McKinsey & Company has agreed to a $650 million settlement to resolve charges related to its consulting work for Purdue Pharma, the manufacturer of OxyContin. The settlement stems from allegations that McKinsey’s advice helped fuel the opioid crisis by encouraging aggressive sales tactics for the highly addictive painkiller. The U.S. Department of Justice announced the settlement on Friday, marking a significant development in the ongoing legal battles surrounding the opioid epidemic.
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McKinsey’s Role in the Opioid Crisis: Turbocharging OxyContin Sales
The core of the charges against McKinsey revolves around its strategic advice to Purdue Pharma. Prosecutors allege that McKinsey developed plans to “turbocharge” OxyContin sales, even after the company faced earlier criminal charges related to the drug’s marketing. Specifically, McKinsey is accused of targeting “high-value” prescribers, including those with a history of prescribing opioids for illegitimate purposes. This strategy, prosecutors argue, led to a surge in unsafe and medically unnecessary prescriptions, contributing significantly to the opioid crisis.
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McKinsey’s headquarters in New York City
A key component of the settlement is a five-year deferred prosecution agreement. This agreement allows McKinsey to avoid criminal prosecution if it adheres to specific terms and conditions over the next five years. In addition to the financial penalty, McKinsey has also agreed to resolve civil claims brought under the False Claims Act.
A Landmark Case for the Consulting Industry
This case represents the first time a management consulting firm has faced criminal charges for advice that led to a client committing a crime. This precedent sets a significant legal benchmark for the consulting industry, emphasizing the potential for accountability when providing advice that results in harmful consequences. U.S. Attorney Joshua Levy underscored this point, stating that consulting firms will be held responsible for their actions, regardless of sophisticated presentations or industry jargon.
A graph depicting the rise in opioid overdose deaths in the United States
Furthermore, a former senior McKinsey partner, Martin Elling, has agreed to plead guilty to obstruction of justice for destroying records related to the firm’s work for Purdue. Elling’s plea agreement highlights the individual level of accountability in this case.
McKinsey’s Response and the Future of Opioid Litigation
McKinsey has issued a statement expressing “deep regret” for its role in the opioid crisis. The firm ceased advising clients on opioid-related businesses in 2019 and acknowledged the profound regret associated with its work for opioid manufacturers. This settlement adds to previous agreements totaling nearly $1 billion that McKinsey reached to resolve lawsuits related to its involvement in the opioid epidemic.
Purdue Pharma’s headquarters in Stamford, Connecticut
While this settlement represents a significant step in holding McKinsey accountable, the broader legal battles surrounding the opioid crisis are ongoing. Purdue Pharma itself pleaded guilty in 2020 to charges related to its handling of prescription painkillers. The company is currently involved in bankruptcy proceedings and mediation to rework a multibillion-dollar civil settlement with states, local governments, and other entities affected by the epidemic. The outcome of these proceedings will further shape the landscape of opioid litigation and the allocation of resources for abatement and victim compensation.
This settlement with McKinsey serves as a stark reminder of the devastating consequences of the opioid crisis and the complex web of responsibility that extends beyond pharmaceutical companies to include those who provided them with strategic guidance. The legal and financial ramifications of this crisis will continue to unfold in the years to come.
