McKinsey secretly advised the tobacco and then vaping industries for over sixty years

The renowned McKinsey & Company advised Altria and several other tobacco multinationals until 2021, as well as JUUL from 2017 to 2019, while working for the FDA and other health institutions since 2009. The renowned firm, already criticized for its role in the current opioid epidemic in the United States, hides behind the principle of loyalty to its clients.

In a book to be published in early October 2022, investigative journalists Walt Bogdanich and Michael Forsythe trace the many links established between the consulting firm McKinsey & Company and the tobacco and vaping industries.[1]This history, which has been poorly understood until now, is all the more damaging given that McKinsey has become, over the past twenty years, a regular partner of the authorities of many countries in the field of public health.

A long history of advising the tobacco industry

Founded in 1926 and nicknamed "the firm" internally, McKinsey & Company provides advice and strategic recommendations to large companies, institutions and governments. Established in France since 1964, the group is present in 66 countries and has 20,000 employees. According to the American magazine Forbes, its turnover in 2019 was 8.3 billion euros.

McKinsey & Company's relationship with Philip Morris began in 1956, when the cigarette manufacturer commissioned the firm to conduct a comprehensive audit of its production facilities. McKinsey's recommendations led to the establishment of a department dedicated to research, and to the shift from an agricultural production approach to a more scientific approach, particularly to determine the level of nicotine sufficient to generate smoker addiction.[2].

During the 1960s through the 1990s, the firm expanded its client base to include most of the other major tobacco companies: RJ Reynolds, Lorillard, Brown & Williamson, British American Tobacco (BAT), Japan Tobacco International (JTI), and others. In a 1985 study for Philip Morris USA, McKinsey concluded that tobacco products were the most profitable of all dry grocery products, a study the tobacco company quickly shared with retailers in an effort to increase the space given to tobacco products. In 1993, at the beginning of the cigarette litigation turmoil in the United States, tobacco company Lorillard recommended McKinsey to its employees. “for their ability to solve problems and create opportunities”.

Between 1999 and 2001, McKinsey participated in the “Cerberus” project.[3], through which BAT, Philip Morris and JTI intend to offer "credible alternatives", with a view to neutralizing the tobacco control measures of the World Health Organization (WHO) and contained in the future Framework Convention on Tobacco Control (FCTC, adopted in 2004). The objectives of this project are to reintegrate the tobacco industry into the negotiations of public health policies from which they had been excluded, while restoring public confidence in a "controversial product", in this case tobacco.

Bridges between McKinsey and the tobacco industry

McKinsay also collaborates with third parties in the tobacco industry. In October 2017, the firm organized an event in London for the Foundation for a Smoke-Free World (FSFW), an organization that claims to be independent but is exclusively funded by Philip Morris International (PMI), to the tune of 80 million US dollars annually.[4].

It was only in 2021 that McKinsey decided to distance itself from the tobacco industry. However, from 2018 to early 2020, the firm reportedly generated at least $45 million in revenue from the four tobacco majors (PMI/Altria, BAT, JTI, Imperial Brands), including $30 million from Altria (formerly Philip Morris USA) alone. For the latter, McKinsey notably designed a smartphone app for Marlboro cigarettes, and provided multiple ideas for retaining its customers and winning new ones. “We are one team, working hand in hand.”, proclaimed a McKinsey slide deck prepared for Altria.

There has also been a lot of movement between McKinsey and tobacco companies, in both directions: McKinsey consultants have gone on to work in the tobacco industry or the Smoke-Free Foundation, and industry executives have joined the firm. One of the most notable examples of this movement is Eddy Pirard, who was a manager at McKinsey from 1991 to 1995, before joining tobacco company Gallaher in 1998 and rising through the ranks to become, since 2017, chairman and CEO of JTI.[5], Gallaher having been acquired by JTI in 2007.

Conflicts of Interest Around the FDA

Drawing on its expertise acquired from hospitals and public institutions, McKinsay also advised the US Food and Drug Administration (FDA) from 2009, when its powers were extended to tobacco products. For a total amount of US$77 million, McKinsey would intervene more than thirty times for the FDA, including several involving or intended for the Center for Tobacco Products, which regulates tobacco and nicotine products. The interventions for the FDA were very diverse, ranging from a reorganization of services to strategic orientations on “the influence of behaviors, opinions and practices that are contrary to the objectives” of anti-smoking regulations².

Current and former FDA executives interviewed about McKinsey said "shocked and surprised" to uncover today the consulting firm's ties to the tobacco industry, which appear to have remained unknown - or unrecognized. Asked whether this position poses a conflict of interest, a McKinsey spokesperson said he saw no problem with it, since the firm would never have advised the FDA on a specific product.

