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McKinsey faces US criminal probe over opioids work, sources say
KV Prasad Jun 13, 2022, 06:35 AM IST (Published)
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Summary
The probe is focused on whether McKinsey engaged in a criminal conspiracy when advising Purdue and other pharmaceutical manufacturers on marketing strategies to boost sales of prescription painkillers that led to widespread addiction and fatal overdoses, two of the people said.
McKinsey & Co is under criminal investigation in the United States over allegations that the consulting firm played a key role in fueling the opioid epidemic, with federal prosecutors homing in on its work advising OxyContin maker Purdue Pharma and other drugmakers, three people familiar with the matter said.
The consulting firm and the US Justice Department declined to comment.
The probe is focused on whether McKinsey engaged in a criminal conspiracy when advising Purdue and other pharmaceutical manufacturers on marketing strategies to boost sales of prescription painkillers that led to widespread addiction and fatal overdoses, two of the people said.
The Justice Department is also investigating whether McKinsey conspired to commit healthcare fraud when its consulting work for companies selling opioids allegedly resulted in fraudulent claims being made to government programs such as Medicare, they said.
Prosecutors are also looking at whether McKinsey obstructed justice, an inquiry related to McKinsey’s disclosure that it had fired two partners who communicated about deleting documents related to their opioids work, the people said.
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The probe opened several years ago before the onset of the global pandemic, involves Justice Department officials spanning offices in Washington, Massachusetts and Virginia, they said. Both sides are in discussions to resolve the probe, one of the people said.
Investigations are not evidence of wrongdoing and officials conducting the inquiry could ultimately pursue criminal charges, seek civil sanctions or close the probe without taking any action. The Wall Street Journal previously reported the Justice Department investigation.
The Justice Department probe underscores how McKinsey’s past work advising drugmakers on opioids continues to follow the near-century-old consulting firm. It carries higher stakes than other government investigations McKinsey has resolved because of the potential for criminal charges against the company or executives, and steep financial penalties that the Justice Department often demands in exchange for resolving its white-collar probes.
McKinsey earlier reached separate agreements totalling nearly $1 billion to settle widespread opioid lawsuits and other related legal actions brought by all 50 states, Washington, DC, US territories, various local governments, school districts, Native American tribes and health insurers.
McKinsey in 2019 said it would no longer advise clients on any opioid-related businesses. None of the settlements have contained admissions of liability or wrongdoing, McKinsey has said.
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“We understand and accept the scrutiny around our past client service to opioid manufacturers. This work, while lawful, fell short of the high standards we set for ourselves,” McKinsey said in a 2022 statement following the release of a congressional committee report scrutinizing its consulting work.
Purdue did not immediately respond to a request for comment.
The drugmaker pleaded guilty in 2020 to criminal charges over its handling of opioid painkillers. Purdue filed for bankruptcy in 2019 and later negotiated a settlement valued at about $10 billion to settle thousands of lawsuits alleging it contributed to the opioid epidemic.
The Supreme Court halted that settlement and is soon expected to rule on a Biden administration challenge to the deal. Prosecutors are far from making any charging decisions in their criminal investigation of McKinsey, in part because they are sifting through voluminous documents as part of their inquiry and engaging in discussions with the consulting firm’s lawyers, one of the people said.
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