Should J&J Replace The McNeil Management Team?
33 CommentsBy Ed Silverman // July 16th, 2010 // 8:42 am
The ongoing Tylenol recall scandal has been a deeply embarassing and disruptive episode for Johnson & Johnson, which has long benefited from a stellar reputation for a bevy of ubiquitous household medicines as well as its handling of the 1982 Tylenol crisis that transformed the company into a Harvard Business School model. J&J is admired in other ways. Dozens of seniors pour off buses each year to attend its annual shareholder meeting at a hotel near its New Jersey headquarters. And rivals mimic its strategy -remember how Pfizer sold its own over-the-counter unit to J&J, only to happily buy the Wyeth OTC biz last year?
Now, though, the storied J&J image is losing its luster over a series of unusual quality-control gaffes at its McNeil Consumer Healthcare unit and the missteps would appear to be exacerbated by the way this latest crisis has been handled. At least that’s how a Congressional committee has portrayed the episode - the healthcare giant has been drawn into a public spat over its alleged efforts to recall OTC meds without alerting regulators or consumers. The committee called this a ‘phantom recall,’ while McNeil tried to call it a ‘product retrieval,’ a characterization with which the FDA disagreed (see here, here and here).
This mess, which involves OTC products with a musty smell, metallic flecks or too much active ingredient, is taking its toll in various ways. A venerable corporate image is being questioned in the minds of parents who continuously encounter news of recalls (see this); the Fort Washington, Pa., plant where most problems occurred and McNeil execs are based is now closed indefinitely; hundreds of millions of dollars in sales are being lost, prompting scrutiny on Wall Street; and now 300 of some 400 employees at this particular plant are losing their jobs (back story), further damaging employee morale companywide (what J&J hasn’t disclosed is the cost of consultants filing into Fort Washington each day).
Through it all, J&J has tried to manage the situation by keeping a low public profile (see here) and furiously attempting to convince the FDA, which has threatened a criminal investigation, that management has its collective arms around the problems. But the problems keep mounting and corporate image experts say the healthcare giant must take concrete, visible steps to restore public, investor and employee confidence (look here).
The scandal is not yet over, but what exactly should J&J consider doing? During congressional testimony two months ago, Colleen Goggins, head of the global consumer healthcare biz, said some people had been replaced, but details were never released. Given the extent of this bind, would a wholesale cleaning be called for? Is that too easy and too obvious - a heads-will-roll approach for the sake of it? Could such a move make a difference? Would it send the right message after everything that has transpired? Is it too soon to consider? What do you think? Vote and then share your thoughts.
Should J&J Toss McNeil Management Overboard?
- Yes (90%, 161 Votes)
- No (12%, 22 Votes)
Total Voters: 178
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elmore
The management team and board of directors should all get the heave ho. Look at the McKinsey affiliations in that group–ex-McKs on the board, constant interviews, etc. I believe McK was brought in after the operations directors squawked about the independent and “onerous” safety reviews and staged a rebellion. The current structure is the “entrepreneurship” model that McK touts so strongly and recommended to replace the outdated “safety” model.
Marie
I was happily laid off from the PRD sector of J&J in January. In the discovery area I was in, bringing up issues or problems was strongly discouraged. I was hoping it was just the pharma sector, but apparently not. It’s a shame because when J&J acquired the company I worked for, I was excited about the credo and the J&J reputation. The credo has become a joke with employees because how many focus groups can you participate in without ever seeing results. The company needs to clean house- starting with upper management.
H. Lobo
Cleaning needs to begin at the very top. The conditions at Fort Washington are the result of the Executive Committee push towards centralization that removed any type of local authority or accountability.
The only metric the EC used during these changes was reduced costs. Increased return to Wall Street was the main objective. The McKinsey studies in 2007 were conceits, intended to dress up the elimination of quality and compliance areas in favor of ‘the flavor of the month’ management concept.
