mind boggling McKiney recommendation:OxyContin

[budwom]

^ "in part due" to marketing? I think that's something of a gigantic understatement...Purdue pushed OxyContin beyond any reasonable limit. That's why they're forking over billions now (not that that's sufficient).

[bundabergdevil]

I don't want to defend the particular McKinsey statement, but economists like me always want to remind people that the optimal number of bad things happening is often not zero.

Consider speed limits for cars. About 40,000 people died in the U.S. last year in car accidents, the global total is a large multiple of that, and most of these deaths are young people in good health. It's a terrible tragedy. We could greatly cut down on those deaths if we reduced speed limits substantially. Why don't we do that? It seems that we have, collectively, made the judgment that we're willing to trade off the time savings and convenience of faster travel for thousands more deaths each year. There's nothing intrinsically wrong with that collective decision.

More controversially, consider Covid restrictions. We could drive the infection rate close to zero if we all stayed in our house (which is what I'm pretty much doing myself), but opinions vary about whether that's worth the cost. Behavior in epidemics are involves a wider range of ethical issues than do speed limits (though there, too, my behavior affects others' risk), but it's still not clear that we should drive the risk of infection to zero.

With respect to drugs, what if there are drugs that offer very substantial benefits, including added years of life, that also cause death in a small fraction of the treated? If the adverse reaction rate is .00000001 percent, we'd probably say go ahead with the medicine. If the adverse rate is 50 percent, then it's a different story. The general point is that there are tradeoffs to be considered, and that it's possible to underdistribute or overdistribute a medication. Profit motives may lead to over-distribution, but excessive risk aversion by policymakers might lead to under-distribution.

All that said, the opiod epidemic has been a disaster, and they were obviously wildly overprescribed in many parts of the U.S., in part due to overzealous drug company marketing.

True. Related to my chemical company example above, the EPA has set all sorts of acceptable risk thresholds for cancer- and other harm-causing levels in the air, water, etc.

The trouble, as in this this case, is that the company often knows it is either exceeding acceptable risk or knows there is no regulation for a significant risk and doesn't tell anyone, then claims regulatory innocence when it comes to light (Exxon w/ CC, the chemical industry with CFCs, big tobaccos, etc). While often true that technology outpaces regulation, there are some moral, non-economic questions that many companies often fail to ask.

I won't go into the details but I've been in at least one room where a sticky situation was being discussed in a big company about a supply chain sourcing issue that had moral and human rights implications and the question was asked, "what if we did the most economical thing?" And then that's what the company did...until it came to light through a curious shareholder that submitted a resolution on the matter.

[WillJ]

^ "in part due" to marketing? I think that's something of a gigantic understatement...Purdue pushed OxyContin beyond any reasonable limit. That's why they're forking over billions now (not that that's sufficient).

I say "in part" because there are other culprits, too: irresponsible pharmacies; specific MDs that wrote prescriptions by the bushel to their own profit; the medical profession in general, which underweighted the side effects of opiods; the FDA which did a lousy job of regulation; and of course the individuals who sometimes abused the drugs quite knowingly. Purdue deserves to pay, but allocating them full blame seems, to me, inappropriate.

Also, remember that prescription opiods are only one prong of the three-prong opiod epidemic - the other two being heroine and fentanyl. The growth in heroine addiction is only partly due to those who gained exposure via prescriptions - drug cartels, mainly from Mexico, expanded their distribution networks in the 2000s to include rural towns that had previously not had easy access to heroine. The Mexican cartels make for less convenient villains, at least in some people's mind, but they have played a huge role in the increased rate of opiod-related addiction and death. See Sam Quionnes' Dreamland. Fentanyl is even scarier in that it can be - and is - distributed by mail and delivery, and the villains in that story are mostly criminals in China, Mexico and, increasingly, India. Going forward, it's fentanyl and heroine that are the main problems.

[Jeffrey]

Fentanyl is even scarier in that it can be - and is - distributed by mail and delivery, and the villains in that story are mostly criminals in China, Mexico and, increasingly, India. Going forward, it's fentanyl and heroine that are the main problems.

Absolutely, fentanyl is much less expensive and easy to acquire by mail. It’s much more powerful and much harder to control dosage. Most people who are ODing on pills are actually taking bootleg pills made from fentanyl. Some bootlegs can be 20 times as strong as a prescription pill.

[budwom]

I say "in part" because there are other culprits, too: irresponsible pharmacies; specific MDs that wrote prescriptions by the bushel to their own profit; the medical profession in general, which underweighted the side effects of opiods; the FDA which did a lousy job of regulation; and of course the individuals who sometimes abused the drugs quite knowingly. Purdue deserves to pay, but allocating them full blame seems, to me, inappropriate.

