 This topic is very unusual, but it's something I've been speaking about for two years and To any group to any lecture to any class that I teach I talk about the opioid epidemic So if it's a church group or real estate group or principles of macroeconomics I always give a little introduction to this issue and this is the first time I've really talked about it at length It's the first time this lecture has been given at Mises University and I think it's important for the fact that it's a matter of life and death and it's a matter of a short term immediate term problem and It's a problem that now faces all Americans and Indeed a lot of people around the world in European countries. This is also having a big impact And so the best view I think of the opioid epidemic will start off with some statistics to give you some flavor for What this epidemic has become? Okay, so in this chart It shows the overdose deaths from opioid use from 2000 to 2015 Okay, and obviously if we add up all the opioids the number is quite substantial We're talking in far in excess of 30,000 Americans dying each year from this Back when I did my dissertation at Auburn University on the economics of prohibition the number of deaths from opioids was Just a couple of thousand people so the numbers have increased dramatically and the impact is spreading Widely and so when you look at the overall opioid deaths That is a combination of prescription opiates Oxy-cotton, Vicodin things like that things that are routinely prescribed by doctors and Then heroin and synthetic opioids particularly fentanyl Which you've probably all heard of it was involved with the death of Michael Jackson Prince It's his name Seymour Hoffman Just first name Philip Seymour Hoffman and a lot of other celebrities, but also a lot of everyday ordinary Americans So the numbers are quite staggering and the number for 2016 Is expected once it finally comes in to be far in excess of the figure in 2015? But Before we get into this in detail, I want to just mention to you the pain epidemic in the United States in 2003 there was a study of European countries and The number here is that 10 to 55 percent of adult Europeans suffer from chronic pain That's a staggering number The fact that looked at 13 different reports means that they're measuring pain differently and they're measuring populations differently So it's it's not a hard and fast number, but It is indicative of what we're facing in 2006 study similarly looked at European countries and found that the average amount of chronic pain was 20 percent of adults 2011 Study found that 116 million Americans suffered from chronic pain and this is really Staggering when I was a child a teenager it chronic pain was Not much of a major issue and there's no studies recently But what I did was I looked at the number of Google hits for chronic pain in 2011 2012 2013 and so on and I found that the number of Hits for chronic pain in 2011 jumped doubled in 2016 from 13 million hits in 2011 to 26 million hits in 2016 so far in 2017 we've exceeded the 26 million hits on Google so this is something that is kind of exploding but off the radar map and I have no answer for The idea of what's causing all this chronic pain, but it's something that is very unusual Opioid prescriptions, this is data from 2012 The yellow states There are 52 to 71 prescriptions written for 100 for every 100 people That's an enormous amount even if an individual is only is responsible for 12 monthly prescriptions. It's a huge figure The dark states in the center of the country the number of prescriptions written for opioids for per 100 people was 96 to 143 I saw a report earlier this year that the state of Alabama last year Was 149 prescriptions written for every 100 individuals So there's a lot of pain out there and there's a lot of opioids being prescribed and there's a lot of people dying from that Fentanyl which I mentioned earlier. It's a synthetic opioid The number of mentions in law enforcement circles for fentanyl usually an overdose Situations was very very small just a matter of a few hundred prior to 2010 and then in 2013 we saw the number jump tremendously and It is widely known now that a lot of fentanyl is being illegally imported into the United States by China by Pharmaceutical and chemical companies in China the face of the heroin addiction problem has changed dramatically in the 1960s when the heroin problem first emerged in the United States became public notice The face or the image of the heroin addict was that of the inner city urban junkie Or Vietnam vets who took up the habit Fighting the Vietnam War and brought it back and when that's when we saw an explosion of heroin addiction in the United States So in the early years it was mostly inner city minority minorities and Vietnam vets Later that has changed so that older African-American men was a big group More suburban use But the statistics are still dominated by young minority men today the fastest growing component of this problem is Quite unlike what it has been historically now the problem has moved out into rural areas To places like little cities that are coal mining cities or fishing villages in Maine very unusual places and