%0 Report
        %A Deiana, Claudio
%A Giua, Ludovica
%A Nistico, Roberto
        %T The Economics behind the Epidemic: Afghan Opium Price and Prescription Opioids in the US
        %D 2019
        %8 2019 Dec
        %I Institute of Labor Economics (IZA)
        %C Bonn
        %7 IZA Discussion Paper
        %N 12872
        %U https://www.iza.org/publications/dp12872
        %X We investigate the effect of variations in the price of opium in Afghanistan on per capita dispensation of prescription opioids in the US. Quarterly county-level data for 2003-2016 indicate that reductions in opium prices significantly increase the quantity of opioids prescribed. The increase involves natural and semi-synthetic but not fully synthetics opioids, therefore suggesting that the effect is moderated by the amount of opium contained in the products. While this evidence could suggest a pass-through of lower production costs to retail prices, boosting patients' demand for opioids, we fail to detect significant effects of changes in retail prices on per capita dispensation. Moreover, firm-level analysis reveals that advertising expenses of opioid producers increase following opium price declines and so do their stock prices and profits. Overall, our findings suggest that supply-side economic incentives might have played an important role in the opioid epidemic.
        %K opium price
%K drugs
%K prescription opioids
%K supply-side economic incentives