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Australian managing companion of McKinsey regrets consultancy’s function throughout opioid epidemic

A damaging exposé has revealed how international consulting firm McKinsey & Company tried to pump up sales of an addictive painkiller during the opioid epidemic.

Key points:

  • Consultancy firm McKinsey advised Purdue Pharma on how to increase the market share of its painkiller, OxyContin, at the height of the opioid crisis
  • Its advice included offering rebates for OxyContin overdoses
  • A McKinsey Australia spokesperson acknowledged a Zoom meeting was held after the revelations, saying it was part of a commitment to consider broader societal impacts of the firm’s work

After the news broke in The New York Times, the firm was in damage control and it sought to explain itself to its Australian workforce.

On a Monday earlier this month, Australian employees of McKinsey received an email titled “NY Times Article” from the firm’s head, Angus Dawson.

“I’m going to schedule a session on Thursday at 6pm on Friday for anyone who wants to join a zoom,” the email read.

On the Zoom call, McKinsey’s Australian managing partner, Mr Dawson, urged Australian workers to put the scandal in perspective.

He asked staff to try to put themselves in the shoes of the consultants who made the recommendations.

He said he wished they had not accepted the job and “wouldn’t in the future”.

Purdue Pharma logo on buildingPurdue Pharma is the owner of OxyContin, a brand name for the painkiller oxycodone.(AP: Douglas Healey)

McKinsey’s client was Purdue Pharma, manufacturer of painkiller OxyContin, which is a brand name of opioid painkiller oxycodone.

In Australia, an affiliate of the company sold a similar drug — Targin.

What irked some McKinsey workers on the Zoom call, was that in the same breath Mr Dawson also defended Purdue’s actions and said the New York Times article was not entirely accurate.

He told the meeting McKinsey was not trying to increase opioid prescriptions — it was trying to increase “market share”.

For some in the meeting, this was just splitting hairs.

The most significant revelation in the New York Times piece related to the “innovative contracting arrangements” McKinsey had suggested to Purdue in 2017.

On one Powerpoint slide, McKinsey proposed Purdue offer rebates of about $US14,000 ($18,509) for cases of opioid addiction or overdose involving its medication.

There were also documents showing a senior McKinsey executive discussing eliminating documents.

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Broader societal impact of consulting work

McKinsey’s clients are among the biggest companies in Australia, with McKinsey’s senior partners reportedly paid as much as $16,000 a day.

One six-week contract, to restructure the Department of Human Services, cost $858,000 — a deal seen as a discount.

Business meetingBusiness meetingIn the global consultancy business, McKinsey is considered one of the top-tier firms.(AAP: Patrick Hamilton)

On the Zoom call, Mr Dawson said the firm strived to uphold high moral standards and sometimes struggled with which clients to accept and which to reject.

He said tobacco, liquor and gaming companies were the types of clients McKinsey had issues to navigate through when it came to working with them.

“For some people, coal is the next sin,” he said.

When asked about the Zoom meeting, a McKinsey spokesman told the ABC it was part of a commitment to ensure the work it took on today not only had an impact for its clients but also considered broader societal impacts.

Role during US opioid crisis

McKinsey’s ability to explore a problem can sometimes leave the broader social impacts out of scope.

By 2017, no-one could deny Australia and the US was in the grip of a growing opioid crisis.

Packets of OxyContin, Targin and Endone.Packets of OxyContin, Targin and Endone.Major brands of painkillers with the active ingredient oxycodone.(ABC News: Hugh Sando)

In July of that year, a report by Australia’s National Drug and Alcohol Research Centre found the rate of accidental deaths due to opioids had more than doubled among people aged 35 to 44.

About 70 per cent of deaths were due to opioid pharmaceutical drugs that were not heroin. These included strong prescription painkillers.

In the US, more than 90 Americans were overdosing every day in what was being described at the time as an “opioid overdose epidemic”.

In December 2017, in a Powerpoint presentation, McKinsey suggested to Purdue Pharma an innovative strategy to increase market share known as “event-based contracting”.

Dr Art Van Zee

Art Van Zee’s medical centre has become an unlikely rallying point for a class action against OxyContin’s manufacturer.

Watch Foreign Correspondent’s full investigation Opioid America with iview.

“We will pay additional rebates on any new OxyContin-related overdose or opioid use disorder diagnosis,” it said in the presentation.

Purdue Pharma has faced a slew of court cases in the US surrounding its marketing and sale of its painkiller medication.

Last month, it pleaded guilty to three criminal charges, formally taking responsibility for its part in an opioid epidemic in the US.

But it is not just in the US where marketing of the painkiller has caused problems.

In December 2019, the Australian affiliate of Purdue Pharma, Mundipharma Australia, was ordered to pay penalties of $302,400 by the Therapeutic Goods Administration (TGA), which described its marketing of painkiller Targin as “misleading, imbalanced and otherwise inaccurate”.

Mundipharma said at the time it “respectfully disagreed” with the TGA’s determination and said the marketing material was no longer in use.

At the time, the company also said its marketing materials were aimed at cautioning healthcare professionals and “to clarify that this should only be considered in specific circumstances and as part of an overall treatment program if deemed appropriate by healthcare professionals”.

Six days ago, McKinsey released a public statement acknowledging its role in helping Purdue increase sales of its addictive drug, and expressing regret.

“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,” the company said.

It said it had stopped doing any work on opioid-specific business anywhere in the world.

McKinsey did not answer whether its work with Purdue affected the drug’s marketing in Australia.

A spokesman from the Australian arm of the firm told the ABC that its work was designed to support the legal prescription and use of opioids for legitimate medical needs and any suggestion that its work sought to increase overdoses or misuse was wrong.

“That said, we recognise that we have a responsibility to take into account the broader context and implications of the work we do. Our work for Purdue fell short of that standard,” he said.

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