The cost of on-site versus off-site workplace urinalysis testing for illicit drug use

Relationships between urinalysis testing for substance use, medical expenditures, and the occurrence of injuries at a large manufacturing firm

Drug use among employees continues to be a serious concern for American employers. Over 80% of the large employers in the United States use some form of testing to detect drug use, but this practice is controversial and the cost-effectiveness of drug testing remains largely unknown. This study begins an empirical investigation of the consequences of drug testing by estimating its impact on medical care expenditures and injury rates at a large manufacturing firm in 1996-1999. Multiple regression analyses of a pooled cross-sectional time-series data set were used to separate the impact of drug testing from other factors and to help find the optimal level of testing that was associated with minimum medical expenditures. Results indicated that medical expenditures would be minimized when 42% of the employees in a calendar quarter were drug tested. This implies that, on average, employees should be tested 1.68 times a year. The results also indicated that doubling the testing rate would reduce the odds of incurring any injuries on the job by over half, but the injury rate was already so low that this impact was very small. Hopefully the results of this study will inform the policy debate over drug testing by focusing on real data, as opposed to supposition or political considerations that seem to dominate many discussions.