreens also has a pharmacy in a medical building in the hospital complex, but it’s not open on weekends.

    • Jay Z says:

      I’ve used telehealth a number of times, and it’s so much easier than driving to see your own Dr. After I make my initial inquiry I’m speaking to a Doctor by phone in sometimes less than 5 min.

    • Javert Chip says:

      Maybe they all had ugly sisters

  10. Michael Gorback says:

    GoodRx analyzed cash prices for the top 100 generic drugs based on number of prescriptions filled.

    They listed the top 10 most expensive drugs, based on “usual and customary” pricing.

    At #1 was tadalifil (generic Cialis) for erectile dysfunction. The highest retail price for 5 mg was $369 for 390 pills. With GoodRx there were 3 pharmacies charging under $10.

    When I plugged in 10 mg it was over $2,000 but only $15 with GoodRx.

    They also show the price for a 90 day supply. In the case of tadalifil the lowest price was $12.86.

    GoodRx has been in the discount business for years and publishes articles about drug costs. When you look up a drug you not only get a list of pharmacies and prices, they show alternatives. Generic Viagra costs less than generic Cialis. They also have charts of historical price trends.

    Mark Cuban didn’t come up with the idea of providing an online doctor visit to get the prescription. GoodRx already offers that.

    There’s an insidious way for insurers to shift more of the cost to you. Insurance companies have a list of drugs they cover (the formulary).

    Within the formulary are drug rankings called tiers. Tier 1 would be cheap generic. As you move up through the tiers you get into more expensive drugs AND YOUR CO-PAY GOES UP.

    A rather slimy maneuver if you ask me.

    So if you’re paying a $10 co-pay for your tier 1 drug your insurance can kick more cost onto your share by changing to Tier 2. Maybe from $10 to $12, but it adds up. You can look up your drug’s tier by reading their formulary.

    • Michael Gorback says:

      5 mg was $369 for 390 pills should be 30 pills.

      • BuySome says:

        Let the alkihol industry take control. We’d soon have new commercials for KongDong Lite…”More boner, less pilling!”. 😜

      • Apple says:

        I thought you bragging Michael.

        • Michael Gorback says:

          Seriously, if 30 pills is a 30 day supply do you really need ED drugs? Maybe slow down a little.

          Or get married. Your wife be your throttle. Coyote sex. Sit by the hole and howl.

          I wonder if this will get over the WS force field.

        • Wolf Richter says:

          Jeeesuslordalmighty, Michael!

        • PressGaneyMustDie says:

          Trivia: Cialis like viagra is in a family of drugs called phosphodiesterase inhibitors that was originally meant for the treatment of pulmonary hypertension and right sided heart failure. Men, women and children take these meds for the heart and not just for the dumb stick. During the clinical trials it was discovered that there was a useful side effect and voila a marketing bonanza was born!

        • kitten lopez says:

          “Coyote sex. Sit by the hole and howl.”

          Never ever change, Michael Gorback.

          (smile)

          x

    • Scott says:

      I am stunned how pharmacies can charge one client $300 for a prescription, but the guy next to him pays only $35 for the same prescription because he flashed his phone with the GoodRx app. Why isn’t there a standard price for all? Either the drug costs $35 or it costs $300.

      • Harrold says:

        Keep being stunned. I tried using GoodRx at 2 places and they both refused to honor it.

        Did you think corps wouldn’t fight back for their massive greed?

  11. phleep says:

    I don’t use prescription stuff, but I’ve walked into various stores like CVS and Walgreens, looking of over-the-counter meds and small consumer items, lotions and such. Instant sticker shock, even before recent inflation. They must evolve or go extinct. Amazon is just too effective. The last mile problem is solved.

    • Harrold says:

      Yep, they are the convenience stores of medicine. I have completely avoided them for years. The turning point was the sticker shock for a measly roll of adhesive tape. You’d think it was gold plated.

  12. roddy6667 says:

    Amazon puts almost anything I need on my doorstop in 2 days with free delivery. That’s hard to beat.

  13. Xavier Caveat says:

    Funny how the USA really got hooked on prescription drugs was about the time Nancy Reagan uttered ‘Just Say No’.

    • OutWest says:

      And ironically, her spouse kicked off the war on drugs that has been estimated to have cost US taxpayers well over a trillion dollars. Meanwhile many our fellow citizens became addicts!

      Over the past 30 years, my spouse and I have purchased prescription drugs less than a dozen times, mostly antibiotics.

      The need for pharmaceuticals is mostly driven by lifestyle choices. Excercises relentlessly, eat a clean diet, and avoid risky behavior. That’s the ticket.

      Much better to invest in the pharmaceutical industry than consumer their product.

