From Ethics Hero to Goat
On July 12, 2018, J&J was ordered to pay $4.69 billion to 22 women and their families who had claimed that asbestos in the company’s talcum powder products caused them to develop ovarian cancer. The punitive damage part of the award ($4.14 billion) was the largest ever awarded in a product liability case.
J&J plans to appeal the verdict calling the process unfair and disputing the health claims. They point to studies that found the powder to be safe including testing of 100,000 men and women that found the product doesn’t cause cancer or asbestos-related disease.
Let me play devil’s advocate for a moment and assume J&J is telling the truth about the studies. We all know it only takes one case to raise questions about the safety of a product. One person getting cancer from an asbestos-related product is one too much. What if it were your mother?
The J&J studies must be counterbalanced by a new report issued by Reuters on December 14, 2018, that claims J&J knew for decades that its baby powder contained asbestos. Reuters based its report on a review of documents and deposition and trial testimony. Reuters say the review shows that from 1971 to the early 2000s, J&J officials, doctors, and lawyers were aware the company’s raw talc and finished powders sometimes tested positive for small amounts of asbestos. Those involved discussed the problem but they did not disclose it to the regulators or the public.
J&J used to be viewed as a model of corporate ethical behavior. I had cited J&J as an ethical company in my teaching of ethics for many years. The reason was how it handled the news of poisoning of Tylenol capsules, a J&J product, back in 1982. In case you weren’t born yet, here is a brief summary of what happened and why J&J earned a (then well-deserved reputation) for an ethical company.
Seven people in the Chicago area collapsed suddenly and died after taking Tylenol capsules that had been laced with cyanide. These five women and two men became the first victims ever to die from what came to be known as “product tampering.” The news of this incident traveled quickly and was the cause of a massive, nationwide panic.
J&J’s stock price dropped precipitously after the initial incident was made public. In the end, the stock price recovered because the company’s actions gained the support and confidence of consumers. J&J acted to remove all the product from the shelves of supermarkets, provide free replacements of Tylenol capsules with the tablet form of the product, and make public statements of assurance that the company would not sell an unsafe product.
J&J reacted swiftly to the news and by all accounts the company took the steps necessary to gain the public trust. Many wondered why J&J was able to do what other companies could not. The company pointed to their corporate credo which reads in part:
“We believe our first responsibility is to the doctors, nurses, and patients, to mothers and fathers and all others who use our products and services... In meeting their needs, everything we do must be of high quality... We must constantly strive to reduce our costs in order to maintain reasonable prices... Customers’ orders must be serviced promptly and accurately.”
Since the Tylenol incident, the Wharton School looked at some of the product recalls at J&J and concluded the company had quality control problems with several of its brands. For example, the painkiller Motrin was found to be dissolving improperly and two hip replacement devices that were recalled in 2010 after the shredding of metal fragments led to post-surgical complications in some patients. The company also agreed to pay the state of Texas $158 million to settle claims it improperly marketed the anti-psychotic drug Risperdal to patients on Medicaid. Since the Tylenol incident, J&J has been consistently questioned about putting profits over patient safety.
The moral of the J&J story is ethical corporate behavior is not like a faucet you can turn on and off at a whim. It requires consistent behavior based on ethical values such as honesty, trust, respect, and responsibility. Any company that loses site of the public’s expectation for product safety threatens its own long-term viability.
J&J seems to have lost its moral way and now seems willing to overlook bad reports about products to be more competitive, gain profits and market share. I believe the underlying cause of the problem is a culture that has morphed from honesty to dishonesty accompanied the failure of ethical leadership.