San Francisco Will Examine Co-Op Model as Pharmacies Across the City Shutter

Following more than 50 pharmacy closures in recent years, San Francisco is exploring whether the city could create a cooperative model to cut the middleman out of prescription procurement and help more drug stores stay open.

Supervisor Jackie Fielder this week requested that the Budget and Legislative Analyst produce a report on how the city could support such an idea. The Mission District supervisor said she hopes streamlining prescription reimbursements for drug store owners can help both mom-and-pop pharmacies and retail chains at a time when 12 more pharmacies are slated to close by the end of this month.

“Pharmacies are an essential component of our healthcare system, and the devastating closures of retail pharmacies are pointing to the need to decouple the healthcare of our residents from major corporations,” Fielder said in a statement. “In other parts of North America, pharmacies can be found on every street corner, and people can fill prescriptions without waiting in long lines or breaking the bank.”

Fielder is asking the BLA to analyze recent pharmacy closures locally and nationally and their causes, identify ways to support family-run pharmacies and review existing models elsewhere.

The report is also expected to outline legal and financial requirements for creating a co-op pharmacy model in San Francisco. One idea could be to allow the city to purchase certain medications in bulk and local pharmacies could purchase directly from, rather than going through pharmacy benefit managers, which set drug prices and act as an intermediary between manufacturers and health providers.

“Pharmacy benefit managers take forever to reimburse a lot of pharmacies for the medications they are distributing, so a lot of small pharmacies can’t be on the hook for months waiting for those reimbursements,” said Preston Kilgore, a legislative aide for Fielder. “We’re curious to see, as one option, if DPH can purchase in bulk and sell some of these prescriptions in a way that we can distribute to and support local pharmacies.”

Pharmacy benefit managers manage nearly 95% of all prescriptions filled in the United States, according to a 2024 report from the Federal Trade Commission.

A pharmacy co-op run by a major city would be novel, but the idea in part stems from a concept investor and TV personality Mark Cuban launched to similarly circumvent the middleman in the drug distribution market.

“Dominant pharmacy benefit managers can hike the cost of drugs — including overcharging patients for cancer drugs,” FTC Chair Lina M. Khan said in a statement. “PBMs can squeeze independent pharmacies that many Americans — especially those in rural communities — depend on for essential care.”

The same FTC report found that drug market middlemen can particularly challenge independent pharmacies by setting “unfair, arbitrary and harmful contractual terms” that can hurt their ability to keep their doors open.

Fielder said she hopes information from the report will slow the pace of pharmacies downsizing their footprint across San Francisco, creating so-called “pharmacy deserts” most impacting low-income neighborhoods. Closures not only limit crucial medication access but other critical services these stores provide, such as blood pressure testing and vaccine appointments, as well as the ability to buy other basic goods in the same shop.

The report is expected to come back to the Board of Supervisors in six months.