McKinsey & Co has consented to a settlement of $650 million to address allegations stemming from a US Department of Justice inquiry into the consulting firm's advisory role to Purdue Pharma, the manufacturer of the opioid OxyContin. The company has entered into a five-year deferred prosecution agreement, filed in federal court in Abingdon, Virginia, to resolve criminal charges related to the marketing of addictive painkillers, which have been linked to the devastating opioid crisis in the United States.

Prosecutors have alleged that McKinsey offered advice to Purdue on strategies to significantly increase sales of OxyContin, leading to charges of misbranding a drug and obstruction of justice. Martin Elling, a former senior partner at McKinsey, has also agreed to plead guilty to obstruction of justice for the destruction of records pertaining to the firm's work with Purdue. He is set to enter his plea on January 10th. According to court documents, Elling removed documents related to Purdue from his company laptop and sent himself emails as reminders to do so.

In a statement, McKinsey expressed deep regret for its past services to Purdue and the actions of the former partner who deleted the documents, acknowledging that they should have recognized the harm caused by opioids and refrained from engaging in sales and marketing work for Purdue Pharma. The firm stated, "This terrible public health crisis and our past work for opioid manufacturers will always be a source of profound regret for our firm." A lawyer representing Elling declined to comment on the matter.

As part of the deferred prosecution agreement, McKinsey has agreed to a payment schedule of $650 million over five years, enhancement of its compliance practices to detect illegal activities, and submission to oversight by the DOJ and the US Department of Health and Human Services inspector general's office.

The consulting firm has also agreed to settle a related civil investigation concerning alleged violations of the False Claims Act and to enter into a "corporate integrity" agreement with the HHS inspector general's office. In 2020, Purdue pleaded guilty to criminal charges related to widespread misconduct in its handling of prescription painkillers, including conspiracy to defraud US officials and payment of illegal kickbacks to doctors and an electronic health care records vendor.

Purdue is currently engaged in court-ordered mediation over a multibillion-dollar settlement reached in bankruptcy proceedings, which the US Supreme Court has declined to intervene in. In a statement, Purdue indicated that it is working towards a consensus on a plan to provide billions of dollars in value for opioid abatement efforts and to establish a new company aimed at being an "engine for good." The settlement funds are also intended to compensate victims, as stated by Purdue.

Previously, McKinsey had reached agreements amounting to nearly $1 billion to resolve widespread lawsuits and other legal actions alleging that the company contributed to the opioid epidemic through its advisory work with Purdue Pharma and other pharmaceutical companies. In 2019, McKinsey announced that it would cease advising clients on opioid-related businesses. The company has maintained that none of its settlements include admissions of liability or wrongdoing.

The resolution of this case highlights the significant role that corporate entities can play in exacerbating public health crises, such as the opioid epidemic, through their business practices and advisory services. The hefty settlement and the admission of regret by McKinsey underscore the gravity of the situation and the responsibility that corporations have in ensuring that their actions do not contribute to societal harm. The case also serves as a reminder of the importance of corporate governance and compliance in preventing illegal activities and mitigating the risk of involvement in harmful practices.

The involvement of the DOJ and the US Department of Health and Human Services in overseeing the compliance and integrity of McKinsey's future operations is a clear indication of the government's commitment to holding corporations accountable for their actions and ensuring that they operate within the bounds of the law. The "corporate integrity" agreement with the HHS inspector general's office is a step towards rebuilding trust in the corporate sector and ensuring that companies like McKinsey are held to high standards of ethical conduct.

The case also raises questions about the role of individual accountability within corporations. The plea by Martin Elling to obstruction of justice charges highlights the potential for individuals within companies to engage in illegal activities that can have far-reaching consequences. It underscores the need for robust internal controls and a culture of compliance within corporations to prevent such actions and to ensure that those who engage in them are held accountable.

The Purdue case, with its multibillion-dollar settlement and ongoing mediation, is a testament to the complexity of resolving legal actions related to the opioid crisis. It demonstrates the challenges faced by courts and companies in finding a resolution that addresses the needs of victims, compensates for the harm caused, and prevents future harm. The creation of a new company by Purdue, aimed at being an "engine for good," is an attempt to move forward from the past and to contribute positively to society, although it remains to be seen how effective this approach will be in addressing the ongoing opioid crisis.

The opioid epidemic in the United States has had a profound impact on society, with countless lives lost and communities devastated by addiction. The involvement of consulting firms like McKinsey in advising companies like Purdue on how to increase sales of addictive painkillers has only exacerbated the crisis. The resolution of the McKinsey case and the ongoing efforts to hold Purdue accountable are crucial steps in addressing the opioid epidemic and preventing future public health crises of this magnitude.

As the nation continues to grapple with the opioid crisis, the role of corporations and their responsibility in contributing to or mitigating such crises will remain a critical issue. The McKinsey settlement serves as a cautionary tale for other companies, emphasizing the importance of ethical business practices and the potential consequences of engaging in activities that can cause harm to society.