J&J Discloses More Subpoenas Over Consumer Recalls

Aug. 12, 2010
Johnson & Johnson disclosed Wednesday that the health products giant has now received multiple subpoenas from federal prosecutors related to repeated recalls of Tylenol and other consumer health products.The grand jury subpoenas request "documents broadly relating to" both the recent recalls of products made by McNeil Consumer Healthcare and inspections of two of the unit's factories.One of the plants, in the Philadelphia suburb of Fort Washington, Pa., has been shut down since April due to multiple problems and is expected to remain shut until at least next summer.The other, in Lancaster, Pa., is operated by a joint venture called Johnson & Johnson/Merck Consumer Pharmaceuticals Co. Food and Drug Administration inspectors noted many severe problems after spending a dozen days there, from not following rules for manufacturing quality to poor record-keeping.Johnson & Johnson mentioned the grand jury subpoenas, filed by the U.S. Attorney's Office in Philadelphia, in its quarterly financial filing with the Securities and Exchange Commission.The disclosure follows one made by a company official on July 20, when J&J reported its second-quarter results, that it had received a single subpoena related to the recalls. J&J gave no details about that subpoena at the time, but said that the recalls and plant closure would cost the company $600 million this year alone.The maker of Band-Aids, birth control and biotech drugs said it is cooperating with the U.S. Attorney's Office in responding to the subpoenas."The company and its subsidiaries are vigorously contesting the allegations asserted against them and otherwise pursuing defenses to maximize the prospect of success," J&J said in the quarterly filing.Those allegations also include demands for documents from "multiple State Attorneys General Offices relating to the same issues," according to the SEC filing. The filing also noted that multiple lawsuits seeking class-action status have been filed against the company related to the recalls. The company gave no further details.Company officials declined further comment.Patricia Hartman, spokeswoman for the U.S. Attorney in Philadelphia, said she could neither confirm nor deny any investigation.New Brunswick, N.J.-based J&J has been under scrutiny by Congress, FDA officials and others for eight recalls since September covering tens of millions of bottles of pain reliever Tylenol and other popular nonprescription medicines. That includes some liquid medicines for children.The series of recalls covered products made at the Fort Washington plant and another in Las Piedras, Puerto Rico. They have involved problems ranging from contamination with bacteria and a nauseating smell on containers to possible problems with the wrong amount of active ingredient and liquid medicines that may contain tiny metal shavings.In May, an FDA official told Congress the agency had turned the case over to its Office of Criminal Investigations. No one has been charged.The Fort Washington factory makes nonprescription pain relievers, allergy medicine, sleeping pills and heartburn tablets. The recalled products include liquid Tylenol for infants and children, Tylenol arthritis caplets, Motrin, Benadryl, Rolaids, St. Joseph's aspirin and Simply Sleep.The manager of the Fort Washington plant has since been fired, 300 of the 400 workers there will lose their jobs shortly and the fiasco led Johnson & Johnson to sharply reduce its 2010 profit forecast.Then a July 21 FDA report on inspections at the Lancaster, Pa., factory in the past month indicates a pattern of ignoring rules for manufacturing and quality, failure to investigate problems that could affect the composition of products, carelessness in cleaning and maintaining equipment, and shoddy record-keeping. In some cases, medicine batches made during equipment failures were not checked for quality. That factory makes nonprescription heartburn medicines Mylanta and Pepcid, plus Imodium for diarrhea.In trading Wednesday, shares fell down 93 cents, or 1.6 percent, to $58.50, as the broader markets also declined.