01 December 2010

Market Economics in Action

I've discovered over the years that I really like economics. I never took an econ class in my entire life, since I was pretty focused on the life sciences, but I've picked up a fair amount informally over the years.  Fortunately I have a strong background in statistics and math, and I've done a lot of reading on economics. I wouldn't say that I have any special level of understanding or credibility on the topic. Perhaps it should be noted that my wife took away the checkbook for good reason. But I enjoy it as a topic, as something to read about and a powerful tool for understanding how the world works.

On another note, one consequence of being an ER doc is that you are pretty close to "the street," and I don't mean Wall Street. I mean the folks living and scrounging on the streets. As a matter of functioning in the job, you learn the street jargon, you learn what drugs people are using and why and what the effects of those drugs look like. The other day I saw a middle aged guy brought in for acting really weird. Though everything in his social history argued against it, he just looked like he was on meth. I checked a tox, and sure enough, it came back positive. He strenuously denied any drugs, but eventually gave in and admitted the meth use. I remember in residency walking through downtown Baltimore with a fellow resident and our spouses and we amazed them by serially identifying the likely drug of choice of the various street people we passed, based on casual observation of their behavior. It's just what we do.

Now Baltimore was a heroin town. I remember a statistic that of the population of 700,000, 70,000 were actively using heroin, though I am not sure if that was true. It seemed an underestimate based on the folks we saw at our inner-city hospital. There was a bit of coke and the ever-present alcohol, but heroin was the epidemic. (Ever see The Wire? That show used to send shivers down my back it was so accurate; The Corner is maybe even better.)  Chicago, where I did med school, was more of a cocaine town. But when I moved to the Pac NW, the whole matrix shifted. There was no heroin -- literally none. We had a meth epidemic, and if I am not mistaken, the Pac NW was the first region where meth was really big. Cocaine was also unheard of in our town. A bit of prescription drug abuse, oxycontin and xanax rounded out the stable of abused substances (in addition to the ever-present alcohol). 

So it went for the better part of a decade. We saw an occasional heroin addict, the meth population waxed and waned, and the oxycontin abuse really became frightening in its dramatic increase.  The heroin addicts were a tough bunch -- the only heroin available in our state was "Black tar," which is thick and sludgy and very sclerotic to the veins. Basically it destroys the veins quickly and users have to switch to IM administration, and they got these terrifying deep facial plane abscesses that needed to be drained in the OR. No wonder it was unpopular!  So these users were hard-core, long-time addicts, really committed to their drug. In Baltimore, they had the highly refined "China White" which was practically pharmaceutical-grade and could be used IV for 30+ years. I didn't miss dealing with heroin addicts, but the oxycontin addicts were nearly as challenging to treat.

So it went -- unti recently. Over the last eight months, something changed.  All of a sudden, we started seeing large numbers of herion users, many of them "novice" injectors, still using their veins. Most of them were pretty frank that they had only recently started using heroin, and few of them had any record of ER visits for drugs in the past.  So, amateur economist that I am, I started systematically asking the heroin users how long they had been using, whether and what they had used before, and why they changed. I was surprised how consistent the answers were: they were nearly all former oxycontin users. Until this year, Oxycontin was easily available and cheap in our area. The users knew their doses and were able to carefully calibrate their intake to avoid accidental ODs or other misadventures. Few injected -- most chewed, smoked or simply swallowed the drug. For most, it was safe and simple and they stayed out of trouble (and out of my ER).  Then recently, Oxys became nearly unavailable, and scarcity drove the price way up. Previously, our community had a going rate of about a dollar a milligram for oxycodone, and at the epidemic's peak, the price was half that. Now, I was informed, it was triple, if you could find them at all.  "So we all switched to heroin," one pretty eighteen-year-old with track marks up both her arms glumly informed me.  Heroin was much cheaper, and apparently the local suppliers were more than able to accommodate the sudden spike in demand.

Of course, the dosing of heroin is harder to titrate, being of variable purity and quality, so people started OD'ing more regularly. And injecting causes all sorts of complications like abscesses. And while pill popping (or smoking) can for some be easily hidden from family, track marks are harder to explain away.  So they started appearing in the ER.

There you have it: economics in action. If I were a clever, real economist, I might neatly package the conclusion along the lines of the demand for opiates being relatively inelastic, but the brand (?) sensitivity is low, and once the incidental costs of heroin (inconvenience, lower quality, abscesses, disease, visibility) became lower than the absolute cost of oxycontin, the market suddenly tilted. (That's probably mostly gibberish, but it sounds economish.) As it is, I just shake my head at the sadness of it all and the seeming futility of interdiction as a strategy for dealing with drug abuse. Cut off one drug, and people switch to another, more harmful one. A funny sort of progress.


