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Pain Killers: How can impact investors help stop the opioid addiction epidemic?



If impact investors are worth their salt, they’ll soon –– if not soon enough –– come up with a whole raft of investible solutions to the crushing burden of opioid addiction.

The problem may have snuck up over the past decade, but there’s no escaping the costs of the crisis now. As many as 23 million addicts in the U.S. More than 64,000 overdose deaths, most of them opioid-related. The annual economic cost: an estimated $193 billion.

The epidemic will land at investors’ feet soon enough, Imogen Rose-Smith, an investment fellow at the University of California, said in the most recent episode of ImpactAlpha’s Returns on Investment podcast. Providers of so-called ESG ratings, which provide signals of environmental, social and governance performance, are grappling with what investors in the capital markets are doing to perpetuate or profit from the addiction crisis. Drug and other companies may take hits for their eventual liabilities.

“Investors are going to start feeling that,” Imogen says in the podcast.

>>LISTENPain Killers: How Can Impact Investors Help Stop the Opioid Addiction Epidemic?

Action has been slower to mobilize on the front of positive impact to reverse the epidemic.

Broader investments, both philanthropic and impact, around “the social determinants of health,” including housing, job creation, de-incarceration and community-building, may in the long term impact the underlying dislocation that may be driving the dislocation. But few ventures or fund managers are aiming for specific performance metrics around addiction-reduction.

“Why hasn’t the impact community embraced this issue more aggressively, given that it ticks so many boxes of things they care about and things they are good at?” Imogen wonders in the discussion. There’s a clear social need, lots of potential savings or even profits at stake, and rare bipartisan buy-in on the need for a solutions. “I’m surprised the voice of the impact community hasn’t been louder.”

One reason: One person’s addiction treatment breakthrough is another person’s profiteering from the crisis. Addiction treatment already is one of the country’s most lucrative health care industries. Even now, only a fraction of the country’s 23 million addicts are in rehab, meaning an enormous market remains untapped. Private equity firms are indeed moving aggressively into opioid addiction treatment.

“As investors, we need to think this through and be cognizant of what our money is doing,” Imogen warns. “If our money is just being part of an addiction-treatment cycle, that is not a long-term sustainable good, setting aside the ethical considerations.”

>>LISTENPain Killers: How Can Impact Investors Help Stop the Opioid Addiction Epidemic?

Investors, and many others, can be overwhelmed by large, complex problems. Climate-change, for example, is at least as multi-faceted and huge, but there now exists a coordinated set of activities for combating it. AIDS presented novel scientific and social challenges, but the health crisis came under control after a few decades of dedicated efforts. It would be wrong to say that the opioid crisis is insoluble, or that it won’t in time be solved.

A quick scan disclosed only two tiny social-impact bond efforts that attempt to attach repayment obligations to success against certain addition-related targets.

Collaborative nonprofit efforts are emerging. For example, in Portland, Maine, Mercy Hospital catalyzed the Greater Portland Addiction Collaborative, which brings together healthcare providers, homeless shelter operators, law enforcement and the courts, in a community-led initiative that aimed to serve 1,200 people.

What would “opioid lens” investing look like? Experts are converging around a public-health approach, and impact investors should look there for a pipeline of interventions. Brookings Institute’s Dayna Boyen Matthew sums up the directions for action:

  1. Medicaid reimbursements for supportive housing programs with employment, education, and health services.
  2. Two-generation, family-centered treatment and support for children in foster care.
  3. Preventive systems for younger children to promote healthy behaviors and pro-social involvement.
  4. Public health-based approaches to bring victims of past drug epidemics into the workforce, including individuals returning from the criminal justice system.
  5. Supports for public housing providers to avoid eviction when residents are amenable to treatment for opioid addiction.

The floor is open for both practical and innovative approaches to reducing the burden of addiction. What are you seeing, hearing or doing? Drop a note to editor@impactalpha.com.

>>LISTENPain Killers: How Can Impact Investors Help Stop the Opioid Addiction Epidemic?

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