Consulting firm probed over opioid scourge

Investigation covers criminal conspiracy, fraud and obstruction of justice

McKinsey & Co is under criminal investigation in the United States over allegations that the consulting firm played a key role in fuelling 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 investigation 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 programmes 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 sources said.

The investigation, 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 investigation, one of the sources said.

Investigations are not evidence of wrongdoing and officials conducting the inquiry could ultimately pursue criminal charges, seek civil sanctions or close the investigation without taking any action. The Wall Street Journal previously reported the Justice Department investigation.

The Justice Department investigation 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 investigations.

McKinsey earlier reached separate agreements totalling nearly US$1 billion (RM4.78 billion) to settle widespread opioid lawsuits and other related legal actions brought by all 50 states, Washington, D.C., 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. “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 scrutinising 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 US$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 sifting through voluminous documents and engaging in discussions with the consulting firm’s lawyers, one of the sources said. – Reuters