The Economic Costs

the United States

1992–2002

Executive Office of the President

Office of National Drug Control Policy

of Drug Abuse in
THE ECONOMIC COSTS OF DRUG 

ABUSE IN THE UNITED STATES

1992-2002 

Executive Office of the President 

Office of National Drug Control Policy 

Washington, D.C. 20503 

December 2004 
Acknowledgements 

This publication was sponsored by the Executive Office of the President, Office of National 

Drug Control Policy (ONDCP). Henrick Harwood, Ellen Bouchery and other members of The 

Lewin Group produced this publication under a contract to ONDCP under DHHS prime contract 

number 282-98-0016, Task Order number 37. Maria Fe Caces served as Project Manager for this 

publication. 

Disclaimer 

The opinions expressed herein are the views of the authors and do not necessarily reflect the 

official policy of the Federal Government. 

Public Domain Notice 

All material appearing in this report is in the public domain and may be reproduced without 

permission from ONDCP or the authors. Citation of the source is appreciated. Suggested 

citation: 

Office of National Drug Control Policy (2004). The Economic Costs of Drug Abuse in 

the United States, 1992-2002. Washington, DC: Executive Office of the President 

(Publication No. 207303) 

Electronic Access to Publication 

This document can be accessed electronically through the following World Wide Web address: 

http://www.whitehousedrugpolicy.gov 

Originating Office 

Executive Office of the President 

Office of National Drug Control Policy 

Washington, DC 20503 

Publication Number 207303 

Printed in December 2004 
TABLE OF CONTENTS

EXECUTIVE SUMMARY ......................................................................................................................VI

A. Overview ............................................................................................................................. vi

B. Overall Costs ...................................................................................................................... vii

C. Health Care Costs ................................................................................................................ ix

D. Productivity Losses .............................................................................................................. x

E. Cost of Other Effects ........................................................................................................... xi

F. Crime Related Costs ........................................................................................................... xii

G. Discussion .........................................................................................................................xiii

I. INTRODUCTION ...................................................................................................................... I-1

A. Purpose of this Report ........................................................................................................I-1

B. Scope of this Report ...........................................................................................................I-2

C. Overview of This Report ....................................................................................................I-3

II. METHODOLOGY ....................................................................................................................II-1

A. Prior Literature ................................................................................................................. II-1

B. Methods ............................................................................................................................ II-2

1. Re-estimation ........................................................................................................... II-3

2. Application of Trend Factors ................................................................................... II-4

III. DATA AND ESTIMATION OF BASE COST COMPONENTS ........................................ III-1

A. Health Care Costs ............................................................................................................ III-1

1. Community-Based Specialty Treatment ................................................................. III-2

2. Federal Specialty Treatment Costs.......................................................................... III-3

3. Health Infrastructure and Support ........................................................................... III-3

4. Medical Consequences ............................................................................................ III-6

B. Productivity Losses ....................................................................................................... III-12

1. Premature Death .................................................................................................... III-14

2. Drug Abuse-related Illness .................................................................................... III-16

3. Institutionalization/Hospitalization ....................................................................... III-17

4. Victims of Crime ................................................................................................... III-17

5. Incarceration.......................................................................................................... III-18

6. Crime Careers........................................................................................................ III-19

C. Cost of Other Effects ..................................................................................................... III-20

1. Loss of Goods and Services Due to Crime............................................................ III-21

2. Social Welfare ....................................................................................................... III-24

D. Reliability of Estimates ................................................................................................. III-25

IV. ESTIMATES FOR 1992-2002 ................................................................................................ IV-1

A. Overall Costs ...................................................................................................................IV-1

B. Health Care Costs ............................................................................................................IV-2

C. Productivity Losses .........................................................................................................IV-2

D. Cost of Other Effects .......................................................................................................IV-5 

E. Direct and Indirect Costs ................................................................................................IV-7

F. Crime Related Costs ........................................................................................................IV-7

V. FURTHER COMPARISONS AND ANALYSES ................................................................... V-1

A. Drug Abuse versus Other Health Problems...................................................................... V-1

B. Costs in Other Nations...................................................................................................... V-3

C. Real Costs 1992-2002....................................................................................................... V-3

D. Discussion ........................................................................................................................ V-5

i 
REFERENCES........................................................................................................................................ R-1

APPENDIX A: ACRONYMS AND ABBREVIATIONS ................................................................... A-1

APPENDIX B: SUPPLEMENTAL TABLES FOR CALCULATION OF COST ESTIMATES .. B-1

APPENDIX C: ESTIMATED COSTS IN CONSTANT 2002 DOLLARS ....................................... C-1

APPENDIX D: ESTIMATED COSTS IN CONSTANT 1998 DOLLARS ....................................... D-1

ii 
Tables 

Page # 

Section II 

Table II-1. Components of the Update of Lost Productivity Due to Drug Related Illness...... II-6 

Section III 

Table III-1. Health Care Costs, 1992 and 2002........................................................................ III-1 

Table III-2. Factors for Updating Specialty Treatment Costs, 1998-2002............................... III-3 

Table III-3. Derivation of State and Local Drug Abuse Prevention Spending, 1992-2002 ..... III-4 

Table III-4. Health Insurance Administration Costs, 1992-2002............................................. III-6 

Table III-5. Tuberculosis Cases, 1992-2002 ............................................................................ III-9 

Table III-6. Acute Hepatitis Cases, 1992-2002...................................................................... III-11 

Table III-7. Estimated Cost of Medical Care for Crime Victims, 2002 ................................. III-12 

Table III-8. Productivity Losses, 1992 and 2002 ................................................................... III-14 

Table III-9. Cost of Other Effects of Drug Abuse, 1992 and 2002 ........................................ III-21 

Table III-10. Police and Legal/Adjudication/Court Costs, 1992-2002 ................................... III-22 

Section IV 

Table IV-1. Estimated Societal Cost of Drug Abuse, 1992 – 2002 Overall Costs................... IV-1 

Table IV-2. Estimated Societal Cost of Drug Abuse, 1992 – 2002 Health Care Costs ........... VI-3 

Table IV-3. Estimated Societal Cost of Drug Abuse, 1992 – 2002 Productivity Losses......... VI-4 

Table IV-4. Estimated Societal Cost of Drug Abuse, 1992 – 2002 Cost of Other Effects ...... VI-6 

Table IV-5. Estimated Societal Cost of Drug Abuse, 1992 – 2002 Direct & Indirect Costs ... VI-7 

Table IV-6. Estimated Societal Cost of Drug Abuse, 1992 – 2002 Crime Related Costs ....... VI-8 

Section V 

Table V-1. Comparison of Costs of Major Health Problems in US......................................... V-1 

Appendix B 

Table B-1. Base Cost Components and Data Sources for the Updates Health Care Costs ......B-3 

Table B-2. Base Cost Components and Data Sources for the Updates Productivity Costs ......B-4 

Table B-3. Base Cost Components and Data Sources for the Updates Cost of Other Effects .B-5 

Table B-4. Cost Adjustment Factors, 1992-2002 .....................................................................B-6 

Table B-5. Number of Individuals with 100 or More Days of Marijuana or Cocaine Use 

iii 
Effects in Their Lifetime, 1992-1998 .....................................................................B-7 

Table B-6. Drug Abuse-Related Admission to Short Stay Hospitals by Primary/ 

 Secondary Drug-Related Diagnosis, 1992-2002.....................................................B-8 

Table B-7. Number of Persons Living with AIDS with Drug Related Exposure, 1992-2002..B-9 

Table B-8. Number of Crime Victims and the Percentage of Victims Attributable

to Drug Abuse, 1992-2002....................................................................................B-10 

Table B-9. Number of Deaths Related to Drug Abuse, 1992-1998 ........................................B-11 

Table B-10. Number of Deaths Related to Drug Abuse, 1999-2000 ........................................B-12 

Table B-11. Jail and Prison Inmates by Offense.......................................................................B-13 

Table B-12. Number of Inmates by Offense and the Number Attributable to 

Drug Related Crime, 1992-2000...........................................................................B-14 

Table B-13. Total State and Local Criminal Justice Expenditures, 1992-1999........................B-15 

Table B-14. Number of Arrests by Type of Offense and Drug Abuse Attribution Factors, 

1992-2002 .............................................................................................................B-16 

Table B-15. Percentage of Arrests Attributed to Drug Abuse, 1992-2002...............................B-17 

Table B-16. Percentage of Persons Under Incarceration in Local Jails and in State and 

Federal Prison for Drug Related Crimes, 1992-2002 ...........................................B-18 

Table B-17. Federal Funds for Reducing the Supply of Drugs, 1992-2002 .............................B-19 

Table B-18. Private Legal Defense Spending, 1992-2002........................................................B-20 

Appendix C 

Table C-1. The Economic Cost of Drug Abuse, 1992-2002 in Real 2002 Dollars ..................C-2 

Table C-2. Health Care Costs of Drug Abuse 1992-2002 in Real 2002 Dollars ......................C-3 

Table C-3. Productivity Losses of Drug Abuse 1992-2002 in Real 2002 Dollars....................C-4 

Table C-4. Costs for Other Effects of Drug Abuse 1992-2002 in Real 2002 Dollars ..............C-5 

Table C-5. Crime Related Costs of Drug Abuse 1992-2002 in Real 2002 Dollars ..................C-6 

Appendix D 

Table D-1. The Economic Cost of Drug Abuse, 1992-2002 in Real 1998 Dollars ................. D-2 

Table D-2. Per Capita Economic Cost of Drug Abuse, 1992-2002 in Real 1998 Dollars ....... D-2 

iv 
Figures 

Page # 

Executive Summary 

Figure 1. Overall Cost of Drug Abuse, 1992-2002......................................................................... viii 

Figure 2. Distribution of Cost of Drug Abuse, 2002 By Cost Category......................................... viii 

Figure 3. Health Care Costs, 1992-2002............................................................................................ix 

Figure 4. Productivity Losses, 1992-2002 ..........................................................................................x 

Figure 5. Cost of Other Effects, 1992-2002.......................................................................................xi 

Figure 6. Crime Related Costs, 1992-2002...................................................................................... xii 

Section II 

Figure II-1. Components of the Health Care Cost Estimate .......................................................... II-2 

Figure II-2. Components of the Productivity Loss Estimate ......................................................... II-2 

Figure II-3. Components of the cost of Other Effects Estimate .................................................... II-3 

Section III 

Figure III-1. Trends in Factors for Updating Drug Abuse Training 1992-2002........................... III-5 

Figure III-2. Admissions to Short-term Hospitals with Primary or Secondary Diagnosis 

of Drug Dependence/Abuse, 1992-2000 ............................................................. III-7 

Figure III-3. Persons Living with AIDS, with Injection Drug Use Exposure, 1992-2002 ......... III-10 

Figure III-4. Lost Productivity Due to Drug Use, 2002.............................................................. III-14 

Figure III-5. Drug Abuse-Related Deaths, 1992- 2000 .............................................................. III-15 

Figure III-6. Substance Abusers in 24 Hour Specialty Care, 1992-2002 ................................... III-17 

Figure III-7. Drug Abuse-Related Victimizations, 1992-2002................................................... III-18 

Figure III-8. Inmates Incarcerated for Drug-Related Offenses, 1992-2002 ............................... III-19 

Section V 

Figure V-1. Trends in Real Economic Costs of Drug Abuse 1992-2002 ...................................... V-4 

v 
Executive Summary 

EXECUTIVE SUMMARY 

A. Overview

The economic cost of drug abuse in 2002 was estimated at $180.9 billion. This value represents 

both the use of resources to address health and crime consequences as well as the loss of 

potential productivity from disability, death and withdrawal from the legitimate workforce. This 

estimate has incorporated extensive new data, although several major components have been 

trended forward. 

Several trends stand out from this analysis. First, the costs of drug abuse have increased an 

average of 5.3 percent per year from 1992 through 2002. This rate is very slightly above the 5.1 

percent annual growth in the gross domestic product for the entire economy. The most rapid 

increases in drug abuse costs have been in criminal justice efforts, particularly increased rates of 

incarceration for drug offenses and drug-related offenses and increased spending on law 

enforcement and adjudication. There appear to have been more moderate increases in costs 

associated with health consequences and treatment and prevention initiatives. 

This report was developed for The Office of National Drug Control Policy (ONDCP) which 

asked The Lewin Group to develop more current estimates of the societal cost of drug abuse. In 

the context of this report, we use the phrase “drug abuse” to refer to consequences of using illicit 

drugs, as well as societal costs pertaining to the enforcement of drug laws. This study does not 

address costs related to abuse of or dependence on legal substances that may be termed drugs 

including alcohol and tobacco. 

The most recent comprehensive estimates of drug abuse-related costs in the United States are for 

1995 (Harwood et al., 1998). Subsequently, a study was undertaken to develop updated 

estimates through the year 2000 (Office of National Drug Control Policy, or ONDCP, 2001). 

The objective of the present study has been to develop more current cost estimates based upon 

the fundamental approach and data of that prior study. In doing so, this study has compiled 

current data and estimates for many cost components, and projected other cost components 

forward based on indices or data series that are believed to reflect expected changes in both the 

real rate of problems (e.g., incidence, prevalence) as well as costs (inflation). This report 

indicates how each of the cost components have been updated. It should be noted that this study 

has not re-examined the literature on the causal relationship of drug abuse and the respective 

consequences. The same attribution factors developed or used in Harwood et al. (1998) and in 

ONDCP (2001) have been used in this effort to update the estimates. 

The limitations of such an “update” study should be recognized when applying its findings. This 

study is limited in terms of both the reliability of the estimates presented and the scope of the 

estimates. First, the methods used in this study yield seemingly very precise values, however 

they should be treated as approximations, because many of the values were derived by trending 

estimates from previous years or by simple manipulations of data drawn from secondary sources. 

A substantial period of time has passed since the calculation of these components was fully 

revisited and primary data was gathered to re-estimate these costs. The most recent fully reestimated value for each of the component costs presented here is for 1992. 

vi 
Executive Summary 

A second limitation of this study is the scope. As noted, this study follows guidelines developed 

by the U.S. Public Health Service for cost of illness studies. There are other approaches that 

could have been used to develop estimates of the cost of drug abuse. Some approaches 

incorporate different facets of the economic impacts of drug abuse such as the intangible or 

“quality of life” impacts of drug abuse. In applying the estimates from this or other cost of 

illness studies, analysts must consider which approach is most appropriate for the particular issue 

they are assessing. Similarly, the results of this study were not designed to assess the absolute 

or relative effectiveness of specific policies to control drug abuse or the alternatives of drug 

prohibition versus legalization. The purpose of this study has been to identify and quantify 

particular negative consequences of the abuse of illicit drugs. These data are likely to inform the 

evaluation of particular policies. However, this study has not undertaken specific policy 

evaluations. 

The results of this study are summarized in the following sections. First, we present the overall 

estimates and trends in the cost of drug abuse for 1992 through 2002. In subsequent sections we 

examine how the costs in each of the three major cost components (health costs, productivity 

losses and non-health direct expenditures) changed between 1992 and 2002. All of the three 

major cost components contain costs related to crime, thus, in the fifth section we extract the 

crime-related costs from each of the other major cost components and summarize them. In the 

final section we provide a brief discussion of the study’s results. 

B. Overall Costs 

Total costs were $180.9 billion in 2002, increasing 5.34 percent annually since 1992. Figure 1 

displays the estimates for 1992 through 2002 overall and for the three major components into 

which the report divides the costs. These three components are health care costs, productivity 

losses, and other costs. Costs in 1992 were $107.6 billion.1

 The rate of increase in costs was in 

excess of the combined increase of 3.5 percent for the adult population and consumer price index 

for all services for this period, however it was only marginally greater than the 5.16 percent 

annual growth in gross domestic product over this time. 

The largest proportion of costs is from lost potential productivity, followed by non-health “other” 

costs and health-related costs. Figure 2 displays the proportion of the societal costs that were 

represented by each of the three major components in 2002. The share of the costs represented 

by each of these components remained fairly constant between 1992 and 2002. The share of 

costs represented by health care and productivity losses declined from 9.9 to 8.7 percent and 72 

to 71 percent, respectively, while the share from “other” effects increased from 18 to 20 percent. 

We have re-estimated the 1992 cost of drug abuse originally developed by Harwood et al (1998) based on more 

recent data. The revised estimate is $102.2 billion. This estimate is 4.6 percent higher than the previous Harwood 

et al. (1998) estimate of $97.7 billion. 

vii 

1 
Productivity Health Other

$110.9 $117.3 $124.9 $129.6 $133.9 $140.1 $151.4

$160.7 $169.2

$180.8

$107.5

Executive Summary 

Figure 1 

Overall Cost of Drug Abuse, 1992-1998 

(in billions of dollars) 

$0 

$50 

$100 

$150 

$200 

$0

$50

$100

$150

$200

$110.9 $117.3 $124.9 $129.6 $133.9 $140.1 $151.4 

$160.7 $169.2 

$180.8 

$107.5 

1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002

Productivity Health Other 

The estimates for 1992 through 2000 were generally developed based on detailed observed data 

on the component costs or of the projection factors. This was possible to a lesser extent for the 

2001 and 2002 estimates, since progressively less observed data was available upon which to 

base the estimates for these years. Therefore, these estimates (and the several components that 

are projections of the 1992 values) should be used with caution until they can be re-estimated 

more accurately based on observed data. 

Figure 2 

Distribution of Cost of Drug Abuse, 2002 

By Major Cost Components 

Other

Productivity 

71.2% 

Health 8.7% 

20.1% 

Productivity

71.2%

Health 8.7%

20.1%

viii 
$15.8

$11.8

$14.6

$13.5 $13.0 $12.5 $11.8 $11.5 $12.1 $11.9 $10.7

Executive Summary 

C. Health Care Costs 

Health-related costs are projected to total $16 billion in 2002. Figure 3 displays the health care 

related cost of drug abuse for each year between 1992 and 2002.2

 Substance abuse-related health 

care costs are projected to have risen 4.1 percent annually between 1992 and 2002. This rate of 

increase is less than the combined rate of increase of population growth and medical inflation as 

measured by the consumer price index for medical services (CPI-M). During this period the 

population grew at one percent annually and the CPI-M grew at 4.1 percent annually for a 

combined annual increase of 5.1 percent. Furthermore, data from the Centers for Medicare and 

Medicaid Services show that total health care spending grew by 6.5 percent per year between 

1992 and 2002. Thus, substance abuse-related health care spending lagged somewhat behind 

what might have been expected. 

Figure 3 

Health Care Costs, 1992-2002 

(in billions of dollars) 

$0 

$2 

$4 

$6 

$8 

$10 

$12 

$14 

$16 

$18 

$0

$2

$4

$6

$8

$10

$12

$14

$16

$18

$15.8 

$11.8 

$14.6 

$13.5 $13.0 $12.5 $11.8 $11.5 $12.1 $11.9 $10.7 

1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002

Note: 1998 through 2002 values are primarily projections 

The rate of growth in this component was moderated by declines in spending for HIV/AIDS 

care. In 1992 the second largest component of the health care costs related to drug abuse was 

spending to care for HIV/AIDS patients. Because of new treatments, the cost of caring for 

HIV/AIDS patients is estimated to have declined from $3.5 to $2.5 billion between 1992 and 

1997 but is projected to have increased since that time due to increases in the number of 

HIV/AIDS patients. Table 1 lists the components of the health care related costs of drug abuse. 

Meanwhile, spending for community-based specialty treatment is estimated to have risen from 

We have re-estimated the 1992 cost of drug abuse originally estimated in Harwood et al. (1998) based on more 

recent data. The revised estimate for health care related costs is $10.7 billion. The 1992 estimate is 9 percent 

higher than the previous Harwood et al. (1998) estimate. The largest source of this increase is a revised estimate 

of spending on drug abuse for community-based specialty treatment. The original estimate for this component 

was $2.8 billion. The revised estimate is $3.8 billion. The revised estimate is based on a study by Mark et al. 

(1999) that was more comprehensive than the original study. 

ix 

2 
$77.4 $79.3 $83.9 $89.2 $93.4 $95.5 $99.3 $107.3 $113.4 $120.0

$128.6

$77.4 $79.3 $83.9 $89.2 $93.4 $95.5 $99.3 $107.3 $113.4 $120.0

$128.6

$77.4 $79.3 $83.9 $89.2 $93.4 $95.5 $99.3 $107.3 $113.4 $120.0

$128.6

Executive Summary 

$3.8 to $6.0 billion between 1992 and 2002, a 4.75 percent annual growth rate, which is less than 

the combined increase in population growth and medical inflation. 

D. Productivity Losses 

By far the largest component of cost is from loss of productivity, at $128.6 billion. In contrast to 

the other costs of drug abuse (which involve direct expenditures for goods and services), this 

value reflects a loss of potential resources. Productivity losses represent work in the labor 

market and in household production that was never performed, but could reasonably be expected 

to have been performed absent the impact of drug abuse. Figure 4 displays the productivity 

related cost of drug abuse for each year between 1992 and 2002. The estimated productivity loss 

in 1992 was $69.4 billion. By 2002, we estimate that this cost had risen to $128.6 billion, a 5.2 

percent annual increase. This rate of increase is somewhat higher than the combined increase in 

the population (about one percent annually) and in wage rates (about 3.1 percent annually) of 4.1 

percent during this period, although it is virtually identical to the 5.1 percent annual increase of 

total economic activity (termed gross domestic product) in the United States. 

Figure 4 

Productivity Losses, 1992-2002 

(in billions of dollars) 

$0 

$20 

$40 

$60 

$80 

$100 

$120 

$140 

$0

$20

$40

$60

$80

$100

$120

$140

$0

$20

$40

$60

$80

$100

$120

$140

$0

$20

$40

$60

$80

$100

$120

$140

$77.4 $79.3 $83.9 $89.2 $93.4 $95.5 $99.3 $107.3 $113.4 $120.0 

$128.6 

1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002

The greatest share of productivity loss is from criminal activities, including losses because 

660,000 offenders were incarcerated and others pursued crime careers to pay for their drug use. 

Together, there was a loss of about 1 million person years of effort that could have and arguably 

would have been available to the legitimate economy if these individuals had not been involved 

with drug-related crime. There were an estimate 23,500 drug-related3

 deaths from all causes 

(e.g., overdose, poisoning, homicide, HIV and hepatitis B/C) in 2000, the most recent year with 

available data. Trend comparisons with earlier years are problematic because the US (and 

world) mortality diagnostic system changed in 1998. The mortality losses represent the present 

These include both causes of death where drug use is the overt cause of death, e.g., drug overdose, as well as 

illnesses such as HIV infection or hepatitis C where needle sharing while abusing drugs was the underlying cause 

of the illness. These are detailed in Section IV.B.1 and in Appendix C. 

x 

3 
Executive Summary 

discounted value of lost lifetime market and household productivity. At a 3 percent discount 

rate, this value averaged about $1 million per death. 

E. Cost of Other Effects 

The final major component of costs came to $36.4 billion in 2002. These primarily concern 

costs associated with the criminal justice system and crime victim costs, but also include a 

modest level of expenses for administration of the social welfare system. Figure 5 displays the 

trend in costs of these other impacts of drug abuse for each year between 1992 and 2002.4 

Between 1992 and 2002, the costs for the other effects of drug abuse rose at a 6.5 percent annual 

rate. This rate is clearly higher than the combined 3.5 percent annual increase which is the sum 

of the growth in population (one percent annually) and general inflation (2.5 percent annually) 

and even exceeds the 5.1 percent annual growth in the total economy over this period. 

Figure 5 

Cost of Other Effects, 1992-2002 

(in billions of dollars) 

The largest detailed component of these costs is for state and federal corrections at $14.2 billion, 

which is primarily for the operation of prisons. Another $9.8 billion was spent on state and local 

police protection, followed by $6.2 billion for federal supply reduction initiatives. Significant 

amounts of our nation’s criminal justice resources are estimated to go towards drug abuse. In 

2002, the most recent year with publicly available data, there were almost 330,000 persons 

incarcerated for drug specific offenses and an estimated 135,000 for income-generating or other 

crimes attributable to drug abuse. There were about 1.5 million arrests on drug specific charges 

and another half million for offenses attributable to drug abuse. In total, about 34 percent of the 

prison and jail population and about 15.5 percent of arrests were attributable to drug abuse. 

