Johnson & Johnson
by Philip Mattera
Johnson & Johnson, which originally made its name in mundane products such as bandages and baby powder and shampoo, grew into a healthcare powerhouse by acquiring pharmaceutical and medical device businesses. Yet those purchases were largely responsible for the deterioration of a company once regarded as a model of social responsibility into a symbol of unreliability with a seemingly endless string of scandals involving tainted and deficient products. Those scandals have forced the company to pay out several billion dollars in civil settlements and criminal fines.
From Band-Aids to Tylenol
J&J had its origins in the 1880s, when Robert Wood Johnson and his two brothers began producing cotton-and-gauze dressings and pioneered new sterilization techniques. They received an enthusiastic response to their adhesive bandages, especially the Band-Aid brand introduced in 1921, and to other products such as baby powder. The company later moved into pharmaceuticals. In 1959 it acquired McNeil Laboratories, producer of a pain medication called Tylenol that at the time was available only by prescription but which J&J turned into an over-the-counter product.
Tylenol would later become the company's best-selling product, but that intensified the problem in 1982 when seven people died from ingesting Tylenol capsules that had been laced with cyanide. J&J moved quickly to remove the product from all store shelves and offered to reimburse consumers for capsules that they discarded during the scare, which turned out to have been cause by tampering at the retail level rather than in the manufacturing process. J&J put Tylenol back into distribution with three levels of tamper-resistant packaging.
J&J stepped up its diversification effort in the 1990s with acquisitions such as Neutrogena, producer of skin and hair products; Cordis Corporation, a leader in the field of cardiovascular devices such as stents; DePuy Inc., manufacturer of orthopedic products; and drugmakers Janssen Pharmaceutica and Centocor. J&J lost a takeover battle for medical device maker Guidant in 2004 but two years later it purchased Pfizer's consumer health unit with its list of well-known brands.
Product Safety and Contamination Issues
In 2004 J&J agreed to pay up to $90 million to settle lawsuits linking the prescription heartburn medication Propulsid made by its Janssen subsidiary to several hundred deaths and many more cases of cardiac irregularity.
In 2007 J&J recalled four million bottles of Listerine mouth rinse for children because of bacterial contamination.
During 2009 and 2010 the company had to announce a string of recalls of medications, contact lenses and hip implants. The most serious of these was the massive recall of more than 136 million bottles of liquid Tylenol and Motrin for infants and children after batches of the medications 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.
It also came out during a Congressional investigation of the matter that in 2008 J&J had engaged in what was labeled a "phantom recall." When faced with Motrin IB caplets that were not dissolving property, McNeil hired contractors to buy up the products in stores while making no announcement to the public.
Reports of operational deficiencies at McNeil operations continued to appear, and the company announced additional recalls, include one in January 2011 involving 43 million packages of Tylenol and other products. .
In 2011 J&J responded to pressure from the Campaign for Safe Cosmetics by agreeing to reformulate its baby products to remove ingredients regarded as carcinogenic.
In 2013 J&J reached a deal with plaintiffs lawyers under which it would pay nearly $2.5 billion in compensation to an estimated 8,000 people who had received flawed hip implants.
Also in 2013 Advanced Sterilization Products (ASP), a division of J&J subsidiary Ethicon Inc., had to pay $1.2 million to settle FDA allegations that it had produced and distributed adulterated and misbranded sterilization monitoring products. The following year, ASP paid a $136,800 penalty to the Environmental Protection Agency for the sale and distribution of unregistered and misbranded pesticides to veterinary clinics and laboratories nationwide.
In 2016 two juries awarded a total of $127 million damages to women who sued J&J claiming that their ovarian cancer was caused by the talc in J&J Baby Powder. The company, which disputes the connection, appealed the verdicts but is facing more than 1,000 similar cases 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. An award of $417 million was made by a California jury in 2017.
Marketing and other Safety Violations
In 1995 a federal judge imposed $7.5 million in penalties on J&J subsidiary Ortho Pharmaceutical for shredding documents in an attempt to thwart an investigation into whether it was improperly marketing Retin-A acne cream as a wrinkle remover.
In 1996 J&J reached a settlement with the Federal Trade Commission under which the company agreed to stop making what the agency called false claims about the failure rates of condoms in the marketing of its K-Y spermicidal lubricant.
In 2010 J&J subsidiaries Ortho-McNeil Pharmaceutical and Ortho-McNeil-Janssen had to pay $81 million to settle charges that they promoted the epilepsy drug Topamax for uses not approved as safe by the Food and Drug Administration. 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 its 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.''
In 2000 J&J subsidiary LifeScan pleaded guilty to a criminal charge and was fined $60 million for selling defective blood glucose monitors and giving false information about the problem to the FDA. It later had to pay $45 million to settle a related class-action lawsuit.
In 2001 J&J agreed to pay up to $860 million to settle a class-action lawsuit alleging that the company had misled consumers into prematurely throwing away disposable Acuvue contact lenses. The suits argued that the company drove up sales of its 1-Day Acuvue soft lenses by recommending that consumers use them only once, even though the product was identical to regular Acuvue lenses, which could be worn as long as two weeks.
In December 2016 a federal jury in Dallas ordered J&J and its DePuy Orthopaedics unit to pay more than $1 billion to six plaintiffs who claimed they were injured by the company's hip implants.
Foreign Corrupt Practices
In 2011 J&J 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. At the same time, J&J agreed to pay $48.6 million to settle a related civil case brought by the Securities and Exchange Commission.
Patents and Poor Countries
In 2011 Doctors without Borders criticized Johnson & Johnson for refusing to make patents on three HIV drugs available to a program that would reduce the cost of the medicines in poor countries. The group repeated the critique in 2013
Government Contract Violations
In 2001 J&J Medical Inc. had to pay $3.9 million to settle federal civil claims that the company overcharged the Department of Veterans Affairs in transactions involving catheters and other medical supplies. That same year, another J&J subsidiary, Lifescan Inc., paid $15 million to settle similar claims involving the VA.
Other Information Sources
Violation Tracker summary page
Watchdog Groups and Campaigns
Key Books and Reports
A Healthy Business? World Health and the Pharmaceutical Industry by Andrew Chetley (1990).
Bad Pharma: How Drug Companies Mislead Doctors and Harm Patients by Ben Goldacre (2012).
Corporate Crime in the Pharmaceutical Industry by John Braithwaite (1984; new edition 2014).
Last updated September 2, 2017