Two reports have been published that explore drug-related public expenditure and the methodological challenges faced in estimating its value: Public expenditure on supply reduction policies1 was published in May 2017, while Drug treatment expenditure: a methodological overview2 was published in October 2017. The reports overlap extensively in terms of their descriptions of what drug-related public expenditure is, the context in which they were commissioned, and the overall messages from their findings.

What is drug-related public expenditure?

Public expenditure is defined as ‘the value of goods and services purchased or utilised by the general government in order to perform each of its functions’ (p. 15).2 This includes any drug-related spending across the various functions of government, including healthcare, justice, public order, education, and social protection. Broadly speaking, drug-related public expenditure is described as ‘labelled’ or ‘unlabelled’. Labelled drug-related expenditure is

the ex-ante planned public expenditure made by general government in the budget that reflects the public and voluntary commitment of a country in the field of drugs. In addition, it is any expenditure identified as drug-related in public accountancy documents.1 (p. 23)

In the Irish context, this would include budget allocations for the Health Service Executive (HSE) addiction services and treatment services in prison, for example. Unlabelled drug-related expenditure is

the non-planned or non-publicly announced ex-post public expenditure incurred by the general government in tackling drugs that is not identified as drug-related in the budget.1 (p. 24)

This would include, for example, the cost incurred for the imprisonment of people for drug-related offences. Total drug-related public expenditure is the sum of both labelled and unlabelled expenditure.

Context of reports

Internationally, there are growing demands on governments to support effective responses to problematic drug use. However, simultaneously, budgets for both supply and demand reduction activities have tended to decrease as a consequence of austerity measures implemented following the 2008 recession. This has contributed to a context where ‘ensuring value for money in public investment [is] high up on the political agenda’ (p. 179).2 It is within this context that there is a need for governments to carry out rigorous policy evaluations that include an economic assessment. This will support better decision-making about where to allocate resources. Being able to quantify a government’s drug-related public expenditure is a key step in carrying out any economic evaluation of its drug policy interventions.

In this economic climate, more than ever, policymakers and service planners require data and information on the capacity, performance and costs of national treatment systems in order to support investment decisions and to make sound policy choices.2 (p. 5)

This move towards improving understanding of drug-related public expenditure and its accurate measurement is reflected in European Union (EU) policy. One of the 15 overarching indicators for measuring the achievements of the EU action plan on drugs (2017—2020) includes developing national evaluations and public expenditure estimates.3 Despite this, it is a methodological area in which knowledge is described as ‘sparse’ (p. 5).1 To address this gap, the European Monitoring Centre for Drugs and Drug Addiction (EMCDDA) has been given the role of ‘developing analytical instruments to better assess the effectiveness and impact of drug policy using a number of tools including the analysis of public expenditure’ (p. 5).2 These reports were commissioned as part of this effort.

Supply reduction public expenditure

Public expenditure on supply reduction policies provides an overview of the key concepts involved in estimating public expenditure. While focused on supply reduction, the report offers a very useful introduction to the field of drug-related public expenditure more generally. It explains in an accessible way the core concepts involved and outlines the key steps in cost estimation and analysis.4 For example, it describes the international classifications for the functions of government used in this field (Reuters and COFOG), as well as a detailed description of the characteristics of labelled and unlabelled expenditure.

Supply reduction initiatives are defined as those comprising ‘the whole system of laws, regulatory measures, courses of action and funding priorities concerning illicit drugs put into effect by a government or its representatives’ (p. 8)1 (e.g. police and customs officers and judges). The report outlines examples of models for estimating unlabelled supply reduction activity in related sectors — the police, customs and prison services as well as court systems. A sample of national studies which have applied models for estimating labelled and unlabelled expenditure on supply reduction are also described.

The report concludes with a set of recommendations that focus on improving the quality of data and methodological approaches to analysis. There is a particular focus on the need for consistency in classification of the data and for partnership working with all relevant stakeholders in the field.

Drug treatment expenditure

Drug treatment expenditure: a methodological overview is a much more substantial report than that on supply reduction policies. It gathers together detailed methodological papers from across the globe to provide an overview of ‘the current state of the art in this field’ (p. 179).2 While it indicates a growing interest and level of research activity on the topic, the authors describe it as still being in its ‘infancy’ (p. 179).2 The report highlights the methodological complexities of the topic, with much discussion on the challenges faced in carrying out this work. It highlights the need for more agreement on common definitions and improved data sources. The main body of the report is broken down into five sections, each of which focuses on broadly different methodological approaches taken on the topic.

‘Towards an overall estimate of public expenditure on drug treatment’ describes the approach taken by a team in Australia to provide an overall estimate of drug treatment expenditure. It highlights the methodological challenges in doing so, including being unable to isolate expenditure on treatment for alcohol misuse from that on drug treatment.

The second and third sections present the methods used when focusing on labelled (three studies) or unlabelled expenditure (five studies), respectively.

‘Other tools to measure the costs of drug-related harm’ contains two studies. The first describes a ‘calculator’ developed by Public Health England which can be used by local authorities in their appraisal of their spending on drug-related interventions. The second explores the issue of cost sensitivity in relation to the delivery of services across teams – how much would costs increase if established drug treatment teams were to increase their activity?

The fifth section is about ‘contextualising costs’. It presents the findings of three diverse studies which show that public expenditure on drug treatment is only part of the picture when exploring costs. They highlight the importance of placing public spending estimates in the right context. It addresses questions such as how should estimates on drug treatment vary if a significant amount of costs are borne by the private sector.

The final substantive section of the report identifies the main methodological commonalities and considerations from across the studies. The authors conclude with a set of 10 ‘good practices’ (p. 188)2 that they suggest could be used to improve estimates of public expenditure on drug treatment. These include to:

Ensure that clearly defined aims and objectives are developed for each exercise, and note that these may differ from case to case.

Develop a clear definition of drug treatment for the study, including the operational definition applied in estimates. This should help to clarify the scope and objective of estimates.

Develop a map of treatment provision and funding flows. This exercise will help identify missing data, minimise the risk of double counting and facilitate assessment of the coverage of estimates.

Analyse all levels of government activity, budgets and/or fiscal-end accountancy reports to identify labelled expenditure on drug treatment, as responsibility for financing drug treatment can lie with multiple actors (p. 188).2

Key messages

While exploring different aspects of drug policy, there was much overlap in the findings of these reports. Both argue the importance of being able to calculate drug-related public expenditure if policy-makers are to be able to make decisions about the most cost-efficient approaches to addressing problematic drug use. They found numerous challenges to collecting and comparing drug-related expenditure across jurisdictions, with different political structures and government accounting systems. An absence of commonly agreed definitions and methodologies, a lack of comparable datasets, and uncertainty about which economic models to use, were identified in both reports as barriers to the rapid development of policy evaluation and cost-effective analysis.

2  European Monitoring Centre for Drugs and Drug Addiction (2017) Drug treatment expenditure: a methodological overview, EMCDDA Insights 24. Luxembourg: Publications Office of the European Union. https://www.drugsandalcohol.ie/28010/

3  European Commission (2017) EU action plan on drugs 2017–2020. Brussels: Council of the European Union. https://www.drugsandalcohol.ie/27680/

4  Another Drugnet article also explains the basic concepts of drug-related public expenditure in some detail. See Pike B (2008) Understanding drug-related public expenditure. Drugnet Ireland, 27: 23—24. https://www.drugsandalcohol.ie/12125/