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McKinsey never told the FDA it was working for both the FDA and opioid makers

410 points by danso 5y ago

htrp 5y ago
It's technically not a conflict of interest, as long as the revenue streams roll through different offices or partners. /s Or as McKinsey puts it > "across more than a decade of service to the FDA, we have been fully transparent that we serve pharmaceutical and medical device companies. McKinsey’s work with the FDA helped improve the agency’s effectiveness through organizational, resourcing, business process, operational, digital, and technology improvements. To achieve its mission, the government regularly seeks support from additional experts who understand both the government’s mission and the industries’ practices. We take seriously our commitment to avoid conflicts and to serve the best interests of the FDA." In practice, just another example of questionable behaviour from McKinsey
- shkkmo 5y ago
  > “the Contractor agrees it shall make an immediate and full disclosure, in writing, to the Contracting Officer of any potential or actual organizational conflict of interest or the existence of any facts that may cause a reasonably prudent person to question the contractor’s impartiality because of the appearance or existence of bias.” So "it should have been obvious" or "technically it wasn't a real conflict of interest" is really not a defense here.
  - cycomanic 5y ago
    > > “the Contractor agrees it shall make an immediate and full disclosure, in writing, to the Contracting Officer of any potential or actual organizational conflict of interest or the existence of any facts that may cause a reasonably prudent person to question the contractor’s impartiality because of the appearance or existence of bias.” > So "it should have been obvious" or "technically it wasn't a real conflict of interest" is really not a defense here. Exactly the key sentence that many people overlook is: "actual organizational conflict of interest or the existence of any facts that may cause a reasonably prudent person to question the contractor’s impartiality" Like i said above it's not if you think you can be impartial it's if others might think you might not be impartial, in other words if they perceive that you could have a conflict of interest.
- cde-v 5y ago
  Exactly, just like there was no conflict between the consulting and accounting arms of Arthur Andersen.
- refurb 5y ago
  This isn't a very fair take. Investment banks do the same. How many companies ask Goldman to help with their IPO? How many are competitors? Plenty. The company has firewalls to separate different work products and have way more to lose by violating company confidentiality than by leveraging it.
  - briffle 5y ago
    I'm pretty sure Goldman discloses that, and the probably exlains/demonstrates to the client their controls to enusre the areas stay seperate. Not disclosing it is at least a bit sketchy.
  - burkaman 5y ago
    Does Goldman sign contracts promising to disclose all potential conflicts of interest when they help with an IPO? Does Goldman have a history of violating those contracts and paying $30 million to settle the case? Does Goldman have a very recent documented history of corrupting government officials and leveraging them to make money? I guess it wouldn't surprise me, but all those things are definitely true of McKinsey.
  - throwawaycities 5y ago
    Your example is an investment bank that was caught and fined for advising clients to buy toxic assets during the 2008 housing bubble, while it simultaneously unloaded the same assets. Of course they too publicly claimed that wasn’t a conflict or even evidence of a conflict, but then the communications were leaked showing Goldman employees knew the assets were toxic and the company needed to push on them on customers to keep the price up while the bank liquidated its own positions.
  - htrp 5y ago
    Consulting is more about long-term multi-year projects to shape things like policy (for regulators) or strategy (for companies). IPOs are very transactional by nature. The walls you speak of are usually between the trading side and the capital markets side of the firm, where there is very little overlap. In this case though, I would wager people who worked on the regulatory side were constantly being restaffed onto the pharmaceutical side and vice versa.
- cm2187 5y ago
  Though it would be naive on the side of the FDA to assume McKinsey didn’t advise some pharma companies. The list of Fortune 500 companies they don’t advise is probably shorter than the one they advise. That doesn’t excuse bad disclosure if it is the case, but it is hard to argue the FDA would have done anything differently.
- pacija 5y ago
  [flagged]
- akudha 5y ago
  There is this TV show called Goliath, on Amazon. In the latest season, a drug company gives work to many attorneys, with the sole aim of preventing them from being on the opposite side later on. I had no idea this was a thing. Companies do all kinds of shady shit to go around the law. They will push and stretch laws to the max, if there is profit to be made.
Grustaf 5y ago
I'm sure they did tell the opioid makers though.
- tharne 5y ago
  > I'm sure they did tell the opioid makers though. That was probably one of the big selling points they highlighted in their RFP PowerPoint.
