Urban Institute
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Pay for success as a tool to tackle the opioid epidemic

Drug-related deaths have been on the rise since 2000, largely due to the increased misuse of opioids: fatal overdoses involving opioids accounted for nearly two-thirds of all drug overdose deaths between 2000 and 2015. Opioids encompass a variety of substances that target the opioid receptors in the brain, which include prescription oxycodone to manage pain; illegally manufactured fentanyl, a synthetic substance 50 to 100 times more potent than morphine; and heroin.

The upward trajectory of deaths related to opioids and other drugs in the last decade-and-a-half has culminated in a nationwide epidemic. More people died as a result of drug overdoses in 2014 than any other recorded year—a total of 47,055 deaths in the United States alone—and an average of 91 people a day died from drug overdoses involving opioids in 2015. These statistics mask the far-reaching consequences of opioid misuse, which can include blood-borne diseases such as HIV or hepatitis from contaminated needles, increased contact with the criminal justice system, and negative outcomes for children born to and raised by parents with substance misuse issues. Despite the magnitude of the problem—and a price tag in the tens of billions for the health and social sectors as a result— just over a tenth of people who needed treatment for opioid misuse actually received it in 2015.

As a result, state and local jurisdictions are exploring innovative strategies, such as pay for success (PFS), also known as social impact bonds, to combat the opioid epidemic. For example, Connecticut Department of Children and Families (DCF) found that nearly half of the families they served struggled with substance misuse, leading to millions in expenditures by the Department and diminished outcomes for the children in those families. The state launched the Connecticut Family Stability PFS Project last year to deliver Family-Based Recovery (FBR) to households in which one or more parent had a substances misuse issue. DCF will repay the project‘s funders based on four outcomes: successful enrollment in FBR, reduction in substance misuse on behalf of the parent(s), prevented out-of-home placements of the children, and prevented re-referrals to DCF.

Last year, the Obama Administration continued to call on Congress to provide $1.1 billion in new federal funding to tackle opioid misuse, signaling executive commitment to managing the epidemic. The Department of Health and Human Services (HHS) and the Office of National Drug Control Policy (ONDCP) awarded more than $70 million to projects and locales around the country to address opioid misuse.

In addition to these efforts to address the opioid epidemic through traditional funding channels, the federal government has also come to see PFS as a potential tool: ONDCP published a Resource Guide on PFS and the opioid epidemic in late December 2016. The document provides an overview of the opioid epidemic, explains the pay for success model, offers two case studies of PFS efforts currently addressing substance misuse, and suggests next steps for jurisdictions interested in leveraging pay for success to address opioid misuse in their communities.

Pay for success is by no means the only solution, nor a permanent one, but it does add value for those tackling the opioid epidemic in three ways. First, the conversations necessary to assessing PFS feasibility, structuring a deal, and implementing a project can highlight the underlying reasons for the continued opioid epidemic, such as a dearth of service providers or difficulty accessing treatment facilities. Second, PFS provides a space for policymakers, service providers, and evaluators to determine what works in addressing opioid misuse, interventions which can then be scaled to reach a different or larger population.

Third, because opioid misuse touches several social sectors—housing, health, criminal justice, child welfare, and so on—tackling it requires comprehensive cross-agency collaboration, which may not be the norm in many communities. Not only can PFS help address the wrong pockets problem (particularly applicable in an issue at the scope of the opioid epidemic), but it can build capacity for the type of ongoing collaboration and coordination needed to effectively address the epidemic moving forward.

In the coming months, the Pay for Success Initiative (PFSI) will lead a community of practice (CoP) on the opioid epidemic within the context of PFS. The CoP will bring together key stakeholders to determine how PFS can best be used to address opioid misuse, how to measure success in opioid-focused PFS projects, and pinpoint potential barriers to project implementation. If you have ideas or examples you would like to contribute to the group’s consideration, or would like to receive updates on the CoP, please contact Dave McClure at DMcClure@urban.org

Have a Pay for Success question? Ask our experts at PFSsupport@urban.org!

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