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Drug abuse

The cost of drug-related crime

Mayhew (2003a, 2003b) and Rollings (2008) identified three main components of the cost of drug offences. These were:

  • the ‘human’ cost of drug offences, which primarily includes the health cost of drug abuse to society as well as the cost of drug-related deaths, HIV/AIDS, hepatitis, injury and the cost of treatment for drug addiction;
  • the cost of offending to fund a drug habit; and
  • the cost of law enforcement associated with the prevention of drug trafficking, drug use and drug-related crime.

This section focuses on the ‘human’ cost of drug-related crime, as the costs to law enforcement and of drug-related offending have been covered elsewhere in this report.

The human cost of drug abuse

Loss of life

Previously, Collins and Lapsley (2008) estimated that there were 872 deaths attributable to illicit drug use in Australia in 2004–05. This included deaths attributed to opiates, cannabis, psychostimulants, hallucinogens, other psychotropics, as well as other licit, unspecified and combined drug use.

In the absence of sufficiently disaggregated data, this appears to be the best available estimate of drug-attributable deaths in Australia. Assuming that that the proportion of drug-related deaths in 2004–05 remained the same in 2011, an estimated 974 deaths could be attributed to illicit drug use in 2011.

Applying the estimated medical and lost productivity cost associated with homicides above to these deaths, yields a total cost of $2.12b. The cost of lost productivity made up nearly all of this cost at $2.11b, while medical costs comprised the remaining $10m. As in the previous reports, intangible costs were not considered as a part of these calculations, as the use of drugs can be considered a ‘willing’ cost (see Mayhew 2003b; Rollings 2008).

Hospitalisation

The Australian Institute of Health and Welfare (AIHW) provide data on incidents of hospitalisation, including illicit drug use in Australia. The latest available data were for the 2010–11 financial year and showed that there were 13,849 public and 6,928 private hospitalisations due to principal diagnoses related to illicit drugs (AIHW 2012b). These figures were determined using the following International Classification of Diseases and Related Health Problems, Tenth Revision, Australian Modification (ICD-10-AM) codes T40, F11–F15, F16, F18 and F19.

The average cost of a stay in a public hospital in 2009–10 was $4,500, which inflated to 2011 prices is $4,649 (AIHW 2013a). Overall, in 2011, the total estimated cost of public hospital stays due to illicit drug use was $64m. In addition, the number of emergency department visits in public hospitals related to illicit drug use (which did not lead to admission) were determined using the 7:1 ratio presented in earlier costs of crime studies (see Mayhew 2003b; Rollings 2008). The Productivity Commission (SCRGSP 2013) determined that the average cost per presentation in a public hospital emergency department was $498 in 2010–11. The cost of an illicit drug-related presentation to a public hospital emergency department was $48m. Overall, the public hospital costs associated with illicit drug-related presentations in 2011 were $112m.

As costs differ between the public and private hospital systems, private hospital stays related to illicit drug use are costed separately here for the first time. Private Healthcare Australia (2011) report the average cost of a private hospital visit is $2,938. Recently, AIHW (2012b) reported that 55 percent of private hospital funding comes from sources (including governments and individuals) other than private health insurance funds. Applying this ratio to the average cost of a private hospital visit, the cost to society of each private hospital visit is approximately $1,615. In total, the cost of private hospital stay due to illicit drug use in 2011 was $11m. In addition, the cost of illicit drug-related presentations to private hospital emergency departments in 2011 was estimated to be $8m; although this may represent an overestimation due to emergency departments not being available in some private hospitals. Overall, the private hospital costs for illicit drug-related presentations in 2011 were $20m.

Illicit drug users in treatment

Data on illicit drug users in treatment were obtained from the AIHWs Alcohol and Other Drug Treatment Services National Minimum Data Set. This dataset does not collect information on those organisations or clients solely providing or receiving opioid pharmacotherapy treatments. It also had a number of other exclusions including treatment received in correctional settings, private agencies not publicly funded, clients aged 10 years and under, and patients admitted in acute care or psychiatric hospitals (for more details, see AIHW 2012a).

Figures presented in this section are for the numbers of closed-treatment episodes in 2010–11 and include those where the primary drug of concern was amphetamines, cannabis, cocaine, ecstasy or opioids. The use of benzodiazepines and other drugs have been excluded, as the legality of their use is unclear. In 2010–11, AIHW (2012a) reported that there were 65,376 closed-treatment episodes, of which 10,801 were in residential treatment.

Using figures from analysis carried out by the Australian National Council on Drugs, the average cost of treating a person in residential drug treatment is $215 per day and $16,110 per treatment episode (ANCD 2012). In total, the cost of residential drug treatment was $174m. As the cost of residential drug treatment was previously unavailable, care should be taken when comparing this figure with previous studies that used residential mental health costs as a proxy (see Mayhew 2003; Rollings 2008).

