We attribute the recent quadrupling of heroin death rates to the August, 2010 reformulation of an oft-abused prescription opioid, Oxycontin. The new abuse-deterrent formulation led many consumers to substitute to an inexpensive alternative, heroin. Using structural break techniques and a difference-in-differences analysis, we find that opioid consumption stops rising in August, 2010, heroin deaths begin climbing the following month, and growth in heroin deaths was greater in areas more likely to substitute from opioids to heroin. The reformulation did not generate a reduction in combined heroin and opioid mortality—each prevented opioid death was replaced with a heroin death.
.. OxyContin is a name-brand opioid pain killer marketed by Purdue Pharma.13 The active ingredient in OxyContin is Oxycodone, an opioid that has been in clinical use since 1917 (Kalso, 2005) and is the active ingredient in such pharmaceuticals as Percodan (Oxycodone and aspirin) and Percocet (Oxycodone and Tylenol). OxyContin is an extended-release formulation that allows for up to 12 hours of pain relief and hence there is typically a high milligram (mg) content of Oxycodone in the pills.14 Since its release in 1996, OxyContin has been one of the most successful pharmaceuticals of all time with worldwide sales totaling $35 billion.15
.. OxyContin was introduced at a time when the medical profession was beginning to re-evaluate its use of opioid-based pain killers. Historically, opioids were reserved for those with acute pain such as postsurgical and cancer patients. Given the limited use of opioids, pain from chronic conditions often went untreated. This was viewed by many as a failure of the medical profession. In the middle 1990s, a number of physicians began to argue for much greater use of opioids for patients with chronic pain. In the 1995 presidential address of the American Pain Society, James Campbell introduced the notion that pain is the “5th vital sign.” Campbell (1995) argued that “Quality care means pain is measured. Quality of care means pain is treated.”
.. an important study used by Purdue Pharma in their advertising materials, Porter and Jick (1980), reported that of “11,882 patients who received at least one narcotic preparation [opioid], there were only four cases of reasonably well documented addiction in patients who had no history of addiction.”
.. This “study” was in actuality a 100-word letter to the editor in the New England Journal of Medicine, the entire substance of which is contained in the quote above.
.. in 1996, the FDA allowed Purdue Pharma to claim that addiction was rare if opioids were legitimately used in the treatment of pain.
.. Between 1996, when OxyContin was released, and 2003, sales of OxyContin increased from $44.8 million to $1.5 billion per year (United States General Accounting Office, 2003)
.. The movement to an abuse-deterrent formulation made OxyContin less desirable for recreational use.
.. Of confiscated heroin, 79 percent is now from Mexico
.. The price has fallen from more than $3,000 per pure gram in 1981 to less than $500 in 2012
.. Groups like the Xalisco Boys have transformed the supply of heroin to suburban and rural US markets. Within their distribution network, independent “cells” within a city are operated by cell managers and each cell is supplied with high-quality Mexican heroin by the cell’s owner. The cell manager employs a telephone operator who receives orders and then relays those orders to the drivers. A driver meets the client at a designated spot or delivers the drugs directly to the customer’s location. Each cell operates almost completely independently and constantly cycles through lower level employees to help prevent detection by authorities.
.. 30 years ago, the typical heroin user was an urban resident. Heroin use in the 1990s and 2000s has now “spread to users in suburban and rural areas, more affluent users, younger users, and users of a wider range of ages. There is no longer a typical heroin user.” The entry into heroin is now much easier because of the purity level. In the 1970s, heroin was mostly an injected drug. Because of increased purity, the drug can now be smoked or inhaled, decreasing the cost of drug initiation
.. the costs of the opioid crisis seem to be driven primarily by the costs associated with mortality. Inocencio et al. (2013) put the total costs at $20.4 billion in 2011 dollars, but 89 percent of these costs, more than $18 billion, are due to lost earnings from higher mortality. Although we do not do a formal cost-benefit analysis, the fact is that Purdue Pharma’s abuse-deterrent formulation of OxyContin was unable to affect the vast majority of the crisis’s costs.
.. While some individuals die from heroin overdoses shortly after initiation, on average, it takes between 5 and 10 years for a heroin user to overdose and die
Trump Sets Nafta Goals: Dilute Pact’s Force, Loosen Regional Bonds
Proposals spark a backlash from Mexico and Canada and from business groups in all three countries
U.S. trade officials have made that theme clear in recent days, prompting a backlash from Mexico and Canada and from business groups in all three countries, casting new uncertainty over the talks as they resume in Washington.
One provision designed with that objective is a “sunset” clause that would force Nafta’s expiration in five years unless all three countries act to renew it, said people briefed on the plan.
Other proposals, these people said, would weaken or eliminate the mechanisms aimed at settling disputes between the three countries and curbing the unilateral threats and sanctions that frequently roiled trade ties in earlier years.
.. The administration wants to “change the incentives to disincentives,” and “create more uncertainty and reluctance for U.S. businesses to invest in Mexico,”
.. Another pending proposal would require for the first time that certain products contain not just a certain level of Nafta-regional content, but U.S.-specific content. That plan, applied to autos and auto parts, would require 50% of Nafta products come specifically from the U.S.
