Consulting giant McKinsey & Co. reached a $ 573 million deal with states in connection with its work, advising OxyContin manufacturer Purdue Pharma LP and other drug manufacturers to aggressively market opioid painkillers, according to people familiar with the issue.
The agreement, reached with 47 states and the District of Columbia and is expected to be publicly announced on Thursday, will avoid the civil lawsuits that attorneys general could bring against McKinsey, people said. Most of the money will be paid in advance, the rest being distributed in four annual payments starting in 2022.
McKinsey said last week that he is cooperating with government agencies on issues related to his past work with opioid manufacturers, while state and local governments are suing companies up and down the opioid supply chain. At least 400,000 people have died in the United States from legal and illegal opioid overdoses since 1999, according to federal data.
The consulting firm stopped doing opioid-related work in 2019 and said in December that its work for Purdue was intended to support the legal use of opioids and help patients with legitimate medical needs.
While some companies have reached agreements with individual states to avoid lawsuits, the McKinsey agreement marks the first national pact on opioids that came from the flood of litigation that began in 2017. A much larger deal, with 26 billion with three drug dealers and Johnson & Johnson has been in the works for more than a year, but is still being negotiated.
The Wall Street Journal reported last week that McKinsey was close to a deal with states and that a deal could be worth hundreds of millions of dollars. Negotiations have taken place as hundreds of exhibits describing McKinsey’s work to boost OxyContin sales have been made public in recent months during Purdue’s Chapter 11 bankruptcy in White Plains, NY.
Memos McKinsey sent Purdue executives in 2013, which were made public in bankruptcy court files, including recommendations that the company’s sales team target health care providers it knew wrote the largest volumes of OxyContin prescriptions and move away from lower volume prescribers. McKinsey’s work has become a Purdue initiative called “Evolving for Excellence,” which the U.S. Department of Justice described in work last year in connection with a plea deal with Purdue as an aggressive marketing and sales campaign for OxyContin.
According to bankruptcy court files, McKinsey sent recommendations to Purdue in 2013, according to which the consultants said they would increase their annual sales by more than 100 million dollars. McKinsey recommended ways in which Purdue could better target what he described as “higher value” prescribers and take other steps toward “Purdue’s Turbocharge Sales Engine.”
Purdue, based in Stamford, Conn., Pleaded guilty in November to three offenses, including paying illegal rewards and defrauding drug enforcement officials. The drug manufacturer has sought the protection of Chapter 11 in 2019 to address thousands of opioid lawsuits filed against him. Purdue said in a lawsuit last week against his insurers that creditors have claimed hundreds of thousands of bankruptcy lawsuits and are collectively seeking trillions of dollars in damages.
McKinsey also advised other opioid manufacturers on sales initiatives. The company’s work for Johnson & Johnson appeared in a 2019 lawsuit in a lawsuit filed by Oklahoma against the drug company for contributing to the state’s opioid crisis by aggressively marketing prescription painkillers. The lawsuit ended with a $ 572 million verdict against Johnson & Johnson, which was later reduced to $ 465 million and is still on appeal.
The vast majority of the money McKinsey will pay under the agreement will be shared between the participating states, with $ 15 million to be reimbursed by the National Association of Attorneys General to reimburse the costs of the investigation, said one of the family members. the agreement. .
The agreement also includes some non-monetary provisions, such as requiring McKinsey to create a repository of documents related to his work for opioid manufacturers, the person said.
Among the states in power is Nevada, which said Wednesday night that its investigation into the giant consultant continues “and we are discussing our concerns with McKinsey.”
Purdue has been negotiating with creditors, which include states, since filing for bankruptcy, but the completion of an agreement was slowed by requests from some states that the company’s owners, members of the Sackler family, contribute more than $ 3 billion they agreed to.
States have strongly focused on ensuring that any settlement of money from opioid disputes is aimed at contributing to mitigating the impact of the crisis, including by strengthening treatment programs and supporting exaggerated law enforcement. States are seeking to avoid the outcome of 1990 tobacco litigation, when $ 206 billion was often spent to fill state budget gaps. McKinsey’s settlement documents say the money is for the reduction, said the person familiar with the agreement, although state laws differ widely on how settlement funds can be allocated.
Write to Sara Randazzo at [email protected] and Jonathan Randles at [email protected]
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