Each morning that he unlocks the doors of Cottage Pharmacy, owner Ken Villani fights a losing battle.

Revenue at his Woodbury, N.Y., store has been dropping for months. But unlike at other retail establishments, sales at his pharmacy may not rebound in tandem with consumer confidence. That’s because more and more of Villani’s customers are getting their drugs in bulk from mail-order companies and no longer need to set foot in his store at all.

“I’m a dinosaur in the industry,” Villani says proudly of Cottage Pharmacy, which has been open for more than 30 years and today fills between 300 and 400 scripts a day. “Service has enabled us to survive up to this point, but we’re losing the customer traffic we had. If they don’t come in for the prescription, the less likely it’ll be that they’ll come in to buy shampoo or gum.”

Villani can’t fight mail order competition through store quality alone. Ironically, he relies on mail-order companies just as much as he contends with them.

The mail-order drug business is run by a few huge corporations that, since the 1980s, have acted as middlemen between drug manufacturers and consumers. Health insurance companies contract with these companies, known as “pharmacy benefit managers” (PBMs), to administer their customers’ prescription plans.

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