Also, remember that prescription opiods are only one prong of the three-prong opiod epidemic - the other two being heroine and fentanyl. The growth in heroine addiction is only partly due to those who gained exposure via prescriptions - drug cartels, mainly from Mexico, expanded their distribution networks in the 2000s to include rural towns that had previously not had easy access to heroine. The Mexican cartels make for less convenient villains, at least in some people's mind, but they have played a huge role in the increased rate of opiod-related addiction and death. See Sam Quionnes' Dreamland. Fentanyl is even scarier in that it can be - and is - distributed by mail and delivery, and the villains in that story are mostly criminals in China, Mexico and, increasingly, India. Going forward, it's fentanyl and heroine that are the main problems.

Fair enough...but what Purdue did was truly remarkable in its scope and irresponsibility. Horrific. You can't read this and avoid an urge to barf: https://www.ncbi.nlm.nih.gov/pmc/articles/PMC2622774/

A 1% chance of addiction eh?

[WillJ]

Fair enough...but what Purdue did was truly remarkable in its scope and irresponsibility. Horrific. You can't read this and avoid an urge to barf: https://www.ncbi.nlm.nih.gov/pmc/articles/PMC2622774/

A 1% chance of addiction eh?

All true. There are problems with the way that prescription drugs - not just opiods - make their way to consumers. The "talk to your doctor" mantra works a lot of the time, but the ability of practitioners to wade through the studies and the marketing bs is limited. There is a lot of not-best-practices prescribing out there, and some of it is fueled by irresponsible drug company marketing.

All that said, it's still true that, as a whole, the drug industry provides remarkable benefits at relatively low cost. Healthcare is exceptionally expensive in this country, but it's mostly not the drug companies.

[bundabergdevil]

McKinsey to settle to avoid prosecution from state AGs?

https://thehill.com/business-a-lobby...-crisis-report

[budwom]

McKinsey to settle to avoid prosecution from state AGs?

https://thehill.com/business-a-lobby...-crisis-report

From McKinsey's point of view, that would be prudent...I doubt they want any more publicity on this, as richly as they may deserve it.

[johnb]

From McKinsey's point of view, that would be prudent...I doubt they want any more publicity on this, as richly as they may deserve it.

I’ve always been fascinated by the fact that corporations pay top dollar for the wisdom of 25 year olds.

[weezie]

Lol I think McK is a big Duke hiring force.

[budwom]

I’ve always been fascinated by the fact that corporations pay top dollar for the wisdom of 25 year olds.

Years ago I was working for a major corporation and McKinsey was brought in for a major project. I was their liaison...as you say, very very bright 25 year olds, one was a Duke (and Harvard law) grad, another was a Stanford grad (plus MBA there).
Very smart, very impressive.

However, this wasn't my first rodeo with consultants...and I made the obligatory statement to them that they might want to run their conclusions by me before they reported up to the company President, knowing full well that's not what consultants do...they get what they want from you, then do their own thing (fine by me). Data isn't just data...it needs to be understood...

In this particular case, they happened to make a (literally) multi billion dollar mistake because they didn't understand (at all) how depreciation works and what it means. It was a colossal embarrassment for them... I found it to be pretty amusing...I wonder if they got their bill (over a million bucks) paid in full...

[bundabergdevil]

Years ago I was working for a major corporation and McKinsey was brought in for a major project. I was their liaison...as you say, very very bright 25 year olds, one was a Duke (and Harvard law) grad, another was a Stanford grad (plus MBA there).
Very smart, very impressive.

However, this wasn't my first rodeo with consultants...and I made the obligatory statement to them that they might want to run their conclusions by me before they reported up to the company President, knowing full well that's not what consultants do...they get what they want from you, then do their own thing (fine by me). Data isn't just data...it needs to be understood...

In this particular case, they happened to make a (literally) multi billion dollar mistake because they didn't understand (at all) how depreciation works and what it means. It was a colossal embarrassment for them... I found it to be pretty amusing...I wonder if they got their bill (over a million bucks) paid in full...

I once had a consultant go above my head and pitch my boss with a white paper that had plagiarized from Wikipedia.

[budwom]

I once had a consultant go above my head and pitch my boss with a white paper that had plagiarized from Wikipedia.

Ouch. Yeah, our small group at work knew how the consultant thing went, they'd promise to show you preliminary conclusions (we always thought it was more for their benefit than ours) but all they did was talk to us, collect mounds of data, report back up thru their own chain..plagiarizing Wikipedia though is really ultra lame territory...

[CrazyNotCrazie]

Years ago I was working for a major corporation and McKinsey was brought in for a major project. I was their liaison...as you say, very very bright 25 year olds, one was a Duke (and Harvard law) grad, another was a Stanford grad (plus MBA there).
Very smart, very impressive.

