COSTS OF HARMFUL ALCOHOL AND OTHER DRUG USE

Report to:

Ministry of Health and ACC

COSTS OF HARMFUL

ALCOHOL AND OTHER DRUG USE

FINAL REPORT

ACKNOWLEDGEMENTS

ACC – Peter Larking, Peter Roscoe, Agnes Guevara, and Wen Jhe Lee Department of Corrections – Peter Johnston

Health Outcomes International Ltd – Jim Hales and Jane Manser

Ministry of Health – Susan Joy, Chris Laurenson, Fiona Julian, Chris Lewis (NZHIS) and Miranda Devlin (H&DIU)

Ministry of Transport – Wayne Jones

New Zealand Police – Jonathan Lyall, Rebecca Stevenson and Virginia Andersen St Johns Ambulance – Andrew Cratchley

Statistics New Zealand – Lynne Mackie

University of Otago – Des O‟Dea and Richard Edwards (Wellington School of Medicine), and Susan Dovey (Dunedin School of Medicine)

We are grateful to both the wider project team (Des, Richard and Susan) for comments received during the course of the project and external reviewers (Professor David Collins and Professor Helen Lapsley) on the final draft of the report. All suggestions were carefully considered and were incorporated as appropriate.

The views expressed in this report are not necessarily those of the New Zealand Ministry of Health or the Accident Compensation Corporation.

Costs of Harmful

Alcohol and Other Drug Use

1

Executive Summary ... 1

2

Introduction ... 6

3

Literature Review ... 14

4

Method and Calculation Summary ... 29

4.1 Method ... 29

4.2 Population patterns and impacts related to AOD use ... 30

4.3 Calculations of the costs of harmful drug use ... 34

5

Results: the Costs of Harmful AOD Use ... 56

5.1 Costs of harmful alcohol and other drug use – overall ... 56

5.2 Costs of harmful alcohol use ... 61

5.3 Costs of harmful other drug use ... 64

6

Additional Analytical Focuses ... 67

6.1 Avoidable costs ... 67

6.2 Injury costs ... 70

6.3 Costs to the government ... 76

7

References ... 78

8

Glossary ... 86

9

Appendix – Method and Calculation Detail ... 88

9.1 Method ... 88

9.2 Methodological issues ... 89

9.3 Population patterns and impacts related to drug use ... 91

9.4 Cost calculations ... 98

10

Appendix – Additional Tables ... 131

11

Appendix – Sensitivity Analysis ... 158

11.1Harmful drug use and consumption decisions ... 172

Tables

Table 2.1 Drinking pattern thresholds by gender, grams of alcohol per day ... 9

Table 4.1 Harmful drug users by sex and age group, 2005/06 ... 31

Table 4.2 New Zealand (2005/06) and Australia (2004/05) alcohol use prevalence by drinking pattern ... 31

Table 4.3 New Zealand (2006) and Australian (1998) illegal drug use prevalence by age group ... 32

Table 4.4 Average daily alcohol consumption by sex and drinking pattern (grams of alcohol per day), 2005/06 ... 33

Table 4.5 Police activity by offence category, 2005/06 ... 42

Table 4.6 AOD-related apprehensions by offence category, 2005/06 ... 43

Table 4.7 AOD-related Police expenditure ($m) by offence category, 2005/06 ... 44

Table 5.1 Social costs of harmful drug use ($m), 2005/06... 56

Table 5.2 Tangible costs of harmful drug use ($m), 2005/06 ... 57

Table 5.3 Intangible costs of harmful drug use ($m), 2005/06 ... 57

Table 5.4 Social costs of harmful alcohol use ($m), 2005/06 ... 61

Table 5.5 Tangible costs of harmful alcohol use ($m), 2005/06 ... 61

Table 5.6 Social costs of harmful other drug use ($m), 2005/06 ... 64

Table 5.7 Tangible costs of harmful other drug use ($m), 2005/06 ... 64

Table 6.1 Potential avoidable alcohol consumption and mortality in Australia, 2004/05 . 68 Table 6.2 Potential avoidable costs of harmful drug use in New Zealand, 2005/06 ... 69

Table 6.3 Injury costs of harmful drug use ($m), 2005/06... 71

Table 6.4 Total tangible and intangible costs of road crash injuries ($m), 2005/06 ... 72

Table 6.5 ACC claim numbers and costs due to harmful drug use ($m), 2005/06 ... 74

Table 6.6 Proportion of AOD injury and social costs borne by ACC, 2005/06 ... 74

Table 6.7 Costs of harmful drug use – government perspective ($m), 2005/06 ... 76

Table 9.1 Alcohol consumption by drinking pattern, sex and age group, 2005/06 ... 93

Table 9.2 Total alcohol and other drug use by sex and age group, 2005/06 ... 93

Table 9.3 Harmful drug users by sex and age group, 2005/06 ... 94

Table 9.4 New Zealand (2005/06) and Australian (2004/05) alcohol use prevalence by drinking risk ... 95

Table 9.5 New Zealand (2006) and Australian (1998) illegal drug use prevalence by age group ... 96

Table 9.6 Workforce status of the additional population with no harmful AOD use, 2005/06 ... 100

Table 9.7 Workforce status of working-age harmful AOD users by drug type, 2005/06 100 Table 9.8 Police activity by offence category, 2005/06 ... 108

Table 9.9 AOD-related apprehensions by offence category, 2005/06 ... 111

Table 9.10 AOD-related Police expenditure ($m) by offence category, 2005/06 ... 111

Table 9.11 Comparison of NZ-ADAM and Alco-Link offence and apprehension rates with alcohol involvement by offence category, 2005/06 ... 113

Table 9.12 Case-weight multipliers, 1998/99 – 2007/08 ... 120

Figures

Figure 3.1 Cost categories, components and analytical focuses ... 17

Appendix Tables Appendix Table 1 Harmful drug use cost inclusions and exclusions ... 131

Appendix Table 2 Tangible costs of harmful drug use ($m), 2005/06 – detail ... 132

Appendix Table 3 Intangible costs of harmful drug use ($m), 2005/06 – detail ... 133

Appendix Table 4 Drug use prevalence 13+ year olds, 2005/06 ... 133

Appendix Table 5 Total alcohol caused deaths by nature of cause, 2001-2005 ... 134

Appendix Table 6 Alcohol caused deaths and age-gender mortality rates, 2001-2005 135 Appendix Table 7 Total other drug caused deaths by nature of cause, 2001-2005 ... 135

Appendix Table 8 Other drug deaths and age-gender mortality rates, 2001-2005 ... 136

Appendix Table 9 Counterfactual population estimates – males, 2005/06 ... 137

Appendix Table 10 Counterfactual population estimates – females, 2005/06 ... 138

Appendix Table 11 Counterfactual population estimates – total, 2005/06 ... 139

Appendix Table 12 NZ-ADAM distribution of crime by offence category and drug type, 2005/06 ... 139

Appendix Table 13 Crime multipliers to estimate actual crime from recorded crime, 2003/04 ... 140

Appendix Table 14 NZP offence codes and offence categories ... 140

Appendix Table 15 NZ-ADAM offence categories (HOI)... 141

Appendix Table 16 Lost output due to harmful drug use ($m), 2005/06 - detail ... 142

Appendix Table 17 Justice sector costs of harmful drug use ($m), 2005/06 - detail ... 143

Appendix Table 18 Health sector costs of harmful drug use ($m), 2005/06 - detail ... 144

