The McKinsey & Co. consulting firm is being held criminally responsible for its advice to Purdue Pharma to “turbocharge” sales of OxyContin, precipitating the ongoing national opioid crisis.
McKinsey has agreed to pay $650 million to resolve the criminal and civil investigation into its work with Purdue Pharma, and a former McKinsey senior partner who worked on Purdue matters has been charged with obstruction of justice in federal court in Southwest Virginia.
Martin E. Elling, 60, a U.S. citizen currently residing in Bangkok, Thailand, has been charged with one count of knowingly destroying records, documents and tangible objects with the intent to impede, obstruct and influence the investigation.
Elling has agreed to plead guilty and is expected to appear in federal court in Abingdon to enter his plea and for sentencing at later dates.
The resolution to this case marks the first time a management consulting firm has been held criminally responsible for advice resulting in the commission of a crime by a client, according to the Justice Department, which announced on Friday that McKinsey has entered into a five-year deferred prosecution agreement in connection with a criminal information filed in U.S. District Court for the Western District of Virginia against McKinsey’s U.S. subsidiary.
“For the first time in history, the Justice Department is holding a management consulting firm and one of its senior executives criminally responsible for the sales and marketing advice it gave resulting in the commission of crime by a client,” said U.S. Attorney Christopher R. Kavanaugh. “This ground-breaking resolution demonstrates the Justice Department’s ongoing commitment to hold accountable those companies and individuals who profited from our Nation’s opioid crisis.”
The information charges McKinsey U.S. with one felony count of knowingly destroying records, documents and tangible objects with the intent to impede, obstruct, and influence the investigation, and one misdemeanor count of knowingly and intentionally conspiring with Purdue and others to aid and abet the misbranding of prescription drugs, held for sale after shipment in interstate commerce, without valid prescriptions.
McKinsey has agreed to pay a penalty of $231 million, a forfeiture amount of over $93 million – reflecting all money it was paid by Purdue from 2004-2019 – and a payment of $2 million to the Virginia Medicaid Fraud Control Unit to resolve the criminal allegations.
“By holding McKinsey accountable for its role in enabling Purdue Pharma’s reckless promotion of OxyContin, an addictive opioid that devastated communities across Virginia and the nation, treating innocent lives as mere chemistry experiments, this historic $650 million resolution sends a clear message: no one, not even the world’s largest consulting firm, is above the law,” Virginia Attorney General Jason Miyares said.
McKinsey also has entered into a civil settlement agreement in which it will pay $323 million to resolve its liability under the False Claims Act for providing advice to Purdue Pharma that caused the submission of false and fraudulent claims to federal healthcare programs for medically unnecessary prescriptions of OxyContin, as well as allegedly failing to disclose to the FDA conflicts of interest arising from McKinsey U.S.’s concurrent work for Purdue and the FDA.
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Chris Graham