Crimes attributable to drug abuse include “drug specific” offenses such as sales, manufacturing 

and possession of illicit drugs and also a quarter to a third of income generating crimes (e.g., 

We re-estimated the 1992 cost of drug abuse as re-estimated in Harwood et al. (1998) based on more recent data, 

using the original methodology. The 1992 estimates was 6 percent higher. 

xi 

4 

$0

$5

$10

$15

$20

$25

$30

$35

$40

1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002

$19.4 $19.8 $21.3 $23.8 $24.7 $26.7 $28.4 $31.3

$33.8 $34.6 $36.4

$0

$5

$10

$15

$20

$25

$30

$35

$40

1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002

$19.4 $19.8 $21.3 $23.8 $24.7 $26.7 $28.4 $31.3

$33.8 $34.6 $36.4
$61.8 $64.6 $67.6 $72.2 $78.4

$85.6 $87.9 $93.4 $98.7 $102.0 $107.8

Executive Summary 

larceny, burglary) that were committed by drug dependent individuals in order to finance 

expensive drug addictions. 

F. Crime Related Costs 

Selected components of health care, productivity loss, and other costs are crime-related costs. 

When these costs are aggregated a more complete picture is gained of the role of drug-related 

crime in the total economic impact. It is estimated that $107.8 billion, or almost 60 percent of 

total costs are related to crime. Figure 6 displays the crime costs related to drug abuse.5

 Overall 

crime related costs rose 5.7 percent annually between 1992 and 2002. The major drivers of this 

increase were increases in police and corrections expenditures and productivity losses from 

incarceration. This rate of increase is greater than the summed increase of population growth 

and general inflation (3.5 percent) and growth in the general economy (5.1 percent). 

As suggested above, the large majority of these costs are for drug specific offenses—sales, 

manufacturing, possession—and the smaller fraction are for drug-related crimes undertaken to 

finance expensive drug habits. Over 11 percent of arrests in the US are for drug offenses. In 

addition, appreciable fractions of income generating crimes are attributed to drug abuse: on the 

order of a quarter of burglaries, personal larcenies and robberies. Many studies have found that 

in excess of half of all arrestees and prisoners charged or convicted for such offenses are users of 

illicit drugs. However, income generating crimes committed by non-addicted users can not be 

blamed on their “need” to finance their expensive addiction. Therefore the cost of income 

generating crimes committed by non-addicted users are not included as costs of drug abuse. 

Figure 6 

Crime Related Costs, 1992-2002 

(in billions of dollars) 

$0 

$20 

$40 

$60 

$80 

$100 

$120 

$0

$20

$40

$60

$80

$100

$120

$61.8 $64.6 $67.6 $72.2 $78.4 

$85.6 $87.9 $93.4 $98.7 $102.0 $107.8 

1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002

The estimate of $61.8 billion is 8 percent higher than the Harwood et al. (1998) 1992 crime cost estimate. The 

main source of this revision was increases in estimated criminal justice system and other public costs of crime 

based on more current data. 

xii 

5 
Executive Summary 

G. Discussion 

The economic cost of drug abuse in the United States was estimated at $180.9 billion in 2002. 

This estimate is fundamentally an update of the detailed cost study for 1992 (Harwood et al., 

1998) that estimated costs of $97.7 billion and the prior update that estimated costs of $143.4 

billion in 1998 (ONDCP, 2001). The new estimate has used the most current data available and 

has made projections of particular components as necessary to produce estimates for 2002. 

The overall cost of drug abuse rose 5.3 percent annually between 1992 and 2002, increasing 

from $107.5 to $180.9 billion. The most rapid growth in drug costs came from increases in 

criminal justice system activities, including productivity losses associated with growth in the 

population imprisoned due to drug abuse. Expenditures on health services and the costs of 

premature mortality grew at relatively slow rates, at least in part due to the development of more 

effective therapies for HIV. 

This study and prior estimates indicate that drug abuse is one of the most costly health problems 

in the United States. The estimates have followed guidelines developed by the U.S. Public 

Health Service for cost of illness studies. These guidelines have been applied in earlier studies of 

drug abuse in the U.S. (e.g., for 1992, 1985, 1980, and 1977), and to cost of illness studies for 

virtually all of the major health problems. Accordingly, these estimates can be compared 

meaningfully to estimates for e.g., cancer, stroke, heart disease, diabetes, alcohol abuse and 

mental illness. The National Institute of Health collects and reports on cost estimates for the 

major health problems in the nation. Based on estimates from the 1990s employing generally 

comparable methodologies, drug abuse ($124.9 billion in 1995) is comparable to heart disease 

($183.1 billion in 1999), cancer ($96.1 billion in 1990), diabetes ($98.2 billion in 1997), 

alzheimer’s disease ($100 billion in 1997), stroke ($43.3 billion in 1998; ), smoking ($138 

billion in 1995), obesity ($99.2 billion in 1995), alcohol abuse ($184.6 billion in 1998) and 

mental illness ($160.8 billion in 1992). Even if we only compare the health-related costs of drug 

abuse--$51 billion in 1995—it still must be considered one of the more costly health problems in 

the nation. 

Finally, these estimates could be considered conservative in that they make no allowances for the 

impact of drug abuse on the quality of life of the family, neighbors and victims of drug abusers 

or on the drug abuser her/himself. Economic valuation studies increasingly incorporate such 

quality of life impacts and costs, and the resulting cost estimates are typically several times 

greater than the productivity losses. However, relatively few studies of the economic costs of 

health problems have yet incorporated quality of life factors, although studies of the cost 

effectiveness of health interventions are based on quality of life analyses. 

xiii 
Section I. Introduction 

I. INTRODUCTION 

A. Purpose of this Report 

This report presents current and trend estimates of the economic costs of drug abuse in the 

United States. It was produced for The Office of National Drug Control Policy (ONDCP), which 

asked The Lewin Group to develop estimates up through calendar year 2002. The most recent 

previous estimates were for 2000 (ONDCP, 2001). This report is based on and extends the 

estimates for 2000, incorporating much of the earlier methodology, analysis, and data. 

This report also provides estimates for 1992 through 2002 that use consistent methodology and 

data to the maximum extent possible. These estimates allow general trends in the overall and 

component costs of drug abuse to be assessed. While some of the cost components have been reestimated, others have been trended or projected forward based on epidemiological and cost 

factors. For the majority of components, the most recent data available is from 2001. Also, this 

study has primarily used the epidemiological factors between drug abuse and particular 

consequences developed in Harwood et al. (1998). 

The methodology has followed guidelines developed by the U.S. Public Health Service for cost 

of illness studies. These guidelines have been applied in earlier studies of drug abuse in the U.S. 

(e.g., for 1992, 1985, 1980, and 1977), and to cost of illness studies for virtually all of the major 

medical problems. Accordingly, these estimates can be compared meaningfully to estimates for 

e.g., cancer, stroke, heart disease, diabetes, alcohol abuse and mental illness. The National 

Institute of Health compiles and publishes these estimates in a report to Congress and on the 

Internet (http://ospp.od.nih.gov/ecostudies/COIreportweb.htm). 

While the “human capital” methodology employed in this analysis is the most frequently applied 

approach in health cost of illness studies, there are other approaches that could be used to 

develop estimates of the cost of drug abuse, such as “willingness to pay” (Miller et al., 1998) or 

the “demographic” approach (Collins and Lapsey, 2002). These alternative methods examine 

different facets of the economic impacts of drug abuse, and yield estimates that are not 

methodologically comparable to studies of other health problems in the United States. Analysts 

must consider which approach is most appropriate for the particular issue they are assessing. For 

example, the costs of pain, suffering, anxiety, and other intangible impacts of drug abuse are not 

included in this study. Similarly, this study does not attempt to tabulate the amount spent by 

drug users on illegal drugs although a portion of what users spend is indirectly included in the 

estimated cost of crime careers.6 

Finally, this report provides a detailed description of the data sources, methods and assumptions 

used to calculate the estimates and projections of the societal costs of drug abuse in the United 

States for 1992 through 2002. The present estimates have either obtained current data (as recent 

as 2001) or have used data to adjust for expected changes in incidence or prevalence, population, 

For information on what drug users spend on illegal drugs, consult the 2002 ONDCP report What American 

Users Spend on Illegal Drugs 1998-2000. 

I-1

6 
Section I. Introduction 

and prices up to 2002. We believe that these estimates are indicative of the direction and 

magnitude of changes in drug abuse costs between 1992 and 2002. In the near future it will be 

necessary to carefully re-examine the evolving scientific literature on several issues that were 

beyond the scope of this study including the relationship between drug abuse and health, 

morbidity, mortality and crime. 

B. Scope of this Report 

This study estimates the economic value of many consequences associated with drug abuse. 

Types of consequences include health problems and health care utilization, effects on 

productivity, and other costs including crime and social welfare. In this report, we use the phrase 

“drug abuse” to refer to consequences of illicit use of drugs, as well as societal costs pertaining 

to the enforcement of drug laws. Illicit drugs include e.g., marijuana, cocaine, heroin, 

amphetamines, methamphetamines and illicit (non-prescribed) use of legal psychoactive 

medications and substances such as analgesics, sedatives and solvents. This study does not 

address costs related to abuse of or dependence on legal substances that may be termed drugs 

such as alcohol, tobacco, or prescription medications. While the abuse of these substances also 

has significant societal costs these costs are not addressed in this study. 

This study did not collect primary data, but rather conducted analyses of secondary data sources. 

Furthermore, this study did not fully re-estimate the value of each cost component. When a cost 

component could be fully re-estimated based on simple tabulations of data from a published 

source, the value of the component was re-estimated. However, when the information necessary 

to fully re-estimate a component value was not readily available from a published source, we 

identified trend factors based on published statistics whose values are expected to parallel 

changes in the value of the components and applied these trend factors to the original estimates. 

The specific data items as well as sources for the data are identified in this document. 

The basic approach taken to calculate the updates presented in this report was to divide the 1992 

estimates from Harwood et al. (1998) into 32 components. Then, we assessed whether the value 

of each component could be re-estimated through straightforward tabulation of published data. 

When this was the case, we gathered the necessary data (which can be found in this document) 

and re-estimated the component. We were able to re-estimate values for 22 of the 32 

components, and these are identified in the report. For the remaining 10 components, either the 

data necessary to develop new estimates was not available, or it would have required too much 

time and too many resources to re-estimate the component within the time to do this study. 

Therefore, trend factors based on published statistics whose values are expected to parallel 

changes in the value of the components were estimated and applied to the original estimates to 

calculate the updated estimates. 

This study subdivides the estimates of the costs of drug abuse into health care, productivity 

losses, and other effects (including crime costs). There are other ways of disaggregating the cost 

estimates that may be of interest to policy makers that were not attempted in this study. These 

include the following: 

• The societal cost of particular illegal drugs (e.g., heroin, cocaine, or marijuana); 

I-2 
Section I. Introduction 

• The effect of different modes of drug consumption (e.g., injection, smoking or oral); and 

• The implications of different potencies or levels of use of the drugs under consideration. 

The results of this study were not designed to address specific policies to control drug abuse or 

the alternatives of drug prohibition versus legalization. The purpose of this study is to identify 

and quantify particular negative consequences of the abuse of illicit drugs. These data may 

inform or more likely motivate the evaluation of particular policies. However, this study has not 

undertaken specific policy evaluations. 

C. Overview of This Report 

Following the guidance for cost-of-illness studies adopted by the Public Health Service 

(Hodgson and Meiners 1979, 1982), this report is organized to differentiate health costs from 

non-health costs and the value of goods and services from the value of lost productive potential. 

The remaining chapters are organized as follows: 

• Chapter II reviews the previous literature and provides an overview of the analytic methods 

that are used in this study. 

• Chapter III describes in detail the data and estimation methods used to derive each of our cost 

of illness component estimates. This chapter is divided into several major sections, one for 

each major cost component. The major cost components are: health care costs, productivity 

losses, and the cost of other effects. The final section discusses the reliability of the 

estimates. 

• Chapter IV summarizes and presents the costs estimates from 1992 through 2002 in current 

year dollars, presenting them in the major cost categories: health, productivity, “other” 

impacts, crime-related, direct and indirect. 

• Chapter V presents further analyses. This includes comparisons of the economic cost of drug 

abuse with cost data on other health problems in the United States as well as several cost 

estimates for other nations. Also, the trends in costs from 1992 through 2002 are presented. 

Final thoughts are provided about the estimates. 

I-3
Section II. Methodology 

II. METHODOLOGY 

A. Prior Literature 

The updated cost estimates developed for this study are based on and extend the estimates 

developed in The Economic Costs of Drug Abuse in the United States 1992-1998 (ONDCP, 

2001). The estimates employ the same general "cost of illness" methodology that has been 

employed in studies of drug abuse over the past 20 years, the most recent of which (Harwood et 

al., 1998) served as the basis for the most recent report by ONDCP (2001). The general 

framework of this approach was presented in the U.S. Public Health Service guidelines 

developed under Dorothy Rice (Hodgson and Meiners, 1982). The guidelines differentiate 

between health system expenditures, the costs of morbidity and premature mortality, which are 

losses of potential productivity and other costs including criminal justice system, and losses from 

motor vehicle crashes, fires and other accidents. For illnesses such as cancer, stroke, heart 

disease, diabetes, costs are concentrated in the health system (hospitals, doctors offices, public 

health clinics) or result from lost work due to morbidity or premature mortality. The economic 

principle of "opportunity cost" is used to attach values to measurements of hospital days, visits to 

doctors and clinics, and lost days of work or household productivity. 

The cost of illness methodology applies directly to drug abuse, although with several important 

extensions that are generally not relevant for other health problems and diseases. Drug abuse, 

like smoking and alcohol abuse, causes further health problems, and the costs of these illnesses 

need to be estimated and attributed to drug abuse. Some of these additional costs of drug abuse 

include HIV, hepatitis, tuberculosis and injury/trauma. Another major characteristic of drug 

abuse with important economic implications is crime. This has impacts including health costs 

and lost work/mortality of crime victims, costs for the criminal justice system, and costs from 

drug abusers dropping out of the legal economy. Drug abusers may work in the "drug economy" 

or live off of income generating crime, and as a result some are incarcerated, which also removes 

them from the legal economy. The major previous cost of illness studies for drug abuse have 

included all of these costs. 

This study does not re-estimate all the costs associated with each component included in the 

previous studies, but rather develops updated estimates for some components by applying trend 

factors based on published data series that are expected to be correlated with the actual change in 

the component. Three previous studies of the societal cost of substance abuse have developed 

similar updated estimates of the cost of drug abuse without completely re-estimating the 

component costs. The first of these studies is Rice et al. (1990) which developed 1985 baseline 

estimates of the costs of alcohol, drug, and mental disorders and in the same document included 

updates to 1988. The second study is Harwood et al. (1998) which developed updated estimates 

of 1995 costs for alcohol and drug abuse based on 1992 baseline estimates. Finally, the third 

study is Harwood (2000) which calculated updated estimates of the cost of alcohol abuse in 1998 

using 1992 baseline data. Finally, ONDCP (2001) developed updated cost estimates for drug 

abuse for 1993 through 1998. All of these studies used the same basic approach. That approach 

entails dividing the estimates into component costs that are likely to have been affected similarly 

by both real and price changes. Then, we identify measures of the real and price changes specific 

to each cost component and apply trend factors based on these measures to the relevant 

component. 

II-1
Section II. Methodology 

As discussed in more detail in the next section, this study takes the same basic approach as these 

previous authors to update the value of some components. For other components, current data 

was available, which permitted this study to re-estimate the value of the component. 

B. Methods 

As noted above, we initially divided the original 1992 estimate into 32 components. Health care 

costs are divided into eighteen components. These components are listed in Figure II-1. 

Figure II-1 

Components of the Health Care Cost Estimate 

Cost Components 

Community-Based Specialty Treatment 

Federally-Provided Specialty Treatment 

Department of Defense 

Indian Health Services 

Bureau of Prisons 

Department of Veterans Affairs 

Health Infrastructure and Support 

Federal Prevention 

State and Local Prevention 

Training 

Prevention Research 

Treatment Research 

Medical Consequences 

Hospital and Ambulatory Care Costs 

Drug-Exposed Infants 

Tuberculosis 

HIV/AIDS 

Hepatitis B and C 

Crime Victim Health Care Costs 

Health Insurance Administration 

Productivity losses are divided into six components, listed in Figure II-2. 

Figure II-2 

Components of the Productivity Loss Estimate 

Cost Components 

Premature Death 

Drug Abuse-Related Illness 

Institutionalization/Hospitalization 

Productivity Loss of Victims of Crime 

Incarceration 

Crime Careers 

II-2
Section II. Methodology 

Finally, the cost of other effects is divided into eight components and these components are listed 

in Figure II-3. 

Figure II-3 

Components of the Cost of Other Effects Estimate 

Cost Components 

Criminal Justice System and Other Public Costs 

State and Local Police Protection 

State and Local Legal Adjudication 

State and Federal Corrections 

Local Corrections 

Federal Spending to Reduce Supply 

Private Costs 

Private Legal Defense 

Property Damage for Victims of Crime 

Social Welfare 

For each of the components listed above one of two approaches was taken to update the estimate. 

If the component could be re-estimated through tabulations of published data then the value of 

the component was re-estimated for each year from 1992 through the most recent available year 

of published data. For subsequent years, the component value was trended forward based on the 

historical trend of the component value. This approach was used for 22 of the 32 components. 

For the remaining components, tabulations of published data was not sufficient to re-estimate the 

component's value. Therefore, for these components, we developed trend factors based on 

published statistics that are expected to parallel changes in the value of the component and 

applied these trend factors to the original estimate. 

The reliability of the resulting estimates depends on which of these methodologies was used to 

calculate the updates as well as the reliability of the underlying data for the calculations. The 

components whose values were re-estimates can be viewed as more reliable than those whose 

values were trended. We provide a detailed discussion of the reliability of the estimates in 

Section III.D.2. In the next section, we provide an overview of the re-estimation and trending 

methods. In Section III, each component is presented along with the specific data sources and 

methods used to update that component. 

1. Re-estimation 

In many cases tabulations of published data are used to re-estimate the value of the cost 

component for this update. There are four groups of components for which the updates are reestimated. These are: 

1. Components measuring federal government spending by function (e.g., specialty treatment, 

prevention, research, and supply reduction); 

II-3
Section II. Methodology 

2. Components measuring crime related costs (i.e., costs to victims, crime related productivity 

losses, criminal justice system costs); 

3. Costs for premature death; and 

4. Components for which other authors have published re-estimates (i.e., HIV/AIDS 

spending, specialty treatment costs). 

The first group of components are re-estimated based on estimates of federal government 

spending that are published annually by ONDCP in the National Drug Control Strategy: 

Budget Summary that presents estimates of spending by federal agencies by function (e.g., 

treatment, supply reduction). These figures are used to re-estimate several cost components 

with minor adjustments to account for issues such as overlap with costs included in other 

component estimates. 

The second group of components is re-estimated based on data published by the Bureau of 

Justice Statistics in the Sourcebook of Criminal Justice Statistics which includes statistics on 

arrests, victimizations, persons under incarceration, and criminal justice system costs. Using 

these data, the cost components that are related to crime are divided into numerous 

subcomponents and data for each of these components are refreshed. Then, the same methods 

that were employed by Harwood et al. (1998) to calculate the 1992 estimate are replicated to 

re-estimate the value for 1993 through the most recent year of data available. 

The third group of components, costs related to premature death, is re-estimated based on 

counts of deaths published annually by the Center for Disease Control (CDC). Again, the same 

methods employed by Harwood et al. (1998) to calculate the 1992 estimate were employed to 

re-estimate the value for 1993 through 1998. 

Finally, the fourth group of components consists of components whose values have been reestimated by other authors. The cost of specialty treatment for drug abuse was estimated by 

Mark et al. (1999s and 1999b) for 1992 through 1997. These values were adopted with minor 

adjustments for overlap with the costs included in other components. Hellinger and Fleishman 

(2000) also estimated the cost of HIV/AIDS care for 1996. This value was disaggregated into 

the non-drug abuse and drug abuse-related costs and the drug abuse-related costs were adopted 

for this study. 

Section III provides detail on the data sources and methods used to re-estimate each of these 

components. 

2. Application of Trend Factors 

As noted above, our second approach to calculating the updates is to use the detailed estimate of 

the economic cost of drug abuse developed for 1992 as the baseline estimate and then apply 

trend factors for changes in the economic costs between 1992 and each subsequent year through 

2002. This section provides an overview of this method and then demonstrates the method in a 

sample calculation. 

II-4
Section II. Methodology 

a) Overview 

Changes in the actual cost of drug abuse and dependence between the year for which detailed 

estimates were developed and more recent years for which estimates are desired may be 

decomposed into two categories: changes in the frequency and intensity of the underlying 

behavioral outcomes and changes in the monetary valuation of these outcomes. For this study, 

we measure changes in these components using indicators of the following types: 

• Incidence/prevalence of selected drug-specific consequences; 

• Population; 

• Consumer price index for health care services; 

• Worker compensation (wage rates); and 

• Consumer price index, all items. 

The first two factors might be thought of as “real” changes in the impacts related to drug abuse 

and dependence. The latter three indicators can be thought of as measures of inflationary change. 

The simplest approach to updating or adjusting cost estimates would be to adjust the original 

total cost estimate for population change (about 1 percent annually) and the general change in 

prices (consumer prices increased by an average of about 2.5 percent annually between 1992 and 

2002 based on the consumer price index). This approach is directly applied, the data are 

available and easily explained and understood. However, there are disadvantages to such a 

limited approach. There may be factors that lead various cost components to change at different 

rates across time, relating to both real changes in behavioral outcomes and changes in subcomponent prices. 

Therefore, for this study, we disaggregate the original cost estimates into 32 components and 

numerous subcomponents—many of which comprises multiple components that are similar to 

each other in the nature of the economic impact that has been measured. We hypothesize that the 

components within a group will be affected similarly by changes in both the real factors 

(incidence, prevalence or population) and by price trends. Thus, a trend factor is developed and 

applied to each of these components to calculate the updated cost estimate (which is documented 

in this report). 

b) Sample Algorithm 

To illustrate how this methodology is applied, we provide a detailed example. In 1992 $14.2 

billion in lost productivity was attributed to drug abuse-related illness. The real change in the 

estimated cost of lost productivity related to drug related illness is measured as the change in the 

number of persons reporting more than 100 days of marijuana or cocaine use in their lifetime as 

reported from the National Household Survey of Drug Abuse (NHSDA). Table III-1 shows that 

between 1992 and 1993, the number of persons reporting more than 100 days of marijuana or 

cocaine use in their lifetime declined 5.4 percent. The price change in the estimated cost of lost 

productivity related to drug related illness is measured based on the Bureau of Labor Statistics 

hourly compensation index. Table II-1 also shows that between 1992 and 1993 the hourly 

compensation index rose from 100.0 to 102.4 or 2.4 percent. 

II-5
Section II. Methodology 

Table II-1 

Components of the Update of Lost Productivity 

Due to Drug Related Illness 

1992-1993 

Data Series 1992 1993 Trend 1992-1993 

Number of Adults Reporting More Than 

100 Days of Marijuana and Cocaine Use in 19,224 18,193 0.946 

Their Lifetime 

BLS Hourly Compensation Index 100.0 102.4 1.024 

Source: Analysis by The Lewin Group, 2001. 

We applied these two factors to the base 1992 estimate to derive the 1993 update value. 

$14,205 * 0.9464 * 1.0240 = $13,766 

This process was repeated to calculate the 1994 value based on the 1993 update and so on until 

updated values through 2002 were calculated. 

II-6
Section III. Data and Estimation 

III. DATA AND ESTIMATION OF BASE COST COMPONENTS 

The economic costs related to drug abuse can be divided into three major components: health 

care, lost productivity, and other impacts (primarily criminal justice impacts). In this section of 

the report we discuss how the updated estimates have been developed for the respective detailed 

components and identify key data used for this purpose. As indicated previously, these estimates 

are built upon the original detail calculations of Harwood et al. (1998), and the estimates 

developed in the prior update study (ONDCP, 2001). 

