Economics of the Opioid Crisis
Saturday, Jan. 7, 2023 2:30 PM - 4:30 PM (CST)
- Chair: Kosali Simon, Indiana University
Pharmaceutical Innovations to Fight the Opioid Crisis: Evidence from the Introduction of Narcan
AbstractNaloxone is a lifesaving medication which helps reduce the effects of an opioid overdose. Improving naloxone access is a central pillar of the federal response to the worsening opioid crisis in the United States. Much of the literature on the role of naloxone has focused on policies that aim to improve naloxone access, while ignoring the roles of pharmaceutical innovations. In this paper, we study how the introduction of the Narcan Nasal Spray affected access to naloxone and opioid-related overdose death rates. Narcan, approved by the FDA in November 2015, was the first naloxone product which did not have to be injected. This innovation permitted laypersons to successfully administer the drug with little training, representing a significant improvement in the naloxone delivery system and substantially broadened the usefulness of naloxone. Narcan quickly became the most dispensed type of naloxone.
This paper studies the importance of the introduction of Narcan and compares its role to the independent effects of specific policies such as naloxone access laws (NALs) and insurance expansions. States with standing orders or prescriptive authority NALs permit naloxone to be dispensed by pharmacies directly to consumers upon request with few restrictions. In other states, naloxone can often require a prescription from a doctor and other legal barriers. We leverage cross-state variation in NALs to study how Narcan’s nationwide introduction differentially affected states with and without standing orders or prescriptive authority. Using claims data from Symphony on pharmacy naloxone dispensing, we observe that states with the most permissive NALs in place prior to 2016 experienced significantly larger increases in overall naloxone dispensing when Narcan was introduced. The rise in naloxone claims outpaces the independent effects found with adoption of standing order and prescriptive authority NALs. In addition, we observe that, when Narcan was introduced, states with
Why Has the Opioid Epidemic Lasted So Long?
AbstractThis paper examines the question of why opioid overdose death rates in the U.S. have been rising for over thirty years. We develop an empirical model of addictive drug deaths with “thick market externalities”—when an exogeneous increase in drug use has feedback effects that induce even more people to use drugs. We identify several reasons for thick market externalities, such as information about drugs flowing more readily when more people use them, drug users serving as suppliers themselves, and the costs of using drugs (prices and expected penalties) falling with greater use. Our empirical analysis demonstrates the importance of thick market externalities using data on overdose death rates linked to peer connectedness, measured by Facebook friendships, and physical distance between counties. We find that rising death rates in friend and neighboring counties cause increases in opioid death rates in one’s own county. The relationship is such that temporary shocks to opioid supply in one county can generate continuously increasing epidemics. We argue the presence of these large spillovers are the main reason why the opioid epidemic has gone on as long as it has. Further, we show that other competing theories—such as exogenous increases in illicit opioid supply—do not adequately explain the long epidemic.
San Diego State University
University of Wisconsin-Madison
W. David Bradford,
University of Georgia
- I1 - Health