LANSING – Independent pharmacies in Michigan face many challenges – but also opportunities – in 2025, experts say.

That matters because rural areas that would otherwise be “pharmacy deserts” depend on independents due to a lack of chain stores in their locations.

While growing slowly in numbers, some independent pharmacists say they’re finding it harder and harder to stay in business.

Many also say changes in how they’re reimbursed for medications make it harder to maintain a profit.

Over the last five years, nationwide, the number of independent pharmacies increased by 1.4%, while the number of chain stores declined by 7.4% over the past five years, according to a report last year by the National Council for Prescription Drug Programs.

Nevertheless, there are still more chain pharmacies than independents. In Michigan, there were 1,100 independents, and 1,147 chains, the report said.

Others say that independent pharmacies are facing tough times.

John Gross owns six pharmacies in Clare, Gladwin and Genesee counties and is the executive director of the Michigan Independent Pharmacists Association.

He described how he came to open his latest store in Beaverton, northwest of Midland:.

“There used to be two pharmacies there, a Rite Aid and another independent. The owner of the independent pharmacy retired and closed his store,” Gross said.

“Then Rite Aid went bankrupt in Michigan. The next-nearest pharmacy was a Walgreen’s 20 miles away,” he said.

“That created a pharmacy desert in that area, so I bought the Rite Aid location,” he said

According to Gross, the greatest obstacle to staying in business is how pharmacies are reimbursed by insurance companies.

He explained that pharmacy benefit managers are intermediaries that process claims for health insurance companies.

He said they unfairly reimburse too little, often less than the cost of expensive medications and other items.

David Allen owns Great Lakes Pharmacy in Midland and describes his store as “sustaining, not thriving.”

He agreed with Gross that benefit managers make it harder to stay in business, “especially for high-cost brand name items, like inhalers, that are reimbursed below cost.”

The situation has progressively worsened over time, especially since the COVID-19 pandemic.

James Pancy, who owns the Village Pharmacy of Fruitport, south of Muskegon, said, “It’s a struggle, but we are going to get there.”

“The cost of doing business has gone up, and the reimbursement we get from the insurance companies has gone down,” he said, noting that 85% of his customers use insurance to pay for the medicines and products they need.

“Some benefit managers only pay me $500 on a drug that costs $680,” he said.

The experiences of these pharmacists are backed up by data.

A July 2024 report by the Federal Trade Commission said, “powerful middlemen inflate drug costs and squeeze main street pharmacies.”

The FTC website quoted agency Chair Lina M. Khan as saying, “The report also details how pharmacy benefit managers can squeeze independent pharmacies that many Americans –especially those in rural communities — depend on for essential care.”

The website said the report found that the benefit managers “hold substantial influence over independent pharmacies by imposing unfair, arbitrary and harmful contractual terms that can impact independent pharmacies’ ability to stay in business and serve their communities.”

Pancy said he feels a personal relationship in the community and relies on word of mouth to attract local customers.

“I do things like sponsor baseball teams to get my name on the jerseys,” he said, “and I give guest lectures to local groups and organizations.”

His is the only independent store in an area with three large retail chains, yet he said he remains optimistic.

“I had a customer who said to me that if five years ago, Rite Aid would be gone and you would still be there, I would have said you were crazy,” he said.