A. Health Care Costs 

Table III-1 displays the health care cost detailed components and their estimated cost for 2002. 

We assessed the available data and determined the most appropriate method for updating each of 

these numerous components. The methods for updating each component are described below. 

Table III-1 

Health Care Costs, 1992 and 2002 

(in millions of dollars) 

Detailed Cost Components 1992 2002 

Annual 

Change 

Community-Based Specialty Treatment $3,770 $5,997 4.8% 

Federally-Provided Specialty Treatment 

Department of Defense $14 $8 -5.8% 

Indian Health Services $26 $54 7.6% 

Bureau of Prisons $17 $39 8.8% 

Department of Veterans Affairs $113 $116 0.2% 

Health Infrastructure and Support 

Federal Prevention $616 $1,203 6.9% 

State and Local Prevention $89 $148 5.2% 

Training $49 $69 3.5% 

Prevention Research $158 $402 9.8% 

Treatment Research $195 $564 11.2% 

Insurance Administration $268 $476 5.9% 

Medical Consequences 

Hospital and Ambulatory Care Costs $518 $1,454 10.9% 

Special Disease Costs 

Drug-Exposed Infants $407 $605 4.0% 

Tuberculosis $30 $19 -4.6% 

HIV/AIDS $3,489 $3,755 0.7% 

Hepatitis B and C $462 $312 -3.9% 

Crime Victim Health Care Costs $92 $110 1.8% 

Health Insurance Administration $340 $513 4.2% 

Total $10,653 $15,844 4.1% 

Source: Analysis by The Lewin Group, 2004. 

III-1 
Section III. Data and Estimation 

The objective of this part of the report is to provide the reader with the most important data and 

estimates that relate to the estimates as well as provide a brief description of how the updated 

estimates have been developed. In accomplishing this, we present or describe the critical data 

that has been used in developing the updated estimates. This report is actually an extension of 

Bouchery and Harwood (2001) in the sense that the methods and data sources employed herein 

are generally identical to those of the earlier report. Thus, the following text does not attempt to 

replicate all of the data tables and specifications presented in the earlier report, since they can 

still be directly accessed elsewhere. There have been a few changes necessitated because data 

series published by agencies have been dropped or replaced. These are noted where applicable. 

1. Community-Based Specialty Treatment 

Community-based specialty treatment includes all specialty drug abuse treatment which is not 

delivered through facilities operated by or at a federal agency. The most comprehensive and 

recent study of treatment spending was done by Mark et al. (1999a and 1999b). Specialty drug 

treatment spending in 1997 was $5.3 billion. SAMHSA has commissioned a new study to 

develop more current estimates of spending, which will take advantage of new data and 

improved data sets. Estimates from this study should be released in the next year. 

The Mark et al. (1999a) estimates include costs for community-based specialty treatment as well 

as for the Department of Defense, Bureau of Indian Affairs, Bureau of Prisons, and Veterans 

Affairs. To update the estimate of community-based specialty treatment costs, we obtained 

estimates of the federal spending for these agencies costs from the ONDCP National Drug 

Control Strategy: Budget Summary (various years) and subtracted these costs from the overall 

Mark et al (1999a) estimates. The federal specialty treatment costs are discussed in the next 

section.7 

Spending for community-based treatment is projected for 1998-2002, since the Mark et al. 

(1999a) estimates are only available through 1997. While there are numerous factors that 

influence spending, the projection method has identified two major elements: the number of 

persons getting “expensive” substance abuse treatment and the rate of inflation in medical prices 

to consumers (Table III-2). Between 1998 and 2002 the number of persons getting inpatient or 

residential treatment modestly declined—from 122,600 to 116,100, or 5 percent. Medical costs 

to urban consumers grew 18 percent, about 4.3 percent annually. The adjustment factors for 

earlier years are not presented because Mark et al. (1999a) developed estimates for those years. 

Once these amounts were subtracted, the Mark et al. (1999a) estimate for the cost of community-based specialty treatment in 

1992 is $374 million higher than the Harwood et al (1998) estimate of community-based specialty treatment costs. The Mark 

et al. (1999a) estimate is higher because it is more comprehensive. 

III-2

7 
Section III. Data and Estimation 

Table III-2 

Factors for Updating Specialty Treatment Costs, 1998-2002 

Data Series 1998 1999 2000 2001 2002 

Daily Census of Clients in Inpatient or 

Residential Care (in 000s) 

122.6 (116.0) 109.3 (112.7) 116.1 

Consumer Price Index - Medical 

Services, All Urban Consumers 

242.1 250.6 260.8 272.8 285.6 

Note: values in ( ) are interpolated from adjacent values because they were not estimated by SAMHSA. 

Sources: UFDS/N-SSATS client census online from Substance Abuse Mental Health Services Administration; 

CPI-M online from U.S. Department of Labor, Bureau of Labor Statistics. 

2. Federal Specialty Treatment Costs 

A relatively limited amount of specialty substance abuse treatment is funded and delivered 

through federal agencies. These expenditures were $217 million in 2002. Specifically, we 

obtained cost estimates for the Department of Defense, Bureau of Indian Affairs, and Bureau of 

Prisons from the National Drug Control Strategy: Budget Summary (Office of National Drug 

Control Policy), which is published annually. Thus, estimates were obtained for each year 

between 1992 and 2001 from these reports. The estimate for 2002 is based on the budget request 

for that year as reported in the Budget Summary for 2002. Values for 1992-2002 are in 

Appendix C. 

The $116 million estimate for the Department of Veterans Affairs (VA) was derived from an 

alternative source because the value reported in the ONDCP Budget Summary is too broad—it 

includes costs of many types of health services that drug abusers have obtained. Fortunately, the 

annual VA spending on specialty substance abuse treatment has been estimated by the VA 

research department in Palo Alto, CA (Chen et al., 2001 and 2003). They estimated that 

specialty care worth $358 million was delivered in 2002, but did not allocate costs between drug 

and alcohol abuse. The online analytic files of the Treatment Episode Data Set (TEDS) 

operated by SAMHSA allows veterans entering public treatment clinics to be studied. In 2000, 

32.3 percent of veterans being admitted to public substance abuse clinics tracked by TEDS were 

drug abusers, increasing steadily from only 22.5 percent in 1992. It was thus estimated that 

$116 million was spent by VA on specialty substance abuse treatment in 2002, and similar 

calculations and have been made for 1992-2001. 

3. Health Infrastructure and Support 

Prevention, training, research, and health administration are also critical health services. The 

methodology for updating each of the components of health infrastructure and support is 

discussed, respectively, below. 

a) Prevention 

The federal government is the primary source of funding for drug abuse prevention services, 

although the services are primarily delivered through state and local governments in the form of 

in-school and community initiatives. It is estimated that national spending on drug abuse 

III-3
Section III. Data and Estimation 

prevention was about $1.35 billion in 2002. The vast majority of this was from federal financing 

($1.2 billion) and the remainder from state and local government funding ($150 million). 

Total federal appropriations for substance abuse prevention in FY2002 was $2.15 billion. Note 

that this includes alcohol as well as drug prevention. The values for 1999-2002 are from the 

National Drug Control Strategy, FY 2003 Budget Summary, published February 2002 and values 

for earlier years were drawn from prior editions of the NDCS. Because these estimates include 

funding for prevention of alcohol abuse, as well as drug abuse we apportion the spending 

estimate between alcohol and drug abuse based on data from analyses of the primary reason for 

treatment among clients in the SAMHSA National Survey of Substance Abuse Treatment 

Services (or N-SSATS; previously known as the Uniform Facility Data Set or UFDS; Substance 

Abuse Mental Health Services Administration). The 2002 data indicated that 24 percent of 

current clients were treated for drug abuse only, and 61.6 percent for both alcohol and drugs 

(Table III-3). Splitting the comorbid group in half to avoid double counting, the cost of alcohol 

and drug abuse treatment was apportioned 54.8 percent to drugs. The share allocated to drug 

abuse has increased from about 40 percent in 1992, as larger shares of clients present with 

primary drug problems or both drug and alcohol problems. 

In addition, State and local substance abuse agencies spent about $599 million in 1999 on 

substance abuse prevention, according to State Resources and Services Related to Alcohol and 

Other Drug Problems (National Association of State Alcohol and Drug Abuse Directors, 

annual). This report and data was terminated due to lack of funding after 1999. 

Table III-3 

Derivation of State and Local Drug Abuse Prevention Spending, 1992-2002 

Data Series 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 

Spending on Alcohol and $515 $517 $524 $563 $495 $492 $524 $599 $599 $599 $599 

Drug Abuse Prevention 

State and Local as Share 43.4 44.9 43.6 44.7 41.1 43.3 43.6 44.9 44.9 44.9 44.9 

of Total Spending 

Share of TX Clients with 40.0 40.0 40.0 40.0 40.0 40.0 51.6 52.4 53.3 54.1 54.8 

Drug Abuse 

State & Local Spending 

for DA Prevention 

$89 $93 $91 $101 $81 $85 $118 $141 $143 $145 $148 

Source: National Association of State Alcohol and Drug Abuse Directors. (annual); UFDS/N-SSATS data from 

Substance Abuse Mental Health Services Administration Web Site. 

In principle an estimate is desired for spending on prevention that is directed against drug abuse 

and that includes only spending funded by state and local government (Table III-3). To 

apportion the spending between alcohol and drug abuse, we use the same ratio applied for federal 

spending on treatment. To apportion prevention funding between state and local government 

funds and funds from the federal government and other sources, we use estimates of the 

proportion of total spending included in the NASADAD report (i.e., spending for treatment, 

prevention, and all other activities) for alcohol and drug abuse that is from state and local 

government funds. This proportion was 44.9 percent in 1999, and ranged from 41.1 to 44.9 

percent during the 1990s. 

III-4
256.5 259.9 263.1 266.3 269.4 272.2 275.9 279 282.2 285.3 288.4

140.3 144.5 148.2 152.4 156.9 160.5 163 166.6 172.2 177.1 179.9

Population CPI

Section III. Data and Estimation 

Prevention spending related to drug abuse that was funded by state and local governments was 

estimated at $141 million in 1999. Prevention spending estimates for 2000-2002 were adjusted 

only to reflect the growing proportion of those entering treatment with drug abuse problems. 

Because state and local governments experienced severe budget problems during this period no 

adjustments were made for either population or inflation growth over these years. 

b) Training 

The cost of training is projected to total about $69 million in 2002,from a base of $49 million in 

1992. This estimate includes initial and continuing education related to drug abuse for 

specialists in substance abuse treatment as well as for other health professionals, law 

enforcement officials, criminal justice professionals, and clergy. No published data specific to 

these costs are available. Therefore, we update the 1992 estimate based on real change in the 

U.S. population and the change in the Consumer Price Index (Figure III-1). 

Figure III-1 

Trends in Factors for Updating Substance Abuse Training, 1992-2002 

350

300

250

200

150

100

50

0

256.5 259.9 263.1 266.3 269.4 272.2 275.9 279 282.2 285.3 288.4 

140.3 144.5 148.2 152.4 156.9 160.5 163 166.6 172.2 177.1 179.9 

1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002

Population CPI 

Sources: Population data from the Bureau of Census online files; CPI online from U.S. Department of 

Labor, Bureau of Labor Statistics. 

c) Research 

Virtually all research related to drug abuse is funded by the federal government and is reported 

annually in the NDCS Budget Summary. Although some foundations, notably the Robert Wood 

Johnson Foundation, support research as part of their efforts, no breakout between research and 

services is published. For FY 2002 federal prevention and treatment related research enacted 

funds came to $966 million of which about 58 percent was for treatment. Actual spending 

estimates are available for these two components through 2001. Research spending almost 

tripled between 1992 and 2002. Annual research expenditures are presented in Appendix C. 

d) Health Administration 

The cost of operating reimbursement systems (e.g., Medicaid, private insurance, state substance 

abuse agencies) is not included in estimates of the value of care delivered. The national health 

III-5
Section III. Data and Estimation 

accounts developed by the Centers for Medicare and Medicaid Services (CMS; Web Site) 

accordingly break out the cost of operating private and public insurance and reimbursement 

mechanisms. In 2002 CMS analysts estimated that health administration expenses were $107 

billion (an additional 8 percent) on top of $1.33 trillion in total nation personal health care 

expenses (Table III-4). This factor has been applied to the projection of about $6.2 billion 

spending on substance abuse treatment, and $6.4 billion spent for care of other health 

consequences of drug abuse, on other yielding an estimate of $500 million and $153 million, 

respectively for these two components. 

Table III-4 

Health Insurance Administration Costs, 1992-2002 

Data Series 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 

Health insurance 

administration costs 

($ in billions) 49 53 58 61 61 61 65 73 80. 90 105 

Personal health care 

expenditures 

(PHCE; $ in billions) 720 776 817 866 911 959 1010 1065 1135 1231 1340 

Health insurance as 

% of PHCE 6.9% 6.8% 7.1% 7.0% 6.7% 6.3% 6.4% 6.9% 7.1% 7.3% 7.8% 

Sources: Data on national health accounts published online by Centers for Medicare and Medicaid Services. 

Based on CMS data, the level of health administration costs has increased more rapidly than 

personal health care costs. During most of the 1990s these costs were about 7 percent. Annual 

ratios from the CMS national health accounts were used in developing these values for 1998-

2002, as was done for estimates in ONDCP (2001) and Harwood et al. (1998). 

4. Medical Consequences 

In addition to the care offered by the specialty substance abuse providers above, drug abuse 

increases health care costs in the following ways: 

• Drug abuse may cause other illnesses (e.g., AIDS) that require treatment; 

• Drug abuse may complicate the treatment of other illnesses or injuries, perhaps resulting in 

longer lengths of hospital stays; or 

• Drug abuse may precipitate violent crimes that result in injuries that require medical care. 

The methodology for updating these costs is described in the next several sections. In the section 

on hospital care costs, we describe our methodology for updating the costs for the following 

types of hospital medical care: 

• Care for conditions specifically caused by drug abuse (e.g., polyneuropathy due to drugs, 

narcotics affecting fetus or newborn via placenta or breast feeding); and 

• Additional hospital days resulting from comorbid drug abuse (secondary to other disorders). 

III-6
Secondary DA Primary DA

Section III. Data and Estimation 

In the section on “specific disease costs” we describe the methodology for updating the 

estimated cost of specific health problems that are partially attributable to drug abuse. These 

illnesses are, respectively, HIV/AIDS, hepatitis B and C, drug-exposed infants, TB, and the 

health care costs related to violent crime. Finally, we describe how updates were done for health 

administration costs. Admissions in 000s

a) Additional Hospital Care Costs 

Harwood et al. (1998) found that hospital stays where the patient has a secondary, but no 

primary, diagnosis of drug abuse are longer on average. The cost of hospital stays with primary 

diagnoses of drug abuse are included under the specialty care estimate, above. That study found 

that just over 2 percent of hospital stays (about 800 thousand) had a secondary drug abuse 

diagnosis, accounting for 500,000 days of hospital care in 1992, at a cost of $518 million. 

The projected estimate for 2002 is $1.454 billion. The projected estimates were extrapolated 

from the 1992 value based on changes in (a) the number of hospital patients with secondary 

diagnoses of drug abuse and (b) the consumers price index for medical services. The data on 

hospital patients with secondary drug abuse diagnoses is from the National Hospital Discharge 

Survey (NHDS), which was the same data source used in Harwood et al. (1998) to analyze this 

issue initially. Tabulations of NHDS data are published annually by the National Center for 

Health Statistics on their web site. We have tabulated the number of admissions to short term 

hospitals in the US that had either a primary or secondary diagnosis of drug abuse8

. Data for 

1992 through 2000 (the most recent year) is graphed in Figure III-2 and appears in Appendix B.. 

Figure III-2 

Admissions to Short-term Hospitals 

with Primary or Secondary Diagnosis of Drug Dependence/Abuse, 1992-2000 

(in thousands) 

1000

800

600

400

200

0

1992 1993 1994 1995 1996 1997 1998 1999 2000 1992 1993 1994 1995 1996 1997 1998 1999 2000

Year

Secondary DA Primary DA 

Source: NHDS data published online by the National Center for Health Statistics. 

Since the primary objective was to represent the trends in this factor, only the major drug abuse diagnoses were tabulated: 

drug dependence, drug abuse (exclusive of tobacco and alcohol) and drug psychoses. 

III-7

8 
Section III. Data and Estimation 

While there was rapid growth in the early 1990s in the number of hospital admissions with 

secondary drug abuse diagnoses, growth then moderated to about 3.5 percent annually from 1994 

forward. This rate was used to develop the cost projections for 2001-2002. 

b) Specific Disease Costs 

Certain types of medical consequences of drug abuse are underrepresented in the hospital and 

ambulatory care costs. These include the cost of drug-exposed infants, TB, HIV/AIDS, and 

hepatitis B and C and violent crime. Methods for updating these disease specific costs are 

described in this section. 

(1) Drug-Exposed Infants 

This cost has been trended forward from 1992, and is $605 million for 2002. The original 

estimate of $407 million for 1992 was based on several studies in the early 1990s (United States 

General Accounting Office; 1990, Phibbs et al., 1991; Joyce et al., 1994) that found newborns of 

women who used cocaine during their pregnancy were more likely to require care in neonatal 

intensive care units and to end up as “boarder babies.” 

While there appears to have been no rigorous national level analysis of the trends in the problems 

experienced by drug-exposed infants, a SAMHSA (2004) analysis of the National Survey on 

Drug Use and Health (NSDUH) found that in 2002, 3 percent of pregnant women had used illicit 

drugs in the past month, about half the rate of other women. However, use of cocaine, which is 

the major correlate of neonate problems, was only reported by 0.1 percent of pregnant women 

(about 4,000 pregnant women in a given month). Most of the illicit use was of marijuana (2.7 

percent) or prescription medications (0.9 percent). Estimates from the NHSDA for earlier years 

were based on small numbers of observations and displayed significant variability from year to 

year. In contrast, one of the earliest analyses of the NHSDA (Gomby and Shiono, 1991) 

estimated that 4.5 percent of newborns had been exposed to cocaine in utero. It is very possible 

that cocaine use by pregnant women has declined massively, perhaps due in large measure to the 

research and public information campaigns in the 1990s. If this is the case, then the current 

“projection” may be much too high. 

The projection was based on growth 1992-2002 in the number of babies born per year (National 

Center for Health Statistics; this was virtually constant at about 4 million) and the change in the 

consumer price index for medical services, at 50.2 percent between 1992 and 2002 (see 

Appendix Table B-4). 

(2) Tuberculosis (TB) 

This component of costs has actually declined in both nominal as well as real terms since the 

initial estimate was developed for 1992. At $19 million in 2002 (versus $30 million in 1992 and 

$22 million in 1998), this is one of the smallest cost components separately trended forward. 

However, in the early 1990s TB was a major concern because after many decades of declines in 

incidence the rates were once again on the increase, and a number of patients had multiple-drugresistant strains of TB. CDC data (published on the CDC web site) show that since 1992 the 

number of new TB cases has declined over 40 percent to about 15,000 cases per year, and the 

proportion of TB cases presenting with drug abuse as an exposure factor fell from 11.5 percent in 

III-8
Section III. Data and Estimation 

1996 to 9.2 percent in 2002. Note however, that only about 4.5 percent of TB cases were 

attributed to drug abuse in Harwood et al. (1998), recognizing that many TB patients had 

multiple exposure factors. 

TB costs related to drug abuse were projected from the 1992 estimate of $30 million based on 

the change in drug-related TB cases (a decline of about 55 percent 1992-2002; see Table III-5) 

and the change in the consumer price index for medical services (50 percent in 1992-2002). 

We measure the real change in the health care costs attributable to tuberculosis (TB) as the 

change in the number of cases of TB that are attributable to injecting or non-injecting drug users 

according to the Center for Disease Control (CDC). The number of TB cases is available from 

the CDC for each year between 1992 and 2002. However, the percentage of cases attributable to 

injecting or non-injecting drug users is only available for 1996 through 2002. Between 1992 and 

1996, we assume the percentage of cases attributable to injecting or non-injecting drug users was 

fixed at the 1996 level. Table IIi-5 shows the number of TB cases overall and related to drug use 

between 1992 and 2002. We measure the price change in the TB costs related to drug abuse 

based on the change in the CPI-M (Appendix B). 

Table III-5 

Tuberculosis Cases, 1992-2002 

Data Series 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 

Total Cases (in 000s)1 26.7 25.3 24.4 22.9 21.3 19.9 18.4 17.5 16.4 16.0 15.1 

Percent Non-Injecting 

Drug Use1 

N.A. N.A. N.A. N.A. 7.7% 7.8% 7.7% 7.1% 7.5% 7.2% 7.0% 

Percent Injecting Drug 

Use1 

N.A. N.A. N.A. N.A. 3.8% 3.3% 2.9% 2.6% 2.5% 2.3% 2.2% 

Drug Related TB 

Cases2 

3,067 2,908 2,802 2,629 2,454 2,203 1,946 1,701 1,638 1,519 1,387 

1. Source: National Center for Health Statistics (2003). TB Surveillance Reports, 1996-2002. 2. Source: calculation by The Lewin Group. 

This update assumes that there was not a major change in the treatment cost per case for TB 

between 1992 and 2002. However, in the face of resurgent TB, a major public health push was 

undertaken, involving new patterns of care. These changes may have affected treatment costs. 

(3) HIV/AIDS 

Risk of infection with HIV from injection drug use is one of the most feared consequences of 

drug abuse. This report estimates that in 2002 $3.75 billion was spent to treat 122,000 persons 

living with AIDS that have a history of injection drug use. 

Data reported to the CDC indicate that nearly a third of persons living with AIDS in 2002 (and 

marginally higher proportions in the 1990s) have a history of injection drug use (HIV/AIDS 

Surveillance Reports, Centers for Disease Control and Prevention, 2003). This comes to an 

estimated 122,000 persons out of the total of 385,000 persons living with AIDS in 2002. Due to 

III-9
49

63

72

80 87

95 101 107 113 119 124

Section III. Data and Estimation 

both the increased effectiveness of HIV therapies and the spread of the disorder, the total 

population living with AIDS has grown from about 140,000 in 1992. Bozzette et al. (2001) have 

shown that most of the costs of treating HIV are for those that meet clinical criteria for AIDS, in 

contrast to HIV infected individuals that have few symptoms or are asymptomatic. This analysis 

uses the proportion of “persons living with AIDS” (PLWA) with a history of injection drug use 

to determine the share of national HIV spending to allocate to drug abuse. Figure III-3 shows the 

number of adult persons living with AIDS in 1992 through 2002. Detailed data and tabulations 

are in Appendix B. 

Figure III-3 

Persons Living with AIDS, with Injection Drug Use Exposure, 1992-2002 

(persons in thousands) 

150

125

100

75

50

25

0

PLWA/IDU (in 000s) 

49 

63 

72 

80 87 

95 101 107 113 119 124 

PLWA/IDU (in 000s)

1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002

Source: analysis of data from Center for Disease Control and Prevention, 2003 

The most recent comprehensive study of the cost of caring for individuals with HIV/AIDS 

(Hellinger and Fleishman, 2000) estimated that the cost of treating all people with HIV disease in 

1996 was between $6.7 and $7.8 billion. This range was calculated through two different 

approaches, specifically, payer-based and provider-based. The estimates calculated under each 

approach were compared. We use the mid-point between these two estimates, $7.25 billion, as 

our estimate for total medical spending on HIV/AIDS in 1996. A more recent study (Bozzette et 

al., 2001) essentially confirmed the earlier estimate. The value was moderately lower, but the 

study design was expected to capture fewer of the costs and the study found that costs per person 

treated for HIV infection declined about 14 percent from 1996 to 1997-98. This was the time 

that new, more effective medications for HIV became generally available. 

This study assumes that after 1998 HIV costs increased at the same rate as the CPI for medical 

care (the CPI-M), which may be a conservative assumption because pharmaceutical prices in 

general have risen more rapidly that the cost of other medical services since the late 1990s. 