Appendix Table 19 Hospital costs due to alcohol use by category, 2001-2006 ... 145

Appendix Table 20 Hospital costs due to other drug use by category, 2001-2006 ... 146

Appendix Table 21 Road crash costs due to harmful drug use ($m), 2005/06 - detail . 147 Appendix Table 22 Drug-attributable morbidity and mortality health conditions ... 148

Appendix Table 23 Alcohol-attributable morbidity and mortality conditions ... 154

Appendix Table 24 Cost to business of lost output ($m), 2005/06 ... 156

Appendix Table 25 Cost to government of lost output ($m), 2005/06 ... 156

Appendix Table 26 Costs to government of harmful drug use ($m) – detail, 2005/06 .. 157

Appendix Table 27 Sensitivity analysis of general assumptions, 2005/06 ... 159

Appendix Table 28 Sensitivity analysis of lost output assumptions, 2005/06 ... 160

Appendix Table 29 Sensitivity analysis of drug production assumptions, 2005/06 ... 162

Appendix Table 30 Sensitivity analysis of crime assumptions, 2005/06 ... 167

Appendix Table 31 Sensitivity analysis of health assumptions, 2005/06 ... 170

Appendix Table 32 Sensitivity analysis of intangible cost assumptions, 2005/06 ... 171

1

Executive Summary

The New Zealand Ministry of Health and the Accident Compensation Corporation engaged BERL to estimate the social cost of harmful drug use in New Zealand. Harms related to drug use include a wide range of crime, lost output, health service use and other diverted

resources. Drug harm may be avoided via interventions that interrupt supply, reduce demand or encourage safe drug use.

The study analyses two categories of drugs: alcohol and other drugs, where other drugs include both illegal and misused legal drugs. It does not cover tobacco. The focus of the study is on the harmful effects of drug use, that is, use that results in a net social cost. This reflects that society, as a whole, has fewer resources and less welfare than in the absence of harmful use. Given this focus, the study covers a broad range of personal, economic, and social impacts, which we denote collectively as „social costs‟.

This report provides four broad answers. First, it estimates the total social costs from harmful drug use in the 2005/06 year. Second, it uses these estimates to characterise the potential level of costs that are avoidable. Third, it estimates the social cost stemming from injuries as a result of alcohol and other drug use. Fourth, it provides an estimate of the social costs from harmful drug use borne by the government.

The study shows that harmful drug use imposed a substantial cost on New Zealand in 2005/06.

 Overall, harmful drug use in 2005/06 caused an estimated $6,525 million of social costs. This is equivalent to the GDP of New Zealand‟s agricultural industry ($6,701 million) or finance industry ($6,982 million). The total was made up of $4,562 million of tangible resource costs and $1,963 million of intangible welfare costs.1

 Harmful alcohol use in 2005/06 cost New Zealand an estimated $4,437 million of diverted resources and lost welfare. To put this figure in perspective, the social cost across all cost categories was equivalent to almost two fifths of Vote Health in 2005/06; and the tangible costs alone to over one quarter of Vote Health.2

1 _{GDP does not include intangible costs according to its definition in the system of national accounts (SNA). This} may suggest that a comparison between social costs (that include intangible costs) and GDP may not be useful, as they have different conceptual bases. However, Easton (1997) argues that some form of benchmarking is useful for informed decision-making. It states that “the magnitudes shed light on the enormity of the problem, and the significance of its various components. In this report, comparisons made with GDP figures are used as orders of magnitudes, to provide an indicator of size rather than a precise measurement of proportion of GDP.

2 _{The term „Vote‟ refers to funding approved by parliament for a specified range of outputs and that is the} responsibility of a particular government Minister (the „Vote‟ Minister).

 Harmful other drug use was estimated to cost $1,427 million, of which $1,034 million were tangible costs. The total is equivalent to over half of the justice sector Vote funding (Justice, Customs, Police, Courts, Corrections), and the tangible costs were equivalent to almost two fifths of the Vote funding.

 Joint alcohol and other drug use that could not be separately allocated to one drug category cost a further $661 million. If the joint costs are split proportionately, total alcohol and total other drug costs equate to $4,939 million (over three quarters) and $1,585 million (just under one quarter).

 Using estimates from international research, this study suggests that up to 50 percent ($3,260 million) of the social costs of harmful drug use may be avoidable.

 The research indicated that 29.9 percent (or $1,951 million) of the social costs of harmful drug use result from injury. This equates to $2,900 per harmful drug user per annum.  The costs of harmful drug use from a government perspective amount to an estimated

$1,602 million, or almost one third (35.1 percent) of the total tangible costs to society.

Summary Table 1 Total social costs of harmful drug use ($m), 2005/06

Summary Figure 1 Tangible costs of harmful drug use by cost type ($m), 2005/06

($m) Alcohol Other drugs Joint AOD Total

Tangible costs 2,875.1 1,034.2 652.1 4,561.5

Intangible costs 1,561.9 392.4 8.7 1,963.1

Total social costs 4,437.1 1,426.7 660.8 6,524.6

% of social costs 68.0% 21.9% 10.13% 100.0% Source: BERL Lost output 1951.6 43% Crime 1111.4 24% Drug prod'n 861.0 19% Health 428.2 9% Road 209.4 5% Source: BERL

Tangible costs reflect productive resources diverted due to harmful drug use and totalled $4,562 million in 2005/06. This was equivalent to 2.9 percent of GDP in 2005/06.3

Lost output ($1,952 million), crime costs not included in other components ($1,111 million) and drug production ($861.0 million) were the largest resource drains overall.

Drug-attributable health care and road crashes not included elsewhere cost a further $638 million. Drug users and victims suffered a further $1,963 million of intangible costs.

The three largest tangible cost drivers for alcohol were labour costs, justice sector costs and drug production, which accounted for 84 percent of the tangible costs of alcohol. Similarly, drug production, crime and labour costs accounted for 92 percent of the tangible costs of other drug use.

Given an estimated 513,000 harmful alcohol users, 27,000 other drug users and 127,000 joint alcohol and other drug users, harmful drug use cost approximately $9,800 per user, where over 70 percent of these impacts represented tangible resource costs.

The research indicates that there is substantial scope to avoid costs resulting from harmful drug use via interventions that target supply and demand and that aim to reduce harmful use. The research did not specifically examine the cost-effectiveness of alcohol and other drug prevention and treatment interventions.

Summary Table 2 Avoidable costs of harmful drug use ($m), 2005/06

International studies suggest that potentially up to 50 percent of social costs can be avoided. Applying this proportion to this study‟s main estimates indicates that $3,260 million of these social costs of harmful alcohol and other drug use are avoidable. However, this figure should be viewed as providing an order of magnitude on potential avoidable costs, rather than an accurate estimate based on New Zealand evidence. At this stage, further analysis cannot be made, and this is an area where we recommend further research.

3

The estimates are GST exclusive figures. GDP, however, is measured at 'market prices', which includes indirect taxes such as GST. Therefore the estimates are not directly comparable with GDP. The percentage figure is indicative of magnitude, but is not precise.

