McKinsey Settlement Opens Eyes to their Role in the Opioid Epidemic

Opioids have been associated with the deaths of over 450,000 people in the U.S. since 1999. For its role in helping its clients (opioid manufacturers) aggressively market opioids to physicians, consulting firm McKinsey & Company has agreed to pay $573 million to settle with the vast majority of U.S. states. This represents a rare case when work for clients, in this instance Purdue Pharma, Johnson & Johnson, as well as others, has resulted in a liability for the significant impact a marketing strategy had on physicians’ prescribing of opioids for pain management, when they were designed for certain types of late stage terminal cancers. McKinsey said that their work was to support the legal use of opioids such as OxyContin, and they stopped opioid-related work in 2019.

Some of McKinsey's communications became public when Purdue Pharma filed for Chapter 11 bankruptcy. As early as 2013, McKinsey was recommending that Purdue focus on health care providers that wrote the most OxyContin prescriptions. The Purdue marketing initiative for OxyContin was called "Evolve to Excellence" and focused on a very aggressive plan for marketing support to grow sales. McKinsey projected that this plan would grow sales by hundreds of millions of dollars annually. The goal of the marketing and sales plan was to "turbocharge Purdue's sales engine." Maura Healey, Massachusetts attorney general stated, "It's always about holding accountable those who created and profited off the opioid epidemic."

McKinsey, as part of the settlement, will retain its emails for 5 years and is required to disclose any potential conflicts of interest in bidding for state contracts. McKinsey will also create a publicly available database with documents related to its opioid work for pharmaceutical companies. The largest part of the state settlement, $478 million, will be used for opioid treatment, prevention, and recovery programs. Purdue settled for $8.3 billion in October of last year over criminal charges of its marketing of OxyContin, later declaring bankruptcy. In addition to these settlements, the Sackler family who owned Purdue, agreed to pay the federal government civil penalties of $225 million and are in negotiations with other litigants for an amount around $3 billion.

Although McKinsey denies any wrongdoing as part of the settlement, Kevin Sneader, the firm's global managing partner stated, "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."

What has changed forever? The relationships between McKinsey and their clients. McKinsey has always maintained that they provide advice and recommendations, not actual actions. McKinsey has been able to avoid legal and reputational liability for its recommendations related to notable client failures including Enron. Also contributing to this was McKinsey’s business model expansion to include not only advice, but implementation guidelines as well.