201801

January 9, 2018 7:00AM

Stop Calling it an Opioid Crisis – It’s a Heroin and Fentanyl Crisis

The National Center for Health Statistics reported last month that a record 63,600 deaths occurred in 2016 due to overdoses. Digging deeper into that number shows over 20,000 of those deaths were due to the powerful drug fentanyl, more than 15,000 were caused by heroin, and roughly 14,500 were caused by prescription opioids, although it has been known for years that, in most cases of prescription opioid deaths, the victims had multiple other potentiating drugs onboard. The rest of the deaths were due to methamphetamines, cocaine, benzodiazepines, and methadone.

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Drugs Involved in U.S. Overdose Deaths* - Among the more than 64,000 drug overdose deaths estimated in 2016, the sharpest increase occurred among deaths related to fentanyl and fentanyl analogs (synthetic opioids) with over 20,000 overdose deaths. Source: CDC WONDER

* Provisional counts for 2016 are based on data available for analysis as of 8/2017.

In its end-of-year report, the National Center for Health Statistics noted deaths from fentanyl increased at a steady annual rate of 18% per year from 1999-2013 and then shot up 88% from 2013-2016.

Fentanyl is not routinely prescribed in the outpatient setting, and when it is, it most commonly is in the form of a skin patch for slow, transdermal release, unsuitable for abuse or nonmedical use. The evidence shows it is being smuggled into the country, often by mail, in powdered form from factories in China and elsewhere, where it is used to fill counterfeit prescription opioid capsules or to lace heroin to enhance its potency.

In the case of heroin, NCHS found the death rate steady from 1999-2005, then it increased 10% per year from 2005-2010, 33% per year from 2010-2014, and has been increasing at a rate of 19% per year since 2014.

Meanwhile, after increasing 13% annually from 1999-2009, the death rate increase from prescription opioids has remained steady at 3% per year since 2009.

For nearly a decade, policymakers have bought into the misguided narrative that the opioid overdose crisis is a result of careless doctors and greedy pharmaceutical companies getting patients hooked on prescription opioids and condemning them to the nightmarish world of drug addiction. As a result, the Drug Enforcement Administration has ordered decreases in prescription opioid production. There was a 25 % reduction in 2017 and a 20% reduction is ordered for 2018. States have set up monitoring programs that put doctors and patients under surveillance leading to a dramatic reduction in the prescription of opioids since 2010. In fact, high-dose prescribing fell 41% since 2010. The popular opioid OxyContin was replaced with an abuse-deterrent formulation in 2010 (that could not be crushed for snorting or dissolved for injecting), and, since then, several other such formulations have come online.

This focus on the supply and prescription of opioids makes many patients needlessly suffer in pain. Some, in desperation, turn to the illicit market to get relief, where they find heroin and heroin-laced fentanyl often cheaper and easier to get. Some resort to suicide.

Policymakers mistakenly focus on doctors treating their patients in pain. By intruding on the patient-doctor relationship they impede physician judgment and increase patient suffering. But another unintended consequence is that, by reducing the amount of prescription opioids that can be diverted to the illicit market, they have driven nonmedical users to heroin and fentanyl, which are cheaper and easier to obtain on the street than prescription opioids, and much more dangerous.

Data from the Centers for Disease Control and Prevention show that from 2006 to 2010 the opioid prescription rate tracked closely with the opioid overdose rate, at roughly 1 overdose for every 13,000 prescriptions. Then, after 2010, when the prescription rate dropped and it became more difficult to divert opioids for nonmedical use, the overdose rate began to climb as nonmedical users switched over to heroin and fentanyl. There is a dramatic negative correlation between prescription rate to overdose rate of -0.99 since 2010.

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The overdose rate is not a product of doctors and patients abusing prescription opioids. It is a product of nonmedical users accessing the illicit market.

The problem will not get better—it will probably only get worse—as long as we continue to call this an “opioid crisis.” The title is too nonspecific. This is a crisis caused by drug prohibition—an unintended consequence of nonmedical drug users accessing the black market in drugs. Policymakers should stop harassing doctors and their patients and shift the focus to reforming overall drug policy. A good place to start would be to implement harm reduction measures, such as safe syringe programs, making Medication Assisted Treatments like methadone and suboxone more readily available, and making the opioid antidote naloxone available over-the-counter, so it can be easier for opioid users to obtain. Even better would be a sober reassessment of America’s longest war, the “War on Drugs.”