      • Nick Kelly says:

        And most of it against pot.

      • Apple says:

        Nixon started the War on Drugs during his campaign in 1968. He was able to associate hippies to pot and Blacks to heroin. This allowed him to vilify and arrest leaders of those communities.

        Reagan continued this with the outsized prison sentences for crack cocaine vs cocaine.

        • Michael Gorback says:

          The War on Drugs started after the passage of the Harrison Act about a century ago.

          The devastation inflicted on the American people has led to the mess we’re in today. The Harrison Act did not outlaw maintaining addicts on narcotics. That was a decision made by law enforcement, kind of how the ATF tried to classify bumpfire stocks as automatic weapons.

          But lo and behold we now give addicts methadone and Suboxone, maintaining addicts with opioids

          Long before Nixon ignored the findings of his Shafer Commission Congress was lied to about the medical community ‘s position on MJ. The AMA sent an MD/JD to meet with the committee studying MJ. He made it clear that the AMA was NOT opposed to MJ. When the bill came to the floor one of (many) congressman who had no idea what MJ was asked about the AMA’s position. The committee chairman lied and said they opposed MJ use.

          It’s a sad and sordid history, where treatment of drug addiction and abuse was usurped by ignorant politicians and bureaucrats.

        • VintageVNvet says:

          Thanks for that MG:
          Mentor MD years ago, who was also ardent history buff, told me about the AMA doing it’s very best to drive out any and all competition around 1900 era.
          That they succeeded far beyond any reasonable level, as you say, has resulted in trillions of dollars of cost to WE the PEONs since.
          Time and enough for all drugs,,, yes, ALL drugs to be ”legal” for adults who want them and are able to deal with them without harming others,,, and for parents everywhere to step up and actually parent their children as was done, mostly, up until early 1970 era…
          Certainly a TON easier to parent when every child has a ”leash” in their hands constantly these days, eh?

      • Augustus Frost says:

        The “War on Drugs” should be abolished right now.

        Incarcerating users for a victimless crime. Treat it like drunk driving.

        Turning what would otherwise be a “normal” business into violence.

        I’ve also heard the opposing argument that legalization might or would turn the country into a society of junkies.

        Not much to say about that. If it’s true, it’s another indication is falling apart. You can keep a society glued together and civilized from the top down.

      • 728huey says:

        Meanwhile, at the same time he was fighting “the war on drugs”, he was using the CIA to funnel cocaine from Colombia to the USA to pay for the arms sales to Iran and the Contra rebels in Nicaragua.

  14. HQ says:

    The woes of CVS could be connected to the amount of money they spend on register receipts with endless coupons and offers. I used my last receipt to make a mummy costume for Halloween. And I had paper left over.

    This article is a good glimpse into the future. The few times I visit CVS I head to the pharmacy, and that is where the activity is. The front store has tumbleweeds rolling down the aisles. There are many places one can find the same items CVS has in their front store at better prices, including my grocery chain and of course Amazon. The name “Consumer Value Stores” certainly has become a misnomer.

    • Apple says:

      The CVS by my house no longer has a cashier at the front of the store, merely a unmanned self service checkout.

    • David Toth says:

      Have to agree that the front store goods are overpriced unless on sale and much less at Costco, especially generics. Service at some of the CVS stores in our area, east of Cleveland has been atrocious.

      One other thought, if the drug companies would stop advertising drugs on TV and other sites, that no one has a clue what they are, they could lower their marketing costs and pass the savings on to the consumer. The drugs that patients need should be left up to the doctors, not the drug companies. (From a retired doctor).

  15. Jpollard says:

    Just picked my 90day prescription of omeprazole( heartburn medication) at Walgreens in Walnut Creek Ca . for 9$.
    Out of pocket costs will obviously vary based upon a number of factors , but since this was my first prescription this year, I assume that I have not reached my deductible level yet.

  16. Brian says:

    Definitely a more appealing option for consumers. Unfortunately, it looks like NowRx only services a select number of areas within CA.

  17. Nick Kelly says:

    Drugs are the perfect delivery class. Low weight low bulk.

  18. cobo says:

    …and if you’re a human being, quit taking so much crap. Boil it down to the few prescriptions that might actually be helping you. From my parents through my family, waaaay tooo much drugging…….

  19. David Hall says:

    I got three Moderna COVID vaccinations and one Shingrix Shingles vaccination at Walgreens. Did not need prescription. A pharmacy tech used her Good RX account to help me get some less expensive Mupirocin ointment for a surgical wound. It was not covered by my health insurance plan.

