Good afternoon ladies and gentlemen. I am very honored to be here with you today and to be able to share with you what we have learned about the economic value of drug prevention in companies in the United States.

 I would like to briefly explain the mission of my organization. It is called "Houston's Drug-Free Business Initiative." It is a coalition of employers in Houston, Texas actively involved in addressing drug abuse in our workplaces. We believe that drug abuse affects the bottom lines of companies and that we have an obligation to our stockholders, the public, and our employees that do not use drugs, to maintain drug and alcohol free work forces. Members of our coalition share what is and is not working as strategies to combat abuse in the workplace.

 Today I would like to cover four issues with you:

 Where are the drug abusers?

 How does drug abuse affect the workplace?

What are employers doing about drug abuse? and

 Are the drug control strategies working?

According to our National Institute on Drug Abuse, 74 percent of the illicit drug users in the United States are employed. That means that they are in our workplaces. I rather suspect that the situation is similar in other countries. This is a fact that American employers cannot ignore.

 Especially if we look at the economic impact of that realization.

 Just to give you an idea of how the drug abuser affects the workplace, let us look at the results of a recent survey of semi-tractor trailer drivers. An unannounced check of these truck drivers found that 29 percent had evidence of alcohol, marijuana, cocaine or stimulants in either their blood or urine. Think of the safety issues involved with these drivers on our highways. And think of the liability of the drivers' employers! Incidentally, studies indicate that 67 percent of all of our industrial accidents are drug or alcohol related.

 The cost of drug abuse to business in the United States has been estimated to be between $35 billion and $100 billion. That cost is experienced through lost productivity and higher benefits costs. It is estimated that drug abusers are 3.6 times more likely to cause workplace accidents, one-third less productive, incur 300 percent higher health care costs, and are two and one half times more likely to have absences of eight days or more than employees who do not abuse drugs.

 For several years, individual U.S. employers have documented their own findings of the impact of drug abuse on their bottom lines.

 In 1987 through 1990, our postal service ran an experiment with their employees. They implemented pre-employment testing but did not eliminate the employee applicants that tested positive for drugs. They then monitored both groups of employees (those who passed their tests and those who did not) for three years. In the end the U.S. Postal Service discovered that those employees who had been identified as drug users through their failed drug tests performed much poorer than the drug-free employees.

 End results showed the drug users were:

Absent from work 66 percent more often; and

Fired for poor work performance 77 percent more often.

 It was estimated that $21,000 per drug abuser could have been saved if they had not been hired.

 In Houston, one of our coalition members, Owen Health care, has tracked their medical insurance, workers' compensation, and sick benefits data since implementing a drug-free workplace program.

 In one year they reported a significant difference in workers' compensation claims filed and the sick leave and medical insurance benefits used by drug abusers versus drug-free employees in their company. Drug abusers were identified by drug testing. Comparisons of the averages of each group showed:

Sick time used by abusers at 60 percent versus about 45 percent by non-abusers;

Workers' compensation claims filed at a rate of 15 percent by abusers versus only 6% by non-abusers; and

 Just under $6,000 dollars worth of insurance claims by abusers versus only a little over $200 used by non-abusers.

 As noted, there was a tremendous difference in the use of medical benefits and their study only looked at the use of these benefits by the employee. It did not address the use by other family members who are also likely to be affected by drug abuse. This highlights a serious cost to employers regardless of the safety sensitive nature of a business.

 Employers in the United States have been surveyed numerous times in various ways and typically indicate that drug and alcohol abuse is a serious problem. Most employers do not look at the social impact of abuse as much as they do the economical impact - especially the impact to their own bottom line.

 According to a recent survey conducted by the American Management Association, approximately 81 percent of major U.S. firms have implemented comprehensive drug and alcohol free workplace programs to address the problem. These programs vary from company to company but, tend to have one or more of the following components:

Written policies prohibiting employees from being at work with the presence in their bodies of drugs or alcohol;

Employee education about the negative consequences of drugs and alcohol;

Supervisor training about identification, intervention, documentation and referral of employees for help;

Employee assistance programs to provide confidential assessments and help for troubled employees; and

Various forms of drug and alcohol testing.

We are at a time now in our country where we are reevaluating our efforts and asking: Are the drug control strategies working? Which ones work best? What should we do more or less of and what should we do differently?

 Various companies in our coalition have conducted their own surveys of their employees. Those studies have revealed, without exception, that the majority of employees support the programs and believe they make a difference. Some employees have identified drug-free workplace programs as "one of the best company benefits available to employees."

 Employers obviously believe the programs are working. As I mentioned earlier, 81 percent of our major U.S. firms have drug-free workplace programs. And companies just do not spend money on strategies that they do not believe provide a return on their investment.

