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AG Derek Schmidt settles opioid lawsuit, brings $4.8 million to state for addiction treatment and abatement

Release Date: Feb 04, 2021

TOPEKA – (February 4, 2021) – Kansas has reached its first legal settlement related to the opioid addiction crisis, and it will bring $4.8 million to the state that must be used for drug treatment and addiction abatement, Attorney General Derek Schmidt announced today.

Schmidt joined a coalition of attorneys general from 46 other states, the District of Columbia and five U.S. territories in reaching a settlement with McKinsey & Company, one of the world’s largest consulting firms. The settlement resolves allegations the company violated the Kansas Consumer Protection Act by helping opioid companies illegally promote their drugs and profiting from the opioid epidemic.

“Opioid addiction has killed hundreds of Kansans and continues to ravage the lives of many more, creating one of the largest man-made public health crises in our country’s history,” Schmidt said. “In addition to the human cost, the economic cost in lost productivity, health care, child welfare and criminal justice has been high. This is our first step toward holding accountable those who peddled addiction for profit, but it will not be our last.” 

Under terms of the settlement, Kansas will be required by court order to use the recovered funds to fight substance abuse and not for general government purposes. Schmidt said he will propose legislation to establish a grant program that allows state agencies, local governments and not-for-profit entities to seek funding from the settlement to address addiction and help ensure services are provided throughout the state.

“Substance abuse together with its associated costs is not a one-size-fits-all problem, and successfully addressing it requires locally tailored solutions in every part of Kansas,” Schmidt said. “This settlement provides an opportunity for added support to build upon ongoing local efforts and address local needs.”

Schmidt confirmed in September 2017 his office was investigating conduct that contributed to the opioid addiction crisis. Today’s settlement with McKinsey is the first investigation to result in payment of damages to the state. Previously, Schmidt reached separate agreements in principle to resolve the state’s claims against Purdue Pharma and Mallinckrodt Pharmaceuticals plc, but each of those companies then filed for bankruptcy and negotiations through bankruptcy court continue. Investigations and settlement negotiations with several other companies are ongoing but have become bogged down by demands by the private lawyers hired by thousands of cities and counties, and by some states, that billions of dollars in recovered funds be paid to them as legal fees.

The Kansas attorney general’s office handled the McKinsey case without using private counsel. No local governments had sued McKinsey, and none of the recoveries will be used for attorney fees, so settlement was less complicated and drug-treatment funding made available more quickly.

Today’s legal filings describe McKinsey’s conduct in providing consulting services to opioid manufacturer Purdue Pharma, which manufactured OxyContin, in selling its product in Kansas from 2004 through 2019. The filing details how McKinsey advised Purdue on ways to maximize profits from its opioid products, including using specific messaging to cause physicians to prescribe more OxyContin to more patients, and circumventing pharmacy restrictions in order to deliver high-dose prescriptions.

The settlement also will increase transparency into the behavior that contributed to the opioid addiction crisis by requiring McKinsey to disclose tens of thousands of internal documents detailing its work for Purdue Pharma and other opioid companies for public viewing online. McKinsey also agreed to adopt a strict document retention plan, continue its investigation into allegations that two of its partners tried to destroy documents in response to investigations of Purdue Pharma, implement a strict ethics code that all partners must agree to each year, and stop advising companies on potentially dangerous Schedule II and III narcotics. 

A copy of the attorney general’s petition and consent judgment, which will be filed today in Shawnee County District Court, can be found at https://bit.ly/3jily9d.

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