John D. Copeland
In 1919, eight members of the Chicago White Sox baseball team, including the outstanding “Shoeless” Joe Jackson, allegedly conspired to throw the World Series. A popular story is that a young boy looked at his fallen hero, Jackson, and said, “Say it ain’t so, Joe.”
Unfortunately for Jackson and the others accused of wrongdoing, baseball Commissioner Judge Kenesaw Mountain Landis believed it was so. He banned the players from baseball for life.
Businesspeople need heroes, too. We need examples of courage and integrity to follow. As Albert Einstein said, “Setting an example is not the main means of influencing others – it is the only means.”
Johnson & Johnson set the gold standard in business ethics for the way it handled the 1982 crisis in which someone contaminated the company’s profitable Tylenol product. Recently, the company failed to meet its own high standards and tarnished its ethics image.
The 1982 crisis In 1982, seven people died in the Chicago area after taking cyanide-laced extra-strength Tylenol capsules. The company immediately took Tylenol off the Chicago-area store shelves and recalled the two batches of Tylenol identified in the poisonings.
An investigation quickly cleared Johnson & Johnson of any wrongdoing. Someone tampered with the Tylenol bottles after they left the company’s control.
The limited recall satisfied the U.S. Food and Drug Administration, but not Johnson & Johnson’s CEO James Burke. He wanted more done to protect the public and the company’s reputation.
Relying on the line in the company’s credo that states, “We believe our first responsibility is to the doctors, nurses and patients, to mothers and fathers and all others who use our products,” Burke convinced the company’s executives to order a nationwide recall of 31 million bottles of regular and extra-strength Tylenol within one week of the first reported death.
The recall cost Johnson & Johnson an estimated $150 million and put at risk a product that produced 17 percent of the company’s profits.
Then, the company developed the tamper-proof bottle and shared its knowledge with the rest of the drug industry.
The 2010 crisisFor more than two decades, business professors used Johnson & Johnson’s response to the 1982 Tylenol crisis as the ethical template for other companies with difficult business decisions. Johnson & Johnson’s history of ethical business conduct makes its recent ethics failure especially disappointing.
On Jan. 15, Johnson & Johnson’s McNeil Consumer Healthcare Division announced a recall of hundreds of batches of moldy over-the-counter drugs, including Tylenol, Benadryl, Motrin, Rolaids, Simply Sleep and St. Joseph Aspirin.
According to the warning letter sent to the company by the FDA, the company’s response to the contaminated drugs was anything but prompt. Twenty months before the recall, Johnson & Johnson received numerous consumer complaints about moldy-smelling drugs. Some consumers complained of nausea, vomiting and stomach pains.
The company eventually identified the source of the problem as a breakdown of chemicals used to treat wooden pallets used for transporting and storing drugs. The FDA severely criticized Johnson & Johnson for not quickly investigating consumer complaints, identifying the source of the problem, alerting the public about the contamination and ordering a recall. The FDA claims the company’s lack of proper action prolonged consumers’ exposure to the moldy drugs.
Stung by the FDA’s criticism, a Johnson & Johnson spokesperson recently admitted the public expected more from the company. The company set up
www.mcneilproductrecall.com to list the lot numbers of the batches of contaminated products. Consumers also can now ask for refunds or replacement of recalled products by calling (888) 222-6036.
Unfortunately for Johnson & Johnson, the company’s ethics reputation took a second hit the same day it announced its recall. The U.S. Department of Justice filed charges against the company in Massachusetts alleging it paid kickbacks to a nursing home pharmacy to promote its prescription drugs for elderly patients. The company contends it did nothing illegal.
Johnson & Johnson’s current ethics problems are a reminder to business leaders that an ethical reputation for doing business needs constant vigilance. It is easy to lose a hard-won good name and difficult to regain it once lost.
Maybe without any reported deaths or serious illnesses the company’s leaders simply underestimated the seriousness of the mold contamination problem. Maybe the kick-back allegations are false.
Possibly, however, the company’s recent problems arose from a decline in the company’s ethical culture and an abandonment of its famous credo.
“Say it ain’t so,” Johnson & Johnson.
John D. Copeland, J.D., LL.M., Ed.D., is an executive in residence at The Soderquist Center for Leadership and Ethics and a retired professor of business at John Brown University in Arkansas. He’s also a Kallman executive fellow at the Center for Business Ethics at Bentley University in Waltham, Mass. He can be reached at jdcethics@gmail.com.
