- McKinsey had built itself into the world’s most influential consultancy.
- As a consulting company, it wasn’t regulated.
- The Massachusetts attorney general has accused McKinsey of fanning the flames of the opioid epidemic.
- McKinsey had instructed the maker of a powerful opioid on how to “turbocharge sales” of the drug, how to counter efforts by drug enforcement agents to reduce opioid use and how to “counter the emotional messages from mothers with teenagers that overdosed” on the drug.
There is a lot wrong with “big pharma,” and a key symptom seems to be a reliance of hiring big consulting companies like McKinsey. Their model is simple: retain MBA’s right out of school, train them in the McKinsey way, burn them out and charge clients big bucks. I am puzzled by pharma’s continues reliance to hire these PowerPoint factories.
My exposure to these consulting companies came when I reviewed a deck presented by one of these consulting companies. The issue was a significant push back on the price increase for a specialty oncology drug. Based on the consulting company recommendations they had raised the threefold at a time when drug pricing was becoming a more significant issue. The consulting company had recommended raising the price, and their justification was “the market will bear the price increase” It might have been the “business” thing to do, but given the qualitative buzz around drug pricing it was not the right thing to do.
Of course, people who analyze spreadsheets and develop PowerPoints who have never worked in the industry said a price increase made sense. They failed to take into account the pushback and the company actually lost market share.
The Times had an excellent journalistic piece in which they said “did McKinsey’s pristine reputation as the foremost purveyor of “best practices” match its record? After nearly a year of reporting, we found that the answer was often no”.
There is a vast difference between doing the “right thing” and “maximizing revenue” for drug companies. Today, however, drug company CEO’s are more inclined to maximize revenue than worry about a pricing strategy that cast their company, and the industry, in a bad light.
Maybe drug company CEO’s know that huge changes are coming and want to get the money while they can for the Street. I do know that I have stopped reading articles and advice from McKinsey and others. There are just too many variables that can’t be measured in a spreadsheet.