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McKinsey’s ‘Ghoulish’ Opioid Sales Advice Holds Legal Ground

May 5, 2022, 9:25 AM

Documents showing McKinsey & Company encouraged Purdue Pharma to pay out thousands in rebates per opioid overdose raise ethical red flags for the global consulting firm, but advice without implementation falls short of breaking the law, attorneys say.

Cash prizes and “unrivaled recognition” were among the perks McKinsey suggested to Purdue salespeople as part of a strategy to ramp up prescriptions for the highly addictive pain medication OxyContin, according to internal documents highlighted as part a congressional investigation. Attorneys say such actions may simply amount to callous advice without proof of a conspiracy or that they directly contributed to opioid deaths.

“While McKinsey’s advice was unquestionably ghoulish and unethical in its content, it is a close call as to whether it violated federal law,” said Harry Nelson, founding partner of life sciences firm Nelson Hardiman LLP.

Lawyers, lawmakers, and others targeting major drugmakers for fueling America’s opioid crisis have set their sights on McKinsey for helping the industry market some of its most addictive products. Members of the House Oversight Committee are among those trying to hold the consultancy accountable, lambasting company leadership in an April hearing over its work with drugmakers and alleged conflicts of interest.

Attorneys say the internal documents could be tied to claims of conspiracy or negligence, but that holding McKinsey liable may prove tough without evidence that it went beyond its advisory role.

“All of the internal analyzing in the world is preliminary to the actual recommendation and implementation and carrying out of a plan—where the liability for the terrible ideas begins,” Nelson said.

A McKinsey spokesperson the company would defend itself against potential cases involving its past work as “that work was lawful and we deny any allegations to the contrary.”

The company’s settlements in 2021 with states, totaling $641 million, “provided us an opportunity to be part of the solution to the opioid epidemic and contained no admission of wrongdoing or liability,” they added.

Advisory Capacity

Backlash over McKinsey’s work with drugmakers has heightened in recent weeks. A House lawmaker investigation “uncovered significant, years-long conflicts of interest” from McKinsey’s advising opioid manufacturers while simultaneously working with the Food and Drug Administration, according to an April report. Sen. Maggie Hassan (D-N.H.) and others have also called on the Health and Human Services Department to investigate the FDA’s work with McKinsey.

“It’s a thoroughly legitimate issue to investigate,” Sen. Bill Cassidy (R-La.) told Bloomberg Law May 3.

McKinsey was “touting the fact that there’s inside information when there’s supposedly a firewall?” he said. The FDA and McKinsey have both said the consultancy’s work with Purdue didn’t overlap with that of the agency.

“You always want to hear the other side of the story, I get that. But as presented by Maggie, it was damning,” he added.

In 2017, over 71,000 people were predicted to have died from an overdose in the U.S., according to the Centers for Disease Control and Prevention.

In documents dated December same year, McKinsey laid out the “stronger than ever” headwinds swirling around Purdue. It detailed a plan for providing rebates to pharmacy benefit managers—liaisons between drug companies and health insurers that run patients’ prescription benefits—"based on actual incidence” of overdoses or opioid use disorder related to OxyContin.

But “even though the recommendation looks fairly gross on its face,” McKinsey was “tasked with fleshing out what could be, they are not enacting anything, they are in an advisory capacity,” said Rachel Fiset, a health-care lawyer at Zweiback, Fiset & Coleman LLP.

“It feels incredibly unethical,” Fiset said. But “it’s not illegal. It is an analysis of how [Purdue] could get their drugs sold.”

‘Conspiracy Type’ Actions

McKinsey is no stranger to allegations that it played a hand in the opioid crisis.

McKinsey has agreed to pay $641 million to settle claims from U.S. states that the company exacerbated America’s struggle with addiction via marketing advice and sales analysis for drugmakers like Purdue. The multimillion deal, attorneys say, marked an important step in corporate accountability.

Plaintiffs’ attorneys representing individuals rattled by the opioid crisis might still consider bringing conspiracy charges, specifically under the Racketeer Influenced and Corrupt Organizations Act, said David Noll, a Rutgers law professor focusing on complex litigation. RICO provides a private right of action for someone injured by a pattern of racketeering activity, such as fraud.

Consultancies like McKinsey are hired for “difficult circumstances,” Nelson said, and they need to weigh recommendations with “the freedom to do so in internal discussions and documents without being afraid to look at all options.”

Yet, he said “the right to consider the options does not protect against liability for conspiracy if the consultant goes beyond weighing possibilities.”

“We need to know more about what McKinsey actually shared with Purdue to determine if their conduct qualified as aiding and abetting and being part of a conspiracy,” such as “what deliverables” and “who said what to whom,” Nelson said.

“With evidence of more participation beyond the internal memo, it is possible to envision McKinsey having liability for aiding and abetting or as a co-conspirator,” he added. But as is, “this is still short of actively aiding and abetting Purdue’s crimes or violating federal law.”

‘Pattern of Fraud’

When it comes to litigation, attorneys have cast their net far and wide in trying to hold actors accountable for America’s opioid crisis.

In addition to drugmakers themselves, pharmacies like Walmart Inc. and CVS Health Corp. have found themselves in the crosshairs of legal actions. Doctors have also been on the hook, with the Supreme Court currently deliberating the fate of two doctors accused of prescribing opioids as if they were drug dealers.

In the McKinsey documents, “there’s clearly a pattern of fraud, along with “a pretty clear strategy of incentivizing inappropriate prescriptions,” Noll said. “Old-school negligence claims” could also be on the table against McKinsey, as the documents seem “to evince a callous disregard for the communities being flooded with pills,” he said.

Proving causation “would be a tricky issue,” Noll added, though “there’s also pretty compelling economic evidence that ties Purdue’s marketing practices to these deaths.”

But while McKinsey’s conduct has caused alarm, it’s ultimately the pharmaceutical companies doling out the opioids, attorneys say.

“Someone may try to loop them into a civil suit, but ultimately it is not McKinsey that is disseminating the drugs,” Fiset said.

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

To contact the editor responsible for this story: Alexis Kramer at akramer@bloomberglaw.com