locations for The heroin epidemic to sort of explode in unusual ways as you saw the opioid prescriptions Were heavily concentrated in the central part of the United States So what's the cause? Well, if you read the media about this epidemic They'll trot out the usual suspects The suppliers on the supply side the drug dealers the smugglers the cocaine cartels and all that that they're Responsible for it and that we need to squash the supply side of this market There's also the demand side. It's these drug addicts. It's the addictive Capacity of these drugs that is responsible for the problem Of course, we have the gateway theory of drugs Which is important to know about which suggests that if you try marijuana You're ultimately going to end up dying from a heroin overdose Now this theory has been completely debunked by about four or five different disciplines That there's no physiological reason why you'd Suspect that marijuana use would lead to heroin overdose. There's no sociological reason That marijuana use would lead to heroin addiction There's no chemical reason There's real there's really not an economic reason why in a free market Marijuana consumption would lead to heroin Use and addiction and so forth So the gateway theory has been completely debunked although it's still Very popular in the media Crack babies totally debunked just recently on Mises dot org Is totally a fabricated story in order to sell copies But nonetheless law enforcement criminal justice the media they all point to this gateway theory as A way of explaining away the problem Of course, the free market is blamed even though the free market isn't in play here experts will You know just say oh well, it's the free markets fault just like they do on so many other occasions They don't have a real explanation. So they resort to these types of Explanation China and our enemies are the evil, you know Central American dictators and Chinese and so on and so forth. They're responsible for the problem They're the ones that are bringing in in particular the fentanyl and Because the media Tends to sell this story most people if they hear these types of ex explanations will accept those types of explanations and As a result, they argue for yet more prohibition more penalties more law enforcement more snooping more power to the DEA and so forth and Of course Drug or addiction treatment programs other types of government intervention Attorney General Jeff Sessions who used to be our US senator is trying to revive this war on drugs. He's trotting out The the old drug awareness programs and so on and so forth which have already been proven Dare what's there? drug awareness Whatever that the program for schools the studies of that program found that the program actually encouraged students to try drugs and Yet, it's still thought of as A way to solve the problem now the real reasons. I'll just list them here and then we'll come back and Flesh them out a little bit And I'm hoping to leave plenty of time here For questions and answers Because this is a topic that is not talked about and written about in a Scientific way, so I would really appreciate all of your input into this discussion as well Okay opioids opiates They are dangerous. They are addictive There is a reason to be very cautious and to avoid these things if it all possible even the prescription Versions the prescription versions on their own kill a lot of people government in an intervention in the economy is Also very important a major source of drug addiction is government intervention in the economy Most notably war. So a lot of people became the first American addicts were veterans of the American Civil War For example, they had injuries. They had amputations. They had real pain And not to mention the horrors of war that they suffered through You can imagine going into battle back then With everybody your age from your county back home whether you were north or south and In a particular battle you may be the only one out of a hundred who survives intact as a result But government intervention in the economy You'll learn this in some of your other classes every time government creates a monopoly position in the economy No matter if it's for doctors or lawyers It doesn't really matter. They're creating monopolies all over the place, right? Most industries in the US Have some kind of monopoly power built into the structure of their industry That means there's fewer of them and that means people who otherwise would have been in those industries Producing goods and services in the economy. They don't have a place in that industry That means that they have to go to a less desirable Occupation a less desirable space in the economy and As they go into those spaces which are don't have monopoly power Wages and returns in those industries are depressed. They're decreased and so there's a natural part of our economy due to government intervention where the returns and the wages and the incomes are artificially suppressed Due to government intervention and then there's the iron the iron law of prohibition The iron law of prohibition which will will get more to Is basically whenever you prohibit something such as drugs and alcohol you make