The number of retail pharmacies in Ohio has dropped below 2,000, according to a data tool released last month by the Ohio Board of Pharmacy. This decline is intensifying concerns, particularly in low-income rural areas, that residents will face increased difficulty accessing medications, vaccines, and guidance on managing chronic health conditions.
Data from the board’s dashboard suggests a pivotal shift occurred between 2015 and 2016 when pharmacy closures began to outpace openings—a trend that has persisted. Dave Burke, a pharmacist, former state senator, and executive director of the Ohio Pharmacists Association, believes this shift was no coincidence.
“Those lines crossed for a reason,” Burke said.
He pointed to the growing influence of pharmacy benefit managers (PBMs) during that time, which imposed stricter regulations and reduced reimbursements to pharmacies.
“There was the slow onset of (clawbacks), increasing audits, tighter network requirements, dropping reimbursements,” Burke explained. “The market changed during that time period and it consistently tightened up, probably even through today.”
Consolidation and Market Control
The three largest PBMs now control nearly 80% of the insured drug transactions in the United States. These companies—UnitedHealth Group, CVS Health, and Cigna-Express Scripts—are affiliated with major insurers, forming powerful conglomerates.
PBMs manage pharmacy transactions on behalf of insurers by establishing networks and determining reimbursement rates for pharmacies. Critics argue that these firms have conflicts of interest, as they own both insurance providers and pharmacies, leading to opaque financial dealings that disadvantage independent pharmacies.
The Federal Trade Commission has accused PBMs of engaging in anticompetitive practices, including inflating drug costs and directing consumers toward their own pharmacies. Independent pharmacists contend that, because PBMs control access to such a large portion of the market, they are left with little choice but to accept unfavorable terms.
Burke sees the impact of PBM consolidation reflected in Ohio’s pharmacy trends.
“I think you saw a lot of consolidation,” he said. “The big three PBMs started to emerge. We had dozens of PBMs in this space and we’re down to three, basically, and that consolidation started at that time.”
The Pharmaceutical Care Management Association, which represents PBMs, disputes the notion that these firms are driving pharmacies out of business.
“It makes no sense that PBMs are putting pharmacies out of business, and blaming PBMs for pharmacy closures is not based on the facts,” association spokesman Greg Lopes said in an email. “Not a single independent retail pharmacy closed last year in Ohio.”
The Impact on Pharmacy Access
Despite Lopes’ assertion, data from the Ohio Board of Pharmacy tells a different story. While the number of independent pharmacies has remained relatively stable—showing a net increase of 37 stores since 2012—small chains have declined by 39 locations, and large chains have shuttered 330 stores in that same period.
Antonio Ciaccia, a drug-pricing expert and former lobbyist for the Ohio Pharmacists Association, argues that Ohio should have seen an increase in pharmacies, given demographic and pharmaceutical trends.
“Ohio’s population growth has been constant since then,” Ciaccia said. “The amount of medications we take nationally has been going up constantly. We have an aging population in the state of Ohio, which means you see more medication use. By every other metric, one would assume that pharmacy need and access would be on the uptick. The opposite actually occurred.”
Large pharmacy chains have struggled in recent years, with closures accelerating during the COVID-19 pandemic. Rite Aid filed for bankruptcy in 2023, planning to shut down hundreds of locations, including in Ohio and Michigan. CVS completed the closure of 900 stores last year, while Walgreens—already in the process of closing more than 1,000 stores—recently announced its sale to a private equity firm, raising the likelihood of further closures.
Part of this decline is attributed to shifts in consumer behavior, with more people opting for online purchases over brick-and-mortar visits. However, business practices by major PBMs also played a significant role in the closures, dating back to the critical 2015-2016 timeframe when pharmacy networks and reimbursement policies became more restrictive.
The Hidden Costs of PBM Practices
Ciaccia pointed to a pivotal moment when CVS’s PBM began charging Ohio’s largest Medicaid managed-care provider, CareSource, using a controversial method called “spread pricing.” Under this system, CVS Caremark billed Medicaid plans at one rate while reimbursing pharmacies at a much lower rate. OptumRx, UnitedHealth’s PBM, employed a similar practice.
For years, these contracts remained opaque. However, in 2018, the Ohio Department of Medicaid compelled PBMs to release data from 2017. The findings were staggering: PBMs had charged the state $224 million more for drugs than they had paid to pharmacies.
CVS, which owned both a PBM and a retail pharmacy chain, took advantage of the situation. While independent pharmacies struggled under low reimbursements, CVS’s real-estate division sent buyout offers to competitors.
At the start of 2019, CVS acquired more than 20 stores from the Ritzman chain, closing most of them and transferring prescription files to nearby CVS locations. The company repeated this strategy nationwide until, during the pandemic, its understaffed stores faced scrutiny from the Ohio Board of Pharmacy. In 2023, CVS paid a record settlement over claims that its staff shortages endangered patient safety.
For Ciaccia, Burke, and other experts, the root of the problem traces back to the mid-2010s, when PBM consolidation and a lack of financial transparency reshaped the pharmacy landscape.
“The plans and the state had no visibility into what the pharmacies were actually being paid,” Ciaccia said. “As soon as that visibility went away, that’s when the floor dropped out. That’s when the pharmacy reimbursements all took a massive hit. Shortly thereafter, that’s when we saw the letters go to pharmacies saying, ‘We know that times are tough, you should sell your pharmacy to us.’ The pharmacy marketplace as a whole has not rebounded from that moment.”