By Dietrich Knauth
NEW YORK, April 9 (Reuters) – Consulting firm McKinsey & Co has agreed to contribute $125 million to Purdue Pharma’s bankruptcy settlement, resolving potential legal claims over advice it provided to Purdue on how to “turbocharge” sales of its addictive painkiller OxyContin, according to a court filing submitted late Wednesday.
Purdue, which received bankruptcy court approval of a $7.4 billion restructuring plan in November, will use the money to pay creditors who accused the company of fueling the U.S. opioid epidemic through its aggressive sales tactics for OxyContin.
The bankruptcy settlement left open the possibility that Purdue could pursue legal claims against McKinsey over marketing advice that contributed to the company’s downfall.
McKinsey, which previously agreed to pay $1.6 billion in settlements with the U.S. Department of Justice, states and local governments over its role in the opioid crisis, did not admit any wrongdoing in its settlement with Purdue.
Purdue and McKinsey did not immediately respond to requests for comment.
McKinsey, which ceased advising clients on opioid-related businesses in 2019, has previously said that it was “deeply sorry” for its advice on boosting opioid sales, and that its work for opioid manufacturers “will always be a source of profound regret for our firm.”
The McKinsey settlement will add $50 million to the expected recovery for individuals harmed by the opioid crisis, a group that had been previously expected to get about $865 million, according to court documents.
Most of the Purdue settlement money will go to states and local governments, which have agreed to use the money for opioid abatement efforts such as addiction treatment. Purdue’s owners, members of the Sackler family, are contributing at least $6.5 billion to fund the bankruptcy settlement.
Purdue twice pleaded guilty to federal criminal charges of falsely marketing the drug, acknowledging it misled regulators, doctors and patients about addiction risks and engaged in illegal practices to boost opioid sales. The company is scheduled to be sentenced over its second guilty plea on April 21.
After the bankruptcy, Purdue will be converted into a nonprofit called Knoa Pharma, which will focus on developing and distributing opioid overdose reversal and addiction treatment medications.
The settlement must be approved by a U.S. bankruptcy judge before it becomes final. Purdue will seek approval of the agreement at an April 30 court hearing in White Plains, New York.
(Reporting by Dietrich Knauth, Editing by Alexia Garamfalvi and Aurora Ellis)
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