McKinsey & Co reaches second major U.S. settlement over allegations it helped fuel opioid crisis

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Consulting firm McKinsey & Co. has agreed to pay a group of U.S. local governments US$230-million in its latest settlement of lawsuits alleging its work for pharmaceutical companies contributed to the opioid crisis.

The dollar figures, revealed in U.S. court documents, put a price tag on a previously disclosed settlement by McKinsey. It adds to a nearly US$641.5-million settlement McKinsey made in 2021 with state governments in the U.S. They based their allegations on McKinsey’s work in designing marketing and sales plans for drug manufacturers, including OxyContin maker Purdue Pharma.

Still pending, however, is the resolution of Canadian claims against McKinsey.

The B.C. government filed a proposed class-action lawsuit in 2021 accusing McKinsey of creating or assisting in the creation of “an epidemic of addiction in British Columbia and throughout every province and territory in Canada,” according to a statement of claim. Ottawa announced in May that it would join the lawsuit.

The B.C. government on Wednesday declined to comment on the status of the province-led legal action, citing the continuing litigation.

McKinsey has not admitted wrongdoing. In a statement provided to Reuters regarding the U.S. local-government settlement, the firm said it continued to believe its past work was lawful. It also noted it had committed in 2019 to no longer advise clients on any opioid-related business.

Canada is the world’s second-largest per-capita consumer of opioids, behind the U.S. The U.S. local-government plaintiffs alleged that about 350,000 people in the United States died from opioid overdoses between 1999 and 2016.

The rise of the Department of McKinsey

There were 36,442 apparent opioid toxicity deaths in Canada between January, 2016, and December, 2022, with the majority attributed to illicit fentanyl.

The Canadian government’s move to join the class-action lawsuit against McKinsey would put it at odds with a company to which it has awarded at least $116.8-million in federal contracts since 2015. The company has said in court filings that its contracts with the federal government make up as much as 10 per cent of its gross revenue in Canada.

In 2018, B.C. launched a class-action lawsuit on behalf of federal, provincial and territorial governments in Canada against dozens of players in the opioid industry, alleging years of misinformation and deception by pharmaceutical companies and distributors that knew, or should have known, that the drugs were addictive and contributing to an increase in overdoses.

The governments reached a $150-million settlement with Purdue Pharma (Canada) in June, 2022. Then-B.C. attorney-general David Eby said at the time it was the largest settlement of a governmental health claim in Canadian history and paves the way for future agreements in the continuing litigation against other opioid manufacturers and distributors.

U.S. litigation over opioids dates back more than a half-decade and involves hundreds of government entities suing multiple drug manufacturers – such as Johnson & Johnson, Teva Pharmaceutical Industries Ltd., and Allergan plc – distributors, and pharmacy companies. The litigation has resulted in more than US$51-billion in settlements, according to lawyers for the plaintiffs.

OxyContin maker Purdue Pharma filed for Chapter 11 restructuring bankruptcy protection in 2019 and struck a US$6-billion settlement that would shield its owners – the Sackler family – from lawsuits over their role.

In August, the U.S. Supreme Court paused the Purdue settlement process and agreed to hear a challenge by President Joe Biden’s administration to its legality. The issue is whether U.S. bankruptcy law allows for legal protections for the members of the Sackler family, who have not filed for personal bankruptcy.