McKinsey & Company, the consultant to blue-chip corporations and governments around the world, has agreed to pay nearly $600 million to settle investigations into its role in helping “turbocharge” opioid sales, a rare instance of it being held publicly accountable for its work with clients.
The firm has reached a $573 million agreement with attorneys general in 47 states, the District of Columbia and five territories, according to a court filing in Massachusetts on Thursday. Separate deals were announced in Washington State, for $13 million, and in West Virginia, for $10 million. Nevada, not party to the agreements, will continue to pursue its opioid investigation, according to the attorney general’s office.
The settlements come after lawsuits unearthed a trove of documents showing how McKinsey worked to drive sales of Purdue Pharma’s OxyContin painkiller amid an opioid crisis in the United States that has contributed to the deaths of more than 450,000 people over the past two decades.
McKinsey’s extensive work with Purdue included advising it to focus on selling lucrative high-dose pills, the records show, even after the drugmaker pleaded guilty in 2007 to federal criminal charges that it had misled doctors and regulators about OxyContin’s risks. The firm also told Purdue that it could “band together” with other opioid makers to head off “strict treatment” by the Food and Drug Administration.
Maura Healey, the Massachusetts attorney general, said the investigation of the firm involved reviewing “thousands and thousands of documents and emails” that, taken together, told “the story of McKinsey’s wrongdoing.”
“Its always been about holding accountable those who created and profited off the opioid epidemic,” she said. Ms. Healey was the first state attorney general to investigate McKinsey’s business dealings with Purdue.
The consulting firm will not admit wrongdoing, according to the multistate settlement, but will agree to court-ordered restrictions on its work with some types of addictive narcotics. McKinsey will also retain emails for five years and disclose potential conflicts of interest when bidding for state contracts. And in a move similar to the tobacco industry settlements decades ago, it will put tens of thousands of pages of documents related to its opioid work onto a publicly available database.
States will use the civil penalties — $478 million of which must be paid within 60 days — for opioid treatment, prevention and recovery programs, the settlement document says. It will be the first money states will see after Purdue Pharma in October agreed to pay $8.3 billion and plead guilty to federal criminal charges over its marketing of OxyContin. Purdue declared bankruptcy, meaning the states party to that agreement will have to line up with other creditors.
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In addition, members of the Sackler family, who own Purdue, agreed last fall to pay the federal government $225 million in civil penalties, and are in talks with other litigants to pay $3 billion.
Massachusetts and many other states were dissatisfied with the October deal, which the Trump administration’s Justice Department reached only days before the former president was defeated in November’s election.
The amount McKinsey is paying is substantially more than it earned from opioid-related work with Purdue or Johnson & Johnson, Endo International and Mallinckrodt Pharmaceuticals, its other opioid-maker clients, a person involved in the settlement negotiations said.
McKinsey may face still more claims in coming months. In some states, the agreements do not bar local governments from suing, and Mingo County in West Virginia, one of the hardest-hit states in the country, filed suit against McKinsey last week. The Biden administration could also take action against the firm.
In a statement on Thursday, McKinsey said it believed “its past work was lawful and has denied allegations to the contrary.”
But Kevin Sneader, the firm’s global managing partner, said: “We deeply regret that we did not adequately acknowledge the tragic consequences of the epidemic unfolding in our communities. With this agreement, we hope to be part of the solution to the opioid crisis in the U.S.”
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One former partner called the settlements hugely significant because it shatters the distance that McKinsey — which argues that it only makes recommendations — puts between its advice and its clients’ actions. For decades, the firm has avoided legal liability for high-profile failures of some clients, including the energy company Enron and Swissair, Switzerland’s defunct national airline. The former partner asked for anonymity because former McKinsey employees are bound by confidentiality agreements.
The Opioid Crisis
From powerful pharmaceuticals to illegally madesynthetics, opioids are fueling a deadly drug crisis in America.
- An Unrelenting Surge:Deaths from drug overdoses again rose to record-breaking levels in 2021. Here is how to talk to your family about the threat opioids pose.
- Bearing Responsibility: A federal judge ordered CVS, Walgreens and Walmart to pay $650.5 million to two Ohio counties for their role in fueling the opioid epidemic.
- McKinsey’s Sway:From poppy fields to pills, a trove of documents shows how the consulting firm gave opioid makers an “in-depth experience in narcotics.”.
- Youth Deaths: Young people are turning to social media to find prescription pills. But drugs found this way are often laced with deadly doses of fentanyl.
Making McKinsey and its competitors even more vulnerable is the fact that in recent years they have aggressively moved into a new line of work, not only offering management advice but also helping companies implement their suggestions.
