Cooperating for better care.


Tag Archives

David Warsh: Sacklers’ lethal painkiller empire and the need for a ‘Healthcare 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 Healthcare 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.

Lack of preventive care poses fiscal danger to hospitals


Robert Ostrowsky, the head of RWJBarnabas Health, in New Jersey, says that lack of preventive care in some communities could end up deeply damaging hospitals.

“It’s not easy because no one is willing to pay for that right now, meaning I don’t get reimbursed by insurance companies to keep somebody healthy and the government doesn’t seem to want to pay us to keep someone healthy,” Mr. Ostrowsky told the Asbury Park Press.

“They all prefer to pay us when someone gets sick and they want us to spend less when that person is sick. That’s where the concentration has been. But an ounce of prevention. If they would take X number of dollars and say, ‘Here, use it to keep people healthy,’ actuarially, that will show you eventually spend less on sickness care.”

But then, as  Ron Shinkman wrote in FierceHealthcare noted:
“It’s simply easier for providers to write a prescription than deploy a complex exercise or lifestyle regimen that might improve health and reduce pain. Some other unsettling forces from the business side of healthcare also play a role. Most notably is Purdue Pharma looking the other way on potential abuse of its OxyContin painkiller, marketing it based on the dubious claim its effects lasted for 12 hours, increasing the risk of abuse, and also taking a significant period of time to reformulate its pills to make them less likely to be abused.”

Mr. Shinkman continues: “Ostrowsky is right. Lack of proactivity on population health is not only making more Americans sick and keeping them out of the workforce, it makes them more likely to lash out against the only institutions that could play a role in their being healthy again. It is a negative feedback loop that could have disastrous consequences for the population and hospitals if it is not aggressively addressed.”

To read the article in the Asbury Park Press, please hit this link.

To read Ron Shinkman’s commentary,  please hit this link. 

Contact Info

(617) 230-4965

Wellesley, Mass