McKinsey to pay $650m to settle US opioid consulting probe

Prosecutors say McKinsey provided Purdue advice on measures it could take to ‘turbocharge’ OxyContin sales.

Consulting firm McKinsey & Company has agreed to pay $650m to resolve a United States Department of Justice investigation into the consulting firm’s work advising opioid manufacturer Purdue Pharma on how to boost OxyContin sales.

McKinsey has entered into a five-year deferred prosecution agreement filed on Friday in federal court in Abingdon, Virginia, to resolve criminal charges brought as part of a rare corporate prosecution concerning the marketing of addictive painkillers that helped fuel the deadly US opioid epidemic.

Prosecutors said McKinsey provided Stamford, Connecticut-based Purdue advice on measures it could take to “turbocharge” OxyContin sales. It was charged with conspiring to misbrand a drug and obstruction of justice.

A former senior partner at McKinsey, Martin Elling, has also agreed to plead guilty to obstruction of justice for destroying records related to McKinsey’s work for Purdue, according to court papers. He is scheduled to enter his plea on January 10.

Elling deleted documents related to his work for Purdue from his company laptop, sending himself emails to remind himself to do so, according to court papers.

“We are deeply sorry for our past client service to Purdue Pharma and the actions of a former partner who deleted documents related to his work for that client,” McKinsey said in a statement.

“We should have appreciated the harm opioids were causing in our society and we should not have undertaken sales and marketing work for Purdue Pharma. This terrible public health crisis and our past work for opioid manufacturers will always be a source of profound regret for our firm.”

A lawyer for Elling declined to comment.

McKinsey agreed to pay $650m over five years, improve its compliance practices to detect illegal activity and submit to oversight from the Justice Department and US Department of Health and Human Services (HHS) inspector general’s office as part of the deferred prosecution agreement, the company said.

The consulting firm also agreed to resolve a related civil probe regarding alleged violations of the False Claims Act and enter into a “corporate integrity” agreement with the HHS inspector general’s office, the company said.

‘Opioid abatement’

Purdue pleaded guilty in 2020 to criminal charges covering widespread misconduct regarding its handling of prescription painkillers, including conspiring to defraud US officials and pay illegal kickbacks to both doctors and an electronic healthcare records vendor.

Purdue is currently involved in court-ordered mediation over a multibillion-dollar settlement reached in bankruptcy proceedings that the US Supreme Court turned aside.

In a statement on Friday, Purdue said it was working to forge consensus on the plan to “deliver billions of dollars of value for opioid abatement” and create a new company as an “engine for good”. Settlement proceeds also aim to compensate victims, Purdue said.

McKinsey previously reached agreements totalling nearly $1bn to settle widespread lawsuits and other legal actions alleging the company helped fuel the opioid epidemic through its work advising Purdue Pharma and other drugmakers.

The settlements involved all 50 states; Washington, DC; US territories; local governments; school districts; Native American tribes; and health insurers.

In 2019, McKinsey announced it would no longer advise clients on opioid-related businesses. The company has maintained that none of its settlements contains admissions of liability or wrongdoing.