Addressing the Economic Impact of Drug Addiction

Omeed Rahimi
Sep 8, 2017 · 3 min read

The Problem

In the midst of the opioid crisis, the bipartisan issue of addiction has been thrust into the media spotlight. We are a nation of drug addicts. In 2015, the Surgeon General Report claimed that 27 million people reported misuse of illegal and prescription drugs and 65 million reported binge-drinking in the past month. This translates to an estimated annual economic impact from the misuse of prescription drugs, illicit drugs or alcohol ranging from $440 to $700 billion. This economic impact breaks down into 2 categories: broader economic costs including healthcare/insurance costs, lost productivity, as well as criminal (prison) costs; and user costs including the cost of the drug itself, the cost of treatment, health/medical, toll on family members, legal, wages, bills, and freedom.

Addiction is a Disease

We recently published a blog on how society has begun to recognize addiction as a disease. This is best highlighted with a response to the Surgeon General’s report, which officially acknowledged this fact, by Sen. Sheldon Whitehouse, who said, “For too long, we tended to think of substance abuse as a moral failing rather than the dangerous disease that is. Thankfully, that’s starting to change.” followed by “Addiction is a powerful illness and recovery is a long and difficult path, but we are making progress”. This is the most important and logical first step in easing the economic burden of addiction, laying the framework for the creation of new treatments and reduction of prison costs. Only with time will we know if this was the genesis of what was necessary to address the economic burden of addiction.

Targeting Criminalization of Drugs

The cost associated with the criminalization of addiction appears to be the quickest and easiest way to reduce the economic burden of substance abuse. While acknowledging that addiction is a disease is a critical first step, the truth is that we are still charging addicts with crimes that come with long-term prison sentences. The National Institute on Drug Abuse (NIDA) analysis has recently identified that treating addiction would cost less per person than imprisonment. For example, the data from NIDA has shown that the average cost for 1 full year of methadone maintenance treatment is approximately $4,700 per patient, whereas 1 full year of imprisonment costs approximately $24,000 per person.

Two extreme examples for reducing the cost associated with criminalization may lie in the approaches Portugal (decriminalized since 2003) and the Czech Republic (decriminalized since 2010) have taken against drugs. The economic data for these countries is not available, yet these countries have seen some positive effects that may eventually lower economic costs. The number of users in these countries has not increased since decriminalization, a trend that is not apparent in the criminalized environment of the United States. In these countries the rates of infection HIV infection have decreased, achieved through needle programs and safe use facilities. It is not yet clear if these changes have eased the economic burden of addiction in these countries, but we can imagine that it’s likely so.

Treatment Programs and the Socioeconomics of Addiction

Another approach that could help address the economic costs of addiction is by improving the quality of treatments, their accessibility, and the availability of educational materials. In addition to the health benefits, treatment also has positive social implications — helping a person to overcome an addiction may keep him or her from situations and events that can precipitate social and governmental expense as well as other undesirable consequences. As a person undergoes treatment he or she is taught vital skills, will receive critical support that can help learn how to overcome their addiction, and achieve a successful recovery, thus allowing the person to successfully integrate back into their lives and responsibilities. NIDA recently explained that, according to several conservative estimates, every dollar invested in addiction treatment programs yields a return of between $4 and $7 in reduced drug-related crime, criminal justice costs, and theft. When savings related to healthcare are included, total savings can exceed costs by a ratio of 12 to 1”. This is best shown with in New Zealand, which is #3 in the world for cannabis use, (USA is #2 & Iceland is #1). There extensive treatment programs and publicly available resources have lowered costs to treat addictions to ~$19/person compared to US at $29/person (http://www.unodc.org).

In a nation with 19 trillion dollars of debt (http://www.usdebtclock.org/), the economic burden of addiction in the United States is one that needs to be squarely addressed, and soon. Any innovation in this space may very well help make inroads into this onerous burden.

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