BOSTON — The consulting firm McKinsey & Company has reached a settlement of $650 million to resolve a federal investigation regarding its assistance to Purdue Pharma in promoting the sales of the highly addictive opioid OxyContin, as detailed in court documents submitted in Virginia.
Under the terms of the agreement with the U.S. Justice Department, McKinsey can avoid criminal prosecution by adhering to several conditions over the next five years, including ceasing all endeavors tied to the marketing or selling of controlled substances.
In addition to the company’s settlement, Martin Elling, a former senior partner at McKinsey, is set to plead guilty to obstruction of justice for removing documents from his laptop after becoming aware of the investigations pertaining to Purdue Pharma. His attorney has not provided comments regarding the matter.
In a statement issued Friday, McKinsey expressed deep regret for its previous association with Purdue Pharma, acknowledging that it failed to recognize the significant harm caused by opioids in society. “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,” the firm stated, highlighting that its involvement in this ongoing public health crisis continues to be a source of considerable remorse.
This settlement marks another step in federal prosecutors’ efforts to hold organizations responsible for contributing to the opioid addiction and overdose epidemic, which is linked to over 80,000 deaths annually in recent years. A significant proportion of these fatalities are attributed to illicit fentanyl, a powerful synthetic opioid often mixed with various illegal drugs, though the epidemic initially saw prescription pills as the primary cause of death.
Over the last eight years, drug manufacturers, wholesalers, and pharmacies have entered into settlements exceeding $50 billion with governmental bodies, with an emphasis on utilizing these funds to combat the crisis.
Purdue Pharma compensated McKinsey with over $93 million throughout a span of 15 years for different initiatives, including strategies to enhance OxyContin’s revenue. Prosecutors contend that McKinsey was fully aware of the risks associated with OxyContin and acknowledged the previous criminal admissions made by Purdue Pharma’s executives regarding their promotion of the drug, yet they chose to continue their partnership.
Court documents reveal that one task assigned to McKinsey involved pinpointing which doctors could produce the highest number of prescriptions if Purdue’s sales personnel concentrated their efforts on them. The result was prescriptions that were deemed medically unnecessary, unsafe, and ineffective, and were frequently misused for non-medical purposes.
“This was not hypothetical,” stated Christopher Kavanaugh, the U.S. Attorney for the Western District of Virginia, during a Boston press conference. “This was not just marketing. It was a strategy. It was executed and it worked.”
Following a downturn in sales in 2013, McKinsey began working earnestly to revitalize Purdue’s sales numbers. Consultants from McKinsey even accompanied Purdue’s sales reps on visits to doctors and pharmacies to gather intel. On one such visit, a McKinsey consultant remarked on a pharmacist’s evident distress, noting that “abuse is definitely a huge issue.” Nonetheless, McKinsey persisted in seeking opportunities to bolster OxyContin sales.
In 2014, the firm identified certain small clinics that were prescribing opioids at higher rates than entire hospital networks and advised targeting them for increased sales efforts. Furthermore, McKinsey attempted to influence federal regulations meant to balance the benefits versus the risks of addictive prescriptions, leading to higher-dose OxyContin being regulated similarly to lower-dose opioids and making refresher training for prescribers optional.
Since 2021, McKinsey has committed to settlements totaling approximately $765 million with various state and local governments concerning its advisory roles in promoting powerful prescription painkillers amid the national opioid crisis.
Additionally, the firm agreed to pay health care funds and insurance companies $78 million last year. Federal officials assert that this settlement is significant as it marks the first instance of a management consulting firm facing accountability for facilitating illegal actions on behalf of a client.
“If a consulting firm conspires with a client to engage in criminal conduct, being an external consultant will not offer protection,” remarked Joshua Levy, the U.S. Attorney for Massachusetts.
Some advocates trace the origins of the opioid crisis back to Purdue Pharma’s launch of OxyContin in 1996. In 2007, three Purdue executives admitted guilt regarding misbranding charges, leading to a financial settlement for the company. Purdue also pleaded guilty to criminal charges in 2020, resulting in an $8.3 billion penalty agreement, most of which will be waived contingent on a comprehensive settlement being finalized through ongoing bankruptcy proceedings.