Avoidable costs ($m) Alcohol Other drugs Joint AOD Total

Tangible costs 1,440 520 330 2,280

Intangible costs 780 200 0 980

Total avoidable costs 2,220 710 330 3,260

% of avoidable costs 70% 20% 10% 100%

% of social costs 34% 11% 5% 50%

Summary Table 3 Injury costs of harmful drug use ($m), 2005/06

Total injury costs due to harmful alcohol and other drug use were estimated to be $1,951 million, or just over one quarter of the total social costs of harmful alcohol and other drug use. According to the injury cost analysis, tangible costs associated with harmful alcohol and other drug use totalled $729 million, and intangible costs was estimated to be around $1,222 million.4 Harmful alcohol use was estimated to cost our community approximately $1,592 million in total in 2005/06. This equates to injury costs of approximately $3,100 per harmful drinker, of which $1,200 is tangible and $1,900 is intangible.

Other drug use accounted for a relatively smaller proportion of total injury costs (17.3 percent); it had an estimated impact of $337 million, the majority of which were intangible costs ($254 million in 2005/06). Approximately 27,000 people (aged 13 years old plus) were estimated to use illegal drugs and not alcohol, implying costs of $12,300 per drug user, of which $3,000 is tangible and $9,300 is intangible.

The research also investigated the impacts of injuries resulting from joint alcohol and other drug use. The tangible costs of injury due to harmful joint alcohol and other drug use were estimated to be around $17.5 million. Almost all of these costs (97.0 percent) were estimated to be tangible costs associated with health care.5

The costs of harmful drug use to the government amount to an estimated $1,602 million, or over one third (35.1 percent) of the total tangible costs to society. Reallocating the joint costs, just under 70 percent of the costs are due to alcohol and just over 30 percent are attributable to other drugs. Justice sector costs related to harmful drug use impose the largest burden on the government, accounting for just under half (49.4 percent) of the

4

Intangible costs make up a relatively larger proportion of injury costs than other costs. This is because many of the tangible costs were excluded as they were not injury related, or in some cases, for example the lost output for victims, it was impossible to separate out injury and non-injury related costs. This latter issue also means that the relativity between tangible cost components, such as lost output versus healthcare costs, will differ from the main estimates, partly as a result of the data issues rather than underlying behaviours and the consequent costs. 5 _{See footnote 4 for discussion on the implications of data availability for the relativity of tangible injury cost} components.

Injury costs ($m) Alcohol Other drugs Joint AOD Total

Tangible costs 624.4 82.7 17.0 729.1

Intangible costs 967.5 254.3 0.5 1,222.4

Total injury costs 1,591.9 337.1 17.5 1,951.4

% of injury costs 81.6% 17.3% 0.9% 100.0%

% of social costs 24.4% 5.2% 0.3% 29.9%

estimated cost to the government. Over one third (38.2 percent) of the government‟s costs were due to lost tax revenue from reduced output, while a substantial 20.6 percent were borne by the health sector.

Estimated costs in this report drew on a range of data and working assumptions. To give a measure of confidence in the robustness of results derived from these assumptions, sensitivity analyses were performed on several key factors. These sensitivity analyses suggest that the estimates of harmful alcohol and other drug use in 2005/06 are robust. On average, a one percent increase in the factors analysed leads to 0.1 percent increase in estimated costs (for positive changes) and a -0.09 percent reduction in estimated costs (for negative changes).

The results are most sensitive to the assumptions about mortality rates; a 10 percent increase in mortality rates leads to a 3.3 percent increase in total social costs. A 10 percent increase in the proportion of the supply of illegal drugs that is imported reduces the total social costs by 1.0 percent. Other sensitive results include harmful alcohol and drug use prevalence, and the value of a statistical life year.

2

Introduction

The Ministry of Health and the Accident Compensation Commission (ACC) commissioned BERL to estimate the social costs of harmful alcohol and other drug (AOD) use in New Zealand.

The Ministry of Health funds a substantial proportion of health care for New Zealanders and has a policy interest in the health and other impacts of harmful drug use. This research estimates the social costs of harmful drug use across a range of sectors, and includes a particular focus on these costs from a government perspective.

ACC is a public insurer charged with providing cover for both workplace and non-workplace accidents. As part of this research, ACC asked for an analysis of the social costs of harmful drug use related injuries. In addition, we were able to access ACC data and provide a further analysis of the implications of harmful drug use for ACC‟s expenditure.

2.1 Research scope

This report separately identifies, where possible, the social cost from harmful alcohol use and other drug use borne by the country in 2005/06. The other drug category in this study primarily covers illegal drugs including cannabis, opioids, stimulants, and hallucinogens. Where possible, the social costs of legal drug use were also included, such as the health care for harmful legal drug use (for example, legal anabolic steroid poisoning) and the cost of providing treatment using legal drugs (for example, methadone and naltrexone use for people receiving treatment for substance dependence).

The study also carried out three sub-analyses of harmful drug use: avoidable costs, injury costs, and costs from a government perspective. Avoidable costs are the portion of total social costs that may be avoided by reducing harmful use via government intervention or changes in user behaviour. The second analysis focused on costs stemming from injuries as a result of AOD misuse. The third analysis uses the main estimates to determine the impacts of harmful AOD use on government expenditure and revenue.

2.1.1 Drugs: alcohol and others

The study analyses two categories of psychoactive substances: alcohol and other drugs. The research specifically excludes consideration of tobacco.6

6 _{The social costs of tobacco were recently updated in two pieces of work by Des O‟Dea and co-researchers, O‟Dea} et al (2007a) and O‟Dea (2007b).

The alcohol category includes both home and commercially produced alcohol.7

The other drugs category refers to both illegal drugs and medicines or other legal products diverted from legitimate use to be used for their psychoactive effects8. The study mainly found suitable evidence on the impacts of illegal drug use, but evidence on the use and impact of legal, but misused drugs, such as some party pills or solvents, tend to be limited. As such, the results are likely to underestimate the impact of misused, legal drugs.

2.1.2 Harmful use

We define harmful AOD use as use that results in a net social cost.9 That is, society as a whole has fewer resources and less welfare than it would in the absence of harmful use. This approach focuses on observed negative impacts of rather than on the level of

consumption. For example, we include the costs of road crashes where alcohol is a causal factor regardless of the driver‟s level of consumption.

The World Health Organisation has a lexicon of terms related to harmful alcohol and drug use. Several of these terms are used in the articles, books, and journals reviewed and the media often uses these terms when discussing alcohol. These terms include, for example:  substance misuse, substance abuse, addictive substance use

 alcohol use, alcohol misuse, hazardous drinking, heavy drinking, binge drinking, abnormal drinking behaviour

 illegal/non-medical drug use, harmful drug use, dependent/ habitual drug use. Some authors reserve the term abuse for illegal substances, such as illegal drugs, while harmful use of legal drugs, such as alcohol, is called misuse. The phrasing of use, misuse and abuse is complicated by the possibility of beneficial substance use, particularly in the case of moderate alcohol consumption. This possibility is based on epidemiological studies

7

While all alcohol is considered in the characterisation of usage patterns and its harmful impacts, it was not possible to determine the share of overall harmful consumption that resulted from home-made alcohol. As such, the estimate of resources diverted by alcohol production is likely to be underestimated. According to the Ministry of Health's (2007) report "Alcohol use in New Zealand 2004", 1.8 percent of New Zealanders reported producing home-made alcohol in 2004. The proportion that home-made alcohol makes up of the total volume of alcohol consumed is likely to be smaller than the proportion of the population making home-make alcohol. Therefore, we believe that this omission will have a minimal impact on the study‟s results and will result in a conservative estimate. 8 _{That is, drugs classified as controlled drugs under the Misuse of Drugs Act 1975 and its subsequent amendments.} However, although benzylpiperazine (BZP) was reclassified as a class C drug in April 2008 under the Misuse of Drugs (Classification of BZP) Amendment Act, there was insufficient information on its impacts to robustly include it in this study.

