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#PizzaIsNotWorking: Inside the Pharmacist Rebellion at CVS and Walgreens
Workers and independent business people - even in the professional class - are supremely mad at monopolists. But they aren't looking to a political party for help.
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Today I’m writing about a worker revolt inside chain pharmacies, and how the broader anger from workers all over the country relates to both market power and politics.
Because of reporting in BIG, the legislation working its way through Congress on expanding Medicare was changed. Under previous rules, Medicare could only buy from the hearing aid cartel, but now it is allowed to pay for over the counter hearing aids. That’s a good thing. The legislation doesn’t address the vertical integration of the hearing aid cartel, though I’m optimistic in the long term we’ll get there.
Farhad Manjoo in the New York Times featured my arguments on how to fix Facebook. I discussed why breaking apart Facebook would actually create a safer and better social networking ecosystem.
Will the Great Resignation Turn Into the Great Rebellion?
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.
The worker stories coming out of the chain pharmacy world are awful. No bathroom breaks. No time for meals. Unforgiving corporate metrics like demerits for taking too long to answer the phone or fill prescriptions, requirements to ask a certain number of people per week to get a flu shot, and always a relentless push for more items to do than time to do them. And these sweatshop conditions for medical professionals don’t just mean an unpleasant day for a pharmacist or technician, it means more mistakes, and accidental deaths.
In fact, before the pandemic, the third leading cause of death in America was medical errors, at between 250,000 and 440,000 people a year, roughly the the size of Reno, Nevada dying annually. (There’s heavy dispute about this number, which comes from a 2016 Johns Hopkins study; a more recent Yale study suggested the number is much lower.) And of course, when there are safety issues caused by understaffing, the chains don’t stand by their pharmacists in front of state boards of pharmacy. If a pharmacist loses his or her license, they can’t practice.
All of this has caused deep concern within the profession. “I am a danger to the public working for CVS,” one pharmacist wrote in an anonymous letter to the Texas State Board of Pharmacy in April. Public officials and corporate executives have been hearing the complaints for years. But when things get really bad, the typical response from higher-ups for flagging morale is to… buy their pharmacists pizza. And that condescension from corporate executives and human resources officials is what finally lit the spark.
The key organizer of this rebellion is an Ivory Coast immigrant who lives in Oklahoma City named Bled Marchall Tanoe. Three months ago, this cheerful and optimistic pharmacist wrote a viral post on Facebook asking customers to be nicer, describing the stress her colleagues are under every day from corporate rules and regulations. At the beginning of the pandemic,” she wrote, there was a team spirit, they were called heroes and fed “pizza and coke.” But low pay and poor conditions soon took their toll. Technicians, the equivalent of nurses, received just $10/hour, and there was chronic understaffing. These staff shortages ultimately led to “emotional breakdown, heart attack, migraines, kidney infections and everything that stem from stress,” as well as suicides. In describing what was going on, Tanoe used the odd but fitting hashtag #PizzaIsNotEnough, which has since gone viral.
In doing so, she gave voice to anger and frustration among pharmacists and technicians working at giant chain pharmacies, predominantly CVS, Walgreens, Walmart, and Kroger, with pharmacists singling out CVS for special scorn. The Facebook group she helps run to support pharmacists during Covid now has 45.5k members. (For a frame of reference, there are roughly 700k pharmacists and pharmacy technicians in America, so this movement is hitting a meaningful swath of the workforce.)
The comments make it clear she’s hit a nerve.
“Working for CVS for 1 month will take 1 year off your life. I only lasted for ~8 months at that crap hole of a corporation.”
“I was at a Walgreens on Friday and a pharmacist started crying cause she was so stressed. There were a lot of people waiting and this old lady came and the pharmacist told her to come back on Monday and then started crying a few sec later. And the old lady was saying how she can not come back, she got a car service to come here and can not come back. I felt so bad for the lady and the pharmacist. Seriously there are so many better options then retail. Get out. So glad I did.”
“Maybe a group of pharmacists should sit down with a legislator to discuss a bill to regulate the amount of work allowed . The chains were able to keep adding work for many years before this breaking point.
Pharmacists have also taken to Twitter to publicly criticize the CEO of CVS Health when she bragged about corporate earnings to Wall Street. Here’s just one example.
I spent some time speaking with Tanoe, who is an unlikely rebel against corporate power. “I have never thought of being anything else but a retail pharmacist,” she told me. “That’s all I wanted to do, because I want to be right there with my patients, to know them, to be present for them.”
And yet, in August, Tanoe had had enough. She quit her job, because like a lot of pharmacists, she felt she was becoming a danger to the very patients she sought to protect “I was too tired,” said explained. Then, after quitting, she used her voice to effect change. The goal was to bring the problems to the attention of the firm leaders themselves, in hopes they would change the situation.
Tanoe has become something of a reporter, explaining publicly what is going on at these stores. A few weeks ago, Tanoe wrote about an unnamed pharmacist at an Indiana CVS who began having chest pains during her shift treating patients. Neither the family nor CVS will release her name, and fellow employees are afraid of retaliation for speaking out. But according to Tanoe, this woman was told to stay in the store until a replacement could arrive, roughly two hours later. She died of a heart attack, her head held by a technician, after a patient tried CPR on her. It’s a grim story, but not one that surprises many pharmacists working for the chains.
