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  3. American Economic Review
  4. January 2023
  5. Retail Pharmacies and Drug Diversion during the Opioid Epidemic

American Economic Review

ISSN 0002-8282 (Print) | ISSN 1944-7981 (Online)

Retail Pharmacies and Drug Diversion during the Opioid Epidemic

  • Aljoscha Janssen
  • Xuan Zhang
American Economic Review
vol. 113, no. 1, January 2023
(pp. 1–33)
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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.

Citation

Janssen, Aljoscha, and Xuan Zhang. 2023. "Retail Pharmacies and Drug Diversion during the Opioid Epidemic." American Economic Review, 113 (1): 1–33. DOI: 10.1257/aer.20210357

Additional Materials

JEL Classification

  • G32 Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
  • I12 Health Behavior
  • L22 Firm Organization and Market Structure
  • L81 Retail and Wholesale Trade; e-Commerce