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How much opioid epidemic costs taxpayers

May 29, 2017

It’s easy for the average American to dismiss the impact of the nation’s opioid abuse epidemic. However, heroin and prescription opioid painkiller addiction may be costing Americans much more than they realize.

A recent study by the U.S. Surgeon General found that 27 million Americans reported misusing illegal drugs or opioid-based prescription painkillers last year. The same study estimates that the nation is spending a total of $442 billion annually dealing with the fallout from drug and alcohol abuse.

Epidemic Costs Non-Users, Too

A 2015 report by Matrix Global Advisors estimated that prescription painkiller abuse alone results in at least $25 billion in annual healthcare costs and $55 billion in total annual costs to society. Matrix estimated that the state of California incurs the largest opioid abuse-driven healthcare expense at roughly $4.2 billion annually. On a per-capital basis, Oregon residents are getting hit hardest by the opioid epidemic. Matrix estimates opioid abuse is costing each Oregon resident roughly $155 per year. In addition to Oregon residents, residents of the states of Washington ($138 per year), California ($110 per year) and Arizona ($104 per year) are getting hit hardest.

Medicaid has been one of the key weapons in the federal fight against opioid abuse. Medicaid paid for 21 percent of all substance use disorder treatments in the U.S. in 2014. In addition, Medicaid covers about 25 percent of total medication-assisted treatments for opioid addiction. In some states, such as Ohio and Vermont, Medicaid accounts for more than half of all MAT payments.

 

In addition to the taxpayer costs of treating opioid abuse, the government is also putting time and resources into preventing opioid abuse in the future. New abuse-deterrent prescription painkiller formulations may help prevent addiction, but many are also much more expensive to produce. A 2016 law exempted drugmakers from paying higher rebates on these expensive reformulations, which will cost the federal Medicaid program roughly $75 million over the next decade, according to the Congressional Budget Office.

Abuse-deterrent painkiller producers, including Purdue Pharma, Endo International plc- Ordinary Shares ENDP 1.78% and Pfizer Inc. PFE 0.06% collectively spent more than $1.7 million lobbying for the exemption.

As the cost of opioid abuse continues to rise, the nation’s ability to fight back may soon be dealt a severe blow. President Trump’s first budget proposal includes more than $600 billion in cuts to Medicaid over the next decade.

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