New Delhi

McKinsey & Co, the renowned consulting firm, is currently under scrutiny of a criminal investigation in the US, with federal prosecutors probing into allegations that the firm played a major role in aggravating the opioid epidemic.

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According to sources familiar with the matter, the investigation is focusing on McKinsey's consultancy services to OxyContin manufacturer Purdue Pharma and other pharmaceutical giants, with suspicions arising regarding the firm's involvement in devising marketing strategies that increased the widespread addiction and fatal overdoses associated with prescription painkillers.

The probe, led by the US Justice Department, is investigating whether McKinsey engaged in a criminal conspiracy by providing counsel to Purdue and other drug companies on marketing tactics aimed at increasing sales of prescription opioids.

Additionally, investigators are checking whether McKinsey's consulting activities for these firms led to fraudulent claims being submitted to government healthcare programs such as Medicare, potentially constituting healthcare fraud.

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The inquiry also includes suspicions of obstruction of justice, particularly following McKinsey's revelation that it terminated two partners involved in discussions about deleting documents related to their work on opioids.

This investigation, initiated several years ago before the COVID-19 pandemic, involves officials from the Justice Department across multiple offices in Washington, Massachusetts, and Virginia.

While both parties are engaged in discussions to resolve the probe, no definitive outcomes have been reached thus far.

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It must be noted that investigations do not inherently indicate wrongdoing, and the ultimate course of action by officials could range from pursuing criminal charges to seeking civil penalties or closing the probe without further action.

The magnitude of this probe indicates the long-term repercussions of McKinsey's past involvement in advising pharmaceutical companies on opioids.

Unlike previous government inquiries that McKinsey has settled, this investigation carries higher stakes due to the possibility for criminal charges against the firm or its executives, along with substantial financial penalties that the Justice Department typically demands in such cases.

Despite reaching settlements totalling about $1 billion to resolve various opioid-related lawsuits, McKinsey has consistently maintained that none of these agreements contain admissions of liability or wrongdoing.

Responding to the scrutiny, McKinsey announced in 2019 its decision to cease advising clients on any matters related to opioids.

However, the firm's past actions continue to attract attention, with congressional committees scrutinising its consulting work in this domain.

McKinsey stated in 2022 acknowledging the scrutiny surrounding its past client services to opioid manufacturers, saying that while their work was lawful, it fell short of the firm's self-imposed high standards.

Purdue Pharma, the primary focus of McKinsey's consultancy services in this context, did not immediately respond to requests for comment.

The drugmaker itself pleaded guilty in 2020 to criminal charges related to its handling of opioid painkillers and filed for bankruptcy in 2019, subsequently negotiating a settlement valued at approximately $10 billion to resolve numerous lawsuits alleging its contribution to the opioid epidemic.

However, the Supreme Court has halted this settlement pending a ruling on a challenge by the Biden administration.

As the investigation into McKinsey continues, prosecutors are yet to make any charging decisions.

This is partly due to the extensive document review process underway and ongoing discussions between investigators and McKinsey's legal representatives.

(Inputs from Reuters)