(4) Hepatitis B and C 

Injection drug use is also known to be a vector for transmission of viral hepatitis B and C (HBV 

and HCV, respectively). Studies by CDC (1996, 2000) found that in the mid-1990s about 12 

III-10
Section III. Data and Estimation 

percent of hepatitis B cases and 23.6 percent of hepatitis C cases belonged to the injection drug 

user exposure category. Data on injection drug exposure has not been published since that time. 

In this update it is projected that the cost of treating injection drug related viral hepatitis was 

about $312 million in 2002, down from the estimate of $462 million for 1992 and $434 million 

in 1998. Despite 50 percent growth in medical costs between 1992 and 2002 these costs have 

declined because the acute incidence of HBV and HCV declined by more than half, and two 

thirds, respectively over this time period. In 2002 there were only 6,800 reported acute HBV 

cases and 3,600 estimated HCV cases, although there are 1.25 million and 2.7 million individuals 

with chronic (non-acute) cases that could cause health problems in the future. The change in 

these costs since 1992 has been projected based on the changes in (a) the incidence of “reported” 

and “estimated” acute hepatitis B and C cases (Table III-7) and (b) the change in consumer 

prices for medical services. These estimates assume that there has not been a major change in 

the treatment cost per case for hepatitis between 1992 and 2002, apart from the average increase 

in medical inflation. 

Table III-6 

Acute Hepatitis Cases, 1992-2002 

Hepatitis B (Reported) and Hepatitis C (Estimated) 

(cases in thousands) 

1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 

Hepatitis B 16.1 13.4 12.5 10.8 10.6 10.4 10.3 7.7 8.0 7.8 6.8 

Hepatitis C 12.0 9.4 8.9 5.9 5.9 6.3 6.8 6.4 5.7 4.0 3.6 

Total 28.1 22.8 21.4 16.7 16.5 16.7 17.1 14.1 13.7 11.8 10.4 

Sources: Web site of Centers for Disease Control and Prevention. Fact sheet on Disease Burden from 

Hepatitis in the United States, and the Morbidity Mortality Weekly Report.

(5) Violent Crime 

The cost of medical care provided to victims of drug abuse-related violent crime was estimated 

at $110 million in 2002. The National Crime Survey estimated that there were about 5.25 

million violent victimizations, of which 380,000 (or 7.2 percent) are attributed to drug abuse. 

Studies of arrestees and prisoners find that about 5 percent of assaults and a quarter of robberies 

are committed by individuals addicted to expensive drugs (this literature was discussed in 

Harwood et al., 1998). The number of violent crimes as estimated by the NCS declined almost 

50 percent since 1992 and most of that (35 percent) was since 1998. There has been no analysis 

of whether or how the role of drug abuse in violent crime has changed over this time period. 

This $110 million estimate is based on 2002 data about the number and type of violent crimes. 

Also, annual estimates of violent crimes for other years are in Appendix B. In order to develop 

cost estimates we need data on how many of the violent crimes are caused by drug addiction, and 

the cost of health care per crime. These factors are not tracked in periodic data series, however, 

so these factors have been adapted and updated from Harwood et al. (1998). The CPI for 

medical services has been used to adjust the medical care cost per crime. The adjusted cost per 

victim factors are in Table IV-7. Thus, the estimated average cost of $210 in 1992 for medical 

care of assault victims was $315 in 2002 dollars, and the cost for robbery, rape and homicide 

were $6, $42 and $13,900, respectively. Fortunately, many victims of non-fatal victimizations 

III-11
Section III. Data and Estimation 

require very little or no medical care immediately after the attack, which makes the averages 

seem low. However, these estimates do not include costs for future disability, care for emotional 

trauma or the pain and suffering that many experience following trauma. The details of the 

calculations are in Table III-7. 

Table III-7 

Estimated Cost of Medical Care for Crime Victims, 2002 

Type of 

Offense 

Annual 

Offenses 

(in 000s) 

Share 

attributed 

to Drug 

Abuse 

Offenses 

attributed 

to DA 

(in 000s) 

Cost per 

victim 

Annual 

Cost 

($ in 

millions) 

Assault 4,581 5.1% 233.6 $315 $73.71 

Rape 146 2.4% 6.5 $42 $0.15 

Robbery 512 27.2% 139.4 $6 $0.84 

Homicide 16 15.8% 2.6 $13,900 $35.40 

Subtotal 5,255 7.3% 382.1 $288 $110.10 

c) Health Administration 

Similar to the calculation of health insurance administration costs related to specialty care, health 

administration costs related to the medical consequences of drug abuse are calculated as a 

percentage of the total medical service costs related to medical consequences of drug abuse. In 

2002 these additional health consequences entailed projected costs of $6.378 billion. Based on 

the ratio that health insurance administration was almost 8 percent of personal health care 

expenditures, these costs totaled $513 million, an increase from $298 million in 1992. 

B. Productivity Losses 

Productivity losses represent a loss of potential economic activity, in contrast to expenditures for 

health goods and services and criminal justice system operations. Thus, productivity losses 

might be thought of as a loss of potential gross domestic product brought about because of a 

reduction in the supply or the quality and effectiveness of the labor force. In the US economy 

sustained growth (or contraction) in the workforce results on average in sustained growth in 

gross domestic product, although there certainly are short term variations as the business 

conditions change--as reflected by swings in the unemployment rate. Between 1970 and 2000 

the US labor force (those wanting to work) grew 59 million persons (from 84 to 143 million) and 

the level of employment increased by 59 million persons (from 79 to 138 million). Growth or 

shrinkage of the labor force results in remarkably similar changes in legitimate employment. In 

general, there is reason to believe that a sustained decrease in the legitimate labor supply reduces 

not only the pool of workers but ultimately the number of persons employed in the legitimate 

economy and therefore the size of the economy as measured by, e.g., the gross domestic product. 

For example, 2 million drug abusers are unavailable or choose not to work in order to pursue 

crime careers or are incarcerated) 

There are several different ways in which any major health problem decreases the size or 

effectiveness of the legitimate labor supply in the United States, or any other economy. These 

III-12
Section III. Data and Estimation 

include premature deaths, as well as disability and sickness, including time convalescing or 

recovering. Moreover, in the case of drug abuse we have the drain on our legitimate workforce 

and economy posed by individuals pursing “crime careers” (theft, drug sales) instead of 

legitimate work, as well as the loss from incarceration of drug offenders. Since a single drug 

abusers may experience all of these over time, the calculations have been performed in a manner 

to attempt to avoid “double counting.” This is done by using “annual averages” which account 

for individuals moving in and out of particular states or activities. 

Valuation of the loss of a worker from productive activities is based on his/her expected value of 

productivity. In the labor market this equals their expected wage rate plus the value of fringe 

benefits (about 30 percent on top of wage/salary before taxes). Under this methodology nonmarket, or household productivity is also valued. It is equal to the cost of hiring someone to 

perform the services they are unable to perform due to sickness, disability or death. If a person 

has primary household responsibility, studies find their household productivity and thus 

household services replacement cost is higher than for a person that also works out of the home. 

In 2002 the average hourly compensation for civilian employees (the “employer cost for 

employee compensation”, or ECEC) was just over $23, of which $6.50 was for benefits such as 

employer contributions for insurance of various types, retirement contributions, social security 

and employment taxes. Studies have estimated the cost of replacing full-time household services 

to be somewhat less than the value of full-time employment. Individuals of different ages and 

genders have different average rates of expected employment, compensation and housekeeping 

contributions. The original, detailed estimates from 1992 incorporated national averages for 

these productivity-related factors as well as available detail about the demographic composition 

of drug abusers in the workforce, in treatment, engaged in crime careers and/or incarcerated. By 

updating the 1992 estimates it is assumed that those demographic distributions have not changed 

over time. 

Figure III-4 below illustrates the impact of drug abuse on the loss of potential productivity from 

the legitimate economy. Total economic productivity (gross domestic product) is the product of 

the size of the employed workforce and the value of their productivity, or box 0ABC. When 

drug abuse impairs or diverts workers it effectively reduces the size of the workforce and 

therefore the size of legitimate productivity to 0DEC, which is smaller than box 0ABC. This 

graphic could be modified to reflect some drug abusers staying in the legitimate workforce, but 

at lower productivity jobs. This could take the form of impacts of drugs on functioning and 

productivity or avoiding jobs with drug testing that might have higher responsibilities and wages. 

III-13
Users - Light

Users – DSM-IV

Deaths

Crime Career

Nonusers

Section III. Data and Estimation 

Figure III-4 

Lost Productivity Due to Drug Use, 2002 

Level/Value of Productivity 

Incarcerated 

A z

z z z

z z

D 

C E 

0 

B 

Level/Value of Productivity

Users - Light 

Users – DSM-IV 

Deaths 

Crime Career 

Incarcerated

Nonusers 

A z

z z z

z z

D

C E

0

B

Total Labor Force

Table III-8 displays the cost components of lost productivity and the 1992 and 2002 estimated 

cost for each component. The cost for all of the components of the productivity loss estimate 

increased in this period. The fastest increases were for productivity losses related to drug abuserelated illness and to incarceration. The losses attributed to these components, respectively, 

increased 8.9 and 8.1 percent annually. In contrast, costs due to drug abuse-related deaths 

increased very little, primarily due to the fact that effective treatments are now available for HIV. 

Table III-8 

Productivity Losses, 1992 and 2002 

(in millions of dollars) 

Cost Components 1992 2002 

Annual 

Change 

Premature Death $22,586 $24,646 0.9% 

Drug Abuse-related Illness $14,205 $33,452 8.9% 

Institutionalization/Hospitalization $1,477 $1,996 3.1% 

Productivity Loss of Victims of Crime $2,059 $1,800 -1.3% 

Incarceration $17,907 $39,095 8.1% 

Crime Careers $19,198 $27,576 3.7% 

Total $77,432 $128,566 5.2% 

Source: Analysis by The Lewin Group, 2004. 

In the next sections we address how we update each of these cost components. 

1. Premature Death 

In the most recent year with mortality data (2000) a total of 23,544 deaths have been attributed to 

drug abuse, and costs have been projected at $24.6 billion in 2002. This amounts to an average 

loss of just over $1 million for each death, and reflects the expected lifetime value of 

productivity discounted at 3 percent. The previous estimate was for 1992, with $14.6 billion in 

losses from 24,476 deaths. This cost estimate was projected ahead to 2002 based on the rate of 

5.7% change in 1999-2000. 

III-14
19.3 19.2

Section III. Data and Estimation 

The costs of premature mortality are somewhat different from all other costs included in this 

study. Mortality costs include the value of lost potential employment in the year of the death, as 

well as the discounted value of productivity over the remainder of their actuarially expected 

lifetime. This is similar conceptually to how the valuation of capital equipment or structures is 

done. Consequently, individuals (or equipment) that are early in their productive life have a 

much higher valuation than those that are further along in their productive life. This valuation 

method is termed the “human capital approach” and is the most commonly used valuation 

approach in cost of illness studies for health problems. The human capital approach yields cost 

estimates that can be considered “conservative,” in the sense that they are substantially lower 

than estimates that come from the alternative valuation method called “willingness-to-pay” (or 

WTP; see Miller et al., 1998) 9. 

The estimates in this update are generally comparable to prior estimates. However the national 

system for collecting data about deaths changed from the ICD-9 to the ICD-10 diagnostic coding 

systems10 beginning in 1999. While there is general concordance between the old and new 

editions (see the annual totals from 1992 through 2000, Figure III-5), there is always some 

uncertainty about the implementation of a major reporting system change. Consequently it is 

difficult to know to what extent coding or real factors accounted for the increase in deaths 

attributed to substance abuse from 19,227 in 1998 (using ICD-9) to 23,070 in 1999 (using ICD10) and 23,544 in 2000. 

Figure III-5 

Drug Abuse-Related Deaths, 1992- 2000 

(patients in 000s) 

30.0 24.5 24.2 26.2 26.8 24.5 24.2 26.2

25.0

20.0

15.0

10.0

5.0

0.0

1992 1993 1994 1995 1996 1997 1998 1999 2000 1992 1993 1994 1995 1996 1997 1998 1999 2000

23.323.123.5

19.3 19.2 

Source: Mortality data from National Center for Health Statistics Web Site. 

The costs due to premature death were re-estimated using the following components: 

• The number of deaths by diagnosis, age, and sex; 

• The percent of deaths attributable to drug abuse by diagnosis; and 

• The estimated lost lifetime productivity per death by age and sex. 

9 This alternative method recognizes that communities and families are generally willing to spend much more to treat or 

prevent life threatening illnesses than the benefited person is likely to earn over the remainder of their expected life. WTP 

studies variously put the value of a life/death in the range of $4 to $6 million. 10 The ICD, or International Classification of Diseases is the standard coding system used across the world to record and collect 

mortality data. The ICD is coordinated by the World Health Organization. 

III-15
Section III. Data and Estimation 

This analysis used the same list of diagnoses and attribution factors that was used by Harwood et 

al. (1998) to calculate the baseline 1992 estimate (this can be found in Appendix B).11 The initial 

list of diagnoses and attribution factors was obtained from the National Institute on Drug Abuse 

which developed the list for the Drug Abuse Warning System. The list includes diagnoses 

including abuse of and dependence on psychoactive drugs as well as accidental and intentional 

(i.e., suicide) poisoning by a range of drugs and medications, psychoactive and otherwise. The 

Harwood et al. (1998) study added TB, hepatitis B and C and HIV/AIDS to the list of diagnoses 

attributable to drug abuse and reviewed the literature to arrive at attribution factors.. 

Data on the number of deaths by age and sex were obtained for each cause of death from death 

certificate data compiled and published (via both hard copy and their Web Site) by the National 

Center for Health Statistics for 1992 through 2000. Tables B-9 and B-10 in Appendix B show the 

number of deaths and the attribution factor (the proportion of deaths attributed to drug abuse) for 

each diagnosis used in the calculations. The largest change in drug-related mortality from 1992 

to 2000 was the decline in drug-related AIDS deaths from about 10,700 to 4,600. 

The number of deaths for each age/sex category was multiplied by the estimated value of 

lifetime earnings. The original lifetime earnings table was obtained from Dorothy Rice (personal 

communication), a leading cost of illness researcher. The estimates for the expected value of 

lifetime earnings for 1992 are trended to future years based on the Bureau of Labor Statistics 

series on “Employer Cost for Employee Compensation, Civilian, All Workers, Total 

Compensation, Cost per Hour Worked.” (U.S. Dept. of Labor, Bureau of Labor Statistics, web 

page for National Compensation Survey). The ECEC increased by an average of 3.0 percent 

annually between 1992 and 2002 and 4.1 percent between 1998 and 2002 (Appendix B-4). 

The cost estimates for 2001 and 2002 are projections, because mortality data was not available 

for 2001-2002. The annualized increase between 1999 and 2000 was 5.7 percent. The number 

of deaths increased by 2 percent from 1999-2000 and the remaining 3.7 percent is slightly 

smaller than the increase in the ECEC. 

2. Drug Abuse-related Illness 

Individuals with medical problems may become disabled or otherwise have difficulty in getting 

or functioning in jobs, depending on the nature and severity of the health problem. There is 

evidence that this can happen with individuals with severe drug problems. This report projects 

that such productivity losses were $33.5 billion in 2002, an increase from $14.2 billion in 1992 

and $23.1 billion in 1998. These costs have been projected to increase by 9.7 percent annually 

since 1998. 

Analyses have found that individuals who have used drugs intensively enough to meet clinical 

criteria for drug dependence are less successful in the workforce than their peers, although other 

studies have found that drug users on average do not have adverse workforce outcomes. 

Analysis of the National Longitudinal Alcohol Epidemiology Survey estimated that about 3 

The definition of deaths attributed to drug abuse in this study is broader than the definition used by the CDC in its tabulation 

of "drug-induced" deaths. 

III-16

11 
122 121 133 122 121 115 120 123 116 109 112.5 116 133 122 121 115 120 123 116 109 112.5 116 133 115 120 123 116 109 112.5 116

Section III. Data and Estimation 

percent of the population age 18-64 (about 4.5 million persons) were or had previously been 

dependent on illicit drugs and that these individuals either had lower wages or higher rates of 

unemployment than their peers (Harwood et al., 1998). 

This component was trended forward, adjusting for changes in wage increases using the ECEC 

(see above) and for real increases by the trend in the number of persons that had used cocaine or 

marijuana more than 100 times in their lives. Use on 100+ days increased by 5.2 percent 

annually between 1992 and 1998, according to the NHSDA. This measure has been 

discontinued since 1998, thus for this update the growth trend in this factor was projected 

forward. Note, however, that this measure is only a proxy for the number of persons that are or 

have ever been drug dependent—which the NHSDA and other major surveys did not estimate 

until late in the 1990s. The complexity of the analysis made it necessary to trend rather than reestimate this component. It will be important to reanalyze this in the future, particularly given 

that the forecasting method yields a rate of increase that is materially higher than for most of the 

other cost components. 

3. Institutionalization/Hospitalization 

When drug abusers are in residential or hospital treatment facilities they are unable to work, and 

again this constitutes a loss of potential productivity, estimated at $2.0 billion in 2002. The 2002 

N-SSATS survey of substance abuse treatment facilities estimated that 116,000 patients were in 

a 24 hour care facility on a given day, slightly below the 122,000 enrolled in 1998 (Figure III-6). 

Just over half of these patients were drug (as opposed to alcohol) abusers (see Table III-3, 

above). 

Figure III-6 

Substance Abusers in 24 Hour Specialty Care, 1992- 2002 

(patients in 000s) 

145 

0 

50 

100 

150 

200 145

0

50

100

150

200 145

0

50

100

150

200

122 121 133 145

115 120 123 116 109 112.5 116 

0

50

100

150

200

1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002

Source: Data from the N-SSATS and UFDS, SAMHSA Web Site. 

The 2002 estimate was produced by adjusting the 1992 estimate for the change in the number of 

patients and change in hourly employee compensation (the ECEC, discussed above). This cost 

component increased by about 3 percent annually between 1992 and 2002, less than the increase 

in employee compensation, because enrollment in 24 hour care dropped fractionally. 

4. Victims of Crime 

Crime victims often need to take time away from work and/or household responsibilities to 

recuperate or otherwise get affairs in order after a violent crime or theft. These losses of 

potential productivity are estimated at $1.8 billion in 2002, which is a slight reduction from the 

III-17
8.5 8.0 7.1 6.6 6.0 5.6 5.4

8.5 8.0 7.1 6.6 6.0 5.6 5.4

8.5 8.0 7.1 6.6 6.0 5.6 5.4

Section III. Data and Estimation 

$2.1 billion in such losses in 1992. These costs fell because violent and property crime rates fell 

by more than 50 percent in the past 10 years. 

In the section on health costs (above), it was reported that in 2002 about 382,000 individuals 

suffered drug abuse-attributable violent crimes. Property crimes are much more numerous. This 

study attributes about 5 million property offenses in 2002 as offenses committed in order to pay 

for illicit drugs driven by drug disorders. Thus, this study estimates that over a quarter of the 17.5 

million property offenses in 2002 may be attributable to drug abuse (annual data from the Bureau 

of Justice Statistics National Crime Survey are in Appendix B). Thus, in 2002 a total of 5.4 

million violent plus property victimizations were attributable to drug abuse. The trend in this 

data from 1992 to 2002 is graphed in Figure III-7. 

Figure III-7 

Drug Abuse-Related Victimizations, 1992- 2002 

(in millions) 

9.9 9.9 9.6 9.1 

0.0 

2.0 

4.0 

6.0 

8.0 

10.0 

12.0 9.9 9.9 9.6 9.1

0.0

2.0

4.0

6.0

8.0

10.0

12.0 9.9 9.9 9.6 9.1

0.0

2.0

4.0

6.0

8.0

10.0

12.0 9.9 9.9 9.6 9.1 8.5 8.0 7.1 6.6 6.0 5.6 5.4 

0.0

2.0

4.0

6.0

8.0

10.0

12.0

1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002

Source: Lewin Group analysis of the National Crime Survey from the Bureau of Justice 

Statistics. 

These calculations assume that the same amount of productive activity was lost by type of crime 

as in the estimates for 1992 (on average 4+ days for violent crime and 2 days for property 

crimes) and that victims had the same average demographic profile. The value of each day lost 

was estimated to be $133 in 1992, which was adjusted to $180 per day in 2002 based on the 35 

percent increase in the ECEC from 1992 to 2002. 

5. Incarceration 

Incarceration of offenders for drug-related crimes is the largest cost component of drug abuse at 

$39 billion in 2002, or about 21.7 percent of total costs. These costs rose from $17.9 billion in 

1992 to $30 billion in 2002. Costs increased by 8.1 percent annually between 1992 and 2002 

due in almost equal measures to increases in the number of incarcerated drug offenders and wage 

increases. 

In 2002 there were about 663,000 individuals incarcerated on drug-related offenses: 475,000 for 

violations of drug laws, and another 190,000 for drug-related property or violent crimes. This 

total had increased from 431,000 in 1992 (Figure III-8). 

III-18
431 455 486 519 543

Section III. Data and Estimation 

Figure III-8 

Inmates Incarcerated for Drug-Related Offenses, 1992-2002 

(in 000s) 

574 603 639 649 648 663 

0 

100 

200 

300 

400 

500 

600 

700 574 603 639 649 648 663

0

100

200

300

400

500

600

700 574 603 639 649 648 663

0

100

200

300

400

500

600

700

431 455 486 519 543 574 603 639 649 648 663

0

100

200

300

400

500

600

700

1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002

Source: Analysis of BJS online data on prison and jail inmates. 

Similar to the update factors derived for the lost productivity of crime victims, productivity lost 

due to incarceration is updated based on two factors. The number of individuals under 

incarceration for drug abuse-related crime in each year between 1992 and 2002 is calculated 

based on three components: 

• The number of individuals under incarceration on June 30th of the year; 

• The distribution of individuals under incarceration by primary offense; and 

• The percentage of crimes of each type that are attributable to drug abuse (Table III-8, above). 

The number of individuals under incarceration in local jails is reported by the Bureau of Justice 

Statistics as of June 30th of each year. The number of individuals in state and federal prison was 

reported as of December 31st of each year between 1992 and 2002. For this time period, the 

number of prisoners as of June 30th of a particular year is estimated by averaging the number of 

prisoners from the preceding and subsequent December 31st. Beginning in 1998 the number of 

state and federal prison inmates is reported in each year as of June 30th of the year. 

The offense distribution of jail inmates is only available for 1989 and 1996. The offense 

distribution of state and federal prison inmates is only available for 1991 and 1997. The 

distribution of individuals under incarceration by primary offense has been calculated for the 

remaining years by assuming a constant trend between these years, and assuming no further 

change in the distribution through 2002. Appendix Table B-10 lists the percentage of local jail, 

state prison, and federal prison inmates by primary offense based on this assumption. Appendix 

Table B-11 provides detail for 1992 to 2002 on the number individuals under incarceration by 

offense and the attribution factors for drug abuse. Figure III-7 shows the number of individuals 

incarcerated for drug abuse-related offense between 1992 and 2002. The price change in the cost 

of lost productivity due to drug abuse-related crime is measured via the BLS's ECEC. 

6. Crime Careers 

Studies of addicts of expensive drugs such as heroin and cocaine entering treatment consistently 

find that on the order of a third of them rely on illegal activities, such as drug dealing and 

manufacture, property crime and commercial sex, to buy drugs and make a living. In this report, 

it is projected that crime career costs were $27.6 billion in 2002, an increase from $19.2 billion 

III-19
Section III. Data and Estimation 

in 1992. This may be the most tentative estimate in the study because of the enormous 

challenges in studying and quantifying the population of addicts. 

The 1992 estimate was based on an estimate that there were about 600,000 heavy drug users that 

had dropped out of the legitimate labor market for a crime career, out of a total of about 1.7 

million heavy drug users (Rhodes et al., 1995). The estimate that about 35 percent of heavy drug 

users pursued crime careers came from drug treatment populations—arguably among the most 

dysfunctional drug abusers. 