- DSingularity 5y ago
  It was part of their pitch. “And here is the water cooler where the consultants working for the FDA are known to discuss the details of the FDA investigation into the pharmaceuticals role in the opioid crisis”.
MattGaiser 5y ago
Doesn't McKinsey frequently work for different clients in the same industry even? I never got the impression that consulting firms really limited themselves in that way.
- zubiaur 5y ago
  They do. I would be surprised if they don't operate in compartmentalized teams. I work with a company that has clients in competing markets. We have "conflict houses", organizations within the organization that compartmentalize clients, sets firewalls and prevents information leak between employees. I would be surprised if McK doesn't do anything similar.
  - dachryn 5y ago
    Indeed, the 'cool-off' time is even part of the statement of work, and negotiable. Its just part of the game. There are maybe 10 companies active in a given region/content that have the fame to pull off this high level of consulting (I am not claiming they are the only capable ones, or even that they are capable, just saying that the shortlist is rather ... short) Its known that they work for the competitors. You just want to handle the exposure and limit the risk of your super realistic super important strategy leaking 3 months before you make it public.
  - shkkmo 5y ago
    And nothing in those practices excuses McKinsey from failing to disclose such possible conflicts.
- kevingadd 5y ago
  Lack of disclosure is a serious problem
- tharne 5y ago
  > Doesn't McKinsey frequently work for different clients in the same industry even? They do. It's a well-known way for companies to get inside info on their competitors. You can't legally/ethically hire an employee away from a competitor and then say, "tell us everything you know about company X". But, you can hire a McKinsey team that worked extensively for your competitor and say "give us a list of 'best practices' in our industry".
tharne 5y ago
If I see McKinsey on someone's resume, it's a huge red flag. Similar to "Head of marketing for children's sales at Phillip Morris". Sure, all companies do some bad things, but the complete lack of ethics required to succeed at McKinsey is next-level.
- buggythebug 5y ago
  Is this anecdotal or is it well known?
  - tharne 5y ago
    Anecdotal, based on personal experience with these folks
  - IMTDb 5y ago
    Well known, based on personal experience with these folks. But most of the time, it's due to how these guys are managed by their client. When you bring in an individual from a top consulting firm, they will fight tooth and nail to get the results you want. Or at least not "fail" at getting those. If this means doing a great job, they will definitely do that. If - due to factors they can't really control - they need to endanger the rest of the project so that their part is successful, they will avoid to do it if they can. But they will do it if they need to. Failing is just not an option. This is the danger of hiring consultants: incentives are not fully aligned between you and them. You want the whole project to be successful - on the long run. They want their part to be successful - right now. If you are careful enough, these two absolutely coexist. If you aren't it can be dangerous for you whole organisation.
- _dujt 5y ago
  > If I see McKinsey on someone's resume, it's a huge red flag I can’t wait for the day when engineers from Facebook or Google are treated the same way after all the harm those companies have caused is revealed.
  - spywaregorilla 5y ago
robg 5y ago
First rule for conflicts of interest: Even the appearance of a conflict is itself a conflict. Knowing the good folks at FDA, this reality is protected against, but glad to have ProPublica shining a light.
- mannykannot 5y ago
  While I do not doubt the integrity of the good folks at the FDA, it is unclear to me that they could in any way protect against the real conflict of interest in McKinsey telling the opioid makers what the folks at the FDA were thinking, doing or being advised to do, or giving the manufacturers advice predicated on that knowledge.
leroy_masochist 5y ago
I bet McKinsey also never told the Department of Transportation that it was working for both the DoT and major car manufacturers. Executives senior enough to approve hiring McKinsey to study something, whether they're F500 CEOs or government agency heads, know full well that the top consulting firms are all advising their competitors, counterparties, and regulators/regulatees. The facts reported in this article would indeed be scandalous if they included evidence that the FDA team at McK was tipping the pharma teams on private FDA plans or discussions, but that is not the case. If anything, this case is merely illustrative of why major consulting firms have borderline-paranoid cultural norms around never discussing client work outside of the respective client team, even (and especially) to one's own colleagues at the firm who are not staffed on said team.
- danso 5y ago