them more potent and more dangerous Okay, so that's a very real reason why this is a very big problem But most importantly What's causing the epidemic today is That drug companies and the American Medical Association have changed the prescription guidelines for pain medication so only in the last few years Has it typically been the case that? Normal average ordinary People who go into the to the doctor's office for a medical problem Their routinely prescribed opiates such as Oxy-Cotin and Vicodin Whereas ten years ago. They wouldn't have been prescribed addictive opiates. They would have been prescribed ordinary painkillers like prescription strength Motrin for example. I had a A minor medical problem about ten years ago. I went into the doctor and they prescribed me prescription strength Motrin not in not a problem about five years ago. I went into a different doctor's office a doc-in-the-box type thing and I was seen by a physician's assistant and I Wasn't surprised by the fact that they wrote me a prescription They called it into the pharmacy. I picked it up on my way home and When I got home, I took one of them and about 30 minutes later I was getting kind of woozy and I stood up and I almost fell over and As soon as I studied studied myself. I Went into the bathroom and looked at the prescription and it was Oxy-Cotin. I couldn't believe it. I Could not believe it So the guidelines for prescribing pain medication have been changed So that an enormous number of people now are routinely given prescriptions for opiates instead of normal painkillers Okay, so the first one heroin is addictive and heroin is dangerous basically heroin is a form of morphine and In terms of reducing pain it also Suppresses your metabolism and if you take too much of it It'll basically Make you fall asleep and stop breathing and die It was introduced in the market by the Bayer pharmaceutical company in 1898 or 97 It was marketed as a non addictive Substitute for morphine Little bit of misleading advertising, of course, they didn't really do all the testing like we do today Back then So they really didn't know but it was very effective product particularly for lung related problems bronchitis and things like that where you're constantly coughing So it was marketed by Bayer from 1898 to 1910 Bayer Realized that the evidence was building up that people were becoming addictive to this new product and so they took it off the market in 1910 and they Introduced during that period an alternative painkiller called aspirin Which is still not completely harmless, but not it's non addictive and doesn't Have nearly the medical consequences of an opiate and then shortly thereafter in 1914 the Harrison narcotic act came into play and Made heroin morphine cocaine In a variety of other drugs and similar substitutes illegal So that's that sets in motion the economics of prohibition Second reason that I mentioned is government intervention in the economy War is a big cause. I mentioned the Civil War. I also mentioned the fact that Vietnam vets came home Smoking pot and taking heroin basically And the more recently wars in Afghanistan in Iraq have again big cause of prescribing opiates using heroin marijuana and so forth As a result of their injuries Which are very severe in many cases as well as the post traumatic stress syndrome And then government intervention in general all sorts of monopoly privileges Creating restrictions in some industries Transferring resources to other industries and suppressing wages and returns in those industries Okay, so if you're on the outside of Having a the positive benefits of government intervention and you're on the negative side of that that means you're an individual who is paying the higher prices To the professionals in the privileged industry and your income is much lower Okay, so it it Benefits some people but that means the other people get lower incomes and they have higher prices to pay the worst off in that second category of people find themselves in A position where they need some kind of release they need some kind of relief They need some kind of escape and so drugs in general provide that release that escape from The terrible rigors of being in that kind of position in the economy where you're on the outside paying higher prices and getting lower incomes and so we find the opioid Traditionally we find the opioid addicts Coming from those circles of society the iron law prohibition now. I've tagged this PowerPoint presentation on to my old Presentation on the war on drugs, which I'm not giving this year So if you want to look at some of the more technical aspects of it all my slides are attached to this lecture on the opioid Epidemic, okay, so I'm not going to go through the technical Analysis of the iron law of prohibition Suffice it to say is that when you prohibit something You make it more potent and more dangerous and in many cases more addictive Okay, and what I show in my book the economics of prohibition is that during alcohol prohibition the type of alcohol that was produced for the black market was much different than the type of alcohol that was Previously produced in the free market or subsequently to the end of alcohol