McKinsey & Company Inc., a management consulting firm based in New York, has agreed to pay $650 million to settle criminal and civil investigations related to its consulting work with Purdue Pharma L.P. The resolution addresses McKinsey's advice to Purdue on the sales and marketing of OxyContin, including a 2013 engagement aimed at boosting sales.
This marks the first instance of a management consulting firm being held criminally accountable for advice leading to client crimes. It also represents the largest civil recovery for such conduct. A former McKinsey senior partner, Martin E. Elling, has been charged with obstruction of justice in Virginia federal court for allegedly destroying records to impede an investigation.
As part of the settlement, McKinsey entered into a five-year deferred prosecution agreement (DPA) involving charges against its U.S. subsidiary for record destruction and conspiracy related to drug misbranding. The company will pay over $231 million in penalties, more than $93 million in forfeiture reflecting payments from Purdue between 2004 and 2019, and $2 million to Virginia's Medicaid Fraud Control Unit.
The settlement includes a civil agreement under which McKinsey will pay over $323 million for liability under the False Claims Act concerning false claims submitted due to their advice on OxyContin prescriptions. This brings total payments under the global resolution to $650 million.
McKinsey has committed to implementing compliance measures including new document retention procedures and training during the DPA term. The company is prohibited from engaging in any work related to controlled substances' marketing or distribution during this period.
Principal Deputy Assistant Attorney General Brian M. Boynton stated that "consulting companies cannot advise their clients to break the law," emphasizing accountability in contributing roles within the opioid crisis.
U.S. Attorney Christopher R. Kavanaugh highlighted this as a historic moment where both a firm and an executive are held responsible for advising on actions resulting in client crimes, demonstrating commitment towards addressing those profiting from the opioid crisis.
Special Agent Jodi Cohen noted that no monetary amount can compensate for lives lost but emphasized accountability through this settlement as crucial against profit-driven practices compromising safety during crises.
Elling faces potential imprisonment following charges of obstruction by deleting documents relevant to McKinsey's work with Purdue amidst legal scrutiny over opioid-related activities.