  20. 91B20 1stCav (AUS) says:

    MG-looks like you’re searching for confirmation that you’ve slipped ‘the force field’. you have-for the second time this go-round…

    may we all find a better day.

  21. dishonest says:

    All drugs should be available on open racks, just like some drugs are now.
    CVS under staffs pharmacists and techs to goose up the bottom line. They also run out of drugs.

  22. jrhill says:

    I picked up an Rx for the dear wife at our normal place, a major++ chain. It was mid afternoon. The Rx as 24 cents. I needed cash back to cross the bridge. They didn’t have $20 at the pharmacy. So I bought her some Easter Peeps (she loves me) at the front. They had to reverse the purchase at the cash register because they didn’t have enough Federal Reserve Notes to give me $20 back.

    Mid day and no cash in the drawer. Wow.

  23. w.c.l. says:

    A couple of weeks ago the doctor wrote me a new prescription but instead of sending it to the local Evil Mart like usual they now work with a place called “DFW Wellness Pharmacy”. I called their toll free line, confirmed my info, paid with my credit card, and the next morning it was waiting outside my door. My only cost was my $10 insurance co-pay.

  24. Zark Muckerberg says:

    In Elysium starring Matt Damon. A dinged robot dispense pills. That is the future of pharmacy.

    • Harrold says:

      That future should have been 10 years ago. All they do is count pills into a bottle. No need for an educated, licensed $130k employee for that.

  25. Michael Gorback says:

    @PressGaneyMustDie,

    And while the price of proprietary Viagra was over the moon you could buy the same drug for less if the dx was pulmonary hypertension.

  26. AverageCommenter says:

    I think that CVS & Walgreens got their 21st century playbook straight from the 80’s crack cocaine dealers: Lockdown ALL corners by any means necessary. The corners are essential for drug distribution, whether controlled substance or prescribed. They went on to place a CVS & Walgreens on any corner they in most major cities that they could find. Overbuilt now they are part-time commercial real-estate holders though most of them just sit empty for years & years. I had an idea to convert a CVS building I saw for lease into a 70’s style disco lol. I noticed that disco generation of the 70’s doesn’t really get out and dance anymore. All my employees there would be required to wear old 70’s style clothes as uniforms, plus I would have lazy boy massage chairs for those who still loved the atmosphere but were no longer physically able to shake their groove thangs when the DJ dropped the needle on Kung fu Fighting

  27. Gabby Cat says:

    Check out the At-Home pharmacy by a high health care facility outside of Central Ohio. It will revolutionize the business. Pill packs for each meal, separately packed as instructed for each person. Not delivered in mailing, but hand delivered by pharmacy staff that helps you with all questions before they leave your house. No, we are going way back to personal care delivered at the door. Oh, and they are working on drone drop offs in non-safe areas. Unfortunately, high crime areas will have inequitable care.

  28. c1ue says:

    I wonder what percentage of meds are controlled substances – like opiates.
    That might be a factor too, if significant.
    I can’t imagine mail order pharmacies being able to control abuse very well for those types of drugs.
    Then there’s the porch pirate thing. Just imagine people dying because their meds were stolen and resold for big bucks.

  29. rick m says:

    I supervised the electrical work on the first three Walgreens built on the Mississippi Gulf Coast in the late 90’s. They were expensive, purpose-built structures that don’t lend themselves to cheap conversions. And two of them are dollar stores now, utilizing existing gondola shelving and cash register locations because over a hundred metal conduits are sticking out of the slab underneath them in the sales area alone, so they cannot move, a new lessee would spend thousands on electrical demo/patch just to get a flat floor. There’s too much commercial real estate sitting empty in prime locations to make extensive remodeling cost-effective. Walgreens’ subsequent moves in this market have been schizophrenic, abandoning a third newish store to remodel a smaller cheesy old Rite-Aid across the street at the states busiest intersection. I expect them to leave some tertiary markets like this soon, as they wind down. Nothing to do with criminals, at least not beneath boardroom level.

  30. kds says:

    Wolf, how do you think the move to online will impact the proliferation of pharmacists? I work in a public university that feeds numerous students into the Pharmacy field. It has always seemed to be a vocational bubble waiting to pop.

    • Wolf Richter says:

      This is not in my wheelhouse.

    • Johnny Dodds says:

      Pharmacy schools have been struggling the past few years to recruit students. Applications are cratering as it seems the word is out that pharmacy is a field with horrible work conditions that could be disrupted at any moment.

      It went from being a career where you came out making $120k guaranteed to more like 80-100k these days and that’s not taking into account inflation.

  31. Petunia says:

    The death of retail has been occurring for over a decade. It’s about the lack of security, especially at the malls. I love shopping but stopped going alone years ago. That’s a problem for landlords because the bulk of spending is done by women, and being hyper anxious about your safety, isn’t conducive to spending. The pandemic crime wave is simply the extension of a problem that was already there.

