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The agreement marks the first time a management consulting firm has been held criminally responsible for advice resulting in the commission of a crime by a client.
ABINGDON, Va. (CN) — The Justice Department announced on Friday a deferred prosecution agreement with McKinsey & Co., a management consulting firm charged with helping a pharmaceutical company maximize profit for OxyContin at the expense of public health.
“This global resolution shows the department’s commitment to holding accountable those who played key roles in fueling the opioid crisis,” Principal Deputy Assistant Attorney General Brian M. Boynton, head of the Justice Department’s Civil Division, said in a statement. “Consulting companies cannot advise their clients to break the law, and then skirt responsibility when their clients do so.”
McKinsey will pay $650 million over the next five years for civil claims and criminal charges relating to the firm’s work with Perdue Pharma. An agreed statement of facts shows McKinsey advised Perdue in 2013 to increase profits by targeting prescribers who were writing opioid prescriptions for uses that were unsafe, ineffective and medically unnecessary.
“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 said in a statement. “This terrible public health crisis and our past work for opioid manufacturers will always be a source of profound regret for our firm.”
Along with the payout, McKinsey agreed to implement a compliance program, including policies designed to identify and assess high-risk client engagements. McKinsey will also implement new document retention procedures and training.
The charges came following an investigation by Virginia’s Medicaid Fraud Control Unit and the U.S. Attorney’s Offices for the Western District of Virginia and the District of Massachusetts.
The Justice Department filed criminal charges against McKinsey in a Virginia-based federal court, accusing the firm of one felony obstruction of justice charge and a misdemeanor count of knowingly conspiring with Purdue to abet the misbranding of OxyContin.
On the civil side, the government accuses the firm of violating the False Claims Act and failing to disclose conflicts of interest to the U.S. Food and Drug Administration arising from the firm’s concurrent work for Purdue and the FDA.
“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,” U.S. Attorney Christopher R. Kavanaugh for the Western District of Virginia said. “This ground-breaking resolution demonstrates the Justice Department’s ongoing commitment to hold accountable those companies and individuals who profited from our Nation’s opioid crisis.”
A former consultant for the firm, Martin Elling, will plead guilty in Virginia for obstruction of justice after the government found Elling had communicated with Perdue about deleting potentially incriminating emails.
“By holding McKinsey accountable for its role in enabling Purdue Pharma’s reckless promotion of OxyContin, an addictive opioid that devastated communities across Virginia and the nation, treating innocent lives as mere chemistry experiments, this historic $650 million resolution sends a clear message: no one, not even the world’s largest consulting firm, is above the law,” Virginia Attorney General Jason Miyares said in a statement.
McKinsey worked with Perdue from 2004 to 2019. In 2007, a Purdue affiliate pleaded guilty to misbranding OxyContin from 1996 through 2001 by falsely marketing it as less addictive, less subject to abuse and diversion and less likely to cause dependence and withdrawal than other pain medications, and Purdue entered into a five-year corporate integrity agreement. In 2010, McKinsey worked with Purdue to obtain FDA approval for a less addictive version of OxyContin.
Perdue quickly saw a drop in profits, primarily attributed to a decline in prescriptions for individuals abusing OxyContin and increases in regulatory safeguards intended to hinder medically unnecessary prescribing. In 2013, Perdue retained McKinsey to assess the underlying drivers of OxyContin’s performance, identify opportunities to increase near-term revenue and develop plans to capture priority opportunities.
McKinsey called the 2013 effort Evolve to Excellence, advising Perdue that by targeting prescribers prone to prescribing the opioid, they could “turbocharge” sales.
Nearly 108,000 people died from drug overdose in 2022 and approximately 82,000 of those deaths involved opioids, according to the Center for Disease Control. Opioids are substances that work in the nervous system of the body or in specific receptors in the brain to reduce pain.
All opioids, including heroin, are chemically similar, with the same biological mechanism and similar effects, meaning addiction to one opioid can be satisfied by another opioid. Often, people turn to illegal opioids like heroin after running out of their prescription opioids following surgery or injury.
“Aiding and abetting in the potential misbranding and illegal distribution of controlled substances poses a danger to U.S. consumers,” special agent in charge George A. Scavdis of the FDA Office of Criminal Investigations Metro Washington Field Office said in a statement. “We will continue to investigate and bring to justice companies whose actions put profits over patient safety.”
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