prohibition so Prior to alcohol prohibition in 1920 Americans spent about 50 cents of every dollar on Whiskey or whiskies, you know vodka rum and that sort of thing and 50 cents on beer and wine during alcohol prohibition about 90 to 95 cents out of the dollar went for whiskies and spirits things of that nature and the type of whiskies that were produced Bathtub gin for example were approximately a hundred and forty to a hundred and 60 proof where in the market. It's typically 80 proof So in the free market, we almost never see that kind of stuff being sold in the stores Except for Saturday morning here in Auburn during the fall football games And why is that the case? There's only like one brand of this stuff in the ABC stores in town I said you ever sell any that stuff. She goes no except for football games Now, why would that be the case? You can't drink in the stadium. It's prohibited unless you pay 75,000 for one of those skyboxes Then for some magical reason it's okay, so they sell, you know That stuff only very rarely and only because of prohibitions So it's produced in a much more concentrated form As enforcement efforts increase so if you increase the penalties if you increase the number of law enforcement officials if you make it easier for law enforcement to find detect apprehend and convict Someone for illegal smuggling of this stuff Then what happens is these producers these smugglers these dealers will switch From bulky low potency drugs to concentrated high potency drugs So what I'm talking about here is for example Switching from producing smuggling and selling marijuana to producing smuggling and selling things like cocaine Which is highly concentrated when it's produced It's highly concentrated when it's produced in its 100 nearly 100% form Okay, so that Any particular container such as this Cover for this thing if you were smuggling something like this in and you were smuggling marijuana You may be able to get in say 15,000 single doses If you were smuggling in cocaine in something this size you may be able to get in 500 600,000 individual doses So it makes more economic sense during prohibitions to especially if they're intensely enforced To switch your business from something like marijuana to something like cocaine or heroin or crystal meth and This movement of going from marijuana to cocaine to heroin It makes it all but it almost makes the gateway theory seem plausible because Americans have gone from the marijuana Which was big in the 60s 70s and early 80s and then in 1984 they really cracked down on marijuana in Florida during the Reagan administration and marijuana did disappear temporarily from the black market and in Florida Because the dealers and the smugglers switched from doing marijuana to Bringing in cocaine and things have only gotten worse Now legal opiates are the real key here to the epidemic That we've been experiencing in the last few years Again, it's things like oxycott and Vicodin and others. So if you're prescribed a painkiller Chances are you're not going to need something this strong Make sure you ask what they're giving you Make sure you clarify that you don't want an opiate you want just normal pain meds and so forth The reason for the switch is that big pharmaceuticals that produce these drugs Have been influential in setting new guidelines the guidelines which now encourage doctors to prescribe opiates For minor things so if you're a fisherman and In Maine and Something you know you fall off the boat and break your arm They'll prescribe you opiates if you're a coal miner and something crashes down your shoulder and you have a separated shoulder They're going to give you opiates These new guidelines encourage their use by doctors and basically the big pharmaceutical companies. There's a committee that's in charge of setting prescription guidelines and The pharmaceutical companies have been Gaining favor with the individuals on this panel and They do that in a very typical way that they do everything else they provide grant money to these doctors they provide travel money to for them to go to conferences and Give their papers their research findings to other doctors And other ways in which the pharmaceutical companies can gain favor With doctors in general, but in this case a select number of doctors who are in charge of writing and rewriting These prescription guidelines It's legal what they're doing, but it's unethical in my judgment Okay, so physicians are encouraged to follow these guidelines the DEA Overseas the prescribing practices of doctors To try to identify people who are just writing, you know prescriptions for opiates for money so that they found certain doctors Have been prescribing a hundred times more of these opiate prescriptions than the average doctor and so because The DEA is overlooking this whole process Doctors know that they're being scrutinized and therefore that encourages them to follow these guidelines Even if they don't like it even if they don't think it's the right thing to do So that typically painful injuries are now treated with these opiates So if you break your arm or you separate your shoulder, you're given a 30 or 60 day prescription for these things to take them