McKinsey agrees to $230 Million Settlement in Opioid Lawsuit Case: A Turning Point in Corporate Responsibility

McKinsey will pay an additional $230 million to settle most of the remaining claims related to the opioid sales “turbocharger,” bringing the total to more than $870 million for its alleged role in the U.S. overdose epidemic. 

The agreement signed with several cities, counties, and school districts must be approved by the court in the coming months. It will sign similar contracts in February and March 2021 with all 50 US states, which paid the consulting firm $61.5 million. McKinsey said it also reached an agreement to settle opioid claims by Native American tribes and an agreement in principle on claims by third-party payers to cover patients’ health care costs, but did not say what they might pay. As in previous settlements, McKinsey did not admit liability or wrongdoing. “As we have said before, we continue to believe that our previous work was justified and deny claims to the contrary,” the statement said. 

Thousands of lawsuits by municipalities, school districts, tribes, parents, and others have been consolidated into a class action pending in federal court in the Northern District of California. The plaintiffs alleged that McKinsey’s advice to clients such as Purdue Pharma, maker of OxyContin, directly contributed to the opioid crisis. According to the National Institute on Drug Abuse, prescription overdose deaths in the United States increased fivefold between 1999 and 2017. The plaintiffs used documents released in earlier lawsuits that showed that McKinsey consultants encouraged Purdue executives to consider “turbocharging the sales engine.” 

Consultants urged administrators to report sellers to doctors with records of prescribing large amounts of opioids, the documents said. Use the sharing tools found in the Share button at the top or side of the articles. Copying articles to share with others is against the T&Cs and copyright policy. 

The case has further tarnished the image of the company, which has also been embroiled in a South African corruption scandal and criticized for working for clients ranging from Saudi Arabia to fossil fuel companies. Some insiders cite the cost of its legal settlements, which reduced the earnings shared by the partners, as one reason why former CEO Kevin Sneader did not win a second three-year term in 2021. Sneader’s successor, Bob Sternfels, told the Financial Times this year that he wanted to be “more humble” about the company’s past mistakes. “We’ve put new policies and protocols in place to make sure things like this don’t happen again,” he said. 

Sternfels announced in July that he would run for a second term. The firm’s roughly 800 senior partners are expected to begin a three-year selection process early next year. In a statement on Tuesday, McKinsey said it agreed to stop advising clients on opioid-related matters in 2019. It also tightened its client selection policy and invested nearly $700 million since 2018 to strengthen its risk management, it said.


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