August 11, 2017
The Washington Post had a column by Ohio attorney general Mike DeWine explaining why he was suing five opioid manufacturers. Dewine explains:
“We believe evidence will show that they flooded the market with prescription opioids, such as OxyContin and Percocet, and grossly misleading information about the risks and benefits of these drugs. And as a result, we believe countless Ohioans and other Americans have become hooked on opioid pain medications, all too often leading to the use of cheaper alternatives such as heroin and synthetic opioids. Almost 80 percent of heroin users start with prescription opioids.”
The incentive to distribute “grossly misleading” information about their products comes from the government-granted patent monopolies which allow companies to charge prices that can be several thousand percent above the free market price. This is straight textbook economics. Corporations are motivated by profit. If they can sell a pill for five dollars that costs them a few cents to manufacture, they have an enormous incentive to market it as widely as possible.
This is a problem with prescription drugs more generally. Manufacturers often exaggerate the effectiveness and safety of their drugs. While it is illegal to knowingly misrepresent the quality of a drug, it is extremely difficult to prove this in court, which means a company has a big incentive to do so. The cost to the public from such misrepresentations is enormous, and unfortunately, it gets very little attention from the media even in the context of the opioid crisis where it is quite obvious.
In the case of opioids, it is true that some of the villains are generic manufacturers. When a drug comes off patent, it is subject to competition. However, even the generics benefit from the high prices that result from patent and related protection. The first generic in a market gets six months of exclusivity, which means that no other generic is allowed to enter the market. Over time more generics will typically enter bringing the price closer to the free market price, but there will be a substantial period in which prices remain inflated, compared to a scenario in which all drugs could be produced as generics on the day they were approved by the Food and Drug Administration.
Addendum
Since some folks don’t think the pharmaceutical industry has been deliberately pushing opioids, here a good WaPo piece on the topic.
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