Experience here in Switzerland would suggest that if the state takes dirty needles, expensive supply, and highly variable purity out of the equation, opioid addicts can lead a life that is, while far from ideal, considerably more functional than before.
My impression is that drugs like Heroin, taken in correct dosage, do not inherently cause massive health damage. It's not clear how deregulation would work with drugs like meth, which DOES seem to inherently cause health damage.