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Retail Pharmacies

Nicole Ortiz

Healthcare Brew delivers the latest news and trends in healthcare.

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When you think “healthcare,” the first place your mind probably goes is Best Buy, right?

No? Well, perhaps that’s a good thing, seeing as it recently divested from its hospital-at-home offering and restructured its health business.

In 2021, the tech retailer acquired the Current Health virtual care platform for roughly $400 million, and in 2023, it shared plans to 

 its healthcare services. But the company’s health arm struggled, recording a Q4 $475 million goodwill impairment charge, which contributed to a nearly 16% stock drop on March 4 and led to a 

 that included an announcement to lay off 161 employees, effective this September.

Current Health announced the split from Best Buy at the end of June. It will be reacquired by co-founder Christopher McGhee, who started the company in 2014, for an unspecified amount. According to a LinkedIn 

, Current Health treated 70,000+ patients during its time under the Best Buy umbrella and had partnerships with major health systems like New York-based Mount Sinai Health System and NYU Langone Health.

“Investors are becoming increasingly cautious about big-name retail companies expanding into healthcare,” David Hamlette, health and wellness analyst at market researcher Mintel, told us via email. “Investors are wary because the long-term profitability and sustainability of these healthcare ventures remain unclear, especially as retailers continue to experiment with digital strategies and partnerships.”

Best Buy and Current Health did not respond to requests for comment.

In general, this seems to follow a trend: Companies saw that healthcare and virtual care were experiencing a boom during and after the height of the 

 and wanted to find a way in, Lucienne Ide, founder and CEO of digital health company Rimidi, told Healthcare Brew.

“A bunch of people thought, ‘Oh, how hard is this? We do virtual business in all other sectors, we can jump in and do this in healthcare,’” she said. “And it’s just not the same.”

According to data from researcher eMarketer, retail health clinics saw the most growth in use (over 51%) compared to other nontraditional care venues between 2020 and 2021. And that was largely because these retailers could offer more convenience, better price transparency, and a customer service element, Ide said.

“These big guys didn’t fail because they had nothing to offer,” she added. “They had a whole lot to offer. They just didn’t have all of this equity that we have in healthcare.”

Now, we’re seeing these retailers divest from parts of their healthcare offerings or ending them altogether after the pandemic bubble burst.

If you’re feeling a sense of déjà vu, that’s because last April, Walmart made a similar move by ending its 

. Or perhaps you’re thinking of Walgreens, which has struggled to 

 its VillageMD primary care offering (which is still of interest for its 

, private equity firm Sycamore Partners).

“Divesting from underperforming healthcare assets is increasingly seen as a necessary move to address stakeholder concerns and adapt to market realities,” Hamlette said.

 related to these healthcare investments, retailer options also contribute to rising healthcare costs when patients receive “disjointed care” that results in “duplicate care, duplicate testing—a lot of inefficiency in the system,” Ide said.

“I don’t think anyone has cracked the nut on it,” she said.

Retailers like Best Buy are divesting from their healthcare offerings following stakeholder wariness

Once seen as an opportunity for growth, big-name retailers still aren’t seeing financial gains from acquisitions and investments.

Retailers like Best Buy are divesting from healthcare offerings following stakeholder wariness

Cassie McGrath

 23 pharmacies in Arkansas after the state passed a law banning companies that own 

 (PBMs) from also operating pharmacies starting in 2026.

But CVS also has a lot of competition in the retail pharmacy space, including 

. 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.

 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.

, 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 

 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.” 

Walgreens is another CVS competitor, though the company has faced significant challenges in recent years, culminating in getting 

 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.

“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 

 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 

 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 (

 have already proposed their own PBM laws). Congress 

 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.

CVS is threatening to close stores in Arkansas, but that may open the door for competitors 

“There’s definitely an opportunity for competitors broadly to capture some of the market share,” one expert says. 

If you’re a fan of winter sports, you might be in luck…because we may have a snowball effect emerging.

It all started when Arkansas Governor Sarah Huckabee Sanders signed a law on April 16 saying any company that owns a 

 (PBM) would be prohibited from also owning or operating pharmacies in the state. That’s seemingly bad news for the 

 PBMs—Cigna Group’s Express Scripts, CVS’s Caremark, and UnitedHealth’s Optum Rx, which collectively control nearly 80% of the market—seeing as they all also operate pharmacy chains.

