Regulatory Design Failure: Intermediation in the Governance of Prescription Drug

This paper analyzes the failure of governance via intermediaries in the case of the U.S. Opioid Crisis and explains the factors that shaped this failure. We first introduce the concept of intermediaries and apply it to the case and its particularities. We show how the Controlled Substances Act has created a system of intermediation, where the Drug Enforcement Administration serves as the regulator and manufacturers and distributors act as both intermediaries and targets of regulation. We then outline the key elements of this system, including the roles of intermediaries, their responsibilities, the oversight mechanisms, the enforcement process, and the sanctioning system. Next, we demonstrate how the DEA and the U.S. government failed to govern the conflicting interests and motivations of the intermediaries, contributing to the disastrous effects of the Opioid Pandemic. We discuss the spectacular failure of the U.S. authorities to enforce the laws and draw lessons from the government’s failure. We then suggest various explanations for the Congress’s and the DEA’s failure to control intermediaries and create an effective intermediation system. We assert that governance by proxies and, more generally, where third parties are active and prominent, requires more governance capacities to control these actors. The failure of intermediation is also the failure of government, and while the intermediaries were called to account, the US government, the DEA, and the Justice Department went on without any notable repercussion for their spectacular failure.