David Warsh: The sleazy Sacklers' lethal painkiller promotions and the need for a 'Health Fed'

President Trump has  declared the opioid crisis a public health emergency, rather than a national emergency, since the Federal Emergency Management Agency is over-extended in dealing with storm relief.  Unfortunately, the Hospital Preparedness and Public Health Emergency Funds are equally strapped for cash, running respectively at 50 percent and 30 percent below their peak levels of a decade ago. Congress will have to act.

It was, therefore, an especially good time for “The Family that Built an Empire of Pain,” to appear last week in The New Yorker. You can read Patrick Radden Keefe’s remarkable story about the wellsprings of the crisis for free online, more easily, if less pleasurably, than in the magazine itself. The sub-head states, “The Sackler dynasty’s ruthless marketing of painkillers has generated billions of dollars – and millions of addicts.”

Others have worked on the Sackler family story over the years, documenting its leading role in producing the opioid epidemic, including Barry Meier, of The New York Times, who first uncovered the extensive marketing efforts for OxyContin,  and the Los Angeles Times team that documented the "12-Hour Problem '' that Keefe describes. But none has achieved anything like the rhetorical force of Keefe’s article. Once it is reworked as a book, I expect that “Empire of Pain” will eventually  attain the status of Rachel Carson’s Silent Spring, Jane Jacobs’s The Death and Life of Great American Cities, and other classics of social criticism. It is an astonishing story. You might as well read it now.

The three brothers of the Sackler family — Arthur (1913-87), Mortimer (1916-2010), and Raymond (1920-2017) – are far better known as philanthropists than as pharmaceutical entrepreneurs.  All three attended medical school and subsequently worked together at Creedmoor Psychiatric Center, in Queens, N.Y.  Arthur put himself through medical school working for William Douglas McAdams, a small advertising agency specializing in medical markets, then bought the business.  In 1952, the three physicians bought Purdue Frederick, a little manufacturer of patent medicines in Greenwich Village (and no relation to the famous university). Each owned a third.

While Mortimer and Raymond built the company, Arthur took a more distant role, concentrating on medicine as editor in chief of the Journal of Clinical and Experimental Psychopathology from 1950-1962. In 1960, he founded a biweekly newspaper, Medical Tribune, which eventually reached 600,000 subscribers.

The Sackler family grew tolerably rich on the sale of Valium, which between 1969 and 1982 was the top-selling pharmaceutical drug in the United States. When Sen. Estes Kefauver (D.-Tenn.) investigated the rapidly growing pharmaceutical industry in the early 1960s, a staff member prepared a memo that read, in part,

"The Sackler empire is a completely integrated operation in that it can devise a new drug in its drug development enterprise, have the drug clinically tested and secure favorable reports on the drug from various hospitals with which they have connections, conceive the advertising approach and prepare the actual advertising copy with which to promote the drug, have the clinical articles as well as the advertising copy published in their own medical journals, [and] prepare and plant articles in newspapers and magazines.''

Enter Raymond’s son Richard Sackler (b. 1945), in 1971, fresh out of medical school. Starting as assistant to his father, during the next 30  years he presided over efforts to develop OxyContin and  turn  it into the best-selling pain medicine in the world.  How the company, re-named Purdue Pharma, managed that forms the bulk of Keefe’s 13,000-word account.

Simply put, thanks to  massive marketing efforts, the long-lasting narcotic came to be widely prescribed, not just for severe pain associated with surgery or cancer, but for almost any discomfort, including arthritis, back pain and sports injuries – despite its obviously addictive properties. Early versions turned out to be ruinously easy to abuse; later editions turned out to be a gateway to the use of cheaper heroin. More than 300,000 lives have been lost to overdoses of opioid drugs since 2000; perhaps 10  times as many have been shattered.

Arthur’s heirs sold their father’s share of the company to his brothers sometime after 1987. Mortimer moved to Europe to spend and save his dividends  Raymond ran the company day-to day for many years, and died only last July. Nine family members are among the directors of the private company.  Past president Richard Sackler was deposed last year, as part of Kentucky’s complaint that many of Purdue’s marketing methods were illegal. A battle to unseal his testimony has ensued.  Many more lawsuits are in train; their tactics resemble the campaign to rein in the use of tobacco. Congress can be expected to again hold hearings.

The editorial board of The Wall Street Journal also addressed the topic, uncharacteristically ignoring the supply side in favor of demand factors, in a piece headlined "The Opioid Puzzle'' (subscription required). The editorial board’s interest was piqued by “the government’s role is allowing too-easy access to painkillers, particularly among society’s poor and vulnerable.”

Medicaid recipients receive prescriptions for twice as much pain medication as those not covered by the government’s low-income plan, the editors wrote, citing government figures. And one out of every three Medicare beneficiaries received opioid prescriptions last year, half a million of them in extravagant doses. “The only way to explain this cascade of pills is an epidemic of fraud,” the editors concluded.

Better to put the two analyses together.  OxyContin sales are estimated to have been around $35 billion over the last 20 years.  An enormous portion of that was surely paid by the government as insurance subsidies.  Only when you see the two programs unfolding together do you begin to comprehend the nature of the problem – the entrepreneurial genius of the Sackler family on the one hand, developing and marketing popular mood-altering and painkilling drugs since the 1950s; on the other, the rise of government medical insurance since 1966, when the Medicare program went into effect.

