In a landmark decision, McKinsey & Company has agreed to a $650 million settlement stemming from an investigation by the U.S. Department of Justice.
The inquiry focused on the firm’s advisory relationship with Purdue Pharma, the manufacturer behind the opioid painkiller OxyContin.
Settlement and Charges
This settlement follows a deferred prosecution deal submitted in a federal court in Abingdon, Virginia.
Over the course of the next five years, McKinsey will fulfill this financial obligation, which addresses serious criminal charges regarding its strategies aimed at boosting sales of addictive pain medications, contributing to the continuing opioid crisis in America.
The investigation uncovered that McKinsey had counseled Purdue Pharma on aggressive marketing strategies designed to spike OxyContin sales significantly.
The company faced accusations of conspiring to misbrand drugs and obstructing justice.
Management Actions and Compliance Measures
Further complicating the case, Martin Elling, a former senior partner at McKinsey, has agreed to plead guilty to charges related to obstructing justice by destroying documents pertinent to his work with Purdue.
His formal plea is expected to be registered on January 10.
Court records show that Elling deliberately erased files related to Purdue from his company laptop, even sending himself reminders to complete these deletions.
In light of the scrutiny, McKinsey has expressed deep regret for its past consulting role with Purdue Pharma.
The firm acknowledged its failure to grasp the widespread damage caused by opioids, admitting that taking on sales and marketing responsibilities for Purdue was a grave error.
The ongoing public health crisis from opioid misuse remains a pressing concern for McKinsey.
Related Legal Proceedings
According to the terms of the deferred prosecution agreement, McKinsey will not only pay a significant settlement but also enhance its compliance practices to more effectively identify and prevent illegal activities.
Oversight from both the Department of Justice and the U.S. Department of Health and Human Services’ inspector general will also be part of this agreement.
Additionally, McKinsey has settled a related civil investigation pertaining to allegations of breaching the False Claims Act and will put in place a “corporate integrity” agreement with the inspector general’s office.
Purdue Pharma previously admitted to several criminal charges in 2020 regarding extensive misconduct related to its prescription pain medication business.
This included conspiracy to deceive government officials and engaging in unlawful payments to healthcare providers and vendors of electronic health records.
Currently, Purdue is engaged in court-sanctioned mediation processes to finalize a multi-billion-dollar settlement connected to its bankruptcy proceedings, a proposal that was recently declined by the U.S. Supreme Court.
As of Friday, Purdue announced efforts to align stakeholders around a plan aimed at generating substantial funds for opioid mitigation initiatives, as well as launching a new entity designed to serve as a beneficial societal influence.
This settlement is also intended to help compensate individuals affected by the opioid epidemic.
In the past, McKinsey has reached nearly $1 billion in settlements addressing various lawsuits and legal challenges associated with its role in exacerbating the opioid crisis through its consulting work for Purdue and other pharmaceutical firms.
In 2019, the company publicly vowed to stop advising any clients tied to the opioid sector.
McKinsey has consistently asserted that none of these settlements signify an admission of wrongdoing or liability.
Source: Claimsjournal