Renaming the problem a “heroin and fentanyl crisis” might be a way to trigger a refocus.

January 8, 2018 2:56PM

Colin Grabow: In Spite of Trump’s Bluster, U.S. Trade Status Quo is Intact

By Cato Editors

In an op-ed published today on The Hill, trade policy analyst Colin Grabow shows that President Trump has not, in fact, raised a single tariff in his first year in office. Although Trump took the momentously disruptive steps of withdrawing the U.S. from the Trans-Pacific Partnership and has threatened to withdraw the U.S. from the North American Free Trade Agreement, "U.S. trade policy  . . . is largely in the same place it was when President Obama left office." 

Have saner voices inside the White House prevailed, or is this just the calm before the storm? The answer should be apparent in the coming months, and possibly even weeks, as a series of trade-related deadlines will force the president to show his hand.

Grabow discusses the inflection points in 2018 that may give Trump an opportunity to reverse course and start imposing tariffs, including ongoing investigations into the national security implications of steel and aluminum imports; an investigation into alleged trade violations committed by China related to technology transfer, intellectual property and its innovation policies; and the U.S. International Trade Commission's recommendations for tariffs on imported solar cell and washing machine. Finally, NAFTA renegotiations and the recent kickoff of renegotiations for the Korea-U.S. Free Trade Agreement may also shed light on Trump's intentions for trade policy in 2018.

He concludes:

The trade story could very well still end in tears, with plenty of opportunities in the New Year for Trump to choose a protectionist path.

But a more optimistic scenario exists: Amid record stock market highs and an unemployment rate trending toward 4 percent, Trump could be swayed by arguments senior administration officials are reportedly making

Namely, that tariff increases would amount to throwing a monkey wrench into an economic machine that is nicely humming along. For the sake of the country, let’s hope they prevail. 

You can read the full op-ed ("Tariffs would throw a monkey wrench into humming economy") here, and click here to see more of Colin Grabow's writing, along with other scholars from Cato's Herbert A. Stiefel Center for Trade Policy Studies. 

January 8, 2018 2:49PM

Privacy Still at Risk Despite New CBP Search Rules

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International travelers, citizens and foreigners alike, enjoy reduced privacy protections at ports of entry. Thanks to the "border exception" to the Fourth Amendment, Customs and Border Protection (CBP) officers do not need reasonable suspicion or probable cause to search electronic devices at airports. This regrettable authority made headlines last year after CBP officers searched phones belonging to innocent American citizens. CBP has updated its electronic device search policy via a new directive. While the directive does include a welcome clarification, it states that CBP can search anyone's electronic devices without probable cause or reasonable suspicion.

The CBP's new directive begins by outlining the unfortunate state of the Fourth Amendment at the border and ports of entry. The Fourth Amendment protects "persons, houses, papers, and effects" from "unreasonable searches and seizures."

Yet, as Justice Rehnquist wrote in his majority opinion in United States v. Ramsey (1977):

[S]earches made at the border, pursuant to the longstanding right of the sovereign to protect itself by stopping and examining persons and property crossing into this country, are reasonable simply by virtue of the fact that they occur at the border.

In 1985, Rehnquist reiterated this point, writing in his United States v. Montoya de Hernandez (1985) majority opinion:

Routine searches of the persons and effects of entrants are not subject to any requirement of reasonable suspicion, probable cause, or warrant.

CBP conducted numerous warrantless searches of electronic devices last year. Perhaps most notable was the January 2017 case involving Sidd Bikkannavar, an American citizen, member of the CBP Global Entry program, and NASA Jet Propulsion Laboratory engineer. After arriving from Chile (not exactly a hotbed of international terrorism), a CBP officer at Houston’s George Bush Intercontinental Airport asked Bikkannavar to unlock his smartphone, which happened to be NASA property. Despite Bikkannavar pointing out that the phone contained sensitive information, the officer persisted, and Bikkannavar eventually gave up the phone's passcode.

A month after CBP needlessly interrupted Bikkannavar's travel, agency officials reportedly stopped another American citizen, Haisam Elsharkawi, from leaving Los Angeles on his way to Saudi Arabia. According to Elsharkawi, CBP officers put him in handcuffs and pressured him into unlocking his phone. The officers released Elsharkawi without charge hours after his plane had left.

