American Corporate Involvement in the Opioid Crisis


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Background Memo

Jacob F.

In America companies operate under stringent U.S. drug laws, which make them ensure that their chemicals are not being used to make illegal drugs. In the case of failure, the Department of Justice holds authority to shut down their operations or even criminally charge them. When companies such as Avantor Inc manufacture and sell those chemicals such as acetic anhydride which is used to make Meth and Heroin inside Mexico, rather than exporting them there from the United States, such oversight does not apply. This allows for convenient loopholes to be exploited in a way that Avantor is not being targeted with litigation by the United States. Their choice to establish their manufacturing within Mexico points to why Mexico is the lead source of Heroin for America, rather than Afghanistan which actually stands as the world’s top Heroin producer. The availability of their chemical Acetic anhydride is obviously then much more prevalent within Mexico and is sold for substantially less than it is in Afghanistan. 

Acetic anhydride has become one of the top targeted chemicals of the International Narcotics Control Board (INCB), which is an agency of the United Nations which polices various drug making substances and chemicals. In Mexico however, the regulation is much less tightly enforced and it took years for Mexico to add it to a list of regulated chemicals, let alone conduct concentrated enforcement to follow up such regulations. In terms of the process of regulation this was limited to very minor required annual filing up until 2018.

It is notable to see the inconsistencies of America’s approach on the drug war where America throws blame on Mexico’s obvious corruption but has their own companies fueling cartel narcotics production right under their nose. In America, and specifically with substances deemed illegal, it is most often the ordinary citizen that gets harshly reprimanded and has their lives ruined for not toeing the line, while large corporations get away with nearly anything under the sun. Even companies that do eventually get targeted like Purdue, for their role in the Opioid crisis, are taken to court after making immense fortunes, and don’t break a sweat when it comes to paying the legal or court fees, and can afford to offer billions (naturally not from the executives personal pocket) to settle claims. 

The community of Radnor, where Avantor’s corporate headquarters is located, is said to be suffering the country’s worst opioid epidemic across the nation. Avantor’s involvement in the crisis is agreed upon behind closed doors in the United States but physically carried out and realized outside of the legal jurisdiction of American regulation and enforcement. While being nestled near a hot zone of opioid addiction they are also publicly traded on the New York Stock Exchange and have ownership ties to large American investment banking firms. A Bloomberg report in August caused immense panic and Avantor promptly shut down it’s operations in Mexico.

References:

Simpson, C., Smith, M., & Cattan, N. (2020, August 26). Latest on Heroin Epidemic: Key Ingredient is Made in Mexico by American Cos. Retrieved from https://www.bloomberg.com/news/features/2020-08-26/u-s-drug-crisis-is-made-in-mexico-with-american-raw-materials

Findings Memo

Jacob F.

In the United States, Mexico stands as the source of the large majority of trafficked heroin and meth. Between 2010 and 2018, more than 142,000 people died from overdoses of the two drugs. Up until December of 2018 (when Mexico moved acetic anhydride to a list of the most strictly regulated chemical list), only a report filing once a year with the government was needed for anyone selling more than a metric ton of acetic anhydride in Mexico. There was no mandated requirement below that level. Currently, sellers are currently required to make sure it’s buyers for every liter sold are legitimate businesses such as labs and factories.      

To date, Afghanistan remains the leading producer of heroin in the world however AA is only available on the black market and prices of acetic anhydride have reached around $400 per liter according to UN reports. As prices remain much cheaper in Mexico, this serves as an indicator of how prevalent the chemical remains in Mexico which costs less than $18 per liter. 

A jug of acetic anhydride, costing $324, is enough to produce 90,000 doses of potent “China white” heroin. Acetic anhydride is the only thing that is necessary to produce heroin, aside from opium flower sap, and little of it is needed to make the final product. In 2001 acetic anhydride was put in the highest category of control. About 1.2 million liters of the chemical had been utilized to feed the supply of meth and heroin in the U.S. between 2011 and 2018 according to U.S. government estimates. Law enforcement seizures from 2011 suggest that at least 1 million liters of acetic anhydride were used for meth production during that year.  

   Roughly 17 miles from Philadelphia, in the township of Radnor, lies the headquarters of Avantor. Authorities have called this the largest open-air heroin market on the East Coast and is said to be suffering the worst of America’s urban opioid crisis. Though through the help of sales in Mexico, has raked in healthy revenue, making $6.04 billion last year. (DB

Historically, Mexico has been a very easy market for cartels to produce narcotics on a large scale. Avantor is one of a handful of U.S. companies that help supply the legal market for the required chemicals to product narcotics in the country of Mexico. Avantor sells these chemicals for the pharmaceutical industry, labs, and for other specialized manufacturers. Avantor was listed on the New York Stock Exchange by it’s majority owners, Goldman Sachs Group Inc, and a private equity firm called New Mountain Capital in 2019.  

