This article originally appeared on the blog of the Institute for New Economic Thinking.
Over a 40-year career, Philadelphia attorney Daniel Berger has obtained millions in settlements for investors and consumers hurt by a rogues’ gallery of corporate wrongdoers from Exxon to R.J. Reynolds Tobacco. But when it comes to what America’s prescription drug makers have done to drive one of the ghastliest addiction crises in the country’s history, he confesses amazement.
“I used to think that there was nothing more reprehensible than what the tobacco industry did in suppressing what it knew about the adverse effects of an addictive and dangerous product,” says Berger. “But I was wrong. The drug makers are worse than Big Tobacco.”
The U.S. prescription drug industry has opened a new frontier in public havoc, manipulating markets and deceptively marketing opioid drugs that are known to addict and even kill. It’s a national emergency that claims 90 lives per day. Berger lays much of the blame at the feet of companies that have played every dirty trick imaginable to convince doctors to overprescribe medication that can transform both teens and adults into zombified junkies.
So how have they gotten away with it?
A Market for Lies
The prescription drug industry is a strange beast, born of perverse thinking about markets and economics, explains Berger. In a normal market, you shop around to find the best price and quality on something you want or need—a toaster, a new car. Businesses then compete to supply what you’re looking for. You’ve got choices: If the price is too high, you refuse to buy, or you wait until the market offers something better. It’s the supposed beauty of supply and demand.
But the prescription drug “market” operates nothing like that. Drug makers game the patent and regulatory systems to create monopolies over every single one of their products. Berger explains that when drug makers get patent approval for brand-name drugs, the patents create market exclusivity for those drugs, which protects them from competition from other brand drugs that treat the same condition as well as from generics. The manufacturers can now exploit their monopoly positions created by the patents by marketing their drugs for conditions for which they never got regulatory approval —and this dramatically increases sales. They can also charge very high prices because when you’re in pain or dying, you’ll pay virtually anything.
Using all these tricks, opioid manufacturers have been able to exploit the public and have created a whole new generation of desperate addicts. They monopolize their products and then, as Berger puts it, “market the hell out of them for unapproved and dangerous uses.”
Opioids are a drug class that includes opium derivatives like heroin (introduced by German drug maker Bayer in 1898), synthetics like fentanyl, and prescription painkillers like oxycodone (brand name: OxyContin). A number of factors are aggravating the addiction crisis: There has been a movement in medicine to treat pain more aggressively, while at the same time wide-ranging economic distress has generated a desire to escape a dismal reality. But a key driving force is doctors who have been wooed by Pharma marketing reps overprescribing for chronic pain.
“For the first time since the years after heroin was invented,” writes investigative journalist Sam Quinones in Dreamland: The True Tale of America's Opiate Epidemic, “the root of the scourge was not some street gang or drug mafia but doctors and drug companies.”
Doctors were once reluctant to write prescriptions for opioids. The U.S. drug regulator, the Food and Drug Administration, would only approve such drugs for severe cases like cancer patients in chronic agony or certain people in short-term pain after, say, an operation. But representatives of Connecticut-based drug maker Purdue, which released OxyContin in 1996, along with other companies, began to flood doctors’ offices with reports asserting that using the drug for off-label purposes was harmless. Often the targets were primary care physicians with little training in addiction. Have a chronic arthritis case? Give your patient OxyContin. Tell folks to take it every day, for weeks, even years, to treat just about any kind of chronic pain. The upshot was dependence, typically not because people were getting high for fun, but because they were using a legal drug in precisely the way the doctor ordered.
Purdue and others whisked doctors to stylish retreats to push them to prescribe drugs for uses not approved by U.S. regulators—a marketing strategy banned by federal law. They even created fake grassroots organizations to make it seem as though patients were demanding more prescriptions. Pharmaceutical companies like to dodge responsibility for the opioid crisis by blaming dishonest distributors and pointing out that they’re not the ones prescribing or handing out drugs to patients. True enough: They don’t need to, because they’ve done their work hooking you long before the drug is in your hands.
“The marketing is not only fraudulent; it’s incredibly elaborate,” says Berger. “Fake scientific studies promote the lie that opioids are better than other medications for pain. They’ve gone to just about any length. Bribery, you name it. It’s outrageous.”
OxyContin is so addictive it can create physical dependency in a matter of weeks. As drug makers and doctors who began to dole out pills by the handful in pain clinics learned, addicts do not behave like ordinary consumers: They don’t “choose” to buy or to wait until next week. They need their drug right away and will do anything to get it because if they don’t they will suffer excruciating symptoms.