Adam
Bill Weldon and Colleen Goggins should have been fired long ago for destroying J&J.
pharmavet
The picture in the story looks like a scene from “Mutiny on the Bounty”. As for how to dispatch with the J&J executives, I quote Captain Bligh’s admonition to First Lieutenant Fletcher Christian:
“Now don’t mistake me. I’m not advising cruelty or brutality with no purpose. My point is that cruelty with purpose is not cruelty - it’s efficiency. Then a man will never disobey once he’s watched his mate’s backbone laid bare. He’ll see the flesh jump, hear the whistle of the whip for the rest of his life.”
Medical Quack
What drug/device companies and the FDA need to create is a simpler way to identify recalls and this falls right into the lap of J and J being a poster child.
Augmentation is where technology is headed and I have written about this in several posts since October of 2009. Using 3D barcodes is needed for recalls and perhaps J and J will consider this when they retool the factory.
There are 2 different types of 2-3D barcodes and for recalls the Microsoft Tags offers a better solution than the QR codes as levels of encryption and other features would be needed as the FDA could maintain a synchronized data base.
Just this week a big bar code was featured in Time Square up in the big lights.
http://mashable.com/2010/06/10/internet-week-qr-codes/
We are going to continue to have multitudes of recalls with food, drugs, and devices and not because the products we produce are necessarily bad, we can identify more problems today with the intelligence we have, so like anything else there’s more information.
Hopefully this will go somewhere but imagine using your cell phone as a scanner to find recalls, I had lot of positive feed back on this and have a poll going on it as well. One Mom said she had to check 7 products for recalls as she has 2 children and she would have loved to use her phone to scan instead of checking manually for lot numbers.
Years ago I used to do business with some J and J facilities and found at that time their standards were above and beyond most, as well as Pfizer who was right up there too with how their warehouses functioned and handled products.
Certainly when they retool I’m sure there will be room for all types of improvements and sometimes it takes something like this unfortunately to occur to catch the fact that perhaps old machinery and/or systems are a big part of the problem. I have a feeling there will be other companies that might fall into this same scenario as time moves forward.
On the device side everyone wants a UDI number and that’s good too but again, solves only part of the problem as hospitals do miss pulling those from the supply rooms and people are implanted with devices that have been recalled.
You can read a summary of using bar codes to help alleviate the recall program at this link and again this is where the recall area needs to go as there will be more and an good efficient way of getting the information out to consumers and healthcare professionals is needed.
http://ducknetweb.blogspot.com/2010/05/microsoft-tags-microsoft-msdn-posts.html
Retooling the factory is a big plus, but also looking to see if anyone had made any recommendations to upgrade, etc. too is part of the solution. Again, I think smarter systems will be the over all answer here rather than finger pointing as that seems to happen anyway, but again this won’t be the end of the line for recall problems by any means so time to look at a bigger solution to prepare for disaster when it happens, kind of like the BP scenario that occurred without proper planning:)
Justce in MI
Interesting to hear from J&J people. I don’t have (hat tip to brother Nathan) an informed opinion on this.
But it does strike me that having “shadow” companies within companies has been convenient. Thus the big Pfizer bust in which the ghosts of Pharmacia and Warner-Lambert could plead guilty, but not Pfizer itself.
Is McNeil in that category? I don’t know. But raises the question of when a subsidiary becomes the company itself. Is it still possible to hold Upjohn accountable for anything?
Karl in FL
The question of whether to toss management must first be answered by who called the shots? If the McNeil execs were limited by budgets or “suggestions” from J&J management, then it’s J&J management that needs to go. If the McNeil execs were independent and called their own shots as to budgets, capital improvements, etc., then the McNeil execs are at fault.
don mccarthy
I used to work for a J&J company in the 1980’s and could not believe my ears/eyes when the McNeill fiasco emerged - incredible thing to happen to a J&J company. Quality and safety and the patient always came first in the past! I agree with all Marie and others said above. I subsequently worked for SB and the same consultants came in to try to dilute quality, etc and earned huge payouts (where did they learn that stuff!) As usual the response is to fire from the lower echelons, probably thesame people who were protesting the decline in quality. They should clear out top management and use this fiasco as a Harvard Business school model because that’s the place the consultants probably came from. Don. McCarthy
M. Black
Mc-crap goes on for extended periods of time because our regulators fail. They fail, and they don’t care. It’s a harsh statement, but I vouch for it. Has anyone considered the fact that even when J&J’s double blind philosophy of partnering with Mc-not, that company and really the most important piece of a final product - that being ANOTHER contract manufacturer that is responsible for making the product itself is way under the radar.
