INSIGHTS: OPIOIDS: BROUGHT TO YOU BY THE MEDICAL CARE INDUSTRY
By Guest Columnist Timothy Taylor:
Managing Editor of the Journal of Economic Perspectives and purveyor of the Conversable Economist blog.
Reprinted with permission.
There’s a lot of talk about the opioid crisis, but I’m not confident that most people have internalized just how awful it is. To set the stage, here are a couple of figures from the 2018 Economic Report of the President.
The dramatic rise in overdose deaths, from about 7000-8000 per year in the late 1990s to more than 40,000 in 2016, is of course just one reflection of a social problem that includes much more than deaths.
However, the nature of the opioid crisis is shifting. The rise in overdose deaths from 2000 up to about 2010 was mainly due to prescription drugs. The more recent rise is overdose deaths is due to heroin and synthetic opioids like fentanyl.
It seems clear that the roots of the current opioid crisis are in prescribing behavior: to be blunt about it, US health care professionals made the decisions that created this situation. The Centers for Disease Control and Prevention notes on its website: “Sales of prescription opioids in the U.S. nearly quadrupled from 1999 to 2014, but there has not been an overall change in the amount of pain Americans report. During this time period, prescription opioid overdose deaths increased similarly.”
The CDC also offers a striking chart showing differences in opioid prescriptions across states. Again from the website: “In 2012, health care providers in the highest-prescribing state wrote almost 3 times as many opioid prescriptions per person as those in the lowest prescribing state. Health issues that cause people pain do not vary much from place to place, and do not explain this variability in prescribing.”
But although the roots of the opioid crisis come from this rise in prescriptions, the problem of opioid abuse itself is more complex. What seems to have happened in many cases is that as opioids were prescribed so freely that there was a good supply for friends, family, and to sell. Here’s one more chart from the CDC, this one showing where those who abuse opioids get their drugs. Three of the categories are: given by a friend or relative for free; stolen from a friend or relative; and bought from a friend or relative.
For example, a study published in JAMA Surgery in November 2017 found that among patients who were prescribed opioids for pain relief after surgery, 67-92% ended up not using their full prescription.
This narrative of how the medical profession fueled the opioid crises has gotten some pushback from doctors. For example, Nabarun Dasgupta, Leo Beletsky, and Daniel Ciccarone wrote (The Opioid Crisis: No Easy Fix to Its Social and Economic Determinants” in the February 2018 issue of the American Journal of Public Health (pp. 182-186). After briskly acknowledging the evidence, the paper veers into the importance of “the urgency of integrating clinical care with efforts to improve patients’ structural environment. Training health care providers in “structural competency” is promising, as we scale up partnerships that begin to address upstream structural factors such as economic opportunity, social cohesion, racial disadvantage, and life satisfaction. These do not typically figure into the mandate of health care but are fundamental to public health. As with previous drug crises and the HIV epidemic, root causes are social and structural and are intertwined with genetic, behavioral, and individual factors. It is our duty to lend credence to these root causes and to advocate social change.”
Frankly, that kind of essay seems to me an attempt to hide the fact that the health care profession made extraordinarily poor decisions. We had root causes back in 1999. We have root causes now. It isn’t the root causes that brought the opioid crisis down on us.
As another example, Sally Satel contributed an essay on “The Myth of What’s Driving the Opioid Crisis: Doctor-prescribed painkillers are not the biggest threat,” to Politico (February 21, 2018). She makes a number of reasonable points. The current rise in opioid deaths is being driven by heroin and fentanyl, not prescription opioids. Only a very small percentage of those who are prescribed prescription opioids become addicts, and many of those had previous addiction problems.
As Satel readily acknowledges:
In turn, millions of unused pills end up being scavenged from medicine chests, sold or given away by patients themselves, accumulated by dealers and then sold to new users for about $1 per milligram. As more prescribed pills are diverted, opportunities arise for nonpatients to obtain them, abuse them, get addicted to them and die. According to SAMHSA, among people who misused prescription pain relievers in 2013 and 2014, about half said that they obtained those pain relievers from a friend or relative, while only 22 percent said they received the drugs from their doctor. The rest either stole or bought pills from someone they knew, bought from a dealer or “doctor-shopped” (i.e., obtained multiple prescriptions from multiple doctors). So diversion is a serious problem, and most people who abuse or become addicted to opioid pain relievers are not the unwitting pain patients to whom they were prescribed.
But her argument is that even though it was true 5-10 years ago that three-quarters of the heroin addicts showing up at treatment centers said they had got their start using presciption opioids, more recent evidence is that addicts are starting with heroin and fentanyl directly. Ultimately, Satel writes:
What we need is a demand-side policy. Interventions that seek to reduce the desire to use drugs, be they painkillers or illicit opioids, deserve vastly more political will and federal funding than they have received. Two of the most necessary steps, in my view, are making better use of anti-addiction medications and building a better addiction treatment infrastructure.
This specific recommendation makes practical sense, and it sure beats a ritual invocation of “root causes,” but I confess it still rubs me the wrong way. We didn’t have these demand-side interventions back in 1999, either, but the number of drug overdoses was much lower. Sure, the nature of the opioid crisis has shifted in recent years. But prescription opioids are still being prescribed at triple the level of 1999. And given that the medical profession lit the flame of the current opioid crisis, it seems evasive to seek a reduced level of blame by pointing out that the wildfire has now spread to other opioids. .