.. Business groups say the U.S. plans—particularly the sunset clause and the one weakening the “investor-state dispute settlement” process—would make it harder for executives to plan the cross-border investment feeding regional supply chains that Nafta has encouraged and that, they say, has raised the efficiency and competitiveness of the North American economy.
How Trump Can Harness the U.S. Energy Boom
The embrace of new technologies to extract oil and natural gas at an unprecedented rate has transformed one of America’s enduring vulnerabilities into a strategic asset. Thanks largely to fracking — hydraulic fracturing of rock — the United States is now the largest producer of oil and gas combined in the world. America consumes large quantities of energy, so this expanded production has not yet made the country energy independent. But it has greatly decreased its dependence on foreign energy: About a decade ago, the United States imported nearly two-thirds of the oil it consumed; that percentage is now closer to one-fifth.
.. an improved trade balance and a stronger economy. The boom has also improved the country’s sources of soft power, in part by underscoring America’s enduring edge in innovation and ingenuity.
.. American producers of oil from shale rock have introduced a new business model to the scene: Small investments in exploration and production can bring oil to the market quickly. This weakens OPEC, by making it more difficult for its production cuts to result in sustained increases in oil prices. For the first time in more than a century, the market determines the price of oil with much less influence from any cartel, commission or band of big oil companies.
.. The energy boom has also weakened many of America’s competitors, particularly Russia, by both decreasing its revenues and reducing its ability to use its energy resources as a political cudgel.
.. The boom also expands opportunities for the United States to forge new partnerships. For instance, given China’s growing dependence, and America’s waning reliance, on Middle Eastern oil, Beijing may be more likely to work with the United States to stabilize that part of the world. Such changes put America in a stronger position to reinforce the international order.
.. Many non-energy policies of the Trump administration undermine the energy boom and all its potential advantages.
.. On climate, Mr. Trump’s pledge to withdraw the United States from the Paris agreement could also hurt the American energy boom. Natural gas stands to gain as the world takes strides to tackle climate change: As countries transition to more sustainable energy, they often move away from coal to natural gas. American natural gas exports could benefit from this transition — but not if countries like China and India also weaken their commitment to tackling climate change and drag their heels in curbing coal consumption.
.. Mr. Trump’s talk of retrenchment overseas has made friends and foes nervous about America’s willingness to continue to use its vast sea power to maintain open shipping lanes. Over half of the world’s oil supply and a growing percentage of the natural gas it consumes is transported through these waterways.
.. Mexico is by far the largest foreign consumer of American natural gas — a trend that will increase with recent Mexican electricity reforms. Yet President Trump’s talk about a border wall has spurred a revival in the presidential candidacy of Mexico’s own populist, Andrés Manuel López Obrador, who is committed to reversing these and other energy reforms. That would not only shrink the largest market for American natural gas but would also dull prospects of the United States, Canada and Mexico of reaching North American energy independence.
Mexico Plays the ‘China Card’
The possibility President Trump will pull out of NAFTA has prompted his Mexican counterpart to court China.
.. This week, while his country is renegotiating the North American Free Trade Agreement, Mexican President Enrique Peña Nieto was in China to pursue his country’s Plan B. Rumblings of a free-trade deal between the two nations have grown since President Trump took office this year, but they’ve mostly been seen as political posturing. But with Trump threatening regularly to dump the deal—even taking time last Sunday, during Hurricane Harvey, to say he “may have to terminate” NAFTA—the possibility of Mexico opening up to China seems ever more real.
.. Peña Nieto’s will participate in the BRICS summit in China, named for its participants, Brazil, Russia, India, China, and South Africa. And he also met with Chinese President Xi Jinping, a sign the two countries are seeking a closer trading relationship.
.. NAFTA changed the waythe U.S. eats, and without NAFTA, consumers stand to lose their perennially fresh and cheap vegetables. But the sector that stand to lose the most is auto manufacturing, because U.S. companies have invested heavily on being able to send car parts to Mexico, assemble them there, then bring them to the U.S. to be sold.
..The WTO tariffs for the auto sector are much higher than for most other industries, so not only would consumers have to pay more for cars, but it would likely disrupt the current chain of manufacturing.
.. if NAFTA did end, it’s trade would likely continue at WTO tariff rates, making many products from Mexico more expensive, but leaving intact the flow of trade.
..Mexico sends about 75 percent of its exports to the U.S., which comes to about $290 billion. By way of comparison, Canada is its second-largest export market at $23 billion, and China its third at $7 billion...And as recently as June, China’s ambassador to Mexico, Qiu Xiaoqi, said his country was open to a free-trade agreement. But while a deal like that could benefit China (and scare the U.S.), it probably wouldn’t benefit Mexico that much. Dussel told me Mexico imports about 14 Chinese products for every one product it exports... “The thing you want to think about is what is Mexico’s competitive advantage,” Adam Collins, a Latin America economist with Capital Economics, a London-based research and consultancy group, told me. “In both cases it’s low wages. So really the place Mexico should look to are other developed countries, like in Europe, and richer East Asian countries. But even that is an uphill battle because of geography, by which I mean Mexico’s other competitive advantage is its location next to America.”