McKinsey agreed to pay an astronomical sum of $650 million to settle criminal allegations linked to the opioid issue in the United States.
McKinsey agreed to pay an astronomical sum of $650 million to settle criminal allegations linked to the opioid issue in the United States.
McKinsey & Company has agreed to pay $650 million to settle an investigation by the US Department of Justice into their consulting services provided to OxyContin manufacturer Purdue Pharma, accused of boosting opioid sales.
The consulting giant has entered a five-year deferred prosecution agreement in federal court in Abingdon, Virginia, over criminal charges for aiding Purdue in boosting OxyContin sales through manipulative marketing strategies.
Prosecutors claimed that McKinsey suggested ways to "speed up" OxyContin sales for Purdue, who were accused of misbranding a drug and obstructing justice.
A former McKinsey partner, Martin Elling, agreed to plead guilty to destroying records related to McKinsey's work with Purdue, with his trial set to take place on January 10.
Elling deleted records related to his work on his company laptop and sent himself reminders to do so, according to court documents.
"We deeply regret our past work with Purdue Pharma and the actions of a former partner who destroyed records related to his work with this client," stated McKinsey.
"We should have recognized the harm opioids were causing in society and should not have engaged in sales and marketing work for Purdue Pharma. This devastating public health crisis and our past work with opioid manufacturers will always be a source of deep regret for our firm."
Elling's lawyer declined to comment.
McKinsey will pay $650 million over five years, amend its compliance practices to spot illegal activity, and submit to oversight from DOJ and HHS inspector general as part of the deferred prosecution agreement, according to the company.
The consulting firm also agreed to settle a related civil probe concerning alleged False Claims Act violations and enter into a "corporate integrity" agreement with the HHS inspector general's office.
Purdue pleaded guilty to criminal charges in 2020 for widespread misconduct regarding its handling of prescription painkillers, including defrauding US officials and paying illegal kickbacks.
Purdue is currently engaged in court-mediated discussions over a multibillion-dollar settlement agreed upon in bankruptcy proceedings, which was later dismissed by the US Supreme Court.
In a statement, Purdue claimed they were working to achieve consensus on a plan to deliver "billions of dollars in value for opioid abatement" and to establish a new company focused on charitable work. Settlement funds will reportedly compensate victims, Purdue said.
McKinsey reached settlements totaling nearly $1 billion to resolve numerous lawsuits and legal actions claiming the company contributed to the opioid epidemic through its work advising OxyContin manufacturer Purdue Pharma and other drug companies.
In 2019, McKinsey announced it would no longer advise on opioid-related businesses. The company maintains that none of its settlements contain admissions of liability or wrongdoing.
McKinsey acknowledged regret over their past business dealings with Purdue Pharma, stating they should not have engaged in sales and marketing work for the opioid manufacturer due to the harm caused by opioids.
Under the deferred prosecution agreement, McKinsey will pay $650 million over five years, amend its compliance practices, and submit to oversight to prevent future illegal activities.