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Consulting Giant McKinsey To Settle States' Opioid Claims For $573 Million

Feb 4, 2021
Originally published on February 4, 2021 12:01 pm

McKinsey & Company has reached a $573 million settlement with nearly 50 state governments as well as the District of Columbia and territories, over its role helping to market and boost sales of high-risk opioids including OxyContin.

Most of the funds will be devoted to paying for treatment and rehabilitation programs in communities devastated by the addiction crisis. As part of the settlement, McKinsey admits to no wrongdoing.

This deal heads off civil lawsuits threatened by state attorneys general.

"Today's agreement sets a new standard for accountability in one of the most devastating crises of our time," said Massachusetts attorney general Maura Healey, in a statement emailed to NPR. "As a result, our communities will receive substantial resources for treatment, prevention, and recovery services."

The settlement follows a rare apology issued by the consulting powerhouse in December, when McKinsey acknowledged its behind-the-scenes work for the opioid industry.

Documents detailing the deal are expected to be filed in state courts on Thursday. The settlement will require court approval.

According to Healey, the company will also be required to make public tens of thousands of internal documents detailing its work for Purdue Pharma and other opioid companies.

In a statement McKinsey said it has reaffirmed its commitment not to advise clients on "any opioid-related business anywhere in the world."

"We chose to resolve this matter in order to provide fast, meaningful support to communities across the United States," Kevin Sneader, global managing partner of McKinsey, said in the statement. "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."

According to documents made public as part of bankruptcy proceedings against Purdue Pharma, the maker of OxyContin, McKinsey's helped Purdue "turbocharge" opioid sales at a time when the risks of addiction had been well-documented.

In one internal email sent in July 2018, a McKinsey executive appeared to acknowledge the growing legal risk faced by Purdue Pharma over its opioid business.

"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," McKinsey senior partner Martin Elling wrote to another executive at the company.

"As things get tougher here, someone might turn to us," he added.

McKinsey is one of a dozen blue-chip American companies embroiled in the legal, financial and public relations debacle linked to the opioid industry.

While major civil lawsuits against companies such as Johnson & Johnson, McKesson and Walmart have largely stalled because of the pandemic, behind-the-scenes settlement talks have continued.

In October 2020, Purdue Pharma reached a deal with the Justice Department valued by the government at $8.3 billion.

Once seen as a major source of profits for pharmaceutical companies, distributors and retailers, prescription opioid medications contributed to a tsunami of addiction that has left more than 400,000 Americans dead, according to the Centers for Disease Control and Prevention.

The addiction crisis escalated again during the pandemic, linked increasingly to the synthetic opioid fentanyl, with more than 81,000 overdose fatalities last year, according to the CDC.

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NOEL KING, HOST:

The consulting company McKinsey has reached a $573 million deal with several states over work it did advising opioid-makers on how to market their products. The states allege that McKinsey's work increased sales of highly addictive medications.

News of the deal was just made public this morning, and NPR's addiction correspondent Brian Mann is following it. Good morning, Brian.

BRIAN MANN, BYLINE: Good morning.

KING: What did McKinsey do for the opioid companies?

MANN: Yeah. So McKinsey is this corporation that provides consulting services to just about everybody - governments, corporations - hugely influential firm. And last year, Noel, documents were disclosed in court showing that their team worked behind the scenes to help companies like Purdue Pharma turbocharge - and that was their word - turbocharge the sale of these highly addictive opioid drugs like OxyContin. Here's North Carolina Attorney General Josh Stein talking about the work they did just a few minutes ago.

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JOSH STEIN: McKinsey's efforts worked. The number of pills prescribed, Purdue's profits and McKinsey's fees skyrocketed - but so did the number of people addicted, the number of people overdosed, the number of lives lost.

MANN: And I should say, this work continued as late as 2018, long after the dangers of these medications were widely known. Hundreds of thousands of Americans have died from overdoses, according to the Centers for Disease Control and Prevention.

KING: Attorney General Josh Stein, who we just heard there, was one of several state attorneys general who worked on this deal. What are they saying about the settlement this morning?

MANN: Yeah. In all, 47 states have signed on to this deal. And these attorneys general are describing this as a landmark in the ongoing national effort to hold companies accountable for their role in selling and marketing these addictive drugs. And I should add that despite this deal and the settlement, a lot of these AGs are still harshly critical of McKinsey. New York Attorney General Letitia James, just a few minutes ago, issued a statement to NPR. She called the company's behavior cynical and calculated.

KING: What does McKinsey say?

MANN: Yeah. Well, first, it's important that in this settlement, the company admits no wrongdoing, and that's a pattern for a lot of these corporate settlements that we've seen. In a statement sent to NPR this morning, the company said, we deeply regret that we did not adequately acknowledge tragic consequences of the opioid epidemic unfolding in our communities. McKinsey has also committed to not take on consulting work in the future linked to opioid products.

KING: At the end of the day, they're going to pay - the company is going to pay $573 million. And what will that money do?

MANN: Yeah. Most of this money will go to pay for drug rehab and treatment programs around the country, helping communities and families who are caught up in this addiction crisis. You know, this has been going on for years and years, but the opioid problem has actually gotten a lot worse during the pandemic, with a record number of overdose deaths. Last year, more than 81,000 people lost their lives. So the communities that we've been talking to, they say this money is just desperately needed right now.

One other interesting thing here is that officials say some of this cash will go to pay for a public document repository where people will be able to see internal documents showing the role McKinsey and other companies played.

KING: Oh, that should be interesting.

Brian Mann covers opioids and addiction for NPR. Brian, thanks so much for your time. We appreciate it.

MANN: Thank you. Transcript provided by NPR, Copyright NPR.