McKinsey & Company, a consultant to blue-chip companies and governments around the world, has agreed to pay $ 573 million to investigate its role in helping opioid sales “turbocharged”, a rare case that it is publicly responsible held for his work with clients.
The firm has reached an agreement with attorneys general in 47 states, the District of Columbia and five territories, according to five people familiar with the negotiations. The settlement comes after lawsuits uncovered a series of documents showing McKinsey working to sell Purdue Pharma’s OxyContin painkiller amid an opioid epidemic in the United States that killed more than 450,000 people. people over the past two decades.
McKinsey’s extensive work with Purdue advised him, among other things, to focus on selling lucrative high-dose pills, the documents show, even after the drugmaker pleaded guilty in 2007 to federal criminal charges of misleading doctors and regulators. about the risks of OxyContin. The firm has also worked with a number of opioid manufacturers to ‘defend against strict treatment’ by the Food and Drug Administration.
McKinsey will not admit wrongdoing in the settlement, which must be filed in state courts on Thursday, but according to the trustees of the arrangement, he will agree to the court restrictions on his work with some types of addictive drugs. McKinsey will also keep emails for five years and reveal potential conflicts of interest when bidding for government contracts. And in a move similar to the settlements of the tobacco industry decades ago, it would place tens of thousands of pages of documents related to the opioid-related work on a public database.
States will use the civil fines – of which $ 478 million must be paid within 60 days – for opioid treatment, prevention and recovery programs. This is the first money that states will see after Purdue Pharma agreed in October to plead guilty to federal criminal charges over the marketing of OxyContin and pay $ 8.3 billion. Purdue has declared bankruptcy, which means the parties involved in the deal will have to collide with other creditors.
One of the people said that the amount McKinsey pays is significantly more than he earned with opioid-related work with Purdue of Johnson & Johnson, Endo International and Mallinckrodt Pharmaceuticals, his other clients for opioid manufacturers. By contrast, members of the Sackler family, which owns Purdue, have agreed to pay $ 225 million in civil fines, only a small fraction of the billions they have drawn from the company over the years.
Many states were dissatisfied with the October agreement reached by the Trump administration The Justice Department only reached days before the former president was defeated in November’s election.
A McKinsey spokesman did not immediately respond to requests for comment.
For decades, McKinsey has successfully distanced itself from the advice it gives companies and the consequences of companies actually responding to it. The consultants only make recommendations, but the decision is to follow them to the customer, McKinsey said.
One former McKinsey partner calls the settlement hugely important because it shatters the distance McKinsey places between his advice and the actions of his clients. In the past, McKinsey has avoided legal liability for notable failures by some customers, including energy company Enron and Swissair, Switzerland’s counterfeit national airline. The former partner asked for anonymity because former McKinsey employees are bound by confidentiality agreements.
To make McKinsey and its competitors even more vulnerable is the fact that they have aggressively moved to a new line of work over the past few years, not only offering management advice but also helping companies implement their proposals.
The McKinsey material released in a litigation over the past two years extends to 2004 and is as recent as in 2019.
The records highlight McKinsey’s close relationship with Purdue over many years. In 2009, the firm wrote a report for Purdue, saying the new sales tactic would increase OxyContin’s sales by as much as $ 400 million a year and ‘suggest that sales managers’ be based on the idea that opioids reduce stress and make patients more optimistic. and make it less isolated. , ”According to a lawsuit filed by Massachusetts in 2018. McKinsey has worked with Purdue executives to find ways to “counteract the emotional messages of mothers with teens who are overdosing” on the drug.
In 2013, the federal government reached a settlement with Walgreens, the pharmacy chain, to curb illegal opioid prescriptions. Sales to Walgreens began to decline. According to the Massachusetts case, McKinsey recommended that Purdue “strive for Walgreens’ leaders to be released.”
And in a 2017 slideshow, McKinsey outlined several options to increase sales. The one was to give Purdue distributors a discount for every overdose of OxyContin that can be attributed to pills they sold. The chips are striking because of their fine detail. McKinsey, for example, estimated that 2,484 CVS customers would suffer an overdose or opioid use disorder in 2019 if they used OxyContin. According to CVS, the plan was never implemented.
By 2018, senior executives at McKinsey have become aware that they may be liable for their opioid work. After Massachusetts sued Purdue, Martin Elling, a leader in the firm’s pharmaceutical practice, wrote to another partner, Arnab Ghatak: “It probably makes sense to talk to the risk committee quickly to see if we have anything to do with it. otherwise have to do “except” to eliminate all our documents and emails. Do not suspect, but if things get harder there, someone can turn to us. ‘
Both men have been placed on administrative leave pending the outcome of an outside investigation into whether any material was destroyed, Liz Hilton Segel, managing partner of McKinsey in North America, said in a letter to Congress in December. This month, McKinsey made a rare public apology for his work on opioids.
“Looking back at our customer service during the opioid crisis, we realize that we have not adequately acknowledged the epidemic in our communities or the devastating impact of opioid abuse and addiction on millions of families across the country,” the company said in a statement. . The firm later changed the statement to ‘abuse’ instead of ‘abuse’.
The agreement with the 47 states – Nevada, Washington and West Virginia were not involved – does not prevent the Biden government from seeking legal action against McKinsey as well. In addition, several counties and cities across the country – including Mingo County in West Virginia, one of the states worst affected by the opioid crisis – have sued McKinsey in recent days.