Devastated by Opioids, Nevada Settles with Consulting Firm McKinsey for $45 Million

Nevada is no stranger to opioid and prescription painkillers like OxyContin. The state has one of the worst overdose and drug abuse rates in the country, behind West Virginia, Maryland, and Ohio. According to the latest numbers from the federal government, Nevada providers wrote 55.5 opioid prescriptions for every 100 persons in 2018, compared to the average U.S. rate of 51.4 prescriptions.

The state finally had its day in court. Nevada has just settled a lawsuit with the global consulting firm McKinsey & Company for accelerating the opioid pandemic.

Turbocharging the Opioid Epidemic

Studies show that over 470,000 Americans have died over the last twenty years because of opioids. Companies like Purdue Pharma and Johnson & Johnson have been tied up in hundreds of opioid-related lawsuits for years, but little was said about the global marketing firm McKinsey & Company until now.

The company started to come under fire over the last few months as major pharmaceutical companies tried to settle these suits out of court. Those lawsuits led to the unsealing of hundreds of documents that show McKinsey’s involvement in the crisis. The company reportedly advised big pharma players over the years on how to sell more opioids more quickly to the general public, exacerbating the damage.

McKinsey also reportedly told Purdue Pharma and other major players in the pharmaceutical industry to “band together” as a way of heading off “strict treatment” by the Food and Drug Administration.

Nevada’s attorney general says McKinsey consulted with Purdue Pharma between 2004 and 2019 to boost sales during the height of the epidemic.

According to court documents, McKinsey consultants focused on getting more prescriptions out the door by advising providers and physicians to send patients home with more doses. The state says that by 2016 it had enough opioid prescriptions for 87 out of every 100 people.

A Hard Bargain

Considering how badly Nevada has been burned by the epidemic, regulators wanted to secure as much money as possible from the settlement to aid the state in its recovery process.

McKinsey settled a massive suit with 47 state attorneys general back in February worth $573 million, but instead of piggybacking off of such a high-profile case, Nevada decided to go it alone.

Now, the state’s work seems to be paying off. The hard bargaining approach let Nevada secure 3.5x more than the average settlements in other states.

According to state Attorney General Aaron Ford, Nevada would have received just $7 million under the multi-state agreement, which Ford called “woefully insufficient.” By filing a separate suit, Nevada will now earn $45 million from the settlement.

“Nevada needed and deserved more than what was being made available to us in the multi-state settlement,” Ford said in a statement on Monday.

The money will be divided into two payments, with $22 million coming in 45 days and $23 million coming in 120 days.

In response to the multi-state settlement, the company acknowledged some wrongdoing, but neither settlement forces the company to publicly take responsibility for its actions. “We deeply regret that we did not adequately acknowledge the tragic consequences of the epidemic unfolding in our communities,” McKinsey Global Managing Partner Kevin Sneader said last month.

According to an insider familiar with the settlement, McKinsey will pay much more than it earned from its consulting services when it advised Purdue Pharma, Endo International and Mallinckrodt Pharmaceuticals, two more opioid manufacturers, during the height of the epidemic.

The money will be used to support communities and individuals still suffering from the epidemic. AG Ford said the details have yet to be sorted out, but the governor and local officials will be distributing the money to those in need.

But Nevada isn’t done yet. The state has another suit that’s still pending. This one is aimed at Purdue Pharma, along with the company’s former president, his family, other pharmaceutical manufacturers, and distributors. The civil suit accuses 40 defendants of violating state laws about deceptive trade practices, false claims, racketeering, negligence, and public nuisance. Ford says the trial is tentatively set for 2022.

Dozens of state attorneys general recently rejected Purdue Pharma’s proposal to turn the company into a public trust, which would distribute the company’s profits to communities in need.

McKinsey is also facing additional lawsuits. Local governments can sue the company as well, and just last week, Mingo County in West Virginia, one of the worst hit in the country, filed suit against the global consulting firm. The Biden Administration may also take action against the company in the months to come. 

Clearly, we’re still a long way from resolving the deadly opioid epidemic, with millions of dollars still up for grabs.