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McKinsey to pay $573M to settle claims over opioid crisis role: source

• mathattack 6y ago
  This is a significant hit for a private company. If McK has 2,000 partners, that’s almost $300k per partner. (Yes - they are very well compensated, and this is probably just a fraction of their pension plan)
  • onetimemanytime 6y ago
    Well, considering the damage they caused this is nothing. They advised on /got and got paid for how to "turbocharge" opioid sales and that tuned out to be an illegal and immoral thing.
    • samizdis 6y ago
      I'd be keen to see the specifics wrt advice given on how to "turbocharge" said sales. Reuters article doesn't give any examples/detail.
      • raesene9 6y ago
        Articles like https://www.nytimes.com/2020/11/27/business/mckinsey-purdue-oxycontin-opioids.html https://www.nytimes.com/2020/11/27/business/mckinsey-purdue-... have some details. A quote from that shows some details :- " In a 2017 presentation, according to the records, which were filed in court on behalf of multiple state attorneys general, McKinsey laid out several options to shore up sales. One was to give Purdue’s distributors a rebate for every OxyContin overdose attributable to pills they sold. The presentation estimated how many customers of companies including CVS and Anthem might overdose. It projected that in 2019, for example, 2,484 CVS customers would either have an overdose or develop an opioid use disorder. A rebate of $14,810 per “event” meant that Purdue would pay CVS $36.8 million that year. "
        • samizdis 6y ago
          Many thanks; an informative read. FWIW I've just come across a related piece in Jacobin from December 2020: https://jacobinmag.com/2020/12/mckinsey-consulting-firm-opioid-epidemic-purdue-pharma https://jacobinmag.com/2020/12/mckinsey-consulting-firm-opio...
        • sjg007 6y ago
          I mean that logic is just sick and heartless.
        • a3n 6y ago
          So, they recommended paying distributors to kill people. Because, in addition to the profit distributors would make by merely being in business, they would make even more money for each related death.
      • rn086 6y ago
        an article I saw said they targeted outreach at doctors who were more likely to write Rxs edit: beaten w/ the article
      • alex_anglin 6y ago
        Many details have been published in the media. For instance: "Documents filed in U.S. courts last year outlined how McKinsey discussed ways for Purdue to “turbocharge” sales of its drug OxyContin, including paying Purdue’s distributors a rebate for every OxyContin overdose attributable to pills they sold." source: https://www.theglobeandmail.com/politics/article-mckinsey-is-open-to-settlement-regarding-opioid-work-in-the-us-and/ https://www.theglobeandmail.com/politics/article-mckinsey-is...
  • Pasorrijer 6y ago
    It's peanuts. This likely will be covered by some form of insurance, and very little will change.
• tharne 6y ago
  Too bad they can't be sued for ruining countless businesses with mindless self-serving "advice" meant to do nothing more than get their contracts re-upped. The whole business is a scam built around sending in some 26 year-old with an Ivy League degree and $100 haircut to regurgitate snippets from articles in HBR.
  • alexpetralia 6y ago
    I know it's fashionable to hate on MBAs, but I am not entirely convinced engineers are any better equipped with skills such as: requirements gathering, scoping, presenting, project management, competitive research, financial modeling, memo writing, and strategic planning. I don't believe these are truly vacuous activities, and - loathe as I am to say - MBAs may be the best trained to do this. (Disclosure: I do not have an MBA)
    • the8472 6y ago
      This is about a specific consulting company, not MBAs in general.
    • cowanon22 6y ago
      I agree with this - young engineers typically do not appreciate the importance of building the right thing vs building it well. However, the OPs point stands. McKinsey and these other companies just regurgitate what is printed in the trade press and charge you top dollars for it. You meet an experienced person once at project kickoff, and then most of your contacts are fresh grads with 2-5 years of experience. They really specialize in attending meetings and conference calls, but are all over the place (from excellent to awful) at actually implementing things.
    • olsonjeffery 6y ago
      I'm fine stating that engineers from non-elite schools are just as well equipped for the tasks you describe, but that wasn't the GP's contention. The point is that McKinsey make bad recommendations that have demonstrably bad outcomes. Their fingerprints are all over numerous bad decisions in business and government in the past few decades[0]. These are the bare minimum, because there are quite likely many negative outcomes they have championed in their role as consultants that were never publicized or reported on. Totally separate from the above is their absolutely mercenary tendency to work with anyone who will pay them[1][2]. [0] - https://en.wikipedia.org/wiki/McKinsey_%26_Company#Controversies https://en.wikipedia.org/wiki/McKinsey_%26_Company#Controver... [1] - https://www.nytimes.com/2018/12/15/world/asia/mckinsey-china-russia.html https://www.nytimes.com/2018/12/15/world/asia/mckinsey-china... [2] - https://www.newyorker.com/news/news-desk/mckinseys-work-for-saudi-arabia-highlights-its-history-of-unsavory-entanglements https://www.newyorker.com/news/news-desk/mckinseys-work-for-...
