McKinsey & Company agrees to pay $650M for helping Purdue Pharma boost opioid sales

[December 14, 2024]  By GEOFF MULVIHILL, ALANNA DURKIN RICHER and STEVE LeBLANC

BOSTON (AP) — McKinsey & Company consulting firm has agreed to pay $650 million to settle a federal investigation into its work to help opioids manufacturer Purdue Pharma boost the sales of the highly addictive drug OxyContin, according to court papers filed in Virginia on Friday.

As part of the deal with the U.S. Justice Department, McKinsey will avoid prosecution on criminal charges if it pays the sum and follows certain conditions for five years, including ceasing any work on the sale, marketing or promotion of controlled substances.

A former McKinsey senior partner, Martin Elling, has also agreed to plead guilty to obstruction of justice for deleting documents from his laptop after he became aware of investigations into Purdue Pharma, the maker of OxyContin that was then a client, according to the filings. A lawyer for Elling declined to comment Friday.

McKinsey said in a statement on Friday that it's “deeply sorry” for its work for Purdue Pharma.

“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 company said. “This terrible public health crisis and our past work for opioid manufacturers will always be a source of profound regret for our firm.”

It's the latest effort by federal prosecutors to hold accountable companies officials say helped fuel the U.S. addiction and overdose crisis, with opioids linked to more than 80,000 annual deaths in some recent years. For the past decade, most of them have been attributed to illicit fentanyl, which is laced into many illegal drugs. Earlier in the epidemic, prescription pills were the primary cause of death.

Over the past eight years, drugmakers, wholesalers and pharmacies have agreed to about $50 billion worth of settlements with governments — with most of the money required to be used to fight the crisis.

Purdue paid McKinsey more than $93 million over 15 years for several products, including how to improve revenue from OxyContin. Prosecutors say McKinsey “knew the risk and dangers” of OxyContin and knew that Purdue Pharma executives had previously pleaded guilty to crimes related to the promotion of the drug, but decided to work with the opioid manufacturer anyway.

One of the jobs for McKinsey, the papers said, was to identify which prescribers would generate the most additional prescriptions if Purdue salespeople focused on that. That resulted in prescriptions that “were not for a medically accepted indication, were unsafe, ineffective, and medically unnecessary, and that were often diverted for uses that lacked a legitimate medical purpose,” the filing said.

“This was not hypothetical," Christopher Kavanaugh, U.S. Attorney for the Western District of Virginia Christopher Kavanaugh said in a news conference in Boston on Friday. “This was not just marketing. It was a strategy. It was executed and it worked.”

OxyContin pills arranged for a photo at a pharmacy, Feb. 19, 2013 in Montpelier, Vt. (AP Photo/Toby Talbot, File)

During work to “turbocharge” Purdue sales in 2013 after a drop in business, McKinsey consultants accompanied Purdue sales representatives on visits to prescribers and pharmacies to gather information. In a note about one ride-along, a McKinsey consultant said one pharmacist had a gun “and was shaking; abuse is definitely a huge issue.” The company continued looking for ways to increase OxyContin sales, according to court papers.

In 2014, McKinsey identified some small clinics that were writing more opioid prescriptions than entire hospital systems — and suggested they be targeted for more sales, the court filing said.

The company also tried to help Purdue get a say in shaping federal rules intended to ensure the benefits of addictive prescription drugs outweighed the risks. The government said in its new filings that that resulted in making high-dose OxyContin subject to the same oversight as lower-dose opioids and made training for prescribers voluntary rather than mandatory.

Since 2021, McKinsey has agreed to pay state and local governments about $765 million in settlements for its role in advising businesses on how to sell more of the powerful prescription painkillers amid a national opioid crisis.

The firm also agreed last year to pay health care funds and insurance companies $78 million.

Federal authorities say the deal represents the first time a management consulting firm is being held accountable like this for advising a client to break the law.

“If a consulting first conspires with a client to engage in criminal conduct, the fact that you’re an outside consultant will not protect you,” said Joshua Levy, U.S. Attorney for Massachusetts.

Some advocates say the opioid crisis was touched off when Purdue Pharma’s OxyContin hit the market in 1996.

Three Purdue executives pleaded guilty to misbranding charges in 2007 and the company agreed to pay a fine. The company pleaded guilty to criminal charges in 2020 and agreed to $8.3 billion in penalties and forfeitures — most of which will be waived as long as it executes a settlement through bankruptcy court that is still in the works.

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Durkin Richer reported from Washington and Mulvihill from Cherry Hill, New Jersey.

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