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J&J Denies Knowledge of "Mystery Shoppers," But Emails Say Otherwise

By Jim Edwards

Updated on: June 11, 2010 / 3:09 PM EDT / MoneyWatch

When Johnson & Johnson (JNJ) worldwide chairman Colleen Goggins testified about the Tylenol recall to Congress, she said she had no knowledge of the company's "phantom recall" of Motrin, in which a contractor was hired to go around buying the substandard painkiller from store shelves rather than staging a full-blown recall.

Now the question is, Was Goggins badly briefed or not telling the truth? Documents obtained in a Congressional investigation of J&J and emails obtained by Pharmalot show other executives in company were well aware of what they were doing, and even gave the contractors a nickname: "mystery shoppers." But a J&J spokesperson told the Times that the phantom recall occurred "without McNeil's knowledge."

At the House Committee on Oversight and Government Reform hearing, Goggins was asked what she knew about the sub rosa Motrin buy-up. She said:

I can't tell you right now what they were instructed to do or not, sir.

Pharmalot has obtained an April 1, 2009, email from Rob Small, director of field operations and transportation at Inmar, the J&J contractor, that describes the operation:

Some stores will not care, others will ask specifically what we are doing. Initially, we are going to buy all product as mystery shoppers. We will need to clarify to the field what the response will be if the store asks questions as we are reviewing products searching for specific lot codes.

Suggested responses to curious retailers include:

Say you are conducting random quality or packaging checks, or looking for packaging changes and need to purchase samples.

The New York Times described a purchase order from McNeil Consumer Healthcare, the J&J unit that makes Tylenol:

One purchase order among the evidence indicated that McNeil had hired a contractor in 2009 to visit 5,000 stores, or about 100 stores per state, for a fee of $487,500.

Put that material together with this FDA slideshow and this document instructing the mystery shoppers "There must be no mention of this being a recall," and it's looking a lot like the folks at McNeil didn't tell Goggins what they had gotten up to before she walked into the lion's den.

Who's to blame? On May 27 I noted that McNeil president Peter Luther had maintained an unusually low profile given that he's the operating company's top man. Lo and behold, the NYT is now reporting that information he gave to Congress in May didn't check out properly:

During an interview in late May, Peter Luther, the president of McNeil, told House investigators that the Fort Washington plant involved in the Tylenol recall did not make products for other companies, Mr. Towns said.

Four days later, Blacksmith Brands, which markets PediaCare children's medicines, announced its own voluntary recall "as a precautionary step" -- because certain of its cough and cold products had been made at the same McNeil plant.

Not to worry. With committee chairman Adolphus Towns becoming increasingly angry at J&J, it's highly likely that Goggins will get a second bite of the Cherry Blast Children's Tylenol, and be invited back for a second grilling.

The takeaway: This is all about communication and management accountability. I suggested in May that J&J's corporate structure has, since 2006, militated against top management's ability to find out what's going on at the companies they run. This appears to be another example of that.

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