Consulting firm McKinsey settles US opioid case for $573 million

Consulting firm McKinsey settles US opioid case for $573 million
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Consulting firm McKinsey has agreed to pay $573 million to settle a case regarding its role in the US opioid crisis.

McKinsey was under investigation for its work with Purdue Pharma, which was geared towards boosting the sales of the pharma firm’s Oxycontin painkiller, which fueled the US opioid crisis.

McKinsey’s role in the crisis

While McKinsey argued that its previous work with Purdue was “lawful” and denied wrongdoing, California Attorney General Xavier Becerra said the firm had been “part of a machine that… destroyed lives”.

According to prosecutors, McKinsey came up with strategies to “turbocharge” Oxycontin sales. These include advising Purdue to increase sales calls to doctors who are known to be high prescribers and to “subvert” restrictions on higher dosages that authorities wanted to impose.

The prosecutors claimed that McKinsey partners discussed deleting documents related to their work with Purdue between 2004 and 2019, once legal action was initiated against the pharma company.

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New York Attorney General Letitia James said: “McKinsey’s cynical and calculated marketing tactics helped fuel the opioid crisis by helping Purdue Pharma target those doctors they knew would overprescribe opioids.”

“They knew where the money was coming from and zeroed in on it,” she added.

The prosecutors also mentioned that similar marketing and sales plans were given by the consulting firm to other firms in the industry, making millions of dollars along the way.

As part of the deal, McKinsey “reaffirmed” a 2019 pledge to not accept any advisory work related to opioids. McKinsey’s global managing partner Kevin Sneader said the firm “chose to resolve this matter in order to provide fast, meaningful support to communities across the United States”.

“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 US,” Sneader said.

Sneader sent out an email to McKinsey employees emphasizing the need to set a “higher standard of behavior” for the consulting industry.

Purdue’s guilty plea and settlement

Last year, Purdue Pharma agreed to plead guilty and settle criminal charges regarding its role in the US opioid crisis.

With the $8.3 billion settlement agreement, Purdue Pharma will plead guilty to enabling the supply of drugs “without legitimate medical purpose”, which was instrumental to fueling the opioid crisis in the US.

Under the deal, Purdue will pay $225 million to the Justice Department and an additional $1.7 billion towards addressing claims made in other lawsuits.

It also involves a criminal fine of $3.54 billion and and $2.8 billion civil penalty, which will compete with other claims in bankruptcy court. The company’s owners, the Sackler family, has also agreed to pay $225 million and give up ownership of the firm.

While the agreement addressed some of most serious charges against the drug maker, Purdue Pharma still faces thousands of cases filed by states and families.

However, the pharmaceutical firm called the settlement an “essential” step to wider resolution of the matter.

Purdue Pharma Chairman of the Board Steve Miller said: “Purdue deeply regrets and accepts responsibility for the misconduct detailed by the Department of Justice.”

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