McKinsey agrees to $550 million opioid-claim settlement

McKinsey has agreed to pay $573 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 and Johnson & Johnson.

New York-based McKinsey will also produce tens of thousands of its internal documents detailing its work for Purdue Pharma and other opioid companies for public disclosure online, according to a statement by North Carolina Attorney General Josh Stein, who helped lead negotiations on behalf of dozens of U.S. states.

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“We allege that McKinsey helped to develop and promote schemes that led to widespread overprescription of Purdue Pharma’s OxyContin,” Stein said on Thursday.

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 people briefed on the settlement, who asked not to be identified because they weren’t authorized to speak publicly on Wednesday. The rest would be paid over four years.

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, the Massachusetts Attorney General has previously said. 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 Wednesday in an emailed statement. 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 website.

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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.

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 website.

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.

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 Justice Department 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.”