A company that makes an oral cancer detection kit claims Johnson & Johnson (JNJ) engaged in a classic conflict of interest by signing it to an exclusive contract to suppress sales and protect its Listerine franchise, which some scientists believe causes mouth cancer.
At J&J, managers are supposed to abide by the company's famous "Credo," which pledges good conduct to patients, customers and employees alike. It says:
Our suppliers and distributors must have an opportunity to make a fair profitNone of that happened when Oral Cancer Prevention International Inc. and J&J's OraPharma dental unit reached an agreement in late 2009. Until then, OCPI sold 2,000 cancer tests per month via a four-person sales team. The contract would permit OraPharma's 100-person salesforce to push the product to 50,000 dentists, the suit alleges. But then, intrigue:
We must provide competent management and their actions must be just and ethical.
On the evening of December 16, 2009, however, when OCPI was told to stand by to receive the signed agreement at OraPharma's instructions, OCPI was suddenly informed that the Listerine division of J&J, which had just learned of the imminent signing of the agreement with OCPI, had prevailed upon J&J management to direct OraPharma to not execute it.J&J's earns $1 billion in revenues from Listerine annually, the suit claims:
James Murphy, Vice-President of J&J's Consumer Products Division ("Murphy"), told OCPI CEO Mark Rutenberg ("Rutenberg") that J&J was extremely concerned about the implications of a study published in Australia that linked oral cancer to mouthwashes with a high alcohol content.
... Listerine has the highest alcohol content of any over the counter mouthwash.Saved by Zero
The Australian study triggered headlines and caused a 50 percent drop in Listerine sales, the suit says, eventually forcing J&J to introduce Listerine Zero, an alcohol-free version of the brand. Then, the suit says:
In early February 2010, Murphy contacted Rutenberg to inform him that Johnson & Johnson's upper management had decided to allow OraPharma to execute the sales agreement partly because Johnson & Johnson's management realized that in light of the widespread anticipation of the Sales Agreement by the dental industry, Johnson & Johnson's blocking OraPharma's execution of the Sales Agreement would generate exactly the publicity regarding the oral cancer risk of Listerine that Johnson & Johnson sought to avoid.Although J&J was now committed to selling OCPI's OralCDx kit, the agreement placed J&J in sole charge of its promotion. OCPI was required to fire its four-person staff. J&J targeted only a small percentage of dentists, those least likely to suggest their patients try it, with happy results for Listerine, the suit claims:
By June 2010, OraPharma's one hundred plus member sales team, with access to over 50,000 dentists, had made fewer than 50% of the sales that OCPI' s four-person sales team had made in the six months preceding the Sales Agreement.The agreement was terminated in 2011. J&J's sales were so feeble that, nationwide, about 7,300 cases of mouth cancer occurred that could have been prevented had J&J promoted OralCDx properly, OCPI alleges.
J&J has not yet responded to the suit or a request for comment from BNET. One obvious question, however, is why OCPI signed an agreement with a company it knew wanted to play down oral cancer risks? According to its suit, in the December 2009 - February 2010 time period when OCPI was aware of the objections of J&J's Listerine managers but did not yet have a fully executed contract, the company could have walked away.
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