The situation becomes four entities covering each other at times, blaming each other at times, huddled together shivering in a proverbial bomb shelter licking each others wounds, or one entity just making one bad move that baloons usually later than they should.
Ask Mc-doodles for a list of their contract manufactures. The FDA kinda “glances” at them because no one knows about those companies so no reason to worry. Right? WRONG! Unless you think insects embedded into final product, and facility having holes in their roof means nothing to you.
Educate yourself. J&J –> Mc-fly –>> X
Solve for X.
And I’ve always said “what will I ever use algebra for?”
~ M. Black
M. Black
By the way, I voted “no” because people shouldn’t lose jobs because of faults by design of a system in itself. The system has to change. If people aren’t on board with that system, throw them overboard.
MB
Moose
I was at Ft. Washington & Lancaster in the 1990s and saw metallic flakes in liquid product during that time. Management had a scientist write a document stating that the metal was innocuous. That was just the tip of the iceberg. Operations made sure that production was primary and quality was secondary. The conflict made me sick and I had to jump ship. I am surprised it took the FDA so long.
The dirty little secret is out
Most who works or have worked at this company know what the real j & j is versus the sanitized image the company spends millions of dollars of pr to cover up, hide or feign ignorance under the decentralized excuse “we didn’t know”.
the credo is the brunt of constant internal jokes.
BP and other companies thast are crucified in the media as unethical are amateurs in comparison to this New Brunswick company, the management team and the behaviors rewarded.
This incident is like much/most of other practices of the company .
Cassandra
I don’t have a good opinion of J&J’s management, but let us try not to read too much in this incident, which is bad enough as it is. And let us not start a search for a scapegoat, when there appears to be plenty of collective responsibility.
Only one week before the Fort Washington recall was announced, on April 23, J&J held its annual shareholder meeting: Shareholders were told that all was well and in majority believed it, William Weldon was confirmed as chairman of the board, a proposal to have a review by shareholders of executive remuneration was rejected, and blithely self-congratulatory press releases were sent out. Optimism prevailed all around, and if the financial press commented at all, it was to note with approval that J&J was planning to lay off 8000 people.
Of course you can read a conspiracy in that if you want to, but the far more likely cause is collective self-hypnosis: Directors, managers and shareholders all wanted to believe that the problems were under control and the company was moving into a bright future, so they did. Managers fervently wanted to believe that they were doing a good job, so they did. Probably even the minority of people who knew about the recalls and the FDA’s warning messages dismissed them as strictly localized problems.
This optimistic attitude appears to have infuriated the FDA, which sent out signal after signal without triggering an adequate response. Probably every time J&J received an external warning, they checked it through the internal communication channels, and were told that all was well, and there was impeccable paperwork to prove it.
M. Black
Solutions to public health hazards get taken care of when the masses yell loud enough.
Or, it could be one little victory that tips over the first domino.
Whatever the case, this will become a case study in how NOT to do things. I don’t think many would disagree. Good job, Ed.
~ M. Black
M. Black
Look:
J&J is squeakly clean because McNeil is assumed to
be squeakly clean. McNeil is squeakly clean because their hired, contract manufacturer is squeaky clean. STOP there.
Who is THAT??? Are they really squeaky clean? If the FDA says so, it is.
