The growth of “pharmacy deserts” represents a growing problem that has serious implications for the health of Americans and the cost of care itself.

As far back as 2014, community pharmacies have been closing faster than new ones opened to take their place. The result has been an increasing number of neighborhoods, towns, and even counties whose residents must travel a significant distance to access a pharmacy. This is more than a matter of inconvenience.

The critical role of the community pharmacy

In addition to serving as a critical source of prescription medication, pharmacies provide access to vaccinations and education, public health screening programs, emergency support during public health crises, medication therapy management (MTM), drug-interaction management, adherence monitoring and coaching, support for chronic diseases like blood pressure and hypertension screening, blood glucose and HbA1c screening, contraception services, and much more.

A 2023 Wolters Kluwer consumer survey found that 58% of Americans are likely to visit a local pharmacy as their first step with a non-emergency issue. Recent research has also shown that closure of a community pharmacy has significant negative impacts on medication adherence for key drug classes, including cardiovascular meds. Mail order options do not meaningfully compensate for the role of community pharmacies. This is significant as the direct cost of medication non-adherence has been estimated at ~$100–$300 billion per year.

The bottom line is that community pharmacies are not just medication dispensers—they are decentralized healthcare access hubs delivering preventive care, chronic disease management, diagnostics, care navigation, and public health services.

Underlying factors

The number of pharma deserts has been increasing. Pharmacy closures accelerated between 2018-2020 and have continued through 2025. The reason is simple: the financial model is not sustainable. Dramatically increased costs, largely driven by inflation, have been accompanied by continually shrinking revenues.

The principal factor behind increased cost is inflation. Rent, labor, and the range of business services have all grown significantly more expensive. Making matters worse, in the same time frame that costs escalated, revenues have been shrinking. The biggest issue in shrinking revenues has to do with PBMs.

A trip to the local pharmacy to pick up a prescription triggers a complex transaction between the pharmacy and typically, a PBM. Pharmacies pay to maintain their inventory and are reimbursed for the product prescribed and for dispensing it by insurers, typically through their affiliated PBMs. Because three PBMs control over 80% of the scripts filled in the US, these PBMs exert disproportionate control over the terms of the reimbursement process. In order to be included by the PBM as “in-network,” pharmacies are generally forced to sign contracts on a take-it-or-leave-it basis that reflect the PBMs’ relentless drive to lower costs for the insurers they serve.

Those contracts enable the PBMs to dictate what they will pay for both the drug and its dispensing, and over time, those revenues have been shrinking, often amounting to less than the drug’s acquisition cost. Even then, PBMs frequently “steer” prescriptions, especially high-cost prescriptions, to the chain pharmacies or to a specialty drug fulfillment subsidiary affiliated with the insurer they serve. PBMs sometimes bill insurers a premium over what they pay pharmacies for a drug, retaining the difference (the “spread” in spread pricing). This, combined with the shift to generic prescriptions which offer smaller margins, reimbursements have made the pharmacy model unsustainable.

Recent efforts to fix the problem

While the increasing number of pharmacy deserts is not exactly front-page news, the business practices and contribution of PBMs to the rising cost of healthcare have not gone unnoticed. In July 2024, the FTC issued a scathing report focused on the harms resulting from the business practices of the six largest PBMs, based on a nearly one-year investigation.

In September 2024, the FTC brought legal action against the three largest PBMs—Caremark Rx, Express Scripts (ESI), and OptumRx—for engaging in anticompetitive and unfair practices. While the case is currently stayed, the spotlight has raised the pressure on Congress to take action to curtail PBM business practices.

Far more than the FTC’s reports and suits, the killing of Brian Thompson, head of UnitedHealth's insurance unit in December 2024 lit the spotlight on PBMs and insurers more broadly because of the negative impact these practices have had on consumers.

Unfortunately, results so far have been disappointing. Congress introduced four pieces of legislation in 2025, none of which have yet been enacted into law. A handful of states have each successfully passed various measures, including mandating rebate pass-through and reimbursement requirements, anti-steering protections, minimum pharmacy reimbursement and dispensing fees, restrictions on vertical integration (e.g., PBM ownership of pharmacies), and licensing & fiduciary duty requirements. This, despite the claim that there is bipartisan support for legislation that would curb the excesses of PBMs.

PBMs and their insurer parents have taken notice of the popular outrage surfaced by Thompson’s killing. The three largest have given assurances to consumers that they will change, taking steps to be transparent, provide better patient support, drive better value, and simplify processes to be more accessible. Some or all of these may occur, but none of them will likely slow the growth of pharmacy deserts.

Meanwhile, throughout 2025, the Trump administration took steps to ratchet up the pressure on pharmaceutical companies for lower drug prices and eliminate the “middleman”. This set the stage for the September announcement of TrumpRx—a direct-to-consumer (DTC) platform for distributing pharmaceuticals that offers discounted prices without going through insurance—or community pharmacies.

The use of TrumpRx is voluntary and without the power of law, and it joins other, more established DTC platforms that already exist. That said, to the extent that TrumpRx (and other such platforms) are successful, they will reduce dispensing business at community pharmacies, further tilting the cost/revenue imbalance that is driving the creation of pharmacy deserts.

If community pharmacies are to survive, they need a business model that articulates how they contribute to better care outcomes at lower total cost.

About the Author

Michael Abrams is a managing partner at Numerof & Associates.