9 _{Epidemiological literature and previous drug abuse cost studies were used to determine thresholds for harmful} AOD use (English et al 1995, Ezzati et al 2004, Rehm et al 2004, Connor et al 2005). This study defines harmful alcohol use as average daily consumption of alcohol per day over 20 grams for women and 40 grams for men. Any illegal drug use is classified as harmful for the range of impacts investigated in this study.

showing reduced risk of certain diseases, such as ischaemic heart disease among light to moderate drinkers.10 So, while alcohol use may be benign or harmful in some cases, it is possible that it may be beneficial in other cases.

Aside from medical drug use, other drug consumption is routinely presented in the literature as misuse or having harmful impacts only. This tends to reflect the absence of evidence for the non-medical health benefits from the consumption of other drugs (Ridolfo and Stevenson 2001). Collins and Lapsley (2008), for example, have “no problem in using the term „abuse‟ when referring to the consumption of… illegal drugs”. The authors argue, “in the case of illegal drugs, by definition, society has decided to proscribe their consumption, with the implication that any consumption is abuse.”

This study uses the term harmful drug use instead of abuse. This term is:  less judgmental than abuse

 recognises the complicated relationship between substance use and its impacts  allows for the possibility that some use may be benign or beneficial.

This term is consistent with the requested focus for this project on drug abuse: where society, including the substance user, incurs extra costs as a result of the drug use.

This study concentrates on the economic costs of harmful use. It does not explicitly estimate the social impacts of non-harmful use, nor the private costs associated with such use. Literature on beneficial use was not specifically reviewed, and estimated impacts of

beneficial drug use were not included in this study.11 However, there are intangible benefits, for example, to consumers from non-harmful consumption of alcohol. As these impacts are benefits, however, they do not fall within the scope of this study on the social costs of harmful drug use.12

10 _{The British Medical Association Board of Science (2008) argues that “alcohol consumption is linked to long-term} health and social consequences through three main causal pathways: intoxication, dependence and toxic (and beneficial) biological effects”. WHO (2002) has also used this schema, but only with reference to harmful alcohol consumption. These arguments are reinforced by recent epidemiological work that argues that firm conclusions on potential health benefits of moderate alcohol consumption cannot be made on the evidence that is available (Lindberg and Amsterdam 2008, Fillmore et al 2007, 2006).

11 _{In the case of alcohol, there is substantial and on-going epidemiological debate about the existence and} magnitude of any health benefits from any level of alcohol consumption. For example, Begg et al (2007) and Connor et al (2005) estimate some positive impacts of alcohol consumption for particular age groups and health conditions. But Lindberg and Amsterdam (2008), Fillmore et al (2007) and Fillmore et al (2006) contest the evidence base of the health benefits of alcohol, and suggest that it is not currently possible to conclude that alcohol is a causal factor for good health.

12 _{We use Collins and Lapsley‟s (2008) attributable fractions in our estimates of AOD-related hospital use and} mortality rates. These fractions indicate some alcohol use may be beneficial but any other drug use is harmful. To

Our study does not assume that the legal status has any necessary implication for the harmfulness of the substance. For example, legality does not imply the substance is harmless nor does illegality imply it is harmful. The basis of whether use is harmful is determined on available epidemiological and other relevant evidence.

This study defines harmful alcohol use as a “hazardous” or “high risk” drinking pattern (English et al 1995, Rehm et al 2004, Connor et al 2005).13,14 Table 2.1 below reports the drinking pattern thresholds, in grams per day, used in this study. They allow for different impacts by gender, and are based on population average levels.

Table 2.1 Drinking pattern thresholds by gender, grams of alcohol per day

Low risk drinkers, such as social drinkers, are assumed to have no harmful alcohol use, unless specific information to the contrary was found. For example, the analysis includes harms resulting from road crashes, hospitalisations, workplace absenteeism or criminal offences involving low-risk drinkers, as these incidents are captured in the data sources used for this study.

Any illegal drug use is assumed to be harmful. This reflects an absence of evidence for the non-medical health benefits from the consumption of illegal drugs (Ridolfo and Stevenson 2001). This approach is also consistent with the approach used in recent Australian social cost estimates (Collins and Lapsley 2002, 2008).

concentrate on harmful drug use, zero fractions were applied to conditions for which alcohol provided a net benefit, that is, for conditions with negative attributable fractions. This approach is likely to underestimate the harmful impacts of drug use. Although the net beneficial impact was removed, the harmful component for those conditions could not be estimated. However, Collins and Lapsley advise that the harmful impact for beneficial conditions is minute.

13 _{The average daily consumption ranges are consistent with the WHO categories (Rehm et al 2004), the Australian} alcohol guidelines (NHRMC 1992), Australian epidemiological and substance abuse studies (English et al 1995, Pidd et al 2006, Collins and Lapsley et al 2008) and a recent New Zealand study on the burden of death, disease and disability due to alcohol (Connor et al 2005).

14 _{These patterns are notional concepts that are derived from aggregated population information and used in a wide} variety of social cost estimation studies. However, these levels should not be interpreted as individual consumption guidelines. ALAC provides guidance and advice on individual alcohol consumption levels that are likely to minimise risk. http://www.alac.org.nz/LowRiskDrinking.aspx?PostingID=963 Women Men Abstinent 0.0 0.0 Low risk 0-19.99 0-39.99 Hazardous 20-39.99 40-59.99 High risk 40+ 60+ Source: Connor et al (2005)

2.1.3 Costs of harmful drug use

This study focuses on a broad range of costs covering personal, economic, and wider social impacts. These costs are collectively denoted by the term „social costs‟ in this report. This focus is consistent with that presented in Collins and Lapsley (2008). Collins and Lapsley gives a “comprehensive economic definition” of harmful drug use costs:

The value of the net resources which in a given year are unavailable to the

community for consumption or investment purposes as a result of the effects of past and present drug abuse, plus the intangible costs imposed by this abuse.

Our definition assumes a counterfactual situation in which no harmful drug use has occurred. The range of costs included in this study is detailed in Appendix Table 1. The inclusions and exclusions are compared to the range of costs found in Collins and Lapsley (2008), BERL (2008a) and other drug misuse cost studies.

The study aimed to estimate net social costs, rather than gross social costs of harmful drug use.15 That is, drug use may offset some costs as users reduce the burden on society‟s scarce resources. For example, while drug use may impose costs on the health system, premature death reduces the health care that users might otherwise have required if they had lived longer.

Net costs are conceptually distinct from avoidable costs as they reflect impacts from consumption. Avoidable costs refer to the potential reduction in net costs due to effective policy or clinical interventions that reduce harmful substance use or minimise harm from substance use. The present study, however, does not extend to analysing the cost-effectiveness of specific drug interventions.

This study takes a conventional approach for economic cost studies, which “do not attempt to fully consider the economic benefits of alcohol… and other drugs, and should not be confused with cost-benefit or cost-effectiveness analyses” (Single et al, 2003: 14).

