Health Care Reform and Firm Dynamics: Evidence from Medicare Part D and the Retail Pharmacy Industry

Brandyn Churchill, Georgina Cisneros and Kelli R. Marquardt

No 35380, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Health care reforms are often enacted before implementation, creating uncertainty that can shape firms’ decisions. We examine how Medicare Part D affected the retail pharmacy industry using 2000-2009 establishment-level data, leveraging the fact that Part D disproportionately affected counties with larger elderly populations. Consistent with predictions from a conceptual model in which pre-implementation uncertainty discourages entry and lower post-implementation margins prevent full recovery, we find that Part D was associated with a 5-percent reduction in pharmacies, driven by fewer openings rather than more closures. We also find suggestive evidence that reduced pharmacy access dampened Part D’s mortality benefits.

JEL-codes: D22 D81 I13 I18 (search for similar items in EconPapers)
Date: 2026-06
Note: EH
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