People Who Work vs People Who Monopolize
I found a number of things fascinating about this campaign. First, it’s intertwined with anger at monopoly power, and in a fundamental way. Tanoe was very clear that this is not a simple fight between employees and employers; the problem is with large chain pharmacies, not independent pharmacies who run their own stores, who she sees as being “very patient driven.” Most people in the industry have a sophisticated understanding of the market power at work and can distinguish between the big players and the small ones.
Tanoe expressed sympathy for the independents, because in her view, they have a boss as well, the small group of middlemen known as pharmacy benefit managers (PBM), that set the terms and pricing for reimbursement rates that independent pharmacists receive for prescribing medicine. Since CVS owns Caremark, one of the largest PBMs, CVS sets the prices its competitors are paid, making this dominant firm the boss not only of its own pharmacists it employs, but of the independent pharmacists who must contract with its PBM subsidiary. CVS also owns the insurance giant Aetna, which means it has the ability to drive more business away from independents to its own pharmacies, while not staffing up those pharmacies adequately. So this labor action is indistinguishable from the anti-monopoly calls from independents to break up PBMs; both are targeting CVS, and for the same reason.
As one might expect, #PizzaIsNotWorking has generated brutal backlash from the chains. Tanoe shared a text with me about an all company meeting, likely CVS (though she wouldn’t tell me which firm), where the #PizzaIsNotWorking movement came up, and the executives said they would be posting a “contingency” for how to handle those who spread “dissent and misinformation.” Another employee mentioned the phrase “Pizza Is Not Working” to her boss, and was fired for “conspiring against the company from within.” She was then told that “maybe learning to keep your head down and mouth shut will help you succeed in whatever you fail in next.” Interestingly, several pharmacy technicians were also fired, but the pharmacist, who also supported the campaign was merely suspended.
And the reason for suspending the pharmacist, instead of firing him/her, is also interesting. Chains simply can’t keep enough people on staff to keep their stores open. And that means that workers finally have leverage.
“Everything ok down there Arkansas?”
The lack of adequate staffing in pharmacies has at this point become something of a joke in the industry. For instance, here’s a list of of pharmacy job openings and signing bonuses in Arkansas, posted by a pharmacist who asked “everything ok down there Arkansas?”
In the comments, pharmacists from New Mexico, Massachusetts, Oklahoma, Indiana, Tennessee, and Florida weighed in with their own stories of understaffing, talking about walk outs, bad working conditions, shuttered stores, and the resulting stress on remaining employees. The understaffing both gives employees leverage, and compounds the stress.
It’s not just pharmacies. This staffing shortage is happening across the economy in many different sectors. And while high labor demand gives employees leverage, it also puts added pressure on them. According to the Society of Human Resource professionals, more than half of the employees in the economy say they’ve had to take on more work because a colleague has quit, and over 40% are now thinking of quitting because they saw a colleague quit.
In health care this problem is especially acute. Nurses too have had enough of being given too many shifts and not enough resources, and I’m told that workers for DaVita dialysis clinics - another dominant firm in its area - are quietly walking off the job, because of a similar problem of low pay and poor working conditions.
These workers want more money, but the basic problem is that as professionals, they do not have enough power to protect their own dignity and the health of their patients. They went into their professions to help people, and the suits upstairs are causing them to hurt their patients instead. In fact, money won’t solve the problem, not unless it’s accompanied by changes to stop interfering with patient care and terrifying caregivers. As Tanoe put it, “Why would I work in fear if I can work at Chick-filet without stress?”
So what’s the solution? I put the question to Tanoe multiple times. And she was fairly hesitant to give a clean answer, probably because the problem is so deep-rooted. CVS, after all, took thirty years to construct. Her goal is to have these firms change their corporate policies in favor of “patient-centered care,” but she didn’t quite know how to get the chains to do that. For them, she said, “it’s about the money.”
We talked about a number of possible policy interventions. She mentioned having state boards actually enacting the death penalty against chain pharmacies who induce unsafe conditions. Since individual pharmacists can have their licenses revoked, the thinking goes, why not the big guys? “If you commit Medicaid or Medicare fraud you are banned by the Centers for Medicare & Medicaid Services,” she said, and it should be that way for chain pharmacies with staffing issues that cause errors.
Tanoe brought up PBMs and independent pharmacies, and we talked about different ways to address the market power of dominant firms. Pharmacists seem to hate Caremark as much as they hate CVS itself. While antitrust economists often still imagine that PBMs and giant health care conglomerates are run efficiently instead of as sweatshops, such thinkers are rapidly losing influence. Today, Federal enforcers are beginning to look at doing something meaningful about PBMs, and states are passing stricter laws regulating their activities.
