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Will the Great Resignation Turn Into the Great Rebellion?

 

Will the Great Resignation Turn Into the Great Rebellion?

Courtesy of Matt Stoller, BIG

Writing about monopoly is largely about pointing out problems, but increasingly it’s also about showing a society waking from its slumber, and beginning to fight back. This particular story has to do with a rebellion inside some of the biggest health care providers in America – the firms that control the pharmacists who dispense our medicine.

These days, chain pharmacies in America are massive, with CVS alone touching a third of Americans not just through its massive retail footprint but through its various subsidiaries in other parts of health care. While big business might seem as American as apple pie, in fact the size of these firms is a new phenomenon. From the late 19th century to the 1970s, pharmacies were small-scale, often single proprietor shops or small chains. Pharmacists always played a dual role, operating as small businesses dealing with medical firms, hospitals, and powerful distributors, but also as health care providers for local communities, often the sole such provider in rural areas.

But roughly forty years ago, after we de facto legalized monopoly power by relaxing antitrust law, bigger chains emerged, using mergers and aggressive pricing tactics. In February of last year, just before the pandemic hit in force, I wrote about the most important of these chains, CVS, and how it gained power over what had been a decentralized industry. Here’s a partial list of acquisitions.

  • 1977, CVS buys 36-store-chain Mack Drug
  • 1990, CVS buys 490-store-chain People Drug Stores in the mid-Atlantic
  • 1997, CVS buys 2600-store-chain Revco D.S. across the midwest for $3.7 billion
  • 1998, CVS buys 200-store-chain in Michigan for $1.5 billion
  • 1999, CVS buys online drug store Soma.com
  • 2002, CVS buys assets from bankrupt discount drug store chain Phar-Mor
  • 2004, CVS buys 1260-store-chain Eckerd stores, plus Eckerd Health Services and $1 billion mail order pharmacy benefits management business, plus three distribution centers from J.C. Penney
  • 2006, CVS buys 700-stand-alone Sav-On and Osco drugstores from Albertson’s
  • 2007, CVS buys Caremark RX pharmacy benefits manager for $26.5 billion
  • 2008, CVS buys 521-store-chain Long Drug Stores for $2.9 billion, including Rx America, a PBM with more than 8 million members
  • 2015, CVS buys Target corporation’s pharmacy business
  • 2018, CVS buys Aetna health insurance for $69 billion

Today, CVS spans not just pharmacies but health insurance, and pharmacy benefit management (PBM), which is a middleman that sits between pharmacies, doctors, and health insurance companies, taking a slice of every prescription pill and treatment sold. The market power of big pharmacy chains had a number of consequences, from lower pay for workers to higher prices and worse service to a slower roll-out of the vaccines. There are still upwards of 20,000 independent pharmacies in America, but every year it gets harder to stay in business.

What this means is that many pharmacists are now employees of big chains. And yet working as a pharmacist for a giant chain has also become increasingly difficult. Work loads have doubled over the last ten years, pay is down, and student debt loads are up (to nearly $200,000 for a recent graduate), even as the profits of Walgreens, CVS, and Walmart skyrocket. And that was before Covid, which put extra strain on pharmacists and technicians….

Continue reading at BIG ->

[Monopoly picture at the top from Pixabay]


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