J&J Reorganizes; More Recalls

It must have been a pretty rough day at J&J headquarters today. After a day like today, it’s no wonder the State of New Jersey put up suicide prevention posters around the J&J headquarters in New Brunswick. First, the company initiated yet another recall – the second in a week. The culprit this time is more toxic Tylenol 8-Hour capsules. The 35,000 bottles had, you guessed it, the same musty, moldy smell – no doubt caused by the same pesticide 2,4,6-tribromoanisole. This batch of toxic Tylenol was also made the same Fort Washington plant that was closed down last year as all the other toxic Tylenol. It makes one ask the question – if the McNeil plant in Fort Washington was closed almost exactly one year ago, why did J&J wait to recall this batch of contaminated medication? Oh, and in addition to recalling the 35,000 bottles of toxic Tylenol, the company also decided to recall over 715,000 packages of various drugs because of sanity problems with the production equipment. On most days, yet another J&J recall would barely register a ripple with the media. However, today, it was just an appetizer to the main event. As predicted here on this very blog nearly a year ago: J&J has reorganized the McNeil Healthcare group. Instead of reporting into the existing J&J Consumer Healthcare business, it will now stand on its own. This does two things for J&J. First, William Weldon can stand up at the shareholders meeting and claim he took decisive steps to fix the problems (yeah, he created the problems in the first place and, yeah, it took him a year to pay attention, but hey – it’s J&J and they like to say they’re “slow cooking”). Of course, we’ll all smirk when it does it, but if it lets the disgraced CEO save a little face, well, the J&J Board of Directors will be all for it. Of course, back in my day we used to say, “You can paint a pile of shit and it may look different, but you and I both know what it is.” Second, this creates a number of strategic options for J&J with respect to McNeil. It gives the company the ability to bucket the financial losses into one underperforming organization (and perhaps some creative accounting), while also looking at other options – including the possible sale of the McNeil organization. McNeil is a tremendous drain on J&J right now and it remains to be seen how loyal consumers will be to Tylenol. As a company, J&J is like those cocaine addicts on the A&E show Intervention – you keep waiting for it to hit rock bottom so it can get better. But J&J keeps falling deeper and deeper into the hole. Maybe J&J needs an Intervention.

A Closer Look at J&J’s Ethicon – More Recalls

The good old Merriam-Webster dictionary defines the word ethic as a set of moral principles – a theory or system of moral values; essentially a guiding philosophy. When you put the word Ethic in your company’s name, you’re making a bold statement about how you intend to do business. So, it should come as no surprise to observers of the Johnson & Johnson (J&J) corporation, that ethic can’t seem to be found at Ethicon.

Last Thursday, the company recalled nearly 400,000 wound draining products in the United States. J&J’s quality control apparatus (whatever is left of it) didn’t detect quality problems, however the company received consumer complaints of sterile packaging which had been compromised. Products covered by the recall include Ethicon’s Blake silicone drains and drain kits, Blake cardio connectors, J-Vac reservoirs, and J-Vac drain adapters.

For those keeping score, this is the third major recall for J&J’s Ethicon division in the last three months – bringing J&J’s recall count up to a number so large we’ve lost count. In the last few weeks, J&J’s Ethicon recalled 700,000 of wound sealant and also recalled over a half million sutures that were believed to be non-sterile sutures (sold mostly in Europe). With a track record like this, the FDA should be looking at Ethicon for a consent decree.

Naturally, J&J is blaming the problem on a contract manufacturer. Sure, other pharmaceutical and healthcare companies keep a close eye on their contract manufacturers and don’t have these problems. But J&J is not like other companies…and that’s a bad thing for both consumers and the industry alike.

J&J’s CEO Remains Defiant

William Weldon, the disgraced CEO of Johnson & Johnson, defiantly told reporters last week that he would not retire or step down, despite the growing calls for his immediate resignation. Weldon oversaw the dismantling of J&J’s quality control infrastructure as a means to reduce costs at the company, which has directly led to the company’s worldwide quality control problems – including a record-setting number of product recalls and an FDA-mandated consent decree for J&J’s three worst-performing manufacturing facilities. Basically, William Weldon has rode J&J’s reputation down the toilet.

Unfortunately for J&J and the consumers who once-relied on its products, J&J’s Board of Directors is just as clueless Weldon. The Board gave Weldon a nice, fat pay-raise and a whopping $29 million in compensation last year to reward him for his efforts. Shareholders who put their faith in the company have been rewarded with millions in destroyed value. J&J’s stock price the day William Weldon took over the company was $63.43. J&J’s closing price today was $58.83. It’s no wonder that shareholders are justifiably pissed and have filed lawsuits against the company.

Yet Weldon remains defiant. He told journalists, “People that know me said I’ll fix this problem and, you know, I will fix it.” Forgive me for snickering. J&J wouldn’t need to have Weldon fix the mess if he didn’t create it in the first place. It’s kind of like the fireman who is also an arsonist – he sets fire to the building and then rushes in to be the hero. One thing is for certain, William Weldon is no hero.