• oaiey 6y ago
  I hope they also fire everyone involved and substract the money directly from each partner compensation. That will maybe teach a lesson to a whole generation. Okay, naive, wishful thinking.
  • klmadfejno 6y ago
    That is, by the nature of a partnership, how it affects partner compensation.
    • jcomis 6y ago
      Not really. This likely will not effect partner comp. It will effect the firm, but partners will spin it as the guilty parties are gone and the leaders need to be retained (through comp!) to right the organization. The low levels will absorb it through lower comp. I've worked in consulting for years and no matter what happens, EVER, partner comp is NEVER effected. They will hem and haw about it, discuss it, maybe make it seem like they are reducing their comp (really just pushing bonuses to more opportune time), but they always get made whole.
      • a3n 6y ago
        Nit: "Effect" is an Entity, a noun. They both start with "E." "Affect" is an Action, a verb. They both start with "A." Effect is sometimes used as a verb, especially in bureaucratese, but not in the way you're using it. With apologies.
        • toby 6y ago
          Since you went there... "Affect" can also be a noun, referring to behavioral characteristics :)
        • jcomis 6y ago
          ha, thank you.
        • Judgmentality 6y ago
• hehehaha 6y ago
  McKinsey also implicitly involved in the whole Valeant debacle. These guys love extracting, no extorting, “value” from thin air.
• the_drunkard 6y ago
  McKinsey or its partners have been directly involved in Enron, Valeant, and now an opioid crisis that's claimed thousands (if not millions of lives). "In for a penny, in for a pound" - this should be McKinsey's new corporate slogan. Valeant article: https://www.ft.com/content/0bb37fd2-ef63-11e5-aff5-19b4e253664a https://www.ft.com/content/0bb37fd2-ef63-11e5-aff5-19b4e2536... Enron article: https://www.theguardian.com/business/2002/mar/24/enron.theobserver https://www.theguardian.com/business/2002/mar/24/enron.theob...
  • hirple 6y ago
    McKinsey are involved in almost every company in the Fortune 500, and have been for decades. Of course they're going to be around for almost any given corporate failure.
    • toby 6y ago
      Totally agree, this is cherry-picking. I don't have an opinion on how useful McKinsey is, but I'll note that no one is pointing out that they also did a lot of work for Microsoft before their big turnaround.
      • the_drunkard 6y ago
        Enron and Valeant are two of the most significant examples of corporate malfeasance over the past 20 years; McKinsey or its partners were directly involved in both. That's not cherry-picking.
        • jankyxenon 6y ago
          I think they work more than a third of F500 companies. What's your definition of cherry picking?
• sharkweek 6y ago
  The absolutely most fascinating part of this is learning how McKinsey has long argued that making recommendations that businesses may or may not act on does not create legal liability (until this). I’m trying to see that argument applied in any other instance and it becomes totally ridiculous. “You see, your honor, I merely suggested to my client that he kill his neighbor in order to take his land, I didn’t think he’d actually DO it!”
  • mywittyname 6y ago
    I think there are times when this disclaimer makes sense. Industry regulation can be quite complicated and nuanced enough that an action might be illegal despite not seeming so on the surface. They also can vary between jurisdiction. Having an experienced industry lawyer review future business plans is just good sense.
  • curiousllama 6y ago
    Note that the only other place it works like this law. Lawyers are always "providing advice" about complex legal matters, with no actual responsibility for the outcome (with limited exceptions). So the idea that lawyers would apply similar logic to a reasonably-similar circumstance (in terms of complexity, difficulty, potential liability, etc.) is not unreasonable.
    • arethuza 6y ago
      I don't know about the US but lawyers in the UK most definitely have liability for what they recommend - if a lawyer gives me advice that ends up causing me £X because it was legally wrong then I'd have a pretty good case for a claim on their professional indemnity insurance.
      • peteretep 6y ago
        Only if you can show negligence
    • wittyreference 6y ago
      What? Lawyers are absolutely liable. Their only shield is in the most complex realms where the actual legal theory isn't yet tested in court / with a regulator, so you know going in their advice may not pan out, because it's /experimental/. That's not the vast majority of law, though.
• asjldkfin 6y ago
  It's funny reading comment here saying how "Consulting is useless BS" whilst also condemning them for "turbocharging Opioid sales"
  • frostburg 6y ago
    You don't need to do much to be wrong, especially in the context of selling highly addictive drugs.
    • asjldkfin 6y ago
      That's not the point; you can't say their advice is ineffective, while also condemning them for being effective. The top comment derisively states: "The whole business is a scam built around sending in some 26 year-old with an Ivy League degree and $100 haircut to regurgitate snippets from articles in HBR" In the context of fining the company $500MM for being too effective. At least in the US, where the punishment is relative to the crime; the court clearly agrees about their efficacy.
      • frostburg 6y ago
        You don't need groundbreaking innovation in sales from your consultants to keep selling too much opioids, a product that mostly sells itself. Better consultants should probably try to stop you, however.