  Sure, but the requirement for disclosure seems pretty straightforward: > . McKinsey’s contracts with the FDA, which ProPublica obtained after filing a FOIA lawsuit, contained a standard provision obligating the firm to disclose to agency officials any possible organizational conflicts. One passage reads: “the Contractor agrees it shall make an immediate and full disclosure, in writing, to the Contracting Officer of any potential or actual organizational conflict of interest or the existence of any facts that may cause a reasonably prudent person to question the contractor’s impartiality because of the appearance or existence of bias.”
- burkaman 5y ago
  Did anybody here read the article? I don't want to keep pasting the same quotes on every comment, but McKinsey just paid $30 million to settle a case where they did the exact same thing to the Department of Justice. Why would they do that if this is normal and nobody cares? The contract language is very clear: they have to disclose potential conflicts (even if "everybody already knows"), and they didn't.
  - notyourday 5y ago
    These as fines are too small. It is just a cost of doing business. The fines should be devastating so getting 5-6 of such fines should be a death penalty for the company
spywaregorilla 5y ago
McKinsey employee here. This isn't a scandal, and is probably required by the FDA client contract and the pharma client contracts. It is normative. The FDA is fully aware that McKinsey serves pretty much every major pharma company in the world. Pharma companies know McKinsey is likely involved with federal agencies, probably including the FDA. The contracts formed with all organizations will clearly indicate that the relationship is going to remain private. A really important part of working with a big consulting firm is that you keep it internal to the team. For example, the partnership might be serving both sides of a vendor/procurement situation. It is a huge conflict of interest if these two teams talk to each other and risk leaking their side's position. Thus, not only are the teams allowed to talk to each other, they're not allowed to communicate to others that they're working with that client. Nothing unique to McKinsey here. That's how consulting tends to work.
- burkaman 5y ago
  Did you read the article? > This year ProPublica submitted a Freedom of Information Act request to the FDA seeking records showing that McKensey had disclosed possible conflicts of interest to the agency’s drug-regulation division as part of contracts spanning more than a decade and worth tens of millions of dollars. The agency responded recently that “after a diligent search of our files, we were unable to locate any records responsive to your request.” > McKinsey’s contracts with the FDA, which ProPublica obtained after filing a FOIA lawsuit, contained a standard provision obligating the firm to disclose to agency officials any possible organizational conflicts. One passage reads: “the Contractor agrees it shall make an immediate and full disclosure, in writing, to the Contracting Officer of any potential or actual organizational conflict of interest or the existence of any facts that may cause a reasonably prudent person to question the contractor’s impartiality because of the appearance or existence of bias.” > Over the past couple of years, for example, McKinsey’s bankruptcy-advisory practice has paid more than $30 million to the Justice Department and one client’s creditors to settle allegations that it failed to disclose potential conflicts, as required by the federal bankruptcy rules. There is no evidence that McKinsey disclosed their conflicts in this case, and plenty of evidence that they regularly fail to do so when working with the government, in clear breach of contract. If they paid $30 million to make it go away, then by definition it is a scandal. It is also potentially criminal: https://www.nytimes.com/2019/11/08/business/mckinsey-criminal-investigation-bankruptcy.html https://www.nytimes.com/2019/11/08/business/mckinsey-crimina...
chirau 5y ago
It seems everytime McKinsey is in the press it's for the wrong reasons. I will never forget what they did to South Africa. Fascinating read https://www.nytimes.com/2018/06/26/world/africa/mckinsey-south-africa-eskom.html https://www.nytimes.com/2018/06/26/world/africa/mckinsey-sou...
shkkmo 5y ago
The people jumping on here to say "of course McKinsey didn't need to disclose, it should have been obvious because consultants always have these conflicts of interest and don't disclose them." need to take a while to reevaluate their ethical guidelines. Failing to disclose conflicts of interest (and the details of the exact steps yaken to mitigate those conflicts) is unethical. In this case, the contract requiring disclosure takes this beyond unethical and it becomes a breach of contract that indicates possible fraudulent or deceptive intent.
- pempem 5y ago
  These are details that ProPublica was unable to get. That doesn't mean they weren't communicated, as spywaregorilla (sp?) has indicated above. Every law firm, accounting firm, consulting firm once it hits a certain size has clients which conflict, but the same employees - the same teams of employees - are barred from serving a conflict of interest. It is assured that: 1. the FDA asked 2. the FDA knew 3. the FDA agreed Its also probable that the person from the FDA working with the person from McKinsey had either already worked with them or been referred to them by a colleague that had worked with them.
caturopath 5y ago
I'd be surprised if McKinsey hadn't been hired by every large pharma company.