The estimate of drug abusers engaged in crime careers has been trended forward using two 

different data series because the series from 1992 through 1998 (see Appendix Table B-4 for 

these estimates of “heavy drug users” published in the 2001 National Drug Control Strategy) 

was discontinued. The estimates from 1998 to 2002 trended down by 1.4 percent annually. This 

was based on Rhodes et al., (2001) study of trends in the number of hardcore cocaine and heroin 

users from 1988 to 2000. Note, however, the Rhodes et al., (2001) estimate of 3.6 million 

hardcore cocaine and heroin users is twice as large as the hard core heavy drug user population 

for 1992. This set of estimates has not accordingly doubled the crime careers estimate because it 

is necessary to look more carefully at the degree of involvement in crime of the population 

studied. It seems likely that the most recent Rhodes et al., (2001) estimate uses a less severe 

definition than the earlier studies, and that a smaller fraction of the 3.6 million hard core users 

are engaged in drug-related crime careers. The price change in the cost of lost productivity due 

to drug abuse-related crime has been measured via the BLS's ECEC (Appendix Table B-4). 

C. Cost of Other Effects 

There are two additional types of costs. These are the cost of goods and services used or lost due 

to drug-related crime and of certain administration costs of the social welfare system. The 

government spent over $167 billion on criminal justice services (police, courts, prosecutors, 

corrections) in 2001 (Bureau of Justice Statistics, 2004), increasing by about 6 percent annually 

between 1992-2001. Much of this is used for drug abuse. In this section we present estimates of 

how much of this is attributable to drug abuse, trended forward to 2002. 

The costs associated with the social welfare system are different than might be expected. First, it 

appears that a relatively small fraction of social welfare beneficiaries get benefits because of 

their drug abuse. Second, in social cost studies only the cost of administering the program is 

counted, not the value of the resources distributed. Table III-9 displays the estimates of these 

costs for 1992 and 2002. 

III-20
Section III. Data and Estimation 

Table III-9 

Cost of Other Effects of Drug Abuse, 1992 and 2002 

(in millions of dollars) 

Cost Components 1992 2002 

Annual 

Change 

Cost of Goods and Services Lost to Crime 

Criminal Justice System Public Costs 

State and Local Police Protection $4,503 $9,785 8.1% 

State and Local Legal Adjudication $1,074 $2,336 8.1% 

State and Federal Corrections $7,495 $14,236 6.6% 

Local Corrections $1,333 $2,694 7.3% 

Federal Spending to Reduce Supply $4,126 $6,228 4.2% 

Private Costs 

Private Legal Defense $365 $647 5.9% 

Property Damage for Victims of $193 $206 0.7% 

Crime 

Social Welfare $337 $231 -1.8% 

Total $19,426 $36,413 6.5% 

Source: Analysis by The Lewin Group, 2001. 

The largest rates of increases among the components were for police protection and legal 

adjudication costs. These costs both increased at 8.1 percent annually during this period. These 

increases are due to growth in overall police protection and legal adjudication spending (which 

was about 6.5 percent annually) as well as growth in the proportion of that spending that we 

attribute to drug abuse. The percentage of arrests attributable to drug abuse increased from 12.9 

percent in 1992 to 15.5 percent in 2001. 

Two of the components had very low rates of increase or declined between 1992 and 2002. The 

cost of property damage for victims of crime grew less than 1 percent annually, and social 

welfare program administration costs decreased 3.7 percent annually. These two components 

represented only 1.2 percent of the cost of other effects in 1992. 

1. Loss of Goods and Services Due to Crime 

Crime-related costs include both the resources used by the public to address crime as well as 

private resources. These costs include costs for police protection, legal adjudication, corrections, 

federal funds for supply reduction efforts, and private costs for legal defense and property 

damage. Each of these components of cost is discussed in the following sections. 

a) Criminal Justice System Public Costs 

We address three types of public costs. These are police protection and legal adjudication, 

corrections costs, and the cost of federal efforts to reduce the supply of drugs. 

III-21
Section III. Data and Estimation 

(1) State and Local Police Protection, Legal and Adjudication Costs 

Drug abuse-related police and legal and adjudication costs are estimated to be $9.8 and $2.3 

billion, respectively, in 2002. This is primarily based on the fact that in that year 11.2 percent of 

all arrests in the US were for drug offenses and another 4.3 percent were estimated for drugrelated offenses such as property crime to pay for expensive drug habits. These expenditures 

came out of projected 2002 total state and local police protection and legal adjudication and 

court costs of $63.1 and $30.1 billion, respectively. These estimates exclude federal funding 

provided to state and local criminal justice jurisdictions. Federal funding is accounted for in a 

later section, and with a greater degree of specificity. 

These costs are calculated in a direct fashion: drug-related police costs are equal to the share of 

all arrests that are considered drug abuse-attributable or -related. In 2002 there were a total of 

13.7 million arrests (U.S. Dept of Justice, Federal Bureau of Investigations, 2003), of which 

1.54 million (11.2 percent) were on drug charges, and another 590 thousand (4.3 percent) were 

for offenses deemed attributable to drug abuse. These proportions were applied to spending on 

police and half12 of the legal adjudication/court costs, respectively, to derive the cost estimates. 

The most recent data published for police and court costs were $53.4 and $25.3 billion 

respectively in 1999 (Bureau of Justice Statistics, 1993). These costs project in 2002 to $63.1 

and $30.1 billion respectively, based on trends 1992-1999. When these percentages are applied 

to total police protection and legal adjudication/court costs the resulting costs attributable to 

drug abuse are listed in Table III-10. 

Table III-10 

Police and Legal/Adjudication/Court Costs, 1992-2002 

(spending in billions of dollars, arrests in % of total) 

Data Series 

Actual Projected 

1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 

Police, Total $34.8 $36.7 $38.7 $41.1 $44.7 $47.7 $50.5 $53.4 $56.5 $59.7 $63.1 

Courts, Total $16.6 $16.9 $17.9 $19.2 $20.5 $21.6 $23.6 $25.3 $26.8 $28.4 $30.1 

Drug Offenses 7.6% 8.3% 9.1% 9.8% 9.9% 10.4% 10.7% 10.9% 11.3% 11.6% 11.2% 

Drug-Related 5.4% 5.3% 5.2% 5.1% 4.9% 4.8% 4.5% 4.3% 4.3% 4.3% 4.3% 

Police, Drugs $4.5 $5.0 $5.5 $6.1 $6.6 $7.2 $7.7 $8.1 $8.8 $9.5 $9.8 

Courts, Drugs $1.1 $1.1 $1.3 $1.4 $1.5 $1.6 $1.8 $1.9 $2.1 $2.3 $2.3 

Note: 1992-1999 trend projected to 2002. 

Source: Justice expenditures from Bureau of Justice Statistics; arrest data from Crime in the United States, 

Federal Bureau of Investigation. 

(2) Corrections Costs 

The cost of incarcerating drug offenders in 2002 was $16.9 billion. About 34.3 percent of 

inmates in state and federal prisons and 15.5 percent of those in local jails were incarcerated on 

drug offenses or other drug-related offenses. Total spending on state and federal prisons was 

The court costs are adjusted down by 50 percent in order to account for the cost of civil and other cases that do not involve 

arrests. 

III-22

12 
Section III. Data and Estimation 

projected at $41.5 billion and $17.4 billion, respectively. Again, at the state and local level this 

only includes funding from their own sources, and excludes federal support. 

Estimated costs are produced in a straight forward manner: drug-related corrections costs are 

equal to the share of all prisoners incarcerated on drug offenses or other drug abuse-attributable 

offenses times the total spent on corrections. In 2002 there were 1.35 million inmates in state 

and federal prisons (the one day census), of which 329 thousand (24.4 percent) were for drug 

offenses, and another 134 thousand (9.9 percent) were for drug-related offenses. Annual data on 

prison census, as well as offense charged is collected and reported annually (see Appendix Table 

B-11). In local jails the allocation of costs has been based on the proportion of arrests for drug 

offenses plus drug-related offenses (a total of 15.5 percent in 2002; discussed under police costs, 

above). The arrest distribution is used because jail populations are largely made up of arrestees 

that have not yet been adjudicated, and the assumption is made that the composition of arrestees 

and the jail census is similar. These proportions were applied to spending on state, federal, and 

local corrections to produce the estimates. 

Corrections costs for local jails and state and federal prisons are published periodically by the 

Bureau of Justice Statistics in the Criminal Justice Expenditure and Employment Extract 

Program. There is a substantial lag in the publication of these estimates. The most recent 

published estimate published for state and federal and local corrections costs were $34.1 billion 

and $14.9 billion, respectively in 1999. These costs project to $41.5 billion and $17.4 billion in 

2002 based on the trend from 1992 to 1999. 

(3) Federal Funds to Reduce the Supply of Drugs 

ONDCP reports annually in the National Drug Control Strategy on federal funds spent to reduce 

the supply of drugs. The detailed components of this funding for 1992 through 2002 are 

presented in the Appendix Table B-16. This was reported to be $6.3 billion in 2002. This had 

grown 4.2 percent annually since 1992, from $4.1 billion. Federal supply reduction spending is 

spread across nearly 20 distinct federal agencies, from the Drug Enforcement Agency ($1.6 

billion) and Department of Defense ($1 billion) to the National Park Service, Fish and Wildlife 

Service and Agricultural Research Service (each less than $10 million). The values for 1992 

through 2001 report actual spending. The 2002 funds indicate the appropriated amounts. 

b) Private Costs 

This study updates two types of private costs related to crime. The first is private legal defense 

costs. The second cost is the cost of property lost due to crime. The next two sections, 

respectively, describe how we update these two components. 

(1) Private Legal Defense 

It is estimated that the cost of private legal defense attributable to drug abuse was $647 million in 

2002 (the costs of publicly provided legal aid are included under legal adjudication costs above). 

These costs are projected to have increased by 5.9 percent annually, from $365 million in 1992. 

This estimate is updated based on three factors: 

• total annual revenue for legal services as reported by the Bureau of Economic Analysis; 

III-23 
Section III. Data and Estimation 

• the percentage of lawyers practicing criminal law; and 

• the percentage of arrests attributed to drug abuse. 

The Bureau of Economic Analysis (2003) reports revenue for legal services annually. Annual 

revenue was $176.7 billion in 2001, and increased by 5 percent annually in 1992-2001. This 

projects to $185.6 billion in 2002. The criminal law section constituted 2.25 percent of members 

in 2002 (American Bar Association, 2003), down from 2.6 percent in the mid-1990s. Based on 

this, we assume that the overall percentage of lawyers practicing criminal law is 2.25 percent and 

is constant across 1999-2002. As discussed above, in 2002 drug-related arrests made up 15.5 

percent of the total. Detailed data and calculations for 1992 to 2002 are in Appendix Table B-17. 

(2) Property Damage due to Crime 

This cost was estimated at $206 million in 2002. This estimate does not include the value of 

property that was stolen, but only the value of damaged property. Social cost estimates treat the 

value of stolen property as “transfers” of wealth from the victim to the thief, which are 

considered to be “offsetting” from the societal perspective, although this value is quite important 

in motivating public policy. 

Property damage due to crime is estimated based on the following three components: 

• Number of victimizations by offense; 

• Percentage of victimizations for each offense attributed to drug abuse; and 

• Estimated mean property loss per crime by offense. 

The number of victimizations is reported annually in the National Crime Victimization Survey. 

There were 5.1 million drug-related victimizations in 2002 of types that sometimes involve 

property damage (theft, motor vehicle theft, household burglary, robbery and rape). This 

calculation is based on the attribution factors for crime already introduced. 

Unfortunately, the estimated mean property loss per offense is estimated in the National Crime 

Victimization Survey infrequently. The estimates we have are for 1992, and average about $10 

each crime for burglary and motor vehicle theft, $5 each for larceny and robbery and a dollar for 

rape. These values may seem low because only a very small proportion of offenses involve 

property damage. These have been trended to subsequent years based on the CPI for all services, 

about 28 percent between 1992 and 2002. 

2. Social Welfare 

The best available evidence available (reviewed in Harwood et al., 1998) indicated that drug 

abuse may only account for about 1 percent of social welfare payments and associated 

III-24
Section III. Data and Estimation 

administrative costs—in this study accounting for $281 million in administrative costs in 200213. 

Several rigorous studies (United States General Accounting Office, 1994; Office of the Inspector 

General, 1994) found that drug abuse was rarely used as a formal reason for benefit eligibility. 

This study has trended the 1992 estimate forward based on trends in the value of Food Stamp 

benefits (Bureau of Economic Analysis, 2003). In fact, this estimate represents a decline from 

the $337 million in 1992, and a slight increase from the estimate of $249 million in 1998. 

The primary reason these expenditures are low relative to 1992 is that effective January 1, 1997 

drug abuse-related disorders no longer constituted an acceptable basis for Supplemental Security 

Income eligibility, and this value went to zero. Other changes in social welfare that became 

effective in 1997 significantly reduced payments to beneficiaries. Data on Food Stamp benefits 

came from the Bureau of Economic Analysis National Income and Product Accounts web site. 

Estimates were only available through 2001. The 2002 value assumes the 2000-2001 growth 

rate continued in 2002. 

D. Reliability of Estimates 

The estimates presented in this update should be considered comparable to the initial estimates 

developed in Harwood et al. (1998). We believe that the cost estimates give meaningful relative 

order of magnitude estimates that differentiate the relatively larger and smaller cost impacts of 

drug abuse in the United States. Also, these cost estimates can be used to make meaningful 

comparisons to the costs of other health problems. The costs which have been re-estimated can 

be considered comparable in quality to the original estimates. The costs which have been trended 

are somewhat less rigorous, although we believe that they still provide valid order of magnitude 

estimates of these respective impacts. 

The objective of developing the estimates and of producing updates is to yield a meaningful 

indication of the absolute and relative economic impact of substance abuse. Updated cost 

estimates can be put in context with cost estimates for other health problems (e.g., alcohol abuse, 

heart disease, cancer, diabetes, mental illness) as well as current economic values such as the 

gross domestic product, government spending in total and for particular types of initiatives. The 

updated estimates make it possible to compare the relative magnitude of the cost impacts of the 

respective components. 

In this section, we provide a qualitative assessment of the validity of each component. 

a) Health Care Costs 

Most of these costs are based on data or projections that are more current than that used in the 

1992 cost estimates. However, only several smaller components have direct cost estimates that 

are as current as the year 2002 or even 2000. The largest number of health cost components 

have been trended forward from the most recent year with good data. 

Although the value of social welfare benefits distributed is not counted in the social cost estimate, it can be relevant in policy 

discussions. Based on the prior analysis, it is projected that $2.8 billion in social welfare benefits were paid out due to drug 

abuse in 2002. 

III-25

13 
Section III. Data and Estimation 

Current expenditure data are primarily available for items tracked in the Budget Summary of the 

National Drug Control Strategy. These components include spending on treatment by several 

federal agencies (including the Department of Veterans Affairs), federal funding for treatment 

and prevention research, and grants to states and localities for treatment and prevention services. 

These components totaled $2.4 billion in 2002. 

The two largest health cost components--community-based specialty drug abuse treatment and 

HIV/AIDS treatment costs--had good estimates for 1997 and 1998, respectively. These 

estimates were then trended forward through 2002 based on indicators of changes in incidence, 

utilization and medical care service cost factors, respectively. Accordingly, the 2002 estimates 

for these should be reasonable indicators of the relative impact of these two factors. 

Estimates of the 2002 costs for other medical consequences of drug abuse were derived based on 

application of trend factors. 

b) Lost Productivity 

Several of the components of lost productivity due to drug abuse were re-estimated for recent 

years. These components are productivity losses related to: 

• Premature death (through 2000); 

• Incarceration (through 2002); 

• Victims of crime (through 2002); and 

• Institutionalization for treatment. 

For each of these components there was current or recent data on the incidence or prevalence of 

the problem in question, which is the most important element of the calculation. Accordingly, 

they should be highly reliable. The other main elements of the calculation are the valuation of 

lost productivity per person and the attribution fractions. The productivity factors have been 

trended forward based on the BLS-ECEC. This index is expected to be a good proxy for the 

actual change in the value of the time lost from productive activities. In this update the 

attribution fractions (e.g., what proportion of particular types of crimes are due to drug abuse) 

have mainly been assumed constant, since re-analysis is beyond the scope of this report. 

The cost of premature mortality through 2000 was estimated based on detailed data on the 

number of deaths by diagnosis as well as age and sex, and this value was trended to 2002 based 

on the change between 1999 and 2000. Incarceration losses were estimated based on the number 

of persons incarcerated by type of crime for each respective year. Productivity losses related to 

victims of crime was based on the number of victimizations by type of crime weighted by the 

estimated number of days of productivity lost for each type of crime. Finally, there were data for 

2002 of the number of persons enrolled in 24 hour treatment settings. 

The valuation of lost time for most of these components, (except for premature mortality), 

assumes that the age and gender distribution of persons affected has remained the same. This is 

a reasonable premise, given that the demographic characteristics of populations (e.g., drug 

abusers, arrestees, prisoners, crime victims) change very slowly over time. 

III-26
Section III. Data and Estimation 

Lost productivity due to crime careers and drug abuse-related illness are likely to be less 

accurately measured than the other components of lost productivity, or perhaps any other 

components of cost in this study. This is primarily because these costs are the most difficult to 

measure. The analysis requires data from “hidden populations” about illegal and stigmatized 

behaviors, which is very difficult to develop reliable information about. Despite the data 

challenge, the original estimates were undertaken using the best data available because the 

calculations can give us some indication of the severity and order of magnitude of these 

problems. The trend estimates are confronted with the same challenges. The data series used to 

update or project these estimates are believed to be meaningful indicators of trends in these costs 

over time, however it will be necessary to re-estimate these costs in the future. 

The point estimates and general trends in these components should be used with caution. 

c) Other Effects 

Most of the components of the cost of other effects were re-estimated for their primary 

components and can be considered as reliable as the original estimates. These include the 

following components: 

• Criminal justice system costs (i.e., police protection, legal adjudication, and corrections); 

• Federal spending to reduce the supply of drugs; and 

• Property loss by crime victims. 

Criminal justice system costs are based on current data such as arrests differentiated by charge, 

and offenders under supervision, also differentiated by charge, as well as total criminal justice 

system expenditures. The former types of data are published with little lag. The expenditure data 

come from surveys performed by the Bureau of Justice Statistics through 1999. The trends in 

these costs after 1999 were based on average annual changes over the prior 6 years. 

Estimates of federal spending through 2002 to reduce the supply of drugs were obtained from the 

ONDCP National Drug Control Strategy Budget Summary (various years). 

The real cost of property loss to crime victims is also recalculated using current data on 

victimizations. However, values for property loss per crime have been trended forward from the 

1992 estimates based on the CPI for all services. This estimate, as well as the estimates of health 

care and lost productivity costs of crime victims are somewhat less reliable because the impact 

and costs on victims per crime have not been re-analyzed by BJS since the early 1990s. Thus 

these factors have been trended forward using the CPI. In addition, the National Crime Survey 

has been redesigned since 1992, with uncertain effects on the cost estimates. 

Two components of the cost of other effects are less accurately projected. These are the costs of 

private legal defense and social welfare costs. Data on total annual receipts for legal services 

were obtained through 2001. However, as for the original estimate, the portion of this spending 

that is attributable to drug related crime can only be estimated indirectly. Trends in social welfare 

administration expenses are projected by trends in food stamp expenditures (available through 

2001). These trends may not be highly correlated, given the recent major welfare reforms. 

III-27
Section III. Data and Estimation 

d) Summary 

Overall just over half of the costs estimated for 2002 are likely to be very reliable. The main 

components that should be used with caution are: 

• Productivity losses for drug abuse-related illness; and 

• Productivity losses related to crime careers. 

The general magnitude of the estimates of these components should be accurate. However, the 

point estimates and the trends from year to year for these components should be used with 

caution. 

III-28
Section IV. Estimates for 1992-2002

IV. ESTIMATES FOR 1992-2002

In this section the updated cost estimates derived based on the methodology discussed above are 

presented. The updated cost estimates overall and for health care, productivity, other costs, and 

crime-related costs are displayed, respectively, in Tables IV-1 through IV-5. For the majority of 

the cost components observed data are available to calculate the updates through 2002. There are 

several exceptions, however. Public Criminal Justice System costs for police protection, legal 

adjudication, and corrections are only available through 1999 and costs for community-based 

specialty treatment are only available through 1997. The estimates for these cost categories 

subsequent to the last year of observed data are projections based on the observable trends in the 

cost category. 

A. Overall Costs 

Table IV-1 displays the estimates for 1992 through 2002 overall and for the three major 

categories. 

Table IV-1 

Estimated Societal Cost of Drug Abuse, 1992-2002 

Overall Costs 

(in billions of dollars) 

Cost Category 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 

Health Care Costs 

Productivity Losses 

Other Costs 

$10.7 

$77.4 

$19.4 

$11.8 

$79.3 

$19.8 

$12.1 

$83.9 

$21.3 

$11.9 

$89.2 

$23.8 

$11.5 

$93.4 

$24.7 

$11.8 

$95.5 

$26.7 

$12.5 

$99.3 

$28.4 

$13.0 

$107.3 

$31.1 

$13.5 

$113.4 

$33.8 

$14.6 

$120.0 

$34.6 

$15.8 

$128.6 

$36.4 

Total $107.5 $110.9 $117.3 $124.9 $129.6 $133.9 $140.1 $151.4 $160.7 $169.2 $180.8 

Source: Analysis by The Lewin Group, 2004. 

Between 1992 and 2002 the overall economic cost of drug abuse to society increased at a rate of 

5.9 percent annually. By 2002 the economic cost of drug abuse was $180.8 billion.14 The rate of 

increase in costs was in excess of the combined increase of 3.5 percent for the adult population 

and consumer price index for all services for this period. 

We have re-estimated the 1992 cost of drug abuse originally estimated by Harwood et al. (1998) based on more recent data. 

The revised estimate is $107..5 billion. This estimate is 10 percent higher than the previous Harwood et al. (1998) estimate of 

$97.7 billion. 

IV-1

14 
Section IV. Estimates for 1992-2002

B. Health Care Costs 

Table IV-2 displays the estimates of health care related costs for 1992 through 2002. 15 Overall 

the health care costs related to drug abuse increased 2.9 percent annually over this six-year 

period. This rate of increase is somewhat lower than the increases in the adult population and 

prices for medical services. Between 1992 and 1998, the adult population increased at 1.0 

percent annually and prices for medical services increased 4.1 percent annually for a combined 

5.1 percent annual increase. The rate of growth in health care service costs was moderated by 

projected declines in the cost of caring for HIV/AIDS patients that have resulted from the new 

treatments available to these patients. The cost of HIV/AIDS care is estimated to have declined 

from $3.7 billion in 1992 to $3.4 billion in 2002. 

The two categories of service with the greatest annual increase in spending were treatment 

research and hospital and ambulatory care for the medical consequences of drug abuse which 

increased at a 11.2 and 10.9 percent annually, respectively. One category of service, Department 

of Defense spending on treatment saw a sharp decline between 1992 and 1994, dropping from 

$14 to $5 million, rising to $8 million in 2002. 

The distribution of spending across the components remained relatively constant during this 

period. However, the share of HIV/AIDS spending declined and then rose. In 1992, HIV/AIDS 

spending represented the second largest component of health care spending attributable to drug 

abuse. HIV/AIDS costs were $3.7 billion or 34.2 percent of total health care costs in 1992. In 

1997, the spending level dropped to $2.5 billion representing or 21.2 percent of all spending, and 

then rose again to $3.75 billion, or 23.7 percent of the total. Meanwhile, the cost of communitybased specialty health treatment increased from $3.8 billion to $6.0 billion. Community-based 

specialty represented 35.7 percent of all health care related drug abuse costs in 1992. By 2002, 

this component represented 37.9 percent. 

