You’ve probably heard of the opioid epidemic. If not, a
quick summary: in the past 10 years or so, there has been a dramatic increase
in the use of both prescription and non-prescription opioid drugs, which are
painkillers such as Oxycontin and heroin. These drugs are extremely addicting and can ruin
lives. In
2016, drug overdoses killed more Americans than the wars in Vietnam and
Iraq combined. Public health officials
are trying to figure out how regular U.S. citizens are accessing these
prescription drugs from pill distributors, but according to this
video from the Daily Show, maybe they need to start talking to economists
and legislators.
I realize that late night talk shows are not the best source of news, but if you skip to the 1:00 min mark in the video, Trevor starts talking about
the rent-seeking activities of the pharmaceutical industry. Drug makers spend more
than any other industry to lobby for certain legislation from Congress. In this
case, the rent that the industry received was greater legal restrictions on the
actions that the DEA could take to stop them from selling opioid pills. This is a
form of protection of the pharmaceutical industry that allowed them to sell
more pills and make positive economic profits. Not only was the $246 million
in actual lobbying a waste of resources that could’ve been used for other
productive activities, but the outcome of the lobbying, the new law, seems to have done way
more harm than good to the public as the opioid epidemic gets worse everyday.
1 comment:
While from Stigler’s model it can appear as though this capturing of government regulation is a done deal, Peltzman’s contributions to Capture Theory and Olson’s insights on interest groups provide a source for careful optimism:
Simply put, the key difference between Stigler and Peltzman is that Peltzman accounts for the probability of opposition by a taxed member [denoted by (N-n)h] and the effect this will have on the ability of the representative to maximize the majority. The goal of the representative under Capture Theory is to maximize the majority (because they are vote maximizers) by increasing the probability of support by beneficiaries to support them while simultaneously decreasing the probability of opposition from taxed members.
Combining this probability of opposition with Olson’s discussion of interest groups, one can begin to envision how a policy change in favor of protecting the health and safety of Americans rather than putting more money in big pharma’s pockets might come about. Those impacted by the opioid epidemic have greatly increased in number, thus they can be viewed as a latent group. If they are able to be mobilized, perhaps by providing some sort of non-collective benefit (monetary compensation to pay for rehabilitation, for example), then the free-rider problem can be overcome, thus hopefully leading to (N-n)h being sufficiently large enough to sway policy in favor of consumers.
Post a Comment