15

A related, but separate, issue is that of the beneficial consequences of drug consumption. This report

concentrates specifically on the social costs of harmful use. It does not analyse the impacts from non-harmful use, such as any protective health effects of alcohol consumption. That is, beneficial impacts of alcohol use are not included as cost offsets. Aside from medical drug use, illegal drug consumption is routinely presented in the literature as misuse or having harmful impacts only. This tends to reflect the absence of evidence for the non-medical health benefits from the consumption of illegal drugs (Ridolfo and Stevenson 2001). Therefore, to be consistent with the focus on harmful drug use and the available evidence base, all illegal drug use is deemed harmful. A focus on the total impacts of drug use, rather than the harmful impacts, would allow for such beneficial impacts and result in lower net harmful effects.

2.1.4 The counterfactual

The literature presents two conventional approaches to evaluate the costs of harmful substance use: prevalence and incidence. This cost study uses a prevalence approach as prevalence-based studies are considered useful for planning and budget decisions. Both prevalence and incidence approaches value a range of cost components that result from misuse and compare these costs to a hypothetical scenario. This scenario is known as the counterfactual. In this study, the counterfactual reflects the costs that would not occur if there was no past or present harmful drug use. The main difference between these

approaches relates to whether the focus is on when the costs occur (prevalence) or when the use occurs (incidence).

2.1.5 Caveats on interpretation

The study has a number of limits. Where possible, it uses New Zealand data and research. Where appropriate, we draw on Australian and American research to support our

assumptions.

Attributable fractions

It was not feasible to re-calibrate attributable fractions using New Zealand prevalence statistics due to data constraints. In particular, it was not possible to get recent drug use prevalence statistics in a form that would suitably match up by drinking pattern with the relevant epidemiological literature on the relative risks associated with harmful drug use. Therefore, we use Collins and Lapsley‟s (2008) attributable fractions to estimate the proportions of mortalities and morbidities caused by AODs. This approach is likely to result in reasonably robust estimates given that the population and policy parameters in Australia and New Zealand are similar. However, New Zealand has a higher prevalence of harmful alcohol use than Australia, and a lower prevalence of other drug use. This means that this study is likely to underestimate the social costs of alcohol, while overestimating those for other drugs, where the estimated components draw on the Australian attributable fractions.

Mortality rates

We calculated AOD-related mortality rates for the 2001 to 2005 period using NZHIS data and attributable fractions. These rates are projected backwards to calculate AOD-related deaths from 1951 to 2006, and the likely survival of these people to 2005/06. That is, we estimate the number of people in the past who would have survived to live in 2005/06 if there was no harmful alcohol or drug use.

One assumption used in this estimation process is that the prevalence of drug use has remained constant over the estimation timeframe. The prevalence of hazardous drinking has remained reasonably constant over the past decade at a population level, although this experience may differ for specific groups within the population (Ministry of Health 2008). It is possible that the prevalence of harmful drinking in earlier periods was lower (Easton 1997). However, other drug use patterns and trends have changed over time (Wilkins and Sweetsur 2007). The mortality rates are based on data from the 2001 to 2005 period. But these rates are likely to overstate mortality from heroin and cocaine use in the 1950s or 1960s when use of these drugs in New Zealand was likely to be lower. Similarly, the data is not sufficient to include changes in recent trends, such as an increase in amphetamine use (and the related specific health conditions) over the last decade and a fall in cocaine use. Therefore our estimates for the additional population in the absence of harmful drug use are likely to be over-stated.

Exclusions due to limited data

In some cases, the local and international research was not sufficient to estimate some components. For example, this study does not provide an estimate of the intangible costs that result from poor health caused by harmful AOD use. This is likely to underestimate overall intangible costs.

General equilibrium impacts

Drug producers provide employment, income and output. This research does not, however, examine the general equilibrium (economy-wide) impacts of reducing harmful drug use. It is beyond the scope of this report to examine the alternatives to which these resources could be put. Such an evaluation would require industry (microeconomic) and countrywide (macroeconomic) analyses of the relative productivity of these resources in their current and alternative uses.16 In the case of alcohol production, this analysis would be complicated by impacts on the cost of production, i.e. „economies of scale‟, from substantial reductions in the size of the industry.

16

The size of the illegal drug industry poses a social and economic policy issue in New Zealand, particularly as some drug production has a strong regional concentration. Drug laws and enforcement lead to high prices for illegal drugs. While these prices may encourage some drug production, the prices give a distorted signal about the social value of that activity. That is, drug production may be profitable but producers fail to (fully) account for the harmful impact of their output. The harmful impacts that drug use imposes on that and other regions should be set against drug profits. Furthermore, the drug industry may trap resources and stop them from moving to better alternatives, such as innovation or education. Reforming the drug industry and moving resources to other industries may cut income in the short term but strengthen a region‟s economic base and deliver higher, sustainable growth in the future.

2.2 Report structure

The remainder of the report is divided into three main parts.

Sections 3 and 4 provide background to the study. Section 3 provides a summary of a brief literature review completed for this project.17 Section 4 briefly sets out the broad methods and definitions BERL used in this study; appendix 8 provides more detail on our methods and calculations.

Section 5 presents the study‟s main results. It analyses the overall impacts of harmful AOD use, including estimated costs for alcohol, other drugs and joint AOD costs, which are costs that could not be attributed to a specific drug given the available data. Separate sub-sections examine those costs identified as relating specifically to alcohol or to other drugs. Section 6 reports three sub-analyses of harmful drug use: avoidable costs, injury costs and costs from a government perspective. Avoidable costs are the portion of total social costs that may be avoided by reducing harmful use via government intervention or changes in user behaviour. The second analysis focused on what part of total social costs results from AOD-related injuries. The third analysis estimates the costs to government of harmful AOD use. The report ends with literature references and a glossary (sections 7 and 8). Additional tables and materials are appended in sections 9 through 12.

17

3

Literature Review

This section summarises a literature review carried out as an initial step in this project.18 The literature review surveys major international and New Zealand literature on harmful substance use cost estimation and drug-related research. It explicitly excludes research on the costs of tobacco.

It initially informed key methodological decisions and later provided a context to interpret the study‟s results. As such the literature review is organised around particular decisions that have been made in the course of the research, works from the general to the particular, and considers various analyses that could build on the main cost estimates.

3.1 Methodological issues

The cost of harmful substance use literature presents two conventional approaches to evaluate these costs: prevalence and incidence approaches (BERL 2008, Collins and Lapsley 2008, Johansson et al 2006, Rehm et al 2006, UK Cabinet Office 2003, Catalyst Health Economics 2001, ONDCP 2001, Devlin 1997, Easton 1997).19 International guidelines for harmful substance use cost estimation recognise both approaches as legitimate (Single et al 2003), but they address different research questions. Both approaches value a range of misuse cost components and compare these costs to a hypothetical or counterfactual scenario where there is no misuse. The main difference relates to whether the focus is on estimating costs of impacts occurring in the current period, which are attributable to past and current drug use (prevalence), or of estimating the current and future impacts of current drug use (incidence).

Single et al (2003) discusses prevalence studies as those that estimate the number of deaths and hospitalisations attributable to harmful substance use in a given year, and the costs associated with these deaths or hospitalisations. These costs also take into account harmful substance use prevention and intervention, and law enforcement costs in the same period. The study argues that prevalence is commonly used to refer to the number of cases of a particular disease or disorder that occurs in the general population during a specified period. Using a prevalence approach is therefore useful to estimate the social costs of

18

The summary is based on a separate literature review report, BERL (2008)

19 _{The terms “incidence” and “prevalence” may have different interpretations in other contexts. For example, in the} justice sector, the New Zealand Crime and Safety Survey (Mayhew and Reilly 2007a) notes, "Risks can be measured in terms of incidence rates – the number of offences per 100 households or adults. Incidence rates are used to estimate the full volume of crime taking into account that some people are victimised more than once. Risks can also be measured in terms of prevalence rates, which show the percentage of households, or adults who have been victimised once or more.”

alcohol misuse as you are able to estimate the costs based on the number of cases of a particular disease or disorder that has occurred in a given year.

