LIMITING SUPPLIES OF DRUGS TO ILLICIT MARKETS

Mark H. Moore

Mark H. Moore is Associate Professor of Public Policy at the Kennedy School of Government at Harvard University. From January, 1974 to September, 1975 he worked at a policy level within DEA. This paper is based largely on information gathered at that time. He continues as a consultant to the U.S. Department of Justice and the National Institute of Drug Abuse. He is the author of Buy and Bust: The Effective Regulation of an Illicit Market in Heroin (Lexington Books, 1977) - an analysis of how state and local police should be used to control the supply of heroin in the context of an overall policy towards heroin use.

The basic purpose of supply reduction efforts is to influence the relative cost and availability of abuseable drugs. In designing supply reduction efforts, one must decide which drugs produce the greatest social problems, and how the supply of each drug can be most effectively reduced. A review of the current situation suggests that supply reduction efforts should be shifted to concentrate more on heroin, barbiturates, and amphetamines. Unfortunately, analysis reveals that effective control of these different drugs requires remarkably diverse organizational capabilities. The control of heroin depends on a capacity to make conspiracy cases against international dealers. The control of barbiturates depends on an increased capacity to prevent diversion from legitimate domestic distribution. And the control of amphetamines requires effective action against small scale illegal importation from Mexico, diversion from domestic distribution, and illegal domestic production. To handle these diverse problems, DEA must be given time to develop and deploy a variety of professional capabilities besides undercover agents.

I. Introduction

The policy to reduce the supply of drugs to illicit markets is an easy mark for critics. It is vulnerable to an ideological attack which questions the right of the government to intervene in private choices about the shape of an individual's life,' and a practical attack which questions the capability of the government to reduce the availability of drugs to levels where many are discouraged from use without imposing substantial resource costs, or intolerably infringing on civil liberties (Packer, 1968).

At a slightly less fundamental level, the policy of a given moment is vulnerable on efficiency grounds. The strategy is arguably concentrated on the wrong drugs, or inefficiently targeted against the production and distribution systems which determine the supply of drugs to illicit markets in the U.S.2 Major loopholes remain open, unique vulnerabilities are not exploited, crucial bottlenecks are ignored.

Finally, spectacular events such as shootings, mistaken identities, bribes, cover-ups, and official vendettas shock us all. To some, these problems are fundamental to our current policy; frequent occurrences cannot be avoided, and the "costs" of such events loom very large in the overall accounting of the effects of the policy. To others, these problems seem less fundamental-relatively easy to avoid, and small in terms of the overall impact on the policy. For all, however, these events stir visceral anxieties registering as misgivings among reasonable supporters, and opportunities for cathartic indignation among reasonable critics.

In the face of the varied and unrelenting attacks, those responsible for the policy protect the niche they have found in the government's business. They shore up legislated authority and appropriations, They cling to their civil service status. They console one another with simple objectives and professional virtues that survive from previous eras. They preach to the already converted. And they wait for the blows to slacken-confident that in the end, they can continue as before.

What is missing from this debate, on both sides, is an accurate sense of both the potential and the limitations of a supply reduction strategy. We lack agreement about reasonable objectives for the policy, a shared calculation of the performance necessary to achieve the objective, and a common evaluation of current bureaucratic capabilities relative to the performance requirements. Lacking this perspective, the endless debate exhausts the combatants without stimulating or guiding improvements.

The purpose of this brief essay is to frame the debate by proposing a coherent, reasonable view of the objectives, requirements and major problems of the current supply reduction strategy. With luck, the perspective proposed here can attract the loyalty of both reasonable critics and reasonable supporters of supply reduction efforts.

II. Limited Objectives of a Supply Reduction Strategy in an Overall Policy Towards Drug Use

The recent White Paper on Drug Abuse did an admirable job of defining the objectives, costs and limitations of supply reduction efforts, and placing these efforts in the context of an overall policy towards drug abuse. The position can be paraphrased in the following terms (Domestic Council Drug Abuse Task Force, 1975:2-4).

