Market Power Correlated with Society
The rising market power of corporations contributed to some of society’s most intractable problems: wage growth stagnated as productivity grew; before-tax profit of U.S. corporations rose sharply as income inequality worsened; and household debt rose as financial instability increased. (Page 49)
McKinsey and ICE
“We don’t do policy,” he said. “We do execution.” Not everyone bought that explanation, including one young member of the ICE team who spoke up. “With that logic,” he said sharply, “you could justify working for any despot, even the Nazis.” (Page 78)
- Wow. The “We do execution” is still cited by McKinsey as how they work.
Another of McKinsey’s “deliverables” to ICE was a “leadership development toolkit,” which came in the form of a seventy-eight-page PowerPoint presentation. It dispensed advice like suggesting leadership seminars be held at places such as Civil War battlefields or at the 9/11 Memorial in New York. (Page 82)
- Clearly, new grad McKinsey consultants with a degree in Finance or Marketing are just brilliant at giving advice to run companies and organizations. A 78 page PowerPoint – the tactic here is to overwhelm people with their “advice”. This is precisely why Jeff Bezos and Jensen Huang bans pretty, well-crafted PowerPoints: it’s typically all fluff and allows people to hide their thinking behind it.
The experience left Elfenbein, who resigned from McKinsey in late 2021, with a jaundiced view of the firm he had so enthusiastically joined, buoyed by the promise from recruiters that he would be “uniquely positioned to do something that does on occasion help move society forward.” (Page 90)
- “Positioned to do something that moves society forward.” – The copium that business students like to tell themselves. Only some realize that this can never be achieved in pursuing value-transferring work as McKinsey does. See Zero to One.
Conflicts of Interest
Moreover, how could McKinsey justify advising hospitals and government agencies on how to reduce health-care costs while their tobacco clients were filling hospital rooms with the sick and dying? (Page 115)
McKinsey is also a teammate of the FDA, which since 2009 has had the authority to regulate tobacco products, including Altria. In other words, McKinsey plays both offense and defense, a dubious practice that has long remained secret. Since 2009, the FDA has awarded McKinsey more than $11 million for advice on regulating tobacco and for organizing the FDA office that includes tobacco regulation. During much of that time, McKinsey also consulted for the world’s biggest cigarette companies without disclosing this potential conflict of interest to the FDA, two senior former officials of that agency said. (Page 120)
- McKinsey consults for hospitals and tobacco clients, for pharmaceutical companies and the FDA… a clear conflict of interest. This causes McKinsey clients to get through any FDA approvals, or create arbitrage within their own spheres of influence.
McKinsey and Juul
Had Durbin and his colleagues examined the roster of Juul employees, they would have discovered an army of former cigarette company employees—thirty-nine of them—from five tobacco companies, all former McKinsey clients. (Page 123)
One fact spoke most convincingly about the FDA’s regulatory record. Not a single Juul device in the United States had been sold legally, according to congressional testimony in late 2019. A vaping device to be sold legally would need pre-market review by the FDA, and as of 2019 that had not happened. Nonetheless, Juul’s sales of e-cigarettes totaled $1 billion in 2018, giving the company an estimated valuation of $38 billion, more than Ford Motor Company. (Page 125)
McKinsey consulted for Juul on highly sensitive topics, such as surveying which flavor names appealed to thirteento seventeen-year-olds, though the firm said that work was in support of the company’s effort to prevent youth vaping. (Page 126)
Asked whether McKinsey worked on FDA issues, an employee with direct knowledge of these meetings replied: “Oh my God, McKinsey helped JUUL write their FDA submission—dead serious.” Pulido in his deposition confirmed that McKinsey helped prepare Juul’s response to the FDA’s inquiry into the company’s marketing practices. (Page 126)
McKinsey and the Opioid Epidemic
From 2004 to 2019, Purdue paid McKinsey $83.7 million in fees for marketing advice that made its billionaire owners even richer by stoking the nation’s appetite for the painkilling drug OxyContin (Page 131)
Within the first two years of the drug’s release, 24 percent of high school juniors in a small western Virginia town said they had tried OxyContin along with 9 percent of seventh graders. (Page 132)
McKinsey helped J&J sell its signature opioid, a narcotic patch called Duragesic. In PowerPoint slides, McKinsey recommended that J&J target “high abuse-risk patients (eg males under 40)” and move physicians who were “stuck” in prescribing less potent opioids into prescribing stronger formulations. Another slide asked, “Are we properly targeting and influencing prescription behavior in pain clinics?” (Page 133)
To boost sales amid the strengthening opioid epidemic, McKinsey had to cook up radical new ideas. One suggestion was to promote OxyContin as a drug that gave patients “freedom” and “peace of mind,” along with the “best possible chance to live a full and active life.” (Page 137)
The most important takeaway from McKinsey’s July 2013 analysis was this: while drugstores and law enforcement officials were trying to limit how much OxyContin was coursing through the nation’s bloodstream, McKinsey was doing just the opposite, even suggesting ways to get around those safety measures (Page 141)
Then, a little more than a week after McKinsey suggested ways to boost sales of OxyContin, the FDA—the agency most responsible for ensuring the safety of the country’s drug supply—rewarded McKinsey with a $2.6 million consulting contract with the Center for Drug Evaluation and Research, which regulates prescription and generic drugs, including OxyContin. (Page 141)
The new name: “Evolve to Excellence.” In 2017, McKinsey made a suggestion that stunned the health-care community when it later became public. The firm thought Purdue should consider giving distributors a rebate for every OxyContin overdose attributable to pills they sold. As a guide, McKinsey estimated how many customers of these companies might overdose. (Page 142)
- Holy shit.
McKinsey did, however, boast about creating the Center for Societal Benefit Through Healthcare. The firm wrote, “We have honored that mission by serving our clients effectively and investing in issues deeply relevant to society, such as social determinants of health, rural health, maternal health and behavioral health—including mental health, substance use and the opioid crisis.” (Page 144)