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McKinsey Opioid Deal Raises Bar for Corporate Accountability

Feb. 5, 2021, 10:31 AM

A multimillion-dollar opioid deal with McKinsey & Co. will pump funds into state treatment programs while shedding light on the inner workings of drug companies, pharmacies, and other companies accused of fueling the addiction crisis.

Current and former state attorneys say the global consultancy’s $573 million settlement turns a new page in corporate accountability for the U.S. opioid epidemic. McKinsey is on the hook for submitting a slew of documents on its work with opioids for a public database, a move attorneys say will help tell the story of the company’s role in advising others involved in the crisis.

Making such documents public “has been one of the key terms that states have been insisting on,” James Boffetti, New Hampshire’s associate attorney general, told Bloomberg Law.

Seeing “how a company operates on a sheer profit basis without any regard to the crisis that they were helping to create in communities all over the country, I think that’s really important,” said Boffetti, who leads his state’s opioid litigation.

McKinsey will have to submit communications it had with Purdue Pharma LP, Johnson & Johnson, and other companies, as well as all “documents reflecting or concerning McKinsey’s work related to opioids” for those companies, according to New Hampshire’s settlement terms.

New Hampshire was one of 47 states that settled with the consulting firm as part of the $573 million agreement, taking its own share of $3.3 million over five years.

Boffetti said all will go to the states except for about $15 million, which will go to the National Association of Attorneys General for litigation costs and related expenses. New Hampshire’s share, he added, will go toward a state trust fund for treating substance use disorder, which includes the purchase of naloxone for first responders and educating prescribers on treating pain.

Other states are putting their shares toward treatment and prevention as well.

Massachusetts will get $13 million and put it toward the state’s Opioid Recovery and Remediation Fund for increasing access to treatment, prevention and other options for opioid use disorder prevention.

Oregon will put its share of $7.8 million toward a fund for providing treatment for substance use disorders. New York Attorney General Letitia James said her state will get $32 million, which will be used for things like prevention and education.

“We can’t arrest our way out of this,” James said in a Thursday press conference, referring to the opioid crisis. “What we need to do is make sure there are resources available.

Standard for Accountability

Forbes estimates that McKinsey had $10.5 billion in 2019 revenue. The company paid to settle claims from states that it aided in fueling the opioid epidemic by giving marketing advice to drugmakers. McKinsey isn’t admitting to liability or wrongdoing under the settlement.

McKinsey said it had made a “policy decision in 2019 to stop any and all opioid-related work,” according to a company release. The company “has further committed to refraining from accepting any future client engagements relating to the discovery, development, manufacture, marketing, promotion, advertising, recall, withdrawal, monitoring, sale, prescribing, use or abuse of any opioid product.”

Massachusetts Attorney General Maura Healey said at a press conference that the settlement “sets a high standard for accountability.”

“If as the plan has been approached most of the dollars flow into abatement of the opioid epidemic this litigation will be a big success,” Mike Moore, former attorney general of Mississippi, said. And making the documents public “will serve as a warning to other companies who saddle up with wrongdoing companies just to make a big fee.”

Yet observers note the settlement falls short in addressing damage.

Keli McLoyd, director at Philadelphia Coalition on Children and Opioids, said the settlement amount “is abysmal when compared to the damage that has been done.”

“Attempting to put a dollar amount on intergenerational trauma, the effects of poverty and loss of life due to the opioid overdose epidemic is an exercise in futility, however, I assure you that $573 million is nowhere close to sufficient to rectify collective harm done,” she said.

Charlotte Bismuth, an author and former prosecutor, said financial settlements like McKinsey’s “are a potent message to the markets and corporations that the opioid painkiller market, which has caused nearly 500,000 deaths, is a hot zone where the public interest and public safety must be considered first.”

“Companies aren’t truly accountable until the human beings who run them have to answer for decisions that cause harm to the public,” Bismuth said.

Bismuth stressed the importance of making the work Purdue, McKinsey, and others conducted publicly available.

“Putting this information into the public domain finally has allowed for a proportionate level of outrage from elected officials—and hopefully will translate into meaningful legislative and legal action,” Bismuth said.

To contact the reporter on this story: Ian Lopez in Washington at ilopez@bloomberglaw.com

To contact the editors responsible for this story: Fawn Johnson at fjohnson@bloombergindustry.com; Alexis Kramer at akramer@bloomberglaw.com; Karl Hardy at khardy@bloomberglaw.com

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