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Monday, November 20, 2017

Price Theory Explains the Opiate Crisis

Understanding the opiate crisis is ECON 101.

The American opioid epidemic reaches new highs every year. Last year, the number of Americans killed by overdosing on opiates surpassed the number of those killed during the duration of the Vietnam War. The proliferation of fentanyl – a synthetic opiate primarily used in medical care and in tranquilizing large animals – and years upon years of medical professionals prescribing opiate painkillers for everything from a debilitating injury to a stubbed toe take the spotlight for the recent spike.

Popular policy response attacks both buckets. Against proliferation of fentanyl, considerably more dangerous and potent than heroin, some municipalities decide to charge dealers whose drugs killed users with manslaughter or even murder. Against the prescription of opiate painkillers, everybody from 60 Minutes to neighborhood moms wants it to be harder for doctors to prescribe painkillers and for it to be easier to prosecute those who recklessly do so.

This will not solve the opiate crisis. A basic exploration of economic concepts shows this.

The Economics of Addiction

How do they end up going from abusing painkillers to buying heroin and fentanyl? The idea that most heroin and fentanyl users get started by abusing prescription painkillers is not entirely wrong. Painkillers did indeed become more common through the late 20th century and the early 21st century, peaking in 2010. The development of new drugs like OxyContin and Dilaudid and a better understanding of the anatomical features of pain in the brain gave reason for medical professionals to treat pain rather than simply trying to help clients get through it. A concentrated marketing and sales effort by pharmaceutical companies propped up by subsidies and with a long record of lobbying the government exacerbated their prescription.

This is how many opiate abusers get their start.

But how do they end up going from abusing painkillers prescribed to housewives and those with chronic pain to buying heroin and fentanyl supplied by Mexican drug cartels?

One of the first concepts taught in an ECON 101 course is that of elasticity of demand. The concept is simple. Some consumers of products show elastic demand – they will not buy (either the product or the specific brand) if the price changes even a dollar. Airline tickets are a good example of this. Most people just buy whatever the cheapest airline ticket is for their specific route, even if the slightly-more-expensive ticket may just cost a few dollars more.

Some consumers show inelastic demand – they will buy the product (or find a substitute) no matter how expensive the product gets.

The example given in nine out of ten econ courses?

Hard drug-users, like those addicted to opiates.

It’s Not Enough to Remove the Drug

When the cost (including non-monetary costs like legal costs and disapprobation) of getting painkillers rises, addicts are not dissuaded from getting their hands on these painkillers. Instead, they search for substitutes – like heroin and fentanyl.

Cutting off the ability of those addicted to painkillers – whether for chronic pain or for a hedonic rush – only pushes these people from the risky-but-safer-than-heroin world of painkillers like OxyContin and Dilaudid into the blacker markets of heroin and fentanyl.

Removing the drug from the market and from the user’s body is not enough and threatens to exacerbate existing problems. Once the addiction pathway in the brain is established, breaking that dopaminergic pathway requires building alternate pathways through deeply meaningful work and activities (this is why religious programs like 12 Step work when they do work – they help the individual tie into a deeply meaningful set of values and reward that pathway in the brain). If the pathway is merely deprived of engagement – through prohibition and then withdrawal – but not then supplemented with a pathway that overwhelms the addiction pathway, the user is just one quick decision or hit of an opiate away from falling back into the same addictive behavior.

Reducing the market in painkillers at the user-level just pushes more existing users into the black market to get their fix.

A proper response focuses on alternatives to opiate-based pain management – through less-addictive prescriptive medicine and through psychotherapy in appropriate cases – and treatment for existing addicts, not expanding prohibition.

Removing the drug from the market and from the user’s body is not enough and threatens to exacerbate existing problems. Users must be able to find meaning in their lives and in their work. They must learn and be taught how to craft significant meaning for themselves and know where to find people to help them with that. They must be prepared to not merely integrate themselves back into mainstream society but go above and beyond mainstream society through seeing themselves as meaningful people through work, contribution, and education.

But that does not look good for an election campaign.

  • Zak Slayback is a venture capital and private equity professional and a small business owner. He is the author of How to Get Ahead (McGraw-Hill, 2019) and wrote the foreword to John Taylor Gatto's Dumbing Us Down (New Society Publishers, 2017). He lives in the United States and writes at He is a Eugene S. Thorpe Fellow and FEE alum.