McKinsey agrees to $ 573 million settlement over opioid advice

McKinsey said last week that he was working with government agencies on issues related to his previous work with opioid manufacturers as state and local governments sued businesses up and down the opioid supply chain. According to federal data, overdoses of legal and illegal opioids have died in the U.S. since 1999.

The consulting firm stopped doing opioid-related work in 2019 and said in December that its work for Purdue was intended to support the legal use of opioids and help patients with legal medical needs.

While some businesses have agreed with individual states to avoid trials, the McKinsey settlement is the first nationwide opioid deal stemming from the flood of litigation that began in 2017. A much larger $ 26 billion deal with three drug distributors and Johnson & Johnson has been underway for more than a year, but is still being negotiated.

The Wall Street Journal reported last week that McKinsey was close to a settlement with states and that a deal could be worth hundreds of millions of dollars. The negotiations took place when hundreds of exhibits highlighting McKinsey’s work to promote OxyContin sales were unveiled over the past few months during Purdue’s Chapter 11 bankruptcy case in White Plains, NY.

Memos McKinsey sent to Purdue executives in 2013, which were made public in bankruptcy court documents, included recommendations that the company’s sales team target health care providers who he said wrote the highest amount of OxyContin prescriptions and moved away from prescribers with a lower volume. McKinsey’s work has become a Purdue initiative called “Evolve to Excellence”, which the U.S. Department of Justice described in papers released last year in connection with a plea agreement with Purdue as an aggressive OxyContin marketing and sales campaign.

According to bankruptcy court records, McKinsey sent recommendations to Purdue in 2013 that consultants said would increase its annual sales by more than $ 100 million. McKinsey has recommended ways to better target Purdue on what he describes as higher-value prescribers and to take other steps around ‘Turbocharage Purdue’s sales engine’.

Purdue, a Stamford-based Purdue, pleaded guilty in November to three offenses, including unlawful setbacks and deception by drug enforcement officers. The drug manufacturer applied for protection for Chapter 11 in 2019 to address thousands of opioid-related lawsuits against it. Purdue said in a lawsuit against his insurers last week that creditors had filed hundreds of thousands of claims in the bankruptcy case and collectively compensated trillions of dollars.

McKinsey also advised other opioid manufacturers on sales initiatives. The firm’s work for Johnson & Johnson came up in a trial in 2019 in a case that Oklahoma filed against the drug company for its contribution to the state’s opioid crisis through aggressive marketing of prescription painkillers. The trial ended with a $ 572 million ruling against Johnson & Johnson, which was later reduced to $ 465 million and is still on appeal.

The vast majority of the money McKinsey will pay in the settlement is divided among the participating states, with $ 15 million to be reimbursed to the National Association of Attorneys General for the costs of the investigation, one of the people said. who is familiar with the agreement said. .

The person said the settlement also contains non-monetary provisions, such as that McKinsey should set up a repository of documents related to his work on opioid manufacturers.

The states being detained include Nevada, which said Wednesday night that the investigation into the consulting giant is continuing “and we are talking to McKinsey about our concerns.”

Purdue has been negotiating with creditors since the bankruptcy, which includes states, but the conclusion of an agreement has been delayed by claims by some states that the owners of the company, members of the Sackler family, contribute more than the $ 3 billion they agreed.

States have been very keen to ensure that money from the lawsuits helps opioids alleviate the impact of the crisis, including by tightening treatment programs and helping too many law enforcers. The states want to avoid the outcome of the tobacco lawsuits in the 1990s, when a $ 206 billion settlement was regularly spent filling holes in the state’s budget. According to the person familiar with the agreement, according to the McKinsey settlement documents, the money is intended for reduction.

Write to Sara Randazzo at [email protected] and Jonathan Randles at [email protected]