That is what happened with McKinsey at Purdue, said Phil Weiser, the attorney general for Colorado. Two McKinsey senior partners led the firm’s effort to implement plans to drive sales, working with members of the Sackler family and even overruling Purdue executives, Mr. Weiser said.
“When you see the actions of these McKinsey partners, they were almost acting as executives of the firm,” Mr. Weiser said.
The McKinsey materials released in litigation over the last two years go back as far as 2004 and are as recent as 2019.
The records highlight McKinsey’s close relationship with Purdue over many years. In 2009, the firm wrote a report for Purdue saying that new sales tactics would increase sales of OxyContin by as much as $400 million annually, and suggested “sales ‘drivers’ based on the idea that opioids reduce stress and make patients more optimistic and less isolated,” according to a lawsuit filed in 2018 by Massachusetts. McKinsey worked with Purdue executives in finding ways “to counter the emotional messages from mothers with teenagers that overdosed” on the drug.
In 2013, the federal government reached a settlement with Walgreens, the pharmacy chain, to crack down on illegal opioid prescriptions. Sales to Walgreens began to fall. According to the Massachusetts lawsuit, McKinsey recommended that Purdue “lobby Walgreens’ leaders to loosen up.”
And in a 2017 slide presentation for Purdue, McKinsey laid out several options to shore up sales. One was to give distributors a rebate for every OxyContin overdose attributable to pills they sold. The slides are notable for their granular detail. For example, McKinsey estimated that 2,484 CVS customers would overdose or develop an opioid use disorder in 2019 from taking OxyContin. CVS said the plan was never implemented.
By 2018, senior executives at McKinsey were becoming aware that they might face liability 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 have a quick conversation with the risk committee to see if we should be doing anything” other than “eliminating all our documents and emails. Suspect not but as things get tougher there someone might turn to us.”
Both men were put on administrative leave pending the results of an outside investigation into whether any material was destroyed, McKinsey’s North America managing partner, Liz Hilton Segel, said in a letter to Congress in December.
On Thursday, a spokesman for McKinsey said the two men had been fired.
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FAQs
How much did McKinsey make from Purdue? ›
The FDA has said that it did not know until last year that McKinsey was simultaneously working for Purdue. The consulting firm was paid $86m by the drug-maker and $140m by the FDA.
How did McKinsey help Purdue? ›After the F.D.A. denied its application in 2008, Purdue enlisted McKinsey's help. The consultants interviewed a former drug dealer about OxyContin abuse, oversaw scientific studies, prepared regulatory documents and coached company officials on how to deal with the F.D.A., which had been a McKinsey client.
What is the McKinsey scandal? ›The firm has been associated with a number of notable scandals including the collapse of Enron in 2001, 2007–2008 financial crisis, and facilitating state capture in South Africa. It has also drawn controversy for involvement with Purdue Pharma, U.S. Immigration and Customs Enforcement and authoritarian regimes.
Who is the biggest supplier of opioids? ›China is the number one supplier of fentanyl to the United States. China is also the main supplier to Canada and Mexico. Cartels in the latter usually then smuggle it into the United States. After years of persistent efforts, the U.S.-China bilateral crackdown on opioid trafficking has started to see recent success.
What did McKinsey do with opioids? ›For more than a decade, McKinsey has advised companies throughout the opioid industry. McKinsey recently settled with 49 states Attorneys General for $573 million due to actions that exacerbated the opioid epidemic, including advising Purdue Pharma on how to “turbocharge” sales of OxyContin.
Is OxyContin still on the market? ›Purdue Pharma, the maker of OxyContin, said it will no longer market the drug to doctors. The announcement comes in response to lawsuits that blame the company for helping to trigger the opioid crisis, CBS News reports.
Which company is responsible for the opioid crisis? ›It started in the mid-1990s when the powerful agent OxyContin, promoted by Purdue Pharma and approved by the Food and Drug Administration (FDA), triggered the first wave of deaths linked to use of legal prescription opioids.
When did McKinsey work for Purdue Pharma? ›The records detail the firm's work for Purdue and other opioid manufacturers over a 15-year period, from 2004 to 2019. Jeff Smith, now a McKinsey senior partner, simultaneously did work for the opioid maker Purdue Pharma, above, and its regulator, the F.D.A., below.
When did Purdue Pharma hire McKinsey? ›In 2008, a year after Purdue Pharma plead guilty to misleading regulators, Purdue and several other drug companies hired McKinsey to help them push back on the FDA's new required sales restrictions meant to curb the opioid crisis.