Avantor held close ties with it’s retailers and distributors in Mexico, the largest being a nationwide chain of nine laboratory supply stores named El Crisol. A previous sales director of El Crisol in Mexico City, Francisco Cervantes, said in an interview that El Crisol abided by all regulations for selling jugs from Avantor, but that “thousands of small outfits that don’t follow the rules which might sell to anyone. It’s an open secret.” A company called Científica Vela Quin in Mexico City, one of Avantor’s other partners, appears to be one of these sellers, in a sea of others. 

References:

Simpson, C., Smith, M., & Cattan, N. (2020, August 26). Latest on Heroin Epidemic: Key Ingredient is Made in Mexico by American Cos. Retrieved from https://www.bloomberg.com/news/features/2020-08-26/u-s-drug-crisis-is-made-in-mexico-with-american-raw-materials

Options Memo

Jacob F.

Proposal #1

  • One option is to have Avantor be ordered to donate no less than 35% of all revenue generated from it’s Mexican operations. This will likely not be readily agreed to without litigation, so we are obliged to consider option 2. 

Proposal #2: 

  • While the damage has already been done, Avantor has tried to quickly save face by quickly shutting down operations in Mexico, but the case at hand is that of needed litigation for the involvement they have had in the form of a negotiation class lawsuit. 

What we have here is an American corporation that has been making great profits (6.04 billion n 2019) by skirting American and UN chemical control regulation and allowing their products to be sold to Cartels. Acetic anhydride has been listed by the International Narcotics Control Board of the UN and the DEA as a tracked and restricted chemical for almost two decades, and despite many other countries have imposed strong regulations.  The company was never unaware of what had been transpiring, they just played their cards in a way that they were able to legally exploit loopholes and get away with profiting off of the opioid epidemic by capitalizing on the lax laws of other local governments where they held their manufacturing operations. 

Avantor is guilty of the same crime that pharmaceutical drugmakers are guilty of. They have helped fuel the nation’s opioid crisis to line their own pockets. However rather than aggressively market opioid treatments, they have allowed the cartels to become some of their largest indirect customers, by exploiting Mexico’s lax enforcement of regulations and have allowed their product to be the main raw material sought after by the drug trade. 

In light of this, the same degree of heavy litigation must be applied to companies like Avantor as the absence of any such response is completely hypocritical and fosters the notion that it is accepted in America. In light of Avantor making 6.04 billion dollars last year a calculated percentage revenue gained from their Mexican operations will be dispersed amongst areas in America like Philadelphia that are seriously affected by the opioid epidemic. Additionally, money should be granted for matters such as healthcare, services for addiction treatment, government agencies who have lost money fighting the crisis, as well as assistance for law enforcement to handle the illegal trade of opioids. Much damage has been done to communities in America from the opioid crisis, many of which are irreparable due to the countless deaths from Heroin and Meth overdoses. Currently, this stands as the only attempt proposed plan for restitution for the damage that Avantor has contributed to, and will serve as an example for future litigation attempts of chemical companies regarding the opioid crisis. 

References:

Dwyer, C. (2019, October 15). Your Guide To The Massive (And Massively Complex) Opioid Litigation. Retrieved from https://www.npr.org/sections/health-shots/2019/10/15/761537367/your-guide-to-the-massive-and-massively-complex-opioid-litigation

Decision Memo

Jacob F.

The final decision is to proceed with last year’s negotiation class lawsuit which allows for the participation from 49 municipalities across America to reach a settlement on behalf of every city and county in the U.S, in which each municipality can calculate their share of a settlement and vote on it. If a municipality wishes to pursue individual lawsuits, they have the option to opt out of the arrangement.  It should be noted that any members that explicitly opt out of the negotiation class lawsuit, in turn forfeit any money they can get from the potential settlement with Avantor, and the decision cannot be reversed in court to rejoin the negotiation class. 

With the drug war having long been called a failure, it is important that we acknowledge part of the reason for this stems from the fact that is American corporations are partly facilitated by corporate participants from the United States. The costs have been immense.The undisputed fact is that the opioid crisis has affected various institutions including that of the healthcare and criminal justice systems, addiction treatment programs, and agencies of every level of the American government and resulted in the loss of tens of billions of dollars. 