Now the state of Iowa wants to get in on the action, with Governor Kim Reynolds signing a law on June 11 to change how PBMs operate in the state.

The current practice, the Iowa governor wrote in a letter, gives PBMs “outsized power.outsized power over which medications patients receive and what they pay—often resulting in unaffordable drug costs, difficult choices for families, and reimbursement below pharmacy acquisition cost,” she wrote in a letter.

 Under the Iowa law, PBMs cannot stop patients from using certain in-network pharmacies. They also can’t reimburse their own pharmacies more for dispensing the same drugs and must adhere to current national average drug costs.

Further, rebates negotiated with drugmakers will need to “pass through” to health plan clients to ensure PBMs are sharing the savings and not just profiting from the arrangement, according to 

“We believe the legislation will result in higher costs for Iowa patients. By restricting the tools PBMs use to control costs, drug companies get even more of an advantage to increase profits and make health plans and patients pay more,” Pharmaceutical Care Management Association spokesperson Greg Lopes told us.

 As late as last week, Louisiana lawmakers were working through a proposal that would go into effect in 2027 to ban PBMs from owning pharmacies in the state. CVS reportedly later sent texts to customers claiming the legislation “threatens to close your CVS pharmacy,” according to 

On June 12, the state’s Senate killed the bill, though the governor could still call a special session.

 on May 29 against the state. CVS threatened to close its 23 retail pharmacies in the state, and Cigna said it would likely end up shuttering some stores.

In response to the Iowa law, CVS Caremark spokesperson Phillip Blando told us the PBM “is committed to making affordable, high-quality pharmacy benefits available to Iowa employers and consumers” and the company believes the law allows it to “coordinate pharmacy services to contribute to lower prescription drug costs and better outcomes.”

Express Scripts and Optum Rx did not immediately respond to a request for comment.

High Cost of Prescription Drugs: Concept prescription bottles with gavel

Leading PBMs face increasing scrutiny from states

Iowa is the latest to impose limits on how PBMs can operate in the state.

 (PBMs), Caremark and Express Scripts, respectively, are suing Arkansas after the state 

 on April 16 that would ban vertical integration between PBMs and pharmacies. The companies filed two separate lawsuits on May 29, claiming the Arkansas law is unconstitutional and “unenforceable.”

In other words, companies that own PBMs (which negotiate medication prices between drug manufacturers and pharmacies) cannot also operate pharmacies in the Natural State starting Jan. 1, 2026. This is a problem since the three largest PBMs all own pharmacies.

As a result of the bill, CVS threatened to close its 23 retail pharmacies in Arkansas, which the healthcare giant said would reduce patients’ access to medications. CVS serves about 340,000 patients in the state, according to 

Cigna also claimed the law “will likely force some retail pharmacies to close” in a press release on May 29.

In the release, Susan Peppers, VP of pharmacy practice at Evernorth Health Services, Cigna’s health services organization, said “hundreds of thousands of Arkansans” would lose access to pharmacies and medications.

Rajiv Leventhal, senior analyst in digital health at research firm eMarketer, told Healthcare Brew these suits are “a very predictable response” to the law, as it would definitely have a “big effect on [PBM] business.”

The country’s three biggest PBMs—Caremark, Express Scripts, and UnitedHealth Group’s Optum Rx—

 of the drugs prescribed in the US. Meaning they also have a lot of control over prices.

 PBMs, according to the Federal Trade Commission, which has 

 against the three giants. PBMs have also 

 as a reason independent pharmacies are closing across the country, including 20 closures in Arkansas in the last year, 

Sam Dubke, spokesperson for the office of Gov. Sarah Huckabee Sanders, told us the governor is “proud” to be the first state to take on PBMs’ “anticompetitive practices.” 

“These big drug middlemen are only attacking Arkansas in the courts because they’re worried other states will join Governor Sanders in fighting for patient access and affordable prescriptions,” he said.

Leventhal said PBMs have never faced such a “tough decision” through a law before.

“The PBMs just have way too much influence over pharmacy reimbursement, over which medications patients can access and at what cost,” he said.

