McKinsey Opened a Door in Its Firewall Between Pharma Clients and Regulators

In December of last year, Jeff Smith, a partner with McKinsey and Company, accepted a highly sensitive assignment. An executive at the company that makes the opioids wanted to change its business and sought out Dr. Smith.

He traveled to the offices of Purdue in Connecticut to meet with executives. His team reviewed the business plans and evaluated the new drugs that the company hoped would help move the company beyond the turmoil associated with the addictive painkiller, which medical experts say helped to spark the opiate epidemic.

The corporate reorganization was not Dr. Smith's only assignment. He was helping the FDA restructure its office that approves new drugs and the same office that would determine the regulatory fate of the new line of proposed products.

McKinsey internal records tell the story of Dr. Smith's work for both the federal and state regulators. There is evidence of a porous firewall between the consulting firm's work for private companies and the authorities that oversee them.

A review by The New York Times of thousands of internal McKinsey documents found that the firm allowed employees who worked for pharmaceutical companies to also work for the F.D.A.

McKinsey promoted inside access in pitches to private clients, according to the documents. A McKinsey consultant highlighted the firm's work for the F.D.A. in an email to the chief executive.

The House Committee on Oversight and Reform obtained the documents that were reviewed by The Times and released the initial results of its investigation into McKinsey. The records show the firm's work for Purdue and other manufacturers over the course of a 15-year period.

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According to the committee's 53-page report, at least 22 McKinsey consultants have worked for both Purdue and the F.D.A., some at the same time. The committee did not receive evidence that the firm had disclosed potential conflicts of interest as required by federal contracting rules.

The McKinsey employees were allowed to help shape the materials that were intended for government officials and agencies. The documents show that references to the severity of the crisis were cut from the draft version of the memo.

The F.D.A. relied on McKinsey's advice to ensure drug safety and protect American lives at the same time the firm was being paid by companies that were fueling the deadly opioid crisis.

A spokesman for McKinsey denied that there was a disclosure requirement related to the work it did for the F.D.A.

Since McKinsey has not advised the F.D.A. on specific regulatory decisions or on specific pharmaceutical products, our consulting engagements with pharmaceutical companies did not create a conflict of interest.

Dr. Smith, who was promoted to senior partner this year, did not respond to calls or emails. The former McKinsey consultant said that Dr. Smith's assignment at the F.D.A. was very high-level project management and could not have helped Purdue. The former consultant was subject to a nondisclosure agreement and spoke on the condition of anonymity.

For nearly a century, McKinsey has taken on clients in the same industries, with internal rules meant to prevent trade secrets from leaking to competitors. McKinsey began to mine a new source of revenue when it expanded to 67 countries, including the United States, Europe and Asia. Potential conflicts of interest drew the attention of Congress when McKinsey began to work with federal agencies.

A bipartisan group of lawmakers introduced legislation last month to prevent conflicts of interest in federal contracting.

McKinsey's own guidelines on dealing with conflicts of interest for government work, which are based on federal rules, state that even the appearance of a conflict requires its consultants to make a report to the government client.

Ms. Maloney said she would hold a hearing and summon a McKinsey partner to testify about the documents obtained by the committee. The documents will be made public as part of an agreement between McKinsey and the attorneys general.

The F.D.A. relies on its contractors to report potential conflicts of interest.

In one proposal, McKinsey noted that Dr. Smith had previously served an unnamed manufacturer, and in a statement to The Times, the firm's spokesman said it had made the agency aware of the industry.

The report criticized McKinsey's disclosures as isolated and vague, and not in accordance with the firm's own policy. The F.D.A. has previously said it was unaware of McKinsey's work.

McKinsey consultants worked on 37 F.D.A. projects. McKinsey's work for the agency, including by Dr. Smith, was even more extensive according to additional documents.

Dr. Smith worked on more than 40 projects for the F.D.A. between 2007 and 2019: advising the drugmaker on interactions with the regulator and, in one case, helping secure approval of a new

The documents show McKinsey consultants who worked with the F.D.A. on regulatory issues.

Navjot Singh led more than 80 McKinsey projects. Emails and presentations from that period show that he worked on multiple projects. The McKinsey team offered him to be an expert in regulatory agencies, after he was solicited his insight in an email.

He didn't respond to calls or emails.

Several of McKinsey's F.D.A. projects were related to work the firm was doing for Purdue at the same time.

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McKinsey was hired by the F.D.A. to advise on plans to monitor the safety of potentially risky products. Dr. Smith worked on the project while also advising on an effort that would demonstrate whether the drug was meeting the requirements.

