Will the pseudoephedrine ban reduce P availability?

Oregon made pseudoephedrine-based cold medicines prescription-only back in 2006. A new report on the effectiveness in reducing the availability of P concludes:

Oregon’s experience with methamphetamine manufacture and abuse since 2006 does not stand out from its neighbors or other parts of the United States. This potentially calls into question whether Oregon’s Rx-only law had any independent effect on these key measures. Moreover, this law does come at some cost to consumers and government and private payers.

So the ban on selling effective cold medicine over the counter had no observable effect upon the P problem, but does cause inconvenience for people with a cold. It will be interesting to see comparable studies for New Zealand in a few years time, although the lack of neighbouring states makes it harder to find control groups to compare with.

  • Rob Salmond

    “…the lack of neighbouring states makes it harder to find control groups to compare with.”
    This lack of neighbouring states also makes it harder for prospective P-makers to secure alternative supply. I think this difference makes the Oregon experience somewhat less relevant to a geographically isolated polity like NZ.

    • http://www.tvhe.co.nz rauparaha

      Maybe you’re right. I’ve no idea how P is made so I don’t know what options are available to P-makers. Are the alternative production options largely reliant on overseas supply of ingredients?

      I imagine Oregon’s proximity to alternative sources of supply would also reduce the effectiveness of the ban, relative to NZ. Together, those factors point to Oregon’s experience being a lower bound for the impact on NZ, although we’ll have to wait for some data to know for sure.

      My primary concern is that any reduction in P availability will count as success, without inclusion of the costs to people with colds.

      • Rob Salmond

        I also have no idea how P is made, I hasten to add!
        I think the hard part about doing a full on cost-benefit analysis that includes the benefits of any reduction in P supply and the costs of inconvenience are that it is even harder to put a $ figure on those inconvenience-based costs than it is to put a $ figure on social benefits from tighter supply. I think attempts to do that can probably come up with whatever answer the researcher wants, depending on which of a wide range of plausible assumptions are chosen.

        • http://www.tvhe.co.nz jamesz

          Probably true, but I don’t think it would be all that hard. We know the cost of cold meds before and after the law change. That gives a range for the willingness-to-pay of consumers who decided not to purchase follwoing the law change. Data on sales of pseudoephedrine-based cold meds is probably available, or at least fairly easy to estimate since it’s been monitored for a while. Putting those two together gives a rough estimate of the loss in consumer surplus, which is a good start.

  • Bill

    On the demand side, you could estimate the extra cost borne by OR consumers who do purchase Rx pseudo-e, get the sales data, and estimate an elasticity. Then, you could apply that elasticity to estimate consumer surplus in NZ.
    Also, a lot of P manufacture was/is based on wholesale pseudo-e through smuggling, rather than retail purchases. That limits the potential production impact.
    You could do something like: less P saves NZ $10m, which is equivalent to $2.00 per pack of cold medicine. Find out if people would be willing to pay $2.00 more to get pseudo-e (I know I would).

    • http://www.tvhe.co.nz jamesz

      I knew there would be an expert on P supply out there somewhere! Thanks, Bill.