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By Jon Jackson and Rachel Dobkin
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The consulting firm McKinsey & Company has agreed to pay $650 million to resolve a federal investigation into its work for opioids manufacturer Purdue Pharma, The Associated Press (AP) reported on Friday while citing court papers filed in Virginia.
According to the AP, the court papers show that the deal with the U.S. Department of Justice (DOJ) will keep McKinsey from facing prosecution on criminal charges if the company pays the sum and adheres to other conditions for a period of five years.
One condition of the settlement is that McKinsey must stop any work on the sale, marketing or promotion of controlled substances. The firm used to help Purdue Pharma increase the sales of the highly addictive painkiller OxyContin, which some advocates say sparked the current U.S. drug crisis in the 1990s.
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McKinsey Expresses Regret
The company said in a statement Friday 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," McKinsey said. "This terrible public health crisis and our past work for opioid manufacturers will always be a source of profound regret for our firm."
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What Did McKinsey Do for Purdue Pharma?
One of McKinsey's jobs for Purdue Pharma was finding out how to improve revenue from OxyContin.
While attempting to "turbocharge" opioid sales in 2013, as company documents put it, McKinsey consultants joined Purdue sales representatives on visits to prescribers and pharmacies to gather information. A McKinsey consultant said in a note about one of the trips that one pharmacist had a gun "and was shaking; abuse is definitely a huge issue." Court papers say McKinsey continued to help Purdue boost OxyContin sales after this visit.
McKinsey was paid over $93 million by Purdue over 15 years for several products, including its help to boost the sale of OxyContin. Even though the consulting firm "knew the risk and dangers" of OxyContin and knew that Purdue executives had previously pleaded guilty to crimes related to the promotion of the opioid, McKinsey decided to work with the drug manufacturer anyway, according to prosecutors.
In 2007, three Purdue executives pleaded guilty to misbranding charges, and the firm agreed to pay a fine. In 2020, Purdue pleaded guilty to criminal charges and agreed to $8.3 billion in penalties and forfeitures. However, most of the $8.3 billion will be waived if the company executes a settlement through bankruptcy court currently in the works.
Feds Crack Down on Drug Crisis
The federal investigation into McKinsey's work for Purdue Pharma is the latest effort by federal prosecutors to hold companies who officials say helped fuel the U.S. addiction and overdose crisis accountable.
In late 2021, the National Center for Health Statistics under the Centers for Disease Control (CDC) released a study that found that over 932,000 people from 1999 to 2020 died from drug overdoses. Nearly 108,000 deaths were caused by drug overdoses in 2022, according to the CDC.
But there is hope for those struggling with addiction, their families and those trying to help end the drug crisis. According to a CDC report published Wednesday, U.S. drug overdose deaths dropped about 17 percent from July 2023 to July 2024.
Most of the drug overdose deaths in the past 10 years have been linked to illicit fentanyl, but in prior years, prescription pills were the primary cause of overdose deaths.
Drugmakers, wholesalers and pharmacies in recent years have had to pay up for their role in the drug crisis. These players agreed to roughly $50 billion worth of settlements with governments in the last eight years. Most of the money has been mandated to be used to fight the drug crisis.
This article includes reporting from The Associated Press.
Update 12/13/24 12:32 p.m. ET: This article has been updated with additional information.
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