I worked as a contractor some time ago in a project that, I did not know it, but was managed by contractors from McKinsey. It was an awful experience and I left as soon as I could. They gave me the worst of impressions. A mixture of arrogance and incompetence. Strong command and control. Obviously this is just an individual’s point of view… just my personal experience… who knows.
Arrogance and incompetence is management consulting in a nutshell.
They're mostly not hired to be competent, though. They're traditionally hired to cover the ass of the executive team that wants to take risks without getting fired by the board if something goes wrong.
Her pedigree is elite, she's attractive with a variety of experiences. She would have no trouble being hired at a tech startup. She could be the pleasant person you grab a beer with after work, and would pass every culture fit test. And these are some of the most evil people in the corporate world.
This is completely evading the truth. Big pharma is protected by legislation. There are restrictions to importing medicine from other countries. There is even legislation preventing the world's biggest buyer (the US government) of drugs from negotiating prices downwards:
When Medicare Part D was passed in 2003, lawmakers included the “non-interference clause,” which essentially prevents the federal government from stepping in to negotiate prescription drug prices.
Do you think Cory Doctorow avoided mentioning that for bad faith reasons, or do you think he just didn't mention it because he didn't feel it was relevant to the story he was covering here?
I agree that it's relevant - but I don't think that means it warranted mentioning in the story.
The specific new piece of information here is that newly released documents show that McKinsey have been helping pharma companies figure out how to extend their patents.
At some point you have to stop adding extra background information to an article, otherwise it will never end!
Is McKinsey helping pharma companies to price gouge? Or is it simply advising them to take advantage of the current set of legislation in the most optimal way possible?
McKinsey is not responsible for drafting the legislation. It's simply advising what's best for its clients in the current context. I see it no different than a lawyer advising his clients to never talk to the police - simply because it is allowed by legislation. Or a tax advisor advising his clients on the best ways to minimize their taxes, which is once again enabled by the legislation.
> The problem with [the plan of changing the formulas of drugs so they can be re-patented, from the patent-holder's perspective] is that a reformulation doesn’t stop the old drug’s patent from expiring, opening the market for cheap generics. To head this threat off, McKinsey developed a disinformation campaign to discourage doctors from prescribing generics and to convince patients to refuse such prescriptions. The McKinsey campaign included outright lies — false statements claiming that the old formulations were unsafe. Alongside those lies, McKinsey developed messaging to convince patients and docs that the old drugs were “a step backwards.”"
Edit: They specifically called out "A concerning lack of safety data in the majority of studies" and spread FUD saying "Ivermectin should not be used during pregnancy since safety in pregnancy has not been established."
This sounds like a blame shifting article. Sure McKinsey as a consulting company would advise its clients on how to do something / anything while staying within legal fringes.
But it was the pharmacy companies that wanted to price gouge while avoiding any kind of scrutiny . So they roped in McKinsey for how to best do that without attracting any kind of government attention and McKinsey advised them on that.
The author blames McKinsey for gaming the system . But what is the system - it is just a list of laws and regulations written by Congress . If Congress finds any kind of gamification-it should change the laws accordingly.
The biggest reason for higher prices for drugs for Medicare was the prescription drug bill passed under the Bush administration that prevented the government from using its buying power to negotiate prices. I understand that affects only Medicare patients but that became the springboard for other opportunistic pricing employed by all drug companies.
Also the age old practice of buying the patents of an old drug and hiking the price by 10000% or more ( as employed by Daraprim (Martin Shakreli) or numerous other companies )was not Mckinsey’s brainchild but rather the demand from the drug companies that McKinsey helped to materialize.
> The author blames McKinsey for gaming the system . But what is the system - it is just a list of laws and regulations written by Congress . If Congress finds any kind of gamification-it should change the laws accordingly.
This is such a crap concept of business ethics. You expect Congress to be everyone's mommy and daddy and tell them right from wrong? Have you seen how Congress operates?
