Since developing an interest in healthcare more than two years ago, I’ve come to appreciate the industry is rife with very bad people who do very bad things. The major culprits driving up costs and diminishing the quality of patient care are well known: Private equity, group purchasing organizations, pharmacy benefit managers, and most of the MBA suits running supposedly “nonprofit” hospitals. Those in the know about the conflicted and often corrupt workings of U.S. healthcare openly refer to the collective filth as the “cartel.”
But one organization has so far escaped meaningful accountability and public opprobrium for its critical role facilitating the U.S. opioid crisis that claimed nearly 500,000 American lives. That would be the consulting firm McKinsey & Company, whose pharmaceuticals practice professionals in my mind are as evil as Mexico’s drug lords, albeit not as violent and far better educationally credentialed.
The New York Times last week posted this story revealing that McKinsey had its consulting tentacles in all aspects of pharmaceutical narcotics sales, ranging from the harvesting of the raw materials to devising sophisticated marketing strategies on how to enlist doctors to become narcotics prescribers. As the opioid crisis progressed, McKinsey also advised U.S. agencies on how to mitigate the fallout, while simultaneously advising its pharmaceutical clients on how best to deal with those agencies.
My head spins contemplating all of McKinsey’s shamefulness.
No admission of wrongdoing
The Times report was based on more than 100,000 documents obtained by a coalition of state attorneys general in a legal settlement related to McKinsey’s consulting work that contributed mightily to the opioid epidemic. McKinsey got off with a $573 million settlement, a pittance for a firm with $10.5 billion in annual revenues. The multistate settlement didn’t require McKinsey to admit wrongdoing, thereby providing a legal shield against additional lawsuits.
“As Americans were dying from the opioid epidemic, McKinsey was trading on its reputation and connections to make the crisis worse,” Massachusetts attorney general Maura Healey told the Times. Healey said the documents recently released as part of the multistate statement “expose McKinsey’s role in the opioid crisis and will inform policymakers’ efforts to prevent this from happening again.”
Until recently, I was a fan of Healey because of her impressive credentials and my perception that she was a true champion of consumer protection, particularly on matters relating to healthcare. In addition to graduating from Harvard where she was captain of the women’s basketball team, Healey also was a junior partner at the international law firm Wilmer Hale where she represented clients in the financial services, pharmaceutical, medical device, software, energy, biotechnology and professional sports sectors. She is a former Special Assistant District Attorney in Middlesex County, where she tried drug, assault, domestic violence, and motor vehicle cases.
I soured on Healey in April when she approved Optum’s acquisition of Atrius Health, Massachusetts’ largest private practice group of independent physicians. Optum is owned by UnitedHealthcare, and both organizations are rife with controversies and conflicts. To her credit, Healey took measures to protect some of Atrius’ charitable activities but allowing an out-of-state for-profit company to take control of a supposed healthcare nonprofit ultimately isn’t in the best interests of consumers.
McKinsey’s far-reaching tentacles
It’s also to Healey’s credit that she spearheaded the investigation of McKinsey’s opioid activities but letting the firm off with a $573 million settlement amounts to a wrist slap given the scope of its wrongdoing. As McKinsey’s efforts no doubt contributed to the suffering and deaths of hundreds of thousands of Americans, seems to me the firm and its senior partners should be held criminally liable.
It was previously reported that McKinsey played a critical role advising Purdue Pharma, including recommending that the company “turbocharge” its sales of OxyContin. Purdue Pharma has admitted criminal wrongdoing in two separate plea agreements with the U.S. Justice Department. Though the Sackler family, which owns Purdue Pharma, haven’t been charged with any personal wrongdoing, they agreed to pay $225 million to the Justice Department as part of a 2020 settlement. The family has also agreed to pay $6 billion as part of a multistate settlement.
I’m not looking to defend the Sackler family, but if McKinsey was advising me on the business practices of my former public relations firm, I possibly could have deceived myself into believing that the firm’s advice was well within prevailing acceptable and ethical business practices. McKinsey in its marketing materials and presentations promoted the firm’s “in-depth experience in narcotics,” further giving the firm’s counsel a patina of legitimacy.
In addition to advising Purdue, the Times revealed that McKinsey was also advising Mallinckrodt, the largest manufacturer of generic opioids. It worked with Endo on the marketing of that pharmaceutical company’s Opana narcotic and helped it grow into a leading generics manufacturer. It advised Johnson & Johnson, whose subsidiary Tasmanian Alkaloids was the largest supplier of the raw materials extracted from poppies used to make many top-selling opioids. And while working with U.S. regulatory agencies on how to mitigate the opioid crisis, McKinsey devised new approaches to help its pharmaceuticals clients drive narcotic sales.
Turning doctors into narcotics dealers
One particularly alarming finding by the Times was McKinsey’s expertise in turning doctors into narcotics dealers.
As reported by the Times:
In 2009, (McKinsey) recommended a technique known as segmentation. The best marketing campaigns — whether for food, cars or electronics — divided consumers into segments based on how they acted and thought, then developed tailored messages to win them over, the consultants said.
In Purdue’s case, the customer was a physician with a license to prescribe controlled substances, and the product was OxyContin.
The consultants interviewed dozens of physicians and solicited the views of hundreds more in a survey. Four groups of doctors emerged, each with a distinct profile. The consultants then developed messages to appeal to each group’s practical and emotional needs.
McKinsey identified a particular opportunity in doctors who were hesitant to prescribe OxyContin because of worries about abuse, addiction and possible scrutiny from the D.E.A. These physicians often tried to treat chronic pain with less powerful drugs.
Persuading them to switch to OxyContin could be worth hundreds of millions of dollars, McKinsey advised. To do this, McKinsey proposed tactics to “raise physician comfort levels through appropriate education and support.” Sales representatives, McKinsey said, should reassure doctors that many of their colleagues prescribed OxyContin and that the drug need not be reserved for extreme pain.
What’s particularly disgraceful is that McKinsey knew full well that OxyContin and other narcotics would result in overdoses. In this story posted on November 27, 2020, and updated on November 5, 2021, the Times reported that McKinsey provided estimates as to how many customers of companies, including CVS and Anthem, might overdose taking OxyContin. The Times said CVS and Anthem were among McKinsey’s biggest customers.
In one example, McKinsey in 2019 projected 2,484 CVS customers would have an overdose or develop an opioid use disorder. McKinsey proposed that Purdue pay CVS a “rebate” of $14,810 per “event,” meaning that Purdue would pay CVS nearly $37 million a year. CVS and Anthem told the Times the proposed rebates were never paid.
McKinsey’s role in the opioid crisis was indicative of an organization devoid of any morals or ethics. The paltry monetary fine won’t deter further wrongdoing by a firm that’s clearly rotten to its corporate core.