The Benefits of North Dakota's Pharmacy Ownership Law

Minneapolis, Minn. - (January 26, 2009). A new report by the Institute for Local Self-Reliance (ILSR) concludes that repealing North Dakota's Pharmacy Ownership 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.

The Pharmacy Ownership Law, which requires pharmacies to be majority-owned by a licensed pharmacist, is under fire from national chain drugstores and mass merchandisers such as Wal-Mart that want to operate pharmacies in the state.

But the new report, written by ILSR researchers Justin Dahlheimer and Stacy Mitchell, concludes, "North Dakota, largely as a result of its unique Pharmacy Ownership Law, outperforms other states in every key measure of pharmacy services."

Among the report’s key findings is that rural areas of the state have far more pharmacies and greater access to these vital health care services than is found 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.