Global consulting firm McKinsey & Co. will pay $573 million to settle claims that the aggressive marketing campaign it designed for pharmaceutical drugs intensified the national opioid crisis.
BOSTON (CN) — A coalition of 53 state attorneys general are set to collect $573 million under a Thursday settlement with McKinsey & Co., which designed marketing schemes for Purdue Pharma that included a plan to “turbocharge” sales of the addictive pain pill OxyContin at the height of the opioid epidemic from 2004 through 2019.
“Today’s agreement sets a new standard for accountability in one of the most devastating crises of our time,” Massachusetts Attorney General Maura Healey said Thursday. “As a result, our communities will receive substantial resources for treatment, prevention, and recovery services, and families who have seen their loved ones hurt and killed by the opioid epidemic will have the truth exposed about McKinsey’s illegal and dangerous partnership with Purdue Pharma.”
Massachusetts, which will receive $13 million from the settlement fund, was the first state to launch an investigation into McKinsey’s misconduct.
Healey said Thursday’s agreement with McKinsey is the first multistate opioid settlement to result in substantial payment to the states to address the epidemic.
The largest slice of the pie meanwhile is going to California, which reported 3,244 deaths related to opioid overdoses in 2019. Attorney General Xavier Becerra announced Thursday that the Golden State would be receiving $59.6 million from McKinsey.
McKinsey has agreed as part of the settlement to turn over and make public tens of thousands of thousands of documents, including its internal communications with Purdue, plus those dealing with the opioid businesses of the pharmaceutical companies Endo, Johnson & Johnson, and Mallinckrodt.
The National Association of Attorneys General will collect $15 million from the settlement to cover the costs and expenses of the states’ opioid investigations and to reimburse participating states for costs and expenses associated with the investigation of McKinsey.
The remaining balance of the NAAG Fund will be used to fund the establishment of the online public repository of opioid industry documents.
“We deeply regret that we did not adequately acknowledge the tragic consequences of the epidemic unfolding in our communities,” Kevin Sneader, the global managing partner for McKinsey, 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.”
McKinsey is of the big-three major strategic consulting firms alongside Boston Consulting Group and Bain & Company. According to Forbes, the company’s revenue in 2019 topped $10 billion.
“They knew where the money was coming from and zeroed in on it,” New York Attorney General Letitia James said of McKinsey’s role in the opioid crisis during virtual press conference Thursday.
According to consent judgment entered in Central Islip, New York, the state will receive $32 million from the settlement fund. James said the money will go to fund prevention, education and treatment programs.
During an hourlong virtual press conference conduct on Zoom, Healey and James were joined by attorneys general Phil Weiser from Colorado and Ellen Rosenblum of Oregon.
“For years McKinsey gave fuel to opioid crisis by teaching the drug manufacturers who made these addictive pills how to sell more pills at higher dosages and how to get doctors to write more prescriptions,” Rosenblum said. “And when we think of who is to blame for the national crisis of prescription pain pills, we think of many of the same actors, we think of Big Pharma, manufacturers, distributors, doctors who were incentivized to write prescriptions, but we don’t typically think of large consulting companies doing work for their clients. But the reason we’re here today is because we are now adding a consulting company the list of bad actors that helped lay the groundwork, with their clients, for America’s addiction to pain pills.”
Weiser called the settlement “precedent-setting” and called on other opioid manufacturers and distributors to follow McKinsey’s example of transparency and accountability for their roles in the national opioid crisis.
“We are seeking accountability and we are seeking a reckoning, a reckoning with this crisis that has devastated so many lives, families, and communities,” he said. “Like state AGs did in tobacco, we’re committed to telling the story, to sunlight as the best of disinfectants, so that we can look back and ask why? How did we allow this to happen here in the United States of America and it didn’t happen elsewhere?
“It’s because people, like these McKinsey partners were willfully blind to the consequences of their actions.”
Attorneys general for the District of Columbia and five U.S. territories are all signatories to Thursday’s deal with McKinsey. Washington state’s attorney general announced a separate $13.5 million deal, and West Virginia has an opioid-related announcement scheduled for Thursday. The only state that has not announced a deal with the company is Nevada.
In October 2020, Purdue Pharma, the maker of OxyContin, pleaded guilty to three charges of fraud and conspiracy and agreed to pay more than $8 billion in fines. Purdue Pharma admitted that, from 2007 through early 2017, it conspired to defraud the United States by continuing to market OxyContin to dodgy doctors while falsely claiming it had an effective anti-diversion program, all to boost the company’s bottom line.
While the $8.34 billion price tag is considered the largest penalty against a pharmaceutical manufacturer, the true number is slightly less. The Stamford, Connecticut-based company is bankrupt, facing $2 billion criminal forfeiture and $3.5 billion in criminal fines.
Five members of the Sacklers — the wealthy family that controls the company — face $225 million in fines. No members of the family face criminal charges.
Nearly half a million Americans have died from an opioid overdose in the last twenty years.