McKinsey settles opioid issue with states; N.J. to get $16M of $573M settlement

Company, under ethical fire for alleged interactions with Purdue Pharma, does not have to admit guilt

McKinsey & Co., the consultant to top corporations around the state and around the world — and a firm widely used by Gov. Phil Murphy and the state of New Jersey — has agreed to pay $573 million to settle investigations into its role in helping boost opioid sales.

New Jersey will receive approximately $16 million, Attorney General Gurbir Grewal said.

The firm said it has reached an agreement with attorneys general in 49 states, the District of Columbia and five territories.

It’s unclear how much money the company earned from its work with opioid manufacturers.

Grewal, in a release, said this is the first multistate opioid settlement to result in substantial payment to the states and jurisdictions to address the epidemic. He announced two weeks ago that New Jersey had settled its case against John Kapoor, the founder of Insys Therapeutics Inc., over his orchestration of a kickback scheme to boost sales of the company’s Subsys product.

In addition to providing funds to address the epidemic, Grewal said the agreement calls for McKinsey to prepare tens of thousands of its internal documents detailing its work for Purdue Pharma and other opioid companies for public disclosure online.

In addition, McKinsey agreed to adopt a strict document retention plan, continue its investigation into allegations that two of its partners tried to destroy documents in response to investigations of Purdue Pharma, implement a strict ethics code that all partners must agree to each year, and stop advising companies on potentially dangerous Schedule II and III narcotics.

“We are continuing to deliver on our promise to hold accountable the corporations and executives whose bad acts contributed to the opioid epidemic that has brought so much despair to our communities,” Grewal said. “With today’s settlement, McKinsey is paying much more than the money it made advising opioid manufacturers like Purdue Pharma on how to sell more of their addictive drugs.

“We look forward to making Purdue and other opioid manufacturers also pay to help New Jersey overcome and heal from the epidemic they unleashed.”

McKinsey did not admit guilt, but it suffered a public relations nightmare — and ethical comeuppance — when a number of documents showing how the company worked with now-disgraced Purdue Pharma’s OxyContin painkiller to drive sales of a drug that is estimated to have led the deaths of nearly half a million people while destroying the lives of millions of others.

Murphy had harsh words for the firm Nov. 30 over a particular damming piece of information — one that suggested the company pay a rebate to pharmacies for customers who overdosed on OxyContin.

“I’ve got no insight into the facts, but I read the same story you did,” Murphy said then. “It’s appalling if it’s true.

“The notion of putting a price on somebody’s life is so offensive, it’s beyond the pale.”

McKinsey, in an email release it put out, said it has reaffirmed the commitment it made two years ago not to advise clients on any opioid-related business anywhere in the world.

As part of the agreement, McKinsey said the attorneys general recognized McKinsey’s “good faith and responsible corporate citizenship in reaching this resolution.”

McKinsey also said it believes its past work was lawful and has denied allegations to the contrary. The settlement agreements themselves contain no admission of wrongdoing or liability.

Kevin Sneader, global managing partner of McKinsey, said: “We 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 U.S.”

McKinsey is perhaps the best-known global consulting firm — one that has done a lot of business with the state.

Last November, Murphy was asked, but did not directly answer, whether the state should continue doing business with the firm.

He did say the state has had a good relationship with McKinsey — and other consulting firms — during the pandemic.

“We have been advised by a number of firms over these past nine months by professionals in their lane, medical and, in many cases, long-term care,” he said. “And they have done a really good job, I have to say, and that includes McKinsey.”