C. Productivity Losses 

Table IV-3 displays the estimates of productivity losses related to drug abuse for 1992 through 

2002.16 Overall the productivity losses related to drug abuse increased 5.2 percent annually over 

this ten-year period. This rate of increase is somewhat higher than the 4.1 percent annual 

combined increase in the adult population and the BLS ECEC. Between 1992 and 1998, the adult 

population increased 1.1 percent annually and the BLS ECEC increased 3.0 percent annually for 

a combined 4.1 percent annual increase. 

15 We have re-estimated the 1992 cost of drug abuse originally estimated by Harwood et al. (1998) based on more recent data. 

The revised estimate for health care related costs is $10.65 billion. This estimate is 9.0 percent higher than the previous 

Harwood et al. (1998) estimate. The largest source of this increase is a revised estimate of spending on drug abuse by the 

Department of Veterans Affairs (VA). The revised estimate is $671 million relative to the original estimate of $235 million. 

The second component of health care costs that was revised substantially is spending for community-based specialty 

treatment. The original estimate for this component was $2.8 billion. The revised estimate is $3.2 billion. The revised 

estimate is based on a study by Mark et al. (1999) that was more comprehensive than the original study. 16 The 1992 estimates are identical to the Harwood et al. (1998) estimates for the productivity loss cost components. 

IV-2 
Section IV

Table IV-2 

Estimated Societal Cost of Drug Abuse, 1992-2002

Health Care Costs 

(in millions of dollars) 

Cost Components 1992 1993 1994 1995 1996 1997 1998 1999 2000 Community-Based Specialty Treatment $3,770 $4,188 $4,423 $4,569 $4,930 $5,091 $5,369 $5,257 $5,159 Federally-Provided Specialty Treatment 

Department of Defense $14 $9 $5 $5 $5 $5 $5 $7 $7 

Indian Health Services $26 $33 $31 $31 $33 $31 $32 $41 $42 Bureau of Prisons $17 $17 $17 $18 $19 $20 $21 $32 $34 

Department of Veterans Affairs $113 $127 $153 $169 $152 $135 $119 $108 $109 

Support 

Federal Prevention $616 $623 $639 $624 $560 $657 $725 $934 $1,024 State and Local Prevention $89 $93 $91 $101 $81 $85 $118 $141 $143 

Training $49 $51 $53 $55 $57 $59 $60 $62 $65 

Prevention Research $158 $164 $175 $180 $212 $231 $250 $286 $317 Treatment Research $195 $242 $254 $261 $283 $313 $328 $382 $417 Insurance Administration $268 $302 $329 $335 $344 $333 $333 $349 $365 

Medical Consequences 

Hospital and Ambulatory Care Costs $518 $657 $796 $848 $879 $1,000 $1,103 $1,172 $1,239 

Special Disease Costs 

Drug-Exposed Infants $407 $424 $439 $453 $468 $480 $503 $523 $558 

Tuberculosis $30 $29 $29 $28 $27 $25 $22 $20 $20 

HIV/AIDS $3,489 $3,894 $3,694 $3,221 $2,592 $2,484 $2,603 $2,853 $3,138 

Hepatitis B and C $462 $399 $419 $457 $394 $439 $434 $371 $376 

Crime Victim Health Care Costs $92 $142 $148 $139 $136 $132 $127 $118 $111 

Health Insurance Administration $340 $383 $392 $360 $301 $287 $308 $347 $397 

Total $10,652 $11,776 $12,087 $11,854 $11,474 $11,806 $12,461 $13,004 $13,52Source: Analysis by The Lewin Group, 2004. 

IV-3 
Section IV

Table IV-3 

Estimated Societal Cost of Drug Abuse, 1992-2002 

Productivity Losses 

(in millions of dollars) 

Cost Components 1992 1993 1994 1995 1996 1997 1998 1999 2000 Premature Death $22,586 $22,391 $23,094 $24,064 $20,709 $17,755 $17,507 $20,869 $22,059 Drug Abuse Related Illness $14,205 $13,766 $15,845 $17,737 $20,270 $19,916 $23,143 $24,999 $27,427 Institutionalization/ Hospitalization $1,477 $1,502 $1,683 $1,872 $1,533 $1,662 $1,786 $1,735 $1,706 Productivity Loss of Victims 

of Crime $2,059 $2,488 $2,554 $2,377 $2,332 $2,293 $2,065 $1,955 $1,847 

Incarceration $17,907 $19,366 $21,095 $22,983 $24,833 $27,221 $30,133 $32,782 $34,693 Crime Careers $19,198 $19,755 $19,603 $20,172 $23,758 $26,608 $24,627 $24,960 $25,688 Total $77,432 $79,268 $83,874 $89,205 $93,435 $95,455 $99,261 $107,300 $113,42Source: Analysis by The Lewin Group, 2004. 

IV-4 
Section IV. Estimates for 1992-2002

Costs related to premature death increased dramatically between 1992 and 1995 with the 

increase in the number of HIV/AIDS deaths. New treatments lead to a decline in AIDS' deaths 

between 1995 and 1998. For the period as a whole the percentage of the productivity losses 

attributed to premature death declined from 21.0 to 19.2 percent. 

Meanwhile during this period the share of productivity losses related to incarceration increased 

from 25.8 to 30.4 percent. The productivity losses related to incarceration increased at a 8.1 

percent annualized rate during this period. The productivity loss related to incarcerations was 

updated based on the change in the number of incarcerations attributable to drug abuse and the 

BLS ECEC. The number of persons under incarceration in local jails and federal and state 

prisons increased 4.7 percent annually in this period. The estimated number attributable to drug 

abuse increased at 4.7 percent annually. 

In addition to the increase in productivity losses related to incarceration, there was an 8.9 percent 

annual increase in productivity losses due to drug abuse related illness. The productivity loss for 

drug abuse related illness was updated based on two factors. The real change was measured 

based on the change in the number of persons reporting more than 100 days of marijuana or 

cocaine use in their lifetime from 1992 to 1998, after which this data series was discontinued by 

SAMHSA. This measure increased at a 5.1 percent annual rate between 1992 and 1998. The 

share of productivity related losses represented by this component increased from 20.5 to 26.0 

percent. 

D. Cost of Other Effects 

Table IV-4 displays the estimates of losses for other effects related to drug abuse for 1992 

through 2002. Overall the losses related to other effects increased 6.5 percent annually over this 

six-year period. This rate of increase is somewhat higher than the increases in the adult 

population and prices for all services. Between 1992 and 2002, the adult population increased 1.1 

percent annually and prices for all goods and services increased 2.5 percent annually for a 

combined 3.6 percent annual increase. 

Criminal justice system costs increased rapidly in this period. Costs for police protection and 

legal and adjudication both increased at a 8.1 percent annualized rate. These increases are due to 

increases in overall police protection and legal and adjudication spending as well as increases in 

the proportion of that spending that we attribute to drug abuse. Driving the increase in criminal 

justice costs was an increase in the percentage of arrests attributable to drug abuse from 12.9 

percent in 1992 to 15.5 percent in 2002. 

IV-5
Section IV

Table IV-4 

Estimated Societal Cost of Drug Abuse, 1992-2002 

Cost of Other Effects 

(in millions of dollars) 

Cost Component 1992 1993 1994 1995 1996 1997 1998 1999 200Cost of Goods and Services Lost to Crime 

Criminal Justice System and Other Public Costs 

Police Protection $4,503 $4,991 $5,505 $6,093 $6,612 $7,216 $7,713 $8,130 $8,

Legal Adjudication $1,074 $1,149 $1,273 $1,423 $1,516 $1,634 $1,802 $1,926 $2,

State and Federal Corrections $7,495 $7,616 $8,416 $9,806 $10,046 $10,467 $10,959 $11,888 $12

Local Corrections $1,333 $1,390 $1,587 $1,746 $1,679 $1,730 $2,108 $2,269 $2,

Federal 

Supply 

Spending to Reduce $4,126 $3,691 $3,521 $3,697 $3,827 $4,620 $4,827 $5,938 $6,

 Private Costs 

Private Legal Defense $365 $388 $429 $447 $445 $522 $548 $514 $5

Property Damage for Victims of 

Crime $193 $229 $231 $217 $214 $208 $186 $191 $1

Social Welfare $337 $355 $367 $368 $364 $283 $249 $234 $2Total $19,426 $19,809 $21,330 $23,797 $24,703 $26,680 $28,391 $31,090 $33Source: Analysis by The Lewin Group, 2004. 

IV-6 
Section IV. Estimates for 1992-2002

E. Direct and Indirect Costs 

The most basic manner in which cost of illness estimates are presented is to separate direct and 

indirect costs. Direct costs represent impacts where there is a requirement for use of goods or 

services or where property is destroyed. Direct costs include the value of goods and services that 

are paid for, such as health care, as well as services provided by government, as in the case of 

criminal justice services). Indirect costs represent the loss of potential productivity—time that 

would have been put toward legitimate employment or useful purposes in household activities if 

not for the substance abuse disorder. 

In the cost estimates for drug abuse, direct costs constituted about $52.3 billion and indirect costs 

$128.6 billion. In fact, direct costs are the sum of health care costs plus the “other” costs, and 

indirect costs are simply the productivity losses (Table IV-5). 

Table IV-5 

Estimated Societal Cost of Drug Abuse, 1992-2002 

Direct and Indirect Costs 

(in billions of dollars) 

Cost Category 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 

Direct Costs 

Indirect Costs 

$30.1 

$77.4 

$31.6 

$79.3 

$33.4 

$83.9 

$35.7 

$89.2 

$36.2 

$93.4 

$38.4 

$95.5 

$40.8 

$99.3 

$44.1 

$107.3 

$47.3 

$113.4 

$49.2 

$120.0 

$52.2 

$128.6 

Total $107.5 $110.9 $117.3 $124.9 $129.6 $133.9 $140.1 $151.4 $160.7 $169.2 $180.8 

Source: Analysis by The Lewin Group, 2004. 

F. Crime Related Costs 

Many health care, productivity, and other costs listed in the three previous sections are crimerelated costs. In this section, we aggregate all the crime-related costs attributed to drug abuse. 

The costs reported in this section are not in addition to the costs from the prior sections. Instead, 

this represents a “cross-cut” of all of the crime-related costs that were estimated and presented in 

earlier sections. These costs totaled $107.8 billion in 2002, growing from $61.8 billion in 1992. 

Table IV-6 displays the estimates of crime related costs for 1992 through 2002. In 1992, crime 

related costs represented 57.5 percent of the total cost of drug abuse. In 2002 crime costs 

represented a slightly greater share, 59.6 percent of the overall cost of drug abuse. Overall the 

costs related to crime increased 5.7 percent annually over this ten-year period between 1992 and 

2002. This rate of increase is somewhat higher than the increases in the adult population and 

prices for all services. Between 1992 and 2002, the adult population increased 1.1 percent 

annually and consumer prices increased 2.5 percent annually for a combined 3.6 percent annual 

increase. 

IV-7
Section IV

Table IV-6 

Estimated Societal Cost of Drug Abuse, 1992-2002 

Crime Related Costs 

(in millions of dollars) 

Cost Component 1992 1993 1994 1995 1996 1997 1998 1999 2000 Health Care Costs 

Crime Victim Health Care Costs $92 $142 $148 $139 $136 $132 $127 $118 $11

Productivity Losses 

Homicide Victims $3,459 $3,348 $3,237 $3,126 $3,014 $2,903 $2,792 $2,681 $2,7

 Productivity

Crime 

Loss of Victims of $2,059 $2,488 $2,554 $2,377 $2,332 $2,293 $2,065 $1,955 $1,8

Incarceration $17,907 $19,366 $21,095 $22,983 $24,833 $27,221 $30,133 $32,782 $34,6Crime Careers $19,198 $19,755 $19,603 $20,172 $23,758 $26,608 $24,627 $24,960 $25,6

Cost of Other Effects 

Criminal Justice System and Other Public Costs 

Police Protection $4,503 $4,991 $5,505 $6,093 $6,612 $7,216 $7,713 $8,130 $8,7Legal Adjudication $1,074 $1,149 $1,273 $1,423 $1,516 $1,634 $1,802 $1,926 $2,0

State and Federal Corrections $7,495 $7,616 $8,416 $9,806 $10,046 $10,467 $10,959 $11,888 $12,5

Local Corrections $1,333 $1,390 $1,587 $1,746 $1,679 $1,730 $2,108 $2,269 $2,4

Federal Spending to Reduce 

Supply $4,126 $3,691 $3,521 $3,697 $3,827 $4,620 $4,827 $5,938 $6,9

 Private Costs 

Private Legal Defense $365 $388 $429 $447 $445 $522 $548 $514 $57

Property Damage for Victims of 

Crime $193 $229 $231 $217 $214 $208 $186 $191 $19

Total $61,804 $64,553 $67,599 $72,226 $78,412 $85,554 $87,886 $93,351 $98,6Source: Analysis by The Lewin Group, 2004. 

IV-8 
Section V. Further Comparisons and Analysis 

V. FURTHER COMPARISONS AND ANALYSES 

Ultimately, the question arises as to the meaning of the estimates that have been developed and 

presented in this report. The meaning is both direct and limited at the same time. Economic cost 

analysis indicates that drug abuse is one of the major health problems in the United States. 

However, the results of this particular analysis do not provide guidance on how to address the 

drug problem. Furthermore, the estimates count both the costs of the efforts taken to reduce drug 

abuse (prevention, treatment and drug law enforcement) and the costs of the consequences (drug 

abuse-related death, illness and crime). Cost estimates can and should motivate the search to 

design effective and efficient strategies to address drug abuse. But cost benefit and cost 

effectiveness studies are needed to learn how we may more effectively and efficiently do this. 

A. Drug Abuse versus Other Health Problems 

Table V-1 compares the economic cost estimates for drug abuse with the estimates for other 

major health problems in the United States. These values have been assembled by the Office of 

Science Policy and Planning in the National Institute of Health, (published at the NIH website; 

http://ospp.od.nih.gov/ecostudies/COIreportweb.htm). Values are reported for the largest health 

disorders for which estimates have been developed using generally comparable methodologies. 

Costs are in dollars of the year for which the estimate was developed, thus there is some 

imprecision in comparisons due to the effects of inflation and population growth. However, even 

given these differences the primary point holds. 

Table V-1 

Comparison of Costs of Major Health Problems in US 

(costs in billions of estimate year dollars) 

Health 

Problem Total Direct Indirect 

Year of 

Estimate 

Drug abuse $180 $52 $129 2002 

Alcohol abuse $185 $50 $134 1998 

Alzheimer’s $100 $15 $85 1997 

Arthritis $65 $15 $50 1992 

Cancer $96 $27 $69 1990 

Diabetes $98 $44 $54 1997 

Eye diseases $38 $22 $16 1991 

Heart disease $183 $102 $81 1999 

HIV/AIDS $29 $13 $16 1999 

Homicide $34 $10 $23 1989 

Kidney $40 $26 $14 1985 

Mental illness $161 $67 $94 1992 

Obesity $99 $52 $46 1995 

Pain, chronic $79 $45 $34 1986 

Smoking $138 $80 $58 1995 

Stroke $43 $28 $15 1998 

Source: National Institute of Health, Office of Policy and Analysis 

website (http://ospp.od.nih.gov/ecostudies/COIreportweb.htm). 

V-1
Section V. Further Comparisons and Analysis 

Comparison of cost of illness estimates indicate that drug abuse clearly ranks among the leading 

health problems in the nation in terms of annual economic impact. This holds whether the 

comparison is for total cost, direct costs (current health care and other expenditures) or indirect 

costs (loss of potential productivity from illness, disability and death). 

This study and prior estimates indicate that drug abuse is one of the most costly health problems 

in the United States. The estimates have followed guidelines developed by the U.S. Public 

Health Service for cost of illness studies. These guidelines have been applied in earlier studies of 

drug abuse in the U.S. (e.g., for 1992, 1985, 1980, and 1977), and to cost of illness studies for 

virtually all of the major health problems. Accordingly, these estimates can be compared 

meaningfully to estimates for e.g., cancer, stroke, heart disease, diabetes, alcohol abuse and 

mental illness. The National Institute of Health collects and reports on cost estimates for the 

major health problems in the nation. 

Based on estimates from the 1990s employing generally comparable methodologies, drug abuse 

($124.9 billion in 1995) is comparable to heart disease ($183.1 billion in 1999; American Heart 

Association, 1998), cancer ($96.1 billion in 1990; Brown and Fintor, 1995), diabetes ($98.2 

billion in 1997; American Diabetes Association, 1998), alzheimer’s disease ($100 billion in 

1997; NIH extrapolation based on Huang et al., 1988), stroke ($43.3 billion in 1998; NCHS and 

NHLBI), smoking ($138 billion in 1995; Rice, 1999), obesity ($99.2 billion in 1995; Wolf and 

Colditz, 1998), alcohol abuse ($184.6 billion in 1998; Harwood, 2000) and mental illness 

($160.8 billion in 1992; Harwood et al., 2000). Even if we only compare the health-related costs 

of drug abuse--$51 billion in 1995—it still must be considered one of the more costly health 

problems in the nation. 

The data provide a basis to argue that drug abuse is among the top five health problems in terms 

of economic impacts—together with mental illness, heart disease, alcohol abuse and smoking. 

However, it is probably more realistic to consider these cost estimates to be general order of 

magnitude indicators. It is reasonable to argue that “drug abuse is among the most expensive 

health problems in the nation.” There differences across the estimates in the years they were 

estimated and other aspects argue against over-interpretation of the rank ordering of disorders or 

specific differences in amounts. While the estimates are probably in aggregate comparable, there 

are other factors to consider such as inclusion and omission of some smaller cost components, 

overlaps in some of the cost estimates (such as smoking with heart disease, cancer, lung disease 

and stroke), quality of life and other “intangible” impacts, and greater concern by the public 

about some disorders than others. 

For example, out of the $181 billion in costs of drug abuse about $108 billion is related to 

impacts of drug-related crime. The involvement of crime in drug addiction is qualitatively 

different from the costs of most other health disorders, although there are also non-negligible 

crime-related components for alcohol abuse and mental illness as well. This distinction is 

pointed out because it might be argued that the crime costs are more serious -- or less serious -- 

than the components that are more like the costs of heart disease, cancer, diabetes and other 

disorders that are “mainstream” health problems. Even when the crime related costs are taken 

out of the comparison among “health impacts” the remaining costs of about $53 billion place 

drug abuse roughly comparable in economic impact to stroke, eye disease, HIV/AIDS, and 

V-2
Section V. Further Comparisons and Analysis 

homicide. It is also reasonable that many policy makers and citizens would weigh the crimerelated impacts of drug abuse more heavily than the direct dollar calculation indicates. 

B. Costs in Other Nations 

Another issue that can be examined is the relative severity of drug abuse in the United States 

relative to other nations. This can be very difficult to examine using standard epidemiological 

data because respective nations have quite different patterns of drug problems, and there are 

different mixes of drug problems. Economic cost studies provide an approach that essentially 

“weights” the various types of impacts using economic measures, which can be summed in order 

to assess the total impact. 

Unfortunately, there have been very few such studies across the world. The several that have 

been performed have been in higher income nations including the United States, Canada, 

Australia, the United Kingdom, and Germany. To date there have been no rigorous studies 

completed for lower income nations, although an initiative in currently underway to study the 

economic impact of drug abuse in Central and South America. 

The United States has the most severe drug abuse problem among the several nations for which 

economic cost studies have been completed to date. The cost estimate of $181 billion in 2002 

(about $650 per capita) is roughly equivalent to 1.7 percent of gross domestic product (GDP; the 

most widely used measure of a nation’s market-derived economic activity). 

The next most severely affected nation is the United Kingdom (Godfrey et al., 2002), with 

estimated total costs of drug abuse at about 12 billion pounds, or 300 pounds per capita (about 

$18 billion US, or $450 per capita US). The loss was equivalent to about 1.8 percent of GDP, 

which is slightly more than the ratio in the US. In several other nations the estimated losses have 

been smaller proportions of GDP: Canada 0.2 percent (Single et al., 1998); Australia 1.0 percent 

(Collins and Lapsley, 2002); Germany 0.4 percent (Hartwig and Pies, 1996; as cited in United 

Nations on Drug Control report Economic and Social Consequences of Drug Abuse and Illicit 

Trafficking). 

In the near future there may be a larger research data base to draw upon in order to compare the 

impact of drug abuse across the nations of the world. 

C. Real Costs 1992-2002 

With the completion of this set of estimates and updates there now exists a complete series of 

values from 1992 through 2002. The base 1992 value is fundamentally as estimated in Harwood 

et al., (1998), with several minor adjustments for more current data. Trends in the current dollar 

estimates for the major components have been presented in previous sections of this report. The 

values of the detailed components are all presented in Appendix C. The current values shown in 

earlier figures have displayed a fairly consistent upward trend. Most financial time series have 

this pattern because of the impact of inflationary price increases over time. 

In this section we net out the effect of inflation using the consumer price index for urban 

consumers in order to examine the “real” increase in the cost of drug abuse over the period 1992-

V-3
Total Productivity Other Health

Section V. Further Comparisons and Analysis 

2002. Real trends for total costs and the main components are presented in Figure V-1. The 

values are presented in 2002 dollars. Cost, billions of 2002 $

Figure V-1 

Trends in Real Economic Costs of Drug Abuse 

Total and Major Components, 1992-2002 

(costs in billions of 2002 dollars) 

$200

$175

$150

$125

$100

$75

$50

$25

$0

1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002

Total Productivity Other Health 

All adjustments have been made with the consumer price index for urban consumers for all items 

(the CPI-U). This measure increased by 2.5 percent annually between 1992 and 2002. The 

values in Figure V-1 have netted out the effect of this factor, thus rates of change greater than 

“0” represent real increases in the loss or burden associated with drug abuse. 

In 2002 total costs of drug abuse were $180.8 billion. This was an increase from $137.9 billion 

in 1992 (again, in real or constant 2002 dollars). Thus, total costs increased 30.2 percent over 

the ten year period, for a 2.8 percent annual rate of change. This represents real growth in the 

cost of drug abuse over the time period. However, over one third of this 2.8 percent annual 

growth was probably due to annual population growth of 1 percent. Thus it appears that between 

1992 and 2002 the cost of drug abuse was increasing somewhat more (about 1.8 percent 

annually) than would be expected based on general inflation and population growth. 

There are differences between the major components that are worth noting. For example, 

although the CPI-U has been used to perform the adjustments, there have been somewhat 

different rates of price increases across the economy. For example, the CPI for medical services 

actually increased by about 4.2 percent annually between 1992 and 2002 (about 1.7 percent 

greater than the CPI-U), and employee compensation (wages and salaries plus benefits) 

increased by about 3.0 percent (0.5 percent annually greater than CPI-U). Thus, the finding that 

health-related costs increased by 1.5 percent annually after adjusting for CPI-U indicates that 

health-related costs actually had no real growth over this time period. Also, since population 

V-4
Section V. Further Comparisons and Analysis 

grew by 1 percent annually, this indicates that per capita real health-related costs probably 

declined by about 1 percent annually over this time period. 

CPI-adjusted productivity losses grew by 2.6 percent annually. Because employee compensation 

increased by about 0.5 percent annually more than CPI-U, this means that the growth in excess 

of compensation growth was about 2.1 percent, and of this about 1.0 percent was related to 

population growth. Thus there was an annual increase in “real” per capita productivity losses of 

about 1.1 percent. 

The greatest growth was in “other” costs consisting primarily of criminal justice system services. 

These costs grew 3.9 percent annually after adjustment for CPI-U. Because the CPI-U is 

probably the best indicator of inflation for these services, it would appear that, after accounting 

for 1 percent population growth, about 2.9 percent annual growth represented real per capita 

increases in drug-related criminal justice system costs. 

A final comparison can also be made to judge the growth of the economic costs of drug abuse: 

with gross domestic product. Costs of drug abuse grew by 2.8 percent after inflation adjustment, 

or 5.3 percent in nominal dollars. Over the 1992-2002 period GDP grew by 3.2 percent annually 

when adjusted for inflation, or 5.2 percent in nominal (unadjusted) dollars. These comparisons 

suggest that the cost of drug abuse was a fairly constant proportion of the national economy— 

that as the GDP grew, drug abuse costs were growing roughly in parallel. By this criterion the 

real burden of drug abuse was certainly growing, just as total and per capita GDP was growing. 

