McKinsey Apologizes For Helping Purdue Pharma 'Turbocharge' Opioid Sales

Dec 9, 2020
Originally published on December 9, 2020 3:17 pm

One of the world's most influential corporate consulting firms, McKinsey & Company, says it regrets efforts to boost sales of OxyContin and other highly addictive opioids.

The rare apology follows revelations in documents made public last month for the first time that showed McKinsey working closely with Purdue Pharma and members of the Sackler family who sat on Purdue's board.

As sales of high-risk opioids declined because of public health concerns, McKinsey developed a series of proposals, outlined in memos and planning documents reviewed by NPR, designed to "turbocharge" profits once again.

"We recognize that we did not adequately acknowledge the epidemic unfolding in our communities or the terrible impact of opioid misuse," said the firm in a statement posted on its website.

One of McKinsey's proposals, outlined in a planning document but apparently never implemented, involved making secret payments to insurance companies up to $14,000 whenever a patient became addicted or overdosed in an "event" linked to Purdue's opioids.

The document was made public in November by attorneys representing states suing Purdue Pharma.

According to the Centers for Disease Control and Prevention, more than 230,000 Americans died from prescription opioid-related overdoses alone during the addiction crisis.

In one internal email sent in July 2018, a McKinsey executive appears to acknowledge the growing legal risk faced by Purdue Pharma over its opioid business.

"It probably makes sense to have a quick conversation with the risk committee to see if we should be doing anything other that [sic] eliminating all our documents and emails," McKinsey senior partner Martin Elling wrote in an email sent to another executive at the company. "As things get tougher here someone might turn to us."

The documents, released as part of a tsunami of civil lawsuits hitting Purdue Pharma, have sparked growing criticism of McKinsey, which also has large contracts with the federal government.

"McKinsey's abhorrent conduct also demands that Congress consider broader action," said Sen. Josh Hawley, R-Mo., in a letter to the company last week. "No firm that proposes paying kickbacks for overdose deaths should receive a single cent from U.S. taxpayers."

Hawley also wrote that the 2018 email exchange about "eliminating" documents "raises the prospect that McKinsey may also have engaged in obstruction of justice."

In a statement posted Sunday on its website, McKinsey said its work with Purdue Pharma was "designed to support the legal prescription and use of opioids for patients with legitimate medical needs."

But the firm added that its decision-making "fell short" of the company's ethical standards and failed to "take into account the broader context and implication" of its work to boost Purdue's opioid sales.

"We have been undertaking a full review of the work in question, including into the 2018 email exchange which referenced potential deletion of documents," McKinsey's statement said.

Purdue Pharma entered bankruptcy last year. Members of the Sackler family have proposed giving up control of the firm and paying $3 billion out of their personal fortunes to settle all claims against them.

More than two dozen state attorneys general have rejected that proposal, in part because of new revelations in internal documents suggesting the Sacklers played a more direct role in decision-making.

Memos, emails and other planning documents show much of McKinsey's work involved direct consultation with Sacklers who sat on the company's board of directors.

The House Committee on Oversight and Reform has scheduled a hearing next week on Purdue Pharma and five members of the Sackler family who sat on the company's board to investigate their role in the opioid crisis.

Committee chair Carolyn Maloney, D-N.Y., has requested members of the Sackler family and current corporate executives from Purdue Pharma testify. The session is scheduled for 10 a.m. on Dec. 15.

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ARI SHAPIRO, HOST:

There's growing anger over the role that McKinsey & Company, one of the world's biggest corporate consulting firms, played in boosting the sale of OxyContin and other highly addictive opioids. The company faces calls for a federal probe into work it did for Purdue Pharma and members of the Sackler family who own the company. Now McKinsey has offered a rare apology. NPR's addiction correspondent Brian Mann joins us now.

Hi, Brian.

BRIAN MANN, BYLINE: Hi, Ari.

SHAPIRO: Tell us more about the role that this consulting giant McKinsey played in the opioid epidemic. What did it do?

MANN: Yeah, so this is a company with deep ties to the corporate world, also does a lot of work for governments around the globe. And what internal documents made public last month show is that a team from McKinsey worked behind the scenes to help turbocharge - and that's the word McKinsey used - turbocharge the sale of Purdue Pharma's opioids. And this happened at a time when sales of OxyContin were declining, in large part because of public health concerns about addiction and overdoses killing tens of thousands of Americans. And McKinsey now says its decision to work with Purdue Pharma, quote, "fell short" of the company's ethical standards.

SHAPIRO: Let me ask you about something that's in one of these internal documents, which is really striking. It's a proposal by McKinsey to pay insurance companies whenever someone became addicted or overdosed on one of Purdue Pharma's opioids. What was the thinking there?

MANN: Yeah. What McKinsey's consultants proposed in 2017 was developing contracts with insurance companies that distributed or used Purdue Pharma's opioids. And under terms of the contract, if those companies kept paying for drugs like OxyContin, they would receive secret rebates of up to $14,000 every time a patient became addicted or overdosed on the medications. McKinsey predicted those payouts would happen hundreds of times a year, and this idea has drawn bipartisan anger and disgust. Here's New Jersey's Democratic Governor Phil Murphy. He was speaking last week.

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PHIL MURPHY: It's appalling if it's true. This is about compensating - somehow giving a rebate back. I mean, the notion of putting a price on somebody's life is so offensive, it's beyond the pale.

MANN: And Missouri's Republican Senator Josh Hawley also sent a letter to McKinsey last week, describing the company's alleged behavior here as abhorrent. I should say, Ari, it appears this plan was never actually implemented. And McKinsey sent a statement to NPR today saying the proposed rebates were part of a good faith effort to make sure legitimate opioid patients could still get coverage for their medications.

SHAPIRO: On top of that, there are also concerns that McKinsey might've destroyed documents related to this issue. What do we know about that?

MANN: Yeah. An internal email sent by a senior McKinsey partner in 2018 acknowledges this growing legal pressure on Purdue Pharma. The email was sent to another McKinsey executive, and it references - and this is a quote - it references eliminating all our documents and emails. And in his letter, Senator Hawley from Missouri suggests that that act, if it occurred, could amount to obstruction of justice. Other lawmakers have called for a federal probe into this. McKinsey says they've started their own internal investigation into what they describe as the potential deletion of documents.

SHAPIRO: So it sounds like their apology is far from the end of this.

MANN: Absolutely. House Oversight Committee already has scheduled a public hearing next week to examine Purdue Pharma's role in the opioid crisis. These McKinsey documents are expected to be part of that inquiry.

SHAPIRO: That is NPR's addiction correspondent Brian Mann.

Thank you, Brian.

MANN: Thank you.

(SOUNDBITE OF ODDISEE'S "SOCIAL INSECURITY") Transcript provided by NPR, Copyright NPR.