Painkillers Aren’t For Profit 💊
Diving into BYB v8 around the Opioid Epidemic.
👋👋 hello everyone and welcome to Better Your Bread v8! Last week was a much-needed breather as I took a week off from posting and spend the short week enjoying the lake with family and friends before the Fourth of July. I hope you all enjoyed the long weekend and were able to relax with those you love.
As I have been recently calling out what we can do to support the Movement for Black Lives, I do want to say before we dive into this week’s topic that there are still unpunished injustices we cannot forget about. Maybe we post on Instagram that the murderers of Breonna Taylor still haven’t been arrested but this past week I finally took the time to sign the petition on Change.org here and actually call the DA, Senator, Governor, Rand Paul, and even Mitch McConnell. It was not hard to do, and the website will dial each of them for you. I highly suggest you call and demand justice as it will take you only 5 minutes of your day. Oddly enough, I even got through to one of Mitch McConnell’s associates so please do not underestimate the power of your call.
Now — digging into this week’s topic, let’s start by looking into the past. I personally think it is fascinating to hear stories of our parents’ childhoods… like how our parents’ folks used to smoke two packs of cigarettes each day indoors (absolutely insane), there never used to be drunk driving laws, no one wore seatbelts, and even how when you finished your meal from McDonald’s you simply tossed it out the window of the car. It is easy to point out how the lack of laws around driving and littering contributed to a cleaner, safer world now but what about addictive, cancer-inducing cigarettes? I think for most of us, we can point to the past and say, well, of course, Nicotine is addicting and smoking causes cancer — I would never smoke them. But here we are once again with companies like JUUL helping to onboard younger and younger teens to smoking vape pens fueling nicotine addictions with no knowledge of how it impacts their future health (which we will save for another time. With Nicotine addictions and smoking, hindsight is always 2020 as we see the longer-term effects play out decades later in a person’s life. However, with opioid addiction — we are in the middle of the next Tobacco epidemic. This week we discuss the opioid crisis, what is happening, who is fueling it, and how you can invest or divest your money to combat it.
As always, I want to link to last week’s post of BYBthat highlights what is wrong with private prisons, prison, labor, and how you can use your money to divest from the companies leveraging these tactics in favor of broad prison reform. It’s better for America and better for business. Find all my other blog posts here for context. Once again, the goal of the blog is to better your bread and make your money materially important. Feel free to subscribe to the blog via email at the bottom of this post and as always, make sure to shoot me an email anytime with any questions at cmahoney@justcapital.com, connect with me on LinkedIn, reach out on Twitter @iCharlieMahoney, and follow me on Medium (Charlie Mahoney). Beyond happy to help.
The opioid crisis in America is so ingrained in our culture that every single one of us knows painkillers as household names. OxyContin, Percocet, Hydrocodone, Vicodin… I’m legitimately listing these drugs by memory without looking them up or having been prescribed them. They are in the songs we listen to on Spotify and in the TV shows and movies we watch… take Mask Off by Future — a super catchy song whose chorus is word for word “Percocets, Molly, Percocets”. The opioid crisis gets a lot of press for affecting the poorer communities like West Virginia and Ohio as they try to combat the spread opiate addiction that is leading to heightened overdoses of black tar heroin and fentanyl. But the truth is that the opioid crisis is affecting everyone. Even Future who raps about Percocet in the song above, Mask Off, was apparently one of many rappers who introduced another young artist named Juice Wrld (an artist I’m a fan of) to codeine. Juice died of an accidental drug overdose at 21 years old this past year due to codeine and oxycodone. Adding to that in September 2018, one of my favorite artists of all time, Mac Miller, also died of an oxycodone overdose after the pills were found to be laced with Fentanyl. The point is that there are many factors influencing the spread of these drugs, the lack of education around them and that anyone — no matter your status — can be affected. Let’s dive into the industry and the industry players…
The crisis took root in the 1990s when doctors increased opioid prescriptions with the belief that they wouldn’t lead to addiction. Once drug companies began marketing the drugs as non-addictive and their many patients reported significantly positive results in reduced pain, the prescriptions of opiates skyrocketed. Because of a single paragraph printed on the New England Journal of Medicine in 1980 saying that painkillers opioids were not addictive, pharmaceutical companies (such as Purdue Pharma, Johnson & Johnson, Teva Pharmaceuticals) took this opportunity to mass-market their new painkillers like Oxycontin. Doctors were encouraged by pain specialists to prescribe opioids to their patients in large amounts, insisting that their drugs were safe and, if anything, underutilized. And of course for big companies like Purdue and J&J, they combated any mounting concerns with aggressive lobbying and PR campaigns.
Fast forward to 2020 and we are seeing approximately 130 Americans dying of an opioid overdose. Every. Single. Day. Today, more than one in three Americans was prescribed opioids to treat pain. If you bring this up to any of the pharmaceutical companies, they will say that today’s overdose crisis is driven more by street drugs like heroin and fentanyl than by prescription opioids like OxyContin. And that’s true… but why do you think those drugs are seeing such heavy increases in abuse? The answer is that when doctors are constantly overprescribing these painkillers to their patients, they develop serious addictions to these drugs. These drugs of course, are not cheap, and for poorer states most affected by the opioid crisis like West Virginia and Ohio — many are without healthcare, left to resort to alternatives. The alternatives are heroin and fentanyl. As more and more people fall victim to opioid addiction, overdose deaths continue to rise…
Some 400,000 people have died of opioid overdoses nationally over the past two decades. The crisis also has taken a staggering toll on the nation’s economy, costing an estimated $78.5 billion a year in health care, lost productivity, and involvement by the criminal justice system, according to the C.D.C.