boh 5y ago
Sorry but I have a hard time believing the FDA didn't know anything about McKinsey's ties to pharmaceuticals. The scenario here is likely ProPublica coming to the FDA and asking why they hired McKinsey since it has ties to Pharma. FDA comes back and says McKinsey never "technically" told them. So that's the story. Any public agency that hires McKinsey can assume a conflict, since McKinsey has clients in every industry. That's partially why they hire them, to get insider views on the industry they regulate/deal with.
- mousetree 5y ago
  Agreed. It's very clear on McKinsey's website that they dp work for pharma companies.
- mousetree 5y ago
  Agreed. It's very clear on McKinsey's website that they do work for pharma companies.
- conductr 5y ago
  > The news of McKinsey’s opioid work apparently did little to dampen the FDA’s enthusiasm for the consultancy. In March 2019, just after the news broke, the agency signed a new contract with McKinsey — extending the firm’s multiyear effort to help the FDA “modernize” the process by which it regulates new drugs. I agree too. I think the FDA hires them exactly because of their clients. They want to modernize their processes, they need intel from industry. How else does McKinsey get this intel besides working with industry? It’s very much a meet in the middle process. The FDA doesn’t want to completely disrupt industry and they’d like to know their new regulations are able to be implemented and probably also care to some degree how painful they are for industry. However as regulators, they could never Work side by side with the industry in this effort. It wasn’t disclosed likely because it was part of the value and McKinsey, through conversation with FDA, thought it was understood. FDA hired them again, so I’m interpreting that as a sign of them not actually thinking a COI occurred, or a material lack of disclosure.
  - kesselvon 5y ago
thecleaner 5y ago
Is there anything useful which consulting as an industry does ? I have been hard-pressed to find examples.
- kesselvon 5y ago
  It made more sense when business knowledge and education was pretty rare. But now they're just very skilled powerpoint makers - nothing McKinsey does is particularly secret or proprietary, and a company could easily have the same results by hiring an internal team or just doing their own research.
  - thecleaner 5y ago
    Wonder why I was down voted then. Lol.
dillondoyle 5y ago
Another gross thing they did: A former DEA council in charge of regulating distributors then worked with them to pass a law by unanimous consent neutering this single enforcement tool the DEA had. The former DEA attorney "gave the industry intimate knowledge of the DEA’s strategy." Below links have gross records that reveled among other things that a Rep. sponsoring the bill emailed the lobbyists asking for questions he can ask the DEA... If you haven't watch Gibney's "Crime of the Century" on HBO it touches on this incident. The context is that the DEA used a stop order against McKesson, it was one of the only tools they had. McKesson did not like this. They pushed back HARD. I understand concerns that legit non-opiate meds were held up for a few days, but this was the only tool DEA had to send a message. Of course.... “Purdue was very active in influencing the ultimate definition of an ‘imminent danger to the public health or safety.’ ” Humans, hell even the most obvious 'AI', could flag ginormous amounts of pills going to tiny zip codes. They put profits over people's lives. They violated the law, minimally in spirit, I believe in conservative textual reading. "the sponsors and co-sponsors have received $1.4 million in campaign contributions from the industry and the alliance, according to campaign finance records." It's shocking how relatively tiny amounts of money open access to decision makers. Gibney's doc also reveals this addiction pushing behavior is endemic: Purdue had a government regulator sit in a motel and draft their label - which gave them the excuse to market a potentially 'less addictive' drug and we all know what happened from there. https://archive.is/bmCiD https://archive.is/bmCiD https://www.cbsnews.com/news/whistleblowers-dea-attorneys-went-easy-on-mckesson-the-countrys-largest-drug-distributor/ https://www.cbsnews.com/news/whistleblowers-dea-attorneys-we... I have very strong feelings about what I consider crimes of big pharma & opiates. To me, our for-profit system is a root cause of human misery. Obviously complicated issue, but I think there has to be some type of semi competitive socialized healthcare.
attwell 5y ago
McKinsey projects on FDA probably had a financial impact on their pharmaceutical customers, according to https://writemyessay.nyc/research-paper-writing-help/ https://writemyessay.nyc/research-paper-writing-help/. For example, in 2010, the FDA hired a firm to help it develop a system for tracking and distribution of potentially harmful prescription drugs.
attwell 5y ago
McKinsey projects on FDA probably had a financial impact on their pharmaceutical customers, according to https://writemyessay.nyc/research-paper-writing-help/ https://writemyessay.nyc/research-paper-writing-help/. For example, in 2010, the FDA hired a firm to help it develop a system for tracking and distribution of potentially harmful prescription drugs.

