District Judge Staci Yandle denied McKinsey & Company’s requests to transfer two opioid lawsuits and strike Madison and St. Clair County’s motions to remand the suits, which allege the global consulting firm contributed to the opioid crisis through OxyContin marketing techniques.
On March 30, Yandle issued two orders denying McKinsey’s requests. She denied the motions to stay and to transfer the cases to New York.
“The court has an obligation to determine whether subject matter jurisdiction exists in every case even absent a jurisdictional challenge by the litigants. Therefore, this matter will not be stayed while the issue of the courts subject matter jurisdiction has been raised and is pending determination,” Yandle wrote.
She also denied the defendant’s motion to strike the counties’ requests to remand the cases to state court.
“Upon review of motion to remand and memorandum in support, the length of plaintiff’s brief is necessary given the issues raised by the notice of removal. However, plaintiff is reminded that compliance with ILSD Local Rules and the undersigned’s case management procedures is required and will be enforced,” she wrote.
Yandle scheduled a motion hearing for April 19 at 1:30 p.m.
McKinsey filed the motion to strike on March 26 through attorney James Brodzik of Hinshaw & Culbertson LLP in Belleville.
The defendant argued that the motions to remand and memorandum in support of the motions do not comply with Local Rules 7.1 (d), which states that briefs may not exceed 20 pages. The motions and memorandum were a combined 33 pages, the motion to strike states.
“In this instance, plaintiff failed to seek leave to file a brief in excess in (sic) 20 pages, has provided absolutely no justification for filing a brief in excess of 20 pages, and should not now be afford an opportunity, post the filing of its motion and memorandum, to argue justification,” Brodzik wrote.
Ann Callis filed the motions to remand the cases to state court on March 19.
She argues that the cases were improperly removed to federal court because “complete diversity is absent between plaintiff and defendant Bashir both of whom are Illinois entities or persons for the purpose of diversity analysis.”
In a memorandum in support of the motion, Callis wrote that McKinsey incorrectly argues that Dr. Naheed Bashir, of Belleville, is a Missouri defendant and improperly joined.
“McKinsey cites to no law for its novel, unsupported theory that an Illinois resident can be domiciled in Missouri based on her employment,” the memorandum states.
“Many individuals domiciled in one state, particularly near a border, choose to work in a neighboring state but that does not convert them to a citizen of that neighboring state,” it continues.
Callis wrote that Bashir is also licensed and has an office in Illinois.
“It was the discipline, probation, applied to her Illinois license in 2020 that alerted the plaintiff to her practices,” Callis wrote.
Bashir was placed on indefinite probation in 2020 for a minimum of two years and fined $5,000 for allegedly inappropriately prescribing controlled substances, the memorandum states.
Callis argues that Bashir is properly joined as a defendant for allegedly having been influenced by McKinsey’s sales strategy. She wrote that Bashir was “a necessary link in the chain, prescribing medications that would eventually be responsible for the opioid crisis in the county.”
“Dr. Bashir was fined and placed on probation for inappropriately prescribing controlled substances. Each defendant was a necessary component to the opioid sales that have harmed the plaintiff,” Callis wrote.
Callis, of Holland Law Firm, filed the complaints on behalf of Madison and St. Clair Counties. 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. They also allege 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 for five years. Callis argues that despite the constraints, Purdue and its controlling owners, the Sacklers, still intended to maximize OxyContin sales.
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.”
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.”
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.”tegy allegedly employed the tactic of “patient pushback,” meaning patients lobbied for OxyContin when their doctors expressed reservations.
Despite the plan to make Purdue appear as an attractive business opportunity, the Sacklers never sold the company.
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 avoided representations regarding withdrawal, drug tolerance, addiction or drug abuse as specified in the corporate integrity agreement.
McKinsey's marketing strategy included targeting 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."
The suit states that additional physicians not yet identified also increased opioid prescriptions as a result of McKinsey's conduct.
McKinsey also 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.
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.