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Walgreens is preparing to shutter 1,200 stores as Amazon Pharmacy gears up to launch in 20 new cities. The two retail giants are each promising customers a new pharmacy experience, but they have different ideas of what it should look like.
It's been a tough year for Walgreens and its drugstore-chain competitors. Walgreens shares have fallen nearly 70 percent this year, and the company is exploring a deal with private-equity firm Sycamore Partners that could be completed in early 2025. On the company's October 15 earnings call, Walgreens CEO Tim Wentworth announced plans to close roughly 14 percent of locations over the next three years—adding to the hundreds of stores already slashed by each Rite Aid and CVS.
Amid this string of closures, some pharmacies are betting big on delivery. On October 9, Amazon Pharmacy shared that it would expand its footprint next year, making nearly half of U.S. customers eligible for same-day medication delivery by the end of 2025. Less than two weeks later, Walmart launched same-day prescription delivery in six states, an offering expected to reach 49 states by the end of January.
Rick Gates, chief pharmacy officer of Walgreens, isn't surprised to see other major retailers crack the medication delivery space. Three years ago, Walgreens launched its own prescription delivery service—but Gates still sees promise in its brick-and-mortar roots.
"Everybody said mail-order [pharmacy] was going to take away all the customers, delivery is going to take away all customers," Gates told Newsweek in late October. "Consumers have different ways they want to engage in their health care, and I think we just have to make sure that we're the most convenient pharmacy-led organization when it comes to solutions for them."
Walgreens is taking an "omni-channel" approach to the future, propped up by four pillars: digital, delivery, in-store and drive-through. Gates describes a solution that revives the old with the new: using tech to improve the physical experience (for those who still want it). For some stores, data entry and phone calls have been centralized elsewhere so pharmacists can spend more time engaging with patients. Upward of 40 percent of its prescriptions are being filled by Walgreens micro-fulfillment sites separate from its stores, according to Gates.
The company also plans to utilize digital check-ins to reduce wait times and expand virtual communication channels for people to connect with pharmacists.
"You're going to see us really lean forward on digital-forward stores," Gates said.
Still, decreasing reimbursement rates from pharmacy benefit managers and health plans are putting the squeeze on drug stores' budgets. Walgreens wants to broaden its engagement with the industry by investing in immunizations and health screenings—services that "payers are really needing an extension to," Gates said.
By doubling down on a health-and-wellness core, Walgreens hopes to offer better connections between patients and pharmacists, according to Gates—even as it shutters approximately one in seven stores. The company massively expanded its retail footprint in the 1990s, but the vast web of storefronts no longer aligns with consumer's expectations. Walgreens hopes that people who lose their home stores will remain in their network through delivery or by transferring to another location.
"We are thinning out a network," Gates said. "We're not leaving geographies."
When Gates was an in-store pharmacist, he said he knew "every customer that walked in," from their disease states to their kids' names. He believes those relationships still exist, anchoring pharmacists to communities—and that consumers still expect that from Walgreens.
John Love, vice president of Amazon Pharmacy, is skeptical.
"You have some of these retail experiences that are lovable," Love told Newsweek. "But that's not universally true."
Love argues that traditional pharmacies place the burden of care on the customer. Long wait times and inconvenient store hours can be frustrating for patients—and once they do make it to the front of the queue, they might be told an overworked pharmacist hasn't gotten around to their prescription. Sometimes, customers have to navigate private health conversations in public.
Mail-order pharmacies aren't much better, according to Love. They offer a limited list of medications which can take more than a week to arrive on the customer's doorstep.
Amazon Pharmacy wants to pioneer "pharmacy 3.0," Love said: a digital-forward strategy that can engage customers 24/7, provide transparent pricing and deliver medications in a matter of hours.
The company has built small, modular pharmacies within Amazon's "sub same-day" logistics and fulfillment model. In the 10 cities where these pharmacies currently operate, it conducts five waves of deliveries per day.
Amazon can also organize its stock regionally and nationally, allowing it to "load-balance" different medications. Traditional pharmacy chains tend to be more fragmented, so patients may have to call multiple stores to find one that has their medication in stock.
