An examination of the economic side effects of the state licensing of pharmacists

The purpose of this research was to investigate empirically the extent that dissimilarities in state licensing laws and their differential enforcement by the states may have affected the availability, incomes, and service quality of pharmacists. The research focused on the impacts of five major licensing-related regulations and practices: (1) fail rates on licensure examinations, (2) the availability and the size of pharmacy schools, (3) interstate licensing requirements, (4) citizenship requisites, and (5) anticompetitive market restraints.

All of the regressions and test statistics generated to ascertain the effects on pharmacist availability consistently revealed the following:

1. Pharmacist-population ratios, the proxy for pharmacist availability, were found to be significantly and inversely correlated with initial licensure examination fail rates, significantly and negatively impacted by nonreciprocity (the nonissuance of reciprocal licenses), significantly and positively affected by numerous guild regulations, and significantly and positively related to pharmacy school graduation rates. The last result implies that pharmacist availability is, ceteris paribus, lower in states which do not have pharmacy schools.

2. Conversely, citizenship requirements and reciprocal licensing requisites were found to have insignificant impacts on pharmacist-population ratios.

Pharmacist earnings were found to be significantly, indirectly, and positively impacted by higher examination fail rates, nonreciprocity, reduced pharmacy school graduation rates, and low "levels" of guild protectiveness. These "indirect" results were obtained by detecting a significant and positive correlation between pharmacist earnings and population-pharmacist ratios. The "earnings" regressions also indicated that guild regulations--if sufficiently numerous--may be pecuniarily beneficial to the pharmacy profession.

Utilizing the "incidence" of pharmacist malpractice suits as the quality proxy, two of the more restrictive licensing-related parameters--high examination fail rates and the nonissuance of reciprocal licenses--were shown to have very little impact on malpractice incidence. Conversely, citizenship requirements and reciprocal licensing requisites were significantly and negatively correlated with malpractice incidence. Prescription-population ratios, a measure of pharmacist "busyness," were found to be negatively and insignificantly correlated with the incidence of pharmacist malpractice.