McKinsey Faces Criminal Investigation Over Role in Opioid Crisis

McKinsey is under criminal investigation in the United States on allegations that the consulting firm played a significant role in fueling the opioid epidemic, with federal prosecutors focusing on its work advising OxyContin maker Purdue Pharma and other drugmakers, according to three people familiar with the matter.

The consultancy business and the United States Justice Department declined to comment.

The investigation is focusing on whether McKinsey engaged in a criminal conspiracy when advising Purdue and other pharmaceutical firms on marketing methods to increase prescription painkiller sales, which resulted in widespread addiction and fatal overdoses, according to two sources. The Justice Department is also looking into whether McKinsey collaborated to conduct healthcare fraud by consulting for companies selling opioids, which reportedly resulted in bogus claims to government programs such as Medicare, according to reports.

Prosecutors are also investigating whether McKinsey obstructed justice, following McKinsey’s statement that it had fired two partners who discussed removing opioid-related records, according to the sources. The investigation, which began several years before the pandemic, involves justice department officials from offices in Washington, Massachusetts, and Virginia, they added. According to one of the persons, both sides are working to resolve the probe.

Investigations are not evidence of the crime, and those conducting the investigation may eventually seek criminal charges, civil punishments, or drop the case without taking any action. The Justice Department’s probe was earlier disclosed by the Wall Street Journal.

The Justice Department investigation highlights how McKinsey’s previous work advising drugmakers on opioids continues to haunt the nearly century-old consulting business. It has higher stakes than other government investigations McKinsey has handled because of the possibility of criminal charges against the corporation or its officials, as well as the substantial financial penalties that the Justice Department frequently wants in exchange for resolving its white-collar investigations.

McKinsey previously achieved separate settlements worth approximately $1 billion to settle extensive opioid lawsuits and other related legal proceedings taken by all 50 states, Washington D.C., US territories, different local governments, school districts, Native American tribes, and health insurance companies.

McKinsey announced in 2019 that it would no longer advise clients on any opioid-related businesses. According to McKinsey, none of the settlements included admissions of guilt or misconduct.

“We realize and embrace the scrutiny surrounding our previous client services to opioid producers. “This work, while legal, fell short of the high standards we set for ourselves,” McKinsey said in a 2022 statement following the release of a congressional committee report probing its consultancy activities.

Purdue did not immediately reply to a request for comment. In 2020, the manufacturer pled guilty to criminal charges related to how it handled narcotic medicines. Purdue declared bankruptcy in 2019 and later negotiated a deal worth approximately $10 billion to resolve hundreds of claims alleging it contributed to the opioid epidemic.

The Supreme Court delayed the settlement and is likely to rule soon on the Biden administration’s challenge to the agreement.

Prosecutors are far from making any charging judgments in their criminal probe into McKinsey, in part because they are going through extensive papers and speaking with the consulting firm’s lawyers, according to one of the sources.