The Benefits of North Dakota’s Pharmacy Ownership Law

Date: 26 Jan 2009 | posted in: Retail | 0 Facebooktwitterredditmail

In this report, ILSR researchers Justin Dahlheimer and Stacy Mitchell examine the impact of North Dakota’s Pharmacy Ownership Law. This unique law requires that pharmacies be owned by pharmacists, which means that almost all pharmacies in the state are locally owned and independent.

National chain drugstores and mass merchandisers, including Wal-Mart, want to operate pharmacies in the state and are campaigning for the law’s repeal.

This report finds that repealing the law would cost the state millions of dollars in annual economic activity and tax revenue, dramatically reduce the number of pharmacies serving rural areas, and degrade the overall quality of pharmacy services in the state. “North Dakota, largely as a result of its unique Pharmacy Ownership Law, outperforms other states in every key measure of pharmacy services,” the authors state.

Data presented in the report show that residents of rural North Dakota have far more pharmacies and greater access to these vital health care services than rural residents in other states. Census tracts with 2,001-3,500 people in North Dakota are 31% more likely to have a pharmacy than those in South Dakota. And, while only one-quarter of census tracts with 1,001– 2,000 people in South Dakota have a pharmacy, nearly half of those in North Dakota do.

North Dakota residents not only benefit from ready access to pharmacies, but the state’s average prescription price is well below the national average.

Another major finding of the report is that the Pharmacy Ownership Law benefits the state’s economy. Compared to chains, locally owned pharmacies spend a much larger share of their revenue on goods and services purchased from in-state businesses.

“Repealing the law would shift a substantial share of the market to chains and mail order pharmacies, causing about 70 independent pharmacies to close. This would result in a net loss to the state of as much as $23 million a year in direct economic benefits,” said Dahlheimer.

Download: The Benefits of North Dakota’s Pharmacy Ownership Law (PDF)

Avatar photo
Follow Justin Dahlheimer:
Justin Dahlheimer

Justin Dahlheimer was a researcher with ILSR and the author of the reports, "Balancing Budgets by Raising Depletion Taxes" and "The Benefits of North Dakota’s Pharmacy Ownership Law."