The fundamental objective of a supply reduction strategy is to make drugs inconvenient, expensive, and somewhat risky to obtain.

If this objective is accomplished, many people will be discouraged from experimenting with drugs, many people already using drugs in experimental patterns will be discouraged from advancing to chronic, intensive levels of use, and many chronic, intensive users will be motivated to seek treatment or reduce voluntarily their drug consumption.

These benefits are costly to secure. The costs are measured in terms of direct governmental expenditures, 3 foregone opportunities in bargaining with foreign governments for other objectives, possible erosions of civil liberties, adverse effects on current users (such as stigmatization, poor health, general anxiety), and other bad side effects (such as the creation of black markets directed by powerful criminals).

Moreover, the benefits are limited. Supply reduction efforts will probably fail to prevent new drug use in areas where drug use is already endemic. 4 And they will motivate current users to seek treatment only if adequate treatment capacity is available to accommodate them.

Consequently, in designing an overall policy towards drug use, supply reduction efforts must be complemented by other policy instruments. Other types of prevention programs must be used in areas where drug use is already endemic. A sufficient quantity and variety of treatment capacity must be available to minimize the adverse effects of supply reduction efforts on current users.

This analysis clearly represents an advance over the days in which the "enforcement approach" was seen as a mutually exclusive competitor to the medical approach," and advocates on each side fought heated ideological battles for larger shares of an expanding federal budget for drug abuse prevention. However, as successful as the analysis is in setting supply reduction efforts in an appropriate context, the simple description of the objectives of the supply reduction efforts masks two important complications.

First, many drugs have legitimate medical uses. To preserve the benefits associated with legitimate medical use of the drugs, we should make the drugs easily and inexpensively available to legitimate users. In effect, we must create two different markets each with a different level of price and availability; an illicit market in which drugs are expensive and inconvenient, and a legitimate market in which drugs are cheap and readily available. Note that the need to preserve the legitimate market complicates not only the description of the objectives of supply reduction efforts, but also the design of strategies to achieve the objectives. For nearly all drugs, the problem of sealing off a legitimate sector will exist at some stage of production or distribution, and our success in controlling diversion will have a decisive influence on the level of supply to illicit markets.

Second, not all drugs are equally dangerous in illicit use. At any given level of use, drugs differ in terms of the consequences for a user's health, economic capability, and level of criminal activity.5 In addition, drugs differ in terms of the chance that an experimental user will advance to chronic, intensive use of the drug. The objectives of a supply reduction effort should reflect those differences. Drugs that are dangerous and likely to lead to chronic, intensive use should be more difficult to find than drugs which are less dangerous and less likely to lead to chronic intensive use. This is true partly because scarce resources require us to concentrate on drugs that cause the greatest social problems, and partly because it is desirable to deflect consumer choices to the less hazardous drugs.

Thus, the objectives of a supply reduction strategy are slightly more complicated than simply making all drugs inconvenient, expensive, and risky to consume. One must be concerned about preserving a legitimate market, and the relative magnitude of the threats associated with the different drugs.

These complications can be accommodated by introducing the concept of "effective prices" for different drugs in different markets.7 The effective price is defined as an index of all things that make drugs difficult, expensive or dangerous to consume: dollar costs, amount of time required to secure the drugs, the toxicity of adulterants, uncertainty about the actual dose, risk of arrest, and the risks of being defrauded or mugged in the transaction. Given this definition, we can describe the objectives of a supply reduction strategy in terms of a desired matrix of effective prices for different drugs to different consuming groups. Table 1 presents such a matrix. The absolute price levels reflect our desire to discourage drug use in general . The relative price levels reflect the fact that different drugs have different individual and social consequences. The two different markets reflect the fact that many drugs that are abused have legitimate medical uses that should be preserved.

This description of supply reduction objectives differs significantly from the common view that our supply reduction effort is designed to "enforce the narcotics laws"; or "put dope peddlers in jail"; or "keep all narcotics and dangerous drugs out of the country". The important differences are the following.

