The "Perfect Drug" is Absinthe, which is a French green liquor. One of the ingredients contains wormwood. Wormwood contains a substance called thujone, which is an epileptic and can cause renal failure in extremely high doses. The effect of absinthe is sometimes compared to the effects of opium and marijuana.
Perfect drug maybe, but not a perfect song. NIN founder Trent Reznor explained in a VIVA 2 Magazine interview, "At that time I was listening to a lot of Drum 'n' Bass and Jungle and stuff. And I think that's the most I've ever seen external influence come out in my own music. And it was a transition period, that's what I want to stress, it was a time when I was feeling out what I wanted to do artistically and given the liberation of working within the context of a soundtrack, it's not like a major work. I always treated that as an area to be freer and try things. I'm glad it was in that context. There was never any consideration to include that on [The Fragile]. It really was an area where I was feeling out the landscape to see what I wanted to do."
The song was written for the David Lynch film Lost Highway. It was accompanied by a video directed by Mark Romanek, who previously shot Nine Inch Nail's "Closer" clip.
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