But "if [Amazon Pharmacy] ran out of medication in Indianapolis and we had it in Austin, we'll just take care of you," Love said. "You'll never even experience that we're out. We just redirect the order."
By simplifying the pill-to-patient pipeline, Vin Gupta, chief medical officer of Amazon Pharmacy, hopes to improve medication adherence. A 2024 study found that 46 percent of U.S. counties have at least one "pharmacy desert," which are significantly more common in areas with socially vulnerable populations (such as those who live in poverty, do not have health insurance, or do not have personal vehicles). When medications are harder to attain, people are less likely to get them, which can worsen health outcomes over time.
With Amazon's new launch, 29 percent of pharmacy deserts will get same-day delivery, according to Love. Many of these areas will be losing stores from Walgreens and other drugstore chains.
"Health is not equitably distributed, and access to health care is not equitably distributed, so one thing that we've really worked hard on is to raise the waterline for access," Love said. "Anyone can get to our store on web or app. The prices are available to anyone."
Amazon is also leveraging technology to help pharmacists work at the top of their licenses, Gupta said. AI has automated two-thirds of data entry, giving pharmacists more time to counsel patients on side effects and craft deprescription plans for certain populations who take 10 or more medications.
Amazon Pharmacy's patients can chat with a pharmacist 24/7, but can they build the same sticky relationships as local pharmacists can? That remains to be seen, but it does raise some eyebrows among pharmacy leaders, according to Brigid Groves, vice president of professional affairs at the American Pharmacists Association.
Delivery-based pharmacies give patients options to get their medications, Groves said. But as brick-and-mortar stores continue to shutter, she's concerned that patients could lose connection with pharmacists.
"At this point, we have concern because we want to make sure that we [pharmacists] remain an accessible health care destination for patients and communities," Groves said.
Pharmacists do more than just fill prescriptions, according to Groves. Their scope of authority varies by state, but in some locations, pharmacists are prescribing interventions like hormonal birth control and HIV PrEP. They can also help chronically ill patients manage their conditions through point-of-care testing. Pharmacies often fill access gaps in rural and urban areas—which are typically home to more vulnerable patient populations, yet are underserved by health care providers.
Many patients still rely on pharmacies' health care services, according to a November survey from information and software services company Wolters Kluwer. Exclusive data shared with Newsweek revealed that over the past year, 35 percent of Americans have received non-emergent care at a local pharmacy like CVS or Walgreens. Nine percent of respondents received care through an online pharmacy during the same time period.
The care offerings outlined in Walgreens' omni-channel strategy could give them an advantage with this consumer group, Dr. Peter Bonis, chief medical officer of Wolters Kluwer Health, told Newsweek. But he isn't convinced that Walgreens can compete with Amazon on delivery.
"I think it's unlikely that Walgreens can achieve the same degree of proficiency with shipping fulfillment that an Amazon could, but maybe it's sufficient for delivering drugs," Bonis said. "They have to develop their capabilities to use digital tools and telemedicine, potentially for telepharmacy."
Still, Wolters Kluwer's data suggests that many customers remain loyal to brick-and-mortar locations. Nearly 3 in 5 expressed concerns about tampering or theft with medication delivery, and only 16 percent said they prefer online pharmacies.
There are business drivers behind the pharmacy closures, but the public health impacts must also be considered, according to Bonis. Notably, people with a household income under $50,000 are more likely to hold a preference for community pharmacies than people in any other income group; however, they are most likely to be affected by a pharmacy closure.
The jury is out on whether people will drive further for a physical pharmacy or will lean toward delivery in the coming years. But the public health implications of closures must be considered alongside the business drivers, per Bonis.
"A new equilibrium is coming," Bonis said, "and we should hope—and perhaps influence with good policy—that the new equilibrium leads to equitable care across all our communities."
Pharmacies are at a tipping point, Groves echoed. But as they work to optimize the modern prescription pipeline, she hopes they'll remember her profession's roots.
"We may need to pivot and change how we're looking to the future," Groves said. "But that oath of a pharmacist—to be there to provide care to the patients in your communities—is still the ultimate driving force."
Update 12/12/24 12:51 p.m. ET: This story was updated with additional information.
