McKinsey’s managing partner has pushed back against allegations that the consultancy breached conflict of interest rules by advising opioids producers on how to “turbocharge” sales while also working for US health regulators seeking to tackle a deadly painkiller overdose epidemic.
Bob Sternfels told a US congressional committee on Wednesday that he regretted McKinsey did not act sooner to cut ties with opioid producers and help solve a crisis that has led to more than 500,000 American deaths in a decade.
But he rejected the interim findings of a congressional report that suggested the consultancy’s work “appears potentially” to have violated rules for federal contractors that require disclosures of potential conflicts of interest.
The investigation found at least 22 McKinsey consultants worked for the Food and Drug Administration regulatory agency and opioids manufacturers over a decade, often at the same time. It alleged the consultancy used government work to solicit more business from drug companies including Purdue Pharma, which is owned by members of the Sackler family and made the powerful painkiller OxyContin.
McKinsey has earned $86mn in fees from Purdue and $140mn in fees from the FDA since 2008, according to committee testimony.
“We don’t hide the fact that they worked with both the FDA and the pharmaceutical companies. It gets to the heart of the issue. We don’t believe there’s a conflict of interest given there was no bias and there was no overlap in topic areas,” Sternfels told the House Committee on Oversight and Reform.
McKinsey said its work with the FDA focused on administrative and operational issues, not advice on regulatory decisions or specific pharmaceutical products such as opioids. But the consultancy has admitted that its work with opioids manufacturers fell short of the “high standards we set for ourselves”.
Last year, McKinsey reached a $574mn settlement of US states’ claims that its advice to drug companies contributed to the opioid crisis. On the same day, the consultancy announced it had fired two partners for discussing eliminating “documents and emails” related to this work. However, the firm did not admit wrongdoing or liability.
The settlement was the costliest of a series of reputational crises that have shaken McKinsey’s public image and stirred internal unrest. Partners elected Sternfels to its top job last year after denying his predecessor, Kevin Sneader, a second three-year term.
Sternfels said in a prepared statement that there had been several flaws in the House committee’s approach to the investigation, alleging that it applied incorrect conflict standards and took “speculative leaps” to reach unwarranted findings.
“Importantly, in undertaking engagements with the FDA, McKinsey was transparent about our professionals’ work for pharmaceutical companies, including on opioid matters,” he added.
But during a fiery hearing, many committee members criticised McKinsey’s failure to acknowledge that having staff work with regulators and the companies they regulated was a conflict of interest.
“McKinsey was advising both the fox and the henhouse — and getting paid by both,” said Carolyn Maloney of New York, the committee chair. Maloney said she had introduced legislation on Wednesday to tighten rules for government contractors on potential conflicts.
Rashida Tlaib, a congresswoman from Michigan, said: “If anyone could explain to me the difference between McKinsey, Big Pharma, opioid cartel and the organisations of people like Pablo Escobar, I’m all ears,” in a reference to the late Colombian drug lord.
Sternfels denied the allegation. “I wouldn’t say that our work on any aspect of sales and marketing is trafficking,” he said.