Consulting Firm Agrees To Pay $650 Million In A Deferred Prosecution Agreement To Avoid Opioid Misbranding Conspiracy Charges
12/17/2024
On December 13, 2024, the United States Attorney’s Offices for the Western District of Virginia and the District of Massachusetts, along with the Department of Justice’s (“DOJ”) Consumer Protection Branch (collectively, “the United States”) filed a Deferred Prosecution Agreement in the United States District Court for the Western District of Virginia with a global consulting firm (“Consulting Firm”) to settle charges that it conspired with a pharmaceutical company (“Pharmaceutical Company”) to aid and abet the misbranding of prescription drugs and knowingly destroyed and concealed records and documents to impede and obstruct the investigation. United States v. McKinsey & Co., Inc. United States, No. 1:24-cr-00046, Doc. 2 at 6 (W.D. Va. Dec. 13, 2024). A corresponding civil case, United States v. McKinsey & Co., Inc. United States, No. 1:24-cv-00063, Doc. 2 (W.D. Va. Dec. 13, 2024), was settled the same day. The Consulting Firm agreed to pay $650 million to resolve the criminal and civil investigation. A former Consulting Firm senior partner also separately pled guilty to a charge of knowingly destroying and concealing records and documents to impede and obstruct the investigation.
The DOJ noted that the agreement 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 and reflects the Justice Department’s ongoing efforts to hold actors accountable for their roles in the opioid crisis.”
The Pharmaceutical Company manufactured, distributed, and sold, among other drugs, OxyContin, the extended-release opioid drug. It marketed this drug until February 2018. During a prior investigation into the Pharmaceutical Company in 2002, the General Accounting Office found the company’s marketing of OxyContin was overly aggressive and exacerbated OxyContin’s abuse and diversion.
According to the statement of facts, the Consulting Firm and the Pharmaceutical Company worked together on a variety of topics including improving revenues from OxyContin. The Consulting Firm worked with the Pharmaceutical Company’s leadership to develop marketing and messages to increase OxyContin sales. Overall, the statement of facts describes the Consulting Firm’s assistance of the Pharmaceutical Company to “turbocharge” OxyContin sales. In one example, the Consulting Firm proposed targeting high-volume prescribers of OxyContin. Two of the prescribers in the Consulting Firm’s pitch were later charged criminally for unlawfully distributing opioids. Another of Consulting Firm’s marketing strategy included “innovative contracts,” wherein the Pharmaceutical Company’s contracts with payors could show that their interests were aligned in order to keep payors paying for OxyContin. A third Consulting Firm proposal suggested applying rebates to the Pharmaceutical Company’s payors, where the Pharmaceutical Company would offer to pay for OxyContin related over-doses.
Over this time period, the statement of facts indicates that the Consulting Firm was aware that several of the Pharmaceutical Company’s top executives had previously pled guilty to federal crimes related to marketing and promotion of OxyContin.
The terms of the DPA note that the Consulting Firm engaged in extensive remedial measures including (1) voluntarily ending its work with opioid-related businesses, (2) terminating two of its senior leadership, (3) hiring a new Chief Legal Officer, Chief Ethics and Compliance Officer, and Head of Internal Audit from outside Consulting Firm, (4) formalizing a new diligence review system, (5) strengthening and enhancing its compliance program and policies, (6) implementing enhanced compliance training for employees, (7) establishing compliance and risk monitoring and audit processes, (8) engaging an independent firm to test key portions of its compliance policy, and (9) enhancing its internal reporting, investigations, and risk assessment. It also noted that the Consulting Firm received credit for its cooperation with the United States by providing updates to information, highlighting documents of interest, and facilitating interviews. The Consulting Firm’s compliance and cooperation obligations will extend for the duration of the five-year term of the agreement.