The era when pharmacy owners could rely on generous contracts and healthy margins is no longer. With rising costs, minimum to negative reimbursement rates, and PBM battles raging on, pharmacy closures have continued accelerating.
Chain pharmacies have also been shrinking, with CVS and Rite Aid shutting hundreds of locations. In just the first three months of 2025, over 300 pharmacies closed, 237 of which were independents.
For pharmacy owners and entrepreneurs, the days of “accidental profit” have been replaced by a new age that demands owners with business acumen, adaptability, and strategic vision.
The era when pharmacy owners could rely on generous contracts and healthy margins is gone. Today, owners face shrinking reimbursements, increased competition, and new regulatory hurdles. The implementation of the Centers for Medicare and Medicaid Services (CMS) rule on direct and indirect remuneration (DIR) fees in 2024 has further squeezed margins, with nearly a third of independent pharmacies at risk of closure due to lower prescription reimbursements.
The financial pressures are compounded by the rise of pharmacy benefit managers (PBMs), whose controversial tactics have been blamed for driving smaller pharmacies out of business.
Jeff Harrell, CEO of Cascadia Pharmacy Group and President of NCPA reflected in a recent interview with RedSail Media, “Ten, fifteen years ago, we used to make money by accident. You didn’t have to really pay attention. You did well in the contracts. And then those started to shrink down, and things started to get tight. Then we had Covid. Everybody got a whole bunch of government cheese. So those stores that were struggling got an influx of cash, and kept them going a few years. And here we are today…”
So how do pharmacy owners thrive today?
As Jeff shows, owners must be more than clinicians—they must be business experts. This means scrutinizing expenses, leveraging vendor relationships, and running their stores with precision. Jeff has seen his fair share of mismanaged sites, sharing a few examples he has personally seen:
The days of “set it and forget it” are over; owners must actively manage cash flow, inventory, and staffing to stay afloat.
“You’ve got to take business classes. You’ve got to run them like a watch. The PBMs have commodified the patient. And so, the patient is now a commodity. You need to understand a business. You need to look at your credit card statements and see what you know, what’s coming out.”
A big part of managing a business? Utilizing technology and other vendor partners to support your business and help manage your growth.
The 2024 NCPA Digest reports that independent pharmacies are increasingly adopting technology to streamline operations, with more than half using point-of-sale systems, social media, and email/text messaging to engage patients.
One important tip from Harrell: As you grow and increase demand, negotiate with vendors for better pricing on labels, on vials, and other items for your store.
While recent pharmacy closures wreak havoc on their local communities—especially in rural and underserved areas—they also create opportunities for independent pharmacy owners to expand their footprint. Jeff Harrell’s Cascadia Pharmacy Group, for example, has grown rapidly by acquiring stores in regions abandoned by chains.
As Jeff puts it, “It’s absolutely astronomical, the growth because of these shutdowns…It’s been just like shooting fish in a barrel for us.”
According to Harrell, in the past eighteen months, the average number of stores owned by pharmacy owners increased from 1.5 to 3.5.
When looking to acquire from bankrupt chains like Rite Aid, owners must be prepared to pivot quickly, manage working capital, and navigate regulatory hurdles. Harrell’s own experience highlights the importance of having trusted local partners and a clear operational plan. Successful acquisitions require not just financial resources, but also the ability to integrate new locations, retain staff, and maintain service quality.
The rules of pharmacy ownership have changed. Success now depends on adaptability, financial savvy, and a willingness to seize opportunities—even when they come disguised as challenges.
Whether you’re considering an acquisition, expanding your footprint, or simply trying to survive in a competitive market, the new era demands a proactive, business-minded approach.
Harrell notes, “I am pretty optimistic to be honest…I think in the next 18-24 months, we’ll be sitting pretty.”
RedSail Technologies is committed to supporting pharmacy owners with the tools, technology, and insights needed to navigate this evolving landscape.
By embracing change and investing in operational excellence, independent pharmacies can continue to serve their communities—and thrive.
