The Opioid Crisis Cost Us Almost $200 Billion Last Year
The horribly tragic irony about the opioid crisis is that opioids are supposed to alleviate pain. Instead, they’ve caused untold pain and suffering… to the 400,000 people who have died since 1999 from overdoses related to prescribed or illicit opioids… to their families… and to the thousands more currently grappling with addiction.
The opioid crisis is far from over. In 2018 alone, the costs of the epidemic came to $179 billion, according to a recent report by the nonpartisan Society of Actuaries and the actuarial consulting firm Milliman. These are costs borne by governments providing taxpayer-funded services (estimated to be about one-third of the cost) and by individuals, families, employers, private insurers and more.
Here’s how the report breaks down the costs…
Overdose deaths: $72.6 billion. Every day, 130 people die from opioid overdoses. Most of them are in the 25- to 55-year-old age range, right in the middle of their prime working years. Lost earning potential accounts for most of those costs.
Healthcare: $60.4 billion. Researchers calculated the overall healthcare costs directly and indirectly (like mental illness) related to addicted patients. They took into account the health costs for people who live in the same household as someone with an opioid use disorder. And they counted costs for infants born dependent on opioids. In 2018, those costs were $800 million.
Lost productivity: $26.5 billion.The researchers broke this section out into reduced labor force participation, absenteeism, incarceration, short- and long-term disability, and workers’ compensation.
Criminal justice: $10.9 billion. The researchers captured costs related to police, court cases, correctional facilities and property lost to crime. Having an opioid addiction dramatically increases a person’s chance of being caught up in the criminal justice system. Nearly 20% of people with opioid use disorder report being recently arrested, on parole or on probation, compared with 3% for the general population.
Child and family assistance and education: $9 billion. The epidemic has a profound impact on families and communities. Parents with opioid use disorder have to navigate treatment and sometimes battle for custody of their kids; the state has to handle child welfare cases and find new homes for foster kids; and schools are providing counseling for kids with addicted parents. There are also costs of educating people about the epidemic. Those costs totaled $1.2 billion last year.
That’s a lot of money, even excluding the cost of the human toll. And a recent report by the White House’s Council of Economic Advisers that includes the human cost estimates a much higher price tag than the actuaries report. It estimated a cost of $696 billion in 2018 – and more than $2.5 trillion from 2015 to 2018.
How much it will cost to fix the crisis – to treat those who are addicted, to reduce overdose deaths and more – is another story entirely. We can begin figuring this out by looking at the growing number of court cases against drug companies across the country.
States and local municipalities have brought more than 2,000 cases to court to hold drugmakers, retail pharmacy chains and distributors accountable for the widespread opioid use. Oklahoma’s case was the first to go to trial. And it focused solely on Johnson & Johnson after two other drugmakers settled.
Christopher Ruhm, a professor of public policy and economics at the University of Virginia, calculated that treatment, prevention, education and surveillance for one year would cost $836 million. Applying that number to the whole country, it would cost $69 billion.
The judge in the case made his own calculations and put the cost at $572 million. The case is currently under appeal, so these numbers could change.
Either way, these numbers illustrate just how enormous the problem really is. But there is a silver lining here – a reason to hope that a remedy is at hand…
Scientific American magazine says that in those states where marijuana is legal and cannabis dispensaries are allowed to operate, opioid prescriptions fell significantly. And two papers just published in the Journal of the American Medical Association support this conclusion. (Assistant Managing Editor Allison Brickell wrote about similar evidence earlier this year.)
It makes sense. CBD is known to alleviate pain. And it has many other medical benefits. I’m looking forward to seeing even more data and studies being done to support this important finding.
My team and I have been doing our own research on dozens of cannabis companies. We want to find the best ones that are meeting growing demand from those with opioid addictions and other health problems.
We’ll be making those companies available for our First Stage Investor members in the next couple of weeks.
About Andy Gordon
Andy has three decades of experience in the private and public sectors as an entrepreneur and advisor. The CIA, former Maryland Governor William Donald Schaefer, and Fortune 500 companies such as Lockheed Martin and Dow Chemical have all trusted his advice. Andy founded and ran an international trade and finance company based in Asia. Upon returning to the U.S., he joined a Florida investment advisory service that quickly gained a reputation for recommending companies with outstanding value and fundamentals. Andy has taught marketing and finance courses at local Maryland universities and has written a half-dozen books on global business, published by McGraw-Hill, Frost & Sullivan and others. He now regularly shares his worldly knowledge about investing in startups, cryptocurrency and cannabis with everyday investors in the free daily e-letter, Early Investing.