Abstract
Over a two-week period in December 2007, a massive spike of prescription opioids surged into retail pharmacies in 78 counties in five Southeastern U.S. states. These “spike counties” experienced an average 313% increase over baseline in opioid deliveries – representing more than 147 million excess opioid doses. The pattern of facts available is consistent with the hypothesis that Colombian drug cartels became suddenly unable to launder large amounts of physical cash at the end of 2007 at a time when their capacity to supply eastern US heroin markets was failing; they used their excess cash to acquire prescription opioid products which were diverted to the illicit drug market in the eastern US. This had the potential to change the proportion of prescription opioids (with precisely calibrated potency) relative to drugs like heroin (possessing uncertain potency) in the illicit drug market. We estimate novel difference in-differences models of substance-specific opioid mortality and find that in the three years following the shock non-prescription opioid deaths fell and prescription opioid deaths rose in the eastern (Colombian cartel-controlled) US counties relative to western (Mexican cartel controlled) counties. Further, we estimate that on net overall opioid mortality fell relative to the counterfactual.