McNeil's consent decree terms could have been worse

After more than 18 months of a GMP-noncompliance assault on the once-esteemed McNeil brand--including more than a dozen product recalls, finger-pointing over phantom-recall tactics, and related shenanigans before Congress--Johnson & Johnson's consumer unit and the FDA have entered into a consent decree. The action encompasses three drug-making facilities in Pennsylvania and Puerto Rico.  

It comes with the usual consent decree trappings, bar one: the big fine. The agreement does outline significant financial penalties for missed compliance milestones. But it lacks the one-time wallop sustained in such legal actions by Genzyme last year ($175 million), Schering-Plough in 2002 ($500 million), and Wyeth in 2000 ($297 million plus 18.5 percent of sales of flu vaccine FluShield), for example.

"The terms must have been under negotiation for some time as they could have been worse," explains Donald Riker, president at healthcare industry consultancy On Point Advisors, in an email. He is also editor at OTC Product News, and began writing about the recalls in late 2009. He was the first to anticipate and call for a consent decree last May.

McNeil is hardly the first company to duck the big hit: both Caraco and KV Pharma had similar good fortune in their 2009 consent decrees, as did Eli Lilly 10 years earlier. That's not to say there were no big financial consequences. McNeil reported a $900 million hit to product sales in 2010; the KV Pharma decree extended to three subsidiaries, all of which were forced to halt manufacturing and one of which was eventually shut down.

Riker says that the combination of a string of McNeil plant failures plus the company's inability to remedy them in a timely manner likely triggered the legal action. He suggests also that if McNeil's "responsiveness and forthrightness befuddled FDA as much as the rest of us," that too may have prompted the agency to go to court.

- here's the consent decree release
- see Riker's May and October 2010 calls for a consent decree