McKinsey & Co. Pays $600 Million for Role in Opioid Crisis
Calling McKinsey & Co., a “consultant,” is akin to calling General Motors or Toyota manufacturers of go-carts. McKinsey is a global consultant and massive influencer, with work ranging from major corporations to entire governments. In turn, their expertise has resulted in billions of dollars in revenues; whole classes of new products and services and clearly, the ability to catapult people of power to the highest levels of visibility.
It is said that when a college student is hired by McKinsey & Co., the successful career path of that hire (providing she or he is willing to put in the extensive work and time), is virtually assured. Of course, there is an exchange: absolute loyalty even if some of the outcomes are suspect.
Not with controversy
McKinsey & Co. is not without its controversies. In fact, they have often played on “just this side” of unethical behavior. Gretchen Morgenson, writing for the Associated Press (February 8, 2021) noted:
“The global consulting giant, agreed to pay nearly $600 million last week to settle allegations by 49 states that its work for large opioid manufacturers helped ‘turbocharge’ sales of the drugs, contributing to an addiction epidemic that rocked the country and has caused more than 400,000 deaths.”
While $600 million is a significant penalty, it pales in comparison to Big Pharma giants (and McKinsey clients) like Purdue Pharmaceuticals who will pay out more than $6 billion in penalties. For it was McKinsey who provided Big Pharma with a plan “to hook” millions of people onto the powerful pain-killing drugs.
However, the $600 million payment has raised yet another controversy that may even be more insidious than the initial because it strikes to a serious ethical core.
I must again caution all of us that the company is massive in scope. It cannot be thought of as operating in a narrow silo. McKinsey & Co., wholly owns a hedge fund, MIO Partners.
The $600 million fine is designated to go to addiction treatment centers and companies that produce overdose medications – that’s the good news. The ethically troubling news, according to Gretchen Morgenson is that:
“The firm’s wholly owned hedge fund affiliate, called MIO Partners, holds indirect stakes in addiction treatment centers and a maker of overdose treatment products.”
Say that again, Chuck?
To quote Gretchen Morgenson one last time:
“Investment records show, during the years McKinsey was helping opioid makers propel sales of the drugs, MIO Partners held stakes in companies that profited from increased usage.”
MIO is a fund that is run on behalf of current and past McKinsey employees. Though they strongly deny it, they stand to gain one way or the other. In an official statement:
“McKinsey has no visibility into or control of how settlement money will be used by the states.”
That is quite true on the surface, but if the hedge fund owns treatment centers throughout the nation, as well as stakes in overdose treatment products companies, it isn’t exactly an ethical look.
Let me also be clear in relating that McKinsey has been around for nearly a century at this point. They have made incredible amounts of money. The MIO hedge fund, funded by McKinsey employees, has about $14.6 billion under its management. According to the AP article I quote above:
“Labor Department filings show, a retirement fund managed by MIO has amassed a $108 million stake in Deerfield Management Co., a $10 billion health care investment firm based in New York. Two top Deerfield executives previously worked at McKinsey.”
There are also several other investments MIO has indirectly made in opioid manufacturers. MIO reputedly owns a major stake in Adamis Pharmaceuticals, a company that makes drugs to treat opioid addiction, and Deerfield also has stakes in opioid recovery centers that indirectly benefit MIO.
In the end, Kevin Sneader, McKinsey’s global managing partner, said
“We deeply regret that we did not adequately acknowledge the tragic consequences of the epidemic unfolding in our communities. With this agreement, we hope to be part of the solution to the opioid crisis in the U.S.”
But are they a part of the solution or simply profiting from the solution? When McKinsey was hired by the Big Pharma industry to detail how to market opioid pain killers, it was McKinsey who came up with the marketing plans to addict millions to these highly profitable drugs. They knew damn well what they were doing.
If Kevin Sneader really wanted to perform some ethical good, he might consider sending teams of his high-priced consultants to the homes of the families of men and women who overdosed on the drugs.
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