The alternative incidence-based approach aims to estimate current and future costs resulting from harmful substance use by people in a given year. For example, the value of lost output from a person who dies prematurely as a result of harmful substance use is based on their estimated lifetime earnings rather than the single year of output lost in the year of their death. This requires projections into the future and the use of discount rates to establish the potential loss in output incurred due to morbidity and mortality resulting from harmful use. This approach is more complicated than the prevalence approach, as it involves estimating a lifetime profile of earnings (or other impacts) and choosing an appropriate valuation method so that present and future costs are measured in commensurate terms.

A prevalence approach focuses on the impacts due to current and past AOD use that occur in a given year. Prevalence-based studies are useful for planning and budget decisions. It is for these reasons that this study uses a prevalence approach.

3.2 Analytical perspectives

The primary analytical perspective of this study is the social costs of harmful AOD use; this is the most common perspective used in the major harmful substance use cost studies. The analytical perspective of a study determines what costs are relevant and may be captured in the analysis. Possible viewpoints in the general health economics literature include private, business, government and social (Drummond et al 1994).

Single et al (2003) makes a distinction between private costs and costs borne by others such as businesses or governments. The report argues a key distinction is that private decision costs are knowingly borne by an individual, while social costs are not knowingly or freely borne by the user or are borne by others such as businesses or government. Accurately valuing private benefits is likely to be complicated by the role of addiction, information issues (Collins and Lapsley 2008, Easton 1997) and the hidden nature of illegal drug use.

Social costs are defined in various ways, but a common thread is a version of the economic idea of negative externalities. Conventionally, an externality is an impact – positive or negative – that is borne by a third party and for which there is no compensation, for example, alcohol-related crime. Social costs are the costs imposed on New Zealand society by harmful drug use, excluding purely private impacts.

Markandya and Pearce (1989) extends this idea to include third-party costs plus costs unknowingly borne by the user, for example, where the actual cost is greater than the

perceived cost. Under this definition, poorly informed decisions generate social costs even though these costs are borne by the user. Such costs may be referred to as internal costs in economic terms (Single et al 2003).

Single et al (2003) argues that from the point of view of public policy, social costs are the most relevant as they determine the costs that an activity such as drug misuse imposes on users and the rest of a community. Further, the study states:

Social costs may be incurred by other persons in the private sector (e.g. when private insurance premiums are increased due to payouts to smokers) as well as by public sector expenditure. Thus, in the context of COI [cost of injury] studies, “social” is not a synonym for “public”, nor “private” for “private sector”.

Thus the focus on social costs often appears to be driven by impacts that are relevant to policy or emerging policy issues.

The Strategy Unit of the UK Cabinet Office (2003) argues that estimating the cost of alcohol misuse is a valuable source of information for policy makers. It serves a variety of functions such as justifying, or otherwise, resources spent on reducing the harm associated with alcohol misuse; appropriately targeting specific problems; providing insight into future policy appraisal and evaluations; providing baseline measures to determine the efficiency of alcohol policies and programmes; and helping to identify information gaps, research needs and desirable refinements to national statistical reporting systems.

As social costs are the costs imposed on society, they are often relevant to policy or emerging policy issues. As such, harmful substance use studies concentrate on those impacts that may justify government intervention, such as poorly informed decisions or decisions that harm others.

Easton‟s (1997) study of the costs of alcohol and tobacco use in New Zealand is an

exception to the focus on social costs with the exclusion of known private costs and benefits of substance use. That study incorporates an estimate of the private benefit that non-addicted drinkers derive from alcohol consumption. It is included as a negative item in the counterfactual, that is, a benefit that would be lost if alcohol misuse stopped.

A final note on analytical perspective in the literature concerns the social value placed on resources freed by reduced drug misuse. This issue is complicated in the literature by distributional issues and economy-wide (or general equilibrium) impacts. For example, eliminating cannabis production in New Zealand would be likely to impact on some people and regions more than others. However, harmful substance use studies tend to focus on quantifying the magnitude of harms, rather than the economic impact of reducing or

eliminating harmful substance use. Further, Collins and Lapsley (2008) argues that it would be “speculative” to estimate the macroeconomic impact of reduced drug misuse as “the uses to which these resources would have been put would be largely determined by government macroeconomic and microeconomic policies”.

3.3 Cost categories

The broad categorisation of costs below is common across the major harmful substance use cost studies, and Single et al (2001, 2003) acts as a landmark reference for it. The two broad cost categories are tangible (or productive resource) costs and intangible (welfare) costs. These include crime, inputs diverted to drug production, health care costs, road crash costs, lost output (which is sometimes referred to as lost productivity) and selected

dimensions of quality of life and loss of life.

Despite the wide range of costs included in the major harmful substance use cost studies, there are a number of components for which estimates are not provided due to a lack of data about the distribution of risk factors or the association between a risk factor and an outcome. These include costs such as environmental damage or a broad concept of lost wellbeing.

Figure 3.1 Cost categories, components and analytical focuses

The colours suggest possible alternative analytical focuses, for example, a focus on total costs (light blue plus purple) or on avoidable costs (purple only). Avoidable costs are the portion of total costs that may be avoided by reduced harmful substance use through treatment and preventive interventions. The remaining costs, shown in light blue, represent costs that are likely to persist in spite of policy interventions. Other focuses might

concentrate on who bears the costs, or costs due to particular types of harms such as injury. Accurate categorisation of the costs of harmful substance use also needs to take into account two issues. The first relates to co-morbidity costs, that is, costs which are not primarily caused by the misuse of a substance but may be exacerbated by it. The second issue relates to jointly attributable costs, costs that are associated with the use of multiple substances.

Tangible costs

Total social costs of substance misuse

costs

Cost categories

Health

Crime Diverted inputs Road crashes Lost output Morbidity Mortality

Intangible

3.3.1 Tangible costs

A tangible cost can be either a direct cost or an indirect cost, depending on whether it is an explicit cost or an opportunity lost due to harmful substance use.

The largest direct costs due to the misuse of alcohol or other drugs in dollar terms (Collins and Lapsley 2008, BERL 2008) include:20

 crime costs caused by harmful drug use

 resources diverted from beneficial consumption or investment to drug production  road crashes

 health care costs.

Conceptually, the direct cost category also includes the unpaid time given up by family and friends to take care of those who are ill as a result of harmful drug use, as well as time spent seeking or participating in treatment by persons affected by harmful drug use. Estimation of these costs would require information on the quantum and value of time involved. This study does not estimate this cost.

While the literature is not explicit on this point, some direct cost components may be more relevant for some substances than others. For example, property damage due to fires may be a greater issue for alcohol misusers than injecting drug users.

Indirect costs refer to potential resources or output that is not generated as a result of misuse. These costs may be borne by individuals or third parties such as employers. The primary indirect costs of AOD are:

 production lost to the economy as a result of premature death of users of AODs  production lost to the economy as a result of an injury or disability to users of AODs  reduced production by those who are disabled, for example, due to the ill effects of

harmful drug use or AOD-related road crashes

 reduced production by family members and friends who take care of those who are ill as a result of harmful drug use. However, estimation of these costs would require

information on the quantum and value of time involved. This study does not estimate this cost.