If you do wrong, don't act all surprised and aggrieved if people blame you. It doesn't matter if the authorities happened to have a law on the books at the time. There's more to life than pursuing maximum profit.
I mean there are plenty of people who deserve blame here, the pharma companies for doing this shit, congress for enabling it and McKinsey for consulting on it, but really I think that’s the order the blame flows in.
"Our Constitution was made only for a moral and religious people. It is wholly inadequate to the government of any other." - John Adams.
We will find that the more we lose our morality, the less we are able to abide in freedom, and the more we will require an authoritarian state to control ourselves.
> So they roped in McKinsey for how to best do that without attracting any kind of government attention and McKinsey advised them on that.
My emphasis.
From thefreedictionary.com[1]:
> rope in. To persuade, entice, or enlist someone to do or participate in something. A noun or pronoun can be used between "rope" and "in." I really didn't want to sing in the talent show, but Janet roped me in.
Notice that all the examples there involve either someone who would rather not get involved in the given activity, or a person or animal that lacks the ability to avoid being "roped."
In conclusion: have you ever considered working for McKinsey? If not, you should!
> But what is the system - it is just a list of laws and regulations written by Congress
This attitude stinks, I’m sorry. “If it’s legal, it’s ethical” is no way to run a society.
I had my neighbour on my lawn regarding a minor (cat-related) dispute the other week. He brought his kid with him, trying to show him how to behave I guess. At one point he said “well it’s not illegal” and I thought, wow, there you have it. This guy, 12-year-old in tow, thinks that actions are de facto fine if they’re “not illegal”.
I should have offered to take him to the local brothel. He’s married, I have a long-term partner. But that’s not illegal so I’m sure they would have been A-OK with it.
It seems that if you use the AITA way of looking at things you can just assign it to ESH (Everyone sucks here).
McKinsey is awful for helping enable an immoral business practice. The pharma companies engaging in it are also practicing an immoral business practice. And Congress is failing in its duties to reign in the excesses of American capitalism.
> The biggest reason for higher prices for drugs for Medicare was the prescription drug bill passed under the Bush administration that prevented the government from using its buying power to negotiate prices. I understand that affects only Medicare patients but that became the springboard for other opportunistic pricing employed by all drug companies.
It does no good to always blame those government people for current circumstances. They are just riding on the wave of money like everyone else. The reason for high drug prices is that people continue to pay those prices. Drugs sold in other countries are less expensive than the same drugs sold in the US. Pharma gets paid high prices, because people pay them those amounts.
> The author blames McKinsey for gaming the system . But what is the system - it is just a list of laws and regulations written by Congress . If Congress finds any kind of gamification-it should change the laws accordingly.
I support this view but I've had a lot of difficulty arguing it. It's similar to tax loopholes- accountants find legal, even if unintended ways to avoid or reduce tax. Government can either close the loophole or let it stand, but the point is that accountants are economically incentivized to find flaws in regulations that can be identified and corrected, so the laws get better. It's a form of arbitrage, and is a feature of a well functioning regulatory system.
Another example is what all the electricity companies were doing in California when deregulation happened. All the Enron tactics of sending power out of state and back in, or bringing down generators to game the prices (this is distinct from the accounting fraud the company was known for, was generally legal, and done by all energy players). The root cause was poor regulation, and energy companies were identifying and demonstrating these flaws in a way that could only happen when there is money to be made. The government response should have been to quickly close the loopholes, but from what I remember, there was a lot of blaming the companies.
It's the same here. People would rather blame an evil company because they are a convenient scapegoat than actually understand the root of the problem.
I agree too, for me it sort of boils down to don't hate the player, hate the game, and congress are the ones that make the game's rules. The game right now rewards unscrupulous behavior, so it makes sense that successful companies "get away" with doing it. As demonstrated, simply player hating doesn't do much.