D. Discussion 

The estimates produced for this study have followed guidelines developed by the U.S. Public 

Health Service for cost of illness studies. These guidelines have been applied in earlier studies of 

drug abuse in the U.S. (e.g., for 1998, 1992, 1985, 1980, and 1977), and to cost of illness studies 

for virtually all of the major medical problems. Accordingly, these estimates can be compared 

meaningfully to estimates for e.g., cancer, stroke, heart disease, diabetes, alcohol abuse and 

mental illness. The National Institute of Health compiles and publishes these estimates. 

Based on these guidelines we estimate that the societal cost of drug abuse in the United States 

was $180.8 billion in 2002. The majority of these costs are productivity losses—losses of 

potential market and household production--related to incarceration, crime careers, drug abuserelated illness, and premature death. The share of the societal cost related to the three major 

components of costs and that related to crime remained relatively constant between 1992 and 

2002. 

The overall cost of drug abuse rose 5.3 percent annually between 1992 and 2002 increasing from 

$107.517 to $180.8 billion. This increase is greater than the combined increase in the adult 

population and consumer prices of 3.5 percent annual growth during that period. The primary 

This estimate is a revision of the original estimate of $97.7 billion. Most ($8 billion) of the increase comes from 

use of a lower discount rate for calculating mortality costs, in keeping with recent cost of illness studies and 

Office of Management and Budget guidance on health cost analyses, and the remainder is from more current 

data for 1992 exceeding values which had been projects from earlier years. 

V-5

17 
Section V. Further Comparisons and Analysis 

sources of this increase are increases in productivity losses related to incarceration and drug 

abuse-related illness. 

The estimates presented in this report and prior related analyses do have recognized limitations 

(see Reuter, 1999; Kleiman, 1999; Kopp, 1999; and Cohen, 1999): 

• The reliability of the underlying data and methods; and 

• Limited scope of the study. 

The calculations for this study yield apparently very precise values. However, they should be 

treated as approximations, just as should be done for virtually any quantitative analysis. This is 

particularly true for the component values that have been estimated by trending. This method is 

less reliable than re-estimation, because the estimates are based on data that are not as closely 

related to the actual component value. 

Another consideration is that, all the estimates for this study are based on data from secondary 

sources. Generally, the data from secondary sources can have limitations because it was not 

designed with exactly the purposes of this study in mind. 

Third, the estimates for many if not most component values rely on attribution fractions that are 

difficult to estimate with precision. It is very difficult to discern and measure the role of drugs in 

violent and acquisitive crime, just as it is very difficult to measure the nature and size of the 

illicit drug trade. The data used to develop attribution fractions was not revisited for this study, 

but were adopted from Harwood et al (1998). The scientific basis and ability to measure and 

understand such relationships is constantly improving. Future cost of illness studies will need to 

re-examine the scientific literature on crime and drugs as well as health and drugs. 

Finally, for many components data were not available through 2002. In these cases, the values of 

the components from the last available published data were projected. 

The scope of this study is limited. It has followed guidelines developed by the U.S. Public Health 

Service for cost of illness studies. There are other approaches that could have been used to 

develop estimates of the cost of drug abuse, such as “willingness to pay” (Miller et al., 1998) or 

the “demographic” approach (Collins and Lapsey, 2002). These methods examine different 

facets of the economic impacts of drug abuse. They are able to incorporate factors costs such as 

the costs of pain, suffering, anxiety, and impacts on families and children and other intangible 

impacts of drug abuse that are not included in this study. In applying the estimates from this or 

other cost of illness studies, analysts must consider which approach is most appropriate for the 

particular issue they are assessing. 

V-6
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R-5
APPENDIX A: 

ACRONYMS AND ABBREVIATIONS 

A-1
Acronyms and Abbreviations 

BEA – Bureau of Economic Analysis, U.S. Department of Commerce 

BJS – Bureau of Justice Statistics 

BLS – Bureau of Labor Statistics 

CB – Census Bureau 

CDC – Center for Disease Control and Prevention 

CJEE – Bureau of Justice Statistics Criminal Justice Expenditures and Employment Program 

CMS – Centers for Medicare and Medicaid Services 

CPI-M – Consumer Price Index for Medical Services 

ECEC – Employer Cost for Employee Compensation 

HCFA – Health Care Financing Administration 

HCI – Hourly Compensation Index 

IVDU – Intravenous Drug Use 

NASADAD – National Association of State Alcohol and Drug Abuse Directors 

NCHS – National Center for Health Statistics 

NDCS – National Drug Control Strategy 

NHSDA – National Hospital Discharge Survey 

NHSDA – National Household Survey of Drug Abuse 

NSDUH – National Survey on Drug Use and Health 

N-SSATS – National Survey of Substance Abuse Treatment 

ONDCP – Office of National Drug Control Policy 

SAMHSA – Substance Abuse and Mental Health Services Administration 

SB – Sourcebook of Criminal Justice Statistics 

SSA – Social Security Administration 

SSI – Supplemental Security Income 

A-2
TEDS – Treatment Episode Data Set 

UFDS – Uniform Facility Data Set 

VA – Department of Veterans Affairs 

A-3
APPENDIX B: 

SUPPLEMENTAL TABLES FOR 

CALCULATION OF COST ESTIMATES 

B-1
Appendix B: Summary of Data Used 

Summary of Cost Components and Data Sources 

Tables B-1 through B-3 display the 32 base cost components and the data sources used to update 

each component for health care costs, lost productivity, and other effects, respectively. 

Table B-1 summarizes the methodology used to update the health care cost components. The 

values for most of the components were estimated by applying update factors for real and price 

change in the costs. 

Table B-2 displays the methodology used to update the productivity loss components. The values 

for three of these cost components were re-estimated at least for several years. These 

components are premature death, lost productivity for victims of crime, and incarceration. The 

values for the remaining components were estimated by applying update factors for real and 

price change in the costs. 

Table B-3 summarizes the methodology used to update the cost of other effects components. The 

values for all of the cost components except social welfare spending were re-estimated. The 

values for social welfare were estimated by applying update factors for real and price change in 

the costs. 

B-2
Section IV. Updating the Econ

Table B-1 

Base Cost Components and the Data Sources for the Updates 

Health Care Costs 

Cost Component Community-Based Specialty Treatment 

Federally-Funded Specialty Treatment 

Department of Defense 

Veterans Affairs Bureau of Prisons Indian Health Services 

Support 

Prevention (Federal) 

Prevention (State and Local) 

Training Research Insurance Administration 

Medical Consequences 

Hospital and Ambulatory Care Costs 

Special Disease Costs 

Drug-Exposed Infants 

Tuberculosis HIV/AIDS Hepatitis B and C 

Violent Crime Health Insurance Administration 

Real Change Cost/Price 

Mark et al. (1999) National Spending Estimates for Mental Health, Alcohol, and Drug Abuse T

ONDCP National Drug Strategy Budget Summary (1992-2000) 

ONDCP National Drug Strategy Budget Summary (1992-2000) 

ONDCP National Drug Strategy Budget Summary (1992-2000) 

ONDCP National Drug Strategy Budget Summary (1992-2000) 

ONDCP National Drug Strategy Budget Summary (1992-2000) 

National Association Of State Alcohol and Drug Abuse Directors (1999

Growth in Population 18 or Older (U.S. Department of 

Commerce, U.S. Census Bureau [Census]) 

Consumer Price Index-All Services 

Bureau of Labor Sta

ONDCP National Drug Strategy Budget Summary (1992-2000) 

National Health Expenditures, Health Care Financing Administration 

Number of Individuals 18 or Older Reporting Any Lifetime 

History of Drug Abuse (National Household Survey of Drug 

Abuse [NHSDA]) Consumer Price Index - Me

Number of Births (National Center for Health Statistics 

[NCHS]) Consumer Price Index - Me

Number of Tuberculosis Cases Related to Drug Use (Center 

for Disease Control [CDC]) Consumer Price Index - Me

Hellinger and Fleishman (2000) "Estimating the National Cost of Treating People with HIV Dise

Provider Data." 

Number of Hepatitis Cases Related to Drug Use (CDC) Consumer Price Index - Me

Number of Victimizations (U.S. Department of Justice, Bureau 

of Justice Statistics [BJS]) Consumer Price Index - Me

National Health Expenditures, Health Care Financing Administration 

B-3
Appendix B. Supplemental Tables for Calculation of Cost Estimates 

Table B-2 

Base Cost Components and the Data Sources for the Updates 

Productivity Costs 

Cost Component Real Change Cost/Price Index 

Premature Death Number of Deaths Related to Drug Use, weighted 

by age and gender (CDC) 

Employer Cost for Employee 

Compensation (ECEC), Civilian, 

All Workers, Total 

Compensation, Cost per Hour 

Worked (BLS) 

Drug Abuse- Persons Reporting More Than 100 Days of ECEC (BLS) 

related Illness Marijuana or Cocaine in their Lifetime (NHSDA) 

1992-1998 trend projected to 2002 

Institutionalizatio Clients Using Inpatient Hospital or Residential ECEC (BLS) 

n/ Hospitalization Treatment (National Survey of Substance Abuse 

Treatment Services/Uniform Facilities Data Set) 

Lost Productivity 

of Victims of 

Crime 

Victims of Crimes Attributed to Drug Abuse 

Weighted by the Mean Hours Lost per Offense 

(BJS) 

ECEC (BLS) 

Incarceration Number of Individuals Incarcerated for Offenses ECEC (BLS) 

Attributed to Drug Abuse (BJS) 

Crime Careers Change in Number of Chronic Hardcore Cocaine ECEC (BLS) 

and Heroin Users (Rhodes et al., 2001) 

B-4
Appendix B. Supplemental Tables for Calculation of Cost Estimates 

Table B-3 

Base Cost Components and the Data Sources for the Updates 

Cost of Other Effects 

Cost Component Real Change Cost/Price Index 

Value of Goods and Services Lost to Crime 

Criminal Justice System and Other Public 

Costs 

State and Local Police Protection State and Local Police Protection Costs allocated by the 

Percent of Arrests Attributable to Drug Abuse (BJS) 

State and Local Legal/Adjudication State and Local Legal Adjudication Costs allocated by the 

Percent of Arrests Attributable to Drug Abuse (BJS) 

State and Federal Corrections State and Federal Corrections Costs allocated by the Percent 

of Incarcerations Attributable to Drug Abuse (BJS) 

Local Corrections Local Corrections Costs allocated by the Percent of Arrests 

Attributable to Drug Abuse (BJS) 

Federal Funding to Reduce the ONDCP National Drug Control Strategy Budget Summary 

Supply of Drugs 

Private Costs 

Private Legal Defense Proportion of Arrest that are Total Revenue for Legal 

Drug Related (BJS), the Percent Services (Statistical Abstract 

of the American Bar Association 

in the Criminal Justice Section 

of U.S.) 

Property Damage for Victims of Property Offenses Attributed to Consumer Price Index-All 

Crime Drug Abuse Weighted by the Services (BLS) 

Average Loss per Offense (BJS) 

Social Welfare SSI=0; Balance Trended by Food Stamps (Department of 

Agriculture) 

B-5
Appendix B. Supplemental Tables for Ca

Table B-4 

Cost Adjustment Factors, 1992-2002 

Data Series (Source) 1992 1993 1994 1995 1996 1997 1998 1999 200Consumer Price Index – All Services (BLS) 140.3 144.5 148.2 152.4 156.9 160.5 163 166.6 172Consumer Price Index – Medical Services (BLS) 190.1 198.8 207.4 216.1 224.8 233.4 242.1 250.6 260Personal Health Care Spending (CMS) ($ in billions) $720 $776 $817 $866 $911 $959 $1010 $1065 $11Health Insurance Admin Costs (CMS) ($ in billions) $49 $53 $58 $61 $61 $61 $65 $73 $8Employer Cost for Employee Compensation (ECEC), Civilian, All Workers, Total Compensation, Cost per Hour Worked (BLS) 

$17.27 $17.88 $18.30 $18.21 $18.68 $19.22 $19.76 $20.29 $21.1

US Resident Population 18+ years (CB) 188.9 190.7 192.4 194.2 196.1 198.2 200.3 202.5 209US Resident Population in millions (CB) 256.5 259.9 263.1 266.3 269.4 272.6 275.9 279 282Births in the US in millions (NCHS) 4.065 4.000 3.953 3.900 3.891 3.881 3.942 3.959 4.0Chronic Hardcore Drug Users in millions (ONDCP) 4.718 4.741 4.610 4.646 5.303 5.726 5.031 n.e. n.Food Stamp Expenditures (BEA) ($ in billions) $22.5 $23.7 $24.5 $24.6 $24.3 $21.5 $16.5 $15.5 $14

Sources: Referenced in the section of the report where each data series is introduced and applied. 

B-6 
Appendix B. Supplemental Tables for Ca

Table B-5 

Number of Individuals with 100 or More Days 

of Marijuana or Cocaine Use in Their Lifetime, 1992-1998 

Age Group 1992 1993 1994 1995 1996 1997 1998 

Population (in thousands) 

18-25 26-34 35 + 

27,96438,215

118,850 

 28,327 37,194

120,453 

 28,027 36,588

123,023 

 27,820 35,975

125,529 

 27,796 35,474

128,265 

 27,691 35,246

130,722 

 27,96 34,60

133,13

Percentages of persons reporting more than 100 days of cocaine use in their lifetime 18-25 26-34 35 + 

1.9% 4.5% 

1.1% 

1.5% 4.0% 

1.2% 

1.2% 4.2% 

1.5% 

2.0% 4.2% 1.7% 

1.6% 4.7% 2.1% 

1.3% 3.3% 2.0% 

1.5% 3.1% 2.1% 

Percentages of persons reporting more than 100 days of marijuana use in their lifetime 18-25 26-34 35 + 

10.4% 

16.9% 

5.3% 

8.6% 

15.2% 

5.6% 

9.7% 

16.3% 

6.6% 

10.4% 

14.9% 

8.0% 

13.5% 

16.1% 

8.3% 

12.2% 

13.0% 

8.8% 

14.9% 

13.1% 

9.8% 

Sum of the percentage of persons reporting 100 or more days of cocaine or marijuana use in their lifetime 18-25 26-34 35 + 

12.3% 21.4% 

6.4% 

10.1% 19.2% 

6.8% 

10.9% 20.5% 

8.1% 

12.4% 19.1% 

9.7% 

15.1% 20.8% 

10.4% 

13.5% 16.3% 

10.8% 

16.4% 16.2% 

11.9% 

Estimated number of persons using 100 or more days of cocaine or marijuana in their lifetime 18-25 26-34 35 + 

3,440 8,178 

7,606 

2,861 7,141 

8,191 

3,055 7,501 

9,965 

3,450 6,871 

12,176

4,197 7,379 

 13,340

3,738 5,745 

 14,118

4,585,60

 15,84

Total 19,224 18,193 20,520 22,497 24,915 23,601 26,03

Source: Substance Abuse and Mental Health Services Administration (1996-1998) National Household Survey of Drug Abuse. 

Note: The questionnaire items used to construct this data series were discontinued after the 1998 surve

B-7
Appendix B. Supplemental Tables for Ca

Table B-6 

Drug Abuse-Related Admissions to Short Stay Hospitals 

by Primary/Secondary Drug Related Diagnosis 1992-2002 

(annual admissions in thousands) 

Primary Diagnosis 1992 1993 1994 1995 1996 1997 1998 1999  Drug Psychoses 19 21 28 34 59 47 58 6 Dependence 106 126 130 131 115 116 96 8

Abuse 17 20 23 23 24 24 24 2

Subtotal 142 167 181 188 198 187 178 17

Non-Primary Diagnosis Drug Psychoses 47 61 69 65 69 75 98 8

Dependence 231 252 272 279 283 321 345 35

Abuse 229 302 373 386 376 401 405 43

Subtotal 507 615 714 730 728 797 848 87

Drug psychoses: ICD-9 diagnosis 292.Drug dependence: ICD-9 diagnosis 304. Drug abuse: ICD-9 diagnosis 305.1-.9. Source: National Center for Health Statistics, Centers for Disease Control and Prevention. On-line tabulations of statistic

the National Hospital Discharge Survey, annual surveys for 1992-2000. 

B-8
Appendix B. Supplemental Tables for Ca

Table B-7 

Number of Persons Living with AIDS 

with Drug Related Exposure 1992-2002 

Exposure Category 1992 1993 1994 1995 1996 1997 1998 1999 2000 Male Adult - Injecting Drug Use 26,176 34,465 40,153 44,589 49,074 54,249 56,450 60,075 63,75Male Adult - Have Sex with Men and Injecting Drug Use 

11,325 13,645 14,635 15,369 16,034 17,203 19,265 20,107 20,75

Female Adult - Injecting Drug Use 10,245 13,793 16,175 18,294 20,285 22,586 24,307 25,737 27,39Total Adults Living with AIDS Related to Drug Use 47,746 61,903 70,963 78,252 85,393 94,038 100,022 105,919 111,90Total Children Age <13 Living with AIDS 2,654 3,039 3,267 3,404 3,475 3,569 3,731 3,784 3,82Estimated Percentage of Adult Exposure Related to Drug Use 

34.7% 36.1% 36.6% 36.7% 36.1% 35.5% 35.1% 34.4% 33.8

Estimated Number of Children Living with AIDS Related to Drug Use* 

922 1,098 1,194 1,248 1,254 1,268 1,310 1,303 1,29

Total Persons Living with AIDS Attributable to Drug Use 

48,668 63,001 72,157 79,500 86,647 95,306 101,332 107,222 113,19

*Estimated Based on the percentage of adults whose exposure was drug related. Source: Centers for Disease Control and Prevention. (1993-2002) HIV/AIDS Surveillance Report. 

B-9
Appendix B. Supplemental Tables for Ca

Table B-8 

Number of Crime Victims 

and the Percentage of Victimizations Attributable to Drug Abuse, 1992-2002 

(victimizations in thousands) 

Crime 

Percentage 

Attributable 

to Drug 

Abuse 

 Actual Estimated Actual 

1992 1993 1994 1995 19961 1997 1998 1999 200

Rape Assault Robbery Burglary Larceny Motor vehicle theft Homicide 

2.4% 

5.1% 

27.2% 

30.0% 

29.6% 

6.8% 

15.8% 

141 

5,255 

1,226 

4,757 

20,312

1,959 

24 

160 

9,072 

1,291 

5,984 

 23,020

1,961 

24 

168 

9,129 

1,299 

5,483 

 23,766

1,764 

23 

141 

8,122 

1,142 

4,822 

 22,006 

1,654 

22 

128 

7,741 

1,043 

4,729 

20,877

1,544 

20 

115 

7,359 

944 

4,635 

 19,749 

1,433 

18 

110 

6,897 

886 

4,054 

17,703 

1,138 

17 

141 

6,164 

810 

3,652 

16,495 

1,068 

16 

9

5,33

73

3,44

14,91

93

1

1. Data for 1996 is not available. Therefore the 1996 values are estimated to be the mid-point of the 1995 and 1997 values. The method

was revised between 1992 and 1993 making the 1993 definition of crimes more comprehensive than the 1992 definition. We do nothis revision. The revision would imply that the 1992 cost of crime may be understated and the increase between 1992 and 1993 may 

Source: Bureau of Justice Statistics (1992-1998) Sourcebook of Criminal Statistics. 

B-10 
Appendix B. Supplemental Tables for Calculation of Cost Estimates 

Table B-9. Number of Deaths Related to Drug Abuse, 1992-1998 

Cause of Death ICD-9 

Code 

Percent 

Attributable 

to Drug 

Number of Deaths Attributable to Drug Abuse 

1992 1993 1994 1995 1996 1997 1998 

Abuse 

DIRECT PRIMARY CAUSES 

Drug psychosis 262 100% 13 3 10 9 8 4 11 

Drug Dependence 304 100% 309 333 267 301 335 273 264 

Nondependent abuse of drugs 305.2-

305.9 100% 777 806 932 1,104 1,276 1,251 1,336 

Drug withdrawl syndrome in newborn 779.5 100% 6 0 1 0 0 0 3 

Accidental overdose of psychoactive drugs 

Opiates and related narcotics E850.0 100% 1,279 1,728 1,732 1,904 2,075 2,377 2,718 

Aromatic analgesics, not elsewhere classified E850.2 100% 69 88 90 85 80 107 94 

Other non-narcotic analgesics E850.7 100% 0 0 0 0 0 0 0 

Other E850.8 100% 167 149 182 181 179 178 175 

Unspecified analgesics and antipyretics E850.9 100% 2 1 4 3 2 7 9 

Barbiturates E851 100% 21 17 15 17 19 24 16 

Other sedatives and narcotics E852 100% 11 17 10 13 15 9 8 

Tranquilizers E853 100% 65 11 63 73 82 94 107 

Other psychotropic agents (i.e., antidepressants) E854 100% 269 315 355 350 344 393 334 

Other drugs acting on the central and autonomic 

nervous system E855 100% 1,113 1,183 1,393 1,402 1,411 1,336 1,540 

Agricultural and horticultural chemical 

pharmaceutical preparations other than plan E863 100% 18 16 11 14 16 12 8 

foods and fertilizers 

Accidental Overdose of Drugs and 

Medicaments 

Salicylates E850.1 100% 56 47 37 42 47 27 32 

Pyrazole derivatives E850.3 100% 2 1 1 1 1 2 2 

Antirheumatics E850.4 100% 3 3 6 5 4 4 7 

Other non-narcotic analygesics E850.5 100% 79 77 96 99 102 111 104 

Accidental poisoning by antibiotics E856 100% 55 43 44 46 47 48 39 

Accidental poisoning by other anti-infectives E857 100% 5 9 11 9 6 8 4 

Hormones and synthetic substitutes E858.0 100% 18 9 26 24 21 29 21 

Primarily systemic agents E858.1 100% 44 60 51 47 42 49 57 

Agents primarily affecting blood constituents E858.2 100% 33 34 27 32 36 53 51 

Agents primarily affecting cardiovascular 

system E858.3 100% 218 213 244 236 227 195 194 

Agents primarily affecting gastrointestinal 

system E858.4 100% 3 5 3 4 5 1 3 

Water mineral and uric acid metabolism drugs E858.5 100% 75 74 72 58 44 42 33 

Agents primarily acting on the smooth and 

skeletal muscles and respiratory system E858.6 100% 8 18 15 17 18 12 27 

Agents primarily affecting skin and mucous 

membrane, opthalmological, E858.7 100% 7 7 11 11 10 9 4 

otorhinolaryngological, dental drugs 

Other specified drugs E858.8 100% 1,328 1,902 1,981 1,997 2,012 2,163 2,465 

Unspecified drug E858.9 100% 

Heroin, methadone, other opiates and related E935.0-

narcotics, and other drugs causing adverse E935.2, 100% 27 20 20 22 23 44 60 

effects in therapeutic use. E937-940 

INJURY UNDETERMINED WHETHER ACCIDENTAL OR PURPOSELY INFLICTED 

Analgesics, antipyretics, and antirheumatics E980.0 100% 491 689 687 712 737 857 899 

Barbiturates E980.1 100% 13 7 10 8 6 10 8 

Other sedatives and hypnotic E980.2 100% 8 3 9 8 6 4 8 

Tranquilizers and other psychotropic agents E980.3 100% 159 168 180 173 166 178 171 

Other unspecified drugs and medicinal 

substances E980.4 100% 478 618 657 659 661 780 846 

Unspecified drug or medicinal substance E980.5 100% 252 257 291 290 288 371 366 

Other and unspecified solid or liquid substance E980.9 100% 63 50 32 36 39 50 48 

Homicide and injury inflicted purposely by other 

persons 

E960-

E969 15.8% 3,972 4,053 3,879 3,569 3,260 3,079 2,827 

OTHER CAUSES 

Tuberculosis 010-018 4.5% 77 73 67 60 54 52 50 

Hepatitis C Various 20% 900 214 326 404 476 545 691 

Hepatitis B Various 30% 2,700 312 336 323 340 326 329 

AIDS Various 32% 10,741 12,060 13,475 13,794 9,959 5,283 4,295 

TOTAL 25,934 25,694 27,658 28,133 24,480 20,398 20,265 

Source: National Center for Health Statistics (1993-1998) 

B-11 
Appendix B. Supplemental Tables for Calculation of Cost Estimates 

Table B-10 

Number of Deaths Related to Drug Abuse, 1999-2000

Percent Deaths Attributable 

Attributable to Drug Abuse 

ICD-10 to Drug 

Cause of Death Code Abuse 1999 2000

DIRECT PRIMARY CAUSES 

Mental and behavioral disorders due to psychoactive substance use 

Opioids F11 100% 251 234 

Cannabinoids F12 100% 5 3 

Sedatives or hypnotics F13 100% 3 1 

Cocaine F14 100% 444 364 

Other stimulants, including caffeine F15 100% 26 35 

Hallucinogens F16 100% 3 2 

Volatile solvents F18 100% 2 7 

Multiple drug use and use of other psychoactive F19 100% 1,198 1,269 substances 

Accidental poisoning by and exposure to noxious substances 

Nonopioid analgesics, antipyretics and antirheumatics X40 100% 168 176 

Antiepileptic, sedative-hypnotic, antiparkinsonism and X41 100% 671 704 psychotropic drugs, not elsewhere classified 

Narcotics and psychodysleptics [hallucinogens], not X42 100% 6,009 6,139 elsewhere classified 

Other drugs acting on the autonomic nervous system X43 100% 21 21 

Other and unspecified drugs, medicaments and biological X44 100% 4,286 4,672 substances 

Organic solvents and halogenated hydrocarbons and their X46 100% 63 38 

vapours 

Injury, undetermined whether accidental or purposely inflicted 

Nonopioid analgesics, antipyretics and antirheumatics Y10 100% 38 43 

Antiepileptic, sedative-hypnotic, antiparkinsonism and Y11 100% 231 219 psychotropic drugs, not elsewhere classified 

Narcotics and psychodysleptics [hallucinogens], not Y12 100% 1,425 1,357 elsewhere classified 

Other drugs acting on the autonomic nervous system Y13 100% 4 8 

Other and unspecified drugs, medicaments and biological Y14 100% 775 802 substances 

Organic solvents and halogenated hydrocarbons and their Y16 100% 9 12 

vapours 

OTHER CAUSES 

Homicide or injury inflicted by another person with intent X85-Y09 15.8% 2,639 2,616 to injure or kill, by any means 

Tuberculosis A15-A19 4.5% 42 35 

B17.1, 20% 753 845 Hepatitis C B18.2 

B16, B18.0, 30% 250 266 Hepatitis B B18.1 

HIV B20-B24 32% 4,737 4,633 

Total 23,070 23,544 

Note: Mortality data for prior years used the ICD-9 coding system. See Table B-8.