Serving the vaping industry

Other nicotine products have also benefited from McKinsey's services. In 2015, the firm was contacted by JUUL, an e-cigarette manufacturer that wanted to explore the cannabis market. McKinsey declined the mission on the grounds that cannabis was not yet legal at the time, but became a JUUL service provider starting in 2017.

With JUUL's reputation already beginning to tarnish at this time, McKinsey carried out many assignments for JUUL under the seal of secrecy, concerning the brand, the organization, the evaluation of flavors, retail sales, prevention among young people or even regulatory issues.². McKinsey notably advised JUUL when the company was challenged by the FDA for its role in the current youth and teen vaping epidemic. McKinsey has also conducted flavor studies with youth ages 13 to 21, with no ethical concerns about the research. The youth surveyed listed mint as their favorite flavor, which has proven to be a driver of the e-cigarette market among youth consumers.

Accused of using social media, young influencers and numerous flavors to promote its products, JUUL has been able to end the prosecution over its practices marketing among young people following an agreement with 34 US states, notably leading JUUL to pay US$438 million. McKinsey, for its part, declared that it had ceased all collaboration with JUUL since 2019.

In the e-cigarette sector, McKinsey also advised Altria, which wanted to enter this market. McKinsey’s marketing proposals recommended making it “the Nespresso of e-vapor”, before officially distancing itself from this client in 2021. In parallel with this activity, Altria, which acquired stakes in the company JUUL for nearly 13 billion US dollars in 2018, recently terminated its non-compete clause and is now looking to withdraw from this partnership.[6].

At the Heart of the Opioid Crisis

Marketing skills developed in the tobacco industry have also been put to good use in the pharmaceutical sector. McKinsey was accused of advising several laboratories on expanding the opioid market between 2004 and 2019, particularly Purdue Pharma. The latter, which notably produces the opioid OxyContin, had very close ties with McKinsey, which is said to have advised targeting “patients at high risk of abuse” and would have encouraged the over-prescription of these painkillers[7]McKinsey even offered to fund the restoration of pharmacies whose OxyContin sales had caused fatal overdoses. It also advised Purdue to invest in opioid addiction treatments — not unlike the tobacco industry, which sells products that are supposed to help people quit using other drugs it also sells.

The "opioid crisis" has led to the deaths of approximately 500,000 people in the United States over the past twenty years. Targeted by more than 2,000 complaints, notably for misleading marketing practices, Purdue Pharma went bankrupt in 2007. Accused of having actively contributed to this epidemic and of having generated US$86 million in this sector of activity, McKinsey was also sued by 47 states. To put an end to these lawsuits, the firm negotiated a settlement of US$573 million in February 2021.[8]. A sum that many plaintiffs consider insufficient, fearing that, as in the case of the General Settlement of the tobacco industry, the federal government will keep and reallocate elsewhere the bulk of the amount.

As was the case with the tobacco industry and other polluting industries, the agreement came with a requirement for McKinsey to make public all internal documents related to the case, an unprecedented provision for a consulting firm.[9]. The 114,921 documents in question were entrusted to the University of California, San Francisco (UCSF) for archiving and making available to the public. Posted online on June 30, 2022, not far from those of the tobacco industry, these archives are now accessible to all, allowing researchers and lawyers to clarify McKinsey's responsibility in this health disaster.

Keywords: McKinsey, Altria, JTI, BAT, JUUL, Purdue Pharma, conflict of interest

©Generation Without Tobacco

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[1] Bogdanich W, Forsythe M, When McKinsey Comes to Town: The Hidden Influence of the World's Most Powerful Consulting Firm, New York, Doubleday, to be published October 6, 2022. [2] Bogdanich W, Forsythe M, How McKinsey Got Into the Business of Addiction, The New York Times, published September 29, 2022, accessed October 3, 2022. [3] Mamudu H, Hammond R, Glantz S, Project Cerberus: Tobacco Industry Strategy to Create an Alternative to the Framework Convention on Tobacco Control, Am J Public Health, September 2008, Vol 98, No. 9. [4] McKinsey, Tobacco Tactics, published August 27, 2020, accessed October 3, 2022. [5] Eddy Pirard, Tobacco Tactics, published February 4, 2020, accessed October 3, 2022. [6] United States: Juul will have cost Altria dearly, The World of Tobacco, published on 1^er October 2022, accessed October 4, 2022. [7] Bobelian M, The scandals and hypocrisy behind McKinsey's sterling reputation, The Washington Post, published September 29, 2022, accessed October 3, 2022. [8] Papenhausen L, $573 Million McKinsey Opioid Settlement Reveals Compliance Best Practices for Life Sciences Companies, White & Case, published February 17, 2021, accessed October 3, 2022. [9] Polle B, Investigation: What 114,000 internal documents say about the “McKinsey way”, Consultor, published August 30, 2022, accessed October 3, 2022. National Committee Against Smoking |