However, as the cost of drug treatment through non-residential treatment types are not available, the cost of treating a community-based mental health patient has, as in previous studies, been used as a proxy measure. The Productivity Commission (SCRGSP 2013) reported that the cost of treating a community-based mental health patient in 2011 was $2,089 per episode. Applying this figure to those drug users in non-residential treatment, outreach treatment, home-based treatment and other treatment, the total cost for other treatment services was $114m.

Excluding pharmacotherapy, the cost of treatment for illicit drug use in 2011 was estimated to be $298m.

Pharmacotherapeutic treatment

The number of people in pharmacotherapeutic treatment in 2010–11 was 46,446. Methadone maintenance was the most common form of treatment with two in every three (69%) receiving this treatment, while 18 percent received a combination of buprenorphine and naltrexone, and 14 percent received buprenorphine (AIHW 2012a). Applying the cost of methadone maintenance as provided by Rollings (2008), inflated to 2011 prices, the cost of treatment was nearly $4,000 per client. A total cost of $185m was estimated for pharmacotherapy treatment in 2011. Although, it should be noted that this cost does not take into account the extra cost of buprenorphine and naltrexone treatment and as such, this may be an underestimation of the true cost of pharmacotherapy treatment.

Lost productivity

As in previous AIC cost of crime studies, estimates of lost productivity of drug users in treatment may be overestimated because, as a group of individuals, they tend to be underproductive (Mayhew 2003; Rollings 2008). Nonetheless, applying the lost productivity costs of assault (hospitalised figures have been used for residential treatment episodes and non-hospitalised injuries for non-residential treatment), the lost productivity of drug users in residential treatment is estimated to be $349m and $76m for those in non-residential treatment. Overall, the cost of lost productivity was $425m.

The total estimated human costs of drug abuse are, accordingly, $3,161m (see Table 28).

Table 28 Estimated human costs of drug abuse
Category Estimated cost ($m)
Illicit drug use deaths 2,121
Medical costs of hospitalisation 132
Drug treatment costs 298
Pharmacotherapeutic treatment 185
Lost productivity of drug users in treatment 425
Total 3,161

Other estimates

Collins and Lapsley

In 2008, Collins and Lapsley (2008) published their fourth report, which estimated the costs of tobacco, alcohol and illicit drug abuse to Australian society. The report estimated costs for 2004–05 to be $55.2b, with illicit drug use accounting for $8.2b, or 15 percent of that figure. The report included costs on a wide range of social issues and used drug and alcohol attributable fractions (based in part on data from the two AIC collections of Drug Use Monitoring in Australia and Drug Use Careers of Offenders) to estimate the proportion of crime that can be attributed to drugs and alcohol. Items considered by Collins and Lapsley (2008) included production losses in the paid and unpaid workforce, health costs and crime costs including property theft and damage, as well as the associated costs of policing, criminal courts, prisons and private security.

This report is a valuable piece of work, but caution should be taken when attempting to compare its findings with those reported above. Collins and Lapsley (2008) approached the problem of assessing costs from alcohol, tobacco and drug use by attributing a proportion of total crime costs to, for example, illicit drug use. However, their report does not seek to assign a proportion of criminal justice spending to each crime type, but rather considers it as a whole and estimates costs for each crime type separately.

As indicated above, Collins and Lapsley’s (2008) methodology has been criticised by Crampton, Burgess and Taylor (2011) who reviewed the methods and assessed the policy influence of a series of publicly funded cost of illness studies. Their analysis showed that headline cost estimates, including Collins and Lapsley’s (2008) work, depended on an incorrect procedure for incorporating real-world imperfections in consumer information and rationality, producing what was argued to be a substantial overestimate of costs. Other errors were identified that further inflated these estimates, resulting in headline costs that they found to be unrelated to either total economic welfare or GDP and therefore of no policy relevance. It was argued that counting only external, policy-relevant costs not only deflated overall figures substantially but also resulted in rank-order changes among cost categories.

Australian Federal Police

The AFP’s Drug Harm Index (DHI) was

developed to provide a single measure that encapsulates the potential value to the Australian Community of AFP drug seizures. The index includes both domestic drug seizures and international seizures destined for Australia where the AFP played a significant role (AFP 2003: 1).

The DHI for 2010–11 was $1.2b (AFP 2012). This figure will not be counted separately, as components will have been included elsewhere in this report. However, the DHI is a good, high-level economic indicator that could be used to compare the potential value of drug seizures over time.

Exclusions

There were a number of costs that have deliberately not been taken into account in this section. These were:

  • Health care costs and lost productivity costs of those injured by someone who is drug-dependent. It is assumed some of these costs would have been covered in the assault figures.
  • Social welfare payments made to those who are drug dependent
  • Costs for dependence on alcohol. As the consumption of alcohol is not illegal (other than for certain age-related circumstances and in connection with driving), it was not appropriate to include those estimates in this report. However, it is likely that the assault figures also include a high component of assault that is alcohol related.
  • Intangible costs of drug use are not included.
  • Costs involved with community awareness campaigns about illicit drugs and the research and training that go with them.