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McKinsey to pay nearly $600 million in settlements over its work with opioid companies

McKinsey & Company, one of the world's largest consulting firms, will pay nearly $600 million in multiple settlements over its work consulting for drug compa...

Posted: Feb 4, 2021 2:32 PM
Updated: Feb 4, 2021 7:30 PM

McKinsey & Company, one of the world's largest consulting firms, will pay nearly $600 million in multiple settlements over its work consulting for drug companies that states say fueled the nation's opioid crisis.

McKinsey reached the agreement with a coalition of 47 attorneys general, the District of Columbia and five US territories. The company settled separately with the attorneys general of Washington and West Virginia.

The $573 million multistate settlement, announced Thursday, 'resolves investigations by the attorneys general into the company's role in working for opioid companies, helping those companies promote their drugs, and profiting millions of dollars from the opioid epidemic,' according to a press release from the office of New York Attorney General Letitia James.

'We chose to resolve this matter in order to provide fast, meaningful support to communities across the United States,' Kevin Sneader, global managing partner of McKinsey, said in a statement on the settlement.

'We deeply regret that we did not adequately acknowledge the tragic consequences of the epidemic unfolding in our communities,' Sneader's statement continued. 'With this agreement, we hope to be part of the solution to the opioid crisis in the U.S.'

The abuse of OxyContin and other opioid prescription painkillers has become an epidemic in the United States that is blamed for hundreds of thousands of deaths, according to the Centers for Disease Control and Prevention.

'The opioid crisis has hit every corner of this nation,' James said during a Thursday press conference on the settlement. 'Families are destroyed, opportunities are gone.'

James' office added that this 'is the first multistate opioid agreement to result in substantial payment to states to address the crisis.' Funds from the settlement are expected to be used to help address the effects of the opioid epidemic in the participating states. The agreement also includes a consent order in which McKinsey agreed to certain terms of operation.

The consulting firm told CNN Business in 2019 it would no longer do work for Purdue Pharma, the controversial drug firm that made the prescription painkiller OxyContin. Purdue filed for bankruptcy in 2019. In October, Purdue agreed to plead guilty to three federal criminal charges for its role in creating the nation's opioid crisis, in addition to paying more than $8 billion and dissolving the company.

McKinsey said Thursday it has 'reaffirmed the commitment it made two years ago not to advise clients on any opioid-related business anywhere in the world.' The settlement does not involve an admission of wrongdoing or liability, and McKinsey said it believes its past work was lawful.

In addition to the multistate settlement, McKinsey also reached separate agreements with the Washington and West Virginia state attorneys general for $13.5 million and $10 million, respectively.

McKinsey's plan to 'turbocharge' Purdue's opioid sales

A complaint released along with the settlement detailed McKinsey's work for opioid manufacturers and sellers — in particular for Purdue, which it consulted for from 2004 to 2019, even after Purdue's 2007 $600 million guilty plea deal on a felony charge related to OxyContin.

Early on in its work for the pharmaceutical company, McKinsey advised Purdue that 'it could increase OxyContin sales through physician targeting and specific messaging to prescribers.'

In 2009, McKinsey developed strategies for the company to help increase 'brand loyalty' to the drug among patients and prescribers, it states.

Four years later, McKinsey advised Purdue that it could increase OxyContin sales, including by focusing on selling to the doctors who wrote the most prescriptions, the complaint alleges. McKinsey worked with Purdue to implement its plan to 'Turbocharg[e] Purdue's Sales Engine,' which resulted in increased opioid sales, especially of OxyContin, according to the complaint.

McKinsey's help in implement the plan included 'assisting with sales representative training, productivity, messaging, and call plans, IT systems, promotional strategies, and market forecasting,' the complaint states.

'McKinsey continued to work with Purdue, including on a project that identified the growing addiction crisis as a profit-making opportunity,' the complaint continues, adding that McKinsey advised Purdue to start making 'opioid rescue and treatment medications in order to profit from the realities of dependence, addiction, and abuse.'

The complaint also asserts that McKinsey worked with other opioid manufacturers, including Johnson & Johnson and Endo, both of which have been involved in other opioid-related litigation. Endo declined to comment on the McKinsey settlement; Johnson & Johnson did not return a request for comment.

McKinsey also consulted for governments and nonprofits 'working to abate the raging opioid crisis,' at the same time it was working with drug companies, the complaint states.

The settlement announced Thursday includes a conflict-of-interest clause that requires the company to provide a written disclosure of any 'material conflict' when engaging in work with government clients going forward.

'McKinsey partners were ... seeking to turbocharge a tragic undertaking,' Phil Weiser, Colorado's attorney general, said of the firm's work with opioid sellers during the Thursday press conference. 'They didn't act responsibly. They put profit over people's lives.'

However Weiser, James and several other attorneys general lauded McKinsey during the press conference for agreeing to the settlement. 'McKinsey ... should be thanked for coming to the table, resolving this and for recognizing the harm that they caused all across this nation,' James said.

The settlement

Money from the agreement will be used to help communities struggling with the effects of the opioid crisis, the attorneys general said Thursday. Oregon's portion of the settlement, for example, will be directed to the Drug Treatment and Recovery Services Fund, an account created by the state's voters last year 'to treat substance use disorder as a public health problem and to provide necessary treatment,' Oregon Attorney General Ellen Rosenblum said during the press conference.

As part of the settlement, McKinsey agreed not to accept any future work related to ' any opioid or other opioid-based Schedule II or III controlled substance,' court documents state.

The settlement also includes a provision requiring McKinsey to provide states with documents related to its work around opioids, including its communications and documents concerning its work with Purdue and other pharmaceutical companies, which will likely be compiled into a public repository.

'(The settlement) makes public documents at the heart of the epidemic so that scholars, journalists and the public can learn what went wrong so that it never happens again,' Rosenblum said.

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