The Dynamics of Local Opioid Markets and Their Response to State Policies

Communities are attacking the opioid epidemic using a variety of strategies. While state and federal governments are passing laws that expand access to insurance, improve financing of treatment for opioid use disorders (OUD), and increase coverage for medication assisted therapies (MAT) (Meinhofer et al., 2018; Horowitz et al., 2018; Stein et al., 2015), local communities are adopting their own strategies to tackle problems that have emerged given their own experience with the drugs. Efforts to expand distribution of naloxone, access to evidence based treatment (Cohn et al., 2018; Project ECHO, 2016) and integrate care (Hall et al., 2014) are just a few examples of local initiatives being undertaken. Since multiple policies are being adopted simultaneously to address the opioid crisis at the federal, state and local level, it is imperative to understand the dynamic impacts of these policies on the unique situations communities face. This is where RAND’s Opioid Policy Tools and Information Center (OPTIC) of Excellence comes in, with the goal of educating researchers and policy makers of these issues, providing standardized information relevant for conducting state policy evaluations, and educating users of these data on issues related to local markets and how variation across markets may influence the intended and untended consequences of state policies.

In this paper, we describe variation in aspects of opioid supply and demand observed in over 50 local communities across 19 states for the period 2005 -2016. We examine demand by looking at variation in the types of opioids consumed, as indicated by QUEST drug testing data and CDC overdose data. We examine supply in terms of the legal amount of prescription opioids delivered or prescribed in each of these markets as well as the presence and/or emergence of heroin markets over time. This variation across local markets, often masked in state level assessments, motivates understanding how different local market conditions in terms of supply and/or demand for particular opioids influences the response to state policy initiatives (e.g. limiting the availability of OxyContin, promoting the distribution of naloxone). While the literature has studied the average effects of many types of opioid-related policies, such as Prescription Drug Monitoring Programs (PDMPs), there is less work exploring the heterogeneous effects of these policies given differences in initial market conditions. We will discuss methods to characterize different markets based on the prevalence of opioid misuse and supply, the types of opioids present in the market, and the overlapping nature of the markets for different types of opioids. Based on these characterizations, we will be able to test how various policies interact with market conditions to produce different outcomes. We will also examine how the estimated heterogeneity explains current variation in opioid-related harms across the U.S. while providing predictions about which types of policies are most suitable for different types of markets.