It is easy to point out the large Big Pharma companies who have promoted and lobbied for these opioids as the ones entirely at fault here, and it’s not entirely wrong. Similar to the tobacco crisis in the late ’90s when the tobacco industry settled for 128 billion dollars in fines to be paid out for public health matters related to abuse, government officials are beginning to take notice of the crisis. In 2017, the Trump Administration created the President’s Commission on Combatting Drug Addiction and the Opioid Crisis and declared a public health emergency under the Public Health Services Act. Furthermore, Senator Warren introduced a 100 billion dollar bill to combat the crisis just over a year ago in May 2019. As broader efforts to tackle the crisis through prevention training, stricter laws, and alternative non-addictive painkillers are developed, states are taking measures into their own hands.
In August 2019, an Oklahoma judge found Johnson & Johnson — which sells prescription opioids and supplies other drug companies with opiate ingredients — responsible for contributing to the state’s opioid crisis and ordered the company to pay $572 million. In that same month of August 2019 — Purdue Pharma, which manufactures OxyContin, and the Sackler family that owns the company, are offering to settle thousands of similar lawsuits with billions of dollars. 3 months later in September, Purdue Pharma filed their Chapter 11, bankruptcy.
Strides are being made in the efforts against the opioid crisis and of COURSE, we can help with both our voices and investment dollars. First of all — support any bill like Senator Warren’s to increase doctor training around overprescribing, invest more resources into overdose prevention medication like Naxalone, and heighten the limitations around drug marketing/lobbying by big pharma.
Second of all, talk about it. The discussion and investment around aiding opioid crisis by the media, corporations, and the government is very minimal compared to other crises. For example, in 2017, the federal government only invested $1 billion dollars in combating the epidemic. That same year, we spent $662 billion dollars on weapons and defense in the United States. As over 42,000 people died that year of opioid overdose, I THINK we can spare some dough to save our own people instead of fighting against others. Look at the lack of attention here:
As a final point, given the relationship between those most affected by the opioid crisis (poorer communities) and misuse, the current recession we are in is going to exacerbate this epidemic. The evidence is there that the poorest communities are being hit hardest by the COVID-19 crisis as 39 percent of former workers in households earning $40,000 or less have lost work. These individuals put out of work and forced into isolation to battle sobriety are sending the overdose rate to new heights.
While we may not be able to help these individuals directly right now, we can divest from the companies perpetuating these drugs as “non-addictive” and reallocate our money to those actively trying to change the world for the better and find a cure. Shock stock time!
For your own knowledge, there are dozens of public companies are involved in the manufacture and distribution of opioids, though state lawsuits have most often targeted eight specific companies as the instigators of the opioid crisis. I will highlight 2 stocks in our ⚡Shock Stocks ⚡this week but want to point out a few others to be aware of. These include:
Purdue Pharmaceuticals, now bankrupt
Teva Pharmaceutical Industries
Allergan (AGN)
Endo International (ENDP)
AmerisourceBergen Corp (ABC)
Cardinal Health (CAH)
⚡Shock Stocks⚡
👎 Johnson & Johnson (Ticker: JNJ)
Johnson & Johnson supplied 60% of the opiate ingredients for oxycodone and other drugs through contracts with poppy growers in Tasmania. Between 2015 and 2018, 18 million opioid prescriptions were written in Oklahoma, which has a population of 3.9 million. To determine the settlement amount, the state estimated that services to remediate the effects of the opioid epidemic, such as addiction treatment and drug courts, would cost $17 billion over the next two decades.
An Oklahoma judge has ordered Johnson & Johnson to pay the state $572 million in the first case against a drug manufacturer for aggressive marketing and damages related to the U.S. opioid epidemic
Johnson and Johnson is in the Russell 1000, the S&P 500, and any Pharmaceutical ETF. If you are against Johnson and Johnson — find all ETFs holding the stock here.
👍 Opiant Pharmaceuticals (Ticker: OPNT)
The company who has developed Narcan (Naxalone) which is used to treat overdoses in opioid addicts
How do I help?
What If I don’t want to be invested in either of the bad Pharma stocks like JNJ or Allergan listed above, but still want to capture the broad US stock market investment strategy of the S&P 500?
I recommend putting your money into the iShares MSCI KLD 400 Social ETF, ticker: DSI. Why?
Doesn’t hold either Johnson & Johnson or Allergan listed above
Holds a company called Vertex which has developed their own cure for opioid addiction — see here
Lastly, as always, you must know there is no perfect company, no perfect answers, no perfect ETF. Most pharmaceutical companies are developing incredible drugs to treat the cancers, diseases, and injuries we face every day. Without modern medicine, our lifespan would be much lower and we would have a significantly lower quality of life. I simply want to point out a controversial crisis, highlight who has helped perpetuate it and help you align your money with what you believe in. If you want to support Johnson & Johnson because they treat their employees fairly and invest heavily in reducing their carbon footprint (which they do), then I support you. The goal is always to help spark ideas in your mind to think about how you invest your money and get you to understand that EVERY PENNY MATTERS. You CAN invest your money in only companies you believe in. And you can invest your money purely in companies that focus on profits over everything else if you want, it’s not my decision. The message is that your money matters, whether a lot or a little, so please have a discussion with your financial advisor or do your research on what companies your money supports. You will not only become more financially fit but can help change our economy to be more equitable towards humans and our environment.
I end with my main man, Mac. RIP. Have a good weekend everyone ✌️✌️✌️
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Disclaimer: I aim to provide accurate information on personal finance and investing, but it may not apply directly to your individual situation. I am not a financial advisor and we recommend you consult with a financial professional before making any serious financial decisions. The content on Better Your Bread is informational and educational purposes, thank you!