20 _{These components may also involve indirect and intangible costs. For example, in addition to health care related} to road crashes, time off work would be counted as an indirect cost, while lost quality of life or loss of life would be measured as an intangible cost.

3.3.2 Intangible costs

Intangible costs are welfare impacts borne by individuals that “cannot be shifted” (Collins and Lapsley 2008). Intangible costs harm the individual but any reduction in harm cannot be transferred to other members of society.

In the case of AOD, intangible costs include:

 premature death among users as a result of AOD misuse

 reductions in the quality of life among users due to pain, disability and lost wellbeing caused by AOD misuse.

Most AOD misuse studies estimating intangible costs analyse loss of life and assign a monetary value to it. A UK Cabinet study (2003) argues that a monetary value of premature death can be estimated by the Willingness to Pay (WTP) approach. In this approach life is valued according to what individuals would be willing to pay for a change that reduces the probability of illness or death.

Single et al (2003) also discusses how studies should consider the loss of income and quality of life due to premature mortality. One issue is how to account for the age at which death occurs and the impacts of this on lost output and the quantum of life years lost. The age at death affects both the person‟s potential level of output, the remaining number of productive years and the number of life years sacrificed to premature mortality. Evaluating future losses is primarily an issue for cost studies that use an incidence approach or a human capital approach to valuing lost output. Those approaches aim to capture the current and future impacts, which are affected by the age of death and consequently the number of future years affected. In contrast, a prevalence approach focuses on costs borne in a particular year as a result of past and current behaviours. This approach avoids having to estimate the implications of premature mortality that extend out to the future.

Summary measures of the lifelong impact of disease on loss of wellbeing include years of life lost (YLLs), years of life lost due to disability (YLD), disability-adjusted life years (DALYs), or quality-adjusted life years (QALYs). These measures are briefly defined below.

 YLLs relate to “what reduction in mortality is possible”, and measure “the amount of time a person would have lived had he or she not died prematurely – the (potential) years of life lost” (Ministry of Health 1999). The YLL method implicitly values death at a younger age greater than death at an older age, and YLLs may be calculated to allow for different assumptions about potential life expectancy. However, differential life expectancies, based on the population‟s current life expectancies, raise equity concerns due to existing differences between Māori and non-Māori life expectancy.

 YLDs are the number of years a person has lived with a health condition multiplied by the disability weight for that condition. Disability weights are based on expert opinion rather than individual preference-based estimates.

 DALYs measure disability or lost health in the current population compared to a counterfactual situation where everyone lives to old age in full health. DALYS can be calculated for specific health conditions and are the sum of YLLs and YLDs.

 QALYs are also a summary measure of health-related morbidity and mortality, but a higher QALY measure represents greater wellbeing. QALYs value different health states based on five health dimensions (mobility, self-care, usual activities,

pain/discomfort, and anxiety/depression). The conventional health state values used are based on preference-based evaluations developed by the EuroQol Group (Brooks 1996). Some New Zealand research has looked at developing culturally-specific health state preferences (Devlin et al 2000).

A further step is to convert the total intangible cost measured in natural units (e.g. YLLs or QALYS) to dollar terms using an appropriate value statistic, such as a value of statistical life (VOSL).21

Collins and Lapsley (2008) argues that pain and disability attributable to road accidents can also be given a monetary value. But neither that study nor its earlier editions find sufficient data to estimate other morbidity costs. Easton (1997) argues that intangible morbidity costs in New Zealand were of a similar magnitude to mortality costs. However, he notes that “it is not easy to summarise [alcohol-related loss of wellbeing] in dollar terms”. This is because there is “sparse information about the incidence of morbidity from alcohol misuse” and there is “no measured (let alone agreed) valuation of the reduced quality of life”. However, more recent transport sector research in New Zealand has generated a WTP-based VOSL, which is adapted for use in our study.

Even though well established methodologies exist for this process, there is controversy about what an appropriate VOSL is (BERL 2007b). Issues around VOSLs include whether:  a person‟s relative productivity is significant, for example, placing a higher value on more

productive individuals

 an allowance for a person‟s age, for example, whether the deaths of young people and old people should be attributed the same value

21

 the mode of death is influential, for example, whether death by road traffic accident is psychologically more or less traumatic than death in a house fire.

3.3.3 Co-morbidities and jointly attributable costs

Two further methodological issues involve how to account for co-morbidities and impacts that are jointly attributable to multiple substance use.

Co-morbidity costs are not primarily caused by the misuse of a substance but may be exacerbated by it. In addition, co-morbidities may be exacerbated by joint AOD use when the substances interact. Where these costs are ignored, they will lead to an underestimate. Jointly attributable costs are the product of multiple substance use. Where this joint

attribution is ignored, it could lead to an overestimate due to double counting of a single cost when single substance estimates are inappropriately summed.

The literature concentrates on health-related co-morbidities, for example, where alcohol affects the general condition of a patient whose main diagnosis is non-alcohol related. In this case, alcohol use may worsen pre-existing conditions and increase the cost of health care (Johansson et al 2006). Johansson et al calculates co-morbidity using an extended version of that used by Single et al (1998). In this method, Johansson et al compares patients with alcohol-related secondary diagnosis with patients with no alcohol-related secondary diagnoses. The co-morbidity cost is then estimated by taking the average difference in length of stay times the number of cases with an alcohol-related co-morbidity. Ezzati et al (2004) canvasses the epidemiological issues and research on estimating the joint effects of two or more risk factors and the calculation of joint population attributable fractions (PAFs).22 A joint PAF gives the fraction of a disease collectively due to the factors examined. Following a technical exposition on the calculation of a joint PAF, Ezzati et al briefly surveys examples of joint effects for selected major risk factors, including smoking but not AOD.

English et al (1995) provides an accessible examination of the issues with joint attribution in an appendix and sets out how its estimates of drug-caused attributable fractions account for

22 _{An attributable fraction measures the proportion of a disease or mortality in a population due to exposure to a} defined environmental risk, such as drinking alcohol (WHO 2002). A negative fraction indicates that the drug in question has a protective effect against the medical condition under study (Collins and Lapsley 2008).

joint attribution. The study reviews the ideas of sufficient, component and necessary causes.23 It notes (p 603),

…while hazardous/harmful alcohol use could well be a component cause of some deaths and morbid events ascribed to opiate and other illegal drug poisoning, such deaths would have been ascribed only to illegal drugs. Thus, the question of „double counting‟ does not arise, although such events represent an underestimation of mortality and morbidity caused by hazardous/harmful alcohol intake.

The report specifies 10 conditions for which “sufficient evidence of causation was found, and which are common to at least two out of the three broad categories of drugs (alcohol, tobacco, illegal drugs)”. Only two of these 10 relate to potential interaction effects between alcohol and illegal drugs: low birth weight and suicide. However, there are more than 10 conditions for which attributable fractions have been derived, and many of these conditions could also have interaction effects.