But antitrust interventions and regulation are not the only solutions; I also asked about unionization, a standard model for worker empowerment. “Yes, that is being thrown out to me very, very often,” she told me, but with a sense of hesitancy. In many states, she said, it isn’t necessarily possible to form a union. The traditional organizing model for pharmacists is professional associations, which allows for a combination of chain store workers and independent pharmacists, rather than the normal American firm-specific industrial unions. Tanoe’s not sure if pharmacists and technicians would want a union. “Can we trust those in charge of the union?” she asked. “Are we will to do the work going forward?” Fundamentally unionization is about institution-building, and that’s a difficult endeavor. Nevertheless, Tanoe is doing a survey of pharmacists to find out what they want.
Interestingly, one thing that didn’t come up at all was standard partisan politics. Tanoe wasn’t really seeing the answer as public policymakers intervening, her instinct is that the people with power to be persuaded are the executives at the firms themselves. And now that there’s a worker shortage, most people in the industry realize pharmacists and technicians have levers such as quitting or speaking out. But there’s nothing in the political system that seemed particularly relevant, not even organized labor.
And this brings me to the puzzle that anti-monopolists must solve. Two nights ago, Democrats got crushed in a series of elections around the country. It’s a bizarre situation, because Democrats are traditionally the party of labor unions, and Americans have not been as militantly pro-labor as they are now since 1965. In these most recent elections, Republicans, some of whom are musing on trying to become a party of workers, didn’t really mention worker frustration. It just wasn’t a factor in these races. This is especially weird because workers these days have *power* due to extremely high demand for employment. And yet, there’s simply no institutional connection between the mass worker frustration and the political system.
I think the reason is because this new worker unrest doesn’t actually sit cleanly in either political party. Most independent pharmacists are in rural areas, which skew conservative. And independent pharmacists are business owners, who also skew Republican. Chain pharmacists, by contrast, would normally be considered workers, and thus, most political figures would say ‘well how about a union?’ and thus see them as Democrats. And yet neither a small business association nor a union quite covers their concerns; in both cases, their boss interfering with patient care is the CEO of CVS, and therefore, Wall Street. And neither the Republicans nor the Democrats are fully breaking with the philosophy of Wall Street, which is that maximizing shareholder value brings prosperity.
So far, no one in politics has figured out how to be relevant to this broad revolt of people who work for a living either as small business people or as employees, both of whom are tired of Wall Street driven executives exploiting and insulting them. And I don’t have an answer to this political puzzle. But I do think that whoever figures it out could govern for a generation.
A few months ago, a colleague at my organization noticed there’s a shortage of rapid Covid tests in the U.S., and that these tests are quite expensive, while such tests are cheap and ubiquitous in Europe. We did some digging, and it turns out that the Food and Drug Administration official who approves Covid tests, Tim Stenzel, only approved two of them, and that he had worked at both companies. In September, we sent a letter on the matter to the government, and contacted multiple members of Congress explaining the conflict of interest.
Since our letter, the Biden administration has decided to spend $2 billion on rapid testing, and got agreements with Walmart, Amazon, and Kroger to reduce prices, HHS announced $560 million in funds to build out more manufacturing, the NIH and FDA said they will work on quickening approval times, and the FDA has approved more rapid testing products.
We also gave our letter to ProPublica, who did a great story digging in to just what happened to cause this problem in the first place. That story got published yesterday. The FDA comes out looking timid and softly corrupt, with one official quitting in frustration over the failure to approve more tests. There were no open payoffs, no smoking gun, just a bureaucratic run-around where the FDA simply refused to accept reasonable data (especially if it was collected abroad), and treated firms it had recruited to produce tests as criminals in a Kafka-esque bureaucracy.
It’s easy to blame a revolving door, but the real cause is that our government is full of people who simply believe that big powerful corporations are competent and trustworthy, and that competition is bad. And Stenzel is one of them. As ProPublica noted.
Shuren and Stenzel recommended a year ago in their New England Journal of Medicine column that the U.S. government should have authorized a handful of tests and had the CDC contract with those manufacturers, rather than trying to vet thousands of diagnostics, which they called “an inefficient use of resources.”
This is the theory behind the national champion idea of industrial policy. Dominant well-branded firms, the thinking goes, know what they are doing, so let them drive development. A motley group of smaller entrepreneurs doing whatever they want would be inefficient. Yet in this case, as in most cases, having a duopoly ended up turning into a disaster. Abbott, for instance, not only gouged customers, but actually destroyed tests for financial reasons instead of selling them. (They also apparently refused to sell tests to independent pharmacies, only dealing with the big chains.)
Stenzel’s policy choice has been a failure. And now that the FDA has approved more tests, competition is coming online. So what’s the result?
"On an earnings call in October, Abbott CEO Robert Ford said the company anticipated dropping its price to maintain its market share, but wouldn’t if competition didn’t make it necessary."
And there we go. Stenzel, incidentally, has a sweet mustache, which you can see here.
Thanks for reading. Send me tips on weird monopolies, stories I’ve missed, or comments by clicking on the title of this newsletter. And if you liked this issue of BIG, you can sign up here for more issues of BIG, a newsletter on how to restore fair commerce, innovation and democracy. And consider becoming a paying subscriber to support this work.