McKinsey & business agrees to pay $650M for helping Purdue Pharma boost opioid sales

BOSTON — McKinsey & business consulting firm has agreed to pay $650 million to settle a federal investigation into its work to assist opioids manufacturer Purdue Pharma boost the sales of the highly addictive drug OxyContin, according to court papers filed in Virginia on Friday.

As part of the deal with the U.S. fairness Department, McKinsey will avoid prosecution on criminal charges if it pays the sum and follows sure conditions for five years, including ceasing any work on the sale, marketing or promotion of controlled substances.

A former McKinsey elder associate, Martin Elling, has also agreed to plead guilty to obstruction of fairness for deleting documents from his laptop after he became aware of investigations into Purdue Pharma, the maker of OxyContin that was then a client, according to the filings. A lawyer for Elling declined to comment Friday.

McKinsey said in a statement on Friday that it’s “deeply sorry” for its work for Purdue Pharma.

“We should have appreciated the damage opioids were causing in our population and we should not have undertaken sales and marketing work for Purdue Pharma,” the business said. “This terrible community health crisis and our history work for opioid manufacturers will always be a source of profound remorse for our firm.”

It’s the latest attempt by federal prosecutors to hold accountable companies officials declare helped fuel the U.S. addiction and overdose crisis, with opioids linked to more than 80,000 annual deaths in some recent years. For the history decade, most of them have been attributed to illicit fentanyl, which is laced into many illegal drugs. Earlier in the epidemic, prescription pills were the primary factor of death.

Over the history eight years, drugmakers, wholesalers and pharmacies have agreed to about $50 billion worth of settlements with governments — with most of the money required to be used to fight the crisis.

Purdue paid McKinsey more than $93 million over 15 years for several products, including how to enhance turnover from OxyContin. Prosecutors declare McKinsey “knew the hazard and dangers” of OxyContin and knew that Purdue Pharma executives had previously pleaded guilty to crimes related to the promotion of the drug, but decided to work with the opioid manufacturer anyway.

One of the jobs for McKinsey, the papers said, was to identify which prescribers would generate the most additional prescriptions if Purdue salespeople concentrated on that. That resulted in prescriptions that “were not for a medically accepted indication, were unsafe, ineffective, and medically unnecessary, and that were often diverted for uses that lacked a legitimate medical purpose,” the filing said.

“This was not hypothetical,” Christopher Kavanaugh, U.S. Attorney for the Western District of Virginia Christopher Kavanaugh said in a information conference in Boston on Friday. “This was not just marketing. It was a way. It was executed and it worked.”

During work to “turbocharge” Purdue sales in 2013 after a drop in business, McKinsey consultants accompanied Purdue sales representatives on visits to prescribers and pharmacies to gather information. In a note about one ride-along, a McKinsey consultant said one pharmacist had a gun “and was shaking; abuse is definitely a huge issue.” The business continued looking for ways to boost OxyContin sales, according to court papers.

In 2014, McKinsey identified some tiny clinics that were writing more opioid prescriptions than entire hospital systems — and suggested they be targeted for more sales, the court filing said.

The business also tried to assist Purdue get a declare in shaping federal rules intended to ensure the benefits of addictive prescription drugs outweighed the risks. The government said in its recent filings that that resulted in making high-dose OxyContin subject to the same oversight as lower-dose opioids and made training for prescribers voluntary rather than mandatory.

Since 2021, McKinsey has agreed to pay state and local governments about $765 million in settlements for its role in advising businesses on how to sell more of the powerful prescription painkillers amid a national opioid crisis.

The firm also agreed last year to pay health worry funds and insurance companies $78 million.

Federal authorities declare the deal represents the first period a management consulting firm is being held accountable like this for advising a client to shatter the law.

“If a consulting first conspires with a client to engage in criminal conduct, the truth that you’re an outside consultant will not protect you,” said Joshua Levy, U.S. Attorney for Massachusetts.

Some advocates declare the opioid crisis was touched off when Purdue Pharma’s OxyContin hit the trade in 1996.

Three Purdue executives pleaded guilty to misbranding charges in 2007 and the business agreed to pay a fine. The business pleaded guilty to criminal charges in 2020 and agreed to $8.3 billion in penalties and forfeitures — most of which will be waived as long as it executes a settlement through financial setback court that is still in the works.

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Durkin Richer reported from Washington and Mulvihill from Cherry Hill, recent Jersey.