Addicted to Drug Prices

Addicted To Drug Prices

Why are drug-overdose deaths growing?

Source: National Institute of Health

Drug abuse is a scourge in our country and a source of deep anguish for many families. In 2015, almost 20,000 people died from overdoses, 545 in New Hampshire alone. Over 2 million Americans abuse or are addicted to prescription painkillers, costing the economy almost $200 billion. Why?

Many studies have focused on the demand side of the problem—the rise in unemployment, the decline in funding for mental health care, and so on. But there’s a supply side issue as well. A recent study noted that since 2001, the out-of-pocket cost of for consumers declined from $4.40 per 100 morphine milligram units to $0.90—an 80% drop in the price. Fifteen years ago there was widespread reporting of the under-prescription of painkillers for chronic pain, and it appears that insurers and Medicare have responded by taking on more of the cost.

Source: CDC

But the low prices have stimulated demand—just as classic economic theory suggests they would. Also, many of the most common opioid medications went off patent after 2001—making them a lot cheaper. The drugs are addictive—taking a pill at regular intervals creates an increasing desire—while the body builds up a tolerance. Eventually, the addict nears the line between a dose strong enough to get “high” and an overdose.

It’s likely that Medicare-funded pain pills are finding their way onto the street. We know that doctors now face a lot more reporting requirements and restrictions when they prescribe opioid pain killers. Maybe adjusting insurance payments would help address the issue, too.

Because drug overdoses are just too painful to ignore.

Douglas Tengdin, CFA

Charter Trust Company

By | 2017-07-17T12:21:58+00:00 May 10th, 2016|Global Market Update|0 Comments

About the Author:

Mr. Tengdin is the Chief Investment Officer at Charter Trust Company and author of “The Global Market Update”. The audio version of each post can be heard on radio stations throughout New England every weekday. Mr. Tengdin graduated from Dartmouth College, Magna Cum Laude. He received his Master of Arts from Trinity Divinity School, Magna Cum Laude and received his Chartered Financial Analyst (CFA) designation in 1992. Mr. Tengdin has been managing investment portfolios for over 30 years, working for Bank of Boston, State Street Global Advisors, Citibank – Tunisia, and Banknorth Group. Throughout his career, Mr. Tengdin has emphasized helping clients manage their financial risks in difficult environments where they can profit from investing in diverse assets in diverse settings. - Leave a comment if you have any questions—I read them all! - And Follow me on Twitter @GlobalMarketUpd

Leave A Comment