how to fix the opioid epidemic: part 3


Let’s talk about the opioid epidemic in the USA .

USA heroin use was dying out in the 1990s when a USA based pharmaceutical company developed oxycontin, a delayed release form of oxycodone.   Aggressive marketing by pharmaceutical companies in the USA led to the graph below.

That’s right, opioid prescriptions went up 2.85 x from 1991 to 2012. So US manufacturers used US doctors to get US pharmacies to increase opioid use by just under 3x.  Let’s say that again: all of these respectable businesses and professions worked together to TRIPLE consumer demand for opioids.  Doctors who did not “treat pain adequately” had multimillion dollar medical malpractice judgements and felony charges filed against them. There was an integrated marketing, lobbying, regulator-defanging, and “public education” campaign that caused this explosion of opioid use and addiction.  We tripled the number of people whose bodies were now physically addicted to opioids.

So what happened to  opioid overdose deaths? Here’s a graph from only the last half of the top graph: 2002 to 2015:

That’s right. Opioid OD deaths have TRIPLED since 2002, half the period covered in the first graph. Opioid OD’s now kill about as many Americans as car accidents. Let’s say that again: you now are as likely to die from an OD as you are to die from a car accident. We need to change our approach.

The USA is not the first country to experience an opioid epidemic. Portugal and Switzerland both had exploding use of heroin in the 1990s, just as bad as we have now.  These two countries reversed their own opioid epidemics at very low money and societal cost.

The way Portugal and Switzerland fixed their problem was by decreasing consumer DEMAND for opioids with prevention and rehabilitation programs. Policing was used but the emphasis of strategy and spending was on preventing and treating addiction.

Maybe we should be learning from them?

One reasonable part of this strategy might be to clamp down on the pharmaceutical companies and drug middlemen who are flooding our country (and now trying to flood other countries) with their opioids.  The cartels didn’t create this problem, our pharmaceutical companies created this problem. So why is El Chapo in jail while these guys are playing golf in Connecticut? Just askin’…



how to fix the opioid epidemic: part 2

TL;DR: Cartels are making too much profit to police our way out of the opioid epidemic.

Let’s talk about the economics of illegal opioids. Why are the cartels diving into selling opioids in the USA like there is no tomorrow? You might be shocked to learn that there is a lot of money to be made. You probably will be shocked to learn how MUCH money there is to be made.

So let’s look at the street prices of various illegal opioids:

  • oxycontin
  • heroin
  • fentanyl (Mexican cartel acetyl fentanyl)
  • carfentanyl

Let us make some reasonable assumptions:

OK so let’s first talk about oxycontin.  The street price of oxycontin in the USA is right around $1 per milligram. So our addict is spending $160 /day for diverted oxycontin.  Governments have clamped down on providers so the supply of oxycontin, which used to be as abundant as buffalo on the Great Plains, has dried up. No more oxys from your doctor.

Opiods are physically addictive. When you get cut off, your body actually gets sick. Imagine having a really bad case of the flu. Now imagine drinking 8 Red Bulls every 8 hours while you are that sick. Now imagine that for weeks on end. That’s dope sick.  And you can make it all go away with just another hit. Are you getting the dynamic here?

So our addict asks around and finds enough heroin every day to replace their 160 mg/d oxycontin habit. Do the math and it works out that your average dime bag of heroin at 25% purity will substitute almost perfectly. So our addict’s habit is met at $10 per day, not $160 per day. So for 1/16 of the cost, heroin now substitutes for the hard to get and expensive oxycontin that our addict’s doctor is no longer providing.

How can anybody stay in business by selling heroin this cheaply? Let’s look at the economics of heroin, Mexican cartel fentanyl, and carfentanyl. The price of a kilo of each of these at the source is about US$3000. So our cartel has to move it across the border, distribute it, dilute it down to street strength, make the dime bags, and sell them. So how much money do they make at the final point of sale on the street corner from a kilo of each of our opioids?

Heroin purity at the street in the US averages around 25% (when I was a med student at Detroit General Hospital in the mid 1970s, the average purity of street heroin was 3%. So $10 dollars today buys you over 8 times as much heroin. How’s that drug war working guys?).  Doing the math, our $3000 kilo of heroin is worth $400,000 which gives us a profit of 133 times. This amount of profit allows everybody at every step of the supply chain to make from 2 to 10 times their investment. But wait, it gets better.

