Virginia fraud unit work leads to McKinsey's $650 million opioid settlement (2025)

  • Dave Ress
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Virginia fraud unit work leads to McKinsey's $650 million opioid settlement (1)

Dave Ress

Virginia’s Medicaid Fraud Control Unit‘s investigation into the global consulting firm McKinsey & Co.’s role in the opioid crisis laid the groundwork for the company’s $650 million settlement to fend off federal charges — and netted the unit $2 million for its efforts.

The unit reviewed more than 6.5 million pages of evidence as it worked with the U.S. attorneys for the Western District of Virginia and Massachusetts to investigate McKinsey’s role advising opioid manufacturer Purdue Pharma, said Virginia Attorney General Jason Miyares. The unit is a branch of the Office of the Attorney General.

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That advice included McKinsey’s suggestions in 2013 for ways to “turbocharge” sales of OxyContin, said the U.S. Department of Justice, adding that the settlement 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.

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In addition, a former McKinsey senior partner who worked on Purdue matters, Martin E. Elling, 60, a U.S. citizen now living in Thailand, agreed to plead guilty in U.S. District Court in Abingdon to a charge of obstruction of justice by destroying records and other items to derail the investigation.

McKinsey has agreed to pay a penalty of over $231 million and will forfeit more than $93 million that accounts for the money Purdue paid it from 2004 to 2019.

In addition, the company will pay more than $323 million to clear any liability under the federal False Claims Act for allegedly providing advice to Purdue Pharma L.P. that caused the submission of false and fraudulent claims to federal health care programs for medically unnecessary prescriptions of OxyContin, as well as allegedly failing to disclose to the U.S. Food and Drug Administration conflicts of interest arising from the firms work for Purdue at the same time it was working for the FDA.

McKinsey has also agreed that it will not do any work related to the marketing, sale, promotion or distribution of controlled substances for five years of an agreement to defer action on federal charges, filed with the U.S. District Court for western Virginia, that the company itself obstructed justice.

Virginia Senior Assistant Attorneys General Kimberly Bolton and Kristin Gray served as special assistant U.S. attorneys, prosecuting the case against McKinsey in federal court.

“By holding McKinsey accountable for its role in enabling Purdue Pharma’s reckless promotion of OxyContin ... treating innocent lives as mere chemistry experiments, this historic $650 million resolution sends a clear message: no one, not even the world’s largest consulting firm, is above the law,” Miyares said.

U.S. Attorney for Massachusetts Joshua Levy said, “McKinsey schemed with Purdue Pharma to ‘turbocharge’ OxyContin sales during a raging opioid epidemic. ... Consulting firms like McKinsey should get the message: If the advice you give to companies in boardrooms and PowerPoint presentations aids and abets criminal activity, we will come after you and we will expose the truth.”

The settlement includes McKinsey’s admission that after a Purdue affiliate pleaded guilty in 2007 to charges of misbranding OxyContin by falsely marketing it as less addictive than other pain medications, McKinsey partners worked with Purdue to enhance what they called “brand loyalty” for OxyContin.

In 2010, McKinsey worked with Purdue to secure FDA approval for a reformulated version of OxyContin that included ingredients to deter abuse, but when sales of OxyContin then fell, McKinsey advised Purdue on strategies to, in its words, “turbocharge” the drug’s sales by intensifying marketing to physicians found to have written prescriptions that were medically unnecessary, according to the agreed statement of facts submitted as part of the settlement.

The agreed statement says McKinsey consultants spoke with Purdue about the concerns and increasing reluctance of pharmacists and pharmacy chains to fill prescriptions for OxyContin as abuse of the drug rose.

McKinsey consultants went on “ride-alongs” with Purdue sales representatives as they called on physicians and pharmacists. After one ride-along, a consultant noted that the pharmacist had a gun “and was shaking; abuse is definitely a huge issue.”

At an August 2013 board meeting to present its findings, McKinsey said what was at stake was ““hundreds of millions, not tens of millions” as it urged accelerating the marketing effort, despite the signs of widespread abuse, the statement said.

“We are deeply sorry for our past client service to Purdue Pharma and the actions of a former partner who deleted documents related to his work for that client,” McKinsey said in a written statement.

“We should have appreciated the harm opioids were causing in our society and we should not have undertaken sales and marketing work for Purdue Pharma,” it added.

Dave Ress (804) 649-6948

dress@timesdispatch.com

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Dave Ress

State Politics / Growth and Development Reporter

Virginia fraud unit work leads to McKinsey's $650 million opioid settlement (2025)
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