Trying to Salvage Tylenol, Again
STEVEN P. ROSENFELD
Feb. 28, 1986
NEW BRUNSWICK, New Jersey (AP) _ When Johnson & Johnson President David Clare walked into his boss's office and said, ''We've got big trouble,'' he set the stage for a $100 million struggle for the second time in three years to salvage the company's most successful product, Tylenol.
The company's mid-February recall of Tylenol capsules and its decision to stop making over-the-counter medicine in capsule form have caused problems for the entire drug industry and raised consumer concerns.
The bad news Clare gave Chairman James Burke was that a 23-year-old woman, Diane Elsroth, died Feb. 8 after taking two cyanide-contaminated Extra- Strength Tylenol capsules purchased at a suburban New York store. It was a repeat of the poisoning of Extra-Strength Tylenol capsules that claimed seven lives in the Chicago area in 1982 and an indication that packaging developed subsequently to foil tampering was vulnerable.
Not only was Johnson & Johnson on the spot again, but other drug manufacturers found themselves on the defensive. As Johnson & Johnson grappled with the crisis, other producers waited for the market to make up its mind on the continued acceptance of capsule medication.
Johnson & Johnson was guided throughout by a conviction that what's good for its customers is good for the company. Its handling of the Tylenol crises has been hailed as a textbook example of how a corporation should deal with the unexpected.
As it did when the 1982 sabotage first was uncovered, Johnson & Johnson moved fast to protect public confidence in the Tylenol brand. As soon as Tylenol was linked to the poisoning, on Feb. 10, the company immediately halted advertising of Tylenol and began polling to keep track of consumer attitudes about the brand. It also pulled capsules from stores in the area, advised retailers and wholesalers to return bottles from the batch involved in the poisoning, and set up toll-free telephone lines to handle customer questions.
The next day, Burke held his first news conference, resuming the visible role he played during the Chicago crisis. Behind the scenes, Johnson & Johnson executives felt the poisoning was an isolated event and were satisfied that they had taken all necessary steps.
But two days later, on Feb. 13, another contaminated container was found at a nearby Woolworth store.
At that point, Johnson & Johnson halted capsule production at its McNeil Consumer Proucts Co. and urged consumers nationwide to stop using Tylenol capsules until further notice. It advised merchants not to sell capsules.
Burke met with reporters again the next day, Friday, and was questioned on whether he was going to recall all capsules and abandon the popular form of medication.
With precautions in place to prevent the sale of more capsules and with the public alerted, he deferred a decision on a recall while a crisis team looked for ways that eventually could return a safer capsule to the market.
That team, made up of Burke, Clare, McNeil Chairman David Collins, Johnson & Johnson public relations chief Lawrence Foster and corporate counsel George Frazza, held sometimes heated consultations. Joseph Chiesa, the president of McNeil, also was a key figure in the deliberations, although he stayed at the subsidiary's headquarters in Fort Washington, Pa.
Burke said he had concluded privately that capsules would have to go. But he wanted to give his top managers a chance to debate the choices. The McNeil executives argued against abandoning capsules.
''It was very important to let people say whatever they thought because you are under terrible stress,'' Burke said of the process. ''The anger that comes out in these meetings is just appalling. If you walked in you'd say, 'Geez, these guys aren't going to get anywhere, they hate each other 3/8'
''Well we not only don't hate each other, we all love each other. And we've known each other long enough so we can look somebody in the eye and say, 'That's crazy,' or, 'Will you shut up and listen to me.'''
Cost was not a consideration, he said. The company, which spent $100 million in the Chicago Tylenol crisis, knew it would cost at least that much this time. It also knew that with $613.7 million in profit and $6.42 billion in sales last year, it could afford the expense.
Over the three-day weekend, the team concluded there was no way to guarantee the safety of its capsules. On Monday, Presidents' Day, Burke announced Johnson & Johnson would no longer sell any over-the-counter medicines in capsule form.
The focus immediately turned to persuading its capsule customers to switch to tablets or caplets. Caplets are coated, capsule-shaped tablets designed to be easy to swallow. They were developed by Johnson & Johnson as an alternative to capsules after the Chicago poisonings.
It also prepared to defend its markets for other widely used consumer health products that no longer are being sold in capsule form. Prescription drugs, which are not stocked on store shelves, continue to be sold in capsules.
On Tuesday, Feb. 18, as Burke was appearing on the Donahue Show on NBC to push caplets, representatives of other over-the-counter drug makers were meeting behind closed doors in Washington to consider ways to improve the safety of their capsule products. There has been no move to follow Johnson & Johnson in abandning capsules.
Before the New York death, Johnson & Johnson had 14 million users of Tylenol capsules. But there were 35 million others who use the acetaminophen in tablet or caplet form.
Even without the capsules, Johnson & Johnson says Tylenol's sales are almost twice as high as those of its closest competitor.
It had painfully rebuilt a business that had been written off by some analysts after the Chicago poisonings had slashed its market share from 35 percent to under 7 percent. As 1986 started, the company's growth was strong, despite the entrance of five new pain-relief competitors since the first crisis.
As it did after the 1982 recall, Johnson & Johnson is sending legions of representatives to visit doctors. The company has said more than 70 percent of all Tylenol users had at some time received a recommendation for the product from their physicians.
It also is offering a free exchange of capsules for caplets and is stepping up promotion of caplets in a new advertising campaign.
Five days after dropping capsules, Johnson & Johnson had received 205,000 calls about its offer to exchange medication, with 99 percent requesting caplets rather than a cash refund.
And a week after the decision, the company said factories making Tylenol caplets and tablets were operating around the clock.
The Chicago and New York poisonings, Burke calls them ''an act of terrorism - pure and simple,'' created new worries for the drug industry and society in general.
Johnson & Johnson received another shock this week, when a 32-year-old man was found dead in Nashville and tests indicated the presence of cyanide in his body and in an Extra-Strength Tylenol capsule found in a bottle under his bed.
In 1985, 10.5 billion capsules of medication were produced and sold over the counter in this country without incident, according to the Proprietary Association, a trade group of manufacturers of non-prescription drugs.
But because of the repeat attacks on Johnson & Johnson capsules, the safety of all capsules has been called into question.
''I think Johnson & Johnson did the right thing'' in getting out of the capsule business, said Charles Goodman, a professor of marketing at the Wharton School of the University of Pennsylvania and a specialist in ethical sales practices. The attacks on Tylenol capsules ''suggests somebody is out after them. Presumably the other people (competitors) don't have to worry.''
But, said Goodman, ''If something happens to the others, the producers certainly will be open to criticism, Monday-morning quarterbacking, as to why they didn't do what Johnson & Johnson did. ... Then they're in big trouble.''
Joan Claybrook, president of the consumer advocacy group Public Citizen, while supporting Johnson & Johnson, said she does not favor a total recall of capsules.
It would be premature to deprive consumers of a form of medication they prefer when the facts in the Tylenol cases remain a mystery, she said.
Burke said competitors must make their own decision and should not be rushed on an emotional basis. He suggested the industry work with regulatory bodies and the public.
American Home Products Corp., which sells capsule medication in all three forms of analgesic with its Anacin brand aspirin, Anacin-3 brand acetaminophen and Advil brand ibuprofen, is closely following the situation.
''It's too early to really know,'' said spokesman John Wood. ''The marketplace will tell.''
Steven P. Rosenfeld reports on business ethics and practices.