A new study by Indiana University Kelley School of Business sheds light on how pharmaceutical companies were able to flood the nation with opioids, despite Drug Enforcement Administration (DEA) efforts to regulate their supply.

Researchers identified a loophole in the DEA’s monitoring system that some companies exploited, leading to an oversupply of opioid drugs in certain communities. A key indicator of this activity was complex supply chains, involving pharmacies with an unusually high number of distributors across the country.

The study, titled “Hiding Behind Complexity: Supply Chain, Oversight, Race, and the Opioid Crisis,” appears in the journal Production and Operations Management. It also reveals a concerning racial disparity in the opioid epidemic’s impact. While commonly perceived as a public health crisis primarily affecting white Americans, the study found overdose deaths tripling in Black communities from 2014 to 2020.

Exploiting Loopholes in the Monitoring System

“We believe we’re the first to uncover insights into the supply chain mechanisms used to circumvent the DEA and exacerbate the opioid crisis,” said Jonathan Helm, a professor involved in the research. “Previously, the focus was on individual pharmaceutical companies, neglecting the broader supply chain’s significant influence.”

“The supply chain perspective was overlooked,” added Iman Attari, the study’s corresponding author.

Attari, Helm, and their colleague analysed data from the DEA’s Automation of Reports and Consolidated Orders System (ARCOS) database, encompassing opioid shipments within the US from 2006 to 2014. Their research combined ARCOS data on pharmacy opioid dispensing and supply chain structures with demographics and socioeconomic factors at the county level.

The analysis revealed a correlation between complex supply chains and a potential influx of undetected large quantities of opioids. Their findings suggest a 16% increase in opioid dispensing associated with a one-unit rise in three dimensions of supply chain complexity.

The DEA monitors the opioid supply chain through ARCOS, collecting data on all controlled substance shipments and requiring manufacturers and distributors to report suspicious orders that are unusually large or frequent.

“The issue lies in how pharmacies gamed the system,” explained Attari. “Instead of placing a large order with a single distributor, they divided it amongst multiple distributors, receiving smaller shipments that wouldn’t raise red flags individually. Each distributor only sees the pharmacy’s data within their system, not considering orders from other distributors.”

This method exploited a weakness in the DEA’s monitoring system, allowing pharmacies to evade detection by using more suppliers.

Another factor identified was the DEA’s decentralised structure, with 23 field divisions operating somewhat independently across the US. The researchers suggest a lack of coordination and information sharing among these divisions may have contributed to overlooking potentially suspicious activity.

“Even if a distributor reports a suspicious order in one region, other divisions the pharmacy uses might not be informed,” the study noted.

Attari emphasised that such complex supply chains wouldn’t make business sense under normal circumstances. Pharmacies typically benefit from economies of scale by working with fewer distributors.

“A pharmacy with 25 distributors across the country – that’s a strong signal they’re trying to circumvent the system,” Attari said.

Racial Disparity in the Impact

The study also found a stronger association between complex supply chains and increased opioid dispensing in non-white communities. A 10% increase in the non-white population correlated with a 3.39% rise in overall dispensing by pharmacies with high supply chain complexity.

The researchers suggest that historical under-resourcing and neglect of minority communities by government and social services may have played a role. They point out a potential bias in DEA enforcement, focusing more on arresting non-white drug users than regulating the flow of opioids into these communities.

To isolate the impact on non-medical opioid use, the researchers compared data on reformulated OxyContin, designed to deter abuse.

Isolating the Impact on Non-Medical Use

“Our approach leverages the staggered rollout of reformulated OxyContin across pharmacies,” the study explained. “By comparing dispensing patterns before and after the reformulation, we can isolate the impact on non-medical demand.”

The findings showed a significantly greater reduction in dispensing at high-complexity pharmacies after the reformulation rollout, suggesting their previous oversupply catered to non-medical use.

The research team is currently investigating the dynamics between major pharmacy chains and their distributors, exploring how these relationships might contribute to excessive opioid dispensing. Their initial findings suggest that pharmacy self-distribution practices, combined with close ties to large distributors, may be another factor requiring further scrutiny by the DEA.

Source

Medicalxpress