Class Action Looks for McKinsey to Face the Music for Role in Tripling OxyContin Sales [UPDATE]
Last Updated on March 9, 2021
The County Commission of Mingo County et al. v. McKinsey & Company, Inc.
Filed: January 31, 2021 ◆§ 2:21-cv-00079
Consulting firm McKinsey & Company faces a class action over its alleged role in boosting OxyContin sales amid the opioid crisis.
Case Updates
March 9, 2021 – Class Actions Against McKinsey Mount Over Role in OxyContin Sales
McKinsey & Company faces a least three more proposed class action lawsuits over its apparent role in pushing sales of the opioid OxyContin for Purdue Pharma.
Two of the cases, filed respectively by the Board of County Commissioners of Kay County, Oklahoma and the City of Shawnee, Oklahoma, echo the allegations detailed on this page and aim to hold McKinsey accountable for working with the Sacklers, Purdue Pharma’s owners, to maximize profits in a final “push” of OxyContin before its inevitable decline. A third case, filed by eight counties and the city of Henderson, Kentucky, looks to recoup money from county budgets that was spent tackling the opioid epidemic and its tangential effects in the state.
“Opioids have endangered public health in Kentucky even beyond addiction and overdose,” the lawsuit says. “Addicts who are not killed by drug addiction experience a variety of health consequences (including non-fatal overdoses) and engage in a variety of risky drug-seeking behaviors. This resulting drug addiction imposes significant costs on County Fiscal Courts—e.g., health care, emergency response, substance abuse treatment, law enforcement, etc.—who already face serious budgetary restraints as well as severely limited financial resources.
The legal tussle in which McKinsey has become a main target represents the latest chapter in years-long litigation over the cost of the opioid epidemic for state and local governments. In late February, at least five more non-class action cases were filed against the worldwide consulting firm by tribes and counties harmed by OxyContin abuse.
February 11, 2021 – McKinsey Faces Another City’s Opioid Class Action Following $573M Deal with State AGs
As the ink dries on a $573 million settlement with state governments to end investigations into its role in “turbocharging” OxyContin sales for Purdue Pharma, global advisory firm McKinsey & Company faces another proposed class action, this time from a Florida city.
The new complaint, found here, was filed by the City of Pembroke Pines, Florida, and largely mirrors the case detailed on this page.
As is sometimes the case with settlements between corporations and governmental entities, as opposed to settlements resulting from class action suits, consumers will receive no direct compensation from the deal. The monetary civil penalties from the settlement, which McKinsey reached with the attorneys general of 47 states, the District of Columbia and five territories, as reported by the New York Times, will instead go toward states’ opioid treatment, prevention and recovery programs.
Per the Times, the settlement was reached after lawsuits brought to light documents that showed how McKinsey aided Purdue Pharma in ramping up sales of OxyContin as the opioid crisis gripped the United States, killing more than 450,000 people over the last 20 years.
McKinsey admits to no wrongdoing in the settlement, but has agreed to court-ordered restrictions on its work with certain types of addictive narcotics. The paper also reported McKinsey will, as part of the settlement, retain emails for five years and disclose potential conflicts of interest when bidding for state contracts, as well as make tens of thousands of pages of documents pertaining to its opioid work publicly available through a database.
A proposed class action looks to take global management consulting firm McKinsey & Company to task for concocting the strategy that helped triple sales of OxyContin in the wake of Purdue Pharma’s 2007 guilty plea related to the opioid’s misbranding.
The 67-page lawsuit filed in West Virginia federal court says McKinsey is “liable for its deeds” as they relate to successfully meeting a mandate to increase OxyContin sales while Purdue’s controllers, the Sackler family, explored potentially distancing themselves from the company upon the realization that selling the drug became too much of a business risk.
The case, filed by the County Commission of Mingo County and the Town of Kermit, West Virginia, alleges the defendant successfully threaded the needle of “turbocharging” sales for a drug it knew was addictive and deadly while acknowledging only cursorily the corporate integrity agreement between Purdue Pharma and the Office of Inspector General of the United States Department of Health and Human Services.
“Purdue was the proverbial hot potato,” the complaint says. “The Sackler Family hired McKinsey to help them hand it to someone else. McKinsey obliged, and devised a successful strategy to purposefully increase the amount of OxyContin sold in the United States. Their efforts tripled OxyContin sales.”