Nah. Was regulation inadequate to keep up with Enron's level of sociopathy? Sure. Should we have had better regulation? Also yes. Does that in any way excuse Enron's behavior? Not at all, I say.
But let's see if you're sincere in your principles. If I can find a way to get away with murdering you, is that ok? What if I turn a profit doing it by, say, taking all your assets? After all, it's kinda ridiculous how fragile the human body is. I'm practically doing you (and your next of kin) a favor by demonstrating how dangerous it is to have major arteries and veins so exposed. And I could also surface issues with the legal system; we know that the homicide clearance rate is only 55%, [1] so by your logic I'm helping the laws get better by giving lawmakers more data to work with.
I of course wouldn't do this, because I think one shouldn't do harmful things just because one can get away with it. But if you truly believe in this, just post your name and address, and I'm sure some public-spirited person will take you up on your offer of a little bit of for-profit, blame-free murder.
Responsibility for an outcome is not zero sum. The pharma companies and McKinsey can both be morally responsible. As can Congress, lobbyists, etc.
As somebody who has done consulting, it's perfectly possible to do it in a way that isn't totally amoral like "how to do something / anything while staying within legal fringes" indicates. As an example, read through the IEEE/ACM code of ethics for software engineering: https://ethics.acm.org/code-of-ethics/software-engineering-c...
Big chunks of that are applicable to consulting too. That McKinsey doesn't care is a choice they made, and one we can hold them accountable for.
The point isn't that McKinsey is solely to blame but that a hugely powerful consultancy firm that expounds upon their higher morals at any opportunity was recommending something that was, at the very least, morally bankrupt (and btw, it was also financially catastrophic for any firm that took that advice in the end).
A great example is Valeant...long forgotten today but the stock went from $10 to $250 to $10, it was a huge story at the time, and was in the news every day when their stock was at the peak. The guy who masterminded this actually worked at McKinsey as an outside consultant for Valeant before he became CEO. This was the McKinsey special strategy: jack up prices, reduce R&D spending, make acquisitions and repeat step 1 and 2 (ofc, there was accounting fraud and the CEO tried to make off with multiple billions...again, this guy was a very senior consultant and was one of the most greedy kleptomaniacs I have seen in corporate life...this is not a coincidence).
Also, this strategy was McKinsey's brainchild. I have seen this over and over where a consultancy firm gets known for their a certain strategy in a certain industry, and they sell it everywhere and it looks like they all just came up with it independently. This strategy was not common pre-Valeant to any great degree, Daraprim happened far after. It became huge because McKinsey were recommending it to clients.
Ironically, I have an almost identical story from another industry. In the early 2010s, some consultant (I never was able to find out from execs who, they referred to an NDA) suggested to housebuilders in the UK that they pull back on capex. These housebuilders controlled a good portion of the land that was available for planning permission in the UK, the industry is heavily consolidated so they control the market for new houses, the market was in massive shortage, and then house prices would go up. Right on cue, pretty much every major housebuilder announces within the space of a year that they are going to begin returning capital to shareholders...in a housing market that is in shortage by roughly 200k homes/year, and in which any housebuilder could have taken massive share in a free market. Either way, new house prices go through the roof (the govt also announces a subsidy program), margins are now 20% against the 5-10% previously, everyone is making out like bandits. That wouldn't have happened if the consultant didn't come along (because the only way it worked is if other housebuilders knew this consultant had been around the industry, and knew other firms would cut back on production too).
Consultants have an absolutely huge role in determining company strategy, and they do deserve blame if they recommend things that are unethical (the fortunate thing about US pharma is that politicians came down on these firms like a ton of bricks, this didn't happen in UK housing). They are totally unaccountable too because when you talk to management, they just refer to some faceless consultant who is pulling the strings...if you are a shareholder, what do you do? The CEO is the monkey, not the organ grinder but it is the CEO who is the public face (and ofc, the Board are totally uncommunicative about what is going on). It is a huge problem because, as happened in pharma, it ended up with lots of companies doing things that were legally questionable and incinerating massive amounts of capital (Valeant had something like $40bn in debt at the peak, and equity was worth near $100bn at peak). ESG investing becomes impossible because there is no governance.