What did McKinsey do wrong? ›The firm faced criticism after a report revealed that consultants had discussed destroying documents related to the opioid business and proposed that a drugmaker pay its distributors rebates for overdoses.
What is McKinsey best known for? ›
McKinsey is famous for its Problem Solving Test- also known as the PST. This is a screening test used to assess candidates' problem solving skills, cutting down the applicant pool before interview. McKinsey also have two to three rounds of fit interviews, which are typically more intense than the other two firms.
What is so great about McKinsey? ›One key reason is that in this uncertain world, McKinsey is motivated by its purpose to create positive, enduring change in the world; guided by its values; and able to offer stability and variety in its work. We tackle challenges that matter, and we're doing it with diverse teams of amazing people all over the world.
Is Dopesick true? ›"Dopesick" is a fictionalized version of reporter Beth Macy's book of the same name about the country's opioid crisis and the irresponsible marketing of Purdue Pharma's addictive painkiller OxyContin. Loyd, the former Tennessee opioid epidemic czar, himself once abused pain pills, taking as many as 100 a day.
Where is Richard Sackler now? ›Most of the Sacklers prefer to stay out of the public light. Richard now resides in Florida.
Did the Sacklers go to jail? ›Purdue has twice pleaded guilty to criminal charges, but no members of the Sackler family have been charged with crimes.
Who is McKinsey CEO? ›Bob Sternfels has been elected as our next global managing partner. When his first term begins on July 1, he will become the thirteenth leader of McKinsey since our 1926 founding.
What is McKinsey revenue? › What does McKinsey and Company do? ›McKinsey & Company is a global management consulting firm. We are the trusted advisor to the world's leading businesses, governments, and institutions. We work with leading organizations across the private, public and social sectors. Our scale, scope, and knowledge allow us to address problems that no one else can.
Does Purdue Pharma still exist? ›When the bankruptcy plan takes effect, Purdue Pharma will cease to exist. It will emerge as a new company, Knoa Pharma LLC, owned by the National Opioid Abatement Trust, an entity controlled by creditors of Purdue.
Who got the money from the Purdue Pharma settlement? ›(Hartford, CT) – Attorney General William Tong announced today Purdue Pharma and the Sackler family will pay $6 billion to victims, survivors, and states for their role in the opioid epidemic—40 percent more than the previously vacated settlement appealed by Connecticut.
Why is Teva being sued? ›
Teva ponies up $420M to settle with investors who said company hid price-fixing scheme. Generics giant Teva will pay $420 million to settle a lawsuit with shareholders who said the company concealed a price-fixing scheme that allowed it to raise prices on some drugs by more than 1,000%.
What happened to Purdue Pharma and the Sacklers? ›The Sacklers will lose control of Purdue Pharma, which will be organized into a new company named Knoa Pharma with a board appointed by public officials. Company profits would go toward drug treatment programs.
Is Purdue Pharma related to Purdue University? ›...
Purdue Pharma.
| Type | Private (L.P.) |
|---|---|
| Website | purduepharma.com |
| Footnotes / references | |
Opioids are a class of drugs that include the illegal drug heroin, synthetic opioids such as fentanyl, and pain relievers available legally by prescription, such as oxycodone (OxyContin®), hydrocodone (Vicodin®), codeine, morphine, and many others.
How stressful is working at McKinsey? ›McKinsey consultants are known to be amongst the hardest working in the consulting industry, which is saying a lot. If you're looking for a chill 40-hour workweek with no weekend work, McKinsey is not for you.
Are McKinsey Consultants smart? ›McKinsey colleagues are impressive and diverse
It's not so much that McKinsey consultants are smart (though they are), but that they are often from a prestigious pedigree. At McKinsey, your colleagues are nearly always from the likes of Oxford, Harvard, Stanford, and Yale.
Table of Contents. The dress code for interviews at top consulting firms such as McKinsey, BCG or Bain is the professional business attire. Suits must be dark and neutral colored (black or dark gray is the best), with matching belts, socks and shoes. Accessories should be subtle.
How prestigious is McKinsey? ›McKinsey, Bain and BCG (the Big Three or MBB) are by far the most prestigious consulting firms – as surveyed by Vault in 2020. Within MBB firms, McKinsey is the most prestigious and well-known, both inside and outside the industry.
How much does a McKinsey partner make? ›McKinsey Partner & Director Salary
McKinsey Partners and Directors in the US may earn up to $1,300,000 per year in salary, with $1,000,000 base and $300,000 performance bonus.