While Arkansas has certainly made a statement with this law, Leventhal said we’ll have to wait to see how the lawsuits play out to determine its effect on the industry. Though, he added, he’s also unsure whether the law will hold up because “some of the arguments that CVS and Cigna have made in their lawsuits…could look pretty convincing in court.”

“There’s definitely enough appetite and willingness at the state and federal level to make sure that PBM influence and power does get mitigated, at least a little bit,” Leventhal said. 

A medical caduceus symbol modified to resemble a 'ban' symbol.

CVS, Cigna sue Arkansas over PBM ban

PBMs have reportedly raised drug prices and contributed to local pharmacy closures. But CVS is threatening to close more in Arkansas. 

Maia Anderson

Optum Rx is switching up the pharmacy reimbursement game.

On March 20, UnitedHealth Group-owned Optum, one of the 

 pharmacy benefit managers (PBMs) in the US, announced it would move to a cost-based reimbursement model to “provide pharmacies with better financial means to stock more medicines” and “alleviate drug shortages,” according to a company press release.

“Our plan is to align drug payment models for clients and pharmacies more closely to the costs that pharmacies pay for those drugs,” Angela Adler, SVP of networks and transformation at Optum, told Healthcare Brew.

PBM reimbursement has historically favored generic drugs as part of an industrywide push to make medications more available to patients. But today, drugmakers increasingly prioritize expensive brand-name drugs, and pharmacies often lose money dispensing them, according to the National Community Pharmacists Association (NCPA), a trade group that represents the roughly 19,000 independent pharmacies in the US.

So instead of favoring one type of drug over the other, Optum now plans to reimburse pharmacies on a cost-based model, which means paying them for the cost of acquiring the drug plus a dispensing fee that covers the labor it takes to stock and dispense the drugs, counsel patients, and other overhead.

 and other specialty drugs, “accelerated this need to rebalance pricing,” Adler added.

Optum plans to fully implement the model by the start of 2028, Adler said. She added that the company has been working on a cost-based model for “at least three years.”

The shift could lead to more financial predictability and a more sustainable reimbursement model for pharmacies if implemented, according to Ronna Hauser, SVP of policy and pharmacy affairs at the NCPA.

But it’s “not so clear” whether this model is actually going to be offered to pharmacies, she added. As of April 11, Hauser said she wasn’t aware of any NCPA-affiliated pharmacies receiving information from Optum on when the model would be implemented.

“Oftentimes we see these announcements…the problem is, it’s just talk, and we don’t see action,” Hauser said. “We don’t see that these models are actually being packaged into a network offering for pharmacies to consider.”

 in December 2023 that its PBM arm, Caremark, was moving to a cost-based model called CostVantage, which company executives said at the time would be a “step toward more pricing clarity for consumers.”

But NCPA-affiliated pharmacies “haven’t seen any movement on that program,” Hauser noted, saying none have received a cost-based reimbursement contract from Caremark.

CVS didn’t respond to a request for comment about its program.

What’s needed to hold PBMs to their promises, according to Hauser, is both state and federal legislation requiring the companies to reimburse pharmacies on a cost-based model.

The reimbursement model is already mandated for state fee-for-service Medicaid programs, Hauser noted, so it wouldn’t be “too far of a leap” for the government to pass legislation on a federal level requiring PBMs to switch over. Plus, a bipartisan group of senators introduced legislation in March, called the Protecting Patients in Medicaid Act, that would require Medicaid managed care programs to use a cost-based reimbursement model.

When asked about the pharmacy group’s skepticism that Optum will follow through on its plans, Adler said that uncertainty is why the company chose to work with Epic Pharmacy Network, a pharmacy services administrative organization (PSAO) that represents more than 1,000 independent pharmacies.

A PSAO is a collective bargaining group that helps its small pharmacy members negotiate rates with PBMs and provides the pharmacies with administrative support.

Optum partnered with Epic “to demonstrate real action” because the company understands there may be doubt from pharmacies, Adler said.

“We’ve made the commitment publicly, and we’re working with PSAOs,” she added. “NCPA is very tuned in with all the pharmacies. They’ll know if this is happening or not in real life.” 

