McKinsey agrees to pay nearly $600M over opioid crisis

The business consultant McKinsey & Company agreed to pay nearly $600 million for its role in consulting businesses on how to sell more prescription opioid painkillers amid a nationwide overdose crisis.

“We deeply regret that we did not adequately acknowledge the tragic consequences of the epidemic unfolding in our communities,” McKinsey Global Managing Partner Kevin Sneader said in a statement Thursday, noting the company cooperated with investigations. ”With this agreement, we hope to be part of the solution to the opioid crisis in the U.S.”

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 has an opioid-related announcement scheduled for Thursday.

The only remaining state that has not announced a deal with the company is Nevada.

Most of the payments will come within the next two months under the multistate agreement. The payments are earmarked for abating the raging overdose and addiction crisis that has deepened during the coronavirus pandemic. Opioids, which include prescription drugs and illegal substances such as heroin and illicit fentanyl, have been linked to more than 470,000 deaths in the U.S. since 2000.

“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.

Some documents showed it was trying to “supercharge” flagging OxyContin sales in 2013. Its efforts over the years included encouraging Purdue sales representatives to focus on doctors who already prescribed high volumes of OxyContin and to try to move patients to more potent doses of the drug.

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. The number of pills prescribed, Purdue’s profits and McKinsey’s fees all skyrocketed,” said Stein, whose state stands to receive nearly $19 million in the settlement. “But so did the number of overdoses.”

Stein said the settlement funds could go toward addiction treatment in health care settings as well as in jails plus programs like needle exchanges aimed at reducing the harm of drug use.

In a statement, New Jersey Attorney General Gurbir Grewal said that McKinsey would pay out more than it made advising companies on opioid sales.

“We are continuing to deliver on our promise to hold accountable the corporations and executives whose bad acts contributed to the opioid epidemic that has brought so much despair to our communities,” he said.

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.

The company, which announced two years ago that it would not advise clients on opioid-related businesses, said it has terminated two of its partners for communicating about deleting documents. It also said it will hire a new general counsel with a deep background in ethics and boost professional standards training for its employees.

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.

“Today’s focus is on opioids,” he wrote, “but we have also faced other issues that have made clear the importance of improving how we act everywhere that we operate.”

In a statement, Colorado Attorney General Phil Weiser praised McKinsey for settling quickly.

“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,” he said. “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.”

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. Some of those could go to trial this year.

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. Separately, members of the Sackler family, who own the company, agreed to pay $225 million in a civil settlement, but admitted no wrongdoing.

Another settlement has long been in the works involving the largest U.S. drug distribution companies and Johnson & Johnson. On the call Thursday, California Attorney General Xavier Becerra called them collectively “the opioid machine.”

“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.

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