The War on Drugs: Estimating the Effect of Prescription Drug Supply-Side Interventions∗

Prescription drug abuse is America’s fastest-growing drug problem, with overdose deaths from opioid pain relievers increasing by 313% from 1999 to 2010. This paper estimates the effect of supply-side interventions on prescription drug availability, abuse, public health, and crime. The study is based in Florida, the epicenter of the prescription drug abuse epidemic in the late-2000s, where physicians prescribing and dispensing oxycodone from pain clinics were the main source of drug diversion. In mid-2010, government officials initiated a sweeping crackdown on Florida’s pain clinic suppliers, reducing the number of pain clinic licenses by 59%. Using novel online and administrative data and exploiting the timing and geographic location of the crackdown, I find that enforced regulation of pharmaceuticals’ legal supply chain can reduce prescription drug abuse substantially and sustainably. Between 2008-12, oxycodone street prices increased by 238% and average supply decreased by 59%. In turn, indicators of oxycodone consumption decreased significantly. There is no evidence of an oxycodone price, supply, or consumption recovery. There is substitution to heroin, but this offsetting effect is small relative to substantial public health gains from decreases in oxycodone deaths and hospitalizations. In addition, there is weak evidence of a decrease in drug arrests and index crimes. ∗I am deeply indebted to my advisers Anna Aizer, Emily Oster, and Brian Knight for their guidance and support. I also thank participants at Brown University’s Applied Microeconomics Seminar and at the National Rx Drug Abuse Summit for helpful comments and suggestions. I gratefully acknowledge the financial support of Brown University’s Population Studies and Training Center. All errors are my own. E-mail: [email protected]