The consultancy giant McKinsey has agreed to pay the US Department of Justice $650m over the next five years to resolve an investigation into the consulting firm’s role in the opioid epidemic.
As part of the deferred prosecution agreement, McKinsey accepted responsibility for its role in the crisis and accepted wrongdoing outlined in the investigation. The charges against the firm will be dropped if the company follows the agreement’s terms over the next five years.
A former senior McKinsey executive also agreed to plead guilty to charges of obstructing justice after the former executive destroyed records relating to the firm’s work with Purdue.
McKinsey had advised the OxyContin manufacturer Purdue Pharma for years, including ways the company could “turbocharge” sales of the addictive opioid drug. The firm was also accused of hiding its relationship with Purdue from the Food and Drug Administration (FDA) as it was working with the federal agency on drug policy.
In 2019, the company, which is privately owned and does not publicly disclose its clients, said it would stop advising opioid-related businesses.
The company has already paid nearly $1bn in settlements for its role advising opioid drug manufacturers, like Purdue Pharma. In 2021, it paid out $642m in a settlement with all 50 states, five US territories and Washington DC to resolve various state-level prosecutions against the company.
McKinsey had maintained its settlements did not mean it admits any wrongdoing. But the company changed course on Friday after the justice department settlement, apologizing for its role in the crisis.
“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.”
The firm said the resolution “brings closure to this chapter in our firm’s history”.
“We have agreed to accept responsibility for our conduct and agreed to the facts and allegations underlying the charges against McKinsey,” the statement read.
At a press conference on Friday, justice department officials said McKinsey agreed to two criminal counts: one felony count of obstruction of justice and a second count for knowingly and intentionally conspiring with Purdue and other drug manufacturers to help the misbranding of a prescription drug.
The justice department said that McKinsey stepped in to help Purdue market and prescribe OxyContin after prescriptions dropped, once it became clear that patients were becoming addicted to the drug. The consulting firm helped Purdue identify “high-value prescribers”, or those who were prescribing opioids for unsafe and medically unnecessary uses, that often resulted in addiction.
Chris Kavanaugh, the US attorney for the sestern district of Virginia, noted that the $650m resolution is 85 times the amount of money made from working with Purdue.
“This resolution marks the first time a management consulting firm has been held criminally responsible for advice the firm has given resulting in the commission of a crime by a client,” Kavanaugh said on Friday. “We believe that it sends a powerful message to the consulting industry going forward as they consider future engagements.”
In the agreement, McKinsey also said it will not do any work relating to the marketing, the sale, the promotion or the distribution of any controlled substance.
In 2020, Purdue Pharma pleaded guilty to multiple federal charges, including conspiring to defraud US officials and pay off doctors to keep prescribing OxyContin, despite its known addictive properties. The company was fined a total of $5.5bn in the guilty plea and ended up paying a total of $8bn for various criminal and civil fines.
