Ted Shaffrey/AP Photo
A CVS drugstore with a MinuteClinic and Health Hub in the Harlem neighborhood of New York City, March 3, 2023
Having turned local drugstores into chains dominated by a few giants, CVS and Walgreens are now closing hundreds of stores in order to maximize profits. The drugstore chains are also under fire for their mistreatment of pharmacy technicians and deteriorating service, as well as conflict-ridden mergers with pharmacy benefit managers and insurers.
Drugstores are not just another business. They are part of the health system and the fabric of local community life.
One great American saw this coming—a century ago. I teach at a university named for Justice Louis Brandeis, whose wisdom during his Supreme Court service (1916–1939) was often in dissent. Both off the Court and on, Brandeis fought the dangers of economic concentration. Two of his early books were The Curse of Bigness and Other People’s Money and How the Bankers Use It.
In the 1920s and 1930s, the first wave of chain stores, with their marketing and pricing power, were undermining downtowns and locally owned retail. In 1931, the state of Florida, in an effort to help local retail resist the tide of chain stores, passed a law requiring all retailers to get licenses from the state, and pay fees for the licenses graduated according to the size of the company. In the 1933 case Liggett v. Lee, the Supreme Court, 6-3, found the law an unconstitutional interference with freedom of commerce.
Brandeis disagreed. In his magnificent dissent, he included a long history of how states had long limited the absolute freedom of corporations and only recently had permitted corporations to do whatever they wanted. This was all constitutional. And after noting the increasing degree of corporate concentration among the top 200 corporations, he added this very Brandeisian comment:
Among these 200 corporations, each with assets in excess of $90,000,000, are five of the plaintiffs … they operate, in the several states, an aggregate of 19,718 stores. A single one of these giants operates nearly 16,000. Against these plaintiffs, and other owners of multiple stores, the individual retailers of Florida are engaged in a struggle to preserve their independence—perhaps a struggle for existence.
The citizens of the state … have undertaken to aid the individual retailers by subjecting the owners of multiple stores to the handicap of higher license fees. They may have done so merely in order to preserve competition. But their purpose may have been a broader and deeper one. They may have believed that the chain store, by furthering the concentration of wealth and of power and by promoting absentee ownership, is thwarting American ideals; that it is making impossible equality of opportunity; that it is converting independent tradesmen into clerks; and that it is sapping the resources, the vigor and the hope of the smaller cities and towns.
Brandeis’s critics dismissed him as sentimental or oblivious to convenience and efficiency.
But the trend that Brandeis was combating a century ago was tame compared to what has been happening lately.
Today, local retail and local downtowns are under assault as never before. The forces include Amazon and other online shopping, the purchase and destruction of smaller retail chains by hedge funds, the lingering effect of the pandemic depopulating office buildings and retail customers, and the proliferation of cookie-cutter malls where every store is part of a national chain, making every mall look like every other mall.
The “efficiency” of giant scale supposedly cuts costs to consumers. But the hyper-concentration raises costs.
In this larger trend, pharmacies are a special case. I am fortunate that my local family-owned pharmacy still operates. I can get a pharmacist on the phone. They know my name and I know theirs. They help me chase doctors who are late with refills, and advance me a couple of pills when refills are late. They even deliver. But they are a vanishing breed.
Though the Supreme Court, in Liggett v. Lee, prohibited higher fees on chain stores, government is far from powerless. The revival of antitrust could break up monopoly chains. (Brandeis was also an eloquent proponent of antitrust.) Amazon could be charged for all the costs that its trucks impose on roads and pollution. A law proposed by Sen. Elizabeth Warren would prohibit hedge funds from bleeding local retail. In France, a pharmacy must be owned by a licensed pharmacist, who may own only one.
Let the Brandeisian retail counterrevolution begin.