Disclosure: I have no financial position in J&J (either long or short). And I have no J&J products in my medicine cabinet.

J&J Slapped with Consent Decree

In a signal of just how wrong things have gone at J&J, the company has now been slapped with a consent decree. Today's agreement signals that the FDA lacks any faith in J&J’s management to resolve the manufacturing woes and indicates the company requires outside oversight to correct the major manufacturing abuses. In essence, J&J gets to have the FDA hovering over its every move for the next five years. Frankly, even that amount of time may be insufficient to clean up the mess at J&J.

Today’s consent decree covers the three worst Johnson & Johnson facilities operating under the McNeil Consumer Healthcare Division: Fort Washington, Pennsylvania; Lancaster, Pennsylvania and Las Piedras, Puerto Rico.

It is important to understand that this announcement covers only the McNeil Division. Other J&J facilities with gross quality problems such as the San German, Puerto Rico facility could be added to a possible future consent decree. The manufacturing problems at J&J are much broader than the McNeil division, so J&J isn’t out of the woods yet.

FDA Approves Human Genome Sciences Drug for Lupus

On Thursday, the FDA approved Human Genome Sciences’ Benlysta (Belimumab) drug for the treatment of Lupus. This is the first new treatment for lupus in decades.

It is widely expected that Benlysta will be a certified blockbuster with peak-year sales of between $2.5-$3.1 billion per year.

Human Genome Sciences and its marketing partner GlaxoSmithKline anticipate the drug to be available by the end of March.

FDA Fingers Third J&J Plant for Systemic Abuses

The U.S. FDA has fingered a third Johnson & Johnson manufacturing facility for gross, systemic manufacturing violations. This time, the FDA issued its indictment against the San German, Puerto Facility which manufactured J&J’s Cordis stents. The facility had repeated abuses and the company did not address the FDA’s corrective action plan.

The San German, Puerto Rico facility joins J&J facilities at Fort Washington, Pennsylvania and Las Piedras, Puerto Rico. This latest revelation adds new insights into the far reaching and systemic manufacturing deficiencies across the entire network of J&J’s companies.

HIPAA Breaches for Paper Records – Where is the Rage?

Last month, Massachusetts General Hospital got slapped with a $1 million fine for potential HIPAA Privacy Rule violations. This case is interesting in that it involves paper files that an employee left on the subway. From Florida to Washington State, we’ve seen other HIPAA breaches of paper records.

This is exactly the situation I’ve discussed in the past. Where is the outrage over the privacy breach? Where are the groups that proclaim to support patient privacy rights complaining about this? If these had been electronic medical records, we’d no doubt be bombarded by warnings from these groups about the evils of technology and the end of days. But since these are paper records, there is no outrage…and no real concern over patient privacy rights.

There is always a lot of concern about patient privacy rights when you deal with electronic records. The reason is that manufactures of electronic medical records have money. It is easy to shakedown these manufacturers of EMRs and EHRs for cash so they score well on your scorecard. But, when it comes to really caring about patient privacy rights, they are nowhere to be found.

J&J Recalls Insulin Cartridges

Another day, another recall for embattled drug maker Johnson & Johnson. Today, J&J’s Animas division has recalled 45,000 defective insulin cartridges which can leak and also deliver sub-therapeutic doses of the insulin.

The company has warned consumers not to use the affected lots, but it might be a good idea to speak with your physician about other options such as pumps manufactured by Roche or Medtronic.

J&J Gets Leadership Change

Before we all get too excited, J&J isn't shedding the albatross that is William Weldon. Sadly, Billy-boy is still driving J&J into the ground. Rather, Johnson & Johnson announced today that the President of its embattled DePuy Orthopaedics group would be leaving the organization.

A replacement figurehead hasn't been named, but we can all be certain of two things: 1) it will be someone close to Weldon and 2) the person will have the same lack of focus on quality and patient safety as the rest of the Weldon's circle.

Like all the other J&J operating companies, DePuy had been plagued by product recalls and litigation problems. The company has amassed a $280 million reserve to cover expenses associated with a recall of its artificial hips earlier this year. That amount may be insufficient when you take into account the number of class action lawsuits alleging that the J&J delayed the recall and did not act decisively on specific warnings about problems (an altogether too familiar tune when it comes to J&J).

J&J Secretely Recalls Non-Sterile Sutures in Europe

Recall-plagued Johnson & Johnson quietly recalled a half-million sutures in Europe, primarily in the UK, due to significant risk of contamination from faulty packaging. J&J did not publicize the recall, which took place late last year. However, the recall came to light after the UK's MHRA posted a notice on its website earlier today.

The sutures were manufactured by J&J's Ethicon division and sold under the brand names Ethilon, Ethibond, Mersilene and Mersilk. Patients in Europe who received J&J sutures in Europe and developed an infection are urged to speak with their physicians.