October 06, 2022

Credit: MarketWatch, Paul Brandus

The U.S. economy is being battered on all sides: Inflation, snarled supply chains, severe labor shortages. The pandemic, which has contributed to all three, rolls on; there are still 40,000-plus new cases and about 400 deaths per day, according to current federal, state and local government data. 

But as if all this isn’t damaging enough, here’s another big one that for all the damage it is inflicting, still doesn’t get enough attention: The economic toll of opioid addiction and drug overdoses.  

That toll is massive. A new report by Congress’s Joint Economic Committee (JEC) puts it at a staggering $1.47 trillion in 2020 alone, a 49% increase from 2019. 

Data for 2021 hasn’t been finalized yet, but the report suggests it will be even worse.

“The rise in fatal opioid overdoses in 2021 suggests the total cost is likely to continue to increase,” the JEC says. “In addition, the methodology used to produce the totals involves some uncertainty that likely makes the national cost estimate a lower-bound on the true economic cost of the epidemic in a given year.”

This has been going on for decades. More than a million Americans have died of drug overdoses since the year 2000, the Council on Foreign Relations (CFR) says, the majority of which were due to opioids. It began with the over-prescription of legal pain medications, but has gotten worse, much worse, in recent years with the smuggling of cheap heroin and synthetic opioids, particularly fentanyl. The crisis has reached such a scale, the CFR says, “that it has become a drag on the economy and a threat to national security … not only in health-care expenses but also in the form of a weakened workforce.”

Here’s some additional context. For all the attention that gun deaths get (nearly 49,000 Americans died from gun-related injuries in 2021), opioid-related deaths that same year, including from the powerful synthetic painkiller fentanyl, accounted for about 107,000 fatalities (both data points via the Centers for Disease Control). 

The St. Louis Fed, in an earlier study, breaks costs down into three categories: Criminal justice, treatment and longer-term health complications. All are unquestionably huge, but, it acknowledges, difficult to quantify. 

Meanwhile, the Philadelphia Fed looks at this from a labor angle. A study it cited found that the average age for an overdose fatality is 41, meaning that a person’s early death costs the economy around 25 years of productivity. Federal Reserve Chairman Jerome Powell has said that the opioid crisis, which skews male, is an ongoing factor in the country’s low labor force participation rate, currently 62.4%. 

“It has become abundantly clear that the opioid epidemic is not only a health crisis, but also an economic and national security one,” said Democratic Congressman David Trone of Maryland, co-founder and co-chair of the Bipartisan Addiction and Mental Health Task Force. “With incalculable human cost and a staggering economic impact, this epidemic deserves urgent, collective action on a national scale.” 

The data can be sliced in other ways. The vast majority of those who overdose on opioids are non-Hispanic white Americans, who accounted for nearly 70% of the death toll in 2020. Two economics professors at Princeton, Anne Case and Angus Deaton, call these fatalities “deaths of despair” — largely the result of wages stagnating over decades and a decline in available jobs.

So what’s being done about this massive problem that’s destroying lives and undercutting our economy?

The Biden administration, trying to get a handle on the deepening crisis, just announced nearly $1.5 billion to fund access to medications for opioid overdoses, sanctions against traffickers and increased funding for law enforcement.

“Our nation is facing 107,000 overdose deaths in just 12 months. That’s one life lost every five minutes around the clock,” Dr. Rahul Gupta, director of National Drug Control Policy at the White House, said in a conference call. 

Border security is also part of the problem. The Justice Department says more agents are needed, particularly along California’s border with Mexico, the crossing point for about 60% of all the fentanyl seized in the entire United States so far this year. The feds also point the finger at China, calling it a source of “precursors” that are imported from there and other countries “and then pressed into pills, powder or mixed into other drugs at massive, industrial-scale labs.”

But the federal government has been throwing big money at this for years. Presidents Barack Obama and Donald Trump spent billions and gave states billions more, to tackle everything from prevention programs, treatment, recovery to law enforcement, criminal justice reform and overdose reversal. The $1.5 billion just announced by President Biden follows nearly $5.5 billion that was provided last year as part of the American Rescue Plan.

And yet, compared with $1.5 trillion in economic damage done by the opioid crisis in just one year, all this seems like a drop in the bucket.