The Other Pandemic: McKinsey, Purdue, and the Opioid Crisis

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McKinsey's dealings with Purdue has spotlighted the question of profit at the expense of social responsibility 

America has been hit with far too many disasters in this past year, and there is yet another pandemic which is largely being ignored. In 2021’s first major case of corporate accountability, McKinsey & Company has agreed to pay more than $600 million to settle inquiries into its role driving opioid sales for big pharma companies.[i] The low interest generated by these lawsuits seems to come from lacking public awareness of the Opioid Crisis in America, and addressing that is the first step to bringing about real change.

A Brief History of Medical Opiates

The 1990s were a Golden Age for pharmaceutical companies, a time when the addictive nature of opiates was not understood by the medical community. [ii] Opioid pain relievers were extremely effective – they could be used as pain relivers for virtually any medical operation, and healthcare providers began prescribing them at a faster and faster rate.

The reasonably quiet narrative around the Opioid Crisis changed in 2007, when Purdue Pharma pled guilty to misbranding its OxyContin opioid medication as being “less addictive” and “less subjective” to abuse than other opioids. A high-profile case which ended in a $634 million settlement, the lawsuit exposed the aggressive marketing plan which Purdue was using to propagate sales.[iii]

Purdue had doubled its internal sales force team over a period of 4 years, and introduced a lucrative incentive program for sales representatives to push opioids on physicians – indeed, Purdue ended up paying $40 million in opiate sales bonuses.[iv] Even more questionable was its “starter coupon program” that provided patients with a free limited-time prescription of OxyContin.

The McKinsey Collaboration

No doubt, Purdue’s efforts at the beginning of the 21st century are a case study in successful marketing and branding. Unfortunately, it also contributed to the biggest public health crisis America had seen since the Spanish Flu. From the 1990s until 2018, nearly 450,000 people died from opioid overdose, with the majority stemming from legal prescription drugs until 2015.[v]

Where does McKinsey factor into all of this? Providing premium consulting services to dozens of blue-chip corporations, Purdue Pharma had been a McKinsey client since 2006. Whether your goal was to drive sales, cut expenses or rebrand your organization, McKinsey was your go-to advisor for all things profit-oriented.

All things considered, it is almost certain that Purdue’s OxyContin marketing strategy was McKinsey’s brainchild. It clearly managed to achieve Purdue’s needs, and even though Purdue faced a massive lawsuit, it was nothing compared to the recurring sales and client base they had established.

McKinsey got off scot-free, as it usually has been able to in its long history.

A Tale of 2 Time Periods

It is important that the efforts of these entities be considered in the time when they occurred. The concept of Corporate Social Responsibility was not as prevalent in the early 2000s, and companies were driven solely by the demands of shareholders. It was not expected that either McKinsey or Purdue would step up to address the potential public health crisis that was unfolding – because in the 2000s, the government definitely was not. The US was profiting enormously off tax revenues that opioid sales were raking in, and those monies were valuable in propagating more social services and public programs for Americans. In the eyes of authorities, a handful of overdoses from legal opioid could be therefore justified.

The problem started to take shape when illegal opioids began hitting the streets, as much cheaper and easily accessible alternatives for the average person. The Center for Disease Control and Prevention largely began its initiatives to monitor and control the Opioid Pandemic in 2010, when heroin usage saw a spike.[vi] By 2015, deaths from synthetic and illegal opioids finally overtook legal overdose rates, and marked the beginning of a genuine public campaign against drug manufacturers.

The collaboration between Purdue and McKinsey came to light early in February 2021, and unlike the monetary settlement back in 2007, this represents one of the few times that McKinsey will be held publicly accountable.

The Effects of the Trial

The scope of the case is enormous – and very interesting. The courts have ordered the consultancy to implement mandatory ethics and professional training standards for its employees. Additionally, two McKinsey partners were fired for communicating about deleting documents relevant to its work with Purdue.

Those very documents have revealed details of McKinsey’s proposed strategies to “supercharge” OxyContin sales, target doctors who readily prescribe high volumes of opiates, and encouraging patient to try more potent doses of the drug.

