Bottles of prescription painkiller OxyContin, in Provo, Utah, on April 25, 2017.George Frey/Reuters
One of the world’s most influential corporate consulting firms, McKinsey & Company, is in settlement talks with U.S. states over the advice it gave to opioid makers and is prepared to reach a similar arrangement with Canadian provinces, according to a source familiar with the matter.
The settlement talks cover the period when Canada’s ambassador to China, Dominic Barton, was global managing partner of McKinsey & Co. from 2009 to 2018, a period during which the New York-based consulting firm advised Purdue Pharma on ways to bolster sales of its OxyContin painkiller.
The settlement negotiations between McKinsey and U.S. states could be worth hundreds of millions of dollars although it could take weeks or even months to reach an agreement, according to the source, with direct knowledge of the discussions. The Globe is not identifying the source because they were not authorized to publicly discuss the legal talks with McKinsey. The company did not immediately respond to requests for comment.
Provincial governments have also filed opioid-related claims against Purdue and other pharmaceutical companies totalling US$67.4-billion in a U.S. court, in an attempt to recover health care costs associated with fighting an epidemic that has killed thousands of people and devastated communities across the country.
The source said McKinsey is open to settling with Canadian provinces so it can “turn the page” for the role it played in the opioid epidemic.
B.C. lawyer Reidar Mogerman, one of the lead counsels in the provinces’ civil suit against Purdue, said they are not in active discussions with McKinsey’s legal team at the moment.
“McKinsey, because of its involvement with Perdue, is a serious target,” he said. “We are certainly open to those discussions and expect to have those discussions.”
Between January, 2016, and March 20, 2020, alone, 16,364 Canadians died of opioid-related overdoses. According to the U.S. Centers for Disease Control and Prevention, 450,000 people died from overdoses involving any opioid in that country, including prescription and illicit opioids, from 1999-2019.
Documents filed in U.S. courts last year outlined how McKinsey discussed ways for Purdue to “turbocharge” sales of its drug OxyContin, including paying Purdue’s distributors a rebate for every OxyContin overdose attributable to pills they sold.
Purdue recently pleaded guilty to criminal charges, including bribing doctors to prescribe OxyContin, as part of a US$8.3-billion settlement with the U.S. Justice Department. The company generated US$31-billion in worldwide revenue from its blockbuster pain pill, ranking the Sackler family, which controlled Purdue, among America’s richest families.
Court documents show much of McKinsey’s work involved direct consultation with the Sackler family. Members of the family have agreed to a US$225-million settlement with the U.S. Justice Department.
Another court filing on behalf of more than 20 U.S. states that did not agree to the terms of the Justice Department settlement with Purdue, alleges that McKinsey’s role went even deeper. The November, 2020, filing in the U.S. Bankruptcy Court for the Southern District of New York alleges that the firm worked with the Sackler family to head off stricter opioid measures from government.
“Richard Sackler’s daughter Marianna worked with [Purdue CEO Craig] Landau and a team of McKinsey consultants to block requirements that would reduce sales,” the filing on behalf of the Ad Hoc Group of Non-Consenting States said.
“The team implemented a plan to ‘band together’ with other opioid sellers to avoid restrictions that could cause a ‘significant” loss of revenue,’ it said. “They succeeded. Even to this day, the Food and Drug Administration has never required specialized training for OxyContin prescribers.”
McKinsey has declined to say whether, as CEO, Mr. Barton was aware of the advice his company was providing to Purdue Pharma. The company, which issued a statement in December regretting its advisory work, referred questions to Mr. Barton about his knowledge of McKinsey proposing that pharmacies be paid rebates for opioid overdoses.
In that statement, McKinsey said: “We recognize that we did not adequately acknowledge the epidemic unfolding in our communities or the terrible impact of opioid misuse.”
Both Mr. Barton and the Prime Minister’s Office have declined comment on the issue.
Last month, Prime Minister Justin Trudeau brushed aside questions about whether Mr. Barton, a former top economic adviser to his government, was aware of the controversial work being done under his leadership at McKinsey & Co. to help boost sales of opioids.
“Dominic Barton is an extraordinary Canadian who is doing great work for us in China as Canada’s ambassador,” the Prime Minister said.
The provinces’ claims are among more than 600,000 processed by a U.S. bankruptcy court against Purdue Pharma as of Dec. 7, 2020. Despite the sheer size of the provincial claims – for everything over two decades from emergency medical care to overdose prevention sites and addiction treatment programs – the provinces did not pursue legal action until three years ago.
The B.C. government launched a lawsuit in 2018 on behalf of all the provinces against more than 40 pharmaceutical companies and distributors, including Purdue, alleging that they knew or should have known opioids were addictive and seeping into the illicit market.
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