You guys are asking a lot of McKinsey. Asking that org to be a moral and ethical part of society is like asking a rake to be a shovel. It doesn’t make any sense to the point of being unfair to the rake.
Here’s another Deloitte gem. I can’t decide if the overall diagram is the peak of humorous or if the inclusion of two different items, one called “Simple Design” and the other “Rules of Simplicity” makes it even funnier.
This is part of why I avoid doctors and prescription medication whenever possible. They are not motivated to get me healthy, they are motivated to keep me coming back for more.
The premise of this article is quite funny, the idea that Big Pharma wouldn't care so much about profit optimizing if it weren't for those evil jr. consultants!
It seems McKinsey's chief value proposition of providing executives and governments cover for politically unpopular decisions (both internally or externally)...is in fact accurate.
Amazing how this narrative manages to shift blame off of the government who created these bizarre incentives and the executives who run the damn drug companies and responded to those incentives.
Somehow our joke of a healthcare system is now the fault of 24-year-old powerpoint jockeys and their theatrically fake-analytical powerpoint graphs.
It's easier to make a villain out of McKinsey than it is out of Congress. While it's true Congress is universally disliked, the discussion devolves into opining about my-team-versus-other-team, even though teams spend a great deal of time with lobbyists and fundraising. And even that point faces the critique that "both sides aren't the same", which sure, they aren't identical, but the means for securing influence are the same. None of us have pre-conceived notions about how to 'fix' McKinsey in the way we would with Congress. How to implement preventative measures that would block deeply unpopular policy from becoming law in the first place conjures discussions of first amendment rights.
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[ 2.6 ms ] story [ 65.5 ms ] threadThey're mostly not hired to be competent, though. They're traditionally hired to cover the ass of the executive team that wants to take risks without getting fired by the board if something goes wrong.
McK even profiled her: https://www.mckinsey.com/careers/meet-our-people/careers-blo...
Her pedigree is elite, she's attractive with a variety of experiences. She would have no trouble being hired at a tech startup. She could be the pleasant person you grab a beer with after work, and would pass every culture fit test. And these are some of the most evil people in the corporate world.
Not good form to publicize somebody's personal profile though
can someone screenshot the page? I'm getting a login wall.
They are masters of playing the one-eyed man in the proverb "in the land of the blind, the one-eyed man is king".
When Medicare Part D was passed in 2003, lawmakers included the “non-interference clause,” which essentially prevents the federal government from stepping in to negotiate prescription drug prices.
https://www.alec.org/article/should-the-government-negotiate...
I feel like the regulatory environment that enabled such "price-gouging" is very relevant to the story he's covering.
The specific new piece of information here is that newly released documents show that McKinsey have been helping pharma companies figure out how to extend their patents.
At some point you have to stop adding extra background information to an article, otherwise it will never end!
McKinsey is not responsible for drafting the legislation. It's simply advising what's best for its clients in the current context. I see it no different than a lawyer advising his clients to never talk to the police - simply because it is allowed by legislation. Or a tax advisor advising his clients on the best ways to minimize their taxes, which is once again enabled by the legislation.
Certainly that is the case in his commentary on economics.
https://pluralistic.net/2021/11/25/strikesgiving/#cool-story...
Great explanation of Merck disclaiming Ivermectin (see https://www.merck.com/news/merck-statement-on-ivermectin-use... ) despite the drug being safer than Tylenol when used by humans ( https://www.thedesertreview.com/opinion/columnists/the-great... )
Edit: They specifically called out "A concerning lack of safety data in the majority of studies" and spread FUD saying "Ivermectin should not be used during pregnancy since safety in pregnancy has not been established."
But it was the pharmacy companies that wanted to price gouge while avoiding any kind of scrutiny . So they roped in McKinsey for how to best do that without attracting any kind of government attention and McKinsey advised them on that.
