New Study Examines Implications of Cheap Fentanyl Production

ALBANY, N.Y. (Oct. 16, 2025) — The spread of illegally manufactured fentanyl radically reduced the costs of manufacturing illegal opioids, contributing to a public health disaster that drove overdose deaths to unprecedented levels in the United States and Canada. 

A new analysis published in Global Crime, co-written by the University at Albany’s Shawn Bushway, explores how the reduced cost of production could affect different players in the drug supply chain — from Chinese companies providing fentanyl precursors to Mexican criminal groups, to those making and shipping fentanyl to the United States, to the domestic drug distribution network and to money launderers. 

Bushway, with principal investigator Jonathan Caulkins of Carnegie-Mellon University, H. Brinton Milward of the University of Arizona and Peter Reuter of the University of Maryland, examined the implications of these changes on the structure and operation of the illegal opioid supply industry, as well as the impact on drug law enforcement. 

“In our analysis, we walk through potential implications for both the supply side and the demand side of the market,” said Bushway, professor of public administration at Rockefeller College of Public Affairs and Policy. “We believe our work is the first explicit economic analysis of potential effects of fentanyl on the illegal market for opioids.”

The study notes that while the United States has had a substantial illegal opioid market for more than 50 years, a rise in prescriptions for opioids for pain management beginning around 2000 led to an additional market in diverted prescription opioids. And around 2015, illegally manufactured fentanyl entered the market, spurring continued increases in fatal drug overdoses. A cheap synthetic opioid, fentanyl has significantly replaced heroin, a plant-based, semi-synthetic product that in North America is more expensive, less potent and less lethal than fentanyl.

“Although there has been much research on these changes, few studies have considered the motivations for the rise in fentanyl from the perspective of the illegal drug traffickers,” said Caulkins, professor of operations research and public policy at Carnegie Mellon’s Heinz College.

The analysis found that the implications of fentanyl’s lower cost will be larger in wholesale markets than in U.S. retail markets because the cost of the drug represents a smaller part of the cost of supply in U.S. retail markets. 

“Seizures at higher market levels (wholesale) are less valuable to law enforcement precisely because drug are less costly for traffickers to replace,” the study says. Wholesalers can afford to simply flood market with low cost fentanyl, bypassing traditional supply chains that expose them to law enforcement pressure. This change in the supply chain for opioids should lead law enforcement to reconsider strategies that were designed for heroin markets. 

Also among the key findings: 

• In Mexico, the shift to synthetic fentanyl represents a major loss of income for farmers who grew poppies for opium.
• The health implications in the United States are enormous, with significantly increased rates of overdose compared to heroin.
• The spread of fentanyl in the United States had led to more frequent adulteration of illegal opioids with other dangerous substances and the spread of counterfeit pills containing fentanyl.
• Fentanyl has made the prospect of using illegal drugs scarier for drug consumers.
• The rise of premade pills imported from Mexico might lower overdoses by reducing the need for repackaging powder in makeshift factories in the United States.

The study was supported by the High Intensity Drug Trafficking Areas.