Consulting giant McKinsey & Co. reached a $ 573 million agreement with states over its work advising the manufacturer of OxyContin Purdue Pharma LP and other drug manufacturers to aggressively market opioid pain relievers, according to people familiar with the matter. .
The deal, signed with 47 states and the District of Columbia, which is due to be announced publicly on Thursday, will prevent civil suits that Attorneys General can take against McKinsey, people said. Most of the money will be paid in cash, with the remainder dispensed in four annual payments starting in 2022.
McKinsey said last week that it is cooperating with government agencies on issues related to its previous work with opioid manufacturers, while state and local governments sue companies across the opioid supply chain. At least 400,000 people have died in the United States from legal and illegal opioid overdoses since 1999, according to federal data.
The consulting firm stopped working with opioids in 2019 and said in December that its work for Purdue was aimed at supporting the legal use of opioids and helping patients with legitimate medical needs.
Although some companies have reached agreements with individual states to avoid trials, the McKinsey agreement marks the first national opioid pact to emerge from the flood of litigation that began in 2017. A much larger $ 26 billion deal with three distributors of drugs and Johnson & Johnson did has been under construction for over a year, but is still being negotiated.
The Wall Street Journal reported last week that McKinsey was close to a deal with the states and that a deal could be worth hundreds of millions of dollars. The negotiations took place when hundreds of exhibits describing McKinsey’s work to drive OxyContin’s sales were made public in recent months during the Purdue Chapter 11 bankruptcy case in White Plains, NY
The memos McKinsey sent to Purdue executives in 2013, which were made public in bankruptcy lawsuits, included recommendations that the company’s sales team targeted healthcare providers that she knew how to write the highest volumes of OxyContin prescriptions for and abandon low volume prescribers. McKinsey’s work became a Purdue initiative called “Evolve to Excellence”, which the United States Department of Justice described in documents published last year in connection with a court settlement with Purdue as an aggressive marketing and sales campaign by OxyContin .
According to bankruptcy court records, McKinsey sent recommendations to Purdue in 2013 that, according to consultants, would increase its annual sales by more than $ 100 million. McKinsey recommended ways in which Purdue could better target what it described as “higher value” prescribers and take other measures for “Turbocharge Purdue sales engine”.
Purdue, based in Stamford, Connecticut, pleaded guilty in November to three crimes, including the payment of illegal bribes and the deception of drug enforcement officers. The drugmaker filed for Chapter 11 protection in 2019 to deal with thousands of opioid-related lawsuits filed against it. Purdue said in a lawsuit filed last week against his insurers that creditors have filed hundreds of thousands of claims in the bankruptcy case and collectively seek trillions of dollars in damages.
McKinsey also advised other opioid manufacturers on sales initiatives. The company’s work for Johnson & Johnson emerged in a 2019 trial in an Oklahoma-based case against the pharmaceutical company for contributing to the state’s opioid crisis through aggressive marketing of prescription painkillers. The trial ended with a $ 572 million verdict 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 will be split among the participating states, with $ 15 million going to the National Association of Attorneys General to reimburse it for the costs incurred in the investigation, said one of the people familiar with the matter. business.
The agreement also includes some non-monetary provisions, such as requiring McKinsey to create a repository of documents related to its work for opioid makers, the person said.
Resistant states include Nevada, which said on Wednesday night that its investigation into the consulting giant continues “and we are talking to McKinsey about our concerns”.
Purdue has been negotiating with creditors, including states, since filing for bankruptcy, but closing the deal has been delayed by demands from some states that company owners, members of the Sackler family, contribute more than $ 3 billion. agreed.
States have focused intensively on ensuring that all money from the settlement of opioid litigation goes to help alleviate the impact of the crisis, including by strengthening treatment programs and helping overworked law enforcement. States are trying to avoid the outcome of the 1990s tobacco litigation, when a $ 206 billion deal was often spent to fill gaps in the state budget. McKinsey’s settlement documents say the money is intended for rebate, said a person familiar with the deal, although state laws differ widely on how the settlement’s funds can be set aside.
Write to Sara Randazzo at [email protected] and Jonathan Randles at [email protected]
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