If insurers can rein in bad pharma for drug addiction and anyone aiding and abetting the process, they should very well try shedding their own fixation on fossil fuel. Regretting post facto is, however, not an option when planetary tipping points stare us in the face. Giving up is never easy. We saw it with the dismantling of the Net-Zero Insurance Alliance (#NZIA). A withdrawal syndrome had besieged the insurers. The trigger: “concerns over antitrust risk”. 

In a rare case of successful pushback from insurers, consulting firm McKinsey and Co. agreed to pay $78 million to settle claims from insurers and healthcare funds that its work with drug companies helped fuel an opioid addiction crisis in the U.S., reports Reuters. 

As a consequence, McKinsey would establish a fund to reimburse insurers, private benefit plans and others for some or all of their prescription opioid costs.

Earlier in 2021 McKinsey agreed to pay nearly $600 million for its role in advising businesses on how to sell more prescription opioid painkillers amid a nationwide overdose crisis. This was in lieu of the settlement reached with various states.

According to the insurers, McKinsey worked with Purdue Pharma — the maker of OxyContin (brand name of a long-acting form of oxycodone) — to create and employ aggressive marketing and sales tactics to overcome doctors’ reservations about the highly addictive drugs. As a result, insurers were forced to pay for prescription opioids rather than safer, non-addictive and lower-cost drugs, including over-the-counter pain medication. They also had to pay for the opioid addiction treatment that followed.

“The payments are earmarked for abating the raging overdose and addiction crisis that further deepened during the coronavirus pandemic. Opioids, which include prescription drugs and illegal substances such as heroin and illicit fentanyl, have been linked to more than 470,000 deaths in the U.S. since 2000”. 

— Geoff Mulvihill in AP News.

Detrimental effects

The effects of the opioid crisis on the real economy make for a long list, with vast implications that would indirectly, if not always directly, impact the insurance industry: 

• Workers who reported misuse of prescription drugs, including opioids, were more likely to report more absenteeism. 

• Counties in which more per capita opioid pain medication was prescribed had lower labor force participation rates, lower employment-to-population ratios, higher disability insurance claiming rates, and higher unemployment rates.

• Eroding labor market conditions force firms to invest more in technology and to substitute capital for relatively scarce labor. 

• Negative impacts on small-firm formation and survival.

• Reduced net firm entry and resultant shift in industrial composition due to labor supply issues in affected areas, driving long-term stagnation and fiscal difficulties.

• Rise in consumer defaults in subprime auto loans. 

• Unfavorable credit consequences for consumers living in — and for banks operating in — highly exposed areas. 

• Low-credit-score consumers in areas with greater exposure to the opioid crisis were more likely to default on their loan obligations, including credit card debt, auto loans, and first mortgages. 

• Lower housing values in areas more affected by the epidemic.

Regulatory failures

There are lessons to be learned from the connivance of all those in the value chain. For instance, the Food and Drug Administration (FDA) did not properly enforce the Food, Drug, and Cosmetic Act when it approved Purdue Pharma’s new drug application. 

Furthermore, the FDA neither took a root cause analysis of its regulatory errors that contributed to this public health catastrophe nor instituted any major reforms, warns the AMA Journal of Ethics. The US thereby remains vulnerable to health crises caused by inadequate regulation of pharmaceutical companies, it believes. 

As Purdue earned billions of dollars from sales of oxycodone, other drug companies took note. They introduced their own opioids and joined Purdue in funding a brilliant, multifaceted campaign that changed the culture of opioid prescribing in the U.S., writes Marcia Meldrum in the AMA Journal of Ethics.

Revolving door

Moreover, the two principal FDA reviewers who originally approved Purdue’s oxycodone application both reportedly took positions at Purdue after leaving the agency. Without controls on employment after leaving the FDA, staff might be tempted to put the interests of future employers, whose favor they wish to gain, ahead of public health.

Over to Novo Nordisk

Last year Association of British Pharmaceutical Industry (ABPI) suspended the membership of Novo Nordisk for two years because the company engaged in very doubtful marketing practices to promote Wegovy (contains the same active ingredient semaglutide as Ozempic), its weight-loss drug. The action has been taken by the ABPI Board following an extensive investigation and appeals process conducted by the Prescription Medicines Code of Practice Authority (PMCPA) which found Novo Nordisk to be in serious breaches of the code.

“This all looks very Purdue to me and what needs to be highlighted is that the long-term effects of the drug are totally unclear. Turning Ozempic into a lifestyle drug while knowing that there might be a higher suicide risk among patients using it’’, says Prof. of Ethics at the University of Lausanne, Guido Palazzo.

While insurers grapple with telltale signs of putting profit before people and society from manufacturers like Purdue or Novo Nordisk and consultancies like McKinsey, having insurance coverage does not give Big Pharma a license to stray off the ethical path. 

Last September, analysts at Jefferies Bank estimated that in the “slimmer society” obesity drugs will create, United Airlines could save up to $80 million in jet fuel annually. However far-fetched this may sound, it is no valid justification. 

The entanglement between big oil and insurers is far more complex and the consequences are existential in nature. Fossil fuel value chains run the risk of stranded assets, reputational and liability risks and worse still existential risks of planetary scale. Regulatory capture is very much part of the game.

Regretting the past is no good for the future

“Lloyd’s has a long and rich history dating back over 330 years, but there are some aspects of our history that we are not proud of”. The confession thus goes on: “In particular, we are sorry for the role played by the Lloyd’s market in the eighteenth and nineteenth Century slave trade. This was an appalling and shameful period of British history, as well as our own, and we condemn the indefensible wrongdoing that occurred during this period… We have made progress, but not enough…”.

From slave trade, colonialism, imperialism, industrial revolution, fossil fuel, global warming, biodiversity loss, and pollution — the dotted line runs through to climate breakdown. Will this be a template for all insurers or for that matter, the entire money pipeline aiding and abetting the climate crisis? Will there be any exceptions? Can lessons from big pharma rid insurers of their fossil fuel addiction? As of now, time to push back big oil.

illuminem Voices is a democratic space presenting the thoughts and opinions of leading Sustainability & Energy writers, their opinions do not necessarily represent those of illuminem.