Why everyone must learn a lesson from McKinsey’s $600-mn settlement over American opioid crisis

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February 11, 2021 4:10 AM

McKinsey’s opioid-deal a vote for consultancies’ accountability

The Centers for Disease Control estimates that the US loses $78.5 billion each year from prescription-opioid-abuse related costs on the healthcare, industry, law&order/justice fronts.The Centers for Disease Control estimates that the US loses $78.5 billion each year from prescription-opioid-abuse related costs on the healthcare, industry, law&order/justice fronts.

McKinsey having to pay $600 million to settle investigations/claims it faces in 49 states in the US, five territories and the district of Columbia over the US’s opioid crisis shows the way for apportioning responsibility to consulting companies, auditors, etc, for violations of the law by their corporate clients, where their advice/neglect of due scrutiny plays a role. In 2017, close to 2 million in the US were suffering substance use disorders linked to prescription pain-relief opioids, and since 2000, prescription opioids have contributed to the death of 450,000 Americans—thanks, in no small part, to aggressive marketing of prescription opioids (for pain relief, anaesthetic use, etc) by pharma companies in the late 1990s. With companies underplaying/denying the addictive potential of such drugs in their messaging to doctors and regulators, prescription rates saw quantum jumps and a concurrent jump in opioid abuse. The Centers for Disease Control estimates that the US loses $78.5 billion each year from prescription-opioid-abuse related costs on the healthcare, industry, law&order/justice fronts.

In the present instance, documents unearthed in the context of lawsuits over Purdue Pharma’s OxyContin painkiller, The New York Times (NYT) reports, show how McKinsey offered consultancy services to drive up the drug’s sales over 2004-2019. This was even after the drugmaker pleaded guilty in 2007 to federal criminal charges that it had misled doctors and regulators about the drug’s risks. McKinsey’s consultancy included “sales ‘drivers’” based on the pitch that opioids make patients “more optimistic and less isolated”, lobbying pharmacy chain Walgreens in the face of an agreement it made with the government to crack down on illegal opioid prescriptions and rebates to distributors based on every OxyContin overdose that could be attributed to the pills they sold—probe documents show that it even estimated potential overdose/development of opioid use disorder in 2019 for at least one retail pharmacy chain. And, when the heat began rising, it recommended to Purdue to “band together” with other opioid makers in the face of regulatory action; it even talked of strategies to negate “emotional messaging” by mothers who had lost teenagers to overdose. Beyond all this, NYT reports citing a Colorado justice department official, two McKinsey senior partners worked with Purdue’s promoters—over-ruling the drugmaker’s executives—to implement plans to drive sales.

As per the settlement, McKinsey won’t admit wrongdoing—indeed, it has maintained that its past work was “lawful”—but must agree to court-determined restrictions on work involving certain types of addictive narcotics. More importantly, it will have to put volumes of its opioid-work documents in the public domain. The consultancy may still not be able to fully avoid legal liability—while the state of Nevada will continue to pursue its investigation, the agreement doesn’t preclude lawsuits from local governments. The settlement, though, shatters the shield that consultancies use—that they only make recommendations—to distance themselves from the consequences of their advice and related actions by clients; think McKinsey and Enron, for instance. Governments, and businesses, including advisory concerns, must draw the right lessons from the McKinsey settlement on corporate and consultant accountability.

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