1. Who was really to blame for the lax procedures found? 2. How should this situation be...
Question:
2. How should this situation be remedied?
3. How could the job done by the FDA be improved?
4. J & J had lived under a positive halo due to their earlier recall of tainted capsules of Tylenol. Why did J & J people behave differently, almost 30 years later?
5. How would the total cost of this debacle be estimated?
Johnson & Johnson (J & J) enjoyed a halo effect for many decades after their iconic precautionary recall of Tylenol capsules in 1982, which was greatly facilitated by the famous Johnson & Johnson Credo1 that stipulated patient well-being to be paramount in importance. But that halo has now been lost due to the events that led to the company’s recall of children’s Tylenol and other children’s medicines in 2009 and 2010. On April 30, 2010, J & J’s McNeil Consumer Healthcare, LLC (McNeil Division) “recalled some 50 children’s versions of non-prescription drugs, including Tylenol, Motrin and Benadryl.”2 In total, 136 million bottles of liquid were involved.3 This was the fourth recall in seven months. Earlier recalls included:
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Step by Step Answer:
1 Although the US FDA is partially responsible for not acting faster and tougher on J J it is the responsibility of the companys top management to establish adequate internal controls In this case there were several operational controls that failed repeatedly The internal control framework proposed by the Committee of Sponsoring Organizations of the Treadway Commission COSO explains that Internal control is a process effected by an entitys board of directors management and other personnel This process is designed to provide reasonable assurance regarding the achievement of objectives in effectiveness and efficiency of operations reliability of financial reporting and compliance with applicable laws and regulations Internal control is a process It is a means to an end not an end in itself Internal control is not merely documented by policy manuals and forms Rather it is put in by people at every level of an organization Internal control can provide only reasonable assurance not absolute assurance to an entitys management and board Internal control is geared to the achievement of objectives in one or more separate but overlapping categories 2 A number of things have to change within the company Management needs to change its attitude towards internal control including their views on product safety and quality The company should not try to downplay the possible repercussions and seriousness of the recalls McNeil has publicly stated that the recalls are a precautionary measure and that the risk of serious adverse medical events is remote J J Management should make a strong statement that this situation will be resolved and take the necessary steps to clean the companys reputation Even when the drugs recalled where produced by the McNeil division it is the parent companys reputation that is at stake The company needs to invest in quality control and commit to meet or exceed the cGMP regulations The company should establish a strong foundation for monitoring of internal controls including Support from top management part of what is known as tone at the top Assign monitoring roles to people with appropriate capabilities objectivity and authority Set a starting point or baseline of known effective internal control from which ongoing monitoring and separate evaluations can be implemented for example meet the cGMP regulations Design and implement monitoring procedures focused on key controls that mitigate risks and Assess and report results including the evaluation of the severity of any identified deficiencies and the reporting of the monitoring results to the appropriate personnel and the board for timely action and followup if needed It is not easy to remediate severe internal control weaknesses It takes a cultural shift managerial time and significant economic resources From the pure costbenefit perspective the company has already suffered significant economic losses as a result of the drug recall The problems that motivated the 2009 and 2010 drug recalls did not cause any serious health issues but without major changes the situation could happen again and possibly be worse Finally the company needs to revise its values and policies in place to deal with ethical issues In a subsequent legal action started by the FDA on May 2010 McNeil was found guilty of illegally promoting a drug called Topamax and of causing false claims to be submitted to government health care programs The drug was promoted for a variety of psychiatric uses that were not medically accepted indications and therefore not covered by those programs The company was sentenced to pay a criminal fine of 614 million 3 In this case the ...View the full answer
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Related Book For 
Business and Professional Ethics
ISBN: 978-1285182223
7th edition
Authors: Leonard J. Brooks, Paul Dunn
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