Johnson & Johnson's ($JNJ) McNeil Consumer Healthcare may have cleaned up its act over the past 6 years, but the company is again being bit in the behind by the problems that sprung from the mess that its OTC plant in Pennsylvania once was. The company has pleaded guilty to a federal misdemeanor charge and will pay a $20 million fine and forfeit another $5 million for allowing Infants' Tylenol, Children's Tylenol and Children's Motrin products into the market that were tainted with metals.
The plea agreement announced by Justice Department and FDA officials today stemmed from a complaint that McNeil's plant in Fort Washington, PA, received May 1, 2009, that there were black specks in some of its children's pain medicines. But instead of starting an investigation to find out why, Johnson & Johnson ($JNJ) let it slide, according to the DOJ release.
The particles were later determined to be "nickel/chromium-rich inclusions" and not ingredients that should have been in the products taken by children throughout the world, court records indicate. The FDA would later get from McNeil a list of 30 OTC drug batches with "non-conformances for particles" that occurred in roughly a year's time. In April 2010, McNeil recalled all lots of certain unexpired OTC drugs made for infants and children that it had shipped worldwide.
"Drug quality--and especially with the medicines we give our children--is of paramount concern to the FDA. … Today's guilty plea holds accountable those corporations who risk jeopardizing the public health by not adhering to the high standards set for drug manufacturers," FDA Commissioner Margaret Hamburg said in today's statement.
In a statement from McNeil spokesperson Carol Goodrich, the company said, "This plea agreement fully and finally resolves the federal government's investigation, and closes a chapter on actions that led the company to review and significantly improve its procedures. McNeil has been implementing enhanced quality and oversight standards across its entire business to ensure we are best able to meet our commitment to consumers, patients and doctors who rely on our products."
In 2011, McNeil signed a court-ordered consent decree with the FDA after it had to recall and destroy tens of millions of consumer products. At that point, the recalls and lost market share had reportedly cost the company $1.6 billion and it still faced investing more than $100 million to retool the plant in Fort Washington. In 2012 new CEO Alex Gorsky would bring in Sandra Peterson from Bayer to deal with the situation created by the deeply troubled plant. While the plant has yet to reopen, Peterson was able to get arrange for enough production to meet retailer's demand for J&J's OTC products, resulting in big sales increases for the unit.
- here's the announcement