Fynsa
During these days I had the opportunity to watch a series on Netflix called "Painkiller", which is about the drug "OxyContin". Netflix called "Painkiller", which is about the drug "OxyContin", its birth, boom and the actors involved in it. It shows us the corporate side, the government side, the justice side, along with the sellers and their relationship with the doctors, until finally the patients and users. I do not plan to review the series itself (which I recommend watching anyway), but to analyze from my area of expertise how such a thing could have happened, which today has the United States facing a tremendously complex addiction problem.
Roughly speaking, I believe that the worst failure has to do with the institutional framework. Drug production works like any other industry, although in this one there are two elements that stand out above others (which does not mean that they do not exist): patents and certification. The former functions as a way of being able to grant property rights to research, which in general is expensive and without its due protection would probably not exist. This protection, which generates monopoly profits, is the cost that we as a society agree to pay so that someone decides to create something that will benefit us and, in a sufficiently competitive market, would be compensated for the costs incurred by the producer in developing that product.
Secondly, certification makes it possible to resolve the asymmetry of information that exists between the agents, since we do not know whether what is sold to us is what it is supposed to be used for and, even if it is, we do not know whether the product contains the compound in the amount it says it does. For incentive reasons, this certification should be carried out by a third party, without conflicts of interest, with sufficient incentives to do its job as objectively as possible. In the specific case shown in the series, the institution in charge was the FDA, which initially did what it was supposed to do, denying them commercialization. However, the decision the decision in the end ended up falling on a single person, who ended up giving them a pass, and some time later, went to work for the laboratory requesting the authorization.
This situation then led to the incentives working incorrectly and doctors over-prescribing not only the drug, but also its dosage. This is a problem. However, if the drug had done what it promised to do, with the safety it promised and reliable science behind it, much of the impact on the current addiction crisis would have been avoided.
The proper functioning of institutions is vital for the market economy and for democracy. The challenge is not only their creation, but also their design, their procedures, their financing, their speed of updating, and the existence of checks and balances to avoid concentrations of power. The failure of these can have consequences as dire as the health and public safety problems in the United States described in the series, as well as making it extremely difficult for possible investment projects in a country, This can have dire consequences in terms of reducing poverty, reducing access to public goods and services, and improving people's well-being, among other things..
