The effects of cocaine and heroin price on drug-related emergency department visits

Abstract

This paper estimates the empirical relationship between cocaine and heroin prices and drug-related hospital ED admissions for 21 U.S. cities. These outcomes bypass some of the problems with self-reports and directly measure a component of healthcare costs associated with heavy drug usage. The price elasticity of the probability of a cocaine and heroin episode is estimated at −0.27 and −0.10, respectively. A 10% increase in prices can prevent 10,723 cocaine and heroin-related ED visits, with cost savings between $21 million and $47 million. These low magnitudes of the drug outcome-price response have implications for the cost-effectiveness of enforcement-driven price increases.