The consultancy has made settlement deals with 49 states and 5 US territories, valued at over $573 million.[vii] The funds will be exorbitant, but shall largely be used for addiction treatment, prison programs, rehabilitation efforts and public campaigns to curb the spread of opiates. Beyond a doubt, it is a monumental effort by district attorneys across America, and a rare display of national unity to take action against a pressing problem.

Under the deal, McKinsey will also be making public all communications with pharma companies like J&J and Endo, with the goal of increasing transparency in its operations. It is a bold step forward that McKinsey is taking, and has already led to separate lawsuits being filed against other drug manufacturers.

This case pits the competing views on how corporations should conduct business against each other, and raises an important question – at what point should the welfare of society exceed the responsibility that corporations have to its shareholders? Despite conflicting the public interest, neither McKinsey nor Purdue undertook any actions that a profit-driven board of directors wouldn’t approve of. It is exceedingly difficult to come up with an answer, owing to the complex histories and intricacies of each industry. After all, the ethical tipping point for a market player in the pharmaceutical industry is a product of current events, the socioeconomic landscape, and consumer trends – not simply the quantity of sales.

Further complicating the question is what should be done upon identifying that tipping point. A government can sue companies all day long, but actually stepping into the marketplace and regulating sales would be a free market restriction in one of the most free-market countries on this planet.

Examining the Medical Community’s Role

While the joint effort by state attorneys is admirable, if the proceeds from the settlements are not used wisely, they could inadvertently worsen the crisis.

Forcing consultancies and pharmaceutical companies to expose their business transactions will definitely reduce the supply of legal opiates being sold on the market. Unfortunately, the 2010 spike in heroin usage showed us that black market trade in illegal opiates is more than available to fill that gap. One of the reasons why Canada made the decision to legalize cannabis was to prevent the circulation of illicit, potentially dangerous strains on the market, and restricting quantities of legal opiates will probably have the reverse effect.

Perhaps then, the answer doesn’t lie in restricting sales of the product, but building community resilience against it. Making rehabilitation programs and therapies more accessible, normalized, and cheaper would definitely be a better solution, but would be a very reactive approach, with patients not getting treatment until addiction has taken effect.

Another option is to re-examine the medical practices of physicians who have the authority to prescribe opiate medications. Interestingly, hospitals are big on prescribing opiates because of incentive payments from the government. The Center for Medicare and Medicaid services routinely hands out patient satisfaction surveys to determine how well a hospital was able to meet their needs, and funds hospitals based on those scores.[viii] One of the most obvious indicators of diligence in medical care are pain levels – if your medical staff was able to make your operation painless and easy, you would be more likely to rate them higher.

A Final Look

Finding a way to detach funding from outpatient procedures that involve opioids is definitely a more sustainable solution. Of course, having a clearer framework for when opioids can be prescribed, in what quantities, routinely following-up with patients to ensure that appropriate doses are being taken, and holding physicians accountable for their prescriptions is necessary as well.

If the manner in which pain medication is prescribed becomes more stringent, less people will be exposed to the drug. This would directly lower the probability of addiction and demand for opioids in the first place.

Whatever the answer is, it should be clear to us, as future business leaders, that the welfare of our societies has to be balanced with the forward-moving, capitalist world we live in.


Sources


[i] https://www.nytimes.com/2021/02/03/business/mckinsey-opioids-settlement.html

[ii] https://www.cdc.gov/drugoverdose/epidemic/index.html

[iii] https://www.statnews.com/2016/08/18/opioids-pain-prescribing-physicians/

[iv] https://www.ncbi.nlm.nih.gov/pmc/articles/PMC2622774/

[v] https://www.cdc.gov/drugoverdose/epidemic/index.html

[vi] https://www.poison.org/articles/opioid-epidemic-history-and-prescribing-patterns-182

[vii]https://www.drugabuse.gov/drug-topics/opioids/opioid-overdose- crisis#:~:text=In%202019%2C%20nearly%2050%2C000%20people,died%20from%20opioid%2Dinvolved%20overdoses.&text=The%20misuse%20of%20and%20addiction,as%20social%20and%20economic%20welfare.

[viii]https://www.cms.gov/Regulations-and-Guidance/Legislation/EHRIncentivePrograms/Downloads/MLN_TipSheet_MedicareHospitals.pdf

More posts by Vanit Shah.
The Other Pandemic: McKinsey, Purdue, and the Opioid Crisis
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