In the 4 decades since President Richard Nixon first declared war on drugs, the U.S. counterdrug strategy has remained virtually unchanged—favoring supply-reduction, law enforcement and criminal sanctions over demand-reduction, treatment, and education. While the annual counterdrug budget has ballooned from $100 million to $25 billion, the availability of most illicit drugs remains at an all-time high. The human cost is staggering—nearly 40,000 drug-related deaths in the United States annually. The societal impact, in purely economic terms, is now estimated to be approximately $200 billion per year. The global illicit drug industry now accounts for 1 percent of all commerce on the planet—approximately $320 billion annually. Legalization is almost certainly not the answer; however, an objective analysis of available data confirms that: 1) the United States has pursued essentially the same flawed supply-reduction strategy for 40 years; and, 2) simply increasing the amount of money invested each year in this strategy will not make it successful. Faced with impending budget cuts and a future of budget austerity, policymakers must replace the longstanding U.S. counterdrug strategy with a pragmatic, science-based, demand-reduction strategy that offers some prospect of reducing the economic and societal impacts of illicit drugs on American society.