The national economic burden has been determined to be $78.5 billion according to a published study by the National Institutes of Health in 2013. Considering that around 70,000 die each year from drug overdoses, and that over half of those are opioid related, today’s total cost is likely vastly higher and should be recalculated by the NIH and other agencies. Others have determined the financial blow since 2001 to be from $50 billion to upwards of $1 trillion. An additional half-trillion of financial cost had been projected to have been accumulated by this year.

    In light of an agreement between the collective negotiation class and Avantor reaching a deal, there will be a vote among all the members of the negotiation class. If enough members approve, and if a judge signs off on the agreement, it will establish a binding deal. This will prevent future lawsuits against the company by counties and cities at the federal level. In order for a successful and sufficient settlement, the negotiation class must present sufficient evidence of the costs and amount of time necessary in order to mitigate the American opioid crisis. Not being prepared in this manner in regards to the required evidence, could result in an unfavorable or undesirable verdict for the plaintiffs that are involved in the case.

References:

Dwyer, C. (2019, October 15). Your Guide To The Massive (And Massively Complex) Opioid Litigation. Retrieved from https://www.npr.org/sections/health-shots/2019/10/15/761537367/your-guide-to-the-massive-and-massively-complex-opioid-litigation

Simpson, C., Smith, M., & Cattan, N. (2020, August 26). Latest on Heroin Epidemic: Key Ingredient is Made in Mexico by American Cos. Retrieved from https://www.bloomberg.com/news/features/2020-08-26/u-s-drug-crisis-is-made-in-mexico-with-american-raw-materials

Action Memo

Jacob F.

The proceedings that will take place will be the formation of a negotiation class lawsuit against Avantor corporation for its involvement in fueling the opioid crisis in the United States. Litigation will proceed in this manner due to the comprehensive and consolidated nature of this form of lawsuit. This decision must be made in order to deliver an effective and much needed form of restitution for the aftermath and ongoing effects this crisis has had on the United States. 

Between the costs of healthcare, criminal justice, lost productivity and addiction treatment programs, agencies at every level of government have combined to lose tens of billions of dollars trying to combat the crisis.    Radnor and 48 other local governments will handle settlement deals on behalf of every county and city in the United States, unless any city or county should choose to willingly opt out and forfeit any share of a potential settlement that could result from the lawsuit. 

The determination of the proposed sum to be proposed in the initial lawsuit will be determined by members of the negotiation class and negotiated with the defendant. It will be calculated based on the total revenue which Avantor had made from their operations within Mexico, as well as the cost that is placed on the financial effects of the opioid crisis. This will prevent any future lawsuits from all participating municipalities unless they have chosen to opt out of the negation class lawsuit. A satisfactory resolution must be pursued and attained here to help slow, alleviate, and reverse the damage that is ongoing from this crisis. 

References:

DiStefano, J. N. (2020, September 19). Radnor firm – with a product heroin makers rely on – stops key sales in Mexico. Retrieved from https://www.inquirer.com/columnists/heroin-mexico-avantor-gupta-drugs-20200918.html

Dwyer, C. (2019, October 15). Your Guide To The Massive (And Massively Complex) Opioid Litigation. Retrieved from https://www.npr.org/sections/health-shots/2019/10/15/761537367/your-guide-to-the-massive-and-massively-complex-opioid-litigation

Legislative

Jacob F.

With a vast array of different opioid-related lawsuits all occurring in various United States courts, a judicial panel opted to improve things by colisdiating more than 2,000 pending lawsuits in the hands of a federal judge Dan Polster in Ohio (Northern District) who is responsible for keeping all parties on the same page and leading pretrial motions. This lawsuit is called the National Prescription Opiate Litigation. The Northern district was chosen for various reasons including the fact that the state of Ohio has been hit severely by opioid overdoses, it is convenient location-wise for defendants,  as well as the fact that Judge Polster holds experiences in the overseeing of consolidated cases. The judge is intent on the parties settling rather than going to trial, due to the fact that things rarely progress very far in multidistrict litigation. A large majority of such large cases tend to reach a settlement before proceeding to trial. 

High profile cases in the opioid trials:

Jacob F.

Thus far, most of the high profile attention the media has placed on opioid trials has been from pharmaceutical companies–most notably, Purdue:

Purdue had been accused of having their sales reps to urge doctors to overprescribe the addictive opioid painkiller OcyContin. However, internal documents from Purdue revealed that even after Purdue executives pleaded guilty to misleading patients, doctors, and regulators about the addictive nature of OcyContin, their aggressive marketing behavior continued. It was also said by Attorney General Maura Healey, that the Sackler family of Purdue had significantly increased their marketing, and secured profits in the billions for themselves. 