However, this wasn't my first rodeo with consultants...and I made the obligatory statement to them that they might want to run their conclusions by me before they reported up to the company President, knowing full well that's not what consultants do...they get what they want from you, then do their own thing (fine by me). Data isn't just data...it needs to be understood...

In this particular case, they happened to make a (literally) multi billion dollar mistake because they didn't understand (at all) how depreciation works and what it means. It was a colossal embarrassment for them... I found it to be pretty amusing...I wonder if they got their bill (over a million bucks) paid in full...

I have worked a lot with consultants and it is usually a miserable experience. I interviewed extensively at major consulting firms and realized that it was not a good fit for me, though some are better than others and I hate to generalize about large organizations as there are plenty of exceptions to the rule (before I knew her my wife worked at one of the larger firms).

I am currently tangentially involved with a project involving McKinsey consultants - it started before I was at the company so I had no input on their project scope. I have been in my industry for most of the last 20 years, so I feel like I know what I am doing. They came up with a metric where I could kind of see where it was coming from, but it was not intuitive. I am a strong believer in the fact that new perspectives are helpful and just because we have always done things one way doesn't mean it is the right way, so I tried to be open minded. I asked them for explanations and they humored me and tried to explain it with a lot of back and forth. Theoretically it got us to the right answer, but it was a really overly complicated way to do so - it would require future users to spend hours gathering data to fill out a checklist, rather than having a simple binary to carve out the exceptions it was meant to locate.

I know a lot of current and former McKinsey consultants. Most of them are people who have spent their whole lives being told how smart they are and want to continue to do that. Most of them are not socially well-adjusted, particularly not outside of their immediate peer group. Some are people who get the joke and are willing to tolerate it because they realize that McKinsey on your resume will likely fast track your career, though it might also attach some negative stereotypes. A very bright friend of mine got a job at McKinsey out of grad school. Several of our common friends acted very surprised and he got a bit defensive, listing his prior credentials to show that he was smart enough. The friends replied that no, they acknowledged that he was smart enough to work there, but that he was too nice, normal and fun to work there. He stayed for a few years and moved on to other things. I am currently butting heads with a member of the board of my building who is ex-McKinsey and exhibits all of their worst characteristics.

[budwom]

^ I can definitely relate to all that. Yes, I too interviewed with both McKinsey, Boston Consulting Group, but I knew it was a bad fit as I like to have a robust life outside of work and the new hires get absolutely worked to the bone, spend much of their time on the road, not at all my cup of tea...

I admit I got a chuckle out of the McKinsey guys crapping the bed on the project where I worked, since our CEO had been a former ultra high mucky muck at McKinsey, and he was sure they were going to do a bangup job...wasn't he surprised.

[sagegrouse]

I once had a consultant go above my head and pitch my boss with a white paper that had plagiarized from Wikipedia.

Here's what you do when you are a consultant to a large organization, government or corporate. You go around and talk to the smartest staff people and managers you can find. If this is an improvement project, the answer is somewhere in the organization. Then you package it and present it to the top -- taking full claim for the ideas, but encouraging the boss to involve your sources in the implementation. There's value-added here, believe it or not. Much of the value-add is in building a solid case with data and everything, as well as an implementation plan. And getting your bill paid.

If the "right answer" is a major change and not necessarily supported by the thinking of those within the organization, then keep it short and make it really dramatic -- because no one will accept a major change written in a 200-page report. It will have to proceed through multiple phases of thinking.

[budwom]

Here's what you do when you are a consultant to a large organization, government or corporate. You go around and talk to the smartest staff people and managers you can find. If this is an improvement project, the answer is somewhere in the organization. Then you package it and present it to the top -- taking full claim for the ideas, but encouraging the boss to involve your sources in the implementation. There's value-added here, believe it or not. Much of the value-add is in building a solid case with data and everything, as well as an implementation plan. And getting your bill paid.

If the "right answer" is a major change and not necessarily supported by the thinking of those within the organization, then keep it short and make it really dramatic -- because no one will accept a major change written in a 200-page report. It will have to proceed through multiple phases of thinking.

Not a bad strategy, Sage, but McKinsey's fundamental belief is that they're the smartest people in the room, and they have their own methodology on how to attack these problems, and structure the solution. Sometimes they work, sometimes they don't. Mere mortals get limited input.

[sagegrouse]

Not a bad strategy, Sage, but McKinsey's fundamental belief is that they're the smartest people in the room, and they have their own methodology on how to attack these problems, and structure the solution. Sometimes they work, sometimes they don't. Mere mortals get limited input.

That's why I never wanted to work for McKinsey.

Kindly,
Sage
'By the way, snow is in the forecast for 44 of the next 48 hours, to which I say -- thank goodness!'

[Bluedog]

McKinsey settles for $573 million.

[bundabergdevil]

McKinsey settles for $573 million.

Is that an amount that hurts for them?

Googling says they're ~$10B in annual revenues.