For a list of possible policy steps, one starting point is the President’s Commission on Combating Drug Addiction and the Opioid Crisis, which published its report in November 2017. The 56 recommendations make heavy use of terms like “collaborate,” “model statutes,” “accountability,” “model training program,” “best practices,” “a data-sharing hub,” “community-based stakeholders,” “expressly target Drug Trafficking Organizations,” “national outreach plan,” “incorporate quality measures,” “the adoption of process, outcome, and prognostic measures of treatment services,”” prioritize addiction treatment knowledge across all health disciplines.” “telemedicine,” “utilizing comprehensive family centered approaches,” “a comprehensive review of existing research programs,” “a fast-track review process for any new evidence-based technology,” etc. etc. There are probably some good suggestions embedded here, like fossils sunk deeply into a hillside. Hope someone can disinter them.
ON THE ECONOMY: POLICY UNCERTAINTY, VOLATILITY, AND THE ROLE OF GOVERNMENT IN THE BROADER ECONOMIC LANDSCAPE
By Mike Stoljsavljevich:
Director, Midwest Operations, John Dunham & Associates
Since the financial crisis of 2008-2009, economic policymakers in Washington D.C. have deployed numerous policy instruments with the aim of creating economic and financial stability. These policies have almost exclusively been monetary in nature and have revolved around injecting the banking system with money via Quantitative Easing and lowering interest rates to roughly zero. This textbook Keynesian economic response, while effective in the short-term, has been criticized as being potentially disruptive to the economy in the long-run, especially as it relates to currency values and asset prices.
The members of the Federal Reserve Board of Governors are a very astute crowd, and even though the current Chairman, Jerome Powell, is not a classically trained economist, being a lawyer, he is certainly aware of the criticisms of the current monetary policy, especially after the last election. For the past year and half, the Federal Reserve has been engaged in a slow tightening of short-term interest rates and has made public statements that it will begin the unwind of its $4 trillion-dollar balance sheet in 2018, adding more upward pressure on longer term interest rates.
Given all of these statements by the monetary authorities, you’d think the economy was overheating and that inflation was around the corner. But last week’s Federal Open Market Committee (FOMC) meeting has left a lot of policy makers and economists scratching their heads. The Fed raised short-term rates from a range of 1.25% – 1.5% to a new range of 1.5%-1.75%. Additionally, it confirmed its intention to raise rates two more times in 2018 and 3 times in 2019. This would bring the range to 2.75% – 3.00% by December 2019. However, the language the Fed used in describing the economy was contradictory and was downgraded from “economic activity was rising at a solid rate” to “economic activity was rising at a moderaterate.”
Such conflicting statements by the Fed, immediately lead to a decline in real interest rates, even though the Federal Funds rate has been hiked. On the day of the last Federal Funds rate hike, the benchmark 10-year Treasury yield fell 8 basis points to 2.82%, which was the largest one-day decline since September of 2017.
So, what is going on?
To paraphrase Walter Brooke speaking to Dustin Hoffman in The Graduate: “I just want to say one word to you. Just one word … Are you listening? …” Uncertainty.
Uncertainty is manifesting itself as volatility, which is unnerving. It can be seen in bond yields, stock prices swings, exchange rates, inter-bank lending rates (LIBOR), etc. The volatility is not just an American phenomenon, but also a global one. Much of the uncertainty comes from the fact that Washington policy makers have been over-reliant on monetary policy for over a decade. This changed last year, with the new administration’s economic focus being on fiscal issues, regulatory issues, and trade. The Federal Reserve is becoming more confused and potentially less relevant to the national economic policy dialogue, since monetary policy has not created as much growth as was predicted. Additionally, the Federal Reserve is limited to raising very short-term rates, while a more uncertain longer-term environment is leading investors to believe that in 2019 or 2020, there will be a flattening in the yield curve, where short-term rates are relatively equal to long-term rates. This is generally a sign of recession. On the other hand, lower regulations, lower taxes, repatriation, more bi-lateral trade deals (with tariffs imposed on countries and industries deemed to be abusing the global trade system) are classic fiscal tactics historically employed by government to stimulate the economy. These policies have been kept in the kennel for a very long time.
Most professional economists and business leaders are having trouble reconciling their generally Keynesian background with this new environment and are conflicted on what these fiscal changes might do to businesses. This economic myopia has left many pundits and policy makers in Washington D.C. without a sound response.
Add this confusion to the corporate and academic space where the general feeling is that the current Administration does not have a defined economic policy. Key economic advisors are rotating through like a game of musical chairs adds to this uncertainty.
So, what are we to make of an economic landscape where uncertainty is beginning to rear its ugly head?
Well, understanding that the fundamental driver to this uncertainty is the question of what government’s role in the economy is, how effective that intervention is, and how “involved” the government will be in the future. This is difficult to model or predict and can change dramatically at both the Federal and state level depending on the results of elections, scandals, and even social media memes. To combat this uncertainty, organizations need to spend far more time planning their responses to potential scenarios rather than to simply be reactionary, or complacent. This is new to many, since all too often, this has been the response when government intervention crowded out economic fundamentals.
It will take time to digest this different approach to producing economic welfare coming from Washington and a new focus on fiscal matters and away from monetary stimuli. The volatility stemming from this new paradigm may prove to be difficult for many but concentrating on the fundamentals of economic prosperity would be the most important thing to focus on during this period.
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