FROM THE PERSPECTIVE OF ED DEVLIN
Give Credit To Those In Charge
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-the-counter 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 com-
pany’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 health-
care 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 over-
seeing 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 non-
recall 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.”
By ED DEVLIN, CBCP
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.
v
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.
