Innovation Ecosystem

Accountability in an election year

New stories about McKinsey & Co., Purdue Pharma, and the FDA may open new lines of inquiry about McKinsey’s past relationship with Rhode Island – and why it apparently worked without a state contract

Photo by Richard Asinof/File photo

R.I. Attorney General Peter Neronha may decide to undertake new lines of legal inquiry regarding McKinsey & Company following the recent investigation by the New York Times about the consultant's role with Purdue Pharma and the FDA.

By Richard Asinof
Posted 4/18/22
The latest revelations found in a New York Times investigation into the potential collusion between McKinsey & Company, the FDA, and Purdue Pharma may prompt an inquiry into the role that McKinsey & Company played in working for the state of Rhode Island, apparently without a state contract.
Will the failure by the state to increase the low reimbursement rates paid by Medicaid to providers in Rhode Island, particularly for mental health and behavioral health services, prompt an investigation by the R.I. Attorney General’s office around parity? Have the owners of the Industrial Trust building in downtown Providence requested that an assessment about asbestos in the building be conducted by the R.I. Department of Health, as required by law before any renovations take place? Why is there a gap of some $200 million between what Gov. McKee has put into his FY 2023 budget and what recovery advocates say is necessary to support the ongoing work for recovery and treatment for substance use in Rhode Island?
With Secretary Womazetta Jones scheduled to depart from her job at RI EOHHS in less than two weeks, the complex, complicated process of managing the re-procurement of Managed Care Organizations is ongoing. Currently, there are three insurance plans providing services to roughly one-third of all Rhode Islanders receiving Medicaid. One of the current providers, Tufts Health Plan, has apparently been disqualified for consideration because of a late application. Two new potential applicants, Blue Cross & Blue Shield of Rhode Island, and Molina Healthcare, are competing with the other existing MCOs, Neighborhood Health Plan of Rhode Island, and UnitedHealthcare.
With Secretary Jones’s departure, it is unclear who has been tasked with overseeing the process of re-procurement within Gov. McKee’s administration.
Currently, there are some 352,000 Rhode Islanders receiving Medicaid, more than one-third of the state’s population, a clear dividing line between those who “have” and those who do not.

PART Three

PROVIDENCE – Curiouser and curiouser. The recent front-page story in The New York Times, detailing the relationship forged between McKinsey & Company about how the consulting firm served as the go-between for the U.S. Food and Drug Administration and Purdue Pharma – at the same time – in shaping federal policies regarding regulation of prescription opioids reads, well, much like the convoluted story of the marketing and regulation of the pesticide DDT. Except for the fact that Rhode Island has its own peculiar relationship with McKinsey & Company,

When the coronavirus first began to ravage Rhode Island and the nation in the spring of 2020, the state of Rhode Island contracted with a number of large corporate entities, including the Boston Consulting Group, Salesforce, and Amazon, to help design its response, with a focus on developing not just a public health response but shaping an economic recovery plan.

One such arrangement, apparently made without the benefit of a state contract, but rather through a pro bono “arrangement” with McKinsey & Company, facilitated through the Rhode Island Foundation, and “coordinated” through CommerceRI, was to place consultants from McKinsey & Company at the state’s decision-making table, side-by-side [virtually] with consultants from the Boston Consulting Group

In a series of articles, ConvergenceRI has been doggedly pursuing this story – detailing the settlement with McKinsey & Company over the firm’s role in “turbo-charging” the opioid epidemic on behalf of its client, Purdue Pharma, and then detailing the hush-hush arrangement between McKinsey & Company and the state of Rhode Island. [See links below to ConvergenceRI stories, “The high cost of consulting firms making policy,” “Becoming stuck, and then unstuck, in time,” and “How many m millions?”]]

The latest revelations about McKinsey’s role with Purdue Pharma and the FDA came to light in a New York Times investigation, about the convoluted role that McKinsey & Company played in sharing information, as the headline in the Times story declared: “McKinsey opened a door in its firewall between Pharma clients and regulators,” further explained in the subhead: “The firm let consultants advise both drug makers and their government overseers, internal records show. ‘Who we know and what we know’ was part of their pitch.”