Our friends in the Mexican cartels are now synthesizing acetyl fentanyl, which is about 15 times more powerful than heroin.  They cook it up just like they cook up methamphetamine (btw, our War on Meth has led to the Mexican cartels taking over this market, dropping meth prices to 1/6 of what they were. That’s not a typo: we are getting way better meth at way cheaper prices as a result of our Drug War). And you don’t have to pay farmers, extract morphine gum etc, so there is way lower overhead on the production end for acetyl fentanyl.

So let’s do the math for a $3000 kilo of acetyl fentanyl at the source. You only need 1.67 mg of acetyl fentanyl to get the same effect as the 25 mg of heroin in our dime bag above. That’s why it’s so easy to OD on fent, it  is hard for dealers to measure it accurately enough not to kill their clients.  Our kilo of acetyl fentanyl made into equivalent dime bags and sold is now worth $5.98 million. That’s 1996 times its material cost. Now you understand why the cartels are starting to move fent more than heroin. You make over 10 times the profit per kilo of product moved. But wait, it gets even better.

Carfentanyl is an opioid that was developed for large animal veterinary work: it literally is used to put elephants to sleep. Both China and Mexico are supplying carfentanyl to the US market. Carfentanyl is about 3000 times more potent than heroin. Again, that’s not a typo: carfentanyl is three THOUSAND times as potent as heroin.

So let’s make up our standard dime bag, this time with carfentanyl as the opioid. It turns out that you need only 8 MICROgrams of carfentanyl to get the same blast that you get from 25 mg of heroin. Carfent has been found in lots of ODs because dealers’ scales don’t measure micrograms.  University science labs are now locking up their hi-sensitivity scales because dealers are paying big cash for them.

So let’s make up an equivalent bunch of dime bags of carfent and sell them, shall we? Our revenue from a $3000 kilo of carfentanyl sold as dime bags on the street is now $1.25 billion dollars. Yet again, this is not a typo: that’s 1.25 billion with a B . Our multiplier is now a healthy 62,500 times  material cost.  You can smuggle enough carfentanyl inside a lipstick tube to replace  100 kilos of heroin.

You can lock up as many addicts and cartel leaders as you want. You can interdict as many carloads or even truckloads of product that you want. You can jail as many bankers that launder money as you want (JK: the Wachovia and HSBC bankers that laundered billions of Sinaloa Cartel money had their bonuses delayed 6 months. Human Rights Watch, where are you?) There is so much money in this business that someone else will always be willing to step up.

So let’s stop this nonsense talk about our Drug War, shall we? The way we stop this is to decrease demand for these drugs at the consumer level. We know how to do this. It works, even in the USA. We need to demand a real solution to these problems before another generation is lost.


how to fix the opioid epidemic: part 1

In the USA, we have created an opioid epidemic. Regardless of who you blame, we need to fix this mess.  There is a really great book written by a writer for The Economist called Narconomics .  Basically, it approaches the cartels as businesses selling products to consumers.  Once you start thinking about the opioid epidemic from this perspetive,  you begin to see sensible things that work.

The author makes four suggestions:

  • focus on  decreasing demand, not supply of opioids
  • spend on prevention and rehab, not enforcement
  • governments need to cooperate not shift the blame
  • prohibition does not work

All of these points work together.


First, let’s look at our failed Drug War.  It is really easy to tell everybody that they are ok but that criminals take drugs and more criminals sell it to them. So we put the criminals here in jail and tell the criminals there to stop the supply of drugs.  How’s that approach been working, guys?

The less expensive approach is to invest in prevention, rehab and treatment. This helps users, their families, and their communities by removing the need to steal money to buy drugs.  Because  users no longer need to deal drugs to their friends and family to support their own habits, demand for illegal drugs goes down. Sellers  dont need to sell anymore so they just don’t order the next week’s supply of heroin from their wholesaler. Look at Switzerland for the game book.

Federal spending and resources need to be redirected from expensive, ineffective, and harmful enforcement towards prevention and rehab. We are talking about ten times the benefit per dollar spent. Fiscal conservatives please pay attention !  If you hired some guys to clean your house and they charged $500 and trashed your house, maybe think of hiring another team which will charge you $50 and make your house look brand new. Just an idea…

Next post: the economics of illegal opioids, or why the policing approach is a waste of time.