McKinsey & Company, a consultant to large corporations and governments worldwide, has agreed to pay $ 573 million to end investigations into its role in helping sales of “turbocharge” opioids, a rare case of being publicly held accountable for its work. with customers.
The company reached an agreement with attorney generals in 47 states, the District of Columbia and five territories, according to five people familiar with the negotiations. The deal comes after lawsuits revealed a treasure trove of documents showing how McKinsey worked to boost sales of Purdue Pharma’s painkiller OxyContin amid an opioid epidemic in the United States that has contributed to the deaths of more than 450,000 people in recent years. two decades.
McKinsey’s extensive work with Purdue included advising her to focus on selling lucrative high-dose pills, the documents show, even after the drugmaker pleaded guilty in 2007 to federal criminal charges that it had cheated doctors and regulators about the risks of OxyContin. The company also worked with several opioid manufacturers to come together to “defend themselves against the strict treatment” of the Food and Drug Administration.
McKinsey will not admit irregularities in the deal, to be filed in state courts on Thursday, but will agree with the court’s restrictions on its work with some types of addictive narcotics, according to those familiar with the deal. 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, he will put tens of thousands of pages of documents related to his opioid-related work in a publicly available database.
States will use civil penalties – $ 478 million of which are due in 60 days – for opioid treatment, prevention and recovery programs, people said. It will be the first money that states will see after Purdue Pharma in October agreed to plead guilty to federal criminal charges over the commercialization of OxyContin and to pay $ 8.3 billion. Purdue has declared bankruptcy, which means that the States Parties to that agreement will have to align themselves with other creditors.
The amount McKinsey is paying is also substantially more than he earned from opioid-related work with Purdue or Johnson & Johnson, Endo International and Mallinckrodt Pharmaceuticals, its other opioid-making customers, one of the people said. In contrast, members of the Sackler family, which owns Purdue, agreed to pay $ 225 million in civil penalties, just a small fraction of the billions that they have drawn from the company over the years.
Many states were dissatisfied with the October deal, which the Trump administration The Justice Department arrived just days before the former president was defeated in the November election.
A McKinsey spokesman did not immediately respond to requests for comment.
For decades, McKinsey has maintained a successful distance between the advice it gives companies and the consequences of those companies actually acting on them. Consultants only make recommendations, but the decision to follow this advice is to the customer, McKinsey said.
A former McKinsey partner considered the deal extremely significant because it breaks the distance that McKinsey places between his board and the actions of his clients. In the past, McKinsey has avoided legal liability for high profile failures from some customers, including the energy company Enron and Swissair, Switzerland’s defunct national airline. The former partner requested anonymity because former McKinsey employees are subject to confidentiality agreements.
What makes McKinsey and its competitors even more vulnerable is the fact that, in recent years, they have aggressively moved to a new line of work, not only offering management advice, but also helping companies implement their suggestions.
McKinsey materials released in litigation in the past two years date back to 2004 and are recent in 2019.
The records highlight McKinsey’s close relationship with Purdue over many years. In 2009, the company wrote a report to Purdue saying that new sales tactics would increase OxyContin’s sales by up to $ 400 million annually and “suggested ‘sales drivers’ based on the idea that opioids reduce stress and make more optimistic and less isolated patients, “According to a lawsuit filed in Massachusetts in 2018. McKinsey worked with Purdue executives to find ways to” contain the emotional messages of mothers with teenagers who overdosed “on the drug.
In 2013, the federal government reached an agreement with Walgreens, the drugstore chain, to crack down on illegal opioid prescriptions. Sales to Walgreens started to drop. According to the Massachusetts lawsuit, McKinsey recommended that Purdue “lobby for Walgreens’ leaders to let go.”
And in a slide show in 2017, McKinsey presented several options for increasing sales. One was to give Purdue distributors a discount for each OxyContin overdose attributable to the pills they sold. The slides are notable for their granular details. For example, McKinsey estimated that 2,484 CVS customers would overdose or develop a disorder due to the use of opioids in 2019 when taking OxyContin. CVS said the plan was never implemented.
In 2018, McKinsey senior executives were becoming aware that they could face responsibility for their work with opioids. After Massachusetts sued Purdue, Martin Elling, a leader in the company’s pharmaceutical practice, wrote to another partner, Arnab Ghatak: “It probably makes sense to have a quick chat with the risk committee to see if we should do anything” in addition to “eliminating everyone our documents and emails. Don’t be suspicious, but as things get more difficult, someone can turn to us. “
The two men were put on administrative leave pending the results of an external investigation into the destruction of some material, McKinsey’s managing partner in North America, Liz Hilton Segel, said in a letter to Congress in December. That month, McKinsey issued a rare public apology for its work with opioids.
“As we look at our customer service during the opioid crisis, we recognize that we do not adequately recognize the epidemic that was unfolding in our communities or the terrible impact of opioid abuse and dependence on millions of families across the country,” said the company in a statement. The company later changed the statement to “misuse” instead of “abuse”.
The deal with the 47 states – Nevada, Washington and West Virginia was not part of it – 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, West Virginia, one of the states most affected by the opioid crisis – have sued McKinsey in recent days.