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Retail Pharmacies and Drug Diversion during the Opioid Epidemic

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  • Aljoscha Janssen
  • Xuan Zhang

Abstract

This study investigates the role of retail pharmacy ownership in the opioid epidemic. Using data of prescription opioid orders, we show that compared with chain pharmacies, independent pharmacies dispense 39.1 percent more opioids and 60.5 percent more OxyContin. After an independent pharmacy becomes a chain pharmacy, opioid dispensing decreases. Using the OxyContin reformulation, which reduced nonmedical demand but not the legitimate medical demand, we show that at least one-third of the difference in the amount of OxyContin dispensed can be attributed to nonmedical demand. We show that differences in competitive pressure and whether pharmacists own the pharmacy drive our estimates.

Suggested Citation

  • Aljoscha Janssen & Xuan Zhang, 2023. "Retail Pharmacies and Drug Diversion during the Opioid Epidemic," American Economic Review, American Economic Association, vol. 113(1), pages 1-33, January.
    • Handle: RePEc:aea:aecrev:v:113:y:2023:i:1:p:1-33
    DOI: 10.1257/aer.20210357
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    References listed on IDEAS

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    1. Anca M. Grecu & Dhaval M. Dave & Henry Saffer, 2019. "Mandatory Access Prescription Drug Monitoring Programs and Prescription Drug Abuse," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 38(1), pages 181-209, January.
    2. Sun, Liyang & Abraham, Sarah, 2021. "Estimating dynamic treatment effects in event studies with heterogeneous treatment effects," Journal of Econometrics, Elsevier, vol. 225(2), pages 175-199.
    3. Angélica Meinhofer, 2018. "Prescription Drug Monitoring Programs: The Role of Asymmetric Information on Drug Availability and Abuse," American Journal of Health Economics, University of Chicago Press, vol. 4(4), pages 504-526, Fall.
    4. Sergio Firpo & Nicole M. Fortin & Thomas Lemieux, 2009. "Unconditional Quantile Regressions," Econometrica, Econometric Society, vol. 77(3), pages 953-973, May.
    5. Thomas C. Buchmueller & Colleen Carey, 2018. "The Effect of Prescription Drug Monitoring Programs on Opioid Utilization in Medicare," American Economic Journal: Economic Policy, American Economic Association, vol. 10(1), pages 77-112, February.
    6. Angélica Meinhofer, 2018. "Prescription Drug Monitoring Programs: The Role of Asymmetric Information on Drug Availability and Abuse," American Journal of Health Economics, MIT Press, vol. 4(4), pages 504-526, Fall.
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    Cited by:

    1. Ruenzi, Stefan & Maeckle, Kai, 2023. "Friends with Drugs: The Role of Social Networks in the Opioid Epidemic," VfS Annual Conference 2023 (Regensburg): Growth and the "sociale Frage" 277574, Verein für Socialpolitik / German Economic Association.
    2. Adamopoulou, Effrosyni & Greenwood, Jeremy & Guner, Nezih & Kopecky, Karen, 2024. "The Role of Friends in the Opioid Epidemic," CEPR Discussion Papers 18803, C.E.P.R. Discussion Papers.
    3. Carl Hase & Johannes Kasinger, 2024. "The Pass-through of Retail Crime," Papers 2407.07201, arXiv.org, revised Oct 2024.

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    More about this item

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • I12 - Health, Education, and Welfare - - Health - - - Health Behavior
    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
    • L81 - Industrial Organization - - Industry Studies: Services - - - Retail and Wholesale Trade; e-Commerce

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