      • sudosysgen 6y ago
        I'm not sure there is that much dissonance. In the opioid case, they gave effective advice, but it wasn't necessarily of very high quality - the reason you wouldn't do what McKinsey suggests isn't because you didn't think of it but because you would find immoral and illegal. The reason McKinsey was being sued isn't because they were giving effective advice, but because it was likely illegal. Because of this I'd understand that both can be the case. That said, I'm not sure McKinsey is always as ineffective as the top comment suggests.
      • some1else 6y ago
• jariel 6y ago
  It's interesting because McK is a club, not a company. They are a relatively disparate group of people operating on the basis of culture, it's not top down. Some partners can go way off the reservation compared to others, and they may have little to do with one another.
• minikites 6y ago
  Less than 5% of their revenue. I'm sure they learned their lesson.
  • sschueller 6y ago
    Almost as if crime does pay.
• 0goel0 6y ago
  Maybe ethics and morals should be mandatory trainings?
  • minikites 6y ago
    Ethics and morals get in the way of increasing shareholder value.
  • zests 6y ago
    I am unconvinced that any mandatory training is useful (ignoring the fact that the act of implementing the training itself is useful to the people who implement the training.)
  • jimbokun 6y ago
    I think "training" is a misnomer, as its not actually the case the people doing shady stuff will change their moral compass based off of clicking through a few slides. However, if the "training" includes explaining how employees breaking these rules will be held accountable and how it will affect their continued employment, it could influence behavior of potential bad actors.
  • ativzzz 6y ago
    The only training in the end is that everything is for sale if the price is high enough.
• aneil 6y ago
  A slap on the hand.
• iujjkfjdkkdkf 6y ago
  The war on drugs is responsible for the opioid crisis. Companies psychopathically seek out profits, and need to be kept in check, but that does not diminish the fact that US (and Canadian) drug policy bears direct responsibility for opioid deaths. This kind of news story, while maybe satisfying, is a red herring. As long as addiction is criminalized, and legal drug supplies dont exist, it doesn't matter how many Purdues or McKinseys we punish, the problem does not go away.
  • spaetzleesser 6y ago
    You don't have to choose one or the other. Even if the war on drugs got ended these companies find other unethical ways to make money.
  • elliekelly 6y ago
    Why do you see it as mutually exclusive? I don’t think it’s really an either/or situation. It’s both.
    • iujjkfjdkkdkf 6y ago
      You know in cop shows like "the wire" when the police commissioner says he wants to see "drugs on the table" showing off what they seized from the gangs, but the detectives know it's a hollow victory that just panders to public opinion but does nothing to address the root of the problem? This is like that.
  • tokai 6y ago
    The opioid epidemic was started by over prescription of legal opioids. The war on drugs is an inhumane disaster. But the opioid issue is on the US health system.
    • pessimizer 6y ago
      No. Addicts (after being tricked into addiction by the Sacklers and McKinseys of the world) without the war on drugs could continue to consume legal, clean opiates, which would fail to lead to fent overdoses, and fail to push users into grinding poverty and crime. Being a opiate addict would be like being an asthmatic, just without the high mortality rate that asthma brings.
• tebuevd 6y ago
  No one ever admits guilt. No one ever goes to prison. These fines are just "cost of doing business".
  • deleted 6y ago
    [deleted]
• csciutto 6y ago
  How your classmate became a con artist: "It’s a choice that’s laden with power. Unlike a bank or a traditional business, consultancies have little capital apart from the graduates they hire. A consultancy is a machine for prestige, and you are the source of their prestige, the smoke that obscures the truth of a business that subsists on the crudity of cutting and selling. They purchased your transcript, and they purchased your diploma, but you have the power to take them away. Without you, a firm has no more weight than the shells through which it is paid. So withhold your labor, withhold your prestige, and watch as the façade begins tumbling down." https://stanfordsphere.com/2020/01/30/how-your-classmate-became-a-con-artist/ https://stanfordsphere.com/2020/01/30/how-your-classmate-bec...
• BitwiseFool 6y ago
  When company management wants to make a big change they hire consultants to provide cover and justification for it. The consultants role is to agree to and implement whatever the management's desired change is. The consultants exist to provide an air of authority behind the decision and to act as a smokescreen to the employees facing the change. If the plan succeeds, upper management takes the credit. If it fails, the burden can be shifted onto the consultants. Companies like McKinsey will say whatever you want them to say, and there is no shortage of conflicting case studies to 'prove' their points.
