Tower Records was born in a drugstore.

In 1960, Russ Solomon convinced his father to let him sell records from a corner of the family drugstore, which was located in a building called Tower Theater. The company grew into something remarkable: nearly 200 locations across 21 states and multiple countries, generating over $1 billion in annual revenue at its peak in the late 1990s, a cultural institution where music lovers spent hours browsing, discovering and connecting with their local stores and their staff.

Then, in less than a decade, it was gone.

By 2005, revenue had collapsed to $430 million. Tower filed for bankruptcy a second time in August 2006. All 89 remaining U.S. stores closed by December of that year, taking roughly 3,000 jobs with them.

No single villain killed Tower Records. The music labels survived. The artists survived.

What didn't survive was the physical distribution mechanism — the store itself — made structurally obsolete by a combination of emerging technology and shifting consumer preferences around convenience and access. Napster. iTunes. The iPod. None of these forces set out to destroy Tower Records specifically. They just made the company’s business model irrelevant.

Community pharmacy is not Tower Records. The parallel is imperfect and should not be overstated. But the underlying dynamic — an established, trusted, locally embedded distribution model caught between technological disruption and changing consumer expectations — is uncomfortably familiar. The pharmaceutical manufacturers, wholesalers and pharmacy benefit managers are the labels and artists of this story: they are positioned to adapt and survive.

The question hanging over community pharmacy is whether the physical distribution mechanism — the corner drugstore, the independent pharmacy, the chain location — is in the process of being made obsolete, or whether it can transform fast enough to matter in a different way.

Or whether technology itself can help pharmacy transform.

The Policy Tailwind Most People Are Missing

The conventional narrative about pharmacy regulation focuses on what hasn’t happened: pharmacists still lack federal provider status under Medicare Part B, which means they cannot independently bill for clinical services through the country's largest payer. That gap is real, consequential and has stalled at the federal level despite bipartisan support and multiple legislative attempts.

But beneath that headline, a meaningful revolution has been underway at the state level. Every state now has established prescriptive authority to pharmacists (often protocol-driven and for specific drugs), and the vast majority has also granted provider status to pharmacists. All but nine states have now mandated some form of payment for pharmacist-provided services.

The momentum is real, even if uneven. More than 100 state-level bills were introduced in 2024 and 2025 alone, with pharmacists gaining authority to administer vaccines, test and treat for minor illnesses, prescribe contraceptives, and provide HIV PrEP — in many cases without a physician order.

Samm Anderegg, CEO of DocStation — one of the companies building clinical infrastructure for pharmacy — frames the situation with precision. "The policy infrastructure is falling into place faster than most people realize,” Anderegg noted in an interview. He points to provider status legislation, scope of practice expansion and mandated network inclusion in multiple states.

“Having the legal right to provide and bill for clinical services doesn’t mean you can actually operationalize it," Anderegg explained.

Josh Flum, a former CVS Health executive and venture investor at LRVHealth who closely tracks pharmacy technology ecosystem, sees this as an opportunity for capital. "The caliber of entrepreneurs focused on pharmacy innovation is impressive, and they’re tackling increasingly complicated parts of the value chain," he said in an interview.

Flum noted this may in part be driven by the COVID-19 pandemic, which he notes, “highlighted the value of therapeutics and pharmacy as an access point, and exposed a new generation of entrepreneurs to the power, complexity and unsolved challenges across pharmacy — from patient access to payment."

A New Stack, Layer by Layer

To understand where technology is reshaping pharmacy — and where the real opportunity lies — it helps to have a map. The traditional model was a largely linear chain: manufacturer to wholesaler to PBM to pharmacy to patient. Outsiders have been inserting themselves at every node in that chain, and in some cases rerouting it entirely. The resulting "pharmacy tech stack" has at least five distinct layers, each attracting different capital and different kinds of builders.

At the prescribing layer — the front door of the medication journey — companies like Ro, Hims & Hers and Amazon Clinic have vertically integrated the clinical visit, the prescription and the fulfillment into a single digital experience. Their core product is not the medication itself but the confidence, convenience and continuity of getting care on a smartphone. Ro raised over $1 billion in venture capital and reached a $7 billion valuation at its peak. Hims & Hers went public and now projects revenues of $2.3 to $2.4 billion for 2025, driven significantly by its compounded GLP-1 business, a category that barely existed three years ago.

At the fulfillment layer, Amazon Pharmacy — built on the PillPack acquisition for nearly $1 billion in 2018 — reframed dispensing as a logistics problem that looks more like e-commerce than health retail. Alto Pharmacy has raised over $760 million pairing home delivery with proactive pharmacist outreach. The physical pharmacy counter is being reconceived as a distributed, automated network.

At the pricing and access layer, GoodRx built a billion-dollar business by publishing real-time cash prices, exposing the spread between insurer-negotiated rates and what consumers could actually pay. Mark Cuban's Cost Plus Drugs simplified further: cost plus 15% plus a $5 dispensing fee, all transparent. Capital Rx, now having raised over $400 million, applies a clearinghouse model that standardizes and discloses pricing for employers and payers. Together, these companies have made opacity in pharmacy economics structurally harder to sustain.

At the interoperability layer — arguably the least visible and most important — The Sequoia Project’s Pharmacy Interoperability Workgroup, launched in 2024 with participation from Surescripts, DrFirst, DoseSpot and NCPDP, is developing the common standards and APIs that would finally integrate pharmacy into the national health data fabric. If successful, it closes the information gap that has long isolated pharmacists from value-based care arrangements and coordinated care models. This is infrastructure work, not product work — slow, unglamorous and foundational.

