Association for Public Policy Analysis & Management

Use of prescription opioid pain relievers to manage pain has increased fourfold since 1999, as medical guidelines have increasingly emphasized that appropriate pain management is required for an acceptable standard of care. However, a concomitant rapid rise in opioid abuse, addiction, overdose, and death has led to recent efforts to crack down on opioid prescribing. This paper sheds light on the tradeoffs of public policies that reduce the supply of medical opioids by investigating their health, labor, and welfare ramifications. I exploit state-level variation in the introduction of Prescription Monitoring Program (PMP) laws, and make use of several rich data sources, documenting that PMPs reduce the distribution of opioids, and achieve a key policy goal by reducing opioid overdose deaths by about 12%. I also find substantial costs resulting from these policies, including increased pain in the hospital setting, more missed days for injured and disabled individuals, and substitution towards more expensive medical care. A rough back-of-the-envelope welfare calculation suggests the welfare losses and gains from regulation are on the same order of magnitude - approximately $12.1 billion per year in increased costs from inpatient and outpatient medical spending plus lost wages, compared to $7.3 billion per year in benefits from lives saved from opioid and heroin overdose.