  • Balgair 6y ago
    Aside: When this occurs, how do the C-suite look at themselves and think that they are the ones in charge? You'd think that they'd just have the ability to do it regardless, but an expensive whipping boy (almost literally) is the better fit. How political is your org such that this even becomes a possibility to contemplate? What terrible lack of communication and respect between layers causes this? (These questions are rhetorical, of course)
    • BitwiseFool 6y ago
      Imagine you're a VP, or even a C-Suite Executive... Your employees get to make decisions based on what they think is best, what feels right. You don't have that luxury. Investors, the board, other managers who are vying for your position all demand numbers-based decision making and justification. So what do you do? You hire a well known consultancy to produce documents and data that supports your position. You can now justify your actions by pointing to what they've made for you. And, you have the added bonus of the sunken cost fallacy. "Well of course we took their advice, don't you know how much we paid for it?"
      • Judgmentality 6y ago
        So the VP's job is to be disingenuous to everyone except the consultants? He's already made up his mind about what to do, knows he can't get buy-in from employees, so he hires an external firm to generate the data he has already decided is correct. I feel like all the comments talking about a breakdown of trust seem even more poignant now after reading your comment.
• a3n 6y ago
  A mere licensing fee.
• dia80 6y ago
  The opinions on consultants in the thread is largely negative and it's suggested hiring them is a sign of organisational dysfunction. If you can find information on consulting spend in annual reports you could create a "consultant factor" for stocks and see if big spenders underperform.
  • omalleyt 6y ago
    There’s a level of dysfunction that causes a company to acknowledge the issue and hire consultants. And then there’s a level of dysfunction that causes the company to not acknowledge the issue and not hire consultants. The latter level is higher
  • cycomanic 6y ago
    That relies on the premise that stock performance is somehow correlated with health or overall performance of a company. I think we have recently seen plenty of evidence that the correlation is likely only weak (and I'm not just talking about GME).
• spaetzleesser 6y ago
  It's really tiring to constantly hear how people or organizations with deep pockets can "settle" things by handing over money. Nothing will ever change until either some high level people go to jail or the company goes to jail (as in suspending its business for a while). Or make the fines outrageously high so it really hurts the company and not just as a small part of their profits.
  • sct202 6y ago
    I'm a little more hopeful. They've never been punished like this before for their work. In the future, they'll probably be more careful about who they work with and what they recommend. Not to mention, Purdue Pharma is already taking on the lion share of the blame for these deaths, and paid a $8b settlement and also turned into a public beneficiary company.
• breck 6y ago
  "get an audience for our patent infringement suits so that we are feared as a tiger with claws, teeth and balls, and build some excitement with prescribers that OxyContin Tablets is the way to go." (CEO of Purdue, 1996) There will be another Purdue, except 10x worse, if we don't abolish the http://uspto.gov/ http://uspto.gov/.
• hikerclimber 6y ago
  they should pay all the money they have.
• hikerclimber 6y ago
  hopefully covid kills everyone on earth and the virus keeps mutating every second and there is no cure.
• todipa 6y ago
  $573M will be minimally felt at the organization level. It is less than 5% of global revenues.
  • paxys 6y ago
    5% of total revenue is a MASSIVE charge. Most companies in the world have profit margins lower than that. They will absolutely feel that in their financial statements.
    • bitcharmer 6y ago
      This is not a retail merchant. This is a big five consultancy. I can assure you their margins are well above 30%.
• vypr007 6y ago
  Approaching this from a cold math perspective, like a McK consultant would.. $573M settlement for approx 450k deaths, is a a little over $1200 per death if that is given away as compensation at all. Not bad for McK I'd say. The consultants really managed this well.
  • leafmeal 6y ago
    From the New York Times article, "The amount McKinsey is paying is substantially more than it earned from opioid-related work with Purdue or Johnson & Johnson, Endo International and Mallinckrodt Pharmaceuticals, its other opioid-maker clients, a person involved in the settlement negotiations said" https://www.nytimes.com/2021/02/03/business/mckinsey-opioids-settlement.html https://www.nytimes.com/2021/02/03/business/mckinsey-opioids...
    • RhodoGSA 6y ago
      Yeah, but liquidated damages can far exceed the cost of the project. In most CapEx you can see clauses that include 3-10X the cost of the project in potential liquidated damages if your robot goes down and damages things, or causes the line to go down. I have no idea how this is handled from the Service side but i imagine it's similiar. IANAL.
    • glaucon 6y ago
      And if I killed someone to get their wallet no one suggests that because I didn't get much out of the wallet it's OK for met to have a lenient sentence ? If McKinsey knowingly offered advice that led to thousand of deaths then the penalty should be more than $1200/body regardless of what their fees were.
      • leafmeal 6y ago
        What do you think an appropriate penalty is? When I first read this headline I was worried the fine would be just a slap on the wrist. I was glad to see it was more substantial. Personally, I think a fine like this is just if it causes consulting firms to think about the consequences of their actions and do the right thing in the future. Making firms responsible for damages they cause would be best. Making it it clearly unprofitable is a good step.
• crawdog 6y ago
  Through all of this, no one has received any jail time. That's the biggest crime.
