Tighter Prescribing Regulations Drive Illegal Sales

"The US Drug Enforcement Administration introduced a schedule change for hydrocodone combination products in October 2014. During the period of our study, October 2013 to July 2016, the percentage of total drug sales represented by prescription opioids in the US doubled from 6.7% to 13.7%, which corresponds to a yearly increase of 4 percentage points in market share. It is not possible to determine the location of buyers from cryptomarket data. We cannot know, for example, if a drug shipped from a vendor in Europe was purchased by a US customer. Nevertheless, cryptomarket users often prefer buying and selling from vendors in the same country; international shipments carry risks of loss, interception by officials, and increased delivery times. A study of cryptomarkets in Australia found that local vendors were often preferred over international counterparts, despite substantially higher prices.²⁴ Another study³⁶ also noted the downward trends of international sales and therefore an increase in domestic sales, and yet another study⁴⁷ found that drug trading through cryptomarket is heavily constrained by offline geography. This preference for domestic trading, combined with the relatively large numbers of US drug vendors trading in cryptomarkets, leads us to presume that most sales of prescription drugs by US vendors will be sold to customers based in the US. Conversely, most transactions generated by non-US vendors will not be sold to US customers.

"The results of our interrupted time series suggest the possibility of a causal relation between the schedule change and the percentage of sales represented by prescription opioids on cryptomarkets. Our analysis cannot rule out other possible causal explanatory factors, but our results are consistent with the possibility that the schedule change might have directly contributed to the changes we observed in the supply of illicit opioids. This possibility is reinforced by the fact that the increased availability and sales of prescription opioids on cryptomarkets in the US after the schedule change was not replicated for cryptomarkets elsewhere.

"Our results are consistent with the possibility of demand led increases. The first increase observed for prescription opioids was for actual sales (fig 1); with increases for active listings, and then all listings, following. One explanation is that cryptomarket vendors perceived an increase in demand and responded by placing more listings for prescription opioids and thereby increasing supply. Our results are also consistent with the iron law of prohibition³⁴ insofar as we identified the largest sales increases for more potent prescription opioids—specifically, oxycodone and fentanyl. Cryptomarkets may function as a supply gateway⁴⁸: customers who initially sought out illicit hydrocodone on cryptomarkets after the schedule change might then have favoured more potent opioids available on the marketplace."