Last month the Drug Enforcement Administration, tasked with setting quotas for opioid production in the U.S, announced a proposal to reduce production levels another 10 percent, having already reduced production by 25 percent in 2017 and an additional 20 percent in 2018. This would bring down production levels to 53 percent of 2016 levels. Yesterday the DEA released a proposal to develop “use-specific” quotas.
This is from the excellent Jeffrey A. Singer, “DEA Is About to Demonstrate ‘How Little They Know About What They Imagine They Can Design,” Cato at Liberty, October 24, 2019.
I don’t know who chose the title of Jeffrey’s post, but I do think that whoever chose it is a little hard on the DEA. To be fair, I think the DEA knows very well how to design a drug cartel.
And note that, unlike most people use the term “drug cartel,” I’m using it correctly.
READER COMMENTS
Jeffrey Singer
Oct 24 2019 at 7:55pm
I plead guilty. I chose the title.
Side Bar
Oct 24 2019 at 8:52pm
Seems plausible that limiting supply and raising prices would have some impact on opioid use, provided that there is also enhanced scrutiny by insurers subsidizing the cost. Cato article concludes there is no correlation by linking to one study, and therefore it’s a stupid policy with no impact. I’m skeptical that an open, legal market in highly addictive substances would lead to better outcomes. What’s your view David on the merits of a cartel?
David Henderson
Oct 24 2019 at 10:27pm
You ask:
I think they’re bad. They restrict output and drive up prices of things that people want, and that’s bad. Of course, I’m referring to goods and services that are peaceful. A cartel run by Murder Inc. would be better than a perfectly competitive market in murder.
Mark Z
Oct 25 2019 at 1:22am
I think (echoing Side Bar) Cato is probably jumping the gun to conclude the policy has no impact: opioid-related deaths did go up in 2017, but it’s currently estimated they declined slightly in 2018, for the first time in a while. Maybe that’s partly attributable to clamping down on legal production. But I doubt the effect could be more than modest, it’s only going to get easier over time to manufacture synthetics.
It’s frustrating that the licit drug industry has become the preferred punching bag on this issue. It seems like a case of an impotent agency taking the easiest path to ‘do something.’ It would likely be more worth the effort (and less of a calamity for people who need pain medication) for the DEA to focus its efforts on illegal synthetics, but that would mean more police work than just telling companies to stop making a product. The consensus that has emerged that the entire phenomenon has been caused by malicious drug companies is disturbing. I really hope this sentiment subsides before I get old and start needing pain meds.
Alan Goldhammer
Oct 25 2019 at 7:59am
The ‘war on drugs’ has been a losing proposition for a lot of years. I remember reading an lengthy article in The New Republic, probably sometime in the 1990s, that chronicled how much money had been thrown at it and it was a pretty large number. The focus should be on addiction treatment rather than interdiction of illegal drugs. With respect to FDA-approved opioids, drug manufacturers & distributors, prescribing MDs, pharmacies, and the DEA have all behaved badly in recent years. This appears to be a regional phenomenon.
Interdiction of new synthetic opioids is difficult as their potency is high such that small amounts can easily be brought across US borders (not to mention that the synthesis of many of these compounds is somewhat trivial for a skilled organic chemist).
Jon Murphy
Oct 25 2019 at 8:19am
In response to some of the comments above:
The DEA’s policy is likely having no/very little effect on legal drugs entering the black market (the claim they make), but it is likely increasing the demand for illegal black-market drugs. This means the policy is ineffective at best and outright harmful at worst.
An output restrictor, which is precisely what the DEA is doing, increases the relative price of their product (in this case, legal opioids). This will, in turn, reduce the quantity demanded of legal opioids.
What the output restrictor also does, albeit unintentionally, is lower the relative price of substitutes, in this case, black-market opioids. This, in turn, increases the quantity demanded of those opioids.
In other words, the DEA is likely fueling the problem.
So, the evidence that opioid deaths have increased and plateaued over the past few years as the DEA cut production makes sense and a larger free-market of legal opioid production will likely reduce deaths given the legal market stuff is safer (for reasons of market competition and regulation) than the black market stuff.
Jon Murphy
Oct 25 2019 at 8:31am
Adding on: the 2nd Law of Demand tells us that the longer a price remains relatively high, the more elastic the demand for the good becomes. In other words, the longer the price stays relatively high, the more people will search for and acquire alternatives. Alternatives which include illegal drugs (or less effective painkillers, or just live with the pain).
Comments are closed.