innovation

OxyContin Billionaire Patents New Drug for Opioid Treatment

Family and friends of Americans who overdosed on OxyContin protest at Purdue Pharma’s in Stamford, Connecticut. Photo: Jessica Hill/AP/REX/Shutterstock

In recent years, America’s pharmaceutical industry has taken it on the chin. Populist demagogues have savaged drug companies for “jacking up” the price of life-saving substances like insulin (a.k.a. honoring their fiduciary duty to maximize shareholder value). These boisterous neo-Bolsheviks will point to the fact that pharmaceuticals are several times more expensive in the U.S. than in other countries, and conclude that our government’s exceptionally strong patent laws — and aberrant refusal to push down drug prices through direct negotiation — are meant to enrich Big Pharma at the working American’s expense.

But such cretinous critiques ignore a simple fact: In exchange for paying exceptionally high drug prices, Americans enjoy exceptionally high rates of pharmaceutical innovation. And when we give entrepreneurs the incentive to patent new medicines — by holding out the promise of windfall profits — our whole society benefits.

To see the beneficent effects of encouraging free enterprise in the pharmaceutical trade, consider the career of Dr. Richard Sackler.

In the 1990s, few drug companies saw growth opportunities in the opioid space. Sure, centuries of evidence suggested that the substances had viral appeal — but for that very reason, low-cost generic versions of the painkiller were already widely available. What’s more, conventional wisdom held that such medicines came with a high risk of abuse and addiction.

But where others saw a dead end, Sackler spotted an opening. As a high-level executive at his family’s firm, Purdue Pharma, Sackler helped imagineer a revolution in prescription analgesics. Like most revolutions, his began with a powerful idea: What if opioid painkillers were only addictive because they took effect instantly — which is to say, what if one could safely treat chronic pain with a patentable, extended-release opioid drug?

If Sackler lived in a country that did less to encourage pharmaceutical innovation, his family’s idea might have remained nothing more than a hypothetical. After all, Purdue failed to convince the Food and Drug Administration (FDA) that their signature opioid — OxyContin — came with little risk of abuse. Instead, the FDA merely signed off on the company’s claim that the drug’s extended-release formula was “believed to reduce” (as opposed to “eliminate”) its appeal to addicts, who presumably favored a more immediate high.

But Sackler didn’t let the skeptics hold him back. He moved fast and broke things (specifically, the law). Recognizing the time-honored truth that it’s easier to ask for forgiveness (once you’re rich enough to buy off the legal system) than get permission, Purdue launched a massive advertising campaign centered on the claim that OxyContin posed little-to-no risk of abuse or addiction. On Sackler’s watch, the firm organized conferences with doctors, where it implored America’s medical community to overcome its “opiophobia” and give chronic-pain sufferers the relief they deserved.

From the beginning, there were setbacks. As early as 1997, Purdue was confronted with the prospect that its signature product would fail. Academic researchers found that OxyContin was actually more popular among opioid addicts than other pain pills — while some pharmacies refused to stock it for fear of being robbed by junkies. These developments appeared to stem from a fatal flaw in Sackler’s thinking: Making a long-duration painkiller meant concentrating more narcotic into each individual pill — and since opioid addicts do not typically use pills as directed, but rather, crush them up for snorting or injecting, OxyContin’s patented formula actually made it a more appealing street drug than any of its rivals.

Nevertheless, Purdue persevered. The incentives fostered by the American patent system inspired Sackler & Co. to keep calm and carry on.

And the rest is history. Purdue ultimately paid a $635 million fine for misbranding its opioids, but made more than $35 billion in revenue from selling them. Thus, Sackler created immense value for his shareholders — while providing the American people with a product they value so greatly, demand for it has remained robust, even as opioids began killing upwards of 40,000 Americans a year. To appreciate how much consumers’ appreciate Purdue’s work (as measured by their revealed preferences), consider this: To keep up with demand, drug companies shipped a whopping 21 million opioid painkillers to the 2,900-person town of Williamson, West Virginia, between 2006 and 2016!

After success like this, you might think that Richard Sackler would be content to rest on his laurels (and/or retire to spend more time with his defense attorneys). But the opioid billionaire isn’t done disrupting just yet. While Sackler was proud of all the good OxyContin had done, he recognized that the product isn’t for everyone. Which is to say: He realized that the opioid craze (or, as the haters call it, “epidemic”) he’d helped start had birthed a booming market for addiction treatment. So, after creating billions of dollars in value by selling patented opioids, he’s poised to make millions selling an innovative form of buprenorphine, a mild opiate that reduces cravings for harder opioids like OxyContin.

As the Financial Times reports:

Last year, the leading version of buprenorphine, which is sold under the brand name Suboxone, generated $877m in US sales for Indivior, the British pharmaceuticals group that makes it.


Dr Sackler’s patent, which was granted by the US Patent and Trademark Office in January, acknowledges the existence of the opioid crisis … The patent describes a new, improved form of buprenorphine that would come in a wafer that disintegrated more quickly than existing versions — perhaps in just a few seconds.


… “Drug addicts sometimes still try to divert these sublingual buprenorphine tablets by removing them from the mouth,” the patent application stated. “There remains a need for other … abuse-resistant dosage forms.”

Can you believe that some people consider “conscious capitalism” a contradiction in terms?