Writing Sample: J&J Memo /Credo

Louis Sheehan   ALS 418   9/13/15

“We have been asked to “[d]iscuss where J&J[1] Management was not consistent with the Credo[2] and what actions they might have performed differently”.

Where J&J’s/McNeil’s Management Was Not Consistent With the Credo

J&J’s/McNeil’s Credo consists of numerous provisions broadly articulating standards establishing guidance as to how J&J’s/McNeil’s employees were and are to conduct J&J’s/McNeil’s businesses. The abstract nature of the Credo’s standards affords interpretations which can implicate the violations of multiple Credo standards with any given action or set of actions.[3] Here I discuss J&J’s/McNeil’s use of the 2009 ‘phantom recall’ of defective Motrin tablets in the context of the Credo.[4] For these purposes, these violations fall into two broad categories: (i) duties to patients and (ii) duties to its employees, communities, and shareholders.

Patients

As a threshold matter, J&J’s CEO specifically acknowledges on video that McNeil/J&J violated the “ … first tenant …” of the Credo[5] which is understood to be “We believe our first responsibility is the doctors, nurses, and patients, to mothers and fathers and all others who use our products and services. In meeting their needs everything we do must be of high quality.”[6] Clearly, and as evidenced by the ‘phantom recall’, the clandestinely withdrawn items were not of the highest quality.[7]

Employees, Communities, and Shareholders

 

J&J/McNeil employed unethical — and thus inherently incompetent — management.[8] Here the resulting low quality production and the discovery thereof put the business’ continuation at risk thus threatening both employees’ jobs and shareholders’ returns and intrinsically exhibited anti-communal behavior. Indeed, J&J/McNeil is under criminal investigation.[9]

What Actions J&J/McNeil Might Have Performed Differently

In 1982, erring on the side of over-caution, J&J recalled 31 million bottles of Tylenol when 6 people died relating to tampered bottles (the result was tamper-proof packaging).[10] Very widely lauded, this business practice became a business school case/model of (i) exemplary corporate behavior and (ii) very successful corporate public relations, i.e., J&J expressed to the ‘nth’ degree — with actions and not just words — their concern about their customers thus reassuring their customers as to the safety of their products.[11] In contrast, as described in the assigned articles, the ‘phantom recall’ involved poor manufacturing practices at J&J/McNeil and the conscious, overt and documented hidden recall of certain lots of Motrin.[12]

In response to having been caught in this subterfuge – and in other violations — J&J/McNeil spent money (and concurrently lost profits while doing so) to remediate problems which J&J could have spent to avoid the problems ab initio. In contrast with the response to external tampering in 1982, here J&J — including but not limited to — (i) invested more than $100 million on improvements at the relevant manufacturing facility, (ii) engaged an independent third party consultant vis-à-vis quality manufacturing systems, (iii) appointed a new Vice President of Quality Assurance, (iv) brought in a new Vice President of Operations, (v) hired a new Plant Manager and (vi) terminated the employment of various managers.[13]

J&J/McNeil could have monitored the production of their products with integrity and invested money to maintain high-quality production vis-à-vis the ‘phantom recall’ and all other recalls. In the alternative, J&J/McNeil could have publicly and conventionally recalled the relevant Motrin Units. Fundamentally, J&J/McNeil could have simply conducted its business in-line with its Credo.[14] , [15]

Saved at: J&J Memo.docx

[1] Henceforth referred to as ’ J&J/McNeil’ as the to-be-explained ‘phantom recall’ occurred in conjunction with J&J’s McNeil Consumer Healthcare Unit. [Footnote added.]

[2] I am assuming this assignment is limited to J&J’s/McNeil’s use of the 2009 ‘phantom recall’ of defective Motrin tablets but it should be noted that J&J’s product issues include, but are not limited to:

Again, all such issues essentially implicate the same Credo violations. [Footnote added]

[3] It is assumed the reader is familiar with the Credo which thus need not be here set-forth.

[4] http://money.cnn.com/2010/09/30/news/companies/hearing_johnson_fda_drug_recalls/

[5] http://money.cnn.com/2011/01/13/news/companies/johnson_johnson_phantom_motrin_lawsuit/

[6] Query whether the retention of the sequence of ‘doctors’ and ‘nurses’ before patients, mothers and fathers reflects J&J’s fundamental focus on marketing (and its related profits) to doctors and nurses? At least in our era, why wouldn’t ‘patients’ be listed first?

[7] The defective nature of the products were not life-threatening but resulted in slower delivery than promised of the medication. http://www.boston.com/business/healthcare/articles/2011/12/22/jj_recalls_motrin_caplets_that_may_work_slowly/ ; http://www.fda.gov/NewsEvents/Testimony/ucm227852.htm

[8] The inverse of this sentence is actually another provision of the Credo.

[9] http://money.cnn.com/2010/09/30/news/companies/hearing_johnson_fda_drug_recalls/

[10] http://gmpnews.ru/wp-content/uploads/2010/05/History-gmp.pdf

[11] http://www.hbs.edu/faculty/Pages/item.aspx?num=17858; http://www.nytimes.com/2002/03/23/your-money/23iht-mjj_ed3_.html

[12] Simply put, the ‘phantom recall’ consisted of J&J/McNeil contracting with third parties to surreptitiously purchase the distributed defective Motrin from store shelves and directed the contracted third parties to – if questioned – explain they were merely conducting an ‘audit’. http://www.anesthesiologynews.com/ViewArticle.aspx?d=Pain%2BMedicine&d_id=2&i=March%2B2011&i_id=713&a_id=16812

[13] http://money.cnn.com/2011/01/13/news/companies/johnson_johnson_phantom_motrin_lawsuit/

[14] See also: ICH Q7: http://www.ich.org/fileadmin/Public_Web_Site/ICH_Products/Guidelines/Quality/Q7/Step4/Q7_Guideline.pdf

[15] See also: ICH Q10: http://www.fda.gov/downloads/Drugs/…/Guidances/ucm073517.pdf

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Louis Sheehan
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