McKinsey Settles for Nearly $600 Million Over Role in Opioid Crisis (Published 2021) (2022)

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 “turbochargeopioid 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.

(Video) How a powerful corporate consulting firm helped create the opioid epidemic

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.

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.

(Video) The Opioid Crisis in Tribal Communities

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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(Video) The Downfall of McKinsey

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.

(Video) Opioid Epidemic: How Big Pharma Created A Public Health Crisis

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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(Video) Benzo Dope and Tranq: The Next Wave of the Overdose Crisis

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.

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.. 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.". 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 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 ( JNJ ) and Endo ( ENDP ), both of which have been involved in other opioid-related litigation .. 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.. "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.. However Weiser, James and several other attorneys general lauded McKinsey during the press conference for agreeing to the settlement.. 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 $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.

The consulting firm has reached agreements with 49 states because of its sales advice to drugmakers, including Purdue Pharma, the manufacturer of OxyContin.

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.. 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.. 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.. 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.. 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.. By 2018, senior executives at McKinsey were becoming aware that they might face liability for their opioid work.

The global business consulting firm McKinsey & Co. has agreed to pay nearly $600 million for its role in the opioid crisis McKinsey agrees to pay

The global consulting firm McKinsey & Company agreed to pay nearly $600 million for its role in advising businesses on how to sell more prescription opioid painkillers amid a nationwide overdose crisis.. Most of the money is in a $573 million settlement reached with 47 states, the District of Columbia and five U.S. territories, but the company said it had deals with a total of 49 states.. Washington’s attorney general announced a separate $13.5 million deal and West Virginia announced a $10 million settlement with the New York-based company.. West Virginia Attorney General Patrick Morrisey said the state went with their own lawsuit to avoid the potential of only receiving a measly settlement tied to the population of the state, one of the hardest hit by overdoses.. The only remaining state that has not announced a deal with the company is Nevada, where the attorney general’s office said it is continuing an investigation of McKinsey and speaking with the company about its concerns.. “Even though no amount of money can bring back the lives lost, I hope our settlement provides funding for programs to help those battling opioid addiction,” Arizona Attorney General Mark Brnovich said in a statement Thursday.. McKinsey’s role in the opioid crisis came into focus in recent months in legal documents that were made public as part of OxyContin maker Purdue Pharma’s efforts to settle claims against it through bankruptcy court.. They showed the company long worked with Purdue to boost sales even as the extent of the opioid epidemic became clear.. On a video call with journalists Thursday, North Carolina Attorney General Josh Stein said that McKinsey worked for Purdue for 15 years.. In a statement, New Jersey Attorney General Gurbir Grewal said that McKinsey would pay out more than it made advising companies on opioid sales.. Under the multistate deal, McKinsey agreed to make public all its communications with Purdue plus those dealing with the opioid businesses of the pharmaceutical companies Endo, Johnson & Johnson and Mallinckrodt.. Sneader, the McKinsey managing partner, said in a letter Thursday to the company’s employees that the company should use this settlement to address its practices in other areas, too.. While McKinsey emerged as a target of opioid investigations recently, there have been thousands of lawsuits filed by government entities against companies that make and distribute prescription drugs.. Other settlements have happened or are in the works, including with Purdue, which is attempting to settle with state and local governments after reaching a deal last year to plead guilty to federal criminal charges and settle a civil case.

The global consulting firm McKinsey & Company agreed to pay nearly $600 million for its role in advising businesses on how to sell more prescription opioid painkillers amid a nationwide overdose…

The global consulting firm McKinsey & Company agreed to pay nearly $600 million for its role in advising businesses on how to sell more prescription opioid painkillers amid a nationwide overdose crisis.. Most of the money is in a $573 million settlement reached with 47 states, the District of Columbia and five U.S. territories, but the company said it had deals with a total of 49 states.. Washington’s attorney general announced a separate $13.5 million deal and West Virginia announced a $10 million settlement with the New York-based company.. McKinsey’s role in the opioid crisis came into focus in recent months in legal documents that were made public as part of OxyContin maker Purdue Pharma’s efforts to settle claims against it through bankruptcy court.. They showed the company long worked with Purdue to boost sales even as the extent of the opioid epidemic became clear.. On a video call with journalists Thursday, North Carolina Attorney General Josh Stein said that McKinsey worked for Purdue for 15 years.. “McKinsey’s efforts worked.. In a statement, New Jersey Attorney General Gurbir Grewal said that McKinsey would pay out more than it made advising companies on opioid sales.. Under the multistate deal, McKinsey agreed to make public all its communications with Purdue plus those dealing with the opioid businesses of the pharmaceutical companies Endo, Johnson & Johnson and Mallinckrodt.. “It’s not the last deal and it’s not the biggest of the settlements and actions that we as a collective of states will take,” he said.

Videos

1. McKinsey & Company’s Conduct and Conflicts at the Heart of the Opioid Epidemic
(Oversight Committee)
2. The Sackler Family – A Secretive Billion Dollar Opioid Empire
(ColdFusion)
3. 186 - The Opioid Crisis with Patrick Radden Keefe
(Peter Attia MD)
4. DBHDD Georgia's Opioid Crisis Faith Based Communities
(GPB)
5. Second Hearing on Sackler Family’s Role in Opioid Crisis and Need for Reform
(Oversight Committee)
6. "Arkansas Week" - The Opioid Crisis Arkansas and "Good Roots"
(Arkansas PBS)

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