Rathodics

Call it Rathodics, Rathodology, Rathod-gineering, or Rathodistry; chances are high that you will find lot of useless things on this blog. Nevertheless, I thank you for visiting my blogsite, and hope you spend sometime reading the blogs and commenting on them. Further, you can visit me at http://www.unm.edu/~srathod

Thursday, September 30, 2004

Merck and J&J

The recent news regarding Merck (MRK) announcing a safety recall of its arthritis drug Vioxx reminds me of the Tylenol issue in 1982.

7 people died because of cyanide-laced Tylenol tablets in Chicago. The tablets, it seems, were tampered with. What did Johnson and Johnson (JNJ)do to handle it? J&J put customer safety first, before their profits.

J&J asked consumers throughout US not to consume any Tylenol product. It recalled all Tylenol capsules from the market. This amounts to approximately 31 million bottles of Tylenol, with a retail value of more than 100 million dollars. Also, it stopped production and advertising of Tylenol. J&J announced a reward of $100,000 for the killer.

Just the executives at J&J came to know about the issue, a lot of questions were raised. Should they announce a recall of one of their most successful product (37% market for over-the-counter painkillers)? If yes, how many? Should the recall be nationwide? Will it create a panic? The recall was put on hold for the weekend. On Saturday, the burials of the victims was covered on the television. Any opposition to the recall within the executives, vanished, and on Tuesday, the recall was announced. The recall cost the company $240 million in earnings.

J&J offered to exchange all Tylenol capsules that had already been purchased for Tylenol tablets, costing millions of dollars more. In less than six weeks of the sudden deaths, Tylenol was reintroduced with a new triple-seal tamper-resistant packaging. Many consumers may have switched to other painkillers after the incident. To encourage them to use Tylenol again, McNeil Consumer Products, subsidiary of J&J, provided $2.50-off coupons that were good towards the purchase of any Tylenol product in November and December of 1982. These coupons were available in newspapers. It could be obtained by consumers calling a special toll-free number too.

Further, a 25% discount was put into practice in 1983. Over 2250 J&J sales people made millions of presentations to people in the medical community to promote support for the reintroduction of Tylenol.

How did J&J decide their actions? They turned to their corporate business philisophy, which they call "Our Credo". Their credo was written in the mid-1940's by Robert Wood Johnson, the company's leader for 50 years. J&J's concern for societal interests is summarized in this document, which stresses honesty, integrity, and putting people before profits. Under this credo, J&J would rather take a big loss than ship a bad batch of one of its products. No wonder, J&J is rated each yearin a Fortune magazine poll as one of America's most admired companies, especially for its community and environmental responsibility. In the long run, the company's swift recall of Tylenol strengthened consumer confidence and loyalty, and Tylenol remains the United States' leading brand of pain reliever.

A parting question playing on probably everyone's mind: how will Merck compare to J&J in this respect?

5 Comments:

Anonymous Anonymous said...

Was it a question of good ethics on the part of J&J (as you hint) or was it a warranted fear of a whiplash of lawsuits if more individuals died as a result? I bet that would have cost them much much more .. and so the withdrawing of tylenol capsules was probably just a precautionary measure. what say?

- anya http://www.animaha.com/blog

12:14 PM  
Blogger Parag said...

You are comparing apples to oranges. In case of Tylenol, the safety of the active ingredient of Tylenol was not the issue as it is for Vioxx. J&J was trying to figure out the glitches in Manufacturing and supply chain for contamination which is temporary and they knew they could get back to selling Tylenol. Merck has a deeper problem. The drug molecule that they are selling is of questionable safety. The only way to deal with it is to discontinue selling it which is a disaster considering it was one of their best-sellers. So, Merck had to make sure that they complete the study and analyze the data the best they could before releasing such safety-related information.

Basically, what I am saying is these were two different scenarios and the companies dealt with them differently as they should have. I don't see Merck at fault. The recall was voluntary, they were not forced by the FDA to do it.

6:13 AM  
Blogger SBR said...

Aniruddha, your point regarding the lawsuits is well taken. This brings to forefront an important goal of any business entity: tomorrow's survival. Businesses are more concerned with the question whether they will survive tomorrow or not, leave alone making profits. And, that is one of the main reason why J&J dealt with the Tylenol issue as they did. They feared tons of lawyers knocking on their doors, and that they realized that it would be more costly for them to defend the court cases than to accept the fact that things did go wrong somewhere, though the cyanide poisoning didn't occur in their manufacturing plant. The point which I would like to make is the way J&J combined the goals of avoiding both the lawsuits and alienating its customers, which also made possible its survival.

Parag, your point is well taken too. However, as far as I know, the working of FDA (which I learnt more of it yesterday, when I was discussing on FDA approvals with a surgeon here), as soon as their is human mortality due to any kind of medication or medical instruments, FDA is out to get you. In fact, over the period, and especially after the J&J incident, it has become mandatory for drug and medical instrument manufacturers to use tamper-proof packaging. If something goes wrong which, even though, at first instant might seem to be outside the realm of the drug or the medical instrument manufacturer, the FDA is out to get these manufacturers first. So, if the J&J incident had occured now, it would be J&J's fault since they didn't provide 'tamper-proof' packaging. As regards to the voluntary recall, there is atleast one instance in the past, when reports of negative effects on patients started pouring in, but the drug manufacturer didn't recall the drug voluntarily, and waited till the drug, and its negative medical effects, started to appear worldwide in many nations. As far as I recall, that manufacturer was driven out of business long ago.

On a side note, my blog seems to be slow to update itself. Till today, it still said that I had 9 posts for this week, when I posted the blogs everyday this week.

-SBR

7:13 AM  
Blogger Christian said...

Really great blog! I noticed a mention about rheumatoid arthritis diet . I thought you might be interested to hear that both my parents and several of their friends have had problems with arthritis and we have been very lucky to have come across Bioflow. They are sold at rheumatoid arthritis diet and they have been worth every penny. They don't seem to work for everyone but they have helped reduce the pain in my parents arthritis so that they almost don't notice it any longer. They'd still be taking painkillers if it wasn't for wearing a Bioflow on their wrist

6:23 AM  
Blogger Christian said...

Really great blog! I noticed a mention about cervical arthritis . I thought you might be interested to hear that both my parents and several of their friends have had problems with arthritis and we have been very lucky to have come across Bioflow. They are sold at cervical arthritis and they have been worth every penny. They don't seem to work for everyone but they have helped reduce the pain in my parents arthritis so that they almost don't notice it any longer. They'd still be taking painkillers if it wasn't for wearing a Bioflow on their wrist

12:55 PM  

Post a Comment

<< Home