«The Banality of Evil, MBA Edition”

Last month, legendary management consultant and McKinsey alumnus Tom Peters said he was “angry, disgusted and sickened” by McKinsey’s role in the opioid crisis that has killed roughly half a million people by overdose in the past 21 years. McKinsey may well be chastened by this strong criticism from an august former employee, but it’s the $600 million settlement that McKinsey has promised to pay to settle claims against it for its role in the crisis that will have the bigger impact. This is true because it is fairly obvious that McKinsey—which has also recently been caught up in scandals involving clients in South Africa, clients that were dictatorships, and before that Enron and Swissair—is all about the Benjamins.

Peters blames business schools, in part, because they focus on marketing, finance, and quantitative rules, giving short shrift to corporate culture and what he calls the “moral responsibility of enterprise.” Another McKinsey alum, Anand Giridharadas, calls McKinsey’s work advising Purdue Pharma, Johnson & Johnson and other opioid producers “the banality of evil, M.B.A. edition.” After reviewing the relevant documents, Giridharadas concluded: “[McKinsey] knew what was going on. And they found a way to look past it, through it, around it, so as to answer the only questions they cared about: how to make the client money and, when the walls closed in, how to protect themselves.”

McKinsey started advising Purdue regarding its OxyContin pills in 2004, and in 2008, a year after Purdue had pled guilty to misleading doctors and regulators regarding the risks of its opioids, McKinsey was happy to continue advising Purdue as to how to “Turbocharge” its sales. Over the years, McKinsey recommended among other steps:

  • Targeting physicians, especially those who were high-volume prescribers
  • Banding together with other opioid makers to push back on FDA attempts to regulate
  • Targeting of specific patients, including those new to opioids
  • Pushing higher (and therefore more profitable) dosages
  • Mitigating the impact of emotional appeals by mothers who had lost teenagers to overdoses
  • Distributing OxyContin directly to patients and pharmacies to improve “product access”
  • Reversing falling sales by Walgreens, which had settled with the federal government over its abuses, by lobbying the company’s leaders to “loosen up”
  • Giving distributors like Walgreens and CVS a rebate for every overdose or death traceable to the OxyContin pills they sold!

Fortunately, that last one was apparently not implemented, but not for lack of planning on McKinsey’s part. As Tom Peters noted:   “One 2017 presentation bloodlessly calculated that if Purdue paid $14,810 per “event”, and 2,484 customers of the CVS pharmacy chain overdosed or become addicted in 2019, Purdue would pay CVS $36.8m that year.”

“Bloodless” is an apt description. From a behavioral ethics perspective, the main problem here is framing. The decisions we make have everything to do with what is in our frame of reference as we make decisions. Tom Peters points out that because business schools spend too much time imparting quantitative skills and not enough time focusing on ethics, students enter the business world thinking too little about their moral responsibilities. McKinsey’s advice to Purdue, made by these graduated MBAs, was focused solely on turbocharging sales and thereby maximizing profits while completely ignoring the human carnage that these sales were causing. When you concentrate too much on money, ethical considerations can just fade away, and horrible things can happen. (See our video on ethical fading). There was nothing bloodless about the misery and death McKinsey’s advice led to, but those considerations were apparently not in McKinsey’s frame of reference during the many years its experts advised Purdue. This may have dawned on two McKinsey executives who in 2018 discussed whether they should destroy incriminating documents.       

Two other points from Tom Peters:

First, he noted how large McKinsey has become (130 offices, 30,000 employees), and notes that “size can be a significant contributor to corporate behavior.” We have noted that ourselves in our role morality video, which we strongly recommend.

Second, he takes a “slap” at Milton Friedman whose idea of maximizing shareholder value “led to an insane push for profitability at all costs.” But Friedman at least realized, as McKinsey and Purdue Pharma did not, that what counts is long-term profitability. By their actions, McKinsey and Purdue wrought such human devastation that it inevitably came back to bite them. Purdue Pharma was ruined, paying an $8.34 billion settlement with the Department of Justice and filing for bankruptcy. McKinsey paid more in settlements than it earned from all its opioid consulting. Their emphasis on short-term profits cost them greatly in the long run. We recommend they watch our video on moral imagination so that they can think hard about how to be successful without ignoring their moral responsibilities.

 

Sources

Walt Bogdanich, “McKinsey Advised Johnson & Johnson on Increasing Opioid Sales,” New York Times, July 25, 2019.

Walt Bogdanich & Michael Forsythe, “McKinsey Issues a Rare Apology for Its Role in OxyContin Sales,” New York Times, Dec. 8, 2020.

Walt Bogdanich & Michael Forsythe, “McKinsey Proposed Paying Pharmacy Companies Rebates for OxyContin Overdoses,” New York Times, Nov. 27, 2020.

Michael Forsythe & Walt Bogdanich, “McKinsey Settles for Nearly $600 Million over Roe in Opioid Crisis,” New York Times, Feb. 3, 2021.

Michael Forsythe & Walt Bogdanich, “McKinsey Advised Purdue Pharma How to ‘Turbocharge’ Opioid Sales, Lawsuit Says,” New York Times, Feb. 1, 2019.

Mark Kolakowski, “Purdue Pharma Settles with U.S. DOJ Over Opiod Probes,” Investopedia, Oct. 22, 2020, at https://www.investopedia.com/purdue-pharmaceuticals-settles-with-u-s-doj-over-opioid-probes-5083658.

Beth Macy, Dopesick: Dealers, Doctors, and The Drug Company that Addicted America (2018).

Duff McDonald, The Firm: The Story of McKinsey and Its Secret Influence on American Business (2014).

Tom Peters, “McKinsey’s Work on Opioid Sales Represents a New Low,” Financial Times, Feb. 15, 2021.

Gerald Posner, Pharma: Greed, Lies, and the Poisoning of America (2020).

Peter Whoriskey & Christopher Rowland, “McKinsey, Adviser to Businesses Around the World, Agrees to Pay $573.9 Million to Settle Charges for Its Role in Opioid Epidemic,” Washington Post, Feb. 4, 2021.

 

Videos

Ethical Fading: https://ethicsunwrapped.utexas.edu/video/ethical-fading.

Framing: https://ethicsunwrapped.utexas.edu/video/framing.

Moral Imagination: https://ethicsunwrapped.utexas.edu/video/moral-imagination.

Role Morality: https://ethicsunwrapped.utexas.edu/video/role-morality

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