  1. Great post, I'm a primary care doc and I've experienced similar issues myself.

    I have an alternate hypothesis, though:
    This is what you would find if oxy were very price elastic, but rates of prescription narcotic use are way higher than ER docs experience with the risk of black tar landing you in the ER being very high.

    I'm a primary care doc - I see problem prescription narcotic users many times a day. The epidemic of prescription narcotic use chronically alters every aspect of my patient's lives, but it is rarely an emergency.

    The distinction matters because the pill shortage could be dramatically decreasing addiction rates while increasing ER visits.

  2. long time reader, first time commenter. Based on your experience as an ER doctor, I was wondering what your thoughts are on the drug use, specifically the drug war. Do you see legalization as an option for some drugs? What do you think of the Portuguese model of decriminalization and treatment?
    Will drug users just always be drug users?

  3. Your costs don't take into account externalities as it is obvious that the low price of opiate obviously doesn't bear the real cost to users as the risk of OD is higher which means that the cost of use is net-net higher as the ER visits are likely subsidized by us all.

    Which begs the question of whether we could pass that cost to producers somehow... taxation?quality control? etc?

  4. Just discovered your blog today and really enjoyed this post. Look forward to more.

  5. Nice analysis. Seems to me as if the drug pushers were maybe preparing the people for heroin use.

  6. I've definitely noticed the change with the pill poppers using heroin when they can't get their oxy. That is a big big change from the past when heroin addicts would go scrounging for pills when they couldn't get their heroin.

    In the Eugene area there has been a big heroin problem for years with the sweet young hippies. The heroin available now is so strong that they get addicted smoking it. Seems wholesome enough to them. They mix it with their American Spirit cigarettes. These are kids that eat organic food and think they're back to earth. Don't you know heroin is organic too.

    And no Ahmed, its not the drug pushers, its the pharmacutical companies making a killing off of oxycontin.

  7. Excellent post and your economish sounding analysis is extremely accurate. This breaks my heart that so many are trapped in the horrors of drug addiction. And drug dealers, both illegal and legal, are reaping massive profits from the trade.

    But I can guarantee you there is hope. Drug users do not necessarily always stay drug users. It is possible to break the chains of addiction and stop the cycle of destruction.

    My experience has shown the solution is spiritual in nature - this is not an issue that police or legal action can solve. It is a battle for the soul of a generation...

  8. My comment came out wrong. And plus its winters...

    What i wanted to write was that somebody from the general public wants the youth (future of tomorrow) to be misguided and devoid of any hope. In your time such things were low, so you made it good. But if the current trend, of drug use, keeps on going up then after 10 years or so i'm afraid there would be an 'intellectual' brain drain. Which will result in even more outsourcing of basic manufacturing processes or give rise to the influx of more immigrants. So in the end sooner these hidden men are brought to light and punished, the sooner will the present generation clean up its act and hopefully even more sooner take their country to new heights or moral and technological success.

  9. Kind of a late comment, but I wonder if the recent reformulation of Oxycontin may have something to do with the switch. The tablets are now a little thicker and are made with some sort of epoxy resin base, so that they cannot be crushed for snorting or injecting. I think it may still be possible to chew them, but otherwise, the street user doesn't have any easy way to get immediate release of the drug from the sustained-release tab.

  10. ding ding ding...the anonymous post from 12/8 got it right, the supply of the old OC 80s have gone down, but the new OP OC 80s that cant be crushed are everywhere for cheap. You want a similar feeling to when you sniffed the OC 80s....you do Heroin. Sad by true.

  11. I'm in the NW too (psychiatry) and have seen the same evolution. I think the Anonymi on 12/8 are to some degree correct re: the reformulation (although I also recall everyone disliking the Watson generic SR oxycodone, as they weren't injectable - loved seeing those prescriptions, hated seeing them off the market.)
    But in my little town, heroin is about -half- the cost per morphine-mg equivalent of the pharmaceuticals. Maybe two-thirds when compared to a hydrocodone/APAP formulation.
    And it's mainly tar around here, not white. We see a lot of abscesses too...

    People would prefer the pharmaceuticals if they could get them, I hear, and I don't think it's just any stigma of heroin. I am not seeing people in a position to care about perceived stigma, usually.

    As to WHY we are seeing so much heroin at such a low cost, whether it was just to meet market demand or some other reason, I don't know. But the rx-opioid abuse very, very clearly preceded the heroin use, and the heroin was to fill the void. (Also because we had some high-profile Tylenol ODs. So heroin was perceived as 'healthier.' I suppose it is, when compared to 15 grams of acetaminophen... )


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