Two problems:
• The general majority doesn’t know who the hell this is, so this company, the ONE THAT MAKES AND PACKAGES the final product … manufactures the product in this dirty hole of a manufacturer, from their dirty hole of a plant to your medicine chest in your bathroom. Look at the labeling of certain products, old and new. The place of true manufacture is not seen.
• The FDA audits this company in a way a cop pulls you over for four violations, and gives you one ticket. No one likes paperwork. In pharma, it could be one of several reasons. If anyone here involved in quality and / or manufacturing and packaging, I’m sure there are several things that pop out at you. In addition, the FDA aren’t a collective Mother Teresa or Ghandi’s. Especiay when there have been accounts in the past of FDA wrongdoings.
There’s more. This phanthom contract manufacturer may not be up to snuff testing their products onsite, but outsourcs them. For example, QA / QC sampling of ALL microbiological sampling is sent to a company that will perform them.
How many layers of plausible deniability have we layered yet?
In this “example” it’s a bit more visible - why this occurrs, and why it is not stopped when it should be. Everyone spins in a circle, selling products that may be contaminated by mildew, fungi, bacteria, etc. because the company that is twice removed from J&J (the actual manufacturer and packer) had issues with the samples. The actual manufactrer and packet is literally between the contracted lab and McNeil. At the end of the day, plausible deniability wins again, McNeil gets the quality data to J&J, the quality issue does not get resolved, and patients continue ingesting product that is known only by a select few. And those are unfortunately are the ones that keep their jobs, but also shoot up the ladder the quickest.
And if we keep our mouths shut, this will never cease.
~ M. Black
Zipper
It’s only OTC, it’s not Rx.
If you don’t like a test result, discard it, retest until it passes.
Validate? You’re not being a team player and accepting risk.
And if anyone asks, we never had this discussion, so shut your mouth.
This is real and it happened at their plant.
pharmavet
Cassandra, I agree that Weldon should have been more forthcoming at the Annual Meeting, and maybe shareholders have a legal case. However, J&J has met its fiduciary responsibilities to the shareholders and the financial community by providing regular SEC filings updating the situation. They may be sleazebags, but they are keeping up with their SEC reporting responsibilities.
Given the extensive protections under the Federal Whistleblower Protection Act of 1989, I am somewhat surprised that no one that I am aware of came forward earlier and reported these violations to the proper authorities. You would apparently have had a rock solid case. I’m secretly hoping that one of one of you have done so under the Act, and are not disclosing it here because of confidentiality reasons.
M. Black
Zipper,
You hit the nail on the head. What would it take to change that? And I do not agree whatsoever letting a plant not be controlled as it should because it’s over the counter. I had a strange dream of a bird that told me that the manufacturer of Nicotine patches, while still technically OTC, are slapped on to people that were on the track for being cancer “victims”. Would you want for the most part poorly controlled environments (holes in ceilings to outside
air?!? ~ being slapped on people with already toxic blood!?!?). Well that throws in defence that the patch didn’t cause cancer because the blood of people that used nicotine already have blood that is toxic. A win for the defense, and a barrier to plaintiffs.
It’s just flat out disgusting, and again, the test case for plausible deniability is in the works which is why we are in the year 2010, and these things happen with smirks reading their Sports Illustrated when
they should be inspecting, funding, and problem solving issues such as this.
~ M. Black
M. Black
Cassandra,
Use insight, and be creative in reading blogs.
MB
pharmavet
Zipper, I’m not sure how long you’ve been in the industry or even if you are industry, but you should be aware that the saying “you can’t retest your way into compliance” is violated every day of the week by every company that I’ve observed over 28 years. I don’t condone the practice, but we shouldn’t be naive about it either.
pharmavet
M. Black, please take some time to review J&J’s SEC filings over the pasdt three months. Together with shutdown of Ft. Washington makes your accusation of “plausible deniability” rather implausible.
