Luis Diestre, from IE University, will present his research work. 

The Dark Side of Scarcity: How Drug Shortages Push U.S. Consumers Towards Illegal Pharmacies

We examine whether drug shortages in legal pharmacies push consumers towards illegal pharmacies. Using a novel methodology to measure U.S. consumers’ purchases from illegal pharmacies we find drug shortages have a substantive impact on illegal drug sales. Using a matched sample and difference-in-difference analysis for causal identification, we estimate illegal pharmacies’ sales of drugs experiencing a shortage increase by 31.5% during the shortage. We also find that illegal pharmacies’ sales of concomitant drugs—i.e., other drugs consumers typically take with the drugs experiencing a shortage—increase by 27.7% during the shortage. Further, our results show the effect of drug shortages is long-lasting. We estimate that illegal sales of the drug under shortage, as well as of concomitant drugs, remain 28.2% and 21.1% higher, respectively, six months after the shortage has been resolved. Given that drugs from illegal pharmacies pose serious safety risks, our findings uncover a hidden public health threat of drug shortages.