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McKinsey agrees to pay nearly $600M over opioid crisis

ap photo This 2013 file photo shows OxyContin pills arranged for a photo at a pharmacy in Montpelier, Vt. The global business consulting firm McKinsey & Company has agreed to a $573 million settlement over its role in the opioid crisis, according to a person with knowledge of the deal.

The global consulting firm McKinsey & Company agreed to pay nearly $600 million for its role in advising businesses on how to sell more prescription opioid painkillers amid a nationwide overdose crisis.

“We deeply regret that we did not adequately acknowledge the tragic consequences of the epidemic unfolding in our communities,” McKinsey Global Managing Partner Kevin Sneader said in a statement Thursday, noting the company cooperated with investigations. “With this agreement, we hope to be part of the solution to the opioid crisis in the U.S.”

Most of the money is in a $573 million settlement reached with 47 states, the District of Columbia and five U.S. territories, but the company said it had deals with a total of 49 states. Washington’s attorney general announced a separate $13.5 million deal and West Virginia announced a $10 million settlement with the New York-based company.

West Virginia Attorney General Patrick Morrisey said the state went with their own lawsuit to avoid the potential of only receiving a measly settlement tied to the population of the state, one of the hardest hit by overdoses. He said he aimed to work with state lawmakers to direct the money toward addiction recovery.

The only remaining state that has not announced a deal with the company is Nevada, where the attorney general’s office said it is continuing an investigation of McKinsey and speaking with the company about its concerns.

Most of the payments will come within the next two months under the multistate agreement. The payments are earmarked for abating the raging overdose and addiction crisis that has deepened during the coronavirus pandemic. Opioids, which include prescription drugs and illegal substances such as heroin and illicit fentanyl, have been linked to more than 470,000 deaths in the U.S. since 2000.

“Even though no amount of money can bring back the lives lost, I hope our settlement provides funding for programs to help those battling opioid addiction,” Arizona Attorney General Mark Brnovich said in a statement Thursday.

McKinsey’s role in the opioid crisis came into focus in recent months in legal documents that were made public as part of OxyContin maker Purdue Pharma’s efforts to settle claims against it through bankruptcy court. They showed the company long worked with Purdue to boost sales even as the extent of the opioid epidemic became clear.

Some documents showed it was trying to “supercharge” flagging OxyContin sales in 2013. Its efforts over the years included encouraging Purdue sales representatives to focus on doctors who already prescribed high volumes of OxyContin and to try to move patients to more potent doses of the drug.

On a video call with journalists Thursday, North Carolina Attorney General Josh Stein said that McKinsey worked for Purdue for 15 years.

“McKinsey’s efforts worked. The number of pills prescribed, Purdue’s profits and McKinsey’s fees all skyrocketed,” said Stein, whose state stands to receive nearly $19 million in the settlement. “But so did the number of overdoses.”

Stein said the settlement funds could go toward addiction treatment in health care settings, as well as in jails, plus programs like needle exchanges aimed at reducing the harm of drug use.

In a statement, New Jersey Attorney General Gurbir Grewal said that McKinsey would pay out more than it made advising companies on opioid sales.

“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,” he said.

Under the multistate deal, McKinsey agreed to make public all its communications with Purdue plus those dealing with the opioid businesses of the pharmaceutical companies Endo, Johnson & Johnson and Mallinckrodt.

The company, which announced two years ago that it would not advise clients on opioid-related businesses, said it has terminated two of its partners for communicating about deleting documents. It also said it has hired a new general counsel with a deep background in ethics and boost professional standards training for its employees.

Sneader, the McKinsey managing partner, said in a letter Thursday to the company’s employees that the company should use this settlement to address its practices in other areas, too.

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