 Critics of drug-free workplace programs, and particularly of drug testing, have often pointed to the fact that "scientific evidence" of the effectiveness of these programs does not exist. So, in 1992, Houston's Drug-Free Business Initiative decided to "scientifically analyse" the effectiveness of drug testing.

 Testing was selected over other strategies because it is the newest strategy being utilized in the workplace. I would like to point out that we do not believe that drug testing in and of itself is the panacea to the drug problem. We do however, believe that it is a vital part of an overall comprehensive approach to the problem.

 We conducted a 2-year study in collaboration with the University of Houston-Clear Lake. The study involved 180 employers and had two objectives:

1. To examine the attitudes of employers about drug control strategies such as drug testing and employee assistance programs.

2. To determine if drug testing affects organizational performance.

 We concluded from the attitudinal portion of the study that the implementation of drug control strategies is strongly related to the perception of employers about the cost effectiveness of the strategies.

 The study showed that well over half of the employers surveyed believe that drug testing is cost effective. Just under half believe that employee assistance programs are cost effective.

 Respondents in the study were asked to select which strategy was most important to have in a drug-free workplace program - testing or an employee assistance program. Results showed that more than half (52 percent) of the respondents believe that testing and EAPS are of equal importance. Forty-one percent selected testing as more important and only 8% selected EAPS as the most important.

 To meet the second objective of the study, we gathered two years of historical data pertaining to productivity. We then moved forward for two years in the study gathering productivity data.

 The type of data we attempted to gather included items such as absenteeism, workers' compensation claims and payouts, tardiness, on-the-job injuries, health care claims, theft, disabilities, and terminations.

 We learned during the study that employers do not track the type of data that we thought they would. We also learned that what little tracking is being done, is done in very inconsistent manners, with lots of gaps in collection time periods. We were attempting to apply a "scientifically valid" methodology in the analysis of the data so we were extremely limited as to usable data. Having disclosed our limitations however, I would like to share with you what we found in the analysis of the usable data.

 First, the analysis of workers' compensation claims in companies that conducted pre-employment and random testing simultaneously revealed that the rates per 100 employees per year decreased by 63.7 percent over the four year period examined. Those companies not testing experienced a 19 percent increase during that same time period.

 Second, the analysis of mean workers' compensation expenditures per employee per year showed a decrease in rates of companies that conducted testing versus an increase in companies that did not test.

 Of all the performance indicators included in our study, expenditures for workers' compensation claims are the most volatile over time. One extremely costly claim from a single, severely injured individual can dramatically affect the average or mean value calculated for either the pre or post drug testing periods. A common solution to this problem is to remove "outliers" - unusually high or low values - from the analysis to create groups that are more statistically homogeneous.

 However, such an approach removes from the analysis the most interesting cases and often those cases that represent the predominant concern for a business or agency. We, therefore, compared these expenditures in three groups - our "proactive group" (those conducting testing); the "control group" (those not testing) with an outlier included; and the "control group" (those not testing) with a single outlier removed.

 The group of employers testing experienced a 28.19 percent decrease in expenditures while the group not testing with an outlier included experienced a 97 percent decrease. The removal of this single outlier case, involving an incident which occurred early in the four-year period of study, (which may very well have been drug or alcohol related) however, resulted in an opposite change - an increase of 21.67 percent over the study period.

 This increase in expenditures over the study period is consistent with the results we found for workers' compensation claims, indicating that testing decreases workers' compensation expenditures as well as claims.

 We also concluded from our study that the effectiveness of drug testing may well be related to individual company factors. The prevalence of drug or alcohol abuse and the level of risk of injuries in a company certainly play a vital role in the degree of effectiveness of drug control strategies.

 In summation, the results of our study support random and pre-employment testing combined as effective strategies to address the potential effects of substance abusing workers on organizational performance. The time series results suggested that pre-employment testing in and of itself may reduce rates of injury and workers' compensation claims. The results concerning pre-employment testing also indicated a reduction in absentee rates, but did so less conclusively.

 In conclusion, I believe that the attitudes of employers captured in our study reinforced what is commonly believed by U.S. employers - that one of the best returns on investment that an employer can expect is when he or she invests in a comprehensive drug-free workplace program.

 Drug use is detected and deterred with proactive programs, especially those that consist of testing. This results in fewer accidents, fewer injuries, less absenteeism and tardiness, and higher productivity - a definite improvement to the employer's bottom line.

 Let me close by reminding you that drug abuse is not an American problem. It is a global problem. One that affects all employers' bottom lines and one that we must all address. I call upon all employers, regardless of your geographic location, to get involved with solutions to the problem. The problem belongs to all of us.