McKinsey, FDA and the case of the conflicted consultants

McKinsey has found itself in the congressional crosshairs, following a report last week alleging conflict-of-interest breaches related to its opioid consulting work. The case highlights the need for stricter firewalls, not only among firms advising federal and private clients but also health marketers simultaneously serving multiple pharma brands.

According to the congressional report, McKinsey consultants frequently worked on contracts for the U.S. Food and Drug Administration while also consulting for opioid manufacturers, including Purdue Pharma.

The overlapping work, which took place over a 15-year period and involved 22 consultants, raises “serious” conflict-of-interest concerns, the report alleged. Moreover, McKinsey trumpeted its government access to solicit more business from opioid makers, as well as to influence key health officials.

According to the House Committee on Oversight and Reform, the firm’s conflicts were not disclosed to the FDA, which represents a potential violation of federal law.

The committee issued the report as part of its initial investigation into McKinsey’s work with the federal government, based on documents obtained by the committee and by a coalition of state attorneys general as part of a 2021 settlement resolving an investigation into the consultancy’s services to Purdue.

“Today’s report shows that at the same time the FDA was relying on McKinsey’s advice to ensure drug safety and protect American lives, the firm was also being paid by the very companies fueling the deadly opioid epidemic to help them avoid tougher regulation of these dangerous drugs,” said Carolyn Maloney, the committee’s chairwoman.

In a statement, McKinsey responded, “This work, while lawful, fell short of the high standards we set for ourselves.”

From 2008 to 2022, McKinsey completed 76 contracts for the FDA, for which the agency was paid $140 million. During this period, McKinsey consultants also worked extensively for Purdue. From 2004 to 2019, McKinsey consulted on at least 75 separate engagements for the drugmaker and its affiliates.

The consultancy provided a list of 37 FDA contracts since 2008 that were staffed by at least one McKinsey consultant who simultaneously or previously worked for Purdue, some of them senior partners. They used those federal connections to gain more work at Purdue, as well as to solicit private-sector business from other opioid companies.

In one draft presentation, McKinsey appears to make its case for leading an industry working group of two dozen opioid manufacturers to develop a class-wide FDA REMS safety program. The slide noted that McKinsey had “supported regulatory bodies directly, and as such have developed insights into the perspectives of the regulators themselves.”

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Some of the projects had conflicting aims. For instance, the firm staffed a consultant on the 2009 REMS project in which it recommended Purdue “defend against strict treatment by the FDA.” In 2011, McKinsey staffed the same consultant in an FDA office responsible for overseeing elements of that same REMS program on a project to define that office’s “role in monitoring drug safety.”

Some $40 million in contracts stemmed from FDA’s Center for Drug Evaluation and Research (CDER), which oversees numerous opioid-related programs. In its statement, McKinsey said it does not advise the agency on regulatory decisions or on specific pharmaceutical products, but rather has focused on “administrative and operational topics.”

All the same, there was a pattern of assigning the same consultants to work on its FDA projects and opioid clients. That pattern appears to have “exacerbated McKinsey’s organizational conflicts of interest,” the report notes, notwithstanding the firm’s own internal policies to limit distribution of client information.

Similar to other federal agencies, FDA relies on contractors to assess and report potential conflicts before they are awarded work. But McKinsey doesn’t appear to have disclosed any of these conflicts to the agency. It’s not clear whether that was due to a laxity in the design of McKinsey’s own internal process or a failure of its consultants to abide by the process.

Regardless, Congress found McKinsey’s policies to be lacking. The lesson for marketers is clear: If you don’t have a conflict-of-interest policy, get one tomorrow. And make sure to abide by it.

Agencies and other marketing firms don’t typically have as formal a process for assessing conflicts and mitigating them as, say, a law firm might, one regulatory consultant said. But, especially when doing work with the government, marketers must understand that the government has very high expectations for these types of conflicts, and appropriately so.

“It’s the old ‘wife of Caesar’ standard,” the regulatory consultant said. “It’s not enough to not do something wrong; you must avoid the appearance of doing something wrong. That appearance standard is a very high one. The government very appropriately expects its contractors to maintain that standard.”

The need for bulletproof firewalls becomes even more important in light of the fact that government agencies like FDA don’t normally have insight into the agencies or consulting firms working with pharma companies.

“Sponsors tend to want it that way,” the regulatory consultant continued. “So from the FDA’s perspective, everything is coming solely from the sponsor. Whatever partner a sponsor is working with is completely white-labeled and disappears from the agency’s viewpoint.”

The loopholes in McKinsey’s FDA/Purdue firewall may have political significance. In one of the report’s more egregious allegations, McKinsey permitted employees on the Purdue account to help shape materials that were meant for government officials and agencies. That includes a 2018 memo written for Alex Azar, the incoming secretary of the Department of Health and Human Services, in which references to the opioid crisis appear to have been toned down. It also includes a 2018 speech by then FDA commissioner Dr. Scott Gottlieb concerning a drug safety monitoring program, which included a fabricated claim about opioids.

If the allegations concerning the opioid advice McKinsey submitted to the Trump Administration are true, it underscores prior concerns about the agency. Whether and to what extent the FDA bears responsibility for the opioid epidemic was one issue preventing Dr. Janet Woodcock, who had served as interim director, from being considered for the role of permanent FDA commissioner. On similar grounds, Sen. Joe Manchin explicitly stated that he would vote to oppose Dr. Robert Califf as commissioner.

“Marketers always want to brag about their experience, including what their people are working on,” said the regulatory consultant. “But this division of information and firewalls must be respected.”

McKinsey’s behavior, both its use of federal government contracts as a means to gain more lucrative private-sector business and the overlapping of consultants and sharing of information, raises questions about whether the firm abused client confidence. As such, the report is “absolutely a wakeup call,” the consultant said, both for marketers working on governmental contracts or simply competing pharma brands.

McKinsey said the firm “continues to cooperate with the committee to address further questions.”