A journalist asked me yesterday how libertarians feel about governors exercising all these rarely used “police powers” to shut down businesses and otherwise try to limit the spread of the new coronavirus. I’ll save my answers for his article, but just as I hung up the phone somebody sent me this tweet. In two minutes Steve Baker, perhaps the most libertarian member of the British Parliament, expressed the conflicting feelings I think many of us have about the exercise of power in an emergency.

In order to facilitate social distancing among people in treatment for opioid use disorder, the Drug Enforcement Administration and the Substance Abuse and Mental Health Services Administration relaxed some onerous regulations surrounding the use of buprenorphine or methadone in Medication Assisted Treatment.

For health care providers to prescribe buprenorphine in an ambulatory setting to patients with addiction, they must apply for an “X waiver” on the narcotics prescribing license they get from the DEA. This is an onerous process that has resulted in a paltry number of practitioners with the waiver. Many addiction experts have called for the DEA to remove the requirements and last summer legislation to that effect was being discussed in Congress.

The DEA requires all patients to be seen in person before they may be prescribed a controlled substance. With medical clinics engaging in social distancing by seeing patients for only urgent matters, thinning staff, reducing hours, and minimizing the number of patients in their waiting rooms, patients on buprenorphine treatment face understandable challenges. Last week the DEA temporarily suspended the requirement that MAT patients see their prescriber in person, allowing for the use of telemedicine. This should ease the burden. Removing the X waiver requirement so that all licensed narcotics prescribers can prescribe buprenorphine to the patients with addiction, as recommended by the National Academy of Science, Engineering, and Medicine, would ease it further.

While patients on buprenorphine face challenges during the COVID-19 epidemic, patients receiving methadone treatment have it even worse. Among the many onerous requirements placed on operators of methadone clinics is the one requiring patients to take the methadone each day in front of a clinic staff member. This makes it difficult to participate in the program even under ordinary circumstances, especially if the nearest clinic is miles away. And the long queues of patients that form waiting to get inside the clinics each day are not examples of social distancing. NASEM recommends reforming methadone regulations to allow community health care practitioners to prescribe several days of methadone to patients they see and follow in their offices, as doctors in the U.K., Canada, and Australia have been doing for decades. Clinical researchers at Boston University reported on the success of a government-approved pilot project in the primary care setting in 2018.

In response to the pandemic, SAMHSA informed states that methadone clinics may dispense up to 28 days of Take-Home methadone to their “stable” patients and up to 14 days of take-home methadone to patients who are “less stable” but the program believes “can safely handle this level of Take-Home medication.”

All of these moves are moves in the right direction. They clearly foster addiction treatment compliance. When this crisis passes, making the measures permanent should be a no-brainer. But reform should not stop there. These temporary measures should serve as catalysts for repeal of the “X waiver” and a complete revision of the DEA’s antiquated, stigmatizing approach to methadone treatment programs

Protectionists have been emboldened by the Trump administration’s approach to trade policy, and some are now using COVID-19 as an argument to support their cause. In most cases, it’s not worth responding, but I don’t think of economics columnist Noah Smith as an economic nationalist, so if he is saying things along these lines, I feel like it merits a response. Here’s what he said in his column yesterday:

Offshoring Left the U.S. Unprepared for Coronavirus

…

But a new problem threatens to reverse even this tepid progress: a shortage of personal protection equipment. Medical workers who do coronavirus testing need to wear masks, gowns and other items to prevent them from being infected after dealing with large numbers of infected patients. Another problem is a shortage of the cotton swabs used to carry out the tests.

It seems almost unthinkable that shortages of these simple materials could hamstring the medical system of the country with the biggest economy on the planet. Economist and long-time policy adviser Larry Summers wondered how this could happen:

Thoughts at the end of a long week:

Why can’t the greatest economy in the history of the world produce swabs, face masks and ventilators in adequate supply?

