Sources say McKinsey faces criminal investigations in the US over opioids

McKinsey & Co is under criminal investigation in the US over allegations that the consultancy played a key role in fueling the opioid epidemic. Federal prosecutors are targeting the work of a firm that advises OxyContin maker Purdue Pharma and other drugmakers, according to three people familiar with the matter.

The consulting firm and the US Department of Justice declined to comment.

The investigation focuses on whether McKinsey engaged in a criminal conspiracy when it advised Purdue and other drugmakers on marketing strategies to boost sales of prescription painkillers that led to widespread addiction and fatal overdoses, according to two of the people.

The Justice Department is also investigating whether McKinsey conspired to commit health care fraud when consulting work for companies selling opioids allegedly resulted in fraudulent claims against government programs such as Medicare.

Prosecutors are also investigating whether McKinsey obstructed justice, an investigation related to McKinsey's disclosure that it fired two partners who contacted them about deleting documents related to their opioid work, the people said.

The investigation, which began several years before the global pandemic hit, involved Justice Department officials from Washington, Massachusetts and Virginia, they said. A source said the two sides were in talks to end the investigation.

An investigation is not proof of wrongdoing, and officials conducting the investigation may ultimately face criminal charges, receive civil penalties, or end the investigation without taking action. The Wall Street Journal previously reported on the Justice Department investigation.

The Justice Department's investigation underscores how McKinsey's former work advising drugmakers on opioids continues to haunt the nearly century-old consulting firm. The stakes are higher than in other government investigations completed by McKinsey, because criminal charges can be filed against the company or its executives and the Justice Department often seeks large fines in exchange for ending its white-collar crime investigations.

50 states, Washington, DC, US McKinsey has previously reached separate settlements totaling $1 billion to resolve a wide range of opioid lawsuits and other related claims brought by territories, various local governments, school districts, Native American tribes and health insurers.

McKinsey said in 2019 that it would no longer advise clients on opioid-related transactions. It does not admit liability or wrongdoing in any of the settlements, McKinsey said. “We understand and accept that our previous advice to opioid manufacturers has come under scrutiny. While this work was legal, it did not meet the high standards we set for ourselves,” McKinsey said following the release of the 2022 congressional committee report. He examined the consulting work of the company.

Purdue did not immediately respond to a request for comment. The drugmaker pleaded guilty in 2020 to charges of smuggling opioid painkillers. Purdue filed for bankruptcy in 2019 and later negotiated a settlement worth about $10 billion to resolve thousands of lawsuits that accused the company of contributing to the opioid epidemic.

The Supreme Court has blocked that settlement and is expected to rule on a challenge to the Biden administration's agreement soon.

As part of the criminal investigation into McKinsey, prosecutors are still charging a long way. That's because they are reviewing detailed documents and discussing them with the consulting firm's lawyers as part of their investigation, one of the people said. (Reporting by Mike Spector and Chris Prentice in New York and Nate Raymond in Boston; Editing by David Barrio and Lisa Schumacher)