Innovation institutions and the opioid crisis†

The US has recently—and belatedly—come to recognize opioid addiction as a public health crisis. What has gone mostly unrecognized is the degree to which this crisis is intertwined with US intellectual property law and related elements of US innovation policy. Innovation institutions—the legal arrangements that structure incentives for production and allocation of knowledge goods—encouraged the development and commercialization of addictive painkillers, restricted access to opioid antidotes, and (perhaps most importantly) failed to facilitate investments in alternative, nonaddictive treatments for chronic pain. Although innovation policy does not bear all the blame for the opioid wave that has washed over communities across the country, innovation institutions are bound up in the ongoing epidemic to a degree that so far has gone underappreciated. This article examines the proliferation of opioid use and abuse through the lens of innovation policy, and it envisions ways in which innovation institutions could help to contain the crisis. Along the way, it seeks to derive broader lessons for innovation policy scholarship as well as recommendations for institutional reform. The opioid crisis challenges the conventional understanding of IP law as a trade-off between allocative efficiency and dynamic efficiency; it highlights the potentially pernicious role of IP protection for addictive and habit-forming products; and it exposes deep flaws in the structure of federal subsidies for and regulation of prescription drugs. It also draws attention to the political and cultural factors that contribute to innovation policy failures. Ultimately, the opioid crisis underscores both the urgency and the limits of institutional change in the innovation policy domain.