J&J faces questions about "phantom recall"

If Johnson & Johnson (NYSE: J&J) thought it could come out of yesterday's congressional hearing looking better than it did going in, then it was wrong. Yes, J&J's consumer chief Colleen Goggins was able to publicly promise that the company would do whatever it takes to get its manufacturing plants back up to speed--including replacing compliance and quality-control executives. But the company was caught flatfooted by questions about a "phantom recall" last year.

Meanwhile, FDA reps expressed concern about "systemic problems" at McNeil Consumer Healthcare, the unit responsible for the enormous children's drug recall that's now under investigation. The agency stepped up its inspections of McNeil facilities, and the company has shown a "pattern of non-compliance," Deputy Commissioner Joshua Sharfstein said. The whole issue has been referred to FDA's criminal division for review, another agency official said.

So just what is a "phantom recall?" According to lawmakers at the House Committee for Oversight and Government Reform, J&J consultants tried in 2008 to buy up packets of the painkiller Motrin because the company was worried that the pills were substandard. The FDA didn't know about it until months later, when one of the contractors dropped an instruction document at a retail store. The document was released yesterday; "act like a regular customer" and "THERE MUST BE NO MENTION OF THIS BEING A RECALL" were among the instructions.

The agency asked for a real recall, and that July 2009 event became the first in a string of several recalls for McNeil, culminating in the children's drug recall last month. The House committee said it plans to investigate the first recall further; Goggins said the company didn't know the contractor was buying up the Motrin. The company had told FDA it hired the contractor to purchase only a sampling of the suspect packets for testing to see whether a recall would be necessary. "There was never any intent to mislead or hide anything from anyone," Goggins said during the hearing.

There was some good news for J&J at the hearing; the FDA said it has found "no cases with evidence that a product quality issue contributed to a significant adverse health outcome." But Deputy Commissioner Joshua Sharfstein also said that the manufacturing deficiencies still shouldn't have occurred.

- see the Bloomberg story
- get more from the Washington Post
- read the Reuters article
- check out the Wall Street Journal coverage

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