— Lawrence H. Summers (@LHSummers) March 21, 2020

The reason is offshoring. Over the years, the U.S. has outsourced the production of items such as masks, mostly to China — which is now reluctant to allocate any of its production capacity to the U.S., given its own needs and the deteriorating relations between the two countries. Making these objects is technologically somewhat challenging, but it’s also a low-margin, commoditized business — there’s little in the way of network effects or brand value or patents to yield big profits. So it made sense for the U.S. to focus on higher-value things at the beginning and end of the supply chain — medical services that make use of masks, marketing and distribution, and innovation of technologies used to create better masks.

This was an example of thinking on the margin. Economics predicts that businesses decide what to produce based on what makes a little bit more profit. The siren song of marginal profit drew the U.S. relentlessly away from mask production.

The problem is that when the economy suffers a huge shock such as a war or a pandemic, the margin vanishes. The U.S. economy is projected to shrink by 30% or more in the second quarter as a result of the coronavirus, and the necessity of doing mass testing has created an abrupt shift in the demand for protective equipment and swabs. What made economic sense yesterday doesn’t make sense today.

Eventually the U.S. will reconfigure its economy in response to these shocks. Domestic mask and swab factories will open, or existing facilities will be repurposed to make them. But that will take time, and the U.S. needs more testing now. Lockdowns can suppress the virus, but only at great economic cost; as soon as restrictions end and people go back to their jobs, coronavirus will come roaring back unless the country has a strict regime of widespread testing and contact tracing in place. Thus, every day that the economy fails to provide enough masks and swabs is another day that it has to remain in shutdown.

If businesses will always make decisions on the margin, then it’s government’s job to insure the country against big shocks such as pandemics and wars. The U.S. could have used trade barriers and government support to make sure that the entire supply chain for medical equipment stayed in the country. But government action against offshoring has long been stigmatized, including by Summers himself, who in 2012 lambasted offshoring skeptics as “Luddites.”

The coronavirus crisis should cause advocates of unrestricted free trade to rethink their blanket opposition to protectionism. An economy based entirely on far-flung supply chains is more profitable in normal times, but when a crisis hits, it can quickly become a liability. Items such as masks and swabs are too crucial to be left to the whims of international markets.

There is a valid but narrow point buried in his argument, but it requires a lot more nuance than what he is offering. It’s true that if you are in the midst of a geopolitical conflict with a particular country, you wouldn’t want to be dependent on them for certain essential products. For example, during World War II, we wouldn’t have wanted to be dependent on Germany for rifles or for penicillin.

So yes, you want to make sure that you are not getting all products that are, in some sense of the term, essential from a single country, which could be the subject of a geopolitical conflict, or could be susceptible to a natural disaster. (You also may want to consider whether it really makes sense to have that geopolitical conflict. There are concerns with China, but they could certainly be handled better than we are currently handling them.)

But that’s a very narrow proposition, and it doesn’t translate into “offshoring left the U.S. unprepared for coronavirus.” It also doesn’t necessitate a rethinking of support for free trade. Rather, it requires a country to take a look at what products are essential for security or public health or some other policy, and to make sure it has a diverse and reliable supply of those products. To be clear, that does not mean “reshoring” all production of those products to the United States. Offshoring has many benefits, and in fact helps ensure a supply of these essential products, because there are risks to having your own country as the sole supplier. We want to have good trading relationships with the rest of the world, because when (inevitably) something goes wrong with our own production, we want to be able to quickly get help from others. We are better off if this manufacturing knowledge is distributed around the world. We just want to make sure that we have sources of supply in countries that we can count on.

So is Noah right that offshoring is to blame here? No. Every country needs to have a plan for ensuring that it can get medical equipment when it needs it. But it’s costly and risky to seek self-sufficiency in this production, and it’s better for everyone to maintain a cooperative international approach to making these products.

As COVID-19 spreads through the U.S., cities across the country are halting arrests for nonviolent offenses and releasing low-risk prisoners in efforts to reduce jail crowding and prevent the spread of the disease. Prosecutors in Philadelphia, Baltimore, Los Angeles County, Portland, and Nashville – along with many other cities – are issuing statements that arrests and prosecutions for low-level, nonviolent crimes (including drug offenses, theft, prostitution, traffic offenses, etc.) will stop.

