Supplier Enforcement and the Opioid Crisis,

By J. Travis Donahoe

This paper studies the effects of shutting down prescribers, dispensers, and distributors that inappropriately handle prescription opioids on local opioid supply and mortality. With competitive supply, theory suggests the effects of closing any single supplier will be offset by substitution. Closing a supplier may have an effect on overall supply, however, if the targeted supplier is more lax with prescriptions than others or if the action has general deterrence effects. To examine enforcement empirically, I exploit differential timing of initial enforcement actions across areas following a federal expansion of enforcement in 2008. I show enforcement reduced overall opioid shipments by 20 percent in the average affected county for three years. Results further show that enforcement actions targeting distributors primarily reduced opioid shipments to pharmacies and clinics with suspicious order patterns. Overall, these findings demonstrate a large role for supplier enforcement to reduce harmful prescription opioid supply. Enforcement actions had heterogeneous effects on mortality. In Florida, which experienced the most enforcement, overdose death rates fell by 22 percent due to enforcement actions for five years. Outside of Florida, where enforcement was less intensive, overall mortality was unaffected. This heterogeneity is an important policy issue. (Job Market Paper)

Cambridge, MA: Harvard University, 2022. 69p.