• yawaworht1978 6y ago
  There are people here who say that the consultants are too expensive and are often needed by decision makers to tick a box. But many forget how this demand is created. In a startup, things have to happen fast, some technical debt is unavoidable or the lesser evil. So everything is carrying on, people are hired, many management layers are integrated with what I would call human resources debt( managers covers their own, the top level does not know what is happening at the bottom) and suddenly, the demand for an external consultant is created. This is the price you pay for the fast growth and overlooking the little obstacles. Now the top level management will send a corporate detective aka consultant because he does not trust the management layers, they want a neutral party review and a suggestion to fix it, because nobody else did. Makes sense to me and yes, this forum is very capitalism minded, a 100 usd haircut is fine, first impression and all.
• slumslum 6y ago
  Ex McK-Intern here: From my short-term experience, I'd say there are folks who genuinely want to help their clients while others are mostly in for the prestige and the money. The business model of staffing young graduates alongside more experienced people is actually quite reasonable as the experts could steer the overall project while the juniors would do the number crunching and info gathering. I personally see their value for a broader circle in the sense that if the consultants can make a client $$$ or reduce costs, this can either lead to overall improvement of business and thus increase employment or - in case people need to be fired - save the rest of the employees from their whole company going out of business in the worst case. Just to briefly touch the most common criticisms. Nevertheless, I decided not to take their offer afterwards, partly due to exactly those shady practices that went well beyond even my quite relaxed sense of business ethics.
  • bitcharmer 6y ago
    I've worked with all of the big five and I can assure you there is little to no value that they bring to the table. It's all smoke and mirrors dressed up in suits and sprinkled with corpo-talk that makes no sense if you're a domain expert. Also, deploying clueless but well dressed junior people and only sending the seasoned specialists to extinguish fires is not a reasonable model. I mean it is if your sole goal is to rip off your client with delivering minimum value.
• hospadar 6y ago
  I wonder what McKinsey's profit on this gig was - if >= $573M, then this is just the cost of doing business, no problem, do it again and make some more $$.
  • klmadfejno 6y ago
    Profit for a study like this is likely on the order of $1M
• vmchale 6y ago
  Every time I hear about McKinsey in a headline it's for doing something reprehensible.
• ihaveajob 6y ago
  I know someone who worked for McKinsey for a few years, and some of the projects he described were straight up slimy. The one I recall right now was helping a big payday lender (read: large scale loan shark) figure out how to get their money back from people who were behind on their payments. The problem was that they can only attempt to withdraw so many times from someone's bank before they're banned, so the agreed solution was to estimate the best time of the month when the client had received their paycheck, but before they had used it to pay rent and other expenses. This person is no longer working there, and I'm not surprised.
  • colinmhayes 6y ago
    Same with the people I know at Mckinsey. I makes sense though, companies contract out the work that would cause them bad publicity. Then when someone writes a news story they can say "hey, that wasn't us, it was the consultants."
  • ipv6ipv4 6y ago
    As a very early P2P lending participant in the early days of Prosper Lending, I've seen the other side of this. Many borrowers adopt a mindset that they have earned the money they borrowed and don't feel that they need to pay it back. I came in to Prosper with a distaste for the apparent predatory lender tactics and came out with an appreciation that not everything that seems predatory really is. While there are plenty of legitimately shady lending practices, reasonably high APRs and the collection tactic you described are not some of them.
    • cmmeur01 6y ago
      Asserting your debt as more important than someone's housing does seem like a pretty shitbag thing to me.
      • t-writescode 6y ago
        You say that but every debt company will say that very thing. Miss enough credit card bills, and they come for you; and, in states that don't protect the house, that's fair game.
• froidpink 6y ago
  One of the Mckinsey decks that got leaked can be found here in case anyone's curious https://www.reddit.com/r/consulting/comments/k2c8ku/mckinsey_purdue_presentation_documents_per_latest/ https://www.reddit.com/r/consulting/comments/k2c8ku/mckinsey...
• maybelsyrup 6y ago
  One of my first jobs out of college was at small management consulting firm founded by an formerly very high level McKinsey guy. In a bigger firm, I wouldn't have had much contact with this person, but since we were tiny, he would often be out in the field with the junior people. One week I found myself with him in some faraway city. We were a bit lost (this was before smartphones) and late for our next appointment. He was frustrated about it because we couldn't get a cab to save our lives. As the minutes ticked by, he'd get more and more irritated, muttering to himself about losing the fucking clients, etc. You can imagine one of these master-of-the-universe types when they get indignant; it's just like the movies. At some point in all the running around, he notices how he's acting and tries to summon some perspective on it all, get out of his frustration. "You know," he said, "when the plague comes, society's not gonna need management consultants, nor is anyone gonna miss us. We'll get to the meeting when we get to the meeting; no one's gonna die because we're not there." From a guy who I'd only known as this very hard-charging white collar business guru, a guy who fell out of a Tom Wolfe novel, this was unexpected and funny to young, naive, impressionable me. I got the impression that while he may not have completely rid himself of being annoyed at being late, he was also sincere. I think about this moment a few times a year, actually, something I wouldn't have predicted. Looking back on it, I'm pretty sure that at the highest levels, these people know that they're not giving civilization all that much, and that this is never very far from their minds.
