For the first time in U.S. history, a management consulting firm is being held criminally responsible for giving advice that contributed to a client committing a crime. McKinsey & Company Inc. (McKinsey) has agreed to pay $650 million to settle a federal investigation into its consulting work with opioid manufacturer Purdue Pharma L.P. (Purdue). The resolution focuses on McKinsey’s advice to Purdue regarding the sales and marketing of OxyContin, including a 2013 engagement in which McKinsey advised on steps to ‘turbocharge’ sales of OxyContin.
“McKinsey schemed with Purdue Pharma to ‘turbocharge’ OxyContin sales during a raging opioid epidemic — an epidemic that continues to decimate families and communities across the nation,” said U.S. Attorney Joshua Levy for the District of Massachusetts in a press release.
In addition to the company’s settlement, Martin E. Elling, a former McKinsey senior partner, has agreed to plead guilty for obstruction of justice. Elling, 60, has been charged with one count of knowingly destroying records, documents and tangible objects with the intent to impede, obstruct and influence the investigation and proper administration of a matter within the jurisdiction of the Justice Department.
“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 M. Boynton, head of the Justice Department’s Civil Division.
The settlement includes a detailed 71-page Agreed Statement of Facts outlining McKinsey’s involvement with Purdue. As part of the resolution, McKinsey has committed to significant reforms, including a compliance program to assess high-risk client engagements, enhanced document retention policies, and mandatory training for employees. The firm has also agreed to cease any work related to the marketing, promotion, or distribution of controlled substances for five years.
“No amount of money can make-up for the devastating impact and heartbreaking loss of life the opioid crisis has inflicted on the people of Massachusetts, and our country. But today’s settlement is a sobering reminder that if you try to capitalize on a crisis by putting profits over patient safety — and then try to obstruct a federal investigation — you will pay a hefty price,” said Special Agent in Charge Jodi Cohen of the FBI Boston Field Office. “McKinsey is now being held criminally and financially accountable for devising an aggressive marketing strategy that was in reality a roadmap to boost sales of highly addictive opioids. Their actions resulted in powerful prescription painkillers being used in an unsafe, ineffective, and medically unnecessary manner. As both health care consumers, and taxpayers, this type of fraud negatively impacts all of us.”