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Tuesday, May 7, 2024

St. Clair County files fraudulent misrepresentation suit against marketing firm McKinsey, Belleville doctor over opioid epidemic

Lawsuits

St. Clair County is suing marketing firm McKinsey & Company Inc. and a Belleville doctor for their alleged role in contributing to the opioid crisis.

Attorney Ann Callis of Holland Law Firm filed the lawsuit in the St. Clair County Circuit Court against McKinsey and Dr. Naheed T. Bashir on Feb. 1. McKinsey is accused of negligence, negligent misrepresentation, fraud and deceit and unjust enrichment. McKinsey and Bashir are accused of public nuisance, conspiracy to violate the Illinois Consumer Fraud Act, negligent undertaking and civil aiding and abetting.

Callis also represents Madison County in a similar lawsuit against McKinsey. 

The lawsuit alleges McKinsey constructed a marketing plan to increase opioid sales despite Purdue Pharma’s prior guilty plea for misbranding OxyContin. It also alleges Bashir inappropriately increased OxyContin prescriptions.

Callis wrote that on May 10, 2007, Purdue Frederick Company, the parent company of Purdue Pharma LP, pleaded guilty to the misbranding of OxyContin. Purdue agreed to a corporate integrity agreement, which obligated it to retain an independent monitor and submit annual compliance reports regarding its marketing and sales practices and sales representative training for five years. Callis argues that despite the constraints, Purdue and its controlling owners, the Sacklers, still intended to maximize OxyContin sales.

As a result of the guilty plea, the Sacklers decided to distance the family from Purdue, “which was regarded as an increasingly dangerous ‘concentration of risk’ for Purdue’s owners,” Callis wrote. 

The Sacklers allegedly sought to maximize opioid sales in a short time to make Purdue “appear either as an attractive acquisition target or merger partner to another pharmaceutical manufacturer or as a creditworthy borrower to a lender.”

“In short, the Sacklers planned to engage in a final flurry of opioid pushing in order to rid themselves of their pharmaceutical company dependency for good,” Callis wrote. 

Purdue and the Sacklers allegedly asked global management consulting firm McKinsey for help. 

“Purdue was the proverbial hot potato,” Callis wrote. “The Sackler family hired McKinsey to help them hand it to someone else.”

By June 2009, they were working together. A sales and marketing strategy based on McKinsey’s independent research and unique methodologies was implemented. 

When the corporate integrity agreement ended, “McKinsey’s ongoing relationship with Purdue flourished,” Callis wrote. A marketing strategy called “Project Turbocharge” was implemented in 2013 to increase opioid sales. OxyContin sales peaked, tripling since the 2007 guilty plea. 

“McKinsey is responsible for the strategy that accomplished this,” Callis wrote. “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.”

McKinsey has faced scrutiny for its business practices, including its work on opioid campaigns for Purdue.

“However, the price for McKinsey’s role in the opioid crisis is more than scrutiny,” Callis wrote. “Like any other participant in the arena, McKinsey is liable for its deeds.”

“McKinsey’s task was to thread the needle: to increase OxyContin sales given the strictures imposed by the 5-year Corporate Integrity Agreement,” she added. “This McKinsey did, turbocharging the sales of a drug it knew fully well was addictive and deadly, while paying at least tacit respect to the Corporate Integrity Agreement.”

Despite the plan to make Purdue appear as an attractive business opportunity, the Sacklers never sold the company and no one loaned it money. 

“In time, the full scope of the opioid crisis would be clear not only to experts, insiders, and industry participants,” Callis wrote. “Along with the rest of the nation, St. Clair County’s eyes are now squarely focused on the crisis.”

Marketing strategy

McKinsey’s marketing strategy began by countering emotional messages about overdoses.

“McKinsey advised Purdue to market OxyContin based on the false and misleading notion that the drug can provide ‘freedom’ and ‘peace of mind’ for its users, and concomitantly reduce stress and isolation,” Callis wrote. 

