A bipartisan group of senators announced a bill this week aimed at curtailing the risk of improper influence when companies do work for both the federal government and businesses or other clients. Under the legislation, federal agencies would require prospective contractors to disclose business relationships with “public, private, domestic, and foreign entities” that might pose a conflict of interest.
Existing federal rules already require the disclosure of actual or potential conflicts, which U.S. government agencies rely on to determine whether the situation can be mitigated or should disqualify a company from working on a given project. But most attention has focused on conflicts arising from work on different federal government projects. The question of how the existing rules apply to a contractor’s corporate clients is an issue that has received scant attention until recently, experts in contracting law say, and the new legislation seeks to remove any ambiguity around whether companies have to disclose possible conflicts arising from private-sector work.
In a press release, the bill’s sponsors cited a ProPublica report on the consulting giant McKinsey & Company and its work for the Food and Drug Administration. For over a decade, starting in 2008, McKinsey brought in tens of millions of dollars advising the division of the FDA responsible for drug regulation on a range of matters that directly affected the pharmaceutical industry, such as overhauling drug-approval processes and assessing tools used to monitor drug safety.
Yet the consultancy, which is known for maintaining a veil of secrecy around its client list, never disclosed to the FDA that other McKinsey consulting teams were simultaneously working for some of the country’s largest pharmaceutical companies. McKinsey’s commercial clients at the time included companies, such as Purdue Pharma and Johnson & Johnson, that were responsible for manufacturing and distributing the opioids that decimated communities nationwide. In some instances, McKinsey consultants working for drugmakers even helped their clients ward off more robust FDA oversight. According to the sponsors of the new bill, “This has called into question whether consultants from McKinsey were providing biased advice to the FDA, and whether that advice was influenced by their relationship with the drug makers whose business practices are a root cause of the opioid epidemic.”
McKinsey’s extensive consulting for opioid makers began to emerge in 2019, when ProPublica first reported on it. Among the firm’s engagements was to help Purdue Pharma “turbocharge,” in McKinsey’s words, sales of the company’s flagship painkiller, the highly addictive OxyContin. Last year, McKinsey paid nearly $600 million to settle legal claims related to its opioid work, acknowledged in a statement that its efforts for Purdue “fell short” of the firm’s own standards and pledged not to take on opioid-related projects going forward. Also last year, the House Committee on Oversight and Reform launched an investigation into McKinsey’s role in the opioid epidemic and its potential conflicts of interest.
“We have directly seen the danger that conflicts of interest can pose in government contracting, such as when the consulting firm McKinsey worked for opioid manufacturers at the same time it was working for the FDA on opioid-related projects,” Sen. Maggie Hassan, D-N.H., one of the bill’s sponsors, said in the press release announcing the legislation. “Our bipartisan bill would help ensure that companies that enter into a contract with the government are acting in the best interest of the American people.”