410 points by danso 5y ago

htrp 5y ago

It's technically not a conflict of interest, as long as the revenue streams roll through different offices or partners. /s Or as McKinsey puts it > "across more than a decade of service to the FDA, we have been fully transparent that we serve pharmaceutical and medical device companies. McKinsey’s work with the FDA helped improve the agency’s effectiveness through organizational, resourcing, business process, operational, digital, and technology improvements. To achieve its mission, the government regularly seeks support from additional experts who understand both the government’s mission and the industries’ practices. We take seriously our commitment to avoid conflicts and to serve the best interests of the FDA." In practice, just another example of questionable behaviour from McKinsey

shkkmo 5y ago
> “the Contractor agrees it shall make an immediate and full disclosure, in writing, to the Contracting Officer of any potential or actual organizational conflict of interest or the existence of any facts that may cause a reasonably prudent person to question the contractor’s impartiality because of the appearance or existence of bias.” So "it should have been obvious" or "technically it wasn't a real conflict of interest" is really not a defense here.
- cycomanic 5y ago
  > > “the Contractor agrees it shall make an immediate and full disclosure, in writing, to the Contracting Officer of any potential or actual organizational conflict of interest or the existence of any facts that may cause a reasonably prudent person to question the contractor’s impartiality because of the appearance or existence of bias.” > So "it should have been obvious" or "technically it wasn't a real conflict of interest" is really not a defense here. Exactly the key sentence that many people overlook is: "actual organizational conflict of interest or the existence of any facts that may cause a reasonably prudent person to question the contractor’s impartiality" Like i said above it's not if you think you can be impartial it's if others might think you might not be impartial, in other words if they perceive that you could have a conflict of interest.
cde-v 5y ago
Exactly, just like there was no conflict between the consulting and accounting arms of Arthur Andersen.
refurb 5y ago
This isn't a very fair take. Investment banks do the same. How many companies ask Goldman to help with their IPO? How many are competitors? Plenty. The company has firewalls to separate different work products and have way more to lose by violating company confidentiality than by leveraging it.
- briffle 5y ago
  I'm pretty sure Goldman discloses that, and the probably exlains/demonstrates to the client their controls to enusre the areas stay seperate. Not disclosing it is at least a bit sketchy.
- burkaman 5y ago
  Does Goldman sign contracts promising to disclose all potential conflicts of interest when they help with an IPO? Does Goldman have a history of violating those contracts and paying $30 million to settle the case? Does Goldman have a very recent documented history of corrupting government officials and leveraging them to make money? I guess it wouldn't surprise me, but all those things are definitely true of McKinsey.
- throwawaycities 5y ago
  Your example is an investment bank that was caught and fined for advising clients to buy toxic assets during the 2008 housing bubble, while it simultaneously unloaded the same assets. Of course they too publicly claimed that wasn’t a conflict or even evidence of a conflict, but then the communications were leaked showing Goldman employees knew the assets were toxic and the company needed to push on them on customers to keep the price up while the bank liquidated its own positions.
- htrp 5y ago
  Consulting is more about long-term multi-year projects to shape things like policy (for regulators) or strategy (for companies). IPOs are very transactional by nature. The walls you speak of are usually between the trading side and the capital markets side of the firm, where there is very little overlap. In this case though, I would wager people who worked on the regulatory side were constantly being restaffed onto the pharmaceutical side and vice versa.
cm2187 5y ago
Though it would be naive on the side of the FDA to assume McKinsey didn’t advise some pharma companies. The list of Fortune 500 companies they don’t advise is probably shorter than the one they advise. That doesn’t excuse bad disclosure if it is the case, but it is hard to argue the FDA would have done anything differently.
pacija 5y ago
[flagged]
akudha 5y ago
There is this TV show called Goliath, on Amazon. In the latest season, a drug company gives work to many attorneys, with the sole aim of preventing them from being on the opposite side later on. I had no idea this was a thing. Companies do all kinds of shady shit to go around the law. They will push and stretch laws to the max, if there is profit to be made.

