As a person who spends a large amount of his time analyzing how organizations prepare for and react to crises, I was disappointed to see the recent articles criticizing Johnson and Johnson and their subsidiary McNeil for their response to their product recalls. Over the years, I have used the company as the standard bearer of “how to manage a crisis” in hundreds of “crisis management” presentations.
My opinion was based on how J&J/McNeil handled the Tylenol poisoning crisis in 1982. The response of James Burke, the CEO, was rapid and proper. J&J’s public handling of the crisis assured consumers that Tylenol was safe to buy again and that J&J was a company that consumers could trust.
The reason Burke reacted so quickly and in such a positive manner stems from the company’s mission statement adopted the mid-1940s by Robert Wood Johnson. Paraphrased, it stated that the company‘s responsibilities were to maintain the safety of its consumers.
Now in 2010 we hear about a recall of more than 40 over-thecounter children’s medications because of manufacturing problems. The recall included pediatric versions of Tylenol, Motrin, Zyrtec, and Benadryl. The FDA’s concern was that some of the liquid formulations may contain a higher concentration of their active ingredient than they should, while others may contain inactive ingredients at inappropriate levels. The products in question were made at the Fort Washington, Penn., factory. According to the Philadelphia Inquirer, a critical report filed by inspectors for the FDA identified 20 problems at the plant, including shortcomings in training, improperly maintained equipment, lack of adequate controls governing product quality and strength, and failure to follow up on complaints.
In an article in the trade journal OTCProductNews.com, the editor said the FDA inspection revealed “a breathtaking track record of failure.” The editor went on to say the likelihood that children received more Tylenol than intended raises health concerns. Overdoses of Tylenol can cause liver failure.
The editor’s comments were related to actions taken in 1997 after it was determined during a lawsuit filed against J&J/McNeil that relatively small overdoses of acetaminophen could cause liver damage and even deaths in children. Prior to this, information was disclosed during the case, parents and physicians were unaware that grape flavored infant Tylenol was 3 1/2 times stronger than children’s Tylenol. It was then that J&J/McNeil Labs began advising parents that too much Tylenol can harm children.
The recent recall (of more than 40 over-the-counter children’s medications) was preceded by the recall of Tylenol arthritis pain caplets, Motrin, and Benadryl in November and December 2009. The FDA sent a letter to J&J/McNeil in January 2010 that the company’s inquiry into the contamination, which was first reported in 2008, had been “unjustifiably delayed and terminated prematurely.”
On May 27, 2010, an executive of J&J’s consumer healthcare group explained to the House Committee on Oversight and Government Reform that the Fort Washington plant would remain closed until mid-July, when J&J planned to submit a master plan to the FDA for fixing manufacturing and quality controls that led to the recall. She also said that since the April recall, J&J had named a new plant manager and new head of quality control for the Fort Washington plant, as well as new vice presidents overseeing operations and quality assurance.
Members of this committee also sharply criticized McNeil for what they called a “phantom recall,” or non-recall recall, in which a contractor was instructed to buy packets of Motrin but not to use the word “recall.”
According to documents obtained by the committee, McNeil’s current problems with actual recalls were preceded by a nonrecall recall of adult versions of Motrin that did not dissolve properly. Instead of a recall, McNeil turned to a contractor that specializes in “reverse logistics” and directed the company to go to about 4,500 stores to buy back the suspect product.
Apparently the executives of J&J/McNeil did not see the recalls as a crisis and thought there would not be any negative “push back” to them. The negative effect of this information being reported in the news media was evident in a recent article in the Philadelphia Daily News on July 9, 2010, which stated that sales of Johnson & Johnson pain relievers are collapsing as a string of recalls appears to have made consumers wary of once-sterling brands such as Tylenol and Benadryl.
“An eighth recall, announced on July 8, could worsen consumer reaction. That wariness and the huge amount of products pulled off store shelves look to be costing J&J tens of millions of dollars a month. Data shows that sales of New Brunswick, N.J. based J&J’s pain reliever pills fell 56 percent in the four week period ending June 13, compared with a year earlier. Figures show that U.S. sales of pain-relieving tablets, gelcaps and other types of pills ... plunged to $20.9 million, putting the company behind rivals Bayer Consumer Health and Wyeth Labs. Sales of private-label, or store brands, benefited the most from Johnson & Johnson’s fall, jumping 23 percent to $51.9 million. ... Gordon said sales of any product with Johnson & Johnson on it will be hurt.”
Lesson Learned
From now on, I guess I should stop giving credit to a company for good crisis response actions. Instead, I should give credit to the executives in charge at the time of the crisis. There is a good chance that as executives retire and new executives take over, the policies and mission statements from the past can be modified – or just disregarded.
Ed Devlin, CBCP, has provided business recovery planning consulting services since 1973 when he co-founded Devlin Associates. Since then, Devlin has assisted more than 300 companies in the writing of their business recovery plans and has made more than 800 seminars and presentations worldwide.