The author blames McKinsey for gaming the system . But what is the system - it is just a list of laws and regulations written by Congress . If Congress finds any kind of gamification-it should change the laws accordingly.
The biggest reason for higher prices for drugs for Medicare was the prescription drug bill passed under the Bush administration that prevented the government from using its buying power to negotiate prices. I understand that affects only Medicare patients but that became the springboard for other opportunistic pricing employed by all drug companies.
Also the age old practice of buying the patents of an old drug and hiking the price by 10000% or more ( as employed by Daraprim (Martin Shakreli) or numerous other companies )was not Mckinsey’s brainchild but rather the demand from the drug companies that McKinsey helped to materialize.
This is such a crap concept of business ethics. You expect Congress to be everyone's mommy and daddy and tell them right from wrong? Have you seen how Congress operates?
If you do wrong, don't act all surprised and aggrieved if people blame you. It doesn't matter if the authorities happened to have a law on the books at the time. There's more to life than pursuing maximum profit.
We will find that the more we lose our morality, the less we are able to abide in freedom, and the more we will require an authoritarian state to control ourselves.
My emphasis.
From thefreedictionary.com[1]:
> rope in. To persuade, entice, or enlist someone to do or participate in something. A noun or pronoun can be used between "rope" and "in." I really didn't want to sing in the talent show, but Janet roped me in.
Notice that all the examples there involve either someone who would rather not get involved in the given activity, or a person or animal that lacks the ability to avoid being "roped."
In conclusion: have you ever considered working for McKinsey? If not, you should!
1: https://idioms.thefreedictionary.com/roped+in
Edit: clarification
This attitude stinks, I’m sorry. “If it’s legal, it’s ethical” is no way to run a society.
I had my neighbour on my lawn regarding a minor (cat-related) dispute the other week. He brought his kid with him, trying to show him how to behave I guess. At one point he said “well it’s not illegal” and I thought, wow, there you have it. This guy, 12-year-old in tow, thinks that actions are de facto fine if they’re “not illegal”.
I should have offered to take him to the local brothel. He’s married, I have a long-term partner. But that’s not illegal so I’m sure they would have been A-OK with it.
And how are this laws and regulations made? By massive lobbying. So first they rig the game then play the game.
McKinsey is awful for helping enable an immoral business practice. The pharma companies engaging in it are also practicing an immoral business practice. And Congress is failing in its duties to reign in the excesses of American capitalism.
It does no good to always blame those government people for current circumstances. They are just riding on the wave of money like everyone else. The reason for high drug prices is that people continue to pay those prices. Drugs sold in other countries are less expensive than the same drugs sold in the US. Pharma gets paid high prices, because people pay them those amounts.
I support this view but I've had a lot of difficulty arguing it. It's similar to tax loopholes- accountants find legal, even if unintended ways to avoid or reduce tax. Government can either close the loophole or let it stand, but the point is that accountants are economically incentivized to find flaws in regulations that can be identified and corrected, so the laws get better. It's a form of arbitrage, and is a feature of a well functioning regulatory system.
Another example is what all the electricity companies were doing in California when deregulation happened. All the Enron tactics of sending power out of state and back in, or bringing down generators to game the prices (this is distinct from the accounting fraud the company was known for, was generally legal, and done by all energy players). The root cause was poor regulation, and energy companies were identifying and demonstrating these flaws in a way that could only happen when there is money to be made. The government response should have been to quickly close the loopholes, but from what I remember, there was a lot of blaming the companies.
It's the same here. People would rather blame an evil company because they are a convenient scapegoat than actually understand the root of the problem.
But let's see if you're sincere in your principles. If I can find a way to get away with murdering you, is that ok? What if I turn a profit doing it by, say, taking all your assets? After all, it's kinda ridiculous how fragile the human body is. I'm practically doing you (and your next of kin) a favor by demonstrating how dangerous it is to have major arteries and veins so exposed. And I could also surface issues with the legal system; we know that the homicide clearance rate is only 55%, [1] so by your logic I'm helping the laws get better by giving lawmakers more data to work with.
