The price and mark up of pharmaceutical drugs supplied on the black market

Background: Research examining illicit drug markets has shown that price affects consumption and mark ups are extremely high. However, the economics of black market pharmaceutical supply remains unknown, despite increasing harms due to pharmaceuticals. Methods: Semi-structured, telephone interviews were conducted in Australia with 51 people involved in supplying pharmaceuticals in the previous six months. Interviews were audio-recorded, transcribed and quantitative information on costs, sale price, quantity and frequency of supply were coded and used to calculate the mark up ratio for each drug transaction ‘cycle’, accounting for distribution via selling, gifting and trading. Mixed effects gamma regressions were used to identify predictors of price and mark up, clustering by participant. Results: There were 29 drugs supplied over 111 cycles, including hypnotic-sedatives (38%), pharmaceutical opioids (32%), stimulants (18%) and others (12%). Sedatives were sold at lower prices than opioids and there was a negative relationship between unit price and transaction size, consistent with a discount effect. For every dollar spent acquiring the drugs, the supplier earned a median of $3.19. Cycles involving the distribution of drugs sourced via intermediaries (e.g. friends/family) had lower mark up than drugs sourced directly from the medical system. Conclusion: To our knowledge, this is one of few studies to analyse economic aspects of the pharmaceutical black market from a supply perspective. There were a small number of cycles that realised large profits that may warrant different types of policy responses, however for most suppliers in our sample gross revenue and gross profit was modest.