Seminario JobMarket

Florencia Borrescio

University of Michigan


Seminar 3 – 14:00


This paper analyzes how market forces in the retail market for pharmaceuticals affect utilization of health care. Specifically, I study the impact of Walmart’s $4 Prescription Drug Program on utilization of blood pressure medication and hospitalizations for conditions amenable to drug therapy for the state of Florida. The empirical strategy relies on the change in the availability of cheap generic drugs introduced by the launch of Walmart’s program in 2006, exploiting differences in the distance to the nearest Walmart store across ZIP codes in a difference-in differences framework. I find that living close to a source of cheap generic drugs increases adherence to antihypertensive medications by 16 percent and decreases the probability of an avoidable hospitalization by 6.5 percent, saving over $50.5 million annually in inpatient costs. These findings shed some light on the potential of market forces to have a significant impact on utilization and overall costs in the health care system.

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