McKinsey agrees for $ 573 million settlement on opioid advice

Consulting giant McKinsey & Co. has signed a $ 573 million deal over its work advising Oxycopt manufacturer Purdue Pharma LP and other drug makers to aggressively market painkillers, according to people familiar with the matter.

People said the deal was reached with 47 states and the District of Columbia and is expected to be announced publicly Thursday, which would prevent civil lawsuits against McKinsey. Most of the money will be paid in advance, with the remainder in four annual payments beginning in 2022.

McKinsey said that over the past week it has been collaborating with government agencies because of its past work with opioid manufacturers, as state and local governments sue companies above and below the opioid supply chain. According to federal statistics, at least 400,000 people have died in the US since 1999.

The consulting firm stopped opioid-related work in 2019, and in December its work for Purdue was aimed at supporting the legal use of opioids and helping patients with legitimate medical needs.

While some companies have made deals with individual states to avoid trials, the McKinsey settlement marks the first nationwide opioid treaty to come from a flood of litigation that began in 2017. The $ 26 billion deal has been in operation for more than a year with three drug distributors and Johnson & Johnson, but is still being negotiated.

The Wall Street Journal reported last week that McKinsey was close to reaching a settlement with the states and the deal could be worth hundreds of million dollars. The talks took place in the form of hundreds of demonstrations to boost sales of McKinsey’s Oxcopt, which were made public in recent months in Purdue’s Chapter 11 bankruptcy case in White Wights, NY.

The memo McKinsey sent to Purdue executives in 2013 has been made public in bankruptcy court filings, which included recommendations that the company’s sales team target health care providers knew it would write the highest versions of oxycopt prescriptions and fewer Went away from the quantity subscribers. McKinsey’s work became a Purdue initiative called “Evolution to Excellence”, released by the US Department of Justice last year in connection with a plea agreement with Purdue in the form of an aggressive OxyCopt marketing and sales campaign.

According to bankruptcy court records, McKinsey sent Purdue recommendations in 2013 that advisers said its annual sales would increase by more than $ 100 million. McKinsey recommended ways that could better target Purdue, describing it as “high value” and taking other steps for “turboshard Purdue’s sales engine”.

The Stamford, Conn.-based Purdue pleaded guilty to three goons in November, including paying illegal kickbacks and cheating drug-enforcement officers. The drugmaker filed for Chapter 11 protection in 2019 to address the thousands of opioid-related lawsuits brought against him. Purdue said in a lawsuit filed last week against its insurers that creditors have claimed thousands of claims in the bankruptcy case and collectively seek trillions of dollars in damages.

McKinsey also advised other opioid manufacturers on the sales initiative. The firm’s work for Johnson & Johnson came in 2019 in a case brought by Oklahoma against the drug company for contributing to the opioid crisis in the state through aggressive marketing of trial painkillers. The trial ended with a $ 572 million judgment against Johnson & Johnson, which was later reduced to $ 465 million and is still on appeal.

Most of the money McKinsey has given to the settlement will be distributed among the participating states, with $ 15 million going to the National Association of Attorney Generals to reimburse the costs of the investigation. .

The agreement also includes some non-incorporated provisions, such as McKinsey’s requirement to create a repository of documents related to its work for opioid manufacturers, the person said.

The holdout states include Nevada, which said Wednesday night that its investigation into the consulting giant is continuing “and we are in talks with McKinsey about our concerns.”

Purdue has been negotiating with creditors, including states since filing for bankruptcy, but a deal has been finalized by demands from some states stating that the owner of the company, a member of the Sackler family, Contribute more than 3 billion dollars, which they have agreed to.

The focus has been on states to intensify so that any settlement money from opioid litigation can help mitigate the effects of the crisis, including beefing up treatment programs and helping to enforce the law . States are looking to avoid the consequences of the tobacco litigation of the 1990s, when a $ 206 billion agreement was often made to fill the state budget hole. McKinsey settlement documents state that the funds are intended to be revoked, said a person familiar with the deal, although state laws vary widely on how settlement funds can be characterized.

write to Sara Randazzo at [email protected]

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