Grustaf 5y ago

I'm sure they did tell the opioid makers though.

tharne 5y ago
> I'm sure they did tell the opioid makers though. That was probably one of the big selling points they highlighted in their RFP PowerPoint.
DSingularity 5y ago
It was part of their pitch. “And here is the water cooler where the consultants working for the FDA are known to discuss the details of the FDA investigation into the pharmaceuticals role in the opioid crisis”.

MattGaiser 5y ago

Doesn't McKinsey frequently work for different clients in the same industry even? I never got the impression that consulting firms really limited themselves in that way.

zubiaur 5y ago
They do. I would be surprised if they don't operate in compartmentalized teams. I work with a company that has clients in competing markets. We have "conflict houses", organizations within the organization that compartmentalize clients, sets firewalls and prevents information leak between employees. I would be surprised if McK doesn't do anything similar.
- dachryn 5y ago
  Indeed, the 'cool-off' time is even part of the statement of work, and negotiable. Its just part of the game. There are maybe 10 companies active in a given region/content that have the fame to pull off this high level of consulting (I am not claiming they are the only capable ones, or even that they are capable, just saying that the shortlist is rather ... short) Its known that they work for the competitors. You just want to handle the exposure and limit the risk of your super realistic super important strategy leaking 3 months before you make it public.
- shkkmo 5y ago
  And nothing in those practices excuses McKinsey from failing to disclose such possible conflicts.
kevingadd 5y ago
Lack of disclosure is a serious problem
tharne 5y ago
> Doesn't McKinsey frequently work for different clients in the same industry even? They do. It's a well-known way for companies to get inside info on their competitors. You can't legally/ethically hire an employee away from a competitor and then say, "tell us everything you know about company X". But, you can hire a McKinsey team that worked extensively for your competitor and say "give us a list of 'best practices' in our industry".

tharne 5y ago

If I see McKinsey on someone's resume, it's a huge red flag. Similar to "Head of marketing for children's sales at Phillip Morris". Sure, all companies do some bad things, but the complete lack of ethics required to succeed at McKinsey is next-level.

buggythebug 5y ago
Is this anecdotal or is it well known?
- tharne 5y ago
  Anecdotal, based on personal experience with these folks
- IMTDb 5y ago
  Well known, based on personal experience with these folks. But most of the time, it's due to how these guys are managed by their client. When you bring in an individual from a top consulting firm, they will fight tooth and nail to get the results you want. Or at least not "fail" at getting those. If this means doing a great job, they will definitely do that. If - due to factors they can't really control - they need to endanger the rest of the project so that their part is successful, they will avoid to do it if they can. But they will do it if they need to. Failing is just not an option. This is the danger of hiring consultants: incentives are not fully aligned between you and them. You want the whole project to be successful - on the long run. They want their part to be successful - right now. If you are careful enough, these two absolutely coexist. If you aren't it can be dangerous for you whole organisation.
_dujt 5y ago
> If I see McKinsey on someone's resume, it's a huge red flag I can’t wait for the day when engineers from Facebook or Google are treated the same way after all the harm those companies have caused is revealed.
- spywaregorilla 5y ago

robg 5y ago

First rule for conflicts of interest: Even the appearance of a conflict is itself a conflict. Knowing the good folks at FDA, this reality is protected against, but glad to have ProPublica shining a light.

mannykannot 5y ago
While I do not doubt the integrity of the good folks at the FDA, it is unclear to me that they could in any way protect against the real conflict of interest in McKinsey telling the opioid makers what the folks at the FDA were thinking, doing or being advised to do, or giving the manufacturers advice predicated on that knowledge.

leroy_masochist 5y ago

I bet McKinsey also never told the Department of Transportation that it was working for both the DoT and major car manufacturers. Executives senior enough to approve hiring McKinsey to study something, whether they're F500 CEOs or government agency heads, know full well that the top consulting firms are all advising their competitors, counterparties, and regulators/regulatees. The facts reported in this article would indeed be scandalous if they included evidence that the FDA team at McK was tipping the pharma teams on private FDA plans or discussions, but that is not the case. If anything, this case is merely illustrative of why major consulting firms have borderline-paranoid cultural norms around never discussing client work outside of the respective client team, even (and especially) to one's own colleagues at the firm who are not staffed on said team.