The New York Times story began as follows: Jeff Smith, a partner with the influential consulting firm McKinsey & Company, accepted a highly sensitive assignment in December 2017. The opioid manufacturer Purdue Pharma, beleaguered and in financial trouble, wanted to revamp its business, and an executive there sought out Dr. Smith.

Over the following weeks, [Dr. Smith] traveled to Purdue’s offices in Stamford, Conn., meeting and dining with executives. His team reviewed business plans and evaluated new drugs that Purdue hoped would help move the company beyond the turmoil associated with OxyContin, its addictive painkiller that medical experts say helped to spark the opioid epidemic.

The New York Times story continued: But the corporate reorganization was not Dr. Smith’s only assignment at the time. He was also helping the Food and Drug Administration overhaul its office that approves new drugs — the same office that would determine the regulatory fate of Purdue’s new line of proposed products.

The story of Dr. Smith’s simultaneous work for Purdue and its federal regulator is told through previously undisclosed internal McKinsey records. More broadly, they contain evidence of a porous firewall between the consulting firm’s work for private companies and for the authorities that oversee them.

A review by The New York Times of thousands of internal McKinsey documents found that the firm repeatedly allowed employees who served pharmaceutical companies, including opioid makers, to also consult for the F.D.A., the drug industry’s primary government regulator. Can you say “Ouch!”

Parallels with the DDT story
The parallels with the DDT story unearthed and documented by Elena Conis in her book, How To Sell a Poison, are many:

• The problematic role of government regulation as practiced by FDA – and the ability of high-priced consultants to influence policy decisions.

• The changing definition of what constitutes “safety” when it comes to the use of “dangerous” chemicals and how they enter the body.

• The efforts by corporate entities to sow confusion about who is to blame for the problem. With DDT, Hill and Knowlton devised an entire PR strategy for the chemical industry to put the blame on “housewives.” With OxyContin, McKinsey & Company helped to devise a strategy to blame the drug users, while proposing that pharmacies be paid a bonus for each overdose death.

• The way in which the “hidden” information contained in corporate files was secured through discovery in court cases. With DDT, it was through the Industry Documents Library that held a cache of information from tobacco companies; with OxyContin, it was through a cache of information from drug companies, including Purdue Pharma.

Despite all the millions of dollars in court settlements in the last few months, there still remains a big stumbling block, as yet unresolved, now pending in appellate court, regarding a ruling by a federal District Court Judge overturning a bankruptcy court decision for the Sackler family and whether or not the federal bankruptcy statute allowed for the denial of third-party releases from liability. Stay tuned.

Meanwhile, back at the ranch, in RI
As the settlements move forward with drug manufacturers, drug distributors, and consultants, the way in which the money from those settlements will be disbursed, through an advisory committee set up to be under the guidance of R.I. EOHHS Secretary Womazetta Jones, has perhaps hit a temporary glitch, in that Secretary Jones is departing from her job effective May 1, 2022, in less than two weeks time.

What that means in terms of logistics, given that the top-level staff at R.I. EOHHS is somewhat rudderless until a replacement is named, is anyone’s best guess.

While much media attention has been focused on how and when R.I. Attorney General Peter Neronha will be able to resolve ongoing probes looking at potential wrongdoing by Gov. Dan McKee in relationship to the ILO contract and with the activities of his former chief of staff involving allegedly influencing a land deal, another potential problem may emerge: the activities of McKinsey & Company and whether or not there was anything illicit in the way that the consulting group was apparently able to work for the state of Rhode Island without a contract. The question is: If the state did not pay for the work being done by McKinsey & Company, who did? And, how much were they paid? By whom?

Then there are the ongoing budget arguments regarding the low rates of Medicaid reimbursements being paid for mental health and behavioral health services, and whether or not those low rates may have violated state and federal parity laws. Information “learned” during the discovery regarding the proposed merger between Lifespan and Care New England and, in particular, the low rates of Medicaid reimbursement in the state, may prompt the R.I. Attorney General’s office to pursue new lines of inquiry.

The larger question, of course, is whether or not the R.I. Attorney General’s office is willing to pursue a potential legal investigation into the activities of McKinsey & Company during an election year. The recent story by the New York Times may provide some new fuel for the fire.


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