How pharmacies feel about Optum Rx’s new reimbursement strategy

The PBM says it will now reimburse pharmacies based on the cost to acquire drugs. 

Arkansas is no longer just the place that gave us legends like Johnny Cash and Al Green—it’s now also the state that passed a 

 banning vertical integration between pharmacy benefit managers (PBMs) and pharmacies.

Arkansas Governor Sarah Huckabee Sanders on April 16 signed a law prohibiting any company that owns a PBM from also owning or operating pharmacies in the state. The goal of the law is to eliminate “conflicts of interest” that lead to higher drug prices and care delays, according to a press release.

“For far too long, drug middlemen called PBMs have taken advantage of lax regulations to abuse customers, inflate drug prices, and cut off access to critical medications. Not anymore,” she said in the release.

Some see the law—which takes effect Jan. 1, 2026—as an important step forward to combat the negative consequences of vertical integration, such as high drug prices, in the pharmaceutical industry. Others see it as a threat to patient pharmacy access, as the law could lead to a wave of pharmacies in Arkansas permanently shutting their doors.

CVS Health—which owns both a chain of roughly 9,000 retail pharmacies as well as Caremark, one of the Big 3 PBMs in the US—has said it would be forced to shut all its 23 pharmacies in Arkansas.

“The Arkansas Legislature and governor are choosing to close 23 community pharmacies, including some of the very few that are open 24 hours,” CVS spokesperson Amy Thibault said in a statement shared with Healthcare Brew. The company also claims the law would leave more than 500 CVS employees without a job, limit access to specialty care for 10,000 patients in the state, and raise annual health benefits costs by millions of dollars, according to the statement.

Patrick Conway, CEO of Optum Rx, UnitedHealth Group’s PBM, said during the company’s Q1 2025 earnings call on April 17 the law “concerns” the company significantly. UnitedHealth Group also owns Genoa Healthcare, a pharmacy chain with 11 pharmacies in Arkansas that specialize in mental health treatments.

“This could cut off access for those patients with things like schizophrenia, severe depression,” Conway said. “We’ll work with the state in the regulatory process post-legislation to try to address those populations and maintain access.”

Kelly Davis, a spokesperson for Optum Rx, said in a statement sent to us that proposals requiring PBMs and pharmacies to split “will have significant, unintended negative consequences on patients with conditions like HIV, bipolar disorder, cancer, neurological disorders, and others.”

“Patients, including those covered by Medicare and Medicaid, will lose access to the high-quality specialized care from the specially trained pharmacists who they rely on through Optum pharmacies,” Davis said.

Greg Lopes, a spokesperson for the Pharmaceutical Care Management Association, a trade group that represents PBMs, said in a statement to us that the law is “extremely dangerous for patients in Arkansas.”

“People will lose home delivery prescription drug programs, patients with complex medical conditions will have less access to specialty pharmacies, and retail pharmacies in Arkansas will be forced to close,” he said.

Express Scripts, the third major PBM that also operates a mail-order specialty pharmacy called Accredo, did not respond to Healthcare Brew’s request for comment by publication.

The National Community Pharmacists Association (NCPA), which represents independent pharmacies across the US, said in a statement on April 29 the law will “help put an end to anticompetitive tactics like patient steering, below-cost reimbursements, and punitive audit practices, all while promoting Arkansans’ access to quality pharmacy care.”

 by the Federal Trade Commission in July 2024 found PBMs have “significant influence” over which drugs patients can access and what they cost. A 

 in January found the Big 3 PBMs marked up some drug prices by “thousands of percent.”

The Arkansas Pharmacists Association, a professional group for pharmacists in the state, also supports the law, with CEO John Vinson saying in a statement “ending PBM ownership of pharmacies is essential” to lower drug costs, support local businesses, and protect patient choice.

Some experts fear the new law will create 

, or areas where residents must travel far to reach the nearest drugstore.

“I think it’s better to find other ways to regulate PBMs in a way that doesn’t shut down pharmacies,” Omolola Adepoju, a health services researcher and clinical associate professor at the University of Houston’s college of medicine, told Healthcare Brew. “If you reside in a rural community and there’s…just one CVS, the question is, how much farther do you have to travel to reach another pharmacy?”

