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Liberalizing the opening of new pharmacies and hospitalizations

Author

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  • Andrea Cintolesi

    (Bank of Italy)

  • Andrea Riganti

    (University of Milan)

Abstract

We study the impact of legal restrictions pertaining to pharmacy licences on hospitalizations. We use a reform approved in 2012 in Italy that increased the number of pharmacies allowed to operate in the national territory by 8%. We set up a regression discontinuity design exploiting monthly data on hospitalizations within Italian provinces. We find that an 8% increase in the number of pharmacies decreased medical hospitalizations by 1.1% and related expenditures by 1.3%. This drop is mainly driven by short hospitalizations of children and elderly individuals. On average, every new pharmacy prevents 17 medical hospitalizations every year. We do not find an impact on a control group of surgical hospitalizations, and we validate the results with a battery of placebo tests. Pharmacies appear to reduce hospitalizations by giving information to people who would otherwise be admitted to a hospital, and other mechanisms are not supported by the data.

Suggested Citation

  • Andrea Cintolesi & Andrea Riganti, 2022. "Liberalizing the opening of new pharmacies and hospitalizations," Temi di discussione (Economic working papers) 1388, Bank of Italy, Economic Research and International Relations Area.
    • Handle: RePEc:bdi:wptemi:td_1388_22
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    File URL: https://www.bancaditalia.it/pubblicazioni/temi-discussione/2022/2022-1388/en_tema_1388.pdf
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    References listed on IDEAS

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    More about this item

    Keywords

    regulation; pharmacies; license; healthcare expenditures; hospitalizations;
    All these keywords.

    JEL classification:

    • D45 - Microeconomics - - Market Structure, Pricing, and Design - - - Rationing; Licensing
    • H51 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Health
    • I10 - Health, Education, and Welfare - - Health - - - General
    • K20 - Law and Economics - - Regulation and Business Law - - - General

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