Over 30 prosecutors issued a joint statement calling for public health officials and community leaders to:

• Adopt “cite and release policies” for offenses which pose no immediate physical threat to the community, including simple possession of controlled substances.

• Release all individuals who are being detained solely because they can’t afford cash bail, unless they pose a serious risk to public safety.

• Reduce the prison population to minimize sharing of cells and ensure that there are sufficient medical quarantine beds, and enough staff, to promote the health and safety of staff, those incarcerated, and visitors

• Identify and release the following people immediately, unless doing so would pose a serious risk to the physical safety of the community:

○ Individuals who are elderly;

○ Populations that the CDC has classified as vulnerable (those with asthma, cancer, heart disease, lung disease, and diabetes);

○ People in local jails who are within 6 months of completing their sentence; and

○ People incarcerated due to technical violations of probation and parole.

• Put in place procedures and advocate for reforms that enable past lengthy sentences to be revisited and support release for those individuals who can safely return to the community

While these are steps in the right direction, it begs the question of how necessary these arrests were in the first place. Of the 2.3 million people incarcerated in the U.S. in 2019, 1.9 million are incarcerated in state or local prisons. Almost 40 percent are serving sentences (or in pretrial detention) for non-violent drug or property offenses – the same violations that prosecutors are now opting not to pursue.

The costs of mass incarceration are well documented. If, as these prosecutors argue, there is little danger in halting the arrest and prosecution of low-level offenders during this national emergency, then what justification is there to renew efforts after the current pandemic is over? The mindset of mass incarceration stands contrary to the core ideals of America. It is long past time to break the cycle.

Businesses are racing to produce vaccines, treatments, and medical supplies to help slow and ultimately defeat the pandemic. Companies are ramping up output of safety equipment and ventilators, creating improved tests, working on vaccines, and developing treatments for covid-19.

There is much dismal news these days, so it is heartening to read about the rapid and concerted actions taken by entrepreneurs and businesses on every facet of the crisis.

Here is some of the progress American firms are making:

• EO Products started increasing production of its hand sanitizer brand in January and is now pumping out 16 times more product than before. EO Products saw early market signals hinting at the coming crisis and it pursued swift action. Source.
• GOJO Industries, the maker of Purell, also started ramping up production of hand sanitizer in January. U.S. hand sanitizer sales were 73 percent higher in the four weeks ending February 22 than the same period last year, indicating the rapid industry response. Source.
• 3M Company has doubled its global output of N95 respirators to 100 million per month, including 35 million in the United States. Numerous other companies have jumped into facemask production. Source, source, and source. Fun fact: facemasks are regulated by four separate federal bureaucracies: FDA, CDC, NIOSH, and OSHA. Source.
• Ventec Life Systems is ramping up ventilator production to 1,000 units per month, up from the usual 150. Ventilators are expensive but crucial machines in this crisis because they help severe pneumonia patients breathe. Source and source.
• Medtronic is aiming to double production of ventilators. Source.
• Zoll Medical Corporation has quadrupled production of ventilators in recent weeks. Zoll president Elijah White said of his workers: “They’re working a lot of overtime — they’re putting themselves at higher risk by coming in … but we feel like we have a really important role to play.” Source.
• Bloom Energy is using its capabilities to refurbish older ventilator machines. Source.
• Cepheid has developed a new test for coronavirus that produces results in less than an hour at the point of care. Source.
• Biotech entrepreneur Jonathan Rothberg and his team are rushing to develop a home test kit for coronavirus but will need to jump regulatory barriers. Source.
• Scientists and companies are racing to develop antibody blood tests to help track the spread of the disease. Source and source.
• Globally, dozens of biotech and pharmaceutical companies are rushing to develop vaccines and treatments for covid-19 using a diversity of approaches. Industry group BIO has an information site here. Some of the U.S. firms pursuing vaccines and treatments are Novavax, Pfizer, Gilead Sciences, Heat Biologics, Inovio Pharmaceuticals, Johnson & Johnson, Moderna, Regeneron Pharmaceuticals, Vaxart, Vir Biotechnology, Airway Therapeutics, Altimmune, Tonix Pharmaceuticals, Innovation Pharmaceuticals, CytoDyn, Applied DNA Sciences, Eli Lilly, Arcturus Therapeutics, and likely many others. Source, source, and source.

