As anyone familiar with corporate reputation will recall, in 1982 someone injected with poison the pills inside a number of bottles of J&J's best-selling over-the-counter aches and pains remedy Tylenol. Several people died and panic ensued. The company, to its credit, withdrew all of the Tylenol on the market and destroyed them rather than risk further potential harm to customers. The cost was significant, but the action burnished the company's reputation as a responsible and ethical enterprise. Tylenol was eventually reintroduced with new, sealed caps. Both the product and the parent corporation went on to greater success - and J&J became The case study for how to manage a crisis.
Sadly, times have evidently changed.
It is not clear why a business that literally created the contemporary corporate approach to crisis management would ignore its own experience, but recent stories, as the article below explains, have revealed that a J&J subsidiary which had dominant market share in the artificial hip sector actively concealed knowledge that its premiere product had defects that may have injured - and even contributed to the deaths of hundreds, if not thousands of transplant patients.
J&J has taken an initial $3 billion write-down in anticipation of the legal and operational costs resulting from this ill-considered decision. One suspects, with the New York Times and other opinion-leading media now on the case, that this will be a down-payment rather than the end of the issue. But the larger question is what this does to the company's ability to function in a marketplace increasingly tied to veracity and safety.
We all understand the pressures imposed by the global economy, the fear of disappointment and failure. But history - especially the company's own - teaches us that the returns to transparency and ethical behavior almost always outweigh those of obfuscation and dishonesty. Having established the upside thirty years ago, J&J is about to learn the depths of the downside. The distance between the top and the bottom is going to be large. JL
Barry Meier reports in the New York Times:
Johnson & Johnson executives knew years before they recalled a troubled artificial hip in 2010 that it had a critical design flaw, but the company concealed that information from physicians and patients, according to internal documents disclosed on Friday during a trial related to the device’s failure.The company had received complaints from doctors about the device, the Articular Surface Replacement, or A.S.R., even as it started marketing a version of it in the United States in 2005. The A.S.R.’s flaw caused it to shed large quantities of metallic debris after implantation, and the model failed an internal test in 2007 in which engineers compared its performance to that of another of the company’s hip implants, the documents show.
Still, executives in Johnson & Johnson’s DePuy Orthopaedics unit kept selling the A.S.R. even as it was being abandoned by surgeons who worked as consultants to the company. DePuy executives discussed ways of fixing the defect, the records suggest, but they apparently never did so.
Plaintiffs’ lawyers introduced the documents on Friday in Los Angeles Superior Court during opening arguments in the first A.S.R.-related lawsuit to go to trial. The company faces more than 10,000 lawsuits in the United States in connection with the device. An estimated 93,000 patients worldwide received an A.S.R., about one-third of them in the United States.
DePuy executives insisted before the A.S.R.’s recall in mid-2010 that the implant was working well, despite years of complaints from doctors that it was failing early. In late 2009, the company announced plans to phase out the model but said it was doing so because of slowing sales, not safety concerns.
In opening arguments — followed remotely over the Courtroom View Network — a lawyer for DePuy, Alexander G. Calfo, reiterated those positions, telling jurors that DePuy had behaved ethically throughout the A.S.R. episode.
“The evidence will show that DePuy acted as an extremely responsible manufacturer,” Mr. Calfo said.
But a lawyer for Loren Kransky, the plaintiff in the case, painted a far different picture of DePuy’s behavior for jurors in his opening arguments.
The lawyer, Michael A. Kelly, also introduced a number of internal records that suggested that company executives’ concern for profits might have exceeded their worries about patients. For example, Mr. Kelly said, DePuy officials never told doctors that the A.S.R. had failed an internal performance test against another company hip.
“They did not report the data to American doctors,” Mr. Kelly said. “They changed the test and tested it against other things until they found one it could beat.”
The A.S.R. represents one of the biggest medical device failures in recent decades. According to DePuy’s internal estimates, it is projected to fail within five years in about 40 percent of patients who received one. That is eight times the failure rate of most orthopedic implants.
The A.S.R. belonged to a once-popular class of hip implants introduced about a decade ago in an attempt to address problems associated with hips made from traditional materials like metal and plastic. But surgeons have largely abandoned devices in that class because their components can grind together, releasing metallic debris that damages a patient’s tissue and bone.
DePuy sold two versions of the A.S.R., one used in an alternative hip replacement called resurfacing and one used in standard hip replacement. Only the version used in standard replacements was sold in the United States.
In 2003, DePuy began selling the resurfacing version of the A.S.R. outside the United States in an effort to catch up with a competing device known as the Birmingham hip. But by 2005, some doctors had begun telling DePuy that the A.S.R. was failing quickly after implantation, and company consultants soon stopped using it, records show.
The problem, internal DePuy records indicate, was the design of the cup component that fit into a patient’s hip socket. The cup, which was used in both the resurfacing and the standard versions of the A.S.R., had an inside groove against which a surgeon pressed a tool to implant the component.
The design was flawed because the groove limited the surface area inside the cup in which the device’s ball could rotate as a patient moved. As a result, the ball was more likely to strike the cup’s edge, causing wear and generating metallic debris.
In 2007, DePuy engineers tested the A.S.R.’s rate of wear to see if it matched the wear rate of another all-metal hip implant made by the company. It did not.
“The current results for A.S.R. do not meet the set acceptance criteria for this test,” that report stated.
The same year, company officials began discussing ways to fix the problem, like redesigning the cup to eliminate the groove. But at the same time, it was actively marketing the A.S.R. to surgeons in the United States, who were implanting it into tens of thousands of patients.
“We will ultimately need a cup redesign, but the short-term action is manage perceptions,” one top DePuy sales official told a colleague in a 2008 e-mail. A DePuy executive, Andrew Ekdahl, who is now the unit’s president, was also told by a company consultant that the A.S.R. was flawed, according to another document.
In mid-2008, DePuy apparently abandoned the redesign project, an internal document indicates. A company spokeswoman, Mindy Tinsley, declined to comment on the document.
In the fall of 2009, the Food and Drug Administration rejected DePuy’s application to sell the resurfacing version of the A.S.R. in the United States, saying it was concerned about, among other things, “high concentration of metal ions” in the blood of patients who received it.
DePuy executives soon started making financial estimates of when the company should stop selling the A.S.R., based on the time it would take to convert surgeons to another company implant, a document shows.
Before the Los Angeles trial began on Friday, DePuy had settled a few other A.S.R. lawsuits.
The plaintiff in the current case, Mr. Kransky, a former corrections official, is dying of cancer unrelated to his hip implant. He also has a number of unrelated illnesses.
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