Consulting giant McKinsey & Co. has reached a $ 573 million deal with states to advise OxyContin maker Purdue Pharma LP and other drug makers to aggressively market opioid painkillers, according to people familiar with the matter.
The deal, reached with 47 states and the District of Columbia and expected to be publicly announced Thursday, would avoid civil lawsuits that attorneys general could file against McKinsey, people said. Most of the money will be paid in advance, and the rest will be distributed in annual payments from 2022.
McKinsey said last week that he is collaborating with government agencies on issues related to his past work with opioid manufacturers as state and local governments sue companies up and down the opioid supply chain. According to federal data, at least 400,000 people have died in the United States from legal and illegal opioid overdoses since 1999.
The consultancy 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 deal marks the first opioid pact nationwide since the avalanche of litigation that began in 2017. A much larger deal, of $ 26 billion, with three drug dealers and Johnson & Johnson having been in the works for more than a year, but is still negotiating.
The Wall Street Journal reported last week that McKinsey was close to a deal with the states and that a deal could be worth hundreds of millions of dollars. Negotiations occurred when hundreds of exhibits describing McKinsey’s work to increase OxyContin’s sales were made public in recent months during the Purdue Chapter 11 bankruptcy case in White Plains, New York.
Memos McKinsey sent Purdue executives in 2013 that were made public in bankruptcy court statements and included recommendations for the company’s sales team to target health care providers who knew they were writing the highest volumes of bankruptcy. OxyContin prescriptions and away from low-volume prescribers. McKinsey’s work became a Purdue initiative called “Evolving to Excellence,” which the U.S. Department of Justice described in papers published last year in connection with a claims agreement with Purdue. as an aggressive OxyContin marketing and sales campaign.
According to bankruptcy court records, McKinsey sent recommendations to Purdue in 2013 that consultants said they would increase their annual sales by more than $ 100 million. McKinsey recommended ways in which Purdue could better target what he described as “higher value” prescribers and take other steps for “Turbocharge’s Sales Engine”.
Purdue, based in Stamford, Connecticut, pleaded guilty in November to three offenses, including paying illegal setbacks and defrauding drug control officers. The drug maker sought protection from Chapter 11 in 2019 to address thousands of opioid-related lawsuits. Purdue said in a lawsuit filed last week against its insurers that creditors have filed hundreds of thousands of claims in the bankruptcy case and are collectively seeking trillions of dollars in damages.
McKinsey also advised other opioid manufacturers on sales initiatives. The firm’s work for Johnson & Johnson emerged in a 2019 lawsuit in a lawsuit filed by Oklahoma against the pharmaceutical company for contributing to the opioid crisis in the state through the aggressive marketing of prescription painkillers. The trial 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 for the deal will be distributed among participating states, with $ 15 million earmarked for the National Association of Attorneys General to reimburse them for the costs incurred in the investigation, one person said. familiar with the agreement. .
The settlement also includes some non-monetary provisions, such as requiring McKinsey to set up a repository of documents related to his work for opioid manufacturers, the person said.
Among the most resilient states is Nevada, which said Wednesday night that its investigation into the consulting giant continues “and we’re talking to McKinsey about our concerns.”
Purdue has been negotiating with creditors, including states, since filing for bankruptcy, but the completion of a deal has been slowed by demand from some states that the company’s owners, members of the Sackler family, contribute more than the $ 3 billion they have agreed.
States have focused intensely on ensuring that money from opioid litigation goes to help alleviate the impact of the crisis, even through strengthening treatment programs and helping enforce laws. States seek to avoid the outcome of the tobacco litigation of the 1990s, when a $ 206 billion deal was often spent to fill holes in the state budget. McKinsey’s settlement documents say the money is earmarked for the reduction, according to the person familiar with the deal, although state laws differ widely on how liquidation funds can be allocated.
Write to Sara Randazzo at [email protected] and Jonathan Randles at [email protected]
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