danso 5y ago
Sure, but the requirement for disclosure seems pretty straightforward: > . McKinsey’s contracts with the FDA, which ProPublica obtained after filing a FOIA lawsuit, contained a standard provision obligating the firm to disclose to agency officials any possible organizational conflicts. One passage reads: “the Contractor agrees it shall make an immediate and full disclosure, in writing, to the Contracting Officer of any potential or actual organizational conflict of interest or the existence of any facts that may cause a reasonably prudent person to question the contractor’s impartiality because of the appearance or existence of bias.”
burkaman 5y ago
Did anybody here read the article? I don't want to keep pasting the same quotes on every comment, but McKinsey just paid $30 million to settle a case where they did the exact same thing to the Department of Justice. Why would they do that if this is normal and nobody cares? The contract language is very clear: they have to disclose potential conflicts (even if "everybody already knows"), and they didn't.
- notyourday 5y ago
  These as fines are too small. It is just a cost of doing business. The fines should be devastating so getting 5-6 of such fines should be a death penalty for the company

spywaregorilla 5y ago

McKinsey employee here. This isn't a scandal, and is probably required by the FDA client contract and the pharma client contracts. It is normative. The FDA is fully aware that McKinsey serves pretty much every major pharma company in the world. Pharma companies know McKinsey is likely involved with federal agencies, probably including the FDA. The contracts formed with all organizations will clearly indicate that the relationship is going to remain private. A really important part of working with a big consulting firm is that you keep it internal to the team. For example, the partnership might be serving both sides of a vendor/procurement situation. It is a huge conflict of interest if these two teams talk to each other and risk leaking their side's position. Thus, not only are the teams allowed to talk to each other, they're not allowed to communicate to others that they're working with that client. Nothing unique to McKinsey here. That's how consulting tends to work.

burkaman 5y ago
Did you read the article? > This year ProPublica submitted a Freedom of Information Act request to the FDA seeking records showing that McKensey had disclosed possible conflicts of interest to the agency’s drug-regulation division as part of contracts spanning more than a decade and worth tens of millions of dollars. The agency responded recently that “after a diligent search of our files, we were unable to locate any records responsive to your request.” > McKinsey’s contracts with the FDA, which ProPublica obtained after filing a FOIA lawsuit, contained a standard provision obligating the firm to disclose to agency officials any possible organizational conflicts. One passage reads: “the Contractor agrees it shall make an immediate and full disclosure, in writing, to the Contracting Officer of any potential or actual organizational conflict of interest or the existence of any facts that may cause a reasonably prudent person to question the contractor’s impartiality because of the appearance or existence of bias.” > Over the past couple of years, for example, McKinsey’s bankruptcy-advisory practice has paid more than $30 million to the Justice Department and one client’s creditors to settle allegations that it failed to disclose potential conflicts, as required by the federal bankruptcy rules. There is no evidence that McKinsey disclosed their conflicts in this case, and plenty of evidence that they regularly fail to do so when working with the government, in clear breach of contract. If they paid $30 million to make it go away, then by definition it is a scandal. It is also potentially criminal: https://www.nytimes.com/2019/11/08/business/mckinsey-criminal-investigation-bankruptcy.html https://www.nytimes.com/2019/11/08/business/mckinsey-crimina...

chirau 5y ago

It seems everytime McKinsey is in the press it's for the wrong reasons. I will never forget what they did to South Africa. Fascinating read https://www.nytimes.com/2018/06/26/world/africa/mckinsey-south-africa-eskom.html https://www.nytimes.com/2018/06/26/world/africa/mckinsey-sou...

shkkmo 5y ago

The people jumping on here to say "of course McKinsey didn't need to disclose, it should have been obvious because consultants always have these conflicts of interest and don't disclose them." need to take a while to reevaluate their ethical guidelines. Failing to disclose conflicts of interest (and the details of the exact steps yaken to mitigate those conflicts) is unethical. In this case, the contract requiring disclosure takes this beyond unethical and it becomes a breach of contract that indicates possible fraudulent or deceptive intent.

pempem 5y ago
These are details that ProPublica was unable to get. That doesn't mean they weren't communicated, as spywaregorilla (sp?) has indicated above. Every law firm, accounting firm, consulting firm once it hits a certain size has clients which conflict, but the same employees - the same teams of employees - are barred from serving a conflict of interest. It is assured that: 1. the FDA asked 2. the FDA knew 3. the FDA agreed Its also probable that the person from the FDA working with the person from McKinsey had either already worked with them or been referred to them by a colleague that had worked with them.

