The Economics of Fentanyl Supply

(Image courtesy of Gage Skidmore)

The question is often asked of why distributors are choosing to use something as deadly as fentanyl to cut or disguise as heroin. The answer is fairly simple: regardless of how many customers are dying, for those solely looking to profit, the net financial gain for utilizing fentanyl to adulterate heroin far outweighs whatever risks come with it. Buying large amounts of fentanyl or fentanyl analogues is exceptionally cheap and can be done conveniently via the dark web. For even cheaper, one can purchase fentanyl precursors legally from China and easily produce fentanyl or its analogues.

An article in The Atlantic from this past August outlined the journey of fentanyl ingredients from China to North America. Author Ben Westhoff specifically highlighted the operation of Yuancheng, a large Chinese chemical company that is known to sell fentanyl precursors via the internet. When Westhoff made contact with Yuancheng in January of 2018 he did so in hopes of being able to purchase NPP and 4-ANPP, the two most popular fentanyl precursors. China had announced that it would schedule both of these chemicals, though, with the law going into effect in February 2018. A Yuancheng saleswoman stated that they were a legal company and no longer distributed NPP or 4-ANPP. Westhoff transparently stated that he wanted to make fentanyl, to which they responded by directing him to some similar but unscheduled chemicals that would allow him to produce the deadly synthetic opioid.

A representative at Yuancheng told Westhoff that most of the people purchasing fentanyl precursors are based in Mexico. This is consistent with the fact that most of the fentanyl hitting the streets in the United States flows from Mexico. Cartels in Mexico aren’t properly trained to make fentanyl from scratch, but are able to easily produce fentanyl using these precursors.

To better understand the market we did some research of our own. On a popular dark web marketplace, one can purchase 28 grams of heroin, advertised as being 99% pure, for $2,400 USD. To relate, a different vendor sells 25 grams of pure fentanyl for $3,000 USD. For the sake of comparison we will say that $2,400 USD will buy you 20 grams of fentanyl. According to– a medical website, a common dose of intravenous diamorphine hydrochloride (generic medical term for heroin) used in individuals with chronic pain is ~7.5 milligrams. As indicated by medical website, a common dose for intravenous fentanyl prescribed for severe pain is ~75 micrograms. Let’s assume that these dosages are comparable to the recreational doses for heroin and fentanyl. If this is the case, $2,400 USD worth of heroin provides 3,733 intravenous doses. For $2,400 USD of fentanyl, you get 26,666 intravenous doses. In this specific instance, using fentanyl in place of heroin is roughly seven times cheaper for the supplier. Drug suppliers are able to substitute fentanyl for heroin without changing the price of their final product due to how similar the effects of the two drugs are. Profit margins only stand to increase with volume, or when suppliers are producing the fentanyl themselves using precursors.

Clearly suppliers have a tremendous amount of incentive to cut their heroin with fentanyl. Although China has scheduled some fentanyl precursors, producing fentanyl is still a relatively easy process, and it isn’t clear if/when that will change.

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