McKinsey & Co. has agreed to pay more than $550 million to settle claims by U.S. states that the consulting company helped fuel the opioid epidemic by providing marketing advice to drugmakers including Purdue Pharma LP and Johnson & Johnson, people familiar with the accord said.
New York-based McKinsey will pay about 80% of the money immediately to beef up treatment programs and bolster police budgets strained by expanded abuse of the addictive painkillers, according to the people, who asked not to be identified because they weren’t authorized to speak publicly. The rest would be paid over four years. More than 45 states signed off on the settlement, which will be announced Thursday, the people said.
The consulting firm suggested ways to “turbocharge” sales of Purdue’s OxyContin painkiller at a time when the legal market for the opioid-based medicine was shrinking due to a wave of negative publicity, according to the Massachusetts Attorney General. McKinsey won’t acknowledge any wrongdoing as part of the settlement, the people said.
“McKinsey continues to cooperate with government agencies on matters relating to our past work for opioid manufacturers, and we will not be commenting further at this time,” a company spokesman said in an emailed statement on Wednesday. McKinsey is the 35th-largest private company in the U.S. with $10.5 billion in 2019 revenue, Forbes estimates. It has offices in more than 130 cities and 65 countries, according to its web site.
More than 3,000 state and local governments have targeted opioid makers and distributors in hopes of recouping billions in tax dollars spent dealing with the fallout of the U.S. opioid epidemic. More than 400,000 Americans have died over the last two decades from overdoses tied to opioid-based drugs. Many of the municipalities’ suits have been consolidated before a federal judge in Cleveland.
Public Apology
In December, McKinsey officials issued a formal apology for their work with opioid makers and distributors. “We recognize that we did not adequately acknowledge the epidemic unfolding in our communities or the terrible impact of opioid misuse,” McKinsey said on its web site.
McKinsey said in 2019 it would no longer consult with companies that made the opioid-based pain pills. That move came after Massachusetts claimed the firm advised Purdue to push back against government efforts to reduce the number of opioid prescriptions, while pitching a project to “turbocharge” sales.
Colorado Attorney General Phil Weiser and Massachusetts Attorney General Maura Healey were leading the McKinsey negotiations, the people said. A representative for Healey declined comment. Weiser’s spokesman didn’t immediately return a call and email seeking comment.
Hunter Shkolnick, a New York-based lawyer representing cities and counties in suits against opioid makers and distributors, declined to comment on reports about a McKinsey settlement.
Bankruptcy Settlement
Stamford, Connecticut-based Purdue sought bankruptcy protection in 2019 after being engulfed in a wave of opioid suits filed by state and local governments. It agreed to an $8.3 billion settlement with the U.S. Justice Department requiring the drugmaker to plead guilty to three felonies over its OxyContin marketing. It was the second time in 13 years the company pleaded guilty to criminal charges over its opioid sales tactics.
In Purdue’s bankruptcy court records and its DOJ settlement, the government said McKinsey consultants suggested in 2017 that the drugmaker compensate insurers if a covered consumer became addicted or overdosed up to a limit of $14,000 per patient. Purdue never set up such a program.
A McKinsey partner, in an unsealed 2019 email disclosed in court filings, told a colleague they should give the consulting firm’s risk managers a head’s up about their Purdue work. “It probably makes sense to have a quick conversation with the risk committee to see if we should be doing anything other that [sic] eliminating all our documents and emails,” the partner wrote.
In its December apology, McKinsey said it was “undertaking a full review of the work in question, including into the 2018 email exchange which referenced potential deletion of documents.”
— With assistance by Erik Larson, and Jeremy Hill
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