  • haltingproblem 6y ago
    While amusing, this attempts to humanize them and somewhat whitewash their abominable actions. They are sitting at the top of the power matrix making lives miserable and dangerous for the ones with least power - paycheck to paycheck workers, those with addictions, inmates in Rikers, dissidents. The fact that they are aware of their own lack of usefulness makes the whole enterprise even more cynical and shady.
    • maybelsyrup 6y ago
      To the extent that telling you all this story was an attempt to humanize these guys and "whitewash" their behavior (it wasn't), I have some bad news for you: they're human. It does nothing against evil to pretend that the world is composed of a small number of monsters and the rest of us good ones. I'm the first one to agree with you: consulting - hell, fundamental aspects of capitalism itself - are deeply cynical and morally suspect, and result in a lot of unnoticed pain and death and ruin. But in my view, ignoring the fact that criminals of all types go home and kiss their children at night, and mean it, is part of what keeps us locked in the status quo. And by the way: instead of ascribing intentions to me that you, as the reader, can't know for sure from the text alone, why not just ask me what my intentions are?
• samstave 6y ago
  To whom do the settlement proceeds go?
• haltingproblem 6y ago
  Lets not forget this episode where McKinsey charged NYC $27 million for a flawed, nay, doctored analysis which actually caused violence to soar at Rikers. The software they delivered never worked. The sheer notion of Harvard/Princeton educated McKinsey consultants ripping off NYC for millions and putting inmates at Rikers at more risk of violence is sickening. https://www.propublica.org/article/new-york-city-paid-mckinsey-millions-to-stem-jail-violence-instead-violence-soared https://www.propublica.org/article/new-york-city-paid-mckins...
• haltingproblem 6y ago
  This statement says that 40+ US States and DC. I have seen 50 states in other articles. Does this mean that the Feds can still go after them? The Dems are historically very friendly to the Pharma industry in ensuring outcomes in-spite of populist posturing. Can Medicare/Medicaid/VA sue them for recovery of monies spent in treating addictions and prescriptions?
• neurotech1 6y ago
  Let's not forget, these are the same consultants that did work for Enron, work leading up to the 2008 financial crisis.[0] McKinsey is also advising various government agencies on optimizing their Covid-19 response[1], generating revenue of $100m and counting. [0] https://en.wikipedia.org/wiki/McKinsey_%26_Company#Controversies https://en.wikipedia.org/wiki/McKinsey_%26_Company#Controver... [1] https://www.propublica.org/article/how-mckinsey-is-making-100-million-and-counting-advising-on-the-governments-bumbling-coronavirus-response https://www.propublica.org/article/how-mckinsey-is-making-10...
  • haltingproblem 6y ago
    Worse. Most of Enron management was directly sourced from McKinsey and McKinsey was intricately involved in its strategy and accounting. One day the story will be told of how they got away with it but Andersen took the whole blame. https://www.independent.co.uk/news/business/analysis-and-features/mckinsey-how-does-it-always-get-away-it-9113484.html https://www.independent.co.uk/news/business/analysis-and-fea...
    • nickff 6y ago
      "The Smartest Guys in the Room" told that story, and the short version is that Andersen was the auditor which was supposed to be ferreting out accounting issues (and has certain legal responsibilities). McKinsey was a recruiting ground and consultant.
      • haltingproblem 6y ago
        That is not what this article says: https://www.theguardian.com/business/2002/mar/24/enron.theobserver https://www.theguardian.com/business/2002/mar/24/enron.theob... McKinsey was integral to designing Enron's asset light strategy and also creating the stock borrow structure, their internal talent marketplace, etc. etc. Seems like where Enron stopped and McKinsey started is hard to place.
        • nickff 6y ago
• chiefalchemist 6y ago
  This is going to sound heavy-handed but what they did was terroristic. It undermined individuals, families, and the social fabric. It's not a passing event but an endless altering of fulfilling lives. The dollar amount might feel impressive. But keep in mind the actual employees who contributed to the "turbochargeing" aren't paying that, and they are still walking the streets. I can't imagine how this is Justice, or even justice.
• andrewon 6y ago
  Failure of free market mechanism? McKinsey optimized the business strategy to maximize profit. The strategy is locally optimal but a net negative at society scale. I always puzzle why some economists oppose the basic idea of regulating drugs. Layman like us won't have the prior knowledge to tell the difference between snake oil and effective treatment. Drug maker won't have the incentive to conduct expensive randomized trials. Are we going to tell by reading Amazon reviews?
