Normal misconduct in the prescription opioid supply chain

Abstract

How and when do relationships between supply chain stages normalize misconduct? This question is especially relevant to oversupply, a form of normal misconduct peculiar to supply chains. Oversupply occurs when apparently ordinary production and distribution processes deliver products in excess of the safe needs of a market. Although past research sheds light on firm-level processes of organizational misconduct, it has neglected the question of between-stage influences on systemic phenomena like oversupply. We explore this question by analyzing the oversupply of prescription drugs that fueled the American opioid epidemic during the early decades of the 21st century. Manufacturers, distributors, pharmacies, and physicians have settled billions of dollars in claims related to opioid oversupply. These settlements overshadow the fact that many supply chain members made the strategic choice to not participate in oversupply. Focusing on the pharmacy stage of the supply chain, this study finds that participation in opioid oversupply is positively influenced by pressure from supplier pools and by the example of nearby competitors as well as by market characteristics. We test our model using a unique dataset that combines geographic, market, and public health data with prescription opioid transaction data from the United States Drug Enforcement Agency. The study breaks new ground by developing the oversupply construct to explain how pressures within supply chains shape misconduct. The oversupply concept is widely generalizable with the potential to inform a next generation of responsible supply chain research that addresses wicked problems like toxic production and consumption.