Fynsa
Over the past few days, I had the chance to watch a Netflix series Netflix called “Painkiller,” which is about the drug “OxyContin,” its origins, rise, and the people involved in it. It shows us the corporate, government, and judicial sides, along with the salespeople and their relationships with doctors, and finally the patients and users. I don’t plan to review the series itself (which I highly recommend watching, by the way), but rather to analyze—from my area of expertise—how something like this could have happened, a situation that has now left the United States facing an extremely complex addiction problem.
Broadly speaking, I think the biggest problem has to do with the institutional framework. The pharmaceutical industry operates like any other industry, although in this one there are two elements that stand out above others (which is not to say that others do not exist): patents and certification. The first serves as a way to grant property rights to research, which is generally costly and would likely not exist without proper protection. This protection, which generates monopoly profits, is the cost that we as a society accept in order for someone to decide to create something that will benefit us; and, in a sufficiently competitive market, it would be offset by the costs the manufacturer had to incur in developing that product.
Second, certification helps resolve the information asymmetry that exists among market participants, since we do not know whether what is being sold to us serves the purpose it is supposed to serve, and even if it does, we do not know whether the product contains that compound in the amount it claims to contain. For the sake of proper incentives, this certification must be carried out by a third party with no conflicts of interest and sufficient incentives to perform its work as objectively as possible. In the specific case shown in the series, the agency in charge was the FDA, which initially did what it was supposed to do by denying marketing approval. However, the decision ultimately rested with a single person, who ended up giving them the green light, only to later go to work at the laboratory that had requested the authorization.
This situation led to the incentives subsequently failing to work as intended, causing doctors to overprescribe not only the drug but also its dosage. This is a problem. However, if the drug had delivered on its promises—with the safety it promised and backed by reliable science—much of the impact on the current addiction crisis could have been avoided.
The proper functioning of institutions is vital to the market economy and to democracy. The challenge lies not only in their creation, but also in their design, their procedures, their funding, the speed at which they are updated, and the existence of checks and balances to prevent concentrations of power. The failure of these institutions can have consequences as dire as those affecting public health and safety in the United States, as depicted in the series, and can also greatly hinder potential investment projects in a country, jeopardizing its prospects for future growth—with dire consequences for poverty reduction, access to public goods and services, and improvements in people’s well-being, among other.