By promising “hope,” the strategy allegedly employed the tactic of “patient pushback,” meaning patients lobbied for OxyContin when their doctors expressed reservations. 

The strategy allegedly avoided representations regarding withdrawal, drug tolerance, addiction or drug abuse as specified in the corporate integrity agreement. 

McKinsey also targeted existing high prescribers by selling them more OxyContin. 

“Defendant Bashir exemplifies the types of prescribers McKinsey urged Purdue to target,” Callis wrote. “With the acquiescence and participation of these high prescribers in McKinsey’s plan to increase OxyContin sales, McKinsey’s plan would drive real value for Purdue and the Sacklers.”

According to the complaint, Bashir inappropriately prescribed controlling substances to her patients. She allegedly had her physician and surgeon license placed on indefinite probation for a minimum of two years and was fined $5,000. The suit states that additional physicians not yet identified also increased opioid prescriptions as a result of McKinsey’s conduct. 

“As a result of McKinsey’s activities with Purdue to increase sales and distribution of its opioid products, medical practitioners across the nation including in Illinois and, specifically, within St. Clair County began to dispense prescription medications at a higher rate, including opioids, in situations where the drugs were not medically necessary,” Callis wrote. 

McKinsey also encouraged Purdue to sell higher doses of OxyContin, the suit states.

“McKinsey understood that the higher the dosage strength for any individual OxyContin prescription, the greater the profitability for Purdue,” Callis wrote. “Of course, higher dosage strength, particularly for longer periods of use, also contributes to opioid dependency, addiction and abuse.”

McKinsey urged Purdue to adopt quotas and bonus payments as motivation for sales representatives to sell as many OxyContin prescriptions as possible, the suit states. McKinsey also suggested that if sales representatives spent less time training, they could “squeeze an additional 5% of physical calls per day out of its newly less-trained sales force.”

McKinsey increased sales by increasing the size of the opioid market. This was done by encouraging the sales of generic competitors.

“Notably, this notion that the size of a company’s market share is not as important as the size of the overall market in which it competes is a core insight of McKinseys’ granular approach to identifying corporate growth opportunities,” Callis wrote. 

Second guilty plea

By October 2020, Purdue agreed to plead guilty to “a dual-object conspiracy to defraud the United States and to violate the Food, Drug, and Cosmetic Act” through improper marketing of OxyContin and other opioids again from 2010 to 2018. 

“The new plea agreement does not identify Purdue’s co-conspirators, and McKinsey is not identified by name in the agreement. Instead, McKinsey is referred to as the ‘consulting company,’” Callis wrote. 

On Dec. 5, 2020, McKinsey issued a statement regarding its work with Purdue in response to the guilty plea, the suit states.

“As we look back at our client service during the opioid crisis, we recognize that we did not adequately acknowledge the epidemic unfolding in our communities or the terrible impact of opioid misuse and addiction on millions of families across the country. That is why last year we stopped doing any work on opioid-specific business, anywhere in the world.

"Our work with Purdue was designed to support the legal prescription and use of opioids for patients with legitimate medical needs, and any suggestion that our work sought to increase overdoses or misuse and worsen a public health crisis is wrong. That said, we recognize that we have a responsibility to take into account the broader context and implications of the work that we do. Our work for Purdue fell short of that standard,” the response states.

St. Clair County seeks a judgment in its favor for actual damages caused by the opioid epidemic, including costs for medical care, treatment costs for overdoses, treatment costs for infants born with opioid-related medical conditions, costs for providing care for children whose parents suffer from opioid-related disability or incarceration, law enforcement costs relating to the opioid epidemic, and costs associated with drug court and other resources expended. 

The county also seeks compensation for past and future costs, an “abatement fund,” punitive damages, attorneys’ fees and court costs.

St. Clair County Circuit Court case number 21-L-90

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