McKinsey’s $78 million opioid settlement to reimburse insurers gets final approval

SAN FRANCISCO (CN) — Global consulting firm McKinsey, accused fueling the opioid crisis through its work with drug companies, will pay $78 million to settle insurers' claims after a federal judge gave final approval to the deal on Friday.

U.S. Senior District Judge Charles Breyer said the settlement was fair and reasonable and that he would have court documents out on Monday formally finalizing the agreement, which was first revealed in December. 

Under the agreement, McKinsey will establish a fund to reimburse insurers, private benefit plans and others for some or all of their prescription opioid costs, plus pay a 20% attorneys fee and pay $10,000 to each of five representative class members.

During a hearing Friday morning, an attorney for the plaintiffs said 42,000 third-party payers in the class received notice of the settlement and only seven opted out.

“We all know of the immeasurable human impact that the epidemic had on communities and families," said plaintiff attorney Paul Geller of the firm Robbins Geller Rudman & Dowd LLP.

"What we’re here for today is because somebody paid for those overprescribed pills and treatment relating to opioid use disorder, or addiction, and that was these health benefit payers, these third-party payers. So we're very proud to have reached this agreement with McKinsey,” he said.

Judge Breyer, a Clinton appointee, had just one question for Geller; he wanted to know how the settlement would be affected by the Supreme Court’s decision in a similar case in June, when it ruled 5-4 to block Purdue Pharma's bankruptcy plan and settlement agreement, which would have shielded members of the Sackler family from opioid-related lawsuits. 

That plan was not authorized under the bankruptcy code, the high court said, because it would release the Sacklers from claims without the consent of other bankruptcy claimants. The settlement would have also provided billions of dollars to fight the opioid epidemic. 

Elizabeth Cabraser, lead attorney for the plaintiffs, said the Supreme Court’s decision in the Purdue Pharma case doesn't affect the settlement with McKinsey at all.

“Because neither itself nor any members of the Sackler family were named defendants for purposes of this particular [multi district litigation, the Supreme Court decision and whatever its aftermath is does not affect any of the previously approved settlements,” said Cabraser, of the law firm Lieff Cabraser Heimann & Bernstein LLP.

Attorneys James Bernard of the New York City law firm Hogan Lovells US LLP and Mark McPherson of Goodwin Procter LLP in New York City represented McKinsey during Friday's hearing.

In their lawsuit, the plaintiffs accuse McKinsey of contributing to the deadly drug crisis by helping drug manufacturers including Purdue Pharma design deceptive marketing schemes to boost the sales of painkillers like OxyContin.

McKinsey continued to consult Purdue Pharma even after the scale of the opioid epidemic became apparent, the plaintiffs say.

The plaintiffs claim these aggressive marketing and sales tactics were used to overcome doctors’ reservations about prescribing highly addictive opioids, and that McKinsey’s conduct forced them to pay for prescription opioids rather than safer, lower cost non-addictive options. The plaintiffs also claim they had to pay for the opioid addiction treatment that inevitably followed. 

The settlement is the latest in a years-long effort to hold McKinsey accountable for its part in the opioid epidemic. McKinsey previously paid $641.5 million in 2021 to resolve claims brought by state attorneys general and another $230 million in September 2023 to resolve claims by local governments. In January, McKinsey also agreed to pay $32 million to Native American tribes.

The consulting firm said it stopped advising clients on any business related to opioids in 2019.

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