And at the clinical enablement layer — the focus of the next section — a newer category of companies is building the operational infrastructure that allows a pharmacy to function as a clinical practice: provider enrollment, clinical documentation, medical billing, workflow management and outcomes tracking. This is the layer most directly connected to whether the policy wins of the last three years translate into economic transformation.

Josh Weiner, CEO of Interra Health, a company formed in 2026 as the result of a merger, has a vision for how these layers may come together for pharmacy.

"Retail pharmacy will move from a fragmented, transaction-based model to a patient-centric, intelligence-driven ecosystem, where AI connects prescribing, affordability, and fulfillment into a single, real-time experience,” Weiner noted in an email. He expects that the basis of competition will shift from footprint and scale to which organizations can use data and AI to deliver more convenient and personalized care.

The Real Bottleneck: Where the Opportunity Actually Lives

The layers described above represent genuine disruption, and each has attracted genuine capital.

For investors and founders thinking about where the highest-value, least-crowded opportunity sits, the answer is increasingly clear: not at the consumer-facing layers already dense with competition, but at the clinical enablement layer — the operational infrastructure that determines whether pharmacies can capture the value that policy reforms have made theoretically possible.

To understand why, start with what Anderegg identifies as the most misunderstood thing about community pharmacy economics. "The value pharmacies create and capture are completely disconnected," he said.

A pharmacist doesn’t get paid any more for identifying and resolving an issue that prevents a hospitalization than they do for simply dispensing a prescription.

“There’s no mechanism through the pharmacy benefit to bill for and capture clinical value,” explained Anderegg.

“But, there is through the medical benefit," he added, referring to health plans.

This is a central reframe of the current moment: health plans want high quality, convenient and lower cost care. Pharmacies can provide those.

Pharmacies see patients more frequently than primary care physicians. They are frequently open six or seven days a week in the neighborhoods where people actually live. They know who isn't picking up medications, who is managing side effects without telling their doctor, who is at risk of a preventable hospitalization.

That frequency and proximity is an asset that took decades to build and cannot be replicated from scratch.

The problem is that reframing pharmacy as a clinical practice — rather than a dispensing operation — requires an entirely different operational infrastructure. And that infrastructure has been almost entirely absent.

Anderegg breaks the gap into four concrete walls: provider enrollment, clinical documentation, medical billing infrastructure and workflow integration.

The pharmacies that have solved these problems, typically with technology partners purpose-built for pharmacies’ specific context, are seeing what Anderegg describes as genuinely different economics: net new revenue at significantly higher margins, higher patient satisfaction, reduced staff burnout and better patient outcomes.

The dispensing business, rather than being abandoned, becomes what it arguably always was: the mechanism that earns continuous access to patients — access that can now, finally, be monetized through clinical services billed to the medical benefit.

This is not a small opportunity. Consider the policy scale: roughly 56,000 community pharmacies across the country, each seeing patients at a frequency that primary care cannot match, in communities that in many cases have no viable alternative for accessible clinical care.

The policy permission to capture that value is largely in place. Patients are already walking through the door every day. What’s missing is the operational and technological infrastructure to act on it — and that is precisely what the most interesting companies in pharmacy technology are now building.

What This Means for Investors and Builders

The venture capital that has flowed into pharmacy-adjacent technology over the past decade has been substantial — well over $5 billion across digital pharmacy, telepharmacy, PBM disruption and pharmacy infrastructure. But much of that capital went to the consumer-facing and price-transparency layers, where competition is now intense and margins are compressing. The clinical enablement layer has received comparatively little attention. That is changing, but the window is open.

Flum puts the macro context plainly. “We have a fundamental belief that therapeutics will increase as a percent of healthcare spend, because we are seeing extraordinary advances in how drug development impacts human health,” he said.

That doesn’t mean community pharmacy doesn’t have its challenges.

"The footprint of retail pharmacy is shrinking. It’s fair to ask the question of whether the pharmacy industry overbuilt during a time of expansion,” he noted.

That question, he adds, needs to be considered at the community level, because the pharmacies most at risk of closure are often the ones serving populations with no alternatives.

Weiner pointed to the consumer dimension of the same transition. "As systems become more connected, the medication journey will feel less like a series of handoffs and more like a coordinated, end-to-end experience," he explained.

Tower Records didn’t fail because people stopped loving music. It failed because the mechanism by which they delivered music — the physical store, the curated inventory, the browsing experience — became less essential than the convenience, transparency and immediacy that digital distribution offered. The labels adapted. The artists adapted. The stores did not.

The pharmacy parallel is not that community pharmacy is doomed. It’s that the business model may need to be rethought. Pharmacists are trained, trusted and positioned in communities in ways that no digital-first platform has replicated.

The clinical value pharmacists deliver is real and evidence-backed. But the distribution mechanism around them — the physical retail model, the dispensing economics, the PBM-contracted transaction — is under the same structural pressure that Tower Records faced from iTunes and Napster.

The outsiders rebuilding the pharmacy stack are not, for the most part, trying to eliminate the pharmacist. Many of them are explicitly trying to empower one.

Solomon started Tower Records in a drugstore. The irony is that the drugstore — the pharmacy — is now facing its own version of the disruption that eventually consumed his empire.

The difference is that pharmacy has something Tower Records never did: the legal authority, the clinical training and the community relationships to become something more essential, not less. The technology to act on that potential is finally being built.

Whether community pharmacy seizes that window, and how to do so, may be the defining questions of the next decade.