David Kemp and Sarah Rapier helped research this blog.

Much of the discussion about policy designed to deal with the corona virus has stressed the need to “flatten the curve.” But it might better be labelled, “reach the plateau.”

Important and illustrative are the cases of China and South Korea. After two or three weeks of rapid increases in the number of deaths and of new cases, both numbers ceased to rise much and that condition has persisted. Most impressive in this is the case count. Its rapid rise was substantially due to improvements and expansion of efforts to detect cases, and plateauing took place even as those efforts continued to improve and expand.

Although there is no way to know at present whether the hiatus in China and Korea will prove to be permanent, the experiences suggest that the epidemic can be contained, and that extrapolations concluding that the number of cases will soar into the hundreds of thousands or even millions in a country are not necessarily sound.

The virus came to the United States later, and the country seems only now to be in the early portion of the rapid-increase phase. The China and South Korean comparisons would suggest, then, that for the next two or three weeks the US will continue to experience substantial increases in the death count and in the number of cases detected. The latter count will likely be greatly enhanced by improvements in case detection, an important enterprise in which the US has previously been comparatively slow. After that, there would be the plateau with only small increases in deaths and in the case count.

Total deaths in China, which was caught by surprise, stand at over 3,000 and in South Korea, which was not, at upwards of 100. A comparison might suggest that there might be thousands of deaths in total in the United States. This would be a tragedy of course, but one that should be kept in context: last year there were 61,000 influenza deaths in the United States. That was a peak year over the last eight, but even in the low season for the period, 2011–2012, there were 12,000 influenza deaths.

Whether the United States will follow the same pattern as China and South Korea has yet to be determined of course. In those countries, the problem was substantially concentrated in limited areas—in China’s case, a rather large one containing some 60 million people—and in both, deaths from the virus outside those areas have been substantially lower. That is not so much the case in the United States—though there are considerable regional differences. Also of concern is that the U.S was slow to institute testing, particularly compared to South Korea. And some worry that the dire experience in Italy, where death rates are exceptionally high and where the medical system has been overwhelmed, is more relevant to the American case.

We should know in a few weeks.

Extreme circumstances often inspire innovation. One current example is the pivot by distillers from making spirits to making hand sanitizer.

The transition was not without government hurdles, but in this instance government cooperated with common sense. First, the Alcohol and Tobacco Tax and Trade Bureau waived requirements to obtain permits in order to legally manufacture hand sanitizer and agreed to waive the federal excise tax for alcohol-based hand sanitizer products. In addition, the Food and Drug Administration issued temporary guidance saying, “the agency does not intend to take action against manufacturing firms that prepare alcohol-based hand sanitizers for consumer use and for use as health care personnel hand rubs during this ongoing public health emergency.”

Prior to these actions, distillers were forced to use creative workarounds:

Distillers had been finding ways to work around restrictions, including donating rather than selling sanitizer, or calling it something other than hand sanitizer. For instance, Los Angeles spirits maker Amass was selling “alcohol-based hand wash” on its website… The company will now call the product hand sanitizer.

Before the new guidance distillers were also scrambling to find distribution channels that would not run afoul of FDA or TTB regulations, frequently donating products to local healthcare organizations or providing small quantities to customers as free gifts with purchases.

Even with the relaxed regulations, distillers could still face challenges. In the shift from spirits to hand sanitizer, distilleries are taking on substantial financial burdens. Though some have plans to eventually sell the hand sanitizer in order to defray costs of production and lost spirits revenue, determining a legal way to do so is challenging. Fears of running afoul of the FDA, or price gouging regulations, have slowed the transition.

Although the FDA and TTB have, correctly, relaxed the rules surrounding the production and distribution of hand sanitizer, private businesses should not have faced regulations discouraging them from increasing the supply of a vital public health resource. Private altruism should not be discouraged by government regulations.