Marketing firm McKinsey & Company seeks to create a new multidistrict litigation in the Southern District of New York to handle claims alleging it contributed to the opioid crisis through OxyContin marketing techniques.
McKinsey filed a motion to transfer the cases filed against it by Madison and St. Clair Counties for coordinated or consolidated pretrial proceedings with the judicial panel on multidistrict litigation. The cases were filed in state court and removed to the U.S. District Court for the Southern District of Illinois.
“McKinsey further requests that the United States District of New York be selected for such centralized proceedings,” the motion states.
The defendant does not seek to join the existing opioid-related MDL in the Northern District of Ohio. McKinsey argues that adding the claims against it to the Ohio MDL “would benefit neither that MDL nor the newly-filed cases.”
“In fact, it would likely create significant inefficiencies and further administrative challenges because the claims against McKinsey - raising different theories of secondary liability against an entirely new class of consulting defendant - are unique to the current MDL,” states the brief in support of McKinsey’s motion to transfer.
“Instead, McKinsey respectfully submits that a new MDL should be established in the Southern District of New York, where these new claims are centered,” it continues.
McKinsey argues that New York is an appropriate jurisdiction because Purdue Pharma’s bankruptcy proceeding is in the Southern District of New York, and many plaintiffs suing McKinsey are also pursuing claims against Purdue in New York.
The motion was filed through attorney James Brodzik of Hinshaw & Culbertson LLP in Belleville. The supporting brief was filed through attorney James Bernard of Stroock & Stroock & Lavan LLP in Los Angeles.
“Despite never manufacturing, distributing, or dispensing a single opioid medication, McKinsey, a consulting firm, now faces a growing number of similar or nearly identical complaints being filed against it throughout the country on the heels of its recent $600 million multistate attorney general settlement to resolve potential opioid-related claims,” Bernard wrote in the supporting brief.
“McKinsey settled such claims to be part of the opioid solution but it steadfastly maintains that it has done nothing wrong,” he continued.
McKinsey argues that local government agencies and tribal communities are challenging the Feb. 3 settlement by pursuing individual claims against the defendant.
“Before the ink was dry on the settlement documents, numerous plaintiffs filed suit in jurisdictions around the country. Most of the plaintiffs are counties, cities, or other political subdivisions of the settling states,” Bernard wrote.
McKinsey called the lawsuits against it “boilerplate, copycat complaints.
“McKinsey seeks to centralize all the cases in an appropriate forum and jurisdiction to obtain an efficient and just resolution of what are, at bottom, collateral attacks on an intensely negotiated and eminently fair settlement obtained by state attorneys general,” Bernard wrote.
Madison and St. Clair County lawsuits
Both Madison and St. Clair County’s claims against McKinsey were filed through attorney Ann Callis of Holland Law Firm. McKinsey is accused of negligence, negligent misrepresentation, fraud and deceit and unjust enrichment. McKinsey is accused of public nuisance, conspiracy to violate the Illinois Consumer Fraud Act, negligent undertaking and civil aiding and abetting.
The lawsuits allege McKinsey constructed a marketing plan to increase opioid sales despite Purdue Pharma’s prior guilty plea for misbranding OxyContin.
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.
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 and encouraged Purdue to sell higher doses of OxyContin, the suits allege.
“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 suits state. 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.
“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.
Madison and St. Clair Counties seek a judgment in their 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.
They also seek compensation for past and future costs, an “abatement fund,” punitive damages, attorneys’ fees and court costs.