You use the term “dirty hole of a manufacturer”, without being specific I don’t know how many plants you have toured, but I have toured many, and I am always amazed at theie fastidious attention to cleanliness. For example, to even get into the lab you have to shower, change into a 21st century uniform resembling the spacesuits worn by the medics in “ET”. You become aware of the laminar airflow from the resistance you encounter from air that is recirculating 10,000 times/hour as you open the door. You see everything being done in a “white room”, painted as such so that the tiniest speck of dirt is picked up. You see technicians taking bench swabs on the hour to test for microbial contamination. If they were to allow me to do so I would have no problems eating off the floor. Upon leaving the plant floor, we showered again and discarded our gowns in specially marked biohazard bags that were picked up twice/day and taken away.
These facilities may be guilty of many things, but “dirty hole” is not one of them.
M. Black
Pharmavet,
I don’t know where YOU’ve worked, but look at US v BARR, outliers, and “testing in compliance”. And that didn’t exactly happen yesterday. As the days pass, and as the deadwood dies, and as the new wood take over, this will become less of an occurence than you seem to have experienced.
One little victory at a time.
MB
pharmavet
There must have been a lot of deadwood at Ft. Wasshington since the plant was shut down and 300 workers were fired. Seriously, I believe in the Quality approach by Peter Drucker. Some of his quotes:
-”Quality in a product or service is not what the supplier puts in. It is what the customer gets out and is willing to pay for. A product is not quality because it is hard to make and costs a lot of money, as manufacturers typically believe. This is incompetence. Customers pay only for what is of use to them and gives them value. Nothing else constitutes quality”.
-”The most important thing in communication is to hear what isn’t being said”.
-”There is nothing so useless as doing efficiently that which should not be done at all”.
-”Checking the results of a decision against its expectations shows executives what their strengths are, where they need to improve, and where they lack knowledge or information”.
I also happen to believe that companies should practice Total Quality Management, per Deming and Drucker, acording to principle that everyone has a stake in the quality outcome of a process. That also means that anyone down to the lowest grade technician can (and in my judgement should) report violations when they are spotted. In Japanese TQM model (pre-Toyata), any assembly line worker had the power to shut down production if he/she spotted a potential problem. This was the implicit, if not explicit responsibility of every McNeil employee, down to the last worker. Instead, to paraphrase Drucker, there was a conspiracy of silence.
Feel free to disagree, but I feel little sympathy for those at Ft. Washington who lost their jobs. They simply shirked their reponsibilities, from top to bottom.
M. Black
I do agree with you about TQM. What needs to be in place is a holistic approach. But when the upper eschalon speaks to the entire gaggle of shareholders whose strategy is keep J&J for the long term, as a top 10 (m guessing)
In terms of the other point, I also feel for the 300 laid off. I myself am not working. It’s trying to implement, and takes pure employees that genuinely care what they supposed to, especially when something goes wrong, and the company tries to blame it on you. Don’t eff up. You can’t use CEPA to cover your heiny when you eff up. Document it, investigate it, propose CEPA to your manager
What I really meant was the ones that did no wrong, or did wrong and ammended the situation through the proper cGMP channels, including finding a root cause, presenting and put a CAPA (fixes it). Then monitoring the siituation over a reasonable time period and eventually, the puzzle is ammended. Most companies so a relatively good job, but the most serious problems are swept under the rug .
It’s not easy, especially when there are absurdley high unemployment
~ M. Black
Maddie
I was a sales rep in another company and would say the Pharma industry has too many managers at all levels. As they say, “there are too many chefs in the kitchen”. Although, you do need to hire “effective and successful” managers at the top that are credible. The way to do that is to train them to be successful leaders and managers. I read a book on “the future of management” and the successful companies now have less managers and more efficient ways to manage companies. Not knowing all of the info on J&J, it appears from comments made from previous employees,employees were not able to freely communicate their contributions to meetings which shows management problems exisited.
pharmavet
Maddie i agree with you. I think that the problem is also redundancy of effort. let’s say for example that your manager pre-approved 10 trips to a particular site at an average cost of $2000/trip at the beginning of the budget cycle, for a total of $20,000 for the cycle. The important number here is 20,000, not 10. Now lets say that due to unusual circumstances you have to make 12 trips, but are able to keep the total cost at under $20,00. This change does not need to be approved through 12 layers of management. They only person who needs to approve this is the Finance guy, and is really just a heads up rahther than a sign-off because you’re staying under budget.
