McKinsey’s $650 Million Deferred Prosecution Agreement

According to court documents from Virginia, USA, the well-known management consulting firm McKinsey & Company agreed to pay $650 million to reach a deferred prosecution agreement. This settlement addresses allegations that McKinsey assisted Purdue Pharma in boosting opioid sales, which led to a criminal investigation by the U.S. Department of Justice.

On December 13, McKinsey signed the agreement in the Federal Court of Virginia, stipulating that if McKinsey pays $650 million and meets a series of conditions over the next five years—such as refraining from providing sales, marketing, and promotion services for controlled substances and alcohol—it can avoid criminal prosecution.

McKinsey issued a statement expressing deep regret for its role in serving Purdue Pharma. According to the Associated Press, McKinsey provided strategies to increase opioid revenue for Purdue Pharma over 15 years, contributing to the opioid crisis in the United States. The CDC reported that deaths from drug overdoses in the U.S. rose from 70,000 in 2018 to 112,000 in 2023.

Christopher Kavanaugh, U.S. Attorney for the Western District of Virginia, emphasized that this marks the first instance of a management consulting firm being held criminally accountable for advice leading to a client’s crime, and the first case of a firm being held responsible for contributing to the opioid crisis.

Previously, McKinsey settled other opioid-related lawsuits for nearly $1 billion with Purdue Pharma and other pharmaceutical companies. Purdue Pharma pleaded guilty to three federal criminal charges in 2020.

According to reports from Overseas Network and the Hill, a recent study by the Johns Hopkins Bloomberg School of Public Health revealed that nearly one-third of Americans know someone who has died from opioid abuse. Published in JAMA Network, the study showed that 32% of Americans have lost friends or family members to opioid-related deaths, with similar percentages across political parties: 30% of Democrats, 33% of Republicans, and 34% of independents. The study found that opioid-related deaths are more common among low-income groups.

Researchers have criticized easy opioid prescriptions by doctors for fueling addiction, highlighting flaws in U.S. policy. Since 1999, more than 1 million Americans have died from drug overdoses.

A 2022 report by the U.S. Congress Joint Economic Committee estimated that opioid abuse cost the U.S. economy nearly $1.5 trillion, approximately 7% of GDP, a 33% increase from 2017. Compared to the pre-pandemic period, the U.S. lost 6.3 million workers in 2022, with 20% of these losses attributed to drug abuse.

Hill, director of the Roberts Recovery Center in Ohio, noted that Americans are more likely than people in other countries to use medications for pain and stress relief, driven by pharmaceutical companies’ “most generous marketing campaign in pharmaceutical history” during the mid-1990s.

In 1995, Purdue Pharma promoted OxyContin by pushing the narrative that opioids were non-addictive. The company’s lobbying led the FDA to endorse misleading claims that less than 1% of patients would become addicted.

According to the New Yorker, between 1999 and 2017, 200,000 Americans died from overdoses involving OxyContin or other prescription opioids. In 2015, the Sackler family, owners of Purdue Pharma, ranked among the richest U.S. families with a net worth of $14 billion. To date, the FDA has not publicly acknowledged its responsibility in the crisis.