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The global consulting firm McKinsey and Company Friday agreed to pay $650 million to settle a federal probe into its role in helping “turbocharge” sales of the highly addictive opioid painkiller OxyContin for Purdue Pharma, the U.S. Justice Department announced on Friday.
Federal officials said the influential consulting company – which often advises governments and powerful corporations around the globe – committed crimes while trying to aggressively boost opioid sales.
“It was a strategy, it was executed and it worked,” said U.S. attorney Christopher Kavanaugh during a press conference on Friday. “McKinsey’s strategy resulted in prescriptions for Oxycontin that were unsafe and medically unnecessary.”
According to Kavanaugh, former McKinsey senior partner Martin Elling “personally deleted various Purdue related electronic materials from his McKinsey laptop with the intent to obstruct future investigations.”
DOJ officials said Elling has agreed to plead guilty to a felony count of obstruction of justice for destroying those company records.
The settlement comes from charges brought by U.S. attorney’s offices in Virginia and Massachusetts.
McKinsey’s payment, which includes $2 million paid to the Virginia Medicaid Fraud Control Unit, settles federal civil and criminal charges against the firm and includes a “deferred prosecution” agreement. Under the civil settlement, McKinsey is not admitting liability. A copy of the deferred prosecution agreement was not publicly available at the time of publication.
That means unless it commits additional wrongdoing linked to opioids, the other executives who led McKinsey during years when it helped drug companies boost prescription opioid sales won’t face criminal charges or trial.
Internal corporate memos show McKinsey promised to help Purdue Pharma, maker of the highly addictive pain medication Oxycontin, “turbocharge” sales at a time when deadly overdoses were surging nationwide.
“We are deeply sorry for our past client service to Purdue Pharma,” McKinsey said on Friday in a statement sent to NPR. The firm also apologized for “the actions of a former partner who deleted documents related to his work for that client.”
This payout comes on top of the nearly $900 million McKinsey agreed to pay in opioid settlements released previously with state and local governments that were suing the firm.
“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 McKinsey statement said.
As part of the deal, McKinsey has agreed to refrain from any work in the future involving “controlled substances” including opioids and to face closer federal oversight.
The company also now says it agrees to the “facts and allegations” underlying misdemeanor charges against McKinsey and “felony obstruction by a now-former senior partner.”
DOJ officials said the misdemeanor offense involved “knowingly and intentionally conspiring with Purdue and others to aid and abet the misbranding of prescription drugs.”
“This resolution marks the first time a management consulting firm has been criminally responsible for advice it has given resulting in the commission of a crime by a client,” the DOJ’s Kavanaugh said at Friday’s press conference.
Purdue Pharma, McKinsey’s one-time client, has pleaded guilty twice to federal charges linked to improper opioid practices in 2007 and again in 2020. However, following plea agreements, none of the opioid-makers executives, employees or owners were tried or served prison time.
Following the prescription opioid crisis that began in the 1990s, numerous corporations agreed to pay hefty fines and settlements, worth more than $50 billion but only a handful of corporate executives have been punished.
Critics say that pattern has continued through two decades of Democratic and Republican administrations.
“No one goes to jail,” said Ed Bisch, an opioid activist whose son Eddie died after overdosing on Purdue Pharma’s pain medication Oxycontin in 2001. “It has to stop because these companies look on [corporate] fines as a cost of doing business,” he said.
Bisch’s group, called Relatives Against Purdue Pharma, has staged protests outside DOJ headquarters in Washington, D.C., demanding more accountability for corporate leaders who aggressively promoted and profited from opioid sales.
Bisch noted the DOJ frequently prosecutes street level drug dealers, physicians and “pill mill” pharmacy operators accused of wrongdoing linked to opioids. They often wind up serving lengthy prison sentences.
But high-level corporate players involved in the marketing and distribution of hundreds of millions of opioid pills almost never face felony-level charges or spend time behind bars.
“Just collecting illicit profits without prosecuting individuals behind the crimes is no real deterrent and it sickens parents like myself,” Bisch said.
Indeed, many top company leaders at firms involved in the opioid industry have continued to rack up big bonuses and pay hikes, even as their firms paid out billions of dollars in opioid settlements or admitted to criminal acts highly hazardous to the public.
“The corporation just pays the speeding ticket and moves on,” said Paul Pelletier, a former DOJ attorney who worked on an opioid investigation of Purdue Pharma in 2006.
According to Pelletier, the DOJ’s approach often leaves individual corporate wrongdoers untouched, even when the DOJ says there’s evidence of serious misconduct. “It is essential that DOJ hold corporate executives liable,” he said.
In a statement sent to NPR a Justice Department spokesperson said charging decisions are “based on the facts of each case.”
“While not all crimes that result in corporate criminal liability are committed by company leaders, whether such leaders face criminal charges depends upon whether there is proof beyond a reasonable doubt,” the DOJ statement read.
Federal indictments of opioid executives aren’t completely unheard of. In 2019, the DOJ won a rare conviction against John Kapoor, CEO of Insys Therapeutics, along with four other company executives.
Insys founder John N. Kapoor, center, leaves the John Joseph Moakley United States Courthouse in Boston on May 2, 2019. On the 15th day of deliberations, a US District Court jury in Boston found that Kapoor and four former executives of Insys Therapeutics engaged in a nationwide conspiracy to pay off doctors at pain clinics to prescribe Subsys, an under-the-tongue fentanyl spray approved in 2012 for cancer pain.
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“Today’s convictions mark the first successful prosecution of top pharmaceutical executives for crimes related to the illicit marketing and prescribing of opioids,” then-U.S. Attorney Andrew Lelling said in a statement issued at the time. That year, the DOJ also prosecuted executives with Rochester Drug Co-operative, a regional drug distributor in Upstate New York.
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