Rite Aid bankruptcy is signaling a concerning reality for America’s dwindling pharmacies.
Rite Aid, the third-largest drugstore chain in the US, filed for Chapter 11 bankruptcy on August 18th, 2020, stoking fears of a further loss of pharmacies. The financial woes of the chain, which owns 4,600 stores across the country, will likely force many to shutter their doors and leave customers with fewer places to purchase medications.
The closure of such a large drugstore chain further exacerbates an existing trend of pharmacy closures nationwide. Over the last ten years, America has lost 3,700 pharmacies, a decrease of 12 percent. This is primarily the result of consolidations within the industry. Corporations such as CVS, Walgreens, and Walmart have effectively monopolized the pharmaceutical market, driving out many smaller drugstores.
The bankruptcy of Rite Aid largely hinges on their inability to compete with larger rivals. Despite their long-term strategic partnerships with Amazon and Alphabet, as well as their shift towards the retail clinic space, Rite Aid struggled to attract customers. Consumers had limited access to physical stores due to the pandemic and shifted towards online-based orders.
Given this hostile industry landscape, associates at Rite Aid have struggling to keep up. The uncertain prospects of the chain forced them to take a monetary hit and accept a wage cut. In addition, its bankruptcy filing dismissed more than 200 employees and canceled all 401(k) plans.
The bankruptcy of Rite Aid sends a harsh reminder of a greater problem: the informal nationalization of the pharmaceutical industry. With drugstores and pharmacies disappearing all across America, customers must look to alternative resources for their medications. This can prove to be a difficult prospect, as not all patients have the resources necessary to buy medications online.
The Rite Aid bankruptcy should serve as a warning to those looking to enter the pharmaceutical industry: Monopolization is a real threat, and reliance on larger companies can prove to be a dangerous gamble. Customers must keep in mind that their access to basic medications can be limited and take proactive measures to ensure they have the necessary resources when needed.