Deloitte scored higher in 1 area: Work-life balance. McKinsey & Company scored higher in 8 areas: Overall Rating, Culture & Values, Diversity & Inclusion, Senior Management, Compensation & Benefits, Career Opportunities, Recommend to a friend and Positive Business Outlook. Both tied in 1 area: CEO Approval.
How many hours do consultants at McKinsey work? ›
MBAs at McKinsey & Co., one of the most prestigious employers in the world, told TransparentCareer that they work an average of 72 hours per week. At Boston Consulting Group, it's 63 hours every week, while at Bain & Co., the average is 58 hours per week.
Is it hard to get a job at McKinsey? ›How Hard Is It to Land a Job at McKinsey? According to a recent interview, the firm accepts only 2,000 out of 200,000 applications. This means you only have a one percent chance of getting hired. However, this should not deter you if you feel you have the right skills and experience.
Is McKinsey a big 4? ›The big four consulting firms that account for nearly 40% of the industry are PwC, Deloitte, EY, and KPMG. These are followed by McKinsey & Company and the BCG – US strategy giants.
When did McKinsey work with Purdue? ›The records detail the firm's work for Purdue and other opioid manufacturers over a 15-year period, from 2004 to 2019. Jeff Smith, now a McKinsey senior partner, simultaneously did work for the opioid maker Purdue Pharma, above, and its regulator, the F.D.A., below.
What happened to Purdue Pharma and the Sacklers? ›The Sacklers will lose control of Purdue Pharma, which will be organized into a new company named Knoa Pharma with a board appointed by public officials. Company profits would go toward drug treatment programs.
Which company is responsible for opioid crisis? ›It started in the mid-1990s when the powerful agent OxyContin, promoted by Purdue Pharma and approved by the Food and Drug Administration (FDA), triggered the first wave of deaths linked to use of legal prescription opioids.
What is McKinsey revenue? › Who is McKinsey CEO? ›Bob Sternfels has been elected as our next global managing partner. When his first term begins on July 1, he will become the thirteenth leader of McKinsey since our 1926 founding.
What does McKinsey and Company do? ›McKinsey & Company is a global management consulting firm. We are the trusted advisor to the world's leading businesses, governments, and institutions. We work with leading organizations across the private, public and social sectors. Our scale, scope, and knowledge allow us to address problems that no one else can.
Is Purdue Pharma related to Purdue University? ›...
Purdue Pharma.
| Type | Private (L.P.) |
|---|---|
| Website | purduepharma.com |
| Footnotes / references | |
Where is Richard Sackler today? ›
Personal life. Sackler was married to Beth Sackler but is now divorced; they have three children: Rebecca, Marianna, and David. They have a charitable foundation, the Richard and Beth Sackler Foundation. He has lived outside Austin, Texas, since 2013.
Who got the money from the Purdue settlement? ›Connecticut will receive approximately $95 million from the settlement which will be used to fund opioid treatment and prevention. The agreement authorizes Connecticut to use a portion of the settlement funds to establish an Opioid Survivors Trust to directly aid survivors and victims of the opioid epidemic.
Who got the money from the Purdue Pharma settlement? ›Most of the the money is to flow to state and local governments, Native American tribes and some hospitals, with the requirement that it be used to battle an opioid crisis that has been linked to more than 500,000 deaths in the U.S. over the past two decades.
Is Dopesick true? ›"Dopesick" is a fictionalized version of reporter Beth Macy's book of the same name about the country's opioid crisis and the irresponsible marketing of Purdue Pharma's addictive painkiller OxyContin. Loyd, the former Tennessee opioid epidemic czar, himself once abused pain pills, taking as many as 100 a day.
Did the Sacklers go to jail? ›Purdue has twice pleaded guilty to criminal charges, but no members of the Sackler family have been charged with crimes.
Is Purdue Pharma still in business? ›When the bankruptcy plan takes effect, Purdue Pharma will cease to exist. It will emerge as a new company, Knoa Pharma LLC, owned by the National Opioid Abatement Trust, an entity controlled by creditors of Purdue.
How much does a McKinsey partner make? ›McKinsey Partner & Director Salary
McKinsey Partners and Directors in the US may earn up to $1,300,000 per year in salary, with $1,000,000 base and $300,000 performance bonus.
McKinsey, Bain and BCG (the Big Three or MBB) are by far the most prestigious consulting firms – as surveyed by Vault in 2020. Within MBB firms, McKinsey is the most prestigious and well-known, both inside and outside the industry.
How much does a consultant at McKinsey make? ›Consultant salary at McKinsey & Company ranges between ₹ 16 Lakhs to ₹ 50 Lakhs per year. Salary estimates are based on 64 salaries received from various employees of McKinsey & Company.