• throwawaysea 6y ago
  McKinsey is a firm that simply does not do good work. I am unclear on what value their clients derive from them and why it has the reputation of being a good place to work at or have on your resume. They're basically opinion guns for hire, who can parallel construct their way to whatever conclusion you want, granting the goals of [your company or government agency] a sheen of legitimacy. They manage to avoid oversight regularly (https://www.nytimes.com/2019/12/14/sunday-review/mckinsey-ice-buttigieg.html https://www.nytimes.com/2019/12/14/sunday-review/mckinsey-ic...). They have a history of of corrupt leaders and fingerprints on numerous fiscal disasters (https://www.independent.co.uk/news/business/analysis-and-features/mckinsey-how-does-it-always-get-away-it-9113484.html https://www.independent.co.uk/news/business/analysis-and-fea...). They are also very careful to play the PR game well. A good example of their incompetency intersecting with their PR efforts is their spurious claims on diversity (https://www.mckinsey.com/business-functions/organization/our-insights/why-diversity-matters https://www.mckinsey.com/business-functions/organization/our...). The "Diversity Matters" report here has been quoted by virtually everyone - from the Harvard Business Review to corporate HR teams. And it is remarkably deceptive, because it has been bandied about as evidence that more diversity = better outcomes. Their own study at the link above admits there is no casual link here. It states this in an incredibly misleading way: > While correlation does not equal causation (greater gender and ethnic diversity in corporate leadership doesn’t automatically translate into more profit), the correlation does indicate that when companies commit themselves to diverse leadership, they are more successful. And now here we are, with corporations normalizing discriminatory practices relating to hiring, promotion, and so forth.
  • arbitrary_name 6y ago
    I've worked with them and helped implement some of their recommendations. They do brilliant work and have some very clever people. They also do some very awful things and have some dumb people. Your starting line is overly reductive and not based in fact.
• crumbshot 6y ago
  This is far too low. A fine large enough to destroy the company (as was effectively done to Purdue) would have been the only palatable outcome. And even more importantly, legal repercussions for all their employees who were personally responsible for this. All this settlement achieves is 'a cost of doing business', as they say. It's not punishment or deterrence. McKinsey and other companies like them will do similar in the future, and simply pay it off, again.
  • minikites 6y ago
    If big companies started facing consequences for their actions our economy would fall apart.
    • omosubi 6y ago
      Why? Because people would actually be held accountable for their decisions? Shouldn't that be how it works to begin with? It would be painful in the short term but in the long term i think it would make people better off
      • minikites 6y ago
        I agree that it shouldn't be this way, but I remember 2008 and the fact that zero people were punished. The US government will protect corporate profits at all costs.
        • bcrosby95 6y ago
          I agree, but I'm not really sure what that has to do with this: > If big companies started facing consequences for their actions our economy would fall apart.
          • minikites 6y ago
            There are enough large companies who have committed misdeeds worthy of major consequences that if we actually punished all of them in a meaningful way, the economy would fall apart, because there would not be many companies left.
• idclip 6y ago
  Heh. Sure ... really? How high were the health costs of that crises and how high were their profits during that period? Aaaah. What a world...
• mjcohen 6y ago
  Why aren't these people in jail?
• Clubber 6y ago
  Sadly, I believe the money that will go to the states will help finance the incarceration of those very opioid users.
• deleted 6y ago
  [deleted]
• jypepin 6y ago
  so $573M settlement for 450000 overdoses. So they value life at $1275. The Sackler family is worth $13b. Ridiculous.
  • StormyWeather 6y ago
    copypasta from an answer to a similar comment above: I am not defending what the firm did but we are talking about a study that took place in 2017, it has nothing to do with what happened before and certainly doesn't account for all deaths after 2017 either.
  • logicchains 6y ago
    >So they value life at $1275. McKinsey bears some responsiblity but not all of it; nobody forced people to take those opiates, the addicts also bear some responsiblity. The idea in modern society that people have zero responsibility for their own actions is part of why we're in this mess to begin with, because people with that attitude aren't going to work hard to take responsibility for their own health and wellbeing. I'd bet at least half the people here complaining about McKinsey's behaviour are the same people who'd argue that people should just trust their doctor and do whatever the doctor suggests, and refuse to accept that often what's financially in the doctor's best interests is not in the best interests of the patient's health.
    • tibbetts 6y ago
      Responsibility doesn’t sum to 100%. If I fly on a crappy airline and get in a plane crash, it was partly my fault, and also the fault of pilots, maintenance people, regulators, executives, and many more. If someone makes a box with a hole in it labeled “free prize inside” which chops off your fingers, it’s mostly their fault. If everyone knows that opiates are addictive, and a pharmaceutical company says they figured out how to make non-addictive ones, and gets regulator approval, and convinces doctors to prescribe their new drug, and to tell patients it is not addictive, then I think lack of personal responsibility is only one small part of the problem.
• choward 6y ago
  > U.S. government data resulted in 450,000 overdose deaths from 1999 to 2018 They're paying just over $1,000 per life. According to the U.S. government a human life is worth $10,000,000. Seems totally fair. https://www.npr.org/2020/04/15/835571843/episode-991-lives-vs-the-economy https://www.npr.org/2020/04/15/835571843/episode-991-lives-v...
