McKinsey: Agreement in Opioid Scandal Nears

The renowned consulting firm McKinsey is on the verge of paying over $600 million to settle a criminal investigation regarding its consulting activities for U.S. opioid manufacturers. These investigations arose following allegations that McKinsey had fueled the drug addiction crisis in the U.S. The U.S. Department of Justice has been investigating for some time whether McKinsey's consulting activities constituted a criminal conspiracy against the healthcare system and whether the company obstructed justice. A person familiar with the investigations stated that a settlement could occur within a few weeks. This settlement is expected to include a deferred prosecution agreement, whereby charges would be dropped if certain conditions are met. It would also include the resolution of related civil claims. The first indications of the agreement's details and possible timeline came from Reuters. Neither McKinsey nor the Department of Justice commented on the matter. The $600 million would significantly increase McKinsey's costs related to its work for opioid manufacturers like Purdue Pharma, the maker of OxyContin, for which McKinsey promised to boost sales. Since 2021, McKinsey has already paid nearly $1 billion in litigation related to its opioid consulting activities, including a $640 million settlement with all 50 U.S. states. Additional lawsuits are still pending. The increasing legal costs and loss of reputation have caused internal unrest, particularly in light of a decline in consulting business that is squeezing partners' profit margins. Former managing partner Kevin Sneader failed to secure re-election in 2021, and his successor, Bob Sternfels, narrowly won his second term this year. Sneader had apologized during the settlement with U.S. states for McKinsey's opioid work and acknowledged that the company had not sufficiently recognized the devastating impact of the epidemic in affected communities. McKinsey emphasizes that the consulting services at the time were legal, but it has revised its criteria for selecting clients and has not advised opioid manufacturers since 2019.