A U.S. Judicial Panel on Multidistrict Litigation has created a new MDL in the Northern District of California to centralize opioid marketing litigation against McKinsey & Company and appointed District Judge Charles Breyer to preside.
On June 8, the panel transferred 17 pending actions against McKinsey and 22 potentially-related actions pending in 11 districts to the Northern District of California. The panel was chaired by Judge Karen Caldwell of the Eastern District of Kentucky. The panel also included judges Catherine Perry of the Eastern District of Missouri, Matthew Kennelly of the Northern District of Illinois, Roger Benitez of the Southern District of California, Nathaniel Gorton of the District of Massachusetts, David Norton of the District of South Carolina and Dale Kimball of the District of Utah.
“After considering the argument of counsel, we find that centralization of these actions in the Northern District of California will serve the convenience of the parties and witnesses and promote the just and efficient conduct of the litigation,” Caldwell wrote.
Caldwell wrote that the parties’ positions on the issue of transfer vary, but the primary dispute was whether to create a new MDL for actions against McKinsey or include the claims in the “procedurally mature” opioid-related MDL currently pending in the Northern District of Ohio - MDL 2804, or National Prescription Opiate Litigation.
McKinsey previously argued that joining the Ohio MDL “would benefit neither that MDL nor the newly-filed class.” The Panel on Multidistrict Litigation agreed, but noted that they “understand why some parties would think it logical for these actions to proceed” in Ohio.
“Despite this factual overlap, we find merit in McKinsey’s argument that it will be prejudiced by having to join the three-and-a-half-year-old MDL 2804 at this late stage. Even though a multi-billion dollar global settlement may have been reached among certain defendants (several manufacturers and distributors), much work appears to remain in the MDL,” Caldwell wrote.
“Adding a relatively unique defendant such as McKinsey to an already exceedingly complex and contentious MDL may hinder the transferee judge’s ability to efficiently manage the range of cases now before him,” she continued.
McKinsey sought to create an MDL in the Southern District of New York, which it argued is where the claims are centered. It argued 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.
Plaintiffs in the Western District of Kentucky supported creating an MDL in the Southern District of Illinois.
Both Madison County’s and St. Clair County’s pending claims against McKinsey were included in the cases transferred to California. They took no preference on where the MDL should be centralized, but opposed joining the Ohio MDL. They only requested that the panel order Breyer to rule on their pending motions to remand to state court before the merits are explored.
The Panel on Multidistrict Litigation agreed that creating a new MDL is appropriate. However, they chose to transfer the cases to a judge who is familiar with the Ohio MDL.
Caldwell wrote that Breyer was a member of the Panel on Multidistrict Litigation when the Ohio MDL was initially centralized. He also presides over a bellwether remand action out of the Ohio MDL, which is set for trial in December.
“Judge Breyer has presided over a total of eleven MDL dockets, and he possesses tremendous insight into the conduct of multidistrict litigation, which will without doubt benefit the parties and the courts,” she added. “We are confident in Judge Breyer’s ability to steer this litigation on a prudent course.”
Caldwell wrote that the actions against McKinsey involve nearly identical questions about the defendant’s role in providing marketing advice to opioid manufacturers with the intention of increasing sales of prescription opioid drugs. Various cities, counties, tribal governments and related tribal entities bring claims of public nuisance, negligence, negligent misrepresentation, fraud, unjust enrichment and violation of consumer protection statutes. Some plaintiffs also bring federal RICO claims.
“Centralization will eliminate duplicative discovery; avoid inconsistent pretrial rulings; and conserve the resources of the parties, their counsel and the judiciary,” Caldwell wrote.
Madison and St. Clair County both filed their complaints against McKinsey in their respective state courts through attorney Ann Callis of Holland Law Firm. The cases were later transferred to the U.S. District Court for the Southern District of Illinois with Judge Staci Yandle presiding. Both counties seek to have the claims remanded.
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.