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How Cost-of-Illness Studies Can be Made More Useful for Illicit Drug Policy Analysis

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Abstract

Cost-of-illness (COI) studies seemingly provide a solid foundation for quantifying the potential benefits of illicit drug policy interventions that reduce drug use at the population level. However, their usefulness is severely limited. In this paper, we suggest several improvements to substance abuse COI studies. The first set of improvements can be implemented with little change to the current framework: developing estimates that reflect the best available information, rather than using lower bound estimates that represent ‘conservative’ figures; dealing with uncertainty explicitly by developing estimation ranges; and disaggregating social costs by particular illicit drug types. The second set of improvements address key conceptual problems in transferring a health approach to a ‘condition’ where healthcare costs are a minor component: dealing with the intangible costs of drug dependence; valuing property crime; including systemic crime; and considering the spillover effects of drug abuse on human capital formation. COI studies can become valuable sources of policy-relevant information if their authors improve the current approach by making changes such as those identified here.

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Notes

  1. 1‘Drug policy’ here refers to policies aimed at minimising the use of prohibited substances (e.g. cocaine, heroin, amphetamines, cannabis) or the harmful effects associated with their use. Drug policies include school-based prevention, public health campaigns, substance abuse treatment, law enforcement and harm reduction programmes (e.g. needle and syringe programmes).

  2. 2For example, it is estimated that the Australian Government spent 1.3 billion Australian dollars in the 2002/3 financial year[31] while the US Federal Government is expected to spend $US12.6 billion in the 2007 financial year.[32]

  3. 3for example, the Drug Availability Steering Committee[35] concluded that “US heroin consumption in 2001 was between 13 and 18 metric tons of pure heroin” (page 47). In addition, they state prominently in the first paragraph of the executive summary that “There is significant uncertainty in these estimates due to … [various sources listed]. Therefore, caution is urged in the application of these estimates” (page xi).

  4. 4The $US 10000 figure is over and above any ‘out-of-pocket’ expenses currently estimated within COI studies.

  5. 5By way of comparison, Zaric et al.[45] assume a QALY score of 0.8 for untreated injection drug use and 0.9 for time spent in methadone treatment.

  6. 6There are other examples. Cohen et al.[50] estimates the willingness to pay to avoid a burglary in the US at $US31000 in 2000 compared with direct costs of just $US1300 (in 1992 dollars).[51] COI crime estimates could be an order of magnitude smaller than the social cost of property crime that is relevant for policy analysis.

  7. 7Substance Abuse Mental Health Services Administration (SAMHSA)[52] estimates that >6 million children in the US live with at least one parent who abused or was dependent on alcohol or an illicit drug during the past year. Miller et al.[53] estimate the average social cost per instance of child abuse to be $US60 000 (in 1993 dollars). There probably is no empirical basis for estimating what proportion of substance abusing or dependent parents abuse their children because of that substance abuse or dependence, but the proportion would not have to be very large for child abuse to loom large in social cost estimates. Even if the rate were only 10%, the cost would be $US36 billion (6 million × 10% × $US60000) per year (1993 values; equivalent to $US49 billion per year in 2005 values).

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Acknowledgements

This research was partially funded by the Colonial Foundation Trust as part of the Drug Policy Modelling Project. We wish to thank Peter Reuter, Marian Shanahan and an anonymous referee for helpful comments on this paper. There are no conflicts of interest to declare.

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Authors and Affiliations

  1. Turning Point Alcohol and Drug Centre, 54–62 Gertrude Street, Fitzroy, VIC, 3065, Australia

    Timothy J. Moore

  2. Department of Economics, University of Melbourne, Melbourne, Victoria, Australia

    Timothy J. Moore

  3. CMU Qatar Campus and H. John Heinz III School of Public Policy & Management, Carnegie Mellon University, Pittsburgh, Pennsylvania, USA

    Jonathan P. Caulkins

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Correspondence to Timothy J. Moore.

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Moore, T.J., Caulkins, J.P. How Cost-of-Illness Studies Can be Made More Useful for Illicit Drug Policy Analysis. Appl Health Econ Health Policy 5, 75–85 (2006). https://doi.org/10.2165/00148365-200605020-00002

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