First, the objective presented here acknowledges that despite our best efforts, drugs will reach illicit markets. Given an appropriately unyielding commitment to the maintenance of civil liberties, and competing claims for resources, the government is simply unable to mount a supply reduction effort that will keep all drugs from reaching illicit markets. The problem is cast in terms of minimizing the rate at which drugs move to illicit markets (and measuring this effect in terms of availability) rather than stopping all drugs. Clearly, this is a more realistic objective than stopping all drugs.

Second, the objective presented here allows one to think of the variety of instruments beyond "making cases" and enforcing laws that can contribute to supply reduction objectives. In effect, the statement of the objective does not bias the choice of instruments. The roles of regulatory programs, eradication programs, and the development of international institutions to encourage drug control become noticeable. The inadequacy of a policy that focuses solely on drugs that have no legitimate medical use (e.g., heroin, cocaine, and marijuana) and relies only on arrests of traffickers to achieve the objectives is underscored.

Third, the objective presented here makes a virtue of a selective enforcement. We attack the drugs that cause problems and the individuals who currently account for a large fraction of the supply capability. The strict enforcement objective encourages us to go after all violators of the law equally. Loyal pursuit of this strict enforcement objective would dilute the impact of supply reduction efforts. Resources would be wasted on insignificant individuals, and on reducing supplies of more drugs that are relatively less harmful while allowing supplies of more harmful drugs to increase.

III. The Strategic Calculation

Given this perspective on the objectives of supply reduction efforts, how should supply reduction efforts be targeted and resources deployed? The calculation depends on two different judgments. First, one must decide which drugs represent the greatest current or future social costs! Second, for each drug, one must identify the points in the systems supplying drugs to illicit markets that are relatively vulnerable to attack, the important in determining the rate at which the particular drug moves to illicit markets.

Both judgments are extremely uncertain. The judgment about the relative "costliness" of different drugs is uncertain because we lack reliable information on the current number of illicit users, the distribution of the current users among varying use patterns, the magnitude of the disability associated with each particular drug in each particular use pattern, the shift in total numbers of users and the distribution of use patterns that would occur if a particular drug became more conveniently available, and the likely changes in exogenous factors that will cause the supply of a given drug to grow or shrink despite explicit supply reduction efforts.' The judgment about where to attack production /distribution systems is uncertain because we lack suitable analytic models of these systems-to say nothing of good empirical information to validate the models. Thus, in both areas we are restricted to crude calculations, and uncertain conclusions.

A. A Crude Calculation of Drug Priorities

In making a calculation of the relative importance of the threats presented by different drugs, the White Paper on Drug Abuse has again made a significant contribution (Domestic Council Drug Abuse Task Force, 1975:32-24). 1 will paraphrase the analysis.

· The major costs of drug use are not drug use in itself, but rather the effects of drug use on an individual's social functioning.

· The combined effects of drug use in itself, current policies to control drug use, and the drug user's own personality and social position result in many drug users experiencing bad health, economic dependence, inabilities to discharge conventional responsibilities to family and friends, and increased criminal activity.

· The largest component of the drug abuse problem occurs among people who use drugs at chronic, intensive levels. This group is likely to be badly off. Moreover, among this group, drug use in itself is likely to be a relatively important factor influencing the users' status. People using drugs less frequently and for shorter periods are likely to be "better off," and drug use is less likely to be a major factor influencing behavior. Thus, as a crude approximation, the major component of the drug problem will be located among the chronic, intensive users of any given drug.

· By definition, experimentation with dependence producing drugs has a higher probability of resulting in chronic intensive use of the drug than experimentation with a non-dependence producing drug. The implication is that a higher proportion of people using dependence producing drugs will end up in the costly chronic intensive use patterns. This suggests that dependence producing drugs may represent a large share of the current problem, and that any growth in populations using these drugs represent a significant future threat.

· However, the magnitude of the social problem associated with a particular drug also depends on the absolute size of the population already using the drug. While the proportion of users in socially costly chronic, intensive use patterns will always be greater for dependence producing drugs than for non-dependence producing drugs, the absolute number of users in these patterns need not be greater.

