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Number of independent Minnesota pharmacies on the decline

Photo: Jeremy Noble via Flickr CC

Crookston, Minnesota’s Eagle-Rexall Drug closed in March 2010 after 104 years in business. The business merged with a Thrifty White Drug store nearby.

New data shows the neighborhood corner pharmacy is becoming more and more a thing of the past.

A recent study led by University of Minnesota College of Pharmacy researcher Jon Schommer, Ph.D., found the number of independent pharmacies in Minnesota fell from representing one-half of all Minnesota community pharmacies to representing only one-quarter over a twenty-year period spanning from 1992 to 2012.

The findings showed independent pharmacies may be closing due to decreases in population density in some areas and/or competition from nearby chain pharmacies.

Areas with increases in population density, on the other hand, were prime locations for the addition of new regional or national chain pharmacies.

“The economic downturn cleared out a number of independent pharmacies,” said Jon Schommer, Ph.D., professor and associate department head of Pharmaceutical Care & Health Systems at the University of Minnesota and lead author of the recent paper. “Independent pharmacies are still commonplace in Minnesota, they’re just not nearly as common as they were twenty years ago.”

Schommer pointed to the changing health care environment as one possible contributor to changing pharmacy ownership.

Pharmacies located in clinics, medical centers, grocery stores, and mass merchandiser outlets like Target and Walmart are becoming more common in Minnesota – a trend Schommer surmises is likely in-line with national patterns.

Whereas cost and quality of care are concerned with the loss of independent pharmacies, Schommer says it will be difficult to tell based on industry changes as pharmacies will change significantly due to the Affordable Care Act in coming years with or without this changing trend in ownership.

“The pharmacy business model based on counting and selling pills isn’t cutting it anymore,” said Schommer. “Where medication is dispensed and where pharmacists are practicing is changing. We’re moving away from the pill-counter business model into a model that incorporates pharmacists and pharmacies into existing hospitals, clinics, minute-clinics, and the larger health care team environment.”

Independent pharmacies proving successful today are often those focusing on niche markets, fulfilling an unmet need, or moving to integrate and embed themselves within the larger healthcare picture. Significant growth is expected in niche pharmacies, which turn a higher profit and focus on compounding or specialty drugs like HIV/AIDS medications.

For big-box retailers like Target and Walmart pharmacies are loss leaders, not bringing in significant profits from the pills they sell, but from the traffic they bring into other parts of the store.

  1. July 21, 2013 5:02 pm | Craig Says:

    This is very frustrating to read, the study implies that it is large chains that are putting independent out of business. The reality is chains play a very small part in the demise of MN Indy Rx. What is crushing these business is the oligopoly of the 3 large Rx wholesalers and the complete control of the industry. Since they fund academic studies that get the public looking in the wrong direction, I’ll be surprised if this response see the light of day. If anyone at the U of M wants to discuss how a $320 billion feel free to contact me.

  2. July 22, 2013 10:19 am | Justin Paquette Says:

    Craig, from the above you’ll see that our researchers cite a few reasons for their findings. They don’t single out chain pharmacies. The economic downturn, decreases in population density in some areas and, at times, competition from nearby chain pharmacies are all cited as reasons for a decline in smaller, independent pharmacies. They also note that health care trends are changing and that more pharmacies are located in larger businesses and medical centers.

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