multiple times a day But when the injury heals when the arm is fixed when the shoulder is fixed Of course, the doctors can't continue writing these prescriptions so it's you only get these prescriptions in the short run typically and As a result a certain percentage of these people become addicted now when the original when the guidelines were announced We found that so far There have been over 250 citations within this Area of research to a letter to the editor to the Journal of the American Medical Association This letter was written by a research assistant Who was involved with a study of 40,000 people who went into a hospital and were given at some point opioid pain medications and They found only four out of the 40,000 became addicted And so this was a one paragraph letter to the editor written by a non-phd non-md research assistant About the findings they found for short term I mean how long you're gonna be in a hospital after all two three four days Maybe a week typically So with medical supervision Short-term very few people become addicted But if you're taking opioids three or four times a day for 30 or 60 days The percentage of people who become addicted apparently is much higher much higher than one one hundredth of one percent So with legal opiates alone 15,000 people died in 2015 we think the figure is going to be much higher for 2016 and 17 non-legal opiates or illegal opiates So as we throw Thousands and thousands of people through this new pain regime meta pain medicine regime a Certain percentage are going to become addicted But after 30 days if you still feel like you need these drugs and you go and want to refill the doctors not going to give it to you That would get the doctor in trouble So if you've become if you're one of the people who becomes addicted During the 30 days of your prescription What are you supposed to do at that point go cold turkey It's dangerous, and it's extremely hard to do People have actually died from trying to go cold turkey from heroin addiction You almost need to be under medical supervision to do that kind of thing So it's not a great option in other words Could go into an addiction treatment program The problems with that are many. They're very expensive not necessarily covered by insurance You have to go without your job and your income for 30 days Unless your company is going to cover that and they're not all that successful Because typically drug addicts Whether legal or illegal Face a lot of problems simultaneously. They have an economic problem. They have a sociological problem They have family problems They have psychological problems It's really hard to cure that whole mess in 30 days of drug treatment So one option is to go and get black market opiates you can buy Oxycontin and Vicodin on the black market. So if you find an illegal drug dealer you can buy Additional Oxycontin and Vicodin's the problem with this is That sometimes an Oxycontin pill will be five dollars sometimes it'll be twenty five dollars so Very high prices The supply of these things are uncertain The market is very thin And so the market may totally dry up in an area within driving distance for yourself And as a result there's price spikes in this market for illegal black market Oxycontin and Vicodin and So this leads us down this path to Black market heroin Which very often is actually cheaper than black market Oxycontin and Vicodin And you already know a dealer because you've been buying these illegal Oxycontin and Vicodin's so you're already locked into this black market And as a result a lot of ordinary people like coal miners and school teachers and Fisher people Find themselves these are people who would never ever ever consider buying black market heroin people like preachers people like Grocery store owners, so black market heroin Okay, black market heroin is not commercially or pharmaceutically made It's made in the black market. That means there's a lot of problems with it It very often has a lot of impurities Impurities that might make you sick or impurities or substitutes which may kill you Black market heroin is has an unknown and highly variable variable Potency there's black tar Heroin, which is very crudely produced That is has a relatively relatively stable potency, but the Stuff that mimics the pharmaceutical heroin is highly variable potency and That that's a problem because if you're used to taking a certain amount and then all of a sudden you get Something that looks exactly like what you were taking but is four times more potent then it can kill you and It also has unknown fillers Which are used to enhance the potency and this is where the fentanyl comes in so a lot of people who are heroin addicts They're used to the heroin. They know the dose. They know the dealer all of a sudden something comes through with fentanyl in it Which is considered by some to be as much as a hundred times more potent That can also kill you and we're getting literally tons of fentanyl coming into the country from China now Okay, black the black market versions of these products kill 2015 21,000 people so that's 36,000 people That's a lot of people solutions well people from the right wing Side of the political spectrum have