Also, if you happen to go over budget, the Finance guy can make cuts in other areas that don’t require senior management approval. This is all very transparent if the bosses know how to work with spreadheets. Unfortunately, for many of them if you mention “Excel”, they think that you’re referring to a performance metric.
Zipper
Pharmavet, I’ve been in the J&J plants long enough and saw failures tossed routinely. Common practice is not acceptable. Your perspective betrays these regulations and is symptomatic of the QM style which brought J&J to where they are now.
likeitis
Zipper:
You are pressing all the right buttons.
You should be working for a consulting company that does not shirk its duty to tell its client *like it is* whether they want to hear it or not.
Big pharma has a choice: clean up the act or continue to pay $$$BBB in fines to the US Gov.
Any bets on J&J breaking Pfizers record on this one?
Leo
Re: pharmavet’s comment on why no whistleblowers?
I work for one of J&Js competitors and I can tell you we are no better. Quality is #1 until someone finds a problem then the only answer is tell the Superexecs what they want to hear or else face career suicide. It is easy to say someone should stand up just because it is the right thing to do but WB lawsuits take years and if you follow the most recent ones companies are not shy about trying to smear the reputation of the WB. Maybe you are independently wealthy but for anyone not situated facing an extended period of unemployment is a powerful incentive to remain silent. I have chosen to stand up for patient safety but I have suffered in my career growth because of it. That said I will not stop and hold faith for a better company when the market turns around. I will not cast stones at those who are quite because I live the consequences. I hope the Park doctrine is invoked because it is one of two ways this will begin to change. As with the J&J memos released I can tell you the execs knew, they always do. We are told by execs during meetings to discuss serious quality issues, “no minutes will be published” . No record = plausible deniability intact. This is in a right to work state where tape recordings are inadmissible unless announced prior. What would you have these people do?
My answer - Park Doctrine because fines are now a part of doing business and second, vote with you wallet as so many American’s have now figured out. The honeymoon may be over for big pharma/device. People are abandoning prescriptions in record numbers, postponing surgeries and generally becoming picky about who gets their $$$. If the trend continues it will be more powerful than any legal consequence. Unfortunately honest hardworking people will still pay the consequence for the bad exec decisions. Doing nothing does not make it better though.
Can't tell
This was all conspired by Weldon and Goggins and they should be thrown to the lions. There are 300 employees waiting to talk to you and I am one them. All of the management positions at this plant were on a rotation basis. You did your time and moved on. That’s how they wanted it. That’s why nothing ever got done. I am one of the unfortunate ones that lost my job because of politics, money and greed. They had it coming to them. We basically have been running on a shoe string for years in this cesspool. If you spoke up you payed dearly in the long run. This was nothing more than a conspiracy to shut this plant down. We lost our jobs and all the managers were relocated to other companies, pat them on the back, here’s a promotion. Glad I can finally sleep at night. CEO Weldon, You are nothing but an invertebrate. When are you going to come out from underneath your desk and face the music? You never asked us how are backs were, after slaving for you idiots for the last 25 years, you wimp. I hope all that oil in the gulf washes up on your 8.5 million waterfront property.
mavnick
Yes, it is time to throw Weldon under the bus, back up and drive over him again. It is typical in the pharma/med device industry to see this behavior. They go on and become CEO of other companies and plead ignorance.
Tired
The orders to cut corners come from the powers that be. Working for a Johnson and Johnson company that now relies on LEAN Manufacturing Practices, they believe that quality will prevail with less headcount and more responsibility. “More with less” is what we constantly hear in meetings. I can honestly say that our plant is on a downward spiral and guess what? We don’t make Tylenol or Motrin. We are in suture and needles.