Drugged nation

The battle against painkiller abuse is an engagement issue

#3 Opioids

The overprescription of strong opioid pain medication has led to a widespread addiction to painkillers in the United States. Having gone unnoticed for a long time, this has now become a real drugs epidemic.

More than two million US citizens are already affected and are classed as opioid-dependent. The impact is reflected in the reduction in average life expectancy in the US.

Drug abuse is now the leading cause of death among the under 50s – ahead of traffic accidents, gun violence or AIDS. Cautious estimates from the US Center for Disease Control and Prevention (CDC) suggest that around 100 Americans die of an opioid overdose every day.

But the huge increase in overdose deaths is not the only problem facing the US. The opioid crisis is also causing immense damage to the US economy. The costs of working days lost, the loss to the labour force of well-trained middle-aged professionals, the treatment of withdrawal symptoms, and re-integration into society run into several billion dollars.

Trump declares a national emergency

In 2017, US President Donald Trump declared the opioid crisis a public health emergency, calling opioid addiction the worst drugs crisis in the history of the US. The crisis is also interesting from a sociological p erspective. Those most affected are white, middleclass Americans. Economically deprived federal states such as Alabama, Arkansas, West Virginia and Kentucky, were the first to see opioid abuse reaching high levels.

The unstoppable advance of opioids

But how did it come to this, and what has happened since the public health emergency was declared? Dijana Bogdanovic, an ESG analyst in the Sustainability and Engagement team within Portfolio Management at Union Investment, has been investigating. “Until the early eighties, doctors had serious concerns about prescribing opioids for pain relief.”A relatively short letter in the readers’ section of the January issue of the New England Journal of Medicine (1980) triggered a change in prescribing practice. The letter was something of a door opener in terms of downplaying the risks of opioids. In just five sentences, medical researchers Professor Hershel Jick and Jane Porter claimed that of 12,000 hospital patients whose pain was managed with narcotic drugs, only four had gone on to develop an addiction.

Although the proposition was not based on any peerreviewed study and the statement referred only to patients treated in hospital, the letter had an enormous impact. In the years that followed, it was cited in around 600 scholarly articles on opioids. Jick’s conclusions were used time and time again as proof that the painkillers were harmless. Other studies with similarly limited informative value followed.

The consequences were fatal. In 1995, the unlisted pharmaceutical company Purdue Pharma LP was granted a licence by the US Food and Drug Administration (FDA) for the opioid OxyContin. The drug rapidly became one of the most popular painkillers  in the US. OxyContin was originally categorised as a Schedule II drug with high potential for abuse and dependency. But despite the many concerns, the FDA was persuaded to grant the licence, not least because of Purdue Pharma’s ‘twelve-hour promise’. The company claimed the opioid was released very slowly in the body, which meant the risk of dependency was far lower.

“But what the FDA hadn’t reckoned on,” says Dijana Bogdanovic, “were the aggressive marketing methods used by Purdue Pharma.”The company funded training courses for doctors, sponsored numerous patient associations and specialist bodies and advertised on various platforms with benign-sounding slogans such as ‘Suitable for moderate pain’. Purdue Pharma also used dubious promotional campaigns to push its painkillers, such as giving out discount coupons for OxyContin. Following the success of this drug, other pharmaceutical companies entered the opioid painkiller market, including Johnson & Johnson, Teva and Novartis.

Right to be pain-free

At the same time, several lobby groups in the US were demanding that patients’ pain be taken more seriously. “Pain was elevated to a sort of ‘fifth vital sign’,” says Bogdanovic. “Doctors faced calls to assess pain with the same urgency as heart rate, respiratory rate, blood pressure and body temperature.” Pain management thus became a key criterion in patient questionnaires for rating hospitals. As a result, hospitals were concerned to keep patients as pain-free as possible, which increased the incentive to prescribe pain medication. “Little by little, the culture of prescribing in the US changed,” explains Dijana Bogdanovic. “Opioids were increasingly prescribed for chronic back pain or knee problems – sometimes for weeks at a time.”

“The pharmaceutical industry profited hugely from the use of opioids to treat chronic pain,” says Bogdanovic. “A new, secure long-term revenue stream was created.” In the period from 1999 to 2014 alone, revenue from prescription opioids had quadrupled. However, the frequency of pain reported by patients remained unchanged.

Painkiller prescriptions per 100 Americans

Painkiller prescriptions per 100 Americans
Source: MSCI ESG Research Centers for Disease Control and Prevention, IMS, National Prescription Audits, 2012.