Purdue opted to take a few measures in order to mitigate the effects of the lawsuit in the form of a settlement agreement with plaintiffs. Purde said it would have to file for Chapter 11 bankruptcy, work with a plaintiff selected board to dissolve and transfer all of its assets to a new company, and to award plaintiffs $3 billion of the Sackler’s fortune in addition to billions in future OxyContin derived revenue. By declaring Chapter 11 and pivoting to bankruptcy court, which now oversees the deal’s approval, it threw off all litigation against Purdue and protections from lawsuits extending to the Sackler family are expected to be pushed by Purdue, to the disappointment of many.    

Supporters of the settlement approve of this move as an alternative option to years of continuing litigation in the hopes of getting more personal money from the sacklers because of poor corporate conduct. This is said be a costly pursuit with no guarantees of a win.

References:

Dwyer, C. (2019, October 15). Your Guide To The Massive (And Massively Complex) Opioid Litigation. Retrieved from https://www.npr.org/sections/health-shots/2019/10/15/761537367/your-guide-to-the-massive-and-massively-complex-opioid-litigation

Simpson, C., Smith, M., & Cattan, N. (2020, August 26). Latest on Heroin Epidemic: Key Ingredient is Made in Mexico by American Cos. Retrieved from https://www.bloomberg.com/news/features/2020-08-26/u-s-drug-crisis-is-made-in-mexico-with-american-raw-materials

Facts:

Jacob F.

Litigation against Avantor is sufficiently justified as the company has been fully aware of its involvement in the opioid crisis and it is obvious due to their careful methods of operation. They keep close ties to their distributors and retailers in Mexico, and it is an open secret there that thousands of smaller outfits are selling to nearly anyone who will pay, including cartels. By taking advantage of relaxed regulations in Mexico and raking in the profits from cartel activity, they are applying the corporate method of “having your cake and eating it too.” They are not the first to take advantage of such legal loopholes though it is not something that the United States federal government can ignore financially as it is spending large sums to fight the national crisis at hand, as the fatality rate due to opioid overdoses continues to increase in the country. 

What happens with it will largely determine how much money cities and counties nationwide will have to fight the devastating effects of opioid abuse and when they’ll get it. On top of the tens of billions of dollars the crisis has cost, there have been more than 200,000 overdose deaths since the late 1990s, the stakes are immense. All the companies that are involved in this issue, whether it be pharmaceutical drug companies, or chemical companies like Avantor who assist with heroin manufacturing, are fueling the nation’s opioid epidemic, all the while garnering massive profits from it. 

The longer that more time is spent with lengthy trials, the more money is also spent, and both time and money are wasted that could be put to use in immediately beginning to revere and rectify the damage that has been caused to the country. The more a settlement is delayed also causes the opioid crisis to continue to worsen across the nation, and worsening in areas like Radnor and Ohio that have already been hit severely hard due to the opioid epidemic. 

This will continue to overwhelm the healthcare system, the judicial system, law enforcement, as well as all the various government agencies that have been involved in dealing with the effects of the national crisis. 

Policy Brief

Jacob F.

Avantor, a chemical corporation based in the opioid torn-town of Radnor, Pennsylvania, has heavily for years off of a chemical they produce known as acetic anhydride, a highly regulated chemical that happens to also be an essential ingredient in heroin production. Avantor had opted to produce this chemical in Mexico to conveniently avoid regulations and legal conflicts in America. This move on their part sheds light on their strong contribution to the opioid epidemic that has ravaged parts of the country.

 As a corrective response to this, there will be the formation of a negotiation class lawsuit against Avantor corporation for its involvement in fueling the opioid crisis in the United States. Litigation will proceed in this manner due to the comprehensive and consolidated nature of this form of lawsuit (Dwyer, 2019). Radnor and 48 other local governments will handle settlement deals on behalf of each county and city in the United States, unless any city or county should choose to willingly opt out and forfeit any share of a potential settlement that could result from the lawsuit (Dwyer, 2019). These actions should be put in play to deliver much needed restitution for the consequences and ongoing effects the opioid crisis has had on the United States. 

Companies operate under stringent U.S. drug laws in America, which make them ensure that their chemicals are not being used to make illegal narcotics. The Department of Justice holds authority to shut down their operations or even criminally charge them should they fail to fully comply. Opting to produce and sell chemicals such as acetic anhydride, rather than exporting them there from the United States, allows Avantor to take advantage of convenient loopholes and exploit them in a way so that Avantor is not targeted with litigation by the United States (Simpson, Smith, Cattan, 2020). 