Searches of electronic devices at the border are on the rise. According to CBP's own figures, the number of international travelers processed with electronic device searches in the 2017 fiscal year increased almost 60 percent compared to the 2016 fiscal year. While the number of travelers subjected to these searches represents a small fraction of total international travelers, it's clear that these warrantless searches have targeted innocent Americans and are unlikely to stop. At a time when the smartphone is an increasingly integral part of modern life, containing most of our intimate and private details, this authority is of acute concern.

The directive distinguishes between "Basic" searches and "Advanced" searches. During a Basic Search, officers may—with or without suspicion—"review and analyze" information found on the electronic device. If CBP officers conduct an Advanced Search they may connect the electronic device to equipment that can review, analyze, and copy its contents. The new CBP directive states that the reasonable suspicion standard applies to "Advanced" searches.

The directive makes clear that CBP officers still have the authority to seek technical assistance for any device if it cannot be accessed thanks to encryption or passcodes.

The directive also clarifies what information CBP officers can access. Last year, Senator Ron Wyden (D-OR) wrote to then Department of Homeland Security Secretary John Kelly, asking a range of questions about CBP's search of electronic devices. CBP Acting Commissioner Kevin McAleenan responded.

According to McAleenan, CBP officers conducting an electronic device search only examine information that is "physically resident" on the device and do not access "information found only on remote servers."

What information is found "only on remote servers" is not exactly clear cut, as Ars Technica's Cyrus Farivar explained:

After all, many modern apps—notably social media, e-mail, or messaging apps—keep data on remote servers, but a smartphone often also keeps a local copy of the message or relevant data.

Late last year, McAleenan answered questions presented by the United States Senate Committee on Finance. In answering these questions he clarified the steps CBP officers take to ensure remote data is not accessed (emphasis mine):

Border searches of electronic devices extend to searches of the information residing on the physical device when it is presented for inspection or during its detention by CBP for aborder inspection. To ensure that data residing only in the cloud is not accessed, officers are instructed to ensure that network connectivity is disabled to limit access to remote systems.

The new CBP directive includes this policy:

To avoid retrieving or accessing information stored remotely and not otherwise present on the device, Officers will either request that the traveler disable connectivity to any network (e.g. by placing the device in airplane mode), or, where warranted by national security, law, enforcement, officer safety, or other operational considerations, Officers will themselves disable network connectivity.

This is a welcome clarification, but even with airplane mode enabled revealing details are still visible on a phone. Facebook group membership, emails, contact details, and photos are some of the information that's available on a phone in airplane mode. Even if all of this information was hidden from CBP officers conducting a "Basic" search, the apps someone has downloaded can be revealing. You don't have to be Sherlock Holmes to infer details about someone who has Coinbase, TinderDiabetes and Blood Glucose Tracker, and Muslim Pro apps on their phone.

CBP officers should have to secure a warrant before scouring our most intimate communications and details. A few years ago, the Supreme Court held in Riley v. California (2014) that police cannot search the digital information found on phones belonging to arrested persons without a warrant. In a brief for one of the cases considered in Riley v. California, the United States argued that searching information on phones is "materially indistinguishable" from searching wallets and purses. In his Riley v. California majority opinion Chief Justice Roberts correctly characterized this argument as "like saying a ride on horseback is materially indistinguishable from a flight to the moon."

The modern smartphone is an essential feature of modern life. Almost every American adult owns a cell phone, with 77 percent owning a smartphone. Americans use these devices to contact family and colleagues, organize their finances, find love, publish their thoughts, find transport, play games, track their eating habits, listen to music, and much more. Allowing CBP officers warrantless access to devices that house this information risks needlessly violating Americans' privacy.

Lawmakers in the House and Senate have introduced legislation requiring CBP to have warrants before searching phones. Until such legislation is passed or the Supreme Court revises the border exception to the Fourth Amendment, privacy at ports of entry will be dependant on CBP's policies. Sadly, the new CBP directive shows that we should expect continued privacy violations at ports of entry for the foreseeable future.

January 8, 2018 1:09PM

Backers of Soft Drink Taxes Need To Settle On a Seattle Story

The city of Seattle has now put its stiff new 1.75 cents per ounce tax on sugary beverages into effect, and Costco managers in the tech city, much to their credit, have not hesitated to post signs informing shoppers of its impact. According to a reporter's photo, the sign atop a Gatorade Frost Variety Pack lists the regular Costco price of $15.99 along with $10.34 in newly added Seattle tax for a total of $26.33. Helpfully, an adjacent sign advises shoppers that the same item "is also available at our Tukwila and Shoreline locations without City of Seattle Sweetened Beverage Tax."