America in the grip of an opioid crisis

The problem grew to the point where it could no longer be ignored by politicians. But it was hard to turn back the tide. According to Dijana Bogdanovic, despite the stricter controls that have now been introduced for the prescription of opioids, there is no immediate solution to the problem in sight. “Users have moved on to the black market, or switched to other opioids, including heroin and Fentanyl.” An estimated one million Americans now take heroin. For many of them, painkillers paved the way for the descent into the swamp of drug addiction.

The opioid crisis will in all likelihood continue to occupy the US for a considerable time to come. The effects are still not fully clear. There are many different factors that led to the opioid drug epidemic. Regulatory control, aggressive marketing practices, greater flexibility in the pricing of drugs in the US and finan-  cial support for training programmes for doctors and patient groups all had a role to play in the emergence of the opioid crisis. Besides distributors, retailers and doctors, it is the pharmaceutical industry that bears  the greatest responsibility. Purdue Pharma had been given a $600 million fine as long ago as 2007. In the grounds for its judgment, the court cited deliberate withholding of information about side effects and deception of the public.

Other companies entangled in the opioid crisis are still at high risk of being sued. Multidistrict lawsuits mean they could face horrendous fines. And of course this means a greater risk for investors and for companies in a market that is characterised by takeovers.

Drug-related deaths in the US (absolute p.a.)

Drug-related deaths in the US (absolute p.a.)
Source: National Center for Health Statistics; Union Investment, own calculations.
Prof. Oliver Pogarell

In conversation with Professor Oliver Pogarell, researcher in addiction medicine and senior physician at the Department of Psychiatry and Psychotherapy, Ludwig-Maximilians-University of Munich

Union Investment wants to know more

Could this kind of opioid/painkiller addiction epidemic ever happen in Germany?

There are clear differences between the situation in Germany and that in the US. The prescription rate for opioids here is far below the excessive rates seen in the United States. Our health system is accessible and well organised in all sectors and consequently there is a lesser risk of individuals self-medicating with prescription drugs obtained illegally, due to lack of proper medical care. But that doesn’t mean there are no problems in Germany. Medical training often neglects aspects such as pain therapy and addiction medicine. A holistic, interdisciplinary approach to pain and addiction medicine during training is therefore very important.

Are there prescribing practices in other areas of pharma cology in Germany that give you cause for concern?

Dependency on prescribed and legal drugs attracts relatively little attention in Germany. It is often referred to as ‘silent addiction’ because of its low visibility. It mainly involves sedatives, i.e. sleeping tablets and tranquillisers that are often used unquestioningly for long periods of time. Estimates suggest that up to two million people may be affected, with women being twice as likely to be affected as men, and prevalence increasing considerably among older age groups.

How would you assess the lobbying activities of the pharma industry in Germany? Do they cause harm to patients?

The pharma industry has a legitimate interest in marketing its products and making profits. At the same time, patients have a right to receive evidence-based medical treatment. A problematic grey area may emerge between these two areas, for example through inappropriate promotion that is not based on scientific evidence. Lobbying activities can thus be extremely problematic. On the other hand, it is important to ensure that regulatory regimes do not choke innovation. In the field of psychopharmacotherapy, in particular, there have been recent examples where a genuine additional therapeutic benefit was not recognised, meaning that patients could not claim back the costs of such treatment from their health insurer.



Professor Oliver Pogarell is first chairman of the Bavarian Academy for Addiction  and Health Issues (BAS), an institute that links research with practice on relevant questions regarding the prevention and treatment of addiction.

Opioids are an engagement issue

Someone will have to be held responsible and made to pay for the economic and socio-economic costs. This is bound to have an impact on the record profit margins of many pharma companies that we have seen in recent years in the US.
That is why the subject of opioids and painkiller abuse is part of Union Investment’s engagement activities with pharma companies. We have already had some positive results. Our first discussions with Teva Pharmaceutical, Johnson & Johnson and Novartis, among others, resulted in these companies explicitly distancing themselves from opioids. Some firms have stopped making opioids altogether. For some pharma companies, new business opportunities have opened up. Pfizer and Biogen have initiated clinical trials to investigate non-opioid painkillers that could help to reduce the potential for addiction. The opioid crisis remains an engagement issue for us. One example is participation in shareholders’ resolutions demanding investigations into the financial risks and the reputational risks of the opioid crisis.  In 2018, for example, we pushed for such a s hareholders’ resolution for the pharmaceutical distribution company AmerisourceBergen.

Dijana Bogdanovic

Dijana Bogdanovic

ESG Analyst in the Sustainability and Engagement team in Portfolio Management at Union Investment

Unless otherwise noted, all Information and illustrations are as at 8 May 2019.