a recommendation. They essentially want to lock these people up for their own good Of course that usually doesn't help very much People on the left Also recommend locking people up Okay, neither one of those approaches really works You may You know if you put somebody in a prison Or a secure treatment facility you may temporarily break their addiction But you haven't really solved the problems all those other sociological psychological physiological Problems that these people have Economic problems that they have if you don't solve all of those problems Drug and drug treatment Very often fails It fails in both in the short run in the long run because you haven't really solved the issue My recommendation is to legalize drugs to legalize heroin to legalize cannabis to allow somebody who Comes into a doctor's office and says I'm addicted to this stuff I want to get off of it to allow the doctor to write a prescription for a drug maintenance For the for the drug addict In order to give them time To figure out their other problems to get themselves studied economically sociologically psychologically so that the Breaking of the addiction becomes a permanent feature of their being rather than just a temporary Fixture because if you temporarily solve the problem and the drug addict gets completely clean and Then something happens that what makes them want to reintroduce the drug into their body into their life like it did with Philip Seymour Hoffman when family problems and Professional problems caused him to want to go out and get some heroin that ultimately killed himself so if you give Maintenance if you legalize maintenance so that doctors can do that kind of thing and actually Cannabis is considered by heroin addicts to be one of the best things To help break an addiction because of course cannabis relieves pain it relieves anxiety most of the time It encourages sleeping and eating which heroin addicts don't do a lot of and is important for curing everything so if you Introduce cannabis into the treatment. I think it actually facilitates the cure Okay, why does that work? Well? Drug addicts in the black market. They're more or less constantly working and worried about feeding their habit Okay, so it's it's almost a full-time job To to get and maintain the money and the drugs necessary to maintain the addiction So legalization would would Exit that out. Okay, there's no time and worrying about it if you have maintenance So they can get a job and improve themselves in other areas and They can solve their problems over the long run There are a lot of people who are heroin addicts that eventually grow out of their addiction They become sick and tired of going through that process So people who are wealthy and can afford their addiction very often Maintain their addiction for a number of years and eventually simply grow out of heroin addiction usually with the help of cannabis So in conclusion, this is a real and deadly epidemic It's largely caused by Prohibition the black market and the pharmaceutical companies Legalization I think would be of great help in reducing these problems You can look at the decriminalization in Portugal in 2011 It wasn't a big step as big as it sounds, but basically law enforcement Cut back on its conviction of dealers they were all already kind of lenient towards consumers and The prices of these drugs fell addicts became more normal citizens and the sociological problems associated with illegal Drug use in Portugal dropped significantly Thank you very much Thank you very much We've only got two minutes for questions, but I've got office hours this afternoon and I'll be out there at lunch too in the back Conscription The fact that you have to have a prescription Well Most of my relatives are pharmacists, so I'm actually against the doctor's monopoly. I was brought up that way We would materially benefit if pharmacists could write the prescriptions which they once did Yes I Know Yeah, that's that's very true. It's it's a result of ignorance They're doing the same thing in the Philippines right now. They do the same thing in Iran and in other places And it's a result of ignorance. They think that Like on my one of my original slides that the supply side is responsible and that somehow you can smash the supply side And that gets rid of the problem That's never ever really worked anywhere You because the because of the profit motive and the profits in illegal drugs You can eliminate all the suppliers you want and more people will come in to flood that market And I think traditionally the Chinese have been Much more accepting and caring for the addicts themselves And they want to see Everybody being productive and contributing so they want they want to get those addicts back on their feet last one My medical friends often they confirm from your issue whether being a supply push Yes Yes That's right. That's absolutely correct. That's why I put in that unusual slide right up front about the pain epidemic because Americans are in Enormous numbers suffering from chronic pain, which is in my mind very Poorly understood People I Agree with you 100% it's there's something phantom about this pain epidemic in my mind. Thank you very much