Source: Mortality data published on web: National Center for Health Statistics (1999-2000). 

B-12
Appendix B. Supplemental Tables for Calculation of Cost Estimates 

Table B-11 

Jail and Prison Inmates by Offense

 Percentage of Jail Percentage of State Percentage of Federal 

Offense 

Inmates Prison Inmates Prison Inmates 

1989 1996 1991 1997 1991 1997 

Homicide 2.8% 2.8% 10.6% 11.7% 1.9% 1.5% 

Assault 7.2% 11.6% 8.2% 9.4% 1.5% 1.3% 

Sexual Assault 3.4% 3.2% 9.4% 8.6% 0.7% 0.8% 

Robbery 6.7% 6.5% 14.8% 14.1% 11.2% 10.0% 

Burglary 10.7% 7.6% 12.4% 10.7% 0.7% 0.3% 

Larceny-Theft 7.9% 8.0% 4.9% 4.2% 0.9% 0.5% 

Auto Theft 2.8% 2.6% 2.2% 1.8% 0.5% 0.2% 

Drug Laws 23.0% 22.0% 21.3% 20.7% 57.9% 62.6% 

Receiving Stolen Property 2.4% 2.1% 1.4% 1.6% 0.8% 0.5% 

Source: Sourcebook of Criminal Justice, 1998 Tables 6.31 and 6.0016. 

. 

B-13
Appendix B. Supplemental Tables for Ca

Table B-12 

Number of Inmates by Offense 

And the Number Attributable to Drug Related Crime, 1992-2000 

Data Series Homicide Assault Sexual Assault Robbery Burglary Larceny-Theft Auto Theft Drug Laws Receiving Stolen PropertyTotal Homicide Assault Sexual Assault Robbery Burglary Larceny-Theft Auto Theft Drug Laws Receiving Stolen Property 

Attributed 

to Drug 

Abuse 

15.8% 

5.1% 

5.1% 

27.2% 

30.0% 

29.6% 

6.8% 

100.0% 

15.1% 

1992 

95 

105 

85 

148 

133 

72 

28 

300 

21 

1,266 

15 

5 

4 

40 

40 

21 

2 

300 

3 

1993 

102 

115 

89 

156 

137 

75 

29 

318 

23 

1,340 

16 

6 

5 

42 

41 

22 

2 

318 

3 

1994 

112 

128 

94 

166 

142 

79 

31 

341 

24 

1,436 

18 

7 

5 

45 

43 

23 

2 

341 

4 

1995 

123 

142 

101 

178 

148 

83 

32 

364 

26 

1,541 

19 

7 

5 

48 

44 

25 

2 

364 

4 

1996 

132 

154 

106 

187 

151 

86 

33 

381 

27 

1,622 

21 

8 

5 

51 

45 

25 

2 

381 

4 

1997 

141 

166 

110 

195 

156 

90 

34 

404 

29 

1,719 

22 

8 

6 

53 

47 

27 

2 

404 

4 

1998 

147 

174 

115 

205 

163 

94 

35 

426 

31 

1,802 

23 

9 

6 

56 

49 

28 

2 

426 

5 

1999 

153 

180 

119 

214 

170 

97 

37 

445 

32 

1,875 

24 

9 

6 

58 

51 

29 

2 

445 

5 

200

15

18

12

21

17

10

3

46

3

1,92

2

6

5

3

46

Total 431 455 486 519 543 574 603 630 65

Source: Bureau of Justice Statistics (2003) Prison and Jail Inmates at Midyear 2001. 

B-14 
Appendix B. Supplemental Tables for Calculation of Cost Estimates 

Table B-13 

Total State and Local Criminal Justice Expenditures, 1992-1999 

(in millions of dollars) 

Data Series 1992 1993 1994 1995 1996 1997 1998 1999 

Police Protection 

Costs1 $34.8 $36.7 $38.7 $41.1 $44.7 $47.7 $50.5 $53.4 

Legal 

Adjudication 

Costs1 

$16.6 $16.9 $17.9 $19.2 $20.5 $21.6 $23.6 $25.3 

Fed & State 

Corrections 

Costs 

$21.2 $21.4 $23.9 $28.0 $28.8 $30.6 $31.4 $34.1 

Local 

Corrections 

Costs 

$10.3 $10.4 $11.0 $11.8 $12.2 $12.9 $13.8 $14.9 

1. Includes spending only by state and local justice jurisdictions. 

Source: Bureau of Justice Statistics (2001) Criminal Justice Expenditure and Employment Extracts Program 

(CJEE), Table 05: Total direct and intergovernmental expenditure, by activity and type of government, fiscal 

years 1980-99. 

B-15
Appendix B. Supplemental Tables for Ca

Table B-14 

Number of Arrests by Type of Offense and Drug Abuse Attribution Factors, 1992-200

(arrests in thousands) 

Type of Offense Percent 

Attributed 

1992 1993 1994 1995 1996 1997 1998 1999 2

to Drug 

Abuse 

Homicide1 15.8% 23 23 22 21 19 18 17 15 

Aggravated Assault 5.1% 507 519 548 568 522 535 507 484 

Forcible Rape 2.4% 39 38 37 35 33 32 31 29 

Other Assaults 5.1% 1,075 1,145 1,224 1,290 1,329 1,396 1,339 1,294 

Robbery 27.2% 173 174 172 172 156 132 121 109 

Burglary 30.0% 424 403 396 387 365 356 331 296 

Larceny-Theft 29.6% 1,505 1,476 1,515 1,530 1,486 1,473 1,307 1,189 

Motor Vehicle Theft 6.8% 198 196 200 192 175 167 151 142 

Driving Under the 

Influence 0.0% 1,625 1,525 1,385 1,436 1,467 1,477 1,403 1,511 

Liquor Laws 0.0% 542 519 542 595 677 636 630 658 

Drunkenness 0.0% 832 727 713 708 719 735 710 656 

Stolen Property 15.1% 162 158 165 167 151 155 138 122 

Prostitution 12.8% 96 98 99 98 99 102 94 92 

Drug Abuse Violations 100.0% 1,066 1,126 1,351 1,476 1,506 1,584 1,559 1,532 

Other 0.0% 5,810 5,910 6,281 6,445 7,636 6,486 6,190 5,901 

Total 14,075 14,036 14,649 15,120 16,341 15,284 14,528 14,031 

1. Homicide includes murder and non-negligent manslaughter. 

Source: Federal Bureau of Investigation (2003 and previous) Uniform Crime Reports.

B-16
Appendix B. Supplemental Tables for Calculation of Cost Estimates 

Table B-15 

Percentage of Arrests Attributed to Drug Abuse, 1992-2002 

Data Series 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 

Total Arrests1 14.1 14.0 14.6 15.1 16.3 15.3 14.5 14.0 14.0 13.7 13.7 

Number of Arrests 

Attributed to Drug 

Abuse2 

1.82 1.87 2.11 2.24 2.24 2.31 2.22 2.14 2.17 2.18 2.13 

Percentage of 

Total Arrests 

Attributed to 

Drug Abuse 

12.9% 13.3% 14.4% 14.8% 13.7% 15.1% 15.3% 15.2% 15.5% 15.9% 15.5% 

Source: Analysis by The Lewin Group, 2001. 

B-17 
Appendix B. Supplemental Tables for Ca

Table B-16 

Percentage of Persons Under Incarceration in Local Jails and 

in State and Federal Prison for Drug Related Crimes, 1992-2002 

Data Series 1992 1993 1994 1995 1996 1997 1998 1999 2000 Local Jails 

Number of Individuals 

Incarcerated for Drug Related 138 142 149 154 156 171 178 182 187 Crime1 

Total Number of Individuals 

Incarcerated2 445 460 486 507 518 567 592 606 621 

Percentage of Individuals 

Incarcerated for Drug Related 31.1% 30.9% 30.6% 30.4% 30.1% 30.1% 30.1% 30.1% 30.1% Crime 

State and Federal Prison 

Number of Individuals 

Incarcerated for Drug Related 293 314 337 365 387 403 425 448 465 Crime1 

Total Number of Individuals 

Incarcerated2 822 880 950 1,034 1,103 1,152 1,210 1,269 1,308 

Percentage of Individuals 

Incarcerated for Drug Related 35.6% 35.6% 35.5% 35.3% 35.1% 35.0% 35.1% 35.3% 35.5% Crime 

Source: Analysis by The Lewin Group, 2001. 

B-18 
Appendix B. Supplemental Tables for Ca

Table B-17 

Federal Funds for Reducing the Supply of Drugs, 1992-2002 

Federal Agency 1992 1993 1994 1995 1996 1997 1998 1999 200Justice Drug Enforcement Administration $707.9 $756.6 $768.1 $801.4 $866.7 $1,056.9 $1,208 $1,304 $1,34Federal Bureau of Investigation $204.7 $257.0 $476.5 $540.0 $694.6 $802.2 $824 $589.4 $70Immig. & Naturalization Service $141.2 $147.0 $157.4 $184.6 $225.2 $324.1 $373 $428.7 $46Interpol $1.9 $1.9 $1.9 $1.8 $1.6 $0.8 $0 $0.2 $Treasury Bur. Alcohol, Tob. and Firearms $135.9 $151.0 $158.8 $166.7 $171.2 $175.6 $213 $231.7 $2Internal Revenue Service $102.8 $91.8 $113.0 $100.9 $68.2 $73.4 $72 $72.4 $7U.S. Customs Service $784.7 $561.0 $572.9 $536.4 $531.2 $583.2 $606 $956.1 $6Transportation Federal Aviation Administration $15.8 $21.0 $25.3 $18.0 $18.1 $19.0 $23 $23.6 $2U.S. Coast Guard $436.4 $310.5 $314.8 $306.1 $323.2 $478.1 $485 $815.3 $76State Agency for Intl. Development $250.2 $139.8 n/a n/a n/a n/a n/a n/a nBureau of Intl. Narcotics Matters $144.8 $147.8 $144.9 $231.8 $135.0 $193.0 $210.0 $489.2 $27U.S. Information Agency $9.7 $9.3 $7.9 $8.0 $8.3 $7.2 $8.2 $8.5 Agriculture Agriculture Research Service $6.5 $6.5 $6.5 $6.5 $4.7 $4.7 $4.8 $5.3 $U.S. Forest Service $9.4 $9.6 $9.6 $9.8 $9.8 $5.8 $5.8 $5.8 $Interior Bureau of Indian Affairs $19.1 $19.4 $22.2 $19.9 $15.6 $16.0 $21.3 $17.5 $2Bureau of Land Management $8.5 $10.0 $5.1 $5.1 $5.0 $5.0 $5.0 $5 Fish and Wildlife Service $1.0 $1.0 $1.0 $1.0 $1.0 $1.0 $1.0 $1 National Park Service $10.8 $8.7 $8.8 $8.8 $8.8 $9.3 $9.4 $9.5 $BUNLE: Plan Columbia/Andean Initiative 0 $101Defense $1,135.0 $1,040.6 $726.1 $750.3 $739.0 $864.6 $757.3 $904.3 $1,06DOD Plan Columbia 0 $30Total $4,126.3 $3,690.5 $3,520.8 $3,697.1 $3,827.2 $4,619.9 $4,826.7 $5,867.5 $5,47

Source: ONDCP (1992-2002) National Drug Control Strategy: Budget Summary. 

B-19 
Appendix B. Supplemental Tables for Ca

Table B-18 

Private Legal Defense Spending, 1992-2002 

(in millions of dollars) 

Actual 

Data Series 1992 1993 1994 1995 1996 1997 1998 1999 2000 Total Annual Receipts for Legal Services (billions of dollars) $108.4 $112.1 $114.6 $116.0 $124.6 $132.8 $141.8 $150.0 $163.1 Estimated Percent of Lawyers Practicing Criminal Law 2.6% 2.6% 2.6% 2.6% 2.6% 2.6% 2.25% 2.25% 2.25% Percentage of Arrests for Drug Abuse Related Crimes 12.9% 13.3% 14.4% 14.8% 13.7% 15.1% 15.3% 15.2% 15.5% Estimated Drug Abuse Related Legal Spending (in millions of dollars) $364.7 $388.4 $429.4 $447.1 $444.8 $522.3 $487.3 $513.9 $570.6 

Sources: Bureau of Economic Analysis, 2003; American Bar Association, 2003. 

B-20 
APPENDIX C: 

ESTIMATED COSTS IN CONSTANT 

2002 DOLLARS 

C-1
Appendix C: Estimated Costs 

Table C-1 

The Economic Cost of Drug Abuse, 1992-2002 in Real 2002 Dollars 

(in billions of 2002 dollars) 

Cost Components 1992 1993 1994 1995 1996 1997 1998 1999 2000 Health Care Costs $13.7 $14.7 $14.7 $14.0 $13.2 $13.2 $13.8 $14.0 $14.1 Productivity Losses $99.3 $98.7 $101.8 $105.3 $107.1 $107.0 $109.6 $115.9 $118.5 Other Costs $24.9 $24.7 $25.9 $28.1 $28.3 $29.9 $31.3 $33.6 $35.3 Total $137.9 $138.0 $142.4 $147.4 $148.6 $150.1 $154.6 $163.5 $167.9 

Source: Analysis by The Lewin Group, 2004. 

C-2 
Appendix C: Estimated Costs 

Table C-2 

Health Care Costs of Drug Abuse 1992-2002 in Real 2002 Dollars 

(in millions of 2002 dollars) 

1992 1993 1994 1995 1996 1997 1998 1999 

$4,834 $5,214 $5,369 $5,394 $5,653 $5,707 $5,926 $5,677 

$18 $11 $6 $6 $6 $6 $6 $7 

$33 $41 $38 $37 $38 $35 $35 $44 

$22 $21 $21 $21 $22 $22 $23 $35 

$145 $158 $186 $199 $174 $151 $132 $117 

$790 $776 $776 $737 $642 $736 $800 $1,009 

$114 $116 $110 $119 $93 $95 $130 $152 

$63 $63 $64 $65 $65 $66 $66 $67 

$203 $204 $212 $212 $243 $259 $276 $309 

$250 $301 $308 $308 $324 $351 $362 $412 

$344 $376 $399 $396 $395 $373 $368 $377 

$664 $818 $966 $1,001 $1,008 $1,121 $1,218 $1,265 

$522 $528 $533 $535 $537 $538 $555 $565 

$38 $37 $36 $35 $33 $30 $26 $23 

$4,473 $4,847 $4,484 $3,802 $2,972 $2,784 $2,873 $3,081 

$592 $497 $509 $539 $452 $492 $479 $401 

$112 $118 $177 $180 $164 $156 $148 $140 

$362 $436 $476 $476 $425 $346 $322 $340 

$13,659 $14,662 $14,673 $13,996 $13,158 $13,236 $13,756 $14,044 $

Cost Components Community-Based Specialty Treatment Federally-Provided Specialty Treatment 

Department of Defense 

Indian Health Services Bureau of Prisons 

Department of Veterans Affairs 

Health Infrastructure and Support 

Federal Prevention State and Local Prevention 

Training 

Prevention Research Treatment Research Insurance Administration 

Medical Consequences 

Hospital and Ambulatory Care Costs Special Disease Costs 

Drug-Exposed Infants 

Tuberculosis 

HIV/AIDS 

Hepatitis B and C 

Violent Crime Health Insurance Administration 

Total 

Source: Analysis by The Lewin Group, 2004. 

C-3 
Appendix C: Estimated Costs 

Table C-3 

Productivity Losses of Drug Abuse 1992-2002 in Real 2002 Dollars 

(in millions of 2002 dollars) 

Cost Components 1992 1993 1994 1995 1996 1997 1998 1999 2000 

Premature Death $28,961 $27,877 $28,034 $28,406 $23,745 $19,901 $19,323 $22,535 $23,045 Drug Abuse-related Illness $18,214 $17,138 $19,234 $20,938 $23,241 $22,323 $25,542 $26,995 $28,654 Institutionalization/H ospitalization $1,894 $1,870 $2,043 $2,210 $1,758 $1,863 $1,971 $1,873 $1,782 Productivity Loss of Victims of Crime $2,640 $3,098 $3,100 $2,806 $2,674 $2,570 $2,279 $2,111 $1,930 Incarceration $22,961 $24,110 $25,607 $27,130 $28,473 $30,511 $33,257 $35,399 $36,244 Crime Careers $24,617 $24,595 $23,796 $23,812 $27,241 $29,824 $27,180 $26,952 $26,836 Total $99,287 $98,688 $101,815 $105,301 $107,132 $106,993 $109,553 $115,866 $118,492 

Source: Analysis by The Lewin Group, 2004. 

C-4 
Appendix C: Estimated Costs 

Table C-4 

Costs for Other Effects of Drug Abuse 1992-2002 in Real 2002 Dollars 

(in millions of 2002 dollars) 

Cost Components 1992 1993 1994 1995 1996 1997 1998 1999 Cost of Goods and Services Lost to Crime 

Criminal Justice System/Public Costs 

 Police Protection $5,774 $6,213 $6,683 $7,192 $7,581 $8,088 $8,512 $8,779  Legal Adjudication $1,377 $1,431 $1,546 $1,680 $1,738 $1,831 $1,989 $2,080  State and Federal 

Corrections $9,610 $9,482 $10,216 $11,575 $11,519 $11,732 $12,095 $12,837 $

 Local Corrections $1,709 $1,731 $1,926 $2,061 $1,925 $1,939 $2,326 $2,450  Federal Supply 

Reduction $5,291 $4,595 $4,274 $4,364 $4,388 $5,178 $5,327 $6,412 

 Private Costs Private Legal 

Defense $468 $483 $521 $528 $510 $585 $605 $555 

 Property Damage 

Crime Victims $247 $285 $280 $256 $245 $233 $205 $206 

Social Welfare Administration $337 $418 $432 $442 $446 $434 $417 $317 Total $24,909 $24,662 $25,892 $28,091 $28,325 $29,905 $31,334 $33,572 $

Source: Analysis by The Lewin Group, 2004. 

C-5 
Appendix C: Estimated Costs 

Table C-5 

Crime Related Costs of Drug Abuse 1992-2002 in Real 2002 Dollars 

(in millions of 2002 dollars) 

Cost Components 1992 1993 1994 1995 1996 1997 1998 1999 Health Care Costs 

Crime Victim Health Care Costs $112 $118 $177 $180 $164 $156 $148 $140 

Productivity Losses 

Homicide Victims $4,435 $4,168 $3,929 $3,690 $3,456 $3,254 $3,082 $2,895 

Victims of Crime $2,640 $3,098 $3,100 $2,806 $2,674 $2,570 $2,279 $2,111 

Incarceration $22,961 $24,110 $25,607 $27,130 $28,473 $30,511 $33,257 $35,399 $Crime Careers $24,617 $24,595 $23,796 $23,812 $27,241 $29,824 $27,180 $26,952 $2

Other Costs 

Criminal Justice System/Public Costs 

Police Protection $5,774 $6,213 $6,683 $7,192 $7,581 $8,088 $8,512 $8,779 Legal Adjudication $1,377 $1,431 $1,546 $1,680 $1,738 $1,831 $1,989 $2,080 

 State and Federal 

Corrections $9,610 $9,482 $10,216 $11,575 $11,519 $11,732 $12,095 $12,837 $

Local Corrections $1,709 $1,731 $1,926 $2,061 $1,925 $1,939 $2,326 $2,450 

 Federal Supply Reduction $5,291 $4,595 $4,274 $4,364 $4,388 $5,178 $5,327 $6,412  Private Costs 

Private Legal Defense $468 $483 $521 $528 $510 $585 $605 $555 

 Property Damage: Crime 

Victims $247 $285 $280 $256 $245 $233 $205 $206 

Total $79,249 $80,367 $82,059 $85,258 $89,907 $95,895 $96,998 $100,804 $1

Source: Analysis by The Lewin Gro

C-6
APPENDIX D: 

ESTIMATED COSTS IN CONSTANT 

1998 DOLLARS 

D-1
Appendix D: Estimated Costs 

Table D-1 

The Economic Cost of Drug Abuse, 1992-2002 in Real 1998 Dollars 

(in billions of 1998 dollars) 

Cost Components 1992 1993 1994 1995 1996 1997 1998 1999 2000 Health Care Costs $12.4 $13.3 $13.3 $12.7 $11.9 $12.0 $12.5 $12.7 $12.8 Productivity Losses $90.0 $89.4 $92.3 $95.4 $97.1 $96.9 $99.3 $105.0 $107.4 Other Costs $22.6 $22.3 $23.5 $25.5 $25.7 $27.1 $28.4 $30.4 $32.0 Total $124.9 $125.0 $129.0 $133.5 $134.7 $136.0 $140.1 $148.1 $152.1 

Source: Analysis by The Lewin Group, 2004. 

Table D-2 

Per Capita Economic Cost of Drug Abuse, 1992-2002 in Real 1998 Dollars 

(in 1998 dollars per capita) 

Cost Components 1992 1993 1994 1995 1996 1997 1998 1999 2000 Health Care Costs $48 $51 $51 $48 $44 $44 $45 $46 $45 Productivity Losses $351 $344 $351 $358 $360 $356 $360 $376 $382 Other Costs $88 $86 $89 $96 $95 $99 $103 $109 $114 Total $487 $481 $490 $501 $500 $499 $508 $531 $541 

Source: Analysis by The Lewin Group, 2004. 

D-2 
Executive Office of the President

Office of National Drug Control Policy