The Economic Costs of the Opioid Epidemic
Date Posted: January 22, 2020
Posted In: Discussion, News,
From Medium: by Kaitlyn Hoevelmann, Public Affairs Staff, St. Louis Federal Reserve Bank
The opioid epidemic that has now spanned several decades is rooted in the rise of prescription painkillers.
There was an increase in prescribing opioids in the early 1990s, and the opioid epidemic reached its peak in prescriptions per capita in 2011, says research from the Federal Reserve Bank of Boston.
Though national measures have been taken to reduce the number of pills dispensed, the opioid crisis seems to be far from over. Americans and the economy are still facing its consequences.
Consider that a second wave of economic impacts arose from illicit opioid overdose deaths from heroin and fentanyl, “likely a result of efforts to limit the supply of prescription opioids,” says a 2019 report (PDF) from the Council of Economic Advisers.
In 2017, there were more than 70,200 drug overdose deaths in the U.S. — that’s more than four times the number of homicide deaths, according to the FBI. Out of these overdose deaths, a recent research paper from the Philadelphia Fed noted that nearly 70% of them (PDF) can be attributed to opioids. That includes overdoses from mixing opioids with non-opioid drugs, such as cocaine.
As with any crisis, the opioid epidemic has affected the economy in major ways.
For starters, there is a relationship between the health and resilience of a country’s economy and the health and resilience of a country’s people and communities.
The Opioid Epidemic’s Impact on States
Researchers have estimated the opioid epidemic’s cost to the nation at $504 billion. On a state level, the median total cost per capita was $1,672 (both 2015).
On a state level, the total cost per capita of the opioid epidemic ranges from over $4,300 in West Virginia to about $400 in Nebraska. The median total cost per capita was $1,672 in 2015, according to research by Alex Brill and Scott Ganz of the American Enterprise Institute.¹
They based this number off of the Council of Economic Advisers’ estimate of the cost of the epidemic and local variations of health care costs, criminal justice services and worker productivity.
The opioid epidemic appears to have touched some places more than others.
The Philadelphia Fed’s research found that in Pennsylvania, New Jersey and Delaware, the rate of overdose deaths for synthetic opioids is roughly double the national rate or more.
One possible reason for this trend, suggests the Philadelphia Fed research paper, involves problems with fentanyl in the heroin supply of East Coast cities. Fentanyl is a synthetic painkiller about 50 to 100 times more potent than morphine. Since East Coast heroin is sold in a different form than that of its West Coast counterpart, it may be easier to cut with fentanyl.
Other regions of the country have been greatly affected, too.