Consulting firm McKinsey to pay $650 million to resolve US criminal opioid probe

By Nate Raymond (NS:RYMD ) and Mike Spector

BOSTON (Reuters) -McKinsey & Co has agreed to pay $650 million to resolve a U.S. Department of Justice investigation into the consulting firm's work advising opioid manufacturer OxyContin maker Purdue Pharma on how to boost sales.

McKinsey has entered into a five-year deferred prosecution agreement filed in federal court in Abingdon, Virginia, to resolve criminal charges brought as part of the latest corporate prosecution concerning the marketing of addictive painkillers that helped fuel the deadly U.S. opioid epidemic.

Prosecutors said that McKinsey provided Stamford, Connecticut-based Purdue advice on measures it could take to "turbocharge" OxyContin sales. It was charged with conspiring to misbrand a drug and obstruction of justice.

A former senior McKinsey partner, Martin Elling, has also agreed to plead guilty to obstruction of justice for destroying records related to McKinsey's work for Purdue, according to court papers. He is scheduled to enter his plea on Jan. 10.

Elling deleted documents related to his work for Purdue from his company laptop, sending himself emails to remind himself to do so, according to court papers.

"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."

A lawyer for Elling declined to comment.

McKinsey agreed to pay $650 million over five years, improve its compliance practices to detect illegal activity and submit to oversight from the DOJ and U.S. Department of Health and Human Services inspector general's office as part of the deferred prosecution agreement, the company said.

The consulting firm also agreed to resolve a related civil probe regarding alleged violations of the False Claims Act and enter into a "corporate integrity" agreement with the HHS inspector general's office, the company said.

Purdue pleaded guilty in 2020 to criminal charges covering widespread misconduct regarding its handling of prescription painkillers, including conspiring to defraud U.S. officials and pay illegal kickbacks to both doctors and an electronic healthcare records vendor.

Purdue is currently involved in court-ordered mediation over a multibillion-dollar settlement reached in bankruptcy proceedings that the U.S. Supreme Court turned aside. 

In a statement on Friday, Purdue said it was working to forge consensus on the plan to "deliver billions of dollars of value for opioid abatement" and create a new company as an "engine for good." Settlement proceeds also aim to compensate victims, Purdue said.



McKinsey previously reached agreements totaling nearly $1 billion to settle widespread lawsuits and other legal actions alleging the company helped fuel the opioid epidemic through its work advising OxyContin maker Purdue Pharma and other drugmakers. 

In 2019, McKinsey announced it would no longer advise clients on opioid-related businesses. The company has maintained that none of its settlements contain admissions of liability or wrongdoing.

Source: Investing.com