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The Economics Behind the Epidemic: Afghan Opium Price and Prescription Opioids in the US

Author

Listed:
  • Claudio Deiana

    () (Università di Cagliari and University of Essex)

  • Ludovica Giua

    (European Commission, DG Joint Research Centre, Unit I.1, Monitoring, Indicators & Impact Evaluation, Competence Centre on Microeconomic Evaluation (CC-ME))

  • Roberto Nisticò

    () (Università di Napoli Federico II and CSEF)

Abstract

We investigate the effect of variations in the price of opium in Afghanistan on per capita dispensation of prescription opioids in the US. Quarterly county-level data for 2003-2016 indicate that reductions in opium prices significantly increase the quantity of opioids prescribed, and that the magnitude of the effect increases with the county's ex-ante demand for opioids. Most of the increase involves natural and semi-synthetic but not fully synthetic opioids. We further find that both opioid-related deaths and drug-related crimes increase following a decline in the opium price. Finally, firm-level analysis reveals that the stock prices and profits of opioid producers react significantly to opium price shocks. Overall, the findings suggest that supply-side economic incentives have played an important role in the opioid epidemic.

Suggested Citation

  • Claudio Deiana & Ludovica Giua & Roberto Nisticò, 2019. "The Economics Behind the Epidemic: Afghan Opium Price and Prescription Opioids in the US," CSEF Working Papers 525, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy, revised 13 May 2019.
  • Handle: RePEc:sef:csefwp:525
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    File URL: http://www.csef.it/WP/wp525.pdf
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    References listed on IDEAS

    as
    1. Deiana, Claudio & Giua, Ludovica, 2018. "The US Opidemic: Prescription Opioids, Labour Market Conditions and Crime," MPRA Paper 85712, University Library of Munich, Germany.
    2. Lu, Fangwen, 2014. "Insurance coverage and agency problems in doctor prescriptions: Evidence from a field experiment in China," Journal of Development Economics, Elsevier, vol. 106(C), pages 156-167.
    3. Gihleb, Rania & Giuntella, Osea & Zhang, Ning, 2018. "The Effects of Mandatory Prescription Drug Monitoring Programs on Foster Care Admissions," IZA Discussion Papers 11470, Institute of Labor Economics (IZA).
    4. Daniel I. Rees & Joseph J. Sabia & Laura M. Argys & Joshua Latshaw & Dhaval Dave, 2017. "With a Little Help from My Friends: The Effects of Naloxone Access and Good Samaritan Laws on Opioid-Related Deaths," NBER Working Papers 23171, National Bureau of Economic Research, Inc.
    5. Thomas C. Buchmueller & Colleen Carey, 2018. "The Effect of Prescription Drug Monitoring Programs on Opioid Utilization in Medicare," American Economic Journal: Economic Policy, American Economic Association, vol. 10(1), pages 77-112, February.
    6. repec:wly:hlthec:v:27:y:2018:i:2:p:294-305 is not listed on IDEAS
    7. Harris, Matthew & Kessler, Lawrence & Murray, Matthew & Glenn, Beth, 2017. "Prescription Opioids and Labor Market Pains: The Effect of Schedule II Opioids on Labor Force Participation and Unemployment," MPRA Paper 86586, University Library of Munich, Germany, revised 28 Mar 2018.
    8. Bogdan Savych & David Neumark & Randall Lea, 2018. "Do Opioids Help Injured Workers Recover and Get Back to Work? The Impact of Opioid Prescriptions on Duration of Temporary Disability," NBER Working Papers 24528, National Bureau of Economic Research, Inc.
    9. Currie, Janet & Lin, Wanchuan & Meng, Juanjuan, 2014. "Addressing antibiotic abuse in China: An experimental audit study," Journal of Development Economics, Elsevier, vol. 110(C), pages 39-51.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Prescription Opioids; Drugs; Opium Price; Supply-Side Economic Incentives.;

    JEL classification:

    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
    • I12 - Health, Education, and Welfare - - Health - - - Health Behavior
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • L65 - Industrial Organization - - Industry Studies: Manufacturing - - - Chemicals; Rubber; Drugs; Biotechnology; Plastics

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