While Dr. Smith advised the F.D.A. on its use of data for tracking drug safety, colleagues sought his counsel on how the firm might draw on that work with the agency to help Purdue.

McKinsey promoted its connections with federal regulators when pitching its services to pharmaceutical clients.

Rob Rosiello, one of the consultants, wrote in an email to the chief executive that they serve the broadest range of stakeholders. The F.D.A. is one client that we have supported for over five years.

McKinsey wrote in a presentation that it supported regulatory bodies and that it had developed insights into the perspectives of the regulators themselves.

McKinsey sought to strengthen its ties to Mr. Azar, who was nominated by Mr. Trump to be the nation's top health official. According to McKinsey's internal records, it collected at least $400 million advising pharmaceutical companies.

The firm had a relationship with Mr. Azar before he was appointed. Martin Elling, a senior partner who co-led the firm's work with Purdue, received an email from Mr. Azar, who had left his job as president of the drugmaker Eli Lilly.

Mr. Azar wrote to Mr. Elling that he wanted to sit with him and talk about ideas and how to look at opportunities. Other emails show that Mr. Elling and others at McKinsey were going to have a meeting with Mr. Azar.

Mr. Elling wrote to him after learning of Mr. Azar's Senate confirmation. Thank you.

Mr. Azar said thanks. Thank you for all your help. We can talk about the practice and connection to HHS if I get my sea legs over there.

The documents do not explain the nature of the help provided to Mr. Azar by McKinsey. Mr. Azar issued a statement saying that McKinsey had played no role in my appointment as secretary and that he had not had any meetings with McKinsey.

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The McKinsey spokesman said that the firm had no role in helping Mr. Azar get nominated for a cabinet post.

According to the documents, McKinsey consultants began drafting a detailed memo to Mr. Azar before he was confirmed. The assessment of the continued severity of the crisis was offered in one paragraph. It said that two programs, Medicare and Medicaid, were contributing to the problem by allowing people prone to abuse them and in doses that were too high to be used.

The references were deleted after a consultant objected to them. The final version added responsibility for the crisis to include generic manufacturers and heroin use.

McKinsey's managers were aware of the problem with inviting a consultant for Purdue to weigh in on the memo. A senior partner at McKinsey said that he had made a mistake by conferring with Mr. Ghatak.

He told me that we shouldn't say anything on topic to anyone. That is where he is coming from.

Mr. Azar said in his statement to The Times that he was the first Republican health secretary to declare that addiction is a disease.

Paul Mango was the deputy chief of staff for policy. Both left at the end of the administration.

The memo for Mr. Azar was not the only source of frustration for consultants at McKinsey.

The publications prepared by Mr. Latkovic and his colleagues were sent for review to other McKinsey consultants.

One manager wrote that they wanted to make sure they were comfortable with the content, and that they didn't feel their clients would be concerned in any way.

A colleague working with the drugmakerswaters down whatever I say, Mr. Latkovic complained in an email.

According to the documents, McKinsey partners overseeing the firm's work with the opioid maker appear to have taken steps to limit material that could be subpoenaed. Laura Moran told Mr. Ghatak that she would provide printed copies of the slide decks instead of email them.

She wrote to Mr. Ghatak that the guys will be deposed.

In August of last year, after Massachusetts and New York had sued, Mr. Elling wrote an email to himself that said "delete old pur documents from laptop."

Mr. Elling and Mr. Ghatak were fired after The Times reported that they had discussed removing McKinsey documents. McKinsey agreed to pay about $600 million to settle state investigations into its role in helping sales at opioid makers. Neither responded to calls or emails. Ms. Moran could not be reached.

When some of McKinsey's work with Purdue was revealed by the news media, a consultant named Sarah Nam reached out to Dr. Smith.

She wrote that she was still struggling to come to terms with how the practice impacts public health. She said that she would love to get your thoughts, and that she was unaware of Dr. Smith's work for Purdue.

His reaction to the public disclosure of the firm's work had been different. After a colleague suggested they talk through what to say to the F.D.A., Dr. Smith replied, "Yes, let's discuss how to manage this."

In the three years since the work with Purdue was made public, McKinsey has changed the way it selects clients and tripled the number of staff who oversee compliance, risk management and professional standards.

McKinley will continue to take steps to strengthen our policies, professional standards, and our risk and governance processes to ensure our work is consistent with our values and the high expectations we set for ourselves.