Begg et al (2007) is based on the earlier work of English et al (1995) and Ridolfo and Stevenson (2001) and estimates joint effects for key health risks. It draws on the WHO‟s Comparative Risk Assessment (CRA) project on health risk exposure prevalence and the relationship with health outcomes.24 Begg et al‟s introduction to joint risk attribution makes an “over-simplification” that “health risks are biologically independent and uncorrelated”. However, its quantitative analysis and calculation of joint PAFs does attempt to take into account risk factor interactions. As for English et al (1995), the main conditions where joint attribution is an issue are suicide/self-harm and a set of minor conditions grouped into a broad „Other‟ category. However, it does not report joint PAFs for specific conditions which are jointly related to alcohol and illegal drugs.

Collins and Lapsley (2008), the recent Australian substance abuse cost study, recognises the risk of double counting due to causal interactions between drugs. To account for this possible effect, its aggregate estimates of these types of costs are reduced by 2.18 percent. Its estimates appear to be based on English et al‟s (1995) calculations and the authors‟ analysis of drug-related Australian mortality in 2004/05.25 As noted in the authors‟ earlier

23 _{A sufficient cause “inevitably produces the effect; a component cause “does not cause the effect alone” but may} become a sufficient cause in combination with other factors; a necessary cause “is a component cause that is a member of every sufficient cause” (English et al 1995).

24

The CRA used international panels of experts to collect the up-to-date information for a range of countries and health risks on the prevalence of exposure to the selected health risks and the relationship between these exposures and health outcomes. The results were published in the WHO‟s (2002) annual world health report and by Ezzati et al (2007).

25 _{The authors are aware of Begg et al‟s (2007) work. But as Begg et al (2007) did not report joint PAFs for specific} substances and conditions, Collins and Lapsley may not have been able to use that research in their latest analysis.

study (Collins and Lapsley 2002), the quantified interactions are between alcohol and tobacco, not between alcohol and illegal drugs.

For non-health crime and justice sector costs, Collins and Lapsley (2008) provides a combined estimate when the study is unable to sensibly allocate joint costs to a single substance. For example, some crime costs are jointly attributed to alcohol and illegal drug use, and a portion of these costs could not be robustly allocated to either substance

independently. With regards to violent crime, the independent and joint estimates are based on Police detainee interviews. The interviews list either alcohol, illegal drugs or both as contributing factors to a crime, with the result that the joint portion of violent crimes cannot be disaggregated by substance.

3.3.4 Avoidable costs

One focus that has seen increasing research over the past decade is what costs are susceptible to policy intervention. These costs are known as avoidable costs of substance misuse (Rehm et al 2008, Collins and Lapsley 2008). Avoidable costs are the proportion of total costs, or the burden of misuse, that could in principle be changed given the

implementation of appropriate public policies.

The International Guidelines for the Estimation of the Avoidable Costs of Substance Abuse (Collins et al 2006) argue that identifying the social costs of substance misuse involves estimating the relevant avoidable proportion of each cost category and applying these proportions of avoidable cost to the relevant aggregate cost estimates. That is, estimates of the total costs of drug misuse comprise avoidable and unavoidable costs.

Further, Collins et al argues that avoidable costs are the potential economic benefits (i.e. costs avoided) from substance misuse harm minimisation strategies. These estimates can be used in policy to determine the appropriate level of resources that should be devoted to these strategies.

Single et al (2003) argues that estimates of avoidable costs do not indicate how these cost reductions might be achieved or whether the social benefits that result from these

programmes exceed their social costs. To do this, Single et al (2003) states that project appraisals must be undertaken that evaluate the efficiency of alternative policies or

interventions and/or treatments. These appraisals could use cost-effectiveness analysis to compare the cost of alternative policies or interventions and/or treatments, but they should be undertaken from the viewpoint of the community as a whole, not just the Government.

The level of alcohol misuse will determine the treatment goal – from reducing alcohol consumption to abstaining from alcohol consumption (Collins and Lapsley 2008, Room et al 2005). Room et al (2005) divides alcohol treatment into three general categories:

 brief intervention

 specialised treatment programmes  mutual help groups.

Collins and Lapsley (2008) defines brief interventions as advice and information provided to „at risk‟ drinkers in the context of a primary care physician consultation. This information is usually conveyed verbally but may be accompanied by additional support such as follow-up telephone calls and printed material.

Gibson et al (2007) also includes opportunistic interventions in primary healthcare settings as part of these interventions. This is where general practitioners screen patients on the quantity and frequency of their alcohol consumption levels and encourages patients who are drinking at harmful levels to decrease their consumption. Gibson et al (2007) divides interventions into brief interventions, psychosocial interventions (such as motivational approaches, cognitive-behavioural approaches and self-guided material), and pharmacotherapies.

Room et al (2005) states brief interventions provide prophylactic treatment before or soon after the onset of alcohol-related problems. The study recommends motivating high-risk drinkers to moderate their alcohol consumption rather than promoting total abstinence. Various studies argue that brief interventions are better suited to individuals with mild drinking problems while specialised treatment programmes are better suited to individuals who are heavily dependent on alcohol. However, Collins and Lapsley (2008) argues there is a role for brief interventions for those individuals who are heavily dependent on alcohol alongside pharmacotherapies.

Specialised treatment programmes involve interventions that manage the withdrawal of alcohol, prevent relapse, and help with social and psychological rehabilitation of the problem drinker. They include detoxification, rehabilitation treatment, therapeutic approaches, and pharmacotherapy using alcohol-sensitising drugs.

Room et al (2005) states that mutual help groups, including groups such as Alcoholics Anonymous, are not considered formal treatment. These groups, the study argues, are often used as a substitute, alternative, or adjunct to treatment. In addition, Room et al states

that several studies suggest Alcoholics Anonymous can have an incremental effect when combined with formal treatment and attendance at the group is better than no intervention. Gibson et al (2007) terms these interventions “motivational interventions” as they involve a client-centred non-confrontational style of counselling. Gibson et al also discusses self-guided interventions, which may fall loosely within this group as they involve self-self-guided material provided in booklets and electronic format. This material is initially provided in a primary healthcare setting but little contact is made with medical staff.

Economic literature has argued that the cost of treatment is worthwhile from a societal perspective due to the reduction of harms from alcohol consumption including crime, court costs, and productivity changes. However, the literature comparing the cost-effectiveness of different types of treatment is limited (Gibson et al 2007, Collins and Lapsley 2008). In addition, only a small number of studies have been completed on some alcohol treatments and some of these studies have lacked a control group (Gibson et al).

Chisholm et al (2006) argues that only personal interventions aimed at hazardous drinking have been subjected to economic evaluation, and provides an example from the United States and Australia on the cost-effectiveness of these strategies. In addition, there are limited economic evaluations of drug treatment. Those that have been evaluated use observational studies of treatment outcomes in samples of patients with mixed substance misuse problems including opioids. Using examples from the United States again, Chisholm et al discusses the substitutive maintenance treatments for opioid dependence where buprenorphine maintenance treatment (BMT) provides a viable and cost-effective alternative to methadone in the treatment of opioid dependence.

To evaluate interventions, Gibson et al (2007) uses two treatment outcomes in the analysis; percentage change in alcohol consumed and percentage change in the proportion of abstinent days. These outcomes were chosen as not all the treatment outcomes were consistently expressed as a single measurable unit. As such, Gibson et al (2007) also argues that it illustrates the difficulties of using research studies with non-comparable outcomes to inform policy on the cost-effectiveness of different treatments.

Cost-effectiveness analysis can be used to understand the relative costs and outcomes of different treatments. Collins and Lapsley (2008) states that this type of analysis uses a single outcome unit such as value per life years saved or deaths prevented. However, a single outcome unit is n