McKinsey & Co. has agreed to pay US$573 million to settle claims by U.S. states that the consulting company helped fuel the opioid epidemic by providing marketing advice to drugmakers including Purdue Pharma LP and Johnson & Johnson.

As part of the deal, New York-based McKinsey will pay out most of the money in the next two months to government programs fighting opioid addiction and providing treatment, North Carolina Attorney General Josh Stein said Thursday during an online press conference, adding that his state’s share of the total payout would be almost US$19 million.

“The abuse of opioids, not just by those who consumed these drugs, but by those who produced, marketed, distributed and dispensed them, has left much of America in mourning,” said California Attorney General Xavier Becerra, whose state would get about US$60 million. “We can’t bring back lost lives, but we can hold ringleaders accountable. McKinsey & Co was a player in this unfolding opioids tragedy. Today’s settlement holds McKinsey to account.”

McKinsey helped to “turbocharge” the sale of opioids while working as a consultant to Purdue and its billionaire owners, the Sackler family, for 15 years, according to Stein. McKinsey has also agreed to publicly disclose tens of thousands of internal documents detailing its work for Purdue and other opioid companies, as state and local governments pursue litigation against the industry, he said.

“As part of the agreement, the attorneys general recognized McKinsey’s good faith and responsible corporate citizenship in reaching this resolution,” McKinsey said Thursday in an emailed statement, adding that the deal was with 49 states, five territories and the District of Columbia. The consulting firm denied allegations of wrongdoing, saying its “past work was lawful.”

McKinsey is the 35th-largest private company in the U.S. with US$10.5 billion in 2019 revenue, Forbes estimates. It has offices in more than 130 cities and 65 countries, according to its website.

More than 3,000 state and local governments have targeted opioid makers and distributors in hopes of recouping billions in tax dollars spent dealing with the fallout of the U.S. opioid epidemic. More than 400,000 Americans have died over the last two decades from overdoses. Many of the municipalities’ suits have been consolidated before a federal judge in Cleveland.

The McKinsey deal “may not be a harbinger of a global opioid pact” because it only involves state governments, not all the municipalities that have their own lawsuits, Holly Froum, a litigation analyst at Bloomberg Intelligence, said in a research report.

Public Apology

In December, McKinsey officials issued a formal apology for their work with opioid makers and distributors. “We recognize that we did not adequately acknowledge the epidemic unfolding in our communities or the terrible impact of opioid misuse,” McKinsey said on its website.

McKinsey said in 2019 it would no longer consult with companies that made the opioid-based pain pills. That move came after Massachusetts claimed the firm advised Purdue to push back against government efforts to reduce the number of opioid prescriptions.

Stamford, Connecticut-based Purdue sought bankruptcy protection in 2019 after being engulfed in a wave of opioid suits filed by state and local governments. It also agreed to an US$8.3 billion settlement with the U.S. Justice Department requiring the drugmaker to plead guilty to three felonies over its OxyContin marketing. It was the second time in 13 years the company pleaded guilty to criminal charges over its opioid sales tactics.

In Purdue’s bankruptcy court records and its Justice Department settlement, the government said McKinsey consultants suggested in 2017 that the drugmaker compensate insurers if a covered consumer became addicted or overdosed up to a limit of US$14,000 per patient. Purdue never set up such a program.

A McKinsey partner, in an unsealed 2019 email disclosed in court filings, told a colleague they should give the consulting firm’s risk managers a head’s up about their Purdue work. “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,” the partner wrote.

In its December apology, McKinsey said it was “undertaking a full review of the work in question, including into the 2018 email exchange which referenced potential deletion of documents.”

--With assistance from Erik Larson and Jeremy Hill.