A US judge greenlighted McKinsey & Co.’s proposal to pay $230 million to settle claims that the consulting firm’s marketing work turbocharged opioid sales and led municipal governments to divert public resources to stem painkiller addiction.
The settlement, which was approved Friday by Judge Charles Breyer of the US District Court for the Northern District of California, caps litigation in one of several cases brought by cities and states against more than a dozen drug manufacturers and distributors, retail pharmacies, and associated companies for their role in contributing to the explosive growth of opioid painkiller use throughout the US. The settlement is also the first to offer monetary restitution specifically for schools.
Public governments and school districts filed the class-action lawsuit in 2021, alleging that McKinsey strategized and acted with Purdue Pharma LP and various other opioid manufacturers to create and employ marketing and sales practices to maximize opioid revenues. McKinsey agreed to the $230 million settlement in September.
The sales fueled a crisis of opioid addiction nationwide that required emergency responses to treat side effects and overdoses and other safety measures expending significant public funding, such as educational resources for special needs children who were born to addicted women, the lawsuit said.
Companies have paid more than $50 billion in settlements for making misleading marketing statements that underplayed the addictive quality of opioid pain killers, according to data compiled by Bloomberg News. The US Supreme Court is considering whether to reverse an appeals court’s decision allowing Purdue’s Sackler family owners to dedicate roughly $6 billion to a trust for opioid victims in exchange for protection against civil liability from lawsuits related to opioid marketing.
McKinsey has previously agreed to pay $600 million to settle state attorneys general lawsuits seeking to hold its work with the opioid industry accountable.
Under this latest settlement agreement, McKinsey will allocate $207 million to the class-action’s lead plaintiffs—the cities of Santa Cruz, Calif., and Pope County and Eddyville, Ill.—and $23 million to school districts. The lead plaintiffs said they intend to also ask the court for 10% of the settlement payment to cover their attorneys’ fees and costs, plus $176,000 to reimburse other expenses.
Other members of the lawsuit will receive their portion of the settlement amount pursuant to an allocation formula that governed other multi-state settlements with pharmaceutical makers Janssen Pharmaceuticals Inc, McKesson Corp., Cardinal Health Inc., and AmerisourceBergen Corp.
The court was also set to approve on Friday a $78 million settlement McKinsey agreed in December to pay health insurers and benefits providers, but it postponed a hearing for the decision until March after several parties raised objections.
The health insurers and benefits providers said in their lawsuit that they were deceived into reimbursing prescription opioids over safer, non-addictive, and lower-cost drugs and ought to be compensated for financially supporting the opioid addiction-related treatment that followed.
Dinsmore & Shohl LLP, Todd and Weld LLP, Hogan Lovells US LLP, and Goodwin Procter LLP are lead counsel for McKinsey. Lieff Cabraser Heinmann & Bernstein LLP, Robbins Geller Rudman & Dowd LLP, Simmons Hanly Conroy LLC, Motley Rice LLC, and Browne Pelican PLLC are lead counsel represent plaintiffs.
The case is In re: McKinsey & Co., Inc. National Prescription Opiate Consultant Litigation, N.D. Cal., No. 3:21-md-02996, hearing 2/2/24.