Dreamland: The True Tale of America's Opiate Epidemic by Sam Quinones
My rating: 3 of 5 stars

The Spirit of Capitalism: A Case Study

Adam Smith said it first: ‘Greed is good.’ According to him and his intellectual and political descendants, the desires of individuals form a self-regulating economic system which is advantageous to everyone. The rich do get richer, but so do the poor. It’s called capitalism: having and meeting needs through honest competition without interference from bureaucrats, politicians, or government agencies.

And capitalism works. It does exactly what it says on the packet. Dreamland is a testament to the power of Adam Smith’s theory. The Sackler family and Purdue Pharma spotted a need - unrelieved pain - and they met that need with a ‘killer app’ known as OxyContin. They lobbied for the easing of government restrictions on its use, and employed their formidable marketing skills to sell it to every MD and health care institution in the country. A capitalist win/win success story: less misery, more wealth.

Except there is what economists call an ‘externality.’ Like so many other pharmaceutical breakthroughs in the last half century (Valium was another of the Sackler family marketing successes) OxyContin is really, really addictive. Great for the company who can count on continued rising sales; not so great for the individuals who are dependent on the stuff and have to pay for it, or for the public health and social services that have to deal with the consequences.

But once again the capitalist system demonstrated its ability to respond creatively to issues it might encounter. OxyContin is costly. Its market price has to recover some huge R&D expenses as well as equally huge corporate overheads. Global marketing, for example, doesn’t come cheap. The situation is a Harvard Business School case study in competitive opportunity. Product innovation and a radically new low cost delivery system comes to the rescue of the monopolistic market.

The product is black tar heroin, a low tech high yield pain-killer that costs peanuts to make. Conceivably anyone could have entered the OxyContin market developed over years by the Sacklers; but it was an entrepreneurial group of rancheros on the Pacific coast of Mexico who grabbed the brass ring first. Clever enough as well to avoid the established marketing channels for white heroin (a specialité de la maison of the large, and consequently dangerous, illegal cartels in the big cities), these Mexicans became the WalMart of the drugs world, spreading widely and rapidly across rural America.

Like WalMart, the Mexicans piled it high and sold it cheap. Also like WalMart, they had a fantastic logistics system to supply their nationwide network, using low wage, easily replaceable drivers from the Mexican homestead. Interruptions like police arrests and confiscations were therefore about as serious as an occasional flat tire or speeding ticket. A simple telephone call and the operation was back on the road. Writing off an occasional lost load was trivial given the minimal cost of goods sold. And even this risk was mitigated by the standard financial business tactic of ‘portfolio diversification’ through franchising - too many eggs were never in any one basket.

But unlike WalMart, customer service was a priority in the black tar heroin trade. With another phone call, the Mexicans delivered to your door, or the toilet of your nearest McDonald’s, with the speed of Amazon. Special introductory and volume discounts, periodic sales to promote turnover, local mouth to mouth advertising, incentive compensation, and other standard commercial techniques completed the value-proposition. Absence of fixed assets meant that resources could be re-allocated as required for maximum return. The market boomed and so did the business.

Of course quality control often might not be what it should have been. Product strength and purity wasn’t quite as uniform as OxyContin. But no doubt these hiccups would be ironed out over time. The casualties (mostly infections from muscular injection), deaths (dosage is hard to judge) and costs of emergency services (notably medical rather than police) for the most unfortunate customers were merely part of a business learning curve. In any case an entire sub-culture emerged across America that became increasingly savvy to the new product. Caveat emptor was never a more serious command.

America isn’t unfamiliar with illicit drug use. What makes the black tar heroin market political however is that: 1) it is dominantly white people who are its customers; 2) these people are mainly middle class from the towns and regional centers of the ‘heartland’; 3) it is a market created by pillars of the existing capitalist society - the pharmaceutical industry and the medical profession; and 4) it is organized and run not by international mobsters and terrorists but by a bunch of Mexican sugar cane farmers with a real can-do attitude and entrepreneurial spirit.

That’s the story told in Dreamland. The bulk of the book is journalistic detail, largely anecdotal, about representative ‘players,’ their victims and their families in the legal and illegal drugs game. In good journalistic style, Dreamworld is long on description of people, places and things but short on analysis and productive opinion. So the content of the book doesn’t go much beyond a television documentary. As an introduction to the issue, the book is worthwhile. But serious students of the problem will probably want to look elsewhere for actionable inspiration.

Postscript 31Jan19: Capitalism is truly irrepressible: https://www.propublica.org/article/ox...

Postscript 20Jul19: Still at it: https://www.washingtonpost.com/invest...

Postscript 20Jul19: Forget Purdue Pharma. SpecGx is 10 times bigger: https://www.washingtonpost.com/graphi...

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