Following KIRO7 News coverage of the story, Scott Drenkard of the Tax Foundation wrote a funny Twitter thread on the positions taken by the various advocates:

  • "First they interview people at the Costco who are rightfully shocked at how high prices on soda and sports drinks are now (they are almost doubled)."
  • "Then they interview a public health advocate who says 'that's right! We want these prices to change people's behavior and slow sales!'"
  • "Then they talk to the consumer, 'think you'll change your behavior, maybe even shop somewhere else?' And she's like, 'ya the Tukwila store is close enough.' Then they ask a city council member if this will hurt local biz, who says 'there is no data' suggesting that."
  • "Then the SAME public health advocate says that people won't respond to price increases, shopping elsewhere because it isn't 'worth their while.'"
  • "You can't have it both ways people! The tax is either big enough to elicit behavior change, which would slow sales and hurt local biz and potentially reduce calories, or it isn't. Get your stories straight!"

In 2016 I wrote about Philadelphia's soda tax that "while all taxes are evaded to some extent, excise taxes are especially subject to evasion based on local geography", and followed up on the Philly measure's possible openings for unlawful evasion and eventual public corruption. Seattle authorities intend to use the hoped-for $15 million revenue stream to fund various causes and organizations including an effort to bring fresh fruits and vegetables to urban neighborhoods, even though the once-voguish "food deserts" theory blaming dietary choices on the retail environment has suffered one debunking after another in recent years.

January 8, 2018 12:44PM

Distilling the Trade Policy Signal from the Protectionist Noise

It is not surprising that so many Americans believe President Trump has spent the past year erecting tariff walls around the United States. From Trump’s bombastic, anti-trade rhetoric to media’s and social media’s conflation of that rhetoric with real protectionist actions, hardly a day has passed without publication of an analysis or editorial about how especially protectionist this administration has been. The facts are quite different.

Despite promising 45 percent duties on imports from China, 35 percent duties on re-imports from Mexico, tighter restrictions to limit access to U.S. government procurement markets to U.S. firms and workers, requirements that oil pipeline builders use only American-made steel, and more, the Trump administration has not undertaken any of those actions. There has been no discretionary protectionism imposed by President Trump. None. Not yet anyway.

Certainly, President Trump’s instincts are protectionist. He’s already inflicted incalculable damage by withdrawing the United States from the Trans-Pacific Partnership, playing loose with his aggrandized sense of U.S. indispensability to the trading system, and deliberately throwing sand in the gears of the World Trade Organization’s Dispute Settlement Body. His view of trade as a zero-sum contest played between national monoliths (i.e., Team America vs. Team China), where winning means achieving a trade surplus by way of policies that maximize exports and minimize imports, certainly provides fertile ground for protectionism to take root and flourish. But when it comes to actually imposing tariffs or other trade restrictions, so far Trump has been remarkably circumspect. Why?

First of all, the president’s trade policy actions are constrained legally, politically, and practically. The U.S. Constitution gives Congress, not the president, authority to regulate foreign trade. However, at various points and for various reasons over the past century, Congress delegated—through legislation that became statute—some of its authority to the president. For example, the president can impose tariffs without need of congressional action or consent under several different laws.

Since Trump took office, his administration has initiated investigations under five different statutes: Section 201 of the Trade Act of 1974 (i.e., the “Safeguards” Law); Section 301 of the Trade Act of 1974; Section 232 of the Trade Expansion Act of 1962; the Antidumping Law; and the Countervailing Duty Law. Under each of those laws, certain conditions must be met before restrictions can be imposed. Determining whether those conditions are met normally involves an investigation subject to formal procedures and statutory or regulatory timetables. And, if and once imposed, those tariffs are generally time-limited and usually subject to judicial review. So, while the president has conditional authority to raise tariffs, he does not have carte blanche, which seems to be a popular misconception.

Second, tariffs may benefit the protected industry temporarily, but they usually impose financial burdens on domestic producers in downstream industries. There are inevitably trade-offs to consider, with economic and political implications. Thus, while the president can puff out his chest and direct the public’s attention to the tariffs he imposed to help steel producers or solar cell manufacturers, for example, those actions exact direct and indirect costs on companies and workers in steel-using industries and the solar panel producing and installing industries, respectively. In many of the pending trade cases, workers in the downstream industries that will bear the brunt make up Trump’s base of political support.