Throw in the mostly unrecognized extent to which big pharmaceutical manufacturers have discouraged all manner of research on the painkilling applications of medical marijuana, and you have a real witches’ brew.

The U.S . health-care industry may be, in certain respects, the best in the world; certainly it is the most expensive.  As the opioid epidemic demonstrates, it offers a colossal field for mischief. The editorial board of the WSJ is right about this much:  innovation is the answer, to the opioid crisis, and much else among the medical sector’s many other ills.  In this case the desideratum is regulation – not Pentagon-style hierarchy, but rather the decentralized and consensual decision-making represented by the Federal Reserve System.

The blueprint developed 10 years ago by former Senate Majority Leader Tom Daschle (D.-South Dakota) in his run-up to a presidential campaign that was ultimately overtaken by that of the junior senator from Illinois, Barack Obama, is still the only model that make sense. Daschle imagined a dozen or so regional health-care authorities, sharing power among regulators, physicians, hospitals, insurers, device and pharmaceutical providers, governed by a federal board of governors insulated as much as possible from politics.

A Health Care Fed eventually will deliver efficiency –  and diminish freebooting – in the enormous sector, in much the same way the Federal Reserve Board stabilized the similarly turbulent banking industry a hundred years ago.  It’s just going to take more time – another generation or two, I would guess.

David Warsh, a long time financial columnist and an economic historian, is proprietor of economic principals. com, where this first appeared.

Complication and opaqueness breed corruption

  Respond by rwhitcomb51@gmail.com

 “In its majestic equality, the law forbids rich and poor alike to sleep under bridges, beg in the streets and steal loaves of bread.’’

--  Anatole France

Ambrose Bierce famously defined politics as the "strife of interests masquerading as a contest of principles. The conduct of public affairs for private advantage.’’ There are people of principle in politics, but Bierce’s statement is a pretty good generalization.  The Founding Fathers would have generally agreed with it.

The Supreme Court’s  recent McCutcheon ruling, in which it struck down overall limits on campaign contributions by individual donors, is much less important than many have made it out to be. Yes, it’s true that yet more money will flow into the campaign cycle. And, yes, America’s oligarchs will continue to accumulate power, aided by the general public’s civic disengagement.

But money flows around campaign-finance laws as water flows around rocks in a river. I doubt if any limits have all that much effect. After all, look at the record since Watergate-era reform laws went into effect. There are so many monetary methods by which rich folks can influence politicians to help maintain or expand donors’ wealth and power. And as government has gotten bigger, there’s more and more reason to buy influence in it.

A couple of things, however, could level the playing field a little. One would be tougher (not more) laws mandating transparency in campaign gifts. If more voters could find out who’s giving what to whom, they’d be better able to make evidence-based decisions on Election Day. Back when I was a newspaper editor, I tried to find out who was funding an op-ed writer and/or the “public interest’’ group he/she was writing for and then note it at the bottom of their essays. Much of the time they turned out to be pushing an economic self-interest -- e.g., the climate-change deniers were paid by oil and coal companies, those fighting medical-malpractice reform were funded by trial lawyers’ associations. But all too often I gave up trying to find out. Deadlines!

Indeed, news organizations (most are understaffed) rarely try to discover the paymaster behind opinion pieces. And it can be very difficult to find out, though such organizations as Guide Star, FollowTheMoney.org and the Sunlight Foundation can sometimes help cut through the smoke from the smoke machines of economic royalists.

Another thing that could help reduce the prostitution in Washington is vastly simplifying the tax code, which has been endlessly complicated to please economic interest groups and do social engineering. The more complicated – and the perception it can be complicated even more – the tax code, the more donors are drawn to bribe members of Congress to manipulate it to the donors’ advantage.

Enacting a modified flat-tax system would dramatically reduce campaign corruption and free up vast amounts of time now spent to game the impenetrable code that Congress and the White House have given us over the decades. (Don’t blame the IRS – they’re just following orders.)

Likewise with other laws: The more complicated they’re made, the more campaign donors bribe elected officials to manipulate them and the regulations to enforce them. Complication favors corruption.

Finally, the majority of the public could, for a change, vote. Before that, they could study the issues, and find out who’s paying whom. But they probably won’t bother.

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Let’s laud Rep. Tim Murphy (R.-Pa.), a clinical psychologist, for pushing what would probably be the biggest improvement ever in the federal government’s support for programs to address mental illness. It’s a complex measure but two elements stand out. One would put federal support behind court-ordered treatment of certain severely ill people (bi-polar disorder and schizophrenia victims particularly come to mind). Most states allow, in varying degrees, this sort of mandatory treatment, which is often the only thing that works.

The other thing is easing the disastrous federal law of 1996 that has made it almost impossible in many cases for family and other caregivers of mentally ill people to get actionable medical information on these sick people – and thus can make it almost impossible to treat them. Of course, this bleeds into the rest of the health-care system: Think of how many more overtly physical illnesses stem from mental illness.

xxx

How wonderful  finally to be able to walk around outside without four layers of clothing, to see a few more patches of green grass, more crocuses and even daffodils every morning, albeit on south-facing slopes. As the writer Bill Bryson noted, New England’s beauty is undermined by the difficulty of strolling in it for several months of the year.  I say that an old person for whom harsh weather becomes more inconvenient every year. Still, if winter weather slows the arrival of the Ebola virus, I’ll take it. Colder places are generally healthier places.

Robert Whitcomb is a New England-based writer, editor and business consultant.