The Effect of Opioid Supply-Side Interventions on Opioid-Related Business Establishments

26 Pages Posted: 12 Nov 2020

See all articles by Justine Mallatt

Justine Mallatt

Bureau of Economic Analysis, Office of the Chief Economist

Date Written: June 24, 2020

Abstract

In response to climbing opioid misuse and overdoses, states passed several types of programs that target the supply side of the prescription opioid market, including Prescription Drug Monitoring Programs (PDMPs) which track patient prescription histories, mandates that doctors use the programs, "Pill Mill Bills" that target over-prescribing offices, and abuse-deterrent versions of prescription opioids. This paper studies the effects of these policies on opioid-related business entry and exit.

I use information on counts of establishments across the US, and examine how the policies affect rehabilitation facilities, doctors' offices and clinics, and pharmacies. I find that Pill Mill Bills reduce the number of establishments in a widely-defined category which includes pain management clinics. States that implement the Pill Mill Bills notice a statistically significant 10.5% reduction in the rate of clinics per capita in this category, equal to 23.4 fewer establishments in the average state. The Pill Mill Bills have the potential to reduce the number of pharmacies, but this result is only statistically significant within counties that receive a high concentration of opioids. "Must Access" mandates are associated with a non-significant 1.5-2.5% rise in the rate of residential rehabilitation establishments. There is also weak evidence that pain clinics enter states when PDMPs are passed. There is not evidence that the policies affect inpatient rehabilitation hospitals, outpatient rehabilitation clinics or doctors' offices. While the effect of opioid policies on patient and physician behavior has been well-investigated, this paper provides evidence that policies have effects on the business landscape of opioid-related firms.

Keywords: PDMP, Pill Mill Law, Opioid Crisis, opioids, opioid, opioid use disorder, prescription drugs, drug abuse, heroin, must-access mandate, must-access PDMP, Pill Mill Bill, Pill Mill

JEL Classification: I12, I18

Suggested Citation

Mallatt, Justine, The Effect of Opioid Supply-Side Interventions on Opioid-Related Business Establishments (June 24, 2020). Available at SSRN: https://ssrn.com/abstract=3697626 or http://dx.doi.org/10.2139/ssrn.3697626

Justine Mallatt (Contact Author)

Bureau of Economic Analysis, Office of the Chief Economist ( email )

1441 L Street NW
Washington, DC 20910
United States

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