· Thus, in gauging the social costs of a particular drug, one must look at three different factors: (1) its dependence producing capabilities; (2) its impact on a user's social functioning at high levels of use; and (3) the current absolute number of users in chronic, intensive use patterns.

Table 2 presents the estimates of these characteristics made by the Domestic Council Task Force on Drug Abuse. Based on these observations, they proposed that drugs be ranked in the following order of priority: heroin; amphetamines and barbiturates (particularly in mixed use or when used intravenously); cocaine; the hallucinogens and marijuana.

While I agree with these priorities, they do not in themselves tell us whether or how we ought to shift our existing allocation of supply reduction efforts. To make this calculation, we need to assess our current performance in affecting the relative prices and availability of the different drugs. Table 3 presents calculations of the cost of a "day long binge" with different drugs.' 0 As one can see, the drugs that should attract supply reduction efforts (assuming that there is some relationship between supply reduction efforts and observed levels of price and availability in illicit markets) are heroin, amphetamines and barbiturates. It is these drugs whose prices seem absolutely and relatively low compared with our policy objectives.

Source: Domestic Council Drug Abuse 'Task Force, White Paper on Drug Abuse(Washington, D.C.: Executive Office of the President) September, 1975, p. 33.

B. A Crude Calculation About Optimal Points of Attack

Given a decision about drug priorities, the strategic problem becomes the deployment of supply reduction resources against the elaborate production/ distribution systems that determine the supply to illicit markets. In the past, this calculation has been dominated by the concept of "source of supply." This concept has proved remarkably useful. When used in the context of the enforcement program, it meant either major traffickers or clandestine laboratories. When used in the context of the international program, it meant countries that produced raw materials or harbored major traffickers. When used in the context of the regulatory program, it meant major points of leakage from legitimate systems. In each context, the different meaning proved appropriate to the task of guiding an organization's efforts.

However, the fact that the concept takes on quite different meanings in different programmatic contexts suggests that it is ultimately ambiguous. Moreover, the difficulty of arbitrating discussions among advocates of crop control, enforcement, and regulatory programs quickly shows that the idea of source of supply cannot resolve the issue of relative emphasis. To resolve this issue, one needs a somewhat more complicated model of the systems that supply drugs to illicit markets.

The basic objective of supply reduction efforts is to reduce the throughput capacity of the systems that supply drugs to illicit markets. The strategic problem is to find the specific points in the system which can be attacked, and which, if effectively attacked, would result in large, durable reductions in the rate at which drugs move to illicit markets.

Source: Lee Minichiello, Institute for Defense Analysis, Unpublished working paper.

In principle, the array of potential targets is large. One can attack the wholly illicit system, or seek to control diversion from the legitimate system. One can strike at different "factors" necessary for production or distribution such as raw materials, production facilities, finished inventories of drugs, capital destined to be used in establishing distribution systems, or the transactions that knit the entire system together. Within the distribution systems for finished products (or the collection systems for assembling raw materials), one can choose different levels to attack.

The calculation of an optimal portfolio of policy instruments is by no means trivial. We lack both data and analytic models necessary for a sophisticated calculation. Still, it is possible to outline a crude, general procedure for making the calculation, and to make some rough calculations based on current knowledge about major drugs of abuse.

1. Controlling Diversion from Legitimate Systems

The first step in the design of a strategy against any given drug is to plan for the control of diversion from legitimate production /distribution systems. In planning for the control of diversion, one should gauge: (a) the size of the legitimate system compared to the (estimated) size of the illicit system; (b) the degree of concentration (both organizationally and geographically) in the legitimate systems; (c) the stages (and locations) of production /distribution where major leaks currently, or could potentially, occur; (d) the strength of the authority that can be used to control diversion; and (e) the current capability of the institution that will be charged with the control of diversion. These last factors are important because, in many cases, the relevant authority and institution will be those of foreign governments, not institutions within the United States.'' The smaller the legitimate system, the more concentrated the system, and the stronger the authority and institutions currently devoted to controlling diversion, the smaller will be the necessary investment in instruments to control diversion.