Texas to get $38.4M in opioid settlement
Consultant McKinsey will pay $600 million to states and others
Texas Attorney General Ken Paxton announced Thursday a $38.4 million settlement with global consulting business McKinsey & Co. for its role in a nationwide overdose crisis.
McKinsey, one of the world’s largest consulting companies, agreed Wednesday to a nearly $600 million deal involving 47 states, the District of Columbia and five U.S. territories. Paxton said McKinsey provided consulting services to opioid companies, including selling deceptive marketing plans, programs and advisement to OxyContin maker Purdue Pharma for more than 15 years.
“This settlement is the result of ongoing, aggressive action to hold opioid manufacturers and marketers accountable for their deceptive advertisement of highly addictive pain pills, which spurred an epidemic that left victims and their families with unimaginable consequences. Prescription opioids continue to kill over a thousand Texans every year, and thousands more suffer from health consequences or the addiction or death of a beloved family member,” Paxton said. “Texas will not stand by as countless lives are affected by misleading marketing and dangerous prescriptions. I will continue to do everything I can to protect Texans and help our state heal from this crisis.”
In 2017, Paxton and a bipartisan coalition of 40 states served investigative subpoenas on eight companies that manufacture or distribute highly addictive painkillers. Later, Paxton initiated lawsuits against Purdue and Johnson & Johnson, accusing them of misleading marketing and sale of opioids.
“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.”
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 its own lawsuit to avoid the potential of receiving only a small settlement tied to the population of the state, one of the hardest hit by overdoses.
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 Purdue’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 McKinsey’s consulting 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 such as needle exchanges aimed at reducing the harm of drug use.
Under the multistate deal, McKinsey agreed to make public all its communications with Purdue plus those dealing with the opioid businesses of 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 will boost professional standards training for its employees.
While McKinsey emerged as a target of opioid investigations recently, there have been thousands of lawsuits filed by government entities against companies that make and distribute prescription drugs. Some of those could go to trial this year.
Other settlements have happened or are in the works, including with Purdue, which is attempting to settle with state and local governments after reaching a deal last year to plead guilty to federal criminal charges and settle a civil case.
Separately, members of the Sackler family, who own the company, agreed to pay $225 million in a civil settlement but admitted no wrongdoing.
Another settlement has long been in the works involving the largest U.S. drug distribution companies and Johnson & Johnson. On the call Thursday, California Attorney General Xavier Becerra called them collectively “the opioid machine.”
“It’s not the last deal, and it’s not the biggest of the settlements and actions that we as a collective of states will take,” he said.