Consulting firm McKinsey & Co. reportedly has agreed to pay more than $550 million to settle claims by U.S. states that it helped fuel the opioid epidemic by providing marketing advice to drugmakers including Purdue Pharma and Johnson & Johnson (JNJ) - Get Report.
Citing people familiar with the agreement, Bloomberg reported that McKinsey will pay about 80% of the money immediately to shore up treatment programs and boost police budgets taxed by behavior related to expanded abuse of the addictive painkillers.
The remainder of the settlement will be paid over four years. More than 45 states signed off on the settlement, which will be announced on Thursday, according to Bloomberg. McKinsey won’t acknowledge any wrongdoing as part of the settlement.
New York-based McKinsey was accused of offering Purdue Pharma advice on how to “turbocharge” sales of its OxyContin painkiller at a time when the legal market for the opioid-based medicine was shrinking due to a wave of negative publicity.
In Purdue’s bankruptcy court records and its Department of Justice settlement, the government said McKinsey consultants suggested in 2017 that the drugmaker compensate insurers if a covered consumer became addicted or overdosed up to a limit of $14,000 per patient. Purdue never set up such a program.
McKinsey officials in December issued a formal apology for their work. “We recognize that we did not adequately acknowledge the epidemic unfolding in our communities or the terrible impact of opioid misuse,” McKinsey said.
More than 3,000 state and local governments have targeted opioid makers and distributors in hopes of recouping billions in tax dollars spent dealing with the fallout of the U.S. opioid epidemic. More than 400,000 Americans have died over the past two decades from overdoses tied to opioid-based drugs.
The Justice Department in December sued Walmart (WMT) - Get Report for allegedly allowing its network of pharmacies to fill hundreds of thousands of suspect prescriptions, knowingly fueling the opioid epidemic. Walmart has denied any wrongdoing.