caturopath 5y ago

I'd be surprised if McKinsey hadn't been hired by every large pharma company.

boh 5y ago

Sorry but I have a hard time believing the FDA didn't know anything about McKinsey's ties to pharmaceuticals. The scenario here is likely ProPublica coming to the FDA and asking why they hired McKinsey since it has ties to Pharma. FDA comes back and says McKinsey never "technically" told them. So that's the story. Any public agency that hires McKinsey can assume a conflict, since McKinsey has clients in every industry. That's partially why they hire them, to get insider views on the industry they regulate/deal with.

mousetree 5y ago
Agreed. It's very clear on McKinsey's website that they dp work for pharma companies.
mousetree 5y ago
Agreed. It's very clear on McKinsey's website that they do work for pharma companies.
conductr 5y ago
> The news of McKinsey’s opioid work apparently did little to dampen the FDA’s enthusiasm for the consultancy. In March 2019, just after the news broke, the agency signed a new contract with McKinsey — extending the firm’s multiyear effort to help the FDA “modernize” the process by which it regulates new drugs. I agree too. I think the FDA hires them exactly because of their clients. They want to modernize their processes, they need intel from industry. How else does McKinsey get this intel besides working with industry? It’s very much a meet in the middle process. The FDA doesn’t want to completely disrupt industry and they’d like to know their new regulations are able to be implemented and probably also care to some degree how painful they are for industry. However as regulators, they could never Work side by side with the industry in this effort. It wasn’t disclosed likely because it was part of the value and McKinsey, through conversation with FDA, thought it was understood. FDA hired them again, so I’m interpreting that as a sign of them not actually thinking a COI occurred, or a material lack of disclosure.
- kesselvon 5y ago

thecleaner 5y ago

Is there anything useful which consulting as an industry does ? I have been hard-pressed to find examples.

kesselvon 5y ago
It made more sense when business knowledge and education was pretty rare. But now they're just very skilled powerpoint makers - nothing McKinsey does is particularly secret or proprietary, and a company could easily have the same results by hiring an internal team or just doing their own research.
- thecleaner 5y ago
  Wonder why I was down voted then. Lol.

dillondoyle 5y ago

Another gross thing they did: A former DEA council in charge of regulating distributors then worked with them to pass a law by unanimous consent neutering this single enforcement tool the DEA had. The former DEA attorney "gave the industry intimate knowledge of the DEA’s strategy." Below links have gross records that reveled among other things that a Rep. sponsoring the bill emailed the lobbyists asking for questions he can ask the DEA... If you haven't watch Gibney's "Crime of the Century" on HBO it touches on this incident. The context is that the DEA used a stop order against McKesson, it was one of the only tools they had. McKesson did not like this. They pushed back HARD. I understand concerns that legit non-opiate meds were held up for a few days, but this was the only tool DEA had to send a message. Of course.... “Purdue was very active in influencing the ultimate definition of an ‘imminent danger to the public health or safety.’ ” Humans, hell even the most obvious 'AI', could flag ginormous amounts of pills going to tiny zip codes. They put profits over people's lives. They violated the law, minimally in spirit, I believe in conservative textual reading. "the sponsors and co-sponsors have received $1.4 million in campaign contributions from the industry and the alliance, according to campaign finance records." It's shocking how relatively tiny amounts of money open access to decision makers. Gibney's doc also reveals this addiction pushing behavior is endemic: Purdue had a government regulator sit in a motel and draft their label - which gave them the excuse to market a potentially 'less addictive' drug and we all know what happened from there. https://archive.is/bmCiD https://archive.is/bmCiD https://www.cbsnews.com/news/whistleblowers-dea-attorneys-went-easy-on-mckesson-the-countrys-largest-drug-distributor/ https://www.cbsnews.com/news/whistleblowers-dea-attorneys-we... I have very strong feelings about what I consider crimes of big pharma & opiates. To me, our for-profit system is a root cause of human misery. Obviously complicated issue, but I think there has to be some type of semi competitive socialized healthcare.

attwell 5y ago

McKinsey projects on FDA probably had a financial impact on their pharmaceutical customers, according to https://writemyessay.nyc/research-paper-writing-help/ https://writemyessay.nyc/research-paper-writing-help/. For example, in 2010, the FDA hired a firm to help it develop a system for tracking and distribution of potentially harmful prescription drugs.

attwell 5y ago