Innovation Institutions and the Opioid Crisis

52 Pages Posted: 18 Mar 2020 Last revised: 13 Jul 2022

See all articles by Daniel J. Hemel

Daniel J. Hemel

New York University School of Law

Lisa Larrimore Ouellette

Stanford Law School

Date Written: February 8, 2020


The United States has recently — and belatedly — come to recognize opioid addiction as a public health crisis. What has gone mostly unrecognized is the degree to which this crisis is intertwined with U.S. intellectual property law and related elements of U.S. innovation policy. Innovation institutions — the legal arrangements that structure incentives for production and allocation of knowledge goods — encouraged the development and commercialization of addictive painkillers, restricted access to opioid antidotes, and (perhaps most importantly) failed to facilitate investments in alternative, non-addictive treatments for chronic pain. Although innovation policy does not bear all the blame for the opioid wave that has washed over communities across the country, innovation institutions are bound up in the ongoing epidemic to a degree that so far has gone underappreciated.

This Article examines the proliferation of opioid use and abuse through the lens of innovation policy, and it envisions ways in which innovation institutions could help to contain the crisis. Along the way, it seeks to derive broader lessons for innovation policy scholarship as well as recommendations for institutional reform. The opioid crisis challenges the conventional understanding of IP law as a tradeoff between allocative efficiency and dynamic efficiency; it highlights the potentially pernicious role of IP protection for addictive and habit-forming products; and it exposes deep flaws in the structure of federal subsidies for and regulation of prescription drugs. It also draws attention to the political and cultural factors that contribute to innovation policy failures. Ultimately, the opioid crisis underscores both the urgency and the limits of institutional change in the innovation policy domain.

Note: The authors have no funding information or conflicts of interest to declare.

Keywords: opioids, opioid crisis, opioid epidemic, intellectual property, innovation policy

JEL Classification: I10, I11, I13, I18, K20, K39

Suggested Citation

Hemel, Daniel J. and Ouellette, Lisa Larrimore, Innovation Institutions and the Opioid Crisis (February 8, 2020). Journal of Law and the Biosciences, vol. 7, lsaa001, 2020, Stanford Law and Economics Olin Working Paper No. 547, U of Chicago, Public Law Working Paper No. 745, University of Chicago Coase-Sandor Institute for Law & Economics Research Paper No. 907, Available at SSRN:

Daniel J. Hemel (Contact Author)

New York University School of Law ( email )

Lisa Larrimore Ouellette

Stanford Law School ( email )

559 Nathan Abbott Way
Stanford, CA 94305
United States


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