WCP: Profiting from the Working Class: How the Opioid Epidemic Echoes the Mortgage Crisis
Posted in Visiting Scholars | Tagged Big Pharma, Department of Justice, Financial Crisis, John Russo, Leo Jennings III, Marc Dann, Mortgage Crisis, Opioid Crisis, Sherry Linkon, Wall Street, WCP, Working-Class Perspectives
In this week’s Working-Class Perspective, Marc Dann and Leo Jennings III draw frightening parallels between the opioid epidemic and the subprime mortgage crisis. They call on the Department of Justice to do what it failed to do in 2009: prosecute Wall Street executives whose greed devastate working-class Americans.
“As with predatory mortgage lending, the ongoing opioid and heroin abuse epidemic began quietly and went undetected by regulators and law enforcement officials until evidence of the carnage it was causing began piling up at their feet. One of the most widely-discussed reports came from economists Anne Case and Angus Deaton, who identified rising death rates among middle-aged whites, especially those from the working class, tied in part to overdoses. And while the housing crisis and the opioid/heroin epidemic were both spawned by corporate greed, there’s one significant difference: the victims of the drug epidemic aren’t attempting to rebuild their lives. They’re dead.
The similarities between the two scams are striking and disturbing. Like the bankers who created the mortgage crisis by marketing unsustainable investment tools that exploited homebuyers, the pharmaceutical companies that manufacture opioids engaged in a concerted and highly successful effort to convince physicians and pharmacists to hand out dangerous and highly addictive drugs, including OxyContin and Vicodin, as if they were jelly beans.
How successful was that marketing campaign? Very. As the Charleston Gazette-Mail noted in an explosive report on the epidemic, between 2007 and 2012 pharmaceutical companies sold 780,000,000 hydrocodone and oxycodone pills in West Virginia. That’s 433 pills for every man, woman, and child living there. Ohio, Pennsylvania, New Jersey, Florida, and New York have also been flooded with these drugs.
The drive to convince doctors that opioids could be safely prescribed for the long-term treatment of chronic pain without substantial risk of addiction was led by Purdue Pharmaceutical, the manufacturer of OxyContin. As reported in the American Journal of Public Health, Purdue funded self-serving studies that produced fudged data, distributed that data to thousands of physicians, pharmacists, and nurses during conferences held at luxury resorts, more than doubled its sales force, and paid reps who produced increased OxyContin sales $40 million in bonuses. As a result, Purdue’s owners, the Sackler family, jumped to Forbes Magazine’s list of America’s wealthiest families with a net worth of over $14 Billion at the end of 2015.
Two other factors also contributed to the exponential growth in opioid sales. First, Purdue concentrated its efforts in regions of the country populated by blue-collar workers and the economically disadvantaged because they assumed that patients in those areas were less educated and more likely to place blind faith in medical providers. The Gazette-Mail series on the epidemic demonstrated the companies were correct. While opioid addiction has increased in all demographic groups, the Centers for Disease Control reports the largest increase among whites who earn between $20,000 and $50,000 a year.
But the epidemic was also made possible by the total failure of regulators to recognize what was happening. Despite rules requiring drug distributors and pharmacists to report unusual orders of controlled substances to regulators, billions of pills continued to flood markets across the U.S. for years. No one said a word until the bodies began to pile up and the evidence began to show growing addiction rates among middle-class whites. When regulators did finally act by cracking down on doctors who were over-prescribing pain meds, many addicted patients turned to heroin dealers.
Anyone who has read The Big Short or seen the movie that chronicled the mortgage lending scam will recognize the tactics used by Purdue and the other pharmaceutical manufacturers: create a market for a faulty product, pay once-responsible people lots of money to foist it off on unsuspecting customers, and sit back and reap billions in profit. But the consequences are quite different: victims of the former lose their homes, victims of the latter lose their lives.
It is possible, however, that the U.S. Justice Department will treat this scam differently. In the aftermath of the 2008 housing meltdown, not a single senior banking executive was indicted, convicted, or jailed for the massive fraud committed on the American public. Instead, the feds spent billions to bail out the finance industry and offered only slight assistance to the millions of Americans who lost their homes, their savings, and their dreams.”