A Los Angeles Times report shows that among the lies Purdue spread about OxyContin was that one pill subdued pain for 12 hours. Except that for many patients it wears off much sooner, exposing them to unbearable pain and withdrawal. Purdue knew this, but feared lower sales if it admitted the truth. So sales reps advised doctors to just give stronger doses, which increased the addiction risk. As the money from hooked patients piled up, so did the bodies.
In 2007, Purdue pleaded guilty in federal court in Virginia to misleading doctors and patients about OxyContin’s safety and paid a $600 million fine. But that sum was hardly an annoyance. From 1995 to 2015, Purdue made $35 billion from OxyContin sales alone. The Sacklers, who own the company, is now one of the richest families in America, as revealed by this triumphant Forbes spread. They know that lax regulation keeps the heat off, and that even litigation and criminal prosecutions can do little to stop them. Berger says that until such legal programs are massive in scale and scope, companies will go on with business as usual.
“We have to have injunctive relief [a court order to stop a behavior] that bans the marketing to doctors of opioids completely for unapproved uses, as well as an expansion of the FDA and DEA to specifically target the drugs,” says Berger. His law firm, Berger & Montague, is involved in the effort to seek relief for the city of Philadelphia, which has seen above-average opioid prescribing and suffered the highest rates of fatal drug overdoses in the state last year.
Even though prescriptions have been slightly reduced across the country since 2012, Philadelphia is finding out what happens to many people hooked on opioids when they can’t get a prescription or find the price too high: They turn to heroin. Fatal overdoses of heroin, oxycodone’s close cousin, have been skyrocketing since 2007 across the country.
'Landscapes of Despair'
The opium poppy has been part of human history since at least 3,400 BCE, when it was cultivated in Mesopotamia as the “joy plant.” Derivatives such as laudanum and morphine offered more convenient, and people wrongly believed, safer ways to get the plant’s benefits. Bayer originally touted heroin as a non-addictive substitute for morphine (even for children) until it was outlawed in the U.S. in 1925. Rendering it illegal did not stop it from destroying the lives of many of America’s most celebrated artists, from Billie Holiday to Philip Seymour Hoffman. Drug overdoses now kill more people than gun homicides and car crashes combined. In 2015, nearly two-thirds of all overdoses had one thing in common: opioids.
Syracuse University’s Shannon Monnat, a sociologist focused on rural issues and an INET grantee, has been studying the epidemic and how it impacts various populations. Her research reveals that the rise in drug-induced deaths has been especially sharp among middle-aged people (45-55), with prescription opioid overdoses increasingly impacting both middle-aged and older populations. Heroin, whose sedating and euphoric effects are very similar to prescription narcotics, looks to be the culprit in more young adult overdoses.
Monnat considers how the opioid crisis points to bigger societal problems impacting the economy, educational institutions, the health care system, political systems, and communities. Her work centers on investigating the characteristics of what she calls “landscapes of despair”—places where people are hurting economically and socially, like Appalachia, the industrial Midwest and parts of New England. She points out that persistent disadvantage and long-term poverty are clearly connected to the opioid crisis, noting that many of the areas most impacted were once robust centers of manufacturing before jobs moved to other countries.
Opioid addiction seems to thrive in downwardly mobile small cities in rural areas—but not all of them. “What’s fascinating is that some of these areas have very high mortality rates from drug overdose, like Appalachia,” say Monnat. “But others, like the Southern 'Black Belt' [a region that stretches across Alabama and Mississippi], have not seen such rises.”
Originally named for its rich, dark, soil, which attracted cotton planters in the 19th century, the Black Belt has a high population of African Americans. The area has a history of unremitting poverty, low incomes, high unemployment, and high mortality. Yet despite many hardships, which are linked to the legacy of slavery, Monnat says that the region is also distinct for its “very tight-knit communities, strong kinship networks, and other networks where people can find emotional support.” It seems that when people have somewhere to turn in hard times, they may build up immunity to an epidemic like the opioid scourge.
Ironically, another factor that may have protected these communities, discussed by Quinones in Dreamland, is prejudice: The low-profile heroin dealers originating from Mexico’s west coast who are associated with the current opioid scourge prefer to target white communities. They also avoid big cities where large cartels are already established. So small, predominately white towns are their sweet spot.