I of course wouldn't do this, because I think one shouldn't do harmful things just because one can get away with it. But if you truly believe in this, just post your name and address, and I'm sure some public-spirited person will take you up on your offer of a little bit of for-profit, blame-free murder.
[1] https://www.statista.com/statistics/194213/crime-clearance-r...
As somebody who has done consulting, it's perfectly possible to do it in a way that isn't totally amoral like "how to do something / anything while staying within legal fringes" indicates. As an example, read through the IEEE/ACM code of ethics for software engineering: https://ethics.acm.org/code-of-ethics/software-engineering-c...
Big chunks of that are applicable to consulting too. That McKinsey doesn't care is a choice they made, and one we can hold them accountable for.
A great example is Valeant...long forgotten today but the stock went from $10 to $250 to $10, it was a huge story at the time, and was in the news every day when their stock was at the peak. The guy who masterminded this actually worked at McKinsey as an outside consultant for Valeant before he became CEO. This was the McKinsey special strategy: jack up prices, reduce R&D spending, make acquisitions and repeat step 1 and 2 (ofc, there was accounting fraud and the CEO tried to make off with multiple billions...again, this guy was a very senior consultant and was one of the most greedy kleptomaniacs I have seen in corporate life...this is not a coincidence).
Also, this strategy was McKinsey's brainchild. I have seen this over and over where a consultancy firm gets known for their a certain strategy in a certain industry, and they sell it everywhere and it looks like they all just came up with it independently. This strategy was not common pre-Valeant to any great degree, Daraprim happened far after. It became huge because McKinsey were recommending it to clients.
Ironically, I have an almost identical story from another industry. In the early 2010s, some consultant (I never was able to find out from execs who, they referred to an NDA) suggested to housebuilders in the UK that they pull back on capex. These housebuilders controlled a good portion of the land that was available for planning permission in the UK, the industry is heavily consolidated so they control the market for new houses, the market was in massive shortage, and then house prices would go up. Right on cue, pretty much every major housebuilder announces within the space of a year that they are going to begin returning capital to shareholders...in a housing market that is in shortage by roughly 200k homes/year, and in which any housebuilder could have taken massive share in a free market. Either way, new house prices go through the roof (the govt also announces a subsidy program), margins are now 20% against the 5-10% previously, everyone is making out like bandits. That wouldn't have happened if the consultant didn't come along (because the only way it worked is if other housebuilders knew this consultant had been around the industry, and knew other firms would cut back on production too).
Consultants have an absolutely huge role in determining company strategy, and they do deserve blame if they recommend things that are unethical (the fortunate thing about US pharma is that politicians came down on these firms like a ton of bricks, this didn't happen in UK housing). They are totally unaccountable too because when you talk to management, they just refer to some faceless consultant who is pulling the strings...if you are a shareholder, what do you do? The CEO is the monkey, not the organ grinder but it is the CEO who is the public face (and ofc, the Board are totally uncommunicative about what is going on). It is a huge problem because, as happened in pharma, it ended up with lots of companies doing things that were legally questionable and incinerating massive amounts of capital (Valeant had something like $40bn in debt at the peak, and equity was worth near $100bn at peak). ESG investing becomes impossible because there is no governance.
https://twitter.com/isaach/status/804726366038093824?s=21
It seems McKinsey's chief value proposition of providing executives and governments cover for politically unpopular decisions (both internally or externally)...is in fact accurate.
Amazing how this narrative manages to shift blame off of the government who created these bizarre incentives and the executives who run the damn drug companies and responded to those incentives.
Somehow our joke of a healthcare system is now the fault of 24-year-old powerpoint jockeys and their theatrically fake-analytical powerpoint graphs.