    When I first heard of the Brazilian model of super secure, by appointment only malls, I knew it was only a matter of time before it reached us. Now it probably is the best way to save some of the malls still left.

    As far as pharmacies go, I’ve been buying over the counter meds and toiletries at the supermarket for years now. Better prices and I’m there anyway.

  32. Jack says:

    and mail order totally ignores these temperature warnings and the government agency that controls efficacy under temperature extremes ignores this issue. Also the major manufacturers (name brand manufacturers) have different prices for different classes of trade. These manufacturers have been sued over this discriminatory practice. Most all independent pharmacy owners also believe their is collusion on prices by major name brand drugs. These manufacturers were taken to court to show that different prices to different classes of trade ie retail, clinics, VA, HMO’s, Pharmacy Benefit Managers (mail order), and the court case after about 10 years was delayed, tossed back and forth, appealed, misrepresented all these years until 1 judge said there was not enough evidence to proceed(which was also BS). So when you look at the screwed up pricing the government says everything is fine and dandy even though of the classes of trade I listed, guess who pays the highest price? If you guessed retail, you win the prize. With Pharmacy Benefit Managers controlling the prices and profits a pharmacy charges reimbursement for many name brand drugs was cost of below cost. I, as an independent pharmacist, had reached a point where I could not control what the drug manufacturers were charging me and another entity told me how much I could charge, I had lost the control of my business and sold my pharmacy to a chain 6 years ago. Don’t worry about CVS they own an insurance company now and a Pharmacy Benefit Manager that gets rebates from drug manufacturers to place their drugs on their PBM’S formularies. This so called proprietary information is secret so no one really know how much kickback money these PBM’S make. So when you see all these gimmicks and price discrepancies how hopefully you will see what a mess this drug distribution system is. Lastly, the most value you get from brick and mortar pharmacies is a face to face interaction with a pharmacist that now attends an accredited college or university for 6 years and learns a lot more than how to count, pour, lick, and stick a label on a bottle or vial. The government is complicit in the cluster f*ck and as a pharmacist for 42 years know the biggest loser in this mess is the consumer. They lose this interaction that as drug therapy becomes more complex the more scrutiny a patients healthcare deserves. Mail order cannot provide this care but they get better priced because of discriminatory priced. Hope this adds to debate.

    • SK says:

      On the infrequent occasion that I get an Rx (usually for antibiotics) I use the local still-independent pharmacy. I have no idea if their prices are the best and don’t care, since I rarely need a prescription anyway.

      As you say there is still the face to face interaction with a pharmacist and personal service from the staff. And I trust them more with my personal medical information than I would ever trust a big data mining, predatory corporation like Amazon.

  33. marc says:

    The big secret is multi layered.
    Wholesalers are the ones making the huge dollars. Bypass them and you save 90% : good Rx is just that.
    Generic manufacturers are swollen whole by said wholesalers: Imatinib for example is generic for the last 10 years. While Gleevec (commercial Imatinib) went from $2500 a month 12 years ago to $15000/month (150k/year, wtf) when billed to insurance, the same generic is $12k/month (when it costs a few $ to manufacture) thru insurance and 120$ thru good Rx.
    Makes sense? no. It’s an organizational racket.
    Prices are 5-8 times less in Europe and Canada (poor countries?) and 100 times less in India.
    And btw the India medication is the identical one sold in the US.
    Crazy.

  34. woodson philbin says:

    I used to own half of two Rite Aids. Sold my interest several years ago but still follow the industry somewhat.

    What an informative, and funny, article about the business. Great job!

    Wish Mr. McNellis had written this article a few years ago so I could have shown it to my former partner and and avoided a costly partnership unwind.

  35. Sarra says:

    Ha. Ever notice that the dispensaries are at the back of the stores, and you have to walk thorough half a 7-11complete with ready made sandwiches, beer notions, OTC meds for dandruff, diarrhea, bloating, constipation, itchy skin (h/t Roseanne Rosanadanna), magazines greeting cards and walkers and DMS?

  36. gametv says:

    You have talked about one part of the medical industry disruption, but you are missing the other part – the shirt to DTC prescriptions.

    Why wait for an office visit to a doctor, just jump on an app and fill out some forms and a quick chat exchange and get your prescription. It is cheaper than a doctor office visit and is highly lucrative for the apps that can make this really efficient.

    The monopoly that doctor offices had on prescriptions is evaporating, eventually the laws against corporate healthcare will be gone and doctors will not even need to be doing anything except monitoring the online systems.

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