McKinsey to Pay $650 Million in Opioid Settlement with Justice Department

A former senior partner will also plead guilty to obstruction of justice after destroying company documents.

[ABS News Service/14.12.2024]

McKinsey & Company has agreed to pay $650 million to settle a Justice Department investigation of its work with the opioid maker Purdue Pharma. A former senior partner has also agreed to plead guilty to obstruction of justice for destroying internal company records in connection with that work.

At the center of the government’s case was the global consulting giant’s recommendation that Purdue Pharma “turbocharge” sales of Purdue’s flagship OxyContin painkiller in the midst of an opioid addiction epidemic that was killing hundreds of thousands of Americans.

The settlement and the government’s findings were presented at a news conference in Boston on Friday. According to prosecutors, McKinsey “knew the risks and dangers associated with OxyContin,” as well as the fact that top Purdue Pharma executives had pleaded guilty to federal crimes relating to sales of the drug. Yet the consulting company chose to continue working with the drugmaker to boost sales of the opioid.

More than two dozen McKinsey partners consulted for Purdue over roughly 15 years, earning the firm $93 million.

The settlement, which the government said ended its investigation of McKinsey, stemmed from charges brought by the U.S. attorney’s offices in Massachusetts and the Western District of Virginia. The case is unrelated to Purdue Pharma’s multibillion-dollar bankruptcy plan, now in legal limbo, that would have offered compensation to tens of thousands of families. Still, the McKinsey settlement brings closure to one strand of a broad legal effort to grapple with the industry behind the opioid epidemic.

McKinsey is widely regarded as the world’s most prestigious management consulting firm, with offices around the globe from which it advises most of the Fortune 500 companies as well as government agencies, including those in authoritarian nations such as China and Saudi Arabia.

In recent years, McKinsey has settled government investigations in the United States and overseas by paying hundreds of millions of dollars while not admitting any wrongdoing. That is no longer true.

McKinsey issued a statement on Friday apologizing for its work with the opioid maker.

“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,” the consulting firm wrote. “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.”

In court papers released on Friday, federal prosecutors traced the arc of McKinsey’s work with the opioid maker.

In July 2009, McKinsey wrote that Purdue Pharma’s “top priority” should be “driving a more impactful OxyContin franchise.”

In subsequent years, as the opioid crisis grew, McKinsey continued to formulate new ways for the drugmaker to increase profits, including targeting “opioid naïve” patients, a term used to describe individuals not currently using the drug or those who had used it only once.

“McKinsey understood that part of its role was to empower those within Purdue Pharma’s senior management who favored a more aggressive approach to sales,” federal prosecutors said.

Reporting in The New York Times has documented how McKinsey pushed ethical boundaries by advising drug and cigarette makers while also consulting for their federal regulators, who never publicly questioned these arrangements.

Congress held hearings in 2022 focusing on the firm’s simultaneous work with opioid makers and the Food and Drug Administration after reports in The Times and elsewhere. A congressional report found that since 2010 at least 22 of the firm’s consultants had worked for both Purdue and the F.D.A., sometimes at the same time.