Prior to shutting down their Mexican production sites after bad press this year (Distefano, 2020), Avantor had also maintained close ties to their distributors and retailers in Mexico, and it is an open secret there were thousands of smaller outfits that were selling to nearly anyone who would pay, including cartels. It is also notable that their choice to establish manufacturing within Mexico points to why Mexico is the lead source of Heroin for America. Despite Afghanistan standing as the world’s top producer of heroin, Avantor’s production being located in Mexico allows for a much higher availability of the chemical which allows it to be sold for significantly less than in Afghanistan (Simpson, Smith, Cattan, 2020). Acetic anhydride notably stands as one of the top targeted chemicals of the International Narcotics Control Board (INCB), an agency of the United Nations which polices various narcotic making substances (Simpson, Smith, Cattan, 2020). Due to much lighter enforcement in Mexico, it took years for Mexico to add it to their own list of regulated chemicals, let alone conduct enforcement of such regulations.

There are obvious inconsistencies when one takes notice of the United States casting blame on Mexico’s obvious corruption, while American companies such as Avantor produce the necessary raw materials for cartels within Mexico itself. While Cartel activity is admittedly a well documented issue in Mexico, the United States is also at fault when considering instances such as this. If politicians want to criticize Mexico for their handling of cartel drug trafficking, then they should at least strive to make sure there are not such obvious and complicit participants within the corporate world on their own home soil. 

The total national economic burden has been determined to be $78.5 billion according to a study by the National Institutes of Health (Dwyer, 2019). Considering that around 70,000 die each year from drug overdoses, and that over half of those are opioid related, today’s total cost is likely much  higher and should be recalculated by the NIH and other agencies. When considering the resulting costs of healthcare, criminal justice, lost productivity and addiction treatment programs, government agencies at every level have cumulatively lost tens of billions of dollars trying to combat the crisis. Others have determined the financial blow since 2001 to be from $50 billion to upwards of $1 trillion. An additional half-trillion of financial cost had been projected to have been accumulated by this year.

One can also gain a bit more perspective by looking at other cases. With a vast array of other opioid-related lawsuits all occurring in various United States courts, a judicial panel opted to improve things by colisdiating more than 2,000 pending lawsuits in the hands of a federal judge Dan Polster in Ohio (Northern District) who is responsible for keeping all parties on the same page and leading pretrial motions (Dwyer, 2019). This lawsuit is being called the National Prescription Opiate Litigation. The Northern district was chosen for various reasons including the fact that the state of Ohio has been hit severely by opioid overdoses, it is convenient location-wise for defendants,  as well as the fact that Judge Polster holds experiences in the overseeing of consolidated cases. The judge is intent on the parties settling rather than going to trial, due to the fact that things rarely progress very far in multidistrict litigation (Dwyer, 2019). A large majority of such large cases tend to reach a settlement before proceeding to trial. 

In light of a similar agreement between the collective negotiation class and Avantor reaching an agreement on a deal, there will then be a vote among all the members of the negotiation class. If enough members approve the deal, and if a judge signs off on the agreement, it will establish a legally binding deal (Dwyer, 2019). Employing this strategy would prevent future federal lawsuits from counties and cities against the company. In order for a successful and satisfactory settlement, the negotiation class must present sufficient evidence of the costs and amount of time necessary in order to mitigate the American opioid crisis. Not being prepared in this manner in regards to the required evidence, could result in an unfavorable or undesirable verdict for the plaintiffs that are involved in the case. Everything aside, this collective lawsuit proves to be one of the cleanest and most efficient ways of pursuing effective litigation. Indeed, the longer that more time is spent with lengthy trials, the more money is also spent, and both time and money are wasted that could be put to use in immediately beginning to revere and rectify the damage that has been caused to the country. The more a settlement is delayed also contributes to worsening the opioid crisis to continue to worsen across the nation. Prompt action is of the utmost importance to ensure substantial mitigation and repair of the ongoing problems the crisis has allowed.

References:

Dwyer, C. (2019, October 15). Your Guide To The Massive (And Massively Complex) Opioid Litigation. Retrieved from https://www.npr.org/sections/health-shots/2019/10/15/761537367/your-guide-to-the-massive-and-massively-complex-opioid-litigation

DiStefano, J. N. (2020, September 19). Radnor firm – with a product heroin makers rely on – stops key sales in Mexico. Retrieved from https://www.inquirer.com/columnists/heroin-mexico-avantor-gupta-drugs-20200918.html

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