Though proponents of the law argue it could help drive down drug costs because PBMs wouldn’t be able to 

 to their own pharmacies, Adepoju said it could also do the opposite. Smaller independent pharmacies that aren’t owned by a PBM don’t have the volume or bargaining power larger chains like CVS have to negotiate drug prices with manufacturers and insurers, she said.

But Dima Qato, associate professor of clinical pharmacy and spatial sciences at the University of Southern California, told Healthcare Brew that while some pharmacies may close in the short term, the law could spur more independent pharmacies to open and fill the gaps.

Since the Arkansas bill was introduced in January, legislators in Indiana, New York, Texas, and Vermont have introduced similar bills, according to the NCPA.

It would be better for Arkansas residents if the law were implemented slowly so many pharmacies don’t close all at once, Qato said.

“I think, in the long term, [the law] may improve equitable access to pharmacies in the state, but we really need to ensure that during this time…people have access to pharmacies and medications and other services they’re used to getting at those pharmacies,” she added. “So what is the state doing to ensure that?”

How the Arkansas PBM ban may affect pharmacy access in the state 

The state is the first in the country to prohibit PBMs from owning or operating a pharmacy. 

 in March plans to open a dozen small-format pharmacies in “select communities nationally” by the end of 2025. The stores will be less than 5,000 square feet on average, with a full pharmacy and limited over-the-counter items, CVS spokesperson Amy Thibault said in a statement sent to Healthcare Brew.

“The new pharmacies will be introduced in select neighborhoods to help bridge gaps in care and make it easier for patients to access medications, immunizations, and other pharmacist-provided healthcare services,” Thibault said.

CVS is in a period of change as it attempts to 

 from 2024, when its net income plummeted 45% from $8.4 billion to $4.6 billion. Other recent developments include 

 a potentially lucrative partnership with Novo Nordisk.

However, some analysts don’t think the small-store experiment will make a big splash for CVS.

Small-format stores make sense for retail pharmacies like CVS to “try to meet unmet needs, such as in 

,” Julie Utterback, senior equity analyst at investment research firm Morningstar, told Healthcare Brew. Roughly 34 million adults in the US live in areas with limited access to pharmacies, according to a 2024 study from the Fred Hutchinson Cancer Center and University of Washington, Seattle.

It’s a good thing CVS is focusing on the pharmacy part of the business rather than retail since that’s what’s been driving the most revenue, according to Utterback. But the move still means opening more locations, which she thinks may pose “significant challenges more broadly for the long run.”

Utterback said she was surprised CVS announced a strategy that involves opening more stores when the company has been in the process of reducing its footprint. In 2024, executives announced the company would close 10% of its roughly 9,000 locations, and in February 2025, the company 

 it would shutter an additional 270 stores this year.

However, Thibault said CVS plans to open nearly 30 additional regular-size stores this year on top of the dozen small-format stores, including pharmacies located inside Target stores.

Even with the small-format stores, “CVS will still need to invest more in making its larger store formats more efficient,” Utterback said.

Plus, a dozen stores isn’t enough to make much of a dent for the company overall, Elizabeth Anderson, senior managing director at investment banking advisory firm Evercore, told Healthcare Brew.

“[CVS] should be experimenting because consumer preferences change. They might have some things that work out in urban locations but not suburban locations, or vice versa,” she said. “I think it’s probably too small and too soon to make any conclusions, but they should be thinking through these things regularly.”

 at least four small-format stores in Virginia starting in November 2022.

Executives at the time said the goal was to improve pharmacy access. Rite Aid’s then-CEO Heyward Donigan said in a December 2022 earnings call that the smaller stores would be a “core driver” of growth for the company.

 for bankruptcy less than a year later in October 2023. And the company filed for a 

 on May 5, with plans to sell “substantially all of its assets,” according to a company press release.

With a lack of publicly available information after 2023, it’s unclear how Rite Aid’s small-format stores performed or how many of them remain open. At least one that opened in April 2023 in Craigsville, Virginia, is no longer listed on the company’s website.

Rite Aid did not respond to Healthcare Brew’s request for an interview regarding small-format store performance.

A CVS pharmacy stands in a Brooklyn neighborhood in New York City.