(The Center Square) – Global consulting firm McKinsey & Company Inc. agreed to pay $650 million to resolve a criminal and civil investigation into the firm’s work with opioid maker Purdue Pharma.
McKinsey advised Purdue on steps to “turbocharge” sales of OxyContin, a powerful and addictive extended-release opioid, according to the U.S. Department of Justice.
The resolution marks the first time a consulting firm has been held criminally responsible for advice resulting in the commission of a crime by a client. It is also the largest civil recovery for such conduct, according to the DOJ.
“Consulting companies cannot advise their clients to break the law, and then skirt responsibility when their clients do so,” said Principal Deputy Assistant Attorney General Brian Boynton, head of the Justice Department’s Civil Division.
In addition to the settlement, a former McKinsey senior partner who worked with Purdue, was charged with obstruction of justice in federal court in Abingdon, Virginia.
Martin Elling, 60, a U.S. citizen living in Bangkok, Thailand, was charged with one count of knowingly destroying records. Elling agreed to plead guilty and is expected to appear in federal court in Abingdon to enter his plea and for sentencing.
McKinsey accepted a five-year deferred prosecution agreement in connection with a criminal information filed in U.S. District Court for the Western District of Virginia against McKinsey’s U.S. subsidiary, McKinsey & Company Inc. United States. The information charged McKinsey U.S. with one felony count of knowingly destroying records and one misdemeanor count of knowingly and intentionally conspiring with Purdue and others to aid and abet the misbranding of prescription drugs.
The firm agreed to pay a penalty of more than $231 million, a forfeiture amount of more than $93 million (reflecting all money it was paid by Purdue from 2004 to 2019) and a payment of $2 million to the Virginia Medicaid Fraud Control Unit to resolve the criminal allegations, according to the DOJ.
McKinsey also entered into a civil settlement agreement in which it will pay over $323 million to resolve its liability under the False Claims Act for allegedly providing advice to Purdue Pharma L.P. that caused the submission of false and fraudulent claims to federal healthcare programs for medically unnecessary prescriptions of OxyContin, and for allegedly failing to disclose to the U.S. Food and Drug Administration conflicts of interest arising from McKinsey US’s concurrent work for Purdue and the FDA. That brings the total payments under the resolution to $650 million.
McKinsey & Co. apologized for its work with Purdue.
“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 company 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.”
