By Michael Forsythe, Walt Bogdanich and Bridget Hickey
Feb. 19, 2019, 23 c
“The sins of Valeant Pharmaceuticals are well known. Instead of spending to develop new drugs, Valeant bought out other drugmakers, then increased prices of lifesaving medicines by as much as 5,785 percent. Patients had no choice but to pay.
Valeant’s chief executive, J. Michael Pearson, was hauled into a 2016 Senate hearing and verbally thrashed by lawmakers. “It’s using patients as hostages. It’s immoral,” said Claire McCaskill, then the Democratic senator from Missouri. One executive went to prison for fraud. The company’s share price collapsed.
It hadn’t always been that way. Before Valeant’s fall, its stock was a Wall Street darling, attracting high-profile investors who tirelessly promoted the company on financial news channels. But one investor especially avoided the spotlight — a secretive hedge fund owned by McKinsey & Company, the world’s most prestigious consulting firm. McKinsey, in fact, had deep ties to the drugmaker: Four top Valeant officials, including Mr. Pearson, were McKinsey veterans, and the firm was advising Valeant on drug prices and acquisitions.
J. Michael Pearson, left, testifying on Capitol Hill in 2016 after the pharmaceutical company he led, Valeant, raised the prices of lifesaving medicines. McKinsey had both advised and invested in Valeant.CreditDrew Angerer for The New York Times
That web of relationships underscores the unusual nature of McKinsey’s hedge fund, and the potential for undisclosed conflicts of interest between the fund’s investments and the advice the firm sells to clients.”
If McKinsey is telling the truth about a wall between their consulting and this hedge fund, why do they hide it in the island of Guernsy off the coast of England, in hidden, anonymous accounts? These two points don’t agree with each other.