The timeline in the lawsuit starts on May 10, 2007, when John Brownlee, the U.S. Attorney for the Western District of Virginia, announced the Purdue Frederick Company, the parent of Purdue Pharma, pleaded guilty to charges related to the misbranding of OxyContin. Brownlee stated, in part, that in the face of warnings from healthcare professionals and even members of its own sales force that OxyContin was being widely abused and causing significant harm, Purdue, at the behest of its top executives, continued to push a fraudulent marketing campaign that touted the opioid as less addictive, less subject to abuse and less likely to cause withdrawal.
“In the process,” the lawsuit reads, citing Brownlee’s statement, “scores died as a result of OxyContin abuse and an even greater number of people became addicted to OxyContin; a drug that Purdue led many to believe was safer, less subject to abuse, and less addictive than other pain medications on the market.”
With the guilty plea, Purdue entered into a Corporate Integrity Agreement with the Office of Inspector General of the United States Department of Health and Human Services, the complaint continues. The agreement stipulated that Purdue, for a period of five years ending in 2012, was obligated to retain an independent monitor and submit annual compliance reports about its marketing and sales practices and training of sales reps with regard to their interactions with healthcare providers, according to the suit.
Under the corporate integrity agreement, Purdue faced new constraints on its sales and marketing tactics, the suit says, describing the deal as essentially a problem the drugmaker needed to solve. As the lawsuit tells it, Purdue and its controlling owners, the Sackler family, intended to maximize OxyContin sales even with the corporate integrity agreement in place.
To address the so-called “problem” of trying to sell more OxyContin while under the government’s watchful eye, the Sackler family had the options of either selling Purdue Pharma or merging it with another pharmaceutical manufacturer or borrowing money to assure Purdue could continue operating while the Sacklers, as owners, began to make substantial distributions of money from the company to themselves, the case explains. All of this, the suit says, was considered with the goal of distancing the Sacklers from Purdue given the “concentration of risk” that now came with selling OxyContin.
In order to pursue either of the aforementioned options, the Sacklers needed to maximize opioid sales in the immediate time frame in order to make it appear as though Purdue was “an attractive acquisition target or merger partner,” or as a creditworthy borrower to a lender, the lawsuit states. According to the complaint, the Sacklers turned to McKinsey & Company, who had already been advising the family and Purdue for at least three years, to “help with their new problem.”
By June 2009, McKinsey and Purdue were working in tandem to increase sales of the company’s opioids, the suit says, with the defendant suggesting “a specific sales and marketing strategy” based on the company’s own independent research and unique methodologies. With the plan in place, OxyContin sales began to multiply, even with Purdue subject to the corporate integrity agreement, according to the lawsuit.
Once the agreement ran its course in 2012, the relationship between McKinsey and Purdue “flourished,” the case claims. What followed was 2013’s “Project Turbocharge,” a McKinsey-devised marketing strategy to boost opioid sales by hundreds of millions of dollars annually, the suit states.
According to the complaint, OxyContin sales finally peaked in 2013 “despite significant headwinds.” While the restrictions of the corporate integrity agreement should have led to fewer overall OxyContin sales, which took a dip in the immediate aftermath of the 2007 deal with the government, sales of the opioid would triple within five years, the case says.
“McKinsey is responsible for the strategy that accomplished this,” the lawsuit alleges. “It presented specific plans to Purdue, which Purdue adopted and spent hundreds of millions of dollars implementing. The result: a final spasm of OxyContin sales before the inevitable decline of the drug.”
After becoming the subject of scrutiny for certain business practices, including its role in the opioid crisis, McKinsey, weeks after its global managing partner addressed employees regarding the blowback, announced it would no longer work for any opioid maker, the lawsuit says. The plaintiffs argue that the price for merely “being in the arena” is more than just reputational scrutiny.
In the end, the lawsuit says, the Sacklers never sold Purdue, and no one loaned the company money.
“In time, the full scope of the opioid crisis would be clear not only to experts, insiders, and industry participants,” the suit reads. “Along with the rest of the nation, Plaintiffs are now squarely focused on the crisis.”
The lawsuit looks to represent all counties and municipal corporations in West Virginia from 2004 to the present.
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