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Health Care Companies Work to Ease Opioid Crisis

February 1, 2018

Key Takeaways
  • Successfully addressing the abuse of opioid medications will require cooperation between the public and private sector.
  • Companies are contributing to prevention efforts by developing treatment alternatives and supporting programs that limit the potential for abuse.
  • We bring up the opioid crisis in engagements with pharmacy operators, drug distributors and select pharmaceutical makers and provide feedback on their actions.
Research and Usage Monitoring Aimed at Curbing Opioid Abuse

The UN Sustainable Development Goals (SDGs), a set of milestones established in 2015 to solve some of the world’s most significant social and environmental changes, are seeing increasing acknowledgement and adoption by public companies, shareholders and asset managers. At ClearBridge, we can utilize the SDGs to help frame our ESG research and guide our engagement efforts with companies. Efforts to combat the growing opioid epidemic in the U.S. illustrate how public companies are supporting the SDGs – in this case good health and well-being (goal 3).

Exhibit 1: Treating Opioid Addiction Supports the SDGs


The abuse of opioids, prescription medications used to control pain, was recently classified as a national public health emergency by the Trump administration, releasing federal funding for opioid addiction and prevention programs. But it will take more than the government to address an epidemic that accounted for roughly two thirds of the more than 52,000 overdose deaths in the U.S. in 2015.

Health care companies are also acting to assist the more than two million individuals that have become dependent on opioids, including prescription versions of morphine, oxycodone and hydrocodone as well as heroin. These initiatives range from developing treatment alternatives to limiting access and usage, to partnering with government and other organizations to fund prevention and treatment.

Pacira Pharmaceuticals manufactures and markets Exparel, a treatment that can serve as an alternative to opioids to alleviate post-surgical pain, a primary introduction point for opioid use. The current standard of care to manage post-surgical pain is oral or intravenous opioids and there are few alternatives that offer pain relief as effectively. Exparel is a long acting formulation of a well-known local anesthetic injected directly into the surgical site during a procedure to block pain locally, rather than systemically. By giving patients Exparel during surgery, they can either avoid the use of post-surgical opioids or significantly reduce their dose and duration of use, which in turn diminishes the chance for later abuse or dependence.

Exparel has broad potential and could be used in almost any significant surgical procedure.  We estimate an addressable market of 11 million surgeries with a $3 billion plus revenue potential, compared to the drug’s 2017 revenue total of $280 million. The company is investing heavily in clinical studies to demonstrate the utility of Exparel and partnering with leading hospitals to develop post-surgical care regimens including Exparel to avoid or reduce opioid utilization. Pacira has also partnered with the DePuy orthopedic division of Johnson & Johnson to broaden the marketing of Exparel.

We have also discussed efforts to address the opioid crisis with pharmaceutical maker Alkermes.  The company sells Vivitrol, a long acting injectable drug which reduces the effect and craving for opioids.  The drug is used as part of rehabilitation protocols, along with detoxification and therapy/counseling, and is clinically proven to decrease abuse relapse rates.  Vivitrol is used instead of opioid replacement therapies like methadone.  In addition to traditional drug marketing, Alkermes has engaged at all levels of government and the justice system to broaden the use of Vivitrol to combat the growing opioid addiction problem in the U.S. The clinical efforts of Alkermes and Pacira to help solve an urgent public health crisis should also be beneficial to their businesses.

CVS Health is seeking to control access to opioids through a new prescriber monitoring and suspension program. These efforts can help mitigate risks and support CVS’s goals of improving health outcomes and lower health care costs. The company’s opioid utilization management program, which takes effect February 1, 2018 and covers all commercial, health plan, employer and Medicaid patients, does the following:

  • limits initial first-time opioid prescribers to a seven-day supply;
  • limits the daily dosage based on the strength of the prescribed opioid and;
  • requires that weaker, immediate-release formulations be used before extended-release formulations are provided

CVS also offers counseling and education to customers about safe opioid use and addiction and is expanding its Pharmacists Teach program covering prescription drug abuse from a student audience to include parents.

As with many issues being addressed by the SDGs, success in resolving the opioid epidemic will require partnerships between the public and private sectors. ClearBridge asked CVS for details on its opioids program in a recent engagement with company management and its ESG team and has posed similar questions about the business risks of the opioid crisis in engagements with drug distributors, managed care and other health care companies. We will continue to use our role as a major stakeholder to highlight issues where portfolio companies can make a positive impact and push for change. 

Marshall Gordon

Senior Analyst - Health Care
21 Years experience
13 Years at ClearBridge

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  • All opinions and data included in this commentary are as of February 1, 2018 and are subject to change. The opinions and views expressed herein are of Marshall Gordon and may differ from other analysts, or the firm as a whole, and are not intended to be a forecast of future events, a guarantee of future results or investment advice. This information should not be used as the sole basis to make any investment decision. The statistics have been obtained from sources believed to be reliable, but the accuracy and completeness of this information cannot be guaranteed. Neither ClearBridge Investments nor its information providers are responsible for any damages or losses arising from any use of this information.

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