CVS has threatened to close 23 pharmacies in Arkansas after the state passed a law banning companies that own pharmacy benefit managers (PBMs) from also operating pharmacies starting in 2026.
But CVS also has a lot of competition in the retail pharmacy space, including independent pharmacies, major retail chains like Walgreens and Walmart, and online options like Amazon. Experts told Healthcare Brew CVS closures could open the door for other retailers to grow their footprints in the state.
“There’s definitely an opportunity for competitors broadly to capture some of the market share. But how much of an opportunity, I think, certainly depends on each specific bigger brand,” Rajiv Leventhal, senior analyst in digital health at research firm eMarketer, said.
Shifting market share?
About 1 in 3 retail pharmacies closed across the US between 2010 and 2021 the Arkansas Democrat Gazette reported in May, 100 pharmacies have closed in the state since 2020.
Closures have been linked to the influence of PBMs, which keep reimbursement rates for medications lower than what pharmacy companies say they need to keep their doors open, Healthcare Brew previously reported.
CVS owns Caremark, one of the three largest PBMs in the US—alongside Cigna’s Express Scripts and UnitedHealth Group’s OptumRx (all of which also have a pharmacy or mail-order presence)—which help set the price for 80% of drugs in the country. CVS and Cigna are both suing Arkansas to overturn the law that calls to break up vertical integration among PBMs.
Now that CVS is reevaluating its presence in Arkansas, Amy Thibault, executive director of corporate communications for external affairs at CVS, told Healthcare Brew in an emailed statement that “23 CVS pharmacy locations in Arkansas are currently open and will continue to operate for the immediate future.” She added the company has not announced any store closures, and is “evaluating any and all options” to keep pharmacies open, including legal means.
Referencing the lawsuit CVS filed against the state, Thibault added that the law would “force CVS Health to stop pharmacy operations in the state” and that “an injunction would allow the 23 CVS Pharmacy locations in Arkansas to remain open and continue serving patients and customers while the court considers CVS Health’s arguments that the law violates the United States Constitution.”
Rohan Kulkarni, executive research leader for business consultancy HFS Research, said potential CVS closures could “give new life to independent pharmacies who have been dying a very, very slow and painful death for the last number of years.”
In a May statement, CVS said the law would also restrict consumers’ access to medications. But Kulkarni disagreed, saying smaller chains and mail-order pharmacies “will step up.”
Comparing competitors
Walgreens is another CVS competitor, though the company has faced significant challenges in recent years, culminating in getting bought out by private equity firm Sycamore Partners back in March. Now, Walgreens is closing more of its stores (1,200 nationwide, to be exact) than opening them.
Navigate the healthcare industry
Healthcare Brew covers pharmaceutical developments, health startups, the latest tech, and how it impacts hospitals and providers to keep administrators and providers informed.
“Walgreens probably isn’t thinking about attracting quite as much in-person pharmacy market share as much as it is figuring out its own strategic path going forward. That said, Walgreens and Walmart are in a good position, if [expanding in Arkansas] was a priority for both of them,” Leventhal said.
That’s because Walgreens and Walmart are second and fifth, respectively, on the list of the biggest pharmacies in the US, he said. CVS has more than 9,000 pharmacies nationwide, while Walgreens has about 8,500 and Walmart has more than 5,000 alongside its partnership with wholesale retailer Sam’s Club.
But unlike CVS, Walgreens and Walmart don’t also own a health plan and a PBM, Leventhal said, adding that the whole idea behind the law is to “remove or reduce some of the power of these vertically integrated conglomerates.”
Both companies already have more stores than CVS in Arkansas, too—hundreds of locations for both Walgreens and Walmart, the latter of which is also headquartered in Bentonville, Arkansas.
Walgreens, Walmart, and Amazon did not respond to requests for comment.
“Even though Walgreens is grappling with all its own store closures, there’s definitely an opportunity for it to capture some pharmacy market share,” Leventhal said.
There’s also space for Amazon to pull more customers, Leventhal said, as a digital pharmacy in the market. In October 2024, Amazon announced it would expand same-day medication delivery in 20 new cities in 2025, up from just 10, which Fierce Healthcare reported as an “aggressive expansion.”
“Amazon is carving into the share of retail pharmacy incumbents—a bit even before this law—and I think it has an opportunity to continue doing so,” he added. “As more pharmacies close, even as Walgreens stores close, that’s an opportunity for Amazon.”
The biggest impact to PBMs, Kulkarni said, could come if the Arkansas law spurred a nationwide movement among other states to regulate PBMs more (Iowa and Louisiana have already proposed their own PBM laws). Congress did not include any PBM legislation in the recently passed budget bill.
“That will probably hurt the Caremarks and the Optums and CVS more than what’s happening in Arkansas,” he said.