Tylenol Chief Keeps His Job Despite 11 Product Recalls

Last Updated Nov 29, 2010 1:27 PM EST

Johnson & Johnson (JNJ)'s McNeil Consumer Healthcare unit has announced four product recalls since Nov. 15, the latest -- Tylenol, again -- just before Thanksgiving, and the FDA found J&J's Puerto Rico factory to be substandard in 19 inspections over the last three months. The company has had 11 recalls in the last three years. So whose fault is this? Not McNeil president Peter Luther, judging by J&J's actions, even though his fingerprints are all over the crime scene.

Be assured, now is the time to assign blame. McNeil received complaints from consumers and the FDA about its medicines in 2008, 2009 and 2010, according to this FDA letter. So the company has had plenty of time to get its act together.

CEO William Weldon shivved worldwide chairman Colleen A. Goggins in September. Several other middle managers were let go and replaced at around the same time. Yet Luther kept his job even though his reign at the top of McNeil coincides almost exactly with the implosion of the company and the loss of $665 million in sales. He also kept his job despite failing to inform Goggins that he had organized a secret recall of Motrin. Goggins found out about it when she testified to Congress.

J&J has moved to address the FDA's concerns by shuttering its Fort Washington, Pa., site in order to rebuild it from the ground up. But now the FDA is focused on McNeil's Puerto Rico factory. With Goggins gone, this can no longer be blamed on her, and Luther remains conspicuous by his presence. In fact, it is to Luther that the FDA first addressed its concerns about Puerto Rico in January. That letter hints that Luther's people were either ignoring or trying to hide problems in Puerto Rico. It says:

Your initial investigation into the root cause of the odor was unjustifiably delayed and terminated prematurely.

... these results were not shared with FDA ...

The Agency is concerned about the response of Johnson & Johnson (J&J) to this matter. It appears that when J&J became aware of FDA's concerns about the thoroughness and timeliness of McNeil's investigation, whether all potentially affected products had been identified, and whether the recall was adequate in scope, J&J did not take appropriate actions to resolve these issues.

The failure of your Quality Unit to follow written and approved procedures is a recurrent observation ...
That plant failed its inspections after Goggins resigned. Five of the 11 recalls occurred after Goggins resigned. McNeil is currently not even getting the basics right -- the most recent recall occurred because packaging failed to mention that Tylenol Cold Liquid contained alcohol.

Luther, nominally the unit's leader, has been completely silent since the crisis began. He even deleted his Linkedin profile. Normally, corporate leaders demonstrate their accountability and responsibility for their business units by resigning -- or being asked to leave -- even if they were not personally responsible for the company's substandard performance. J&J does not follow that practice, apparently.

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