New York, N.Y (WorkersCompensation.com) – McKinsey and Company, one of the world’s largest consulting companies, will pay out nearly $600 million to settle lawsuits over its role in the opioid crisis filed by nearly every state attorney general in the country.
A coalition comprised of the attorneys general from 47 states, the District of Columbia and five U.S. territories agreed to the $573 million settlement recently. Money from the settlements will be used to abate the long-lasting effects opioid addiction has had on states, going to treatment, recovery and prevention efforts.
“McKinsey’s cynical and calculated marketing tactics helped fuel the opioid crisis by helping Purdue Pharma target those doctors they knew would overprescribe opioids,” said New York Attorney General Letitia James. “They knew where the money was coming from and zeroed in on it. Under the terms of today’s agreement, the company will finally end its illegal conduct, deliver more than half a billion dollars into communities across the nation, and will never be able to help perpetrate this type of fraud and deception again. While no amount of money will ever compensate for the pain of the hundreds of thousands dead, the millions addicted, and the countless families torn apart from opioid addiction, we can ensure that those responsible for the crisis help to fund prevention, education, and treatment programs to stop additional New Yorkers and Americans across the country from becoming addicted to opioids in the first place.”
New York will get more than $32 million from the settlement.
According to documents filed by James, McKinsey contributed to the opioid crisis by advising Purdue Pharma on how to maximize profits by targeting high-volume opioid prescribers, how to use specific messaging to increase prescriptions and how to circumvent pharmacy restrictions to deliver higher dosage prescriptions.
“In 2013, McKinsey conducted another analysis of OxyContin growth opportunities for Purdue, laying out new plans to increase sales of OxyContin. Among the key components of McKinsey’s plan adopted by Purdue were to: focus sales calls on high-volume opioid prescribers, including those who wrote as many as 25 times as many OxyContin scripts as their lower volume counterparts; remove sales representative discretion in targeting prescribers; focus Purdue’s marketing messaging to titrate to higher, more lucrative dosages; significantly increase the number of sales visits to high-volume prescribers; and create an ‘alternative model for how patients receive OxyContin,’ including direct distribution to patients and pharmacies, to help address the ‘product access’ problem,” documents said. “Purdue approved McKinsey’s plan, and together with McKinsey, moved to implement the plan to ‘Turbocharg[e] Purdue’s Sales Engine,’ under the name Evolve 2 Excellence (‘E2E’). E2E significantly increased Purdue’s opioid sales, in particular, for OxyContin.”
Two other states, West Virginia and Washington, announced their own settlements – for $10 million and $13 million respectively. Nevada, the only state to not participate, is continuing with its investigation, the state’s attorney general said.
“Marketing efforts to boost the profits of opioid drug makers have caused — and continue to cause — immense harm to West Virginia,” West Virginia’s Attorney General Patrick Morrisey said. “Such strategies valued profits above human life, and those responsible must be held accountable. These funds must be used to solve the root causes of opioid abuse, and I am committed to working to develop a long-term plan to help our state’s citizens and communities on a road to recovery.”
The attorneys general also allege that when McKinsey learned they were under investigation, executives within the company discussed how to get rid of documentation of their discussions with Purdue Pharma.
As a result, McKinsey is also required to release tens of thousands of its internal documents over its dealings with Purdue Pharma and other opioid manufacturers. The agreement also requires McKinsey to adopt strict document retention plans, continue its investigation into the executives who tried to destroy documents, implement strict ethics codes that all partners must affirm annually and to stop advising any company on opioid-based Schedule II and III narcotics.
In Colorado, which will also receive $10 million, Attorney General Phil Weiser approved of McKinsey’s decision to enter into the agreement.
“I applaud McKinsey’s decision to step forward, accept responsibility, and work with us to address the opioid crisis. They are the first company to work with the states to fix the problem rather than deny their conduct and engage in protracted litigation or delay. Their approach provides a model for other companies to follow to focus our energy on fixing the problem rather than making excuses or blaming others,” said Attorney General Weiser. “The partners who tried to cover up their actions placed profit over responsible behavior and acted reprehensibly. To address that conduct, and make sure it does not happen again, McKinsey has committed to an expanded company-wide ethics code and agreed never to work for opioid companies like Purdue Pharma again.”
As part of the agreement, however, McKinsey will not admit to any wrongdoing.
California Attorney General Xavier Becerra said the agreement was about accountability.
“The abuse of opioids, not just by those who consumed these drugs, but by those who produced, marketed, distributed and dispensed them, has left much of America in mourning. We can’t bring back lost lives, but we can hold ringleaders accountable,” Becerra said. “McKinsey & Company was a player in this unfolding opioids tragedy. Today’s settlement holds McKinsey to account.”
Since 2018, states, local governments, tribes and other entities have filed more than 2,200 lawsuits against opioid manufacturers, opioid distributors and pharmacies over the opioid epidemic, which has killed more than 450,000 people in the U.S. since 2000.
In November 2020, then U.S. Attorney General Bill Barr announced that the U.S. Department of Justice had entered into an $8.3 billion agreement with Purdue Pharma and the Sackler family that owns it. In that agreement, Purdue Pharma was to pay $3.54 billion in criminal fines, $2 billion in criminal forfeiture of profits and $2.8 billion in civil penalties. However, because of the numerous lawsuits, prior to the agreement the company filed for bankruptcy, and as such lacks the cash on hand to pay the fines.
As a result, the DOJ said in November, the company will be dissolved and assets from the company will be used to create a new public benefit company controlled by a trust where all profits from future earnings would go towards paying the company’s fines and penalties, which would ultimately go to states to use to combat opioids.
The agreement also does not settle any lawsuits with local governments or other entities, and does not prevent them from filing lawsuits in the future. In fact, on Feb. 1, Mingo County in West Virginia filed suit against McKinsey on similar grounds.
According to the New York Times, McKinsey said in a statement that “its past work was lawful and has denied allegations to the contrary.”
However, the paper also quoted Kevin Sneader, the firm’s global managing partner as saying, “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.”