• fqye 6y ago
  McKinsey would think it is a badge of honor because it means they were competent and their advice made difference significant enough from pure BUSINESS point of view.
• olefoo 6y ago
  And not a single director goes to jail. Not even for a weekend.
• StormyWeather 6y ago
  McKinsey employee here. There's a lot of things that I think are quite disfunctional at the firm, but most of the criticism I read in the comments seems to me to be pretty wide of the mark and to be rooted in both an understandable indignation and an ignorance of the many realities of the firm. I share the anger and I would probably point it at the firm too it if I didn't work there and know things from the inside. There is real anger (and a sense of betrayal) inside the firm against the partners responsible for this, as there was over the collaboration with ICE or the South African corruption scandal. Not anger because they put the firm in jeopardy but because what they did was wrong and went against the firm's values. Thankfully they have been terminated. Some will say I am a mouthpiece for the firm on a PR rampage and I have no way to prove them wrong but I still feel I have to try and provide a bit of perspective from the inside. More of that can be found in my fellow firm member klmadfejno's comments to which I subscribe 100%. It doesn't help that very little of what happens in the inside is visible publicly. It does not stem from a conspiracy to do evil things secretly but is considered necessary mainly because: 1. the firm serves competing companies and handles sensitive information (think strategic commercial and financial information, not conspiracy to feed on innocent newborns. Even internally we are not allowed to discuss a lot of what other teams do or only a very sanitized version) 2. the firm advises and clients must decide whether they follow that advice or not (they often don't) and not be able to shield themselves behind someone else (particularly when the client is a government) for the decisions they eventually take. McKinsey is an archipelago where anyone who can convince a team to work with them and a client to pay for it can start an engagement (and I mean anyone). This means that a lot of shitty things can happen (think advising ICE, the South Africa corruption scandal, Enron or the current Purdue situation). The leadership has nothing to do with initiating or managing engagements and doesn't have the kind of executive power that you find in a traditional company. However they do have a role in setting the rules regulating how this takes place. To avoid shit happening engagements must be approved by several committees and it's part of the responsibilities of the leadership to ensure that the policies that these committees enforce are in agreement with the firm's values. The current leadership has recognized in the last couple of years that these policies were not strict enough and has worked hard to strengthen them (that's my opinion, not fact). It now is not possible to start an engagement that would derive into harm against society, the environment, human rights etc... An engagement as the Purdue one (dating back to 2017) would not be possible now, nor can we serve tobacco companies, arms manufacturers or start an engagement that would help create new fossile fuel extraction capacity. To quote the firm's Managing Partner: "As you know, we have made fundamental changes to our professional standards, policies, risk management and culture over the past two years. These changes include: ▪ Adopting a new Client Service Policy in 2019 that would have stopped us from doing this work on multiple grounds as the epidemic unfolded. It is also what led us to cease all opioid-specific work anywhere in the world. ▪ Introducing a new code of conduct that leaves no room for doubt as to the conduct that is expected of every colleague. We said we would have no tolerance for those who violate our professional standards. In this case, after a thorough investigation, two partners have been terminated for violating our Firm’s professional standards. ▪ Adopting a purpose statement after a year of debate and dialogue and using this to inform the decisions that we make. But we need to go further. And we will. We must use this moment to bring further energy to the discussions we have around our values and, critically, to the actions we all take to ensure they are delivered without fail every day, everywhere " (https://www.mckinseyopioidfacts.com/wp-content/uploads/2021/02/todays-settlement-on-opioids-and-setting-a-higher-standard.pdf https://www.mckinseyopioidfacts.com/wp-content/uploads/2021/...) This means that a hard-left guy like me can work at McKinsey and be very proud of what he does and look at his children in the eye. While policies I am dead against are promoted somewhere else at the firm, as a firm member I can (and do) choose to work on projects that promote policies that I agree with. The important part is that the control mechanisms that were too weak keep being strengthened as I think the current leadership is doing, but I am looking hard and will keep doing so and hold them accountable, as a lot of my colleagues are. I'd say most but that would be anecdata. Regarding consultancy value, I can only provide more anecdata. There is a strong culture to overdeliver and bring more to the table than what the client paid for. The young consultant I have seen discussed across the comments is never left alone and is part of a team with experienced subject-matter experts. McKinsey recruits lots of seasoned experts and brilliant minds with amazing skills and working with them is the main part of what makes working at the firm so amazing (along with the challenging problems we are allowed to take a stab at solving). I have definitely come across buzzword-wielding, smooth-talking McKinsey consultants bullshitting their way through an engagement and delivering little value but in my experience it is not the rule. I cannot discuss what I do but I can say we are very much encouraged to go above and beyond, to share all the knowledge we have and have often seen wizened, experienced, no-bullshit-taking and distrustful engineers ending up genuinely amazed with the new insight and actionable knowledge we have shared with them (and of course we learn a lot in the bargain too)