Baby powder, the product along with Band-Aids that for decades
gave Johnson & Johnson a benign image, is now the latest symbol of its
deterioration into one of the most unreliable of large corporations.
Juries
have recently awarded a total of $127 million to women with ovarian cancer who
charge that their disease was caused by the talc in the company’s powder.
J&J, which disputes the allegations and is appealing the
verdicts, faces some 1,400 additional similar lawsuits brought by plaintiffs’
lawyers armed with company documents they say
show that J&J was concerned about a link between talcum powder and ovarian
cancer as early as the 1970s.
It is unclear what will happen with the
litigation, but the lawsuits are part of a long string of scandals that have
plagued the giant medical products firm during the past decade and forced it to
pay out vast sums in civil settlements and criminal fines.
The most serious of those cases involved allegations that several of its subsidiaries marketed prescription drugs for purposes not approved as safe by the Food and Drug Administration, thus creating potentially life-threatening risks for patients.
In 2010 J&J subsidiaries Ortho-McNeil Pharmaceutical and
Ortho-McNeil-Janssen had to pay $81 million to settle charges that
they promoted their epilepsy drug Topamax for uses not approved as safe. The
following year, J&J subsidiary Scios Inc. had to pay $85 million to settle similar charges
relating to its heart failure drug Natrecor.
In 2013 the Justice Department announced that J&J and several of its
subsidiaries would pay more than $2.2 billion in criminal
fines and civil settlements to resolve allegations that the company had
marketed it anti-psychotic medication Risperdal and other drugs for unapproved
uses as well as allegations that they had paid kickbacks to physicians and
pharmacists to encourage off-label usage.
The amount included $485 million in
criminal fines and forfeiture and $1.72 billion in civil settlements with both
the federal government and 45 states that had also sued the company.
At a press conference announcing the resolution of the case,
U.S. Attorney General Eric Holder said the company’s practices ”recklessly
put at risk the health of some of the most vulnerable members of our society —
including young children, the elderly and the disabled.”
Other J&J problems resulted from faulty production
practices. During 2009 and 2010 the company had to announce around a dozen
recalls of medications, contact lenses and hip implants. The most serious of
these was the massive recall of liquid Tylenol and Motrin for infants and
children after batches of the medication were found to be contaminated with
metal particles.
The company’s handling of the matter was so poor that J&J
subsidiary McNeil-PPC became the subject of a criminal investigation and later entered a guilty plea and paid a criminal
fine of $20 million and forfeited $5 million.
J&J also faced criminal charges in an investigation of
questionable foreign transactions. In 2011 it agreed to pay a $21.4 million criminal
penalty as part of a deferred prosecution agreement with the Justice Department
resolving allegations of improper payments by J&J subsidiaries to
government officials in Greece, Poland and Romania in violation of the Foreign
Corrupt Practices Act.
The settlement also covered kickbacks paid to the former
government of Iraq under the United Nations Oil for Food Program.
All of this has been a humiliating comedown for a company that
was once regarded as a model of corporate social responsibility and which set
the standard for crisis management in its handling of the 1980s episode in which
a madman laced packages of Tylenol with cyanide. While the company was then
being victimized, the more recent crises have been largely of its own making.
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Note: This piece is drawn from my new Corporate Rap Sheet on
Johnson & Johnson, which can be found here.