McKinsey Will Pay $650 Million to Resolve DOJ Opioid Probe (1)

Consulting giant McKinsey & Co. has agreed to pay $650 million while avoiding a guilty plea for conspiring with Purdue Pharma and other pharmaceuticals to misbrand addictive opioids.

In a five-year deferred prosecution agreement with the Justice Department, McKinsey will pay a combination of civil and criminal penalties stemming from its role advising Purdue on obtaining FDA approval of OxyContin and how to “turbocharge” sales of the painkiller. DOJ charged the company with intentionally aiding Purdue and other drugmakers in deceptively marketing opioids to be sold without medically appropriate prescriptions.

“For the first time in history, the Justice Department is holding a management consulting firm and one of its senior executives criminally responsible for the sales and marketing advice it gave resulting in the commission of crime by a client,” said US Attorney for the Western District of Virginia Christopher Kavanaugh, in a statement.

A former McKinsey senior partner, Martin Elling, has also agreed to plead guilty to obstruction of justice for destroying evidence during the investigation, prosecutors said in court filings Friday.

The investigation was brought by the US attorney’s offices in the Western District of Virginia and Massachusetts, along with the Commercial Litigation and Consumer Protection branches at DOJ headquarters.

The privately-held consultancy had already paid hundreds of millions of dollars in 2021 to settle states’ claims that it fueled the US opioid epidemic through its sales analysis and marketing advice.

“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.”

Although McKinsey didn’t voluntarily disclose the wrongdoing, prosecutors awarded it cooperation credit for updating them on information obtained from the company’s internal investigation, highlighting the important documents in these voluminous productions, and facilitating interviews.

DOJ also credited the company’s “extensive remedial measures,” such as shuttering its opioid business in 2019 and firing Elling and another senior partner, and hiring new chief legal compliance officers.

The resolution further requires McKinsey to implement a rigorous compliance program to detect future risky engagements.