Johnson & Johnson's Reputation Continues to Take a Hit
Johnson & Johnson has a lot of image building to do to regain the warm and fuzzy image of a family company that sells Band-Aids and other quality products. Since the beginning of 2010, the company has had over 50 products recalled.
Most of the products that have been recalled read like a who's who list from a person's medicine cabinet. Products like Tylenol and St. Joseph Aspirin had certain lots of the drugs recalled for foul odors that made people sick. Benadryl and Zyrtec were recalled for issues with the ingredients. Certain lots of Rolaids also were recalled due to people finding bits of wood and metal in the product.
There has been a cascade of medical product and pharmaceutical recalls in the last 15 months including hernia devices, contact lenses, syringes filled with prescription medications and other products. One of the latest debacles is the recall of the DePuy Hip replacement system. Johnson and Johnson’s DePuy subsidiary manufactures the defective medical device. In addition to the DePuy Hip recall, Johnson and Johnson has recalled 50 other products since January 2010 according to Bloomberg Businessweek. Analysts have not seen this many recalls in such a short amount of time not even from health giants such as Pfizer or Procter & Gamble.
Could the company possibly be putting profit ahead of patients' needs? Back in the early 90's, Johnson and Johnson ran at about 17.7% profit margin but it has grown to 26.8% according to the Bloomberg article.
The Hip Systems That Do Not Work
The most prominent recent recall news is the voluntary recall of two of J & J ASR hip replacement systems. 93,000 patients worldwide received these implants with 37,000 of those residing in the U.S. Patient after patient complained of dislocations, infections, bone fractures and excess heavy metals in their bloodstream.
Johnson and Johnson admits that within 5 years 13 percent of the ASR XL hips had to be replaced because they had failed, and 12 percent of their ASR Hip resurfacing systems had failed. However, the British Hip Society and Orthopaedic Association has indicated that the hip failure rate may be as high as 49% in as little as 4 years after the medical device is implanted according to the Bloomberg article.
Problems for Johnson and Johnson
It was as early as 2007 that Johnson and Johnson allegedly knew about problems with these hip replacement systems. Even while receiving information regarding abnormally high failure rates, they continued to market the product and didn't issue a recall until 3 years later. This is going to end up costing the company billions of dollars.
Since the middle of last year, the company has issued quality overhauls on 3 plants, and the FDA is going to be watching over them for the next 5 years. If there are further issues, they could face fines of up to $10 million per year.
The CEO of Johnson and Johnson, William Weldon, has tried to distance the company from its subsidiary McNeil Healthcare. McNeil is Johnson and Johnson's Consumer Healthcare unit. Unfortunately, this argument rings hollow because many of the products recalled in the last 15 months were manufactured by Johnson and Johnson and its other subsidiaries.
A Brand Ruined
Weldon has denied any responsibility for the hip replacement problem on behalf of Johnson and Johnson, and continues to argue that the responsibility lies entirely with the DePuy subsidiary. J&J sites the voluntary recall as a sign of the company's commitment to its patients. Long gone are the days of just making first aid products. Today, Johnson and Johnson operates more than 250 companies in 60 countries, generating $61.6 billion in sales in 2010.
In the quest to understand how a company with such a long-standing history has gotten so off track, it's hard not to look at the financial motivation behind many of its decisions. The company's McNeil subsidiary had to recall about 8 million bottles of children and infant's Tylenol for possible contamination of ingredients back in 2009. This is when this unit of Johnson and Johnson really started showing signs of trouble. Two months later, the company had to recall 6.3 million bottles of Tylenol Arthritis Pain caplets after consumers complained about moldy odor and side effects, like nausea, vomiting, and diarrhea.
More products were included in the recall when millions of bottles of Rolaids, Motrin, Benadryl, and St. Joseph Aspirin were added to the recalls. As it turns out, Johnson and Johnson had known about the bad odor for more than a year and had declined to do anything about it. The recalls escalated and Johnson and Johnson stepped forward and indicated it was going to spend $100 million to upgrade its equipment and facilities.
Averting FDA Approvals
The ASR XL Hip Replacement System was initially made available in the U.S. market in 2005 with virtually no clinical trials. It was already approved for sale outside of the U.S. so the company used a grandfathering clause to offer the product in the U.S.
In 2007, the FDA received 87 negative reports about the ASR resurfacing device, which rose to 239 reports in 2008 and to 426 adverse reports in 2009. This trend continued until the company was sued for paying doctors for using their hip systems. DePuy paid out $84.7 million to settle the kickback charges.
Many drug companies have come under fire for rushing new drugs to market without sufficient clinical testing to determine that the drug is safe or for using marketing that promotes off-label uses that have not been approved, as well as marketing that minimizes the risk of known side effects. If you or a loved one has been harmed by the dangerous side effects of prescription drugs or a defective medical device, contact the Atlanta defective drug attorneys and defective medical device attorneys at Montlick and Associates to discuss your potential legal rights to compensation.
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