The paper examines the social and private aspects of heroin use in the U.S. today and attempts to estimate the associated costs, both society's and the individual user's. Possible goals of any government policy are discussed. Twelve possible policy alternatives are examined, eight dealing with the demand for heroin, and four dealing with its supply. These alternatives are compared using a rough cost-benefit analysis in terms of costs and benefits to society at large. A more detailed comparison is made of therapeutic communities, methadone maintenance, and the British experience of prescription heroin maintenance as alternatives. The conclusion is reached that to minimize social cost while containing the spread of heroin usage a scheme of prescription heroin should be implemented; but if the spread of usage is seen as benign, the best policy is to sell the drug freely to any adult as alcohol is today.