McKinsey nears $600mn settlement with US over opioid claims

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McKinsey is close to paying more than $600mn to settle a criminal investigation into its work advising US opioid manufacturers on how to boost sales, following claims it fuelled the country’s addiction crisis.

The US Department of Justice has been examining whether McKinsey’s work amounted to a criminal conspiracy against the healthcare system, and whether it obstructed justice, said people familiar with the probes.

A settlement could come within weeks, one person said, and would include a deferred prosecution agreement in which the DoJ agrees to drop charges against the firm after a period of time if conditions are met, along with a settlement of related civil claims. The details and likely timing of the settlement were first reported on Thursday by Reuters.

McKinsey and the DoJ declined to comment.

A payment of $600mn would dramatically increase the cost to McKinsey of its historic work for opioid manufacturers including OxyContin maker Purdue Pharma, for whom its consultants promised to “turbocharge” sales.

The firm has paid close to $1bn since 2021 in litigation over its opioid work, including a $640mn settlement with the 50 US states. Other lawsuits remain outstanding.

The escalating costs and the reputational fallout have caused internal turmoil at the firm, compounding a squeeze on partner profits from a slowdown in the consulting market. Former managing partner Kevin Sneader failed to win re-election in 2021 and his successor Bob Sternfels won a second term this year by a narrow margin.

At the time of the settlement with the US states, Sneader apologised for McKinsey’s opioid work, saying it “did not adequately acknowledge the tragic consequences of the epidemic unfolding in our communities”. The firm insisted its advice was legal, but has revamped how it decides which clients to take on and has not worked for opioid manufacturers since 2019.