(Bloomberg) -- President Donald Trump on Thursday declared widespread opioid abuse a public health emergency, even as he resisted a controversial move that might have tapped federal funds sought by hurricane-stricken Texas, Florida and Puerto Rico.
Trump also said he would use the federal government’s legal powers to pursue companies that helped fuel the epidemic.
"We will be bringing some very major lawsuits against people and against companies that are hurting our people," Trump said in a speech at the White House on Thursday.
Shortly before Trump spoke, federal authorities announced racketeering conspiracy and other felony charges against Insys Therapeutics Inc. founder John Kapoor and other company executives, accusing them of helping fuel the epidemic by bribing doctors to prescribe a powerful form of fentanyl to patients who didn’t need the potent drug.
Trump’s speech and Kapoor’s arrest weighed on drug stocks Thursday. Insys sank 21 percent to $5.90 at 3:16 p.m. in New York. Other opioid makers with legal trouble also were hit: Endo International Plc, which makes a drug pulled from the market under regulatory pressure, fell 5.4 percent to $6.79, and Johnson & Johnson, one of five major drug manufacturers sued by the state of Ohio over its alleged role in the opioid epidemic, declined less than one percent to $141.58.
Trump’s declaration follows months of debate inside and outside government over whether to use emergency funds typically reserved for hurricanes or flu epidemics to deal with a more intractable crisis; leave it for Congress to act; or pursue a combination of executive orders, emergency spending and legislation.
“Families, communities and citizens across our country are currently dealing with the worst drug crisis in our nation’s history,” Trump said. “Addressing will require all of our effort.”
The declaration allows for temporary appointments of specialists to crisis areas under federal grants, but it doesn’t create additional funding, three senior White House officials said on a call with reporters. Trump wants to include money for the effort in an end-of-year budget deal. To do that, the administration will need to have an “ongoing discussion” with Congress about funding, one official said.
The opioid epidemic has emerged as one of the nation’s most pressing public health matters, claiming a life every 19 minutes, according to the U.S. Surgeon General. Cost estimates range, but a study last year in the Medical Care Journal estimated the annual economic cost of opioid overdose, abuse and dependence at $78.5 billion.
Trump signed a memorandum calling on Acting Secretary of Health and Human Services Eric Hargan to declare an emergency under the Public Health Service Act, waiving certain regulations and allowing states greater leeway in how they use federal funds to combat the epidemic, the officials said. The emergency lasts 90 days and can be renewed indefinitely.
Trump laid out his plan in a speech Thursday at the White House. He invited recovering addicts, first responders and some lawmakers to attend. First Lady Melania Trump has also begun speaking publicly on the issue, and administration officials will hit the road Friday to visit some of the nation’s most affected areas.
Opioid abuse has been a concern for decades but has spiraled as doctors more liberally prescribed painkillers such as oxycodone. The crisis is a tangle of issues from addiction to treatment to enforcement to regulatory policy involving drugmakers and diplomacy with other nations where opioids are manufactured.
Several states, counties and cities have sued drugmakers and distributors, saying the companies could have done more to stop it, given their position in the drug supply chain. Unlike suits brought against tobacco makers that resulted in a $246 billion settlement in 1999, cases focusing on opioids are targeting a government-regulated product.
"The opioid crisis is not like a natural disaster whereby it only occurs during a finite period of time and a recovery can be clearly defined," said Rafael Lemaitre, a former top spokesman at the White House Drug Policy Office and former director of public affairs at Federal Emergency Management Agency during the Obama administration. "Declaring a national emergency is not a silver bullet solution. Symbolically it’s important and it may help around the edges but at the end of the day you need a comprehensive legislative package from Congress with its own dedicated stream of funding to make a difference."
Lemaitre said there needs to be increased regulation of the industry particularly when it comes to the wholesale shipment of prescription drugs, and the Drug Enforcement Agency needs to be empowered to go after manufacturers who break the law. Foreign policy is also important, he said, noting that much of the opioid fentanyl is coming from China. "There’s an international cooperation component here," Lemaitre said. "It’s very complicated."
Trump said that he will raise the issue with Chinese President Xi Jinping as a “top priority” when he visits Asia next month. “And he will do something about it,” Trump said.
©2017 Bloomberg L.P.