Proposed “Big Pharma” Opioid Settlement Is a Drop in The Bucket Compared to Its Real Cost

Published on October 30, 2019

Earlier this month, a group of five pharmaceutical companies offered $48 billion in cash and medical services to settle thousands of legal suits filed by state, county, and local governments to recover their costs in dealing with the opioid crisis.

But a report released by the Society of Actuaries reveals that the true economic costs of the opioid crisis are significantly greater than the proposed settlement that the drug companies have offered. In fact, the report estimates that in 2019 alone opioid addiction will cost the U.S. economy approximately $188 billion.

Not surprisingly, hundreds of hospitals have now joined in several of the opioid lawsuits, seeking compensation for their costs in treating uninsured opioid victims. As lawyers for both sides prepare to settle the deluge of opioid lawsuits that have been flowing through our civil justice system for the greater part of this decade, experts believe that the drug companies are offering way to little money to settle the cases. For example, Dr. Andrew Kolodny, Co-Director of Opioid Policy at the Heller School for Social Policy and Management at Brandeis University recently stated that the $48 billion proposed settlement is “way too little.”

The Economic Costs of the Crisis

From 2015 through this past year, the opioid crisis has cost the U.S. economy close to $631 billion, and it may continue to get more expensive for the foreseeable future, according to a report (“Report”) released by the Society of Actuaries on Tuesday.

The Report divides the economic burdens of opioid abuse into five categories:

  1. $63 billion per year in lost earnings and economic activity due to people who die prematurely because of opioids,
  2. $51 billion per year in increased medical expenses,
  3. $24 billion because of lost productivity from those who abuse opioids,
  4. $10 billion per year on increased spending on child and family assistance programs, and
  5. $10 billion a year in costs to the criminal justice system.

While these numbers are staggering, the White House Council of Economic Advisers used different actuarial assumptions and believes the financial costs of the opioid crisis may be four times higher. While actuaries can quibble over the calculations, either way both sets of conclusions support the argument that the money the drug companies are offering is way too little, especially in light of the hundreds of thousand who have died because of prescriptions drugs.

The Human Costs of the Crisis

The Centers for Disease Control and Prevention (CDC) have estimated that more than 400,000 people in the U.S. died from prescription or illegal opioids from 1999 to 2018 and experts predict that approximately 48,000 people will die from opioid overdoses in 2019.

The Report further estimated that as many as 4 million Americans currently abuse opioids and that 1 in 35 households live with someone who is addicted. The Report predicted that by the end of this year, there will be 225,000 arrests and 101,000 incarcerations related to opioids.

Moreover, 40,000 infants born in 2019 (around 1 in 97 births) will be born with prenatal opioid exposure.

The report also notes that the opioid crisis has caused American life expectancy to decrease or stagnate for the last three years. This grim phenomenon has not occurred since 1915-1918, when Americans were dying in large numbers because of the First Word War and the Spanish Flu pandemic.

When it Went Full Emergency

Things got so bad that in 2017, the U.S. Department of Health and Human Services declared a Public Health Emergency, as 130 Americans were dying each day from opioid overdoses. Sadly, even though the number of opioid prescriptions peaked in 2011, opioid overdoses have continued to increase since then, in large part because of increasing use of street drugs, such as heroin and Fentanyl.

The Society of Actuaries divides the opioid crisis into three phases. During the first phase of the crisis, the majority of opioid abusers were dying from pills they received from doctors. During the second phase of the crisis in the early 2010’s, people who were abusing prescription opioids starting to switch to heroin, as doctors began to notice that their “pain” patients were becoming drug addicts. We are currently in the third phase of the crisis, which is marked by the increased availability and use of Fentanyl.

Sackler Family Will Remain Billionaires?

The settlement is with three pharmaceutical distributors – AmerisourceBergen, Cardinal Health, and McKesson Corporation and – and two drug manufacturers – Johnson & Johnson and Teva Pharmaceuticals.

Notably, the $48 billion settlement does not include Purdue Pharma and its owners, the Sackler family. Many consider Purdue Pharma and its owners to be a major contributing factor in creating the crisis, as they aggressively marketed their drug, OxyContin, in the early 2000’s and ignored warning signs that people were abusing the company’s drugs. Opioid prescriptions tripled from 76 million to 219 million per year from 1991 to 2011 and only an idiot would believe that the legitimate use of opioids caused the explosive growth in prescriptions.

Lawsuits Continue Amidst Bankruptcy

Although Purdue Pharma has filed for bankruptcy, it continues to fight thousands of lawsuits across the country. The company and its owners have reportedly offered between $10 and $12 billion to settle these suits, but commentators have criticized the settlement as grossly insufficient, because the Sacklers would remain billionaires even after they pay the settlement.

Given the shockingly high financial cost of opioid addiction, coupled with the fact that the key people who profited from it will remain very wealthy, attorneys for the plaintiffs have only one thing to say the next time they sit down at the settlement table with big pharma – “More Please.”


Kevin Pflug is a News Columnist at Grit Daily. He writes about financial markets, legal affairs, and metaphysical matters. With a background in finance and law, Kevin enjoys studying how financial and legal structures can be used to create a better world. Apart from brief stints in Baltimore and Belgium, Kevin is a lifelong resident of New Jersey.

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