By portraying itself as a company with a heart, not just a lust for profits, McKinsey appeals to younger, idealistic students concerned about global warming, inequality, and racial justice. McKinsey has consulted for at least nineteen pharmaceutical clients — all subject to FDA regulation, but those companies may have paid a HUGE price.
In their first year at McKinsey, business school graduates can make as much as $ 195,000, bonus included, but are often expected to work long into the night with a demanding travel schedule. McKinsey’s decision to help pharma sell more opioids when the abuse of those drugs had already killed thousands of Americans was all about money. Two senior partners discussed possibly purging records, apparently to hide their involvement. McKinsey agreed to pay more than $ 600 million to settle investigations by dozens of state attorneys general into the firm’s role in fanning the opioid epidemic. The firm also issued a rare apology and fired the two employees but said it did nothing illegal.
Overall, McKinsey grabbed more FDA business in four years under Trump — $ 77 million — than in eight years under Obama. McKinsey has also advised at least nineteen drug companies — all subject to FDA regulation — and three major drug distributors, for which it billed a total of at least $ 400 million during a recent three-year period. Even if McKinsey doesn’t share confidential information, the firm’s decision to work simultaneously for drug companies and the FDA puts all parties in an awkward position.
McKinsey and Biogen
The stakes were enormous. As many as six million Americans have Alzheimer’s, and at an estimated annual cost of $ 56,000 per patient, aducanumab represents a potential windfall for Biogen in the billions of dollars. ( Biogen has since lowered the price. ) Yet, some health experts say the drug falsely raises hopes of Alzheimer’s families, desperate for any treatment, while imposing an almost incalculable financial burden on the Medicare program. Public Citizen’s Health Research Group, an influential consumer advocate, called the FDA’s approval of aducanumab, marketed as Aduhelm, “ indefensible ” and “ reckless ” and asked federal officials to investigate.
After two drug trials were stopped because they showed little prospect of helping Alzheimer’s patients, the FDA worked behind the scenes to salvage the drug, eventually approving it over the strong objections of its own independent expert advisory panel. Ten of the eleven-panel members had concluded there was insufficient evidence the drug worked.
While the Aduhelm controversy received extensive media coverage, McKinsey’s behind-the-scenes role in promoting the drug has remained hidden from the public. McKinsey’s strong support for the Alzheimer’s drug. In April 2021, months after the FDA’s expert panel questioned the efficacy of Aduhelm, Kevin Sneader, then McKinsey’s managing partner, praised the drug, calling it a “first-in-class disease-modifying therapy for Alzheimer’s. ” For that reason, he said, Biogen expected “ massive public interest in the drug and the disease.
To help with the product launch, McKinsey partnered with UsAgainstAlzheimer’s, a nonprofit advocacy group funded partly by Biogen. The result was a web and voice service to support families concerned about the disease, Sneader said. The service, BrainGuide, was developed by a joint McKinsey and Amazon Web Services team and launched on ABC’s Good Morning America.
In 2018, McKinsey billed the FDA $ 11.6 million for advice on its drug approval process. The firm also billed Biogen nearly $ 10 million during roughly the same time frame, McKinsey records show. It isn’t clear what McKinsey did for Biogen, apart from its work for UsAgainstAlzheimer’s .
Turbocharging Opioid Sales
It was 2002, and McKinsey was on the hunt for new clients, this time in the target-rich field of pharmaceuticals, already a significant income source for the firm. McKinsey wrote that drug companies could fix the problem simply by analyzing prescription data better. “ When a patient fills a prescription, the order is stored in a database that can be matched for drug, producer, and physician, ” the firm explained. This information could then be used “ to target physicians who are most likely to prescribe more of a given drug over time.
From 2004 to 2019, Purdue paid McKinsey $ 83.7 million in fees for marketing advice that made its billionaire owners richer by stoking the nation’s appetite for the painkilling drug OxyContin. McKinsey assembled a formidable team to advise Purdue, including Elling and two medical doctors, one of whom also had a Ph.D.
McKinsey slides provided ammunition for a lawsuit the Oklahoma attorney general filed years later against J & J — but not McKinsey — accusing the company of “ embarking on a cunning, cynical and deceitful scheme to create and feed the need for opioids, engineer a mutant poppy to amplify the market they made, overstate the effectiveness and minimize the risk of these drugs.
McKinsey also suggested that Purdue pay more attention to nurse – practitioners and physician assistants, who are not doctors but can influence prescribing practices. “ They have the greatest sales rep access and are increasingly important in large group practices, ” McKinsey said. The two groups registered double-digit increases in OxyContin sales, another target of opportunity.
McKinsey began viewing those who challenged Purdue as the enemy. The firm asserted that attempts to curb the epidemic had gone too far, making it difficult for patients who truly needed pain relief to get help. McKinsey asked Purdue to buy more data, right down to how many milligrams of OxyContin each prescriber wrote. The consultants didn’t just sit around their computers and spreadsheets; they ventured into the field, interviewing physicians, nurse – practitioners, and pharmacists. They did ride – alongs with sales reps and studied techniques for keeping patients on opioids longer, according to law enforcement records.
The most important takeaway from McKinsey’s July 2013 analysis was this: while drugstores and law enforcement officials were trying to limit how much OxyContin was coursing through the nation’s bloodstream, McKinsey was doing just the opposite, even suggesting ways to get around those safety measures.
McKinsey rolled out ever-stronger recommendations to keep the OxyContin pipeline flowing, such as targeting the heaviest prescribers, sharply increasing prescriber visits by sales reps, using patient advocacy groups to push back against efforts to limit “ appropriate ” access, accelerating efforts to set up an alternative drug distribution channel, and engaging in high – level talks with Walgreens. “ Rather than addressing the pieces individually, ” McKinsey wrote, “ we recommend you take actions to ‘ Turbocharge Purdue’s Sales Engine ’ and optimize across all elements of the winning sales model — from targeting, to territories, to incentive compensation. ” The firm invoked words from the Vietnam War, stressing the importance of “ winning the hearts and minds ” of the sales force and permanently changing how the company operates. Purdue rebranded its “ turbocharge ” campaign, realizing it might not sit well with families that lost children to opioids. The new name: “ Evolve to Excellence. ” In 2017, McKinsey made a suggestion that stunned the health – care community when it became public. The firm thought Purdue should consider giving distributors a rebate for every OxyContin overdose attributable to pills they sold. As a guide, McKinsey estimated how many customers of these companies might overdose. It projected that in 2019, for example, 2,484 CVS customers would.
As the decade ended, McKinsey announced that it would no longer take on opioid manufacturers as clients. By then, 400,000 Americans had died from abusing prescription or illicit opioids. Along the way, Purdue’s owners had removed $ 10 billion from their company.
By August 2021, McKinsey had paid about $ 641 million to settle claims from states and U.S . territories, but that didn’t end the litigation. At a federal court hearing in California, a McKinsey lawyer said that the firm was facing fifty additional lawsuits filed by cities, counties, Native American tribes, union health benefit plans, and schools, among others.
Purdue is not solely to blame for the opioid epidemic. Doctors overprescribed OxyContin, pharmacists collected bonuses for filling prescriptions they shouldn’t have, the FDA and DEA allowed the epidemic to take shape. Lawmakers failed to enact laws to safeguard the public.
The sad part is that pharma companies rely on these MBA spreadsheet analysis consultants. In my book, McKinsey has crossed the line repeatedly and should not be trusted.