Appalachia is known for kinship networks, but it also has a legacy of isolation and an outlaw tradition associated with the history of moonshining and bootlegging which can feed into today’s underground selling and distribution of opioid drugs. In this region, much of the struggling white working-class has seen economic distress with little hope of relief from America’s political system. Democrats often openly disdain the people they call rednecks and hillbillies, while concentrating on identity politics rather than economic distress. Republicans promote policies of free trade and deregulation that cast the region further into destitution.
Monnat has found that counties with large numbers of people employed in physical labor—especially physical occupations with higher disability rates—have higher drug fatalities. These are places where coal miners work in backbreaking positions and military veterans suffer the pain of injuries. Drug companies have besieged these areas with aggressive marketing of pain pills. “In Appalachia, you’d see mining companies with physicians on staff prescribing opioids to keep people in pain working,” she says. “That was happening before OxyContin, but companies like Purdue targeted these communities to push OxyContin as a safer alternative to other pain medications.”
The National Institutes of Health report that the opioid epidemic, which started as a regional crisis, is now a national crisis, decimating communities and even helping to reshape the American political landscape. Monnat finds a relationship between the landscapes of despair and the 2016 presidential election. Voting patterns show that areas in which President Trump did better than expected, like Pennsylvania and Ohio, were also places where opioid overdoses and deaths from alcohol and suicide occurred at high rates over the past decade.
During his campaign, Trump expressed concern for people in regions like Appalachia and flung stinging barbs at the politicians who had failed them. These voters supported him in high numbers, yet his policies will likely give more power to the pharmaceutical companies that have turned their suffering into stock windfalls.
Profit Trumps People
Trump the campaigner shook his fist at Big Pharma for “getting away with murder”—one of those statements that occasionally drops from his lips with atomic accuracy. But Trump the president has done an about-face. As journalist David Dayen pointed out, a draft of an executive order on drug prices (which never materialized) called for deregulation of the FDA and favors to industry. It was written by a pharmaceutical lobbyist.
In March, President Trump issued an executive order creating a commission to study drug addiction and the opioid epidemic. The commission, headed by New Jersey Governor Chris Christie, has so far released recommendations that locate the overprescribing problem “in doctor’s offices and hospitals in every state in our nation,” while making nary a mention of pharmaceutical marketing departments. The panel suggests insufficient remedies like new treatment facilities and educating schoolchildren on the dangers of opioids, along with ineffective ideas like more funds to Homeland Security. Regulation of Big Pharma? Nope.
The federal government did announce it would team up with drug makers to research and generate non-opioid pain medications and additional medication-assisted treatment options. Among the participants? Purdue.
Economist William Lazonick of the University of Massachusetts Lowell and an INET grantee, agrees with Berger that the way the pharmaceutical industry operates amounts to a catastrophe for the public. “It’s crazy that each and every drug is not treated like a regulated monopoly,” he says. “Taxpayers fund much of the research that goes into creating these drugs through the NIH and other public research facilities. Moreover, the companies are gifted with a monopoly through patents which last two decades.”
Lazonick notes that Big Pharma claims it needs high profits to keep inventing new drugs, but the industry spends more of its profits buying back its own stock than increasing investment in R&D on new drugs. Executives running drug companies are incentivized to make profits any way they can because they are rewarded by high stock prices. Lazonick explains that they stoke those stock prices by gouging patients or lying about the safety of products—whatever it takes.
He observes that for the past several decades America has undergone a devastating experiment based on the philosophy of economist Milton Friedman, who claimed that the only social responsibility of a company is to make a profit. Untimely deaths from tobacco-related illnesses, auto safety failures, and now, harmful opioid drugs, prove that the experiment is a tragic failure.
Lazonick sees the need for nothing less than a new structure of corporate governance that ensures the ethical responsibly of drug makers to do what they are supposed to do: create high-quality, low-cost products that are safe. The current structure, based on the misguided idea that companies should be run for the sole purpose of enriching shareholders, is particularly perverse when it comes to products that are potentially fatal. The problem with this model is that when shareholders are the only people who matter, the rest of us suffer.
Since taxpayers support pharmaceutical companies by funding public research and many other things they require to do business, Lazonick says it is only fair and logical that someone representing the public sits on their boards. Berger adds that companies should be required to make drugs widely available at affordable prices in return for their use of publicly funded basic research at no cost whatsoever.
America, for the time being, stands out among nations in letting pharmaceutical companies run amok to inflate drug prices, advertise and market drugs without proper regulation, and use taxpayer resources while exposing them to egregious harm. “The only thing America’s drug companies are competitive about,” says Lazonick, “is getting people addicted.”
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