Question

This is the introduction to the Think Tank Opioid Epidemic. The United States is in the grips of a health care crisis. Beginning in the 1990s pharmaceutical companies increased the number of prescription painkillers on the market, including new lines of pain killers that were advertised as being non-habit forming, not addictive.

Doctors began to prescribe more painkillers for injury treatment but also for a new and growing medical practice of pain management. It turned out that a number of the painkillers prescribed including Oxycontin were addictive for many people. The result was that many have become addicted to prescription painkillers, some because

they abused prescriptions but many who simply followed doctors' orders in taking what turned out to be a highly addictive substance. There have been lawsuits brought against some of the pharmaceutical companies that make these addictive painkillers. But does that solve all the problems?

Were the right people sued? In other words, who's really responsible for the crisis and how can people get themoney needed to deal with the fallout now? Begin by identifying the parties involved. Start with the private transaction, which is not the lawsuit against the pharmaceutical company.

It's the business transaction at the base of everything. Identify the private benefits and costs. Then think about the public parties, everyone impacted by the opioid crisis, and identify the public benefits and costs. The final step is devising a legal solution that will fix the alignment between private

and public. The first part of your Think Tank project will involve the earlier steps where you identify. The second part will involve the last step, devising a legal solution, and explaining it with an economic model. Keep these things in mind as you begin reading the articles.

Think Tank Project Part 1

                             

Who are the private parties/actors? Think about who is involved in the initial business transaction. This is probably different from the activity that is the focus of the legal issue.

What are the benefits for each private actor/party? What are the costs to each?

Who are the public parties/actors? Think about who is harmed and who benefits by the initial transaction that is not a party to that initial transaction.

What are the benefits for each public actor/party? What are the costs to each?

What is the market inefficiency? Refer to the book and explain the market inefficiency of your issue in those terms.

Compare the private transaction to the public. Overall, do you think there is a social benefit or a social cost to what's happening? You can change your answer in the final draft. Your goal now is to track your thought process.

What do you think the best solution will be? You can change your answer in the final draft. Your goal now is to track your thought process.

Answer 1

1.Who are the private parties/actors? Think about who is involved in the initial business transaction. This is probably different from the activity that is the focus of the legal issue.

As explained below: People involved are: Companies, employees, doctors, society at large, govt. intervention.

What are the benefits for each private actor/party? What are the costs to each?

Private costs: The costs that companies pay in developing new types of painkillers, their manufacturing and marketing. Costs that customers pay to buy these products.

External costs: Costs that addicts pay to get rid of addiction. Also health impact costs.

Private benefits: Profits earned by companies. Patients relieved from pain

External benefits: Jobs generated in the companies, Corporate social responsibility projects undertaken by these companies.

Social cost = Private cost + external cost

Social benefit= private benefit + external benefit.

To exactly check the viability and social impact, social benefit should be more than social costs.

3.Who are the public parties/actors? Think about who is harmed and who benefits by the initial transaction that is not a party to that initial transaction.:

Refer answer to part 2

What are the benefits for each public actor/party? What are the costs to each?:

Refer answer to part 2.

What is the market inefficiency? Refer to the book and explain the market inefficiency of your issue in those terms.

Market will be inefficient if social costs are more than social benefits as in this case consumption is creating negative externality and people are being addicted. Costs are higher to get rid of this habit. Doctors image also affected negatively if these kind of medicines are prescribed more.

Compare the private transaction to the public. Overall, do you think there is a social benefit or a social cost to what's happening? You can change your answer in the final draft. Your goal now is to track your thought process.

As answered above, social costs are more than social benefits.

What do you think the best solution will be? You can change your answer in the final draft. Your goal now is to track your thought process.

Solution is government regulation through legislation. Advertisements can be banned and only doctors can be consulted to take appropriate doses. Putting taxes on these products and using same money generated to spread awareness is also a solution.