Third, while national governments are permitted to resort to temporary protectionist measures under certain circumstances without violating the rules of the global trading system, in other circumstances trade protection measures can lead to authorized retaliation against U.S. exporting interests. Trump may like to talk tough, but will he really want to impose measures that could hurt the economy?

Certainly, 2018 will offer more opportunities than previous years for protectionist measures. But so far, despite the media frenzy, Trump has been restrained.

January 8, 2018 12:28PM

ObamaCare’s Greatest Political Vulnerability

In two new posts at the Health Affairs blog, I lift the fog of economic jargon to show ObamaCare's preexisting-conditions provisions are reducing quality, are wildly unpopular with voters, and are indeed the law's greatest political vulnerability:

Public opinion surveys show voters support ObamaCare’s preexisting conditions provisions by a two-to-one margin. If those provisions have the effect of reducing quality, however, that initial support flips to two-to-one opposition. The biggest shift is among Democrats, who swing from 82 percent in favor to 55 percent opposed. Voters turn against those provisions whether the erosion in quality comes in the form of less access to medical tests and treatments, longer waits for care, more surprise medical bills, or less access to top-rated treatment centers...

In “Is ObamaCare Harming Quality? (Part 1),” I explain that new research shows that ObamaCare is not working how it is supposed to work in theory: the law’s preexisting conditions provisions create perverse incentives for insurers to reduce the quality of coverage; those provisions are reducing the quality of coverage relative to employer plans; and the erosion in quality is likely to accelerate in the future.

In "How To Ensure Quality Health Coverage (Part 2)," I explain why regulators cannot fix this problem, and why providing sick patients secure access to quality health care requires allowing consumers to purchase health plans not subject to ObamaCare’s preexisting conditions provisions.

Part 2 also explains how expanding the definition of "short-term" health insurance to include policies that include guaranteed-renewability riders, a change the Trump administration can make on its own via regulation, would free consumers from ObamaCare and pressure Democrats to come to the negotiating table.

January 8, 2018 11:06AM

Market Failure and The College Football Championship

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Tonight is the college football championship, an all-SEC affair between the Bulldogs of the University of Georgia and the Alabama Crimson Tide. Going into it, however, even these programs have something to lament: the end of the 80 percent federal tax deduction season ticket holders would get for providing mandatory “gifts” to the schools’ athletics departments. It went away with the recently enacted tax reform package.

Yes, the tax code treated it as charitable giving when one made a required donation, on top of actual ticket costs, to get into college football games. That included the $4,000 per-seat, per-year, needed to obtain Ivory Club seating at the University of Alabama, and the $2,250 required for Champions Club views at Georgia. Presumably the justification was that market failure—season ticket buyers thinking only of the private good of attending games—would have undervalued Alabama head coach Nick Saban’s, or Georgia coach Kirby Smart’s, contribution to the public good, and absent Saban’s roughly $11 million annual compensation, and Smart $3.8 million, the public would have been hurt by these guys (and lots of assistant coaches) doing something other than coaching football. (To be fair, both figures include such provisions as payments for apparel use and media appearances.) Meanwhile, outside the Power Five, the National Champion* Knights of the University of Central Florida were demanding a $1,500 per-seat donation for Tower Club seats, but nonetheless lost head coach Scott Frost to Nebraska. Frost was only earning $2 million at UCF, which was presumably a failure to subsidize correctly.

Of course, big-time college football and basketball are not about the public good. Yes, schools often argue that their football and basketball programs make big bucks that support other sports, but not only is there little justification for sports at all as a public good, many of these programs lose money as they compete in the uber-expensive college sports arms race. And there is no reason that season ticket holders should get tax deductions for attending games they thoroughly enjoy, or that colleges that do make big football and hoops bucks can’t use those profits to subsidize other sports without tax incentives.

Much more important, these programs are just the shiniest parts of widely gold-plated American higher education, a system that costs taxpayers hundreds-of-billions of dollars a year, while producing rampant price inflation, cruise ship-like facilities, greatly devalued credentials, and massive non-completion. So tonight, let’s all cheer the arrival of a little rationality in the wacky world of college sports, but tomorrow focus on all the rest of the far larger, crazily counterproductive subsidies going to America’s Ivory Tower.

* Self-declared for having had an undefeated season and beating a team that beat Alabama. And the college football playoff system is unfair to non-Power Five schools. And a whole lot of other things no doubt all intimately connected to serving the public good, as higher education purely exists to do.