Yet Another J&J Product Recall Mess

Yet Another J&J Product Recall Mess

April 9th, 2013 // 12:58 pm @

As the saying goes: Another day, another Johnson & Johnson recall. The latest involves the 2020 Insulin Infusion Pump sold by the Animas unit for treating diabetes. A “component” issue is causing the device to sound a false alarm and when that happens, the pump may prompt the user to incorrectly follow the usual sequence of steps and lead to an unintended delivery of insulin. This can cause a potentially serious health risk, such as hypoglycemia. As a result, this is being described as a Class I recall, the most serious type that is classified by the FDA.

The specific reason is not described any in further detail, but the FDA alert does say the recall affects pumps made between March 1, 2012 and November 30, 2012. We asked J&J for additional information about how many pumps are being recalled and will update you when we hear back. There is another problem, by the way, which is a software limitation that will affect the ability of the pump to function past December 31, 2015. Afterwards, the pump will no linger deliver insulin and will generate a “Call Service Alarm” (read here). [UPDATE: A J&J spokeswoman writes us the probelm was discovered by patients and about 5,000 pumps worldwide.]

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As we have reported numerous times, this is only the latest in a long series of product recalls, which have included such venerable over-the-counter staples as Tylenol, Motrin, Rolaids, Sudafed and Benadryl; K-Y Jelly; Acuvue contact lenses; syringes, hip replacement devices and the Topamax epilepsy drug.

The OTC product recalls reflected serious manufacturing issues. A congressional investigation revealed J&J (JNJ) surreptitiously conducted recalled some products after discovering problems at its plants and hired outside contracts to work as ‘mystery shoppers’ to remove items from stores. A key plant is now being retooled and operating under a consent decree (see this). Meanwhile, 300 jobs were cut and hundreds of millions of dollars in sales were lost.

The J&J Ethicon unit last year halted marketing of four vaginal mesh implants that have been the subject of lawsuits filed by approximately 1,000 women who claim the products have caused serious internal injuries. The healthcare giant also had difficulty stocking Tampons and the Nizoral anti-fungal shampoo, the only over-the-counter shampoo that is a salve for dandruff and psoriasis.

As we have written more than once, the cumulative effect of these various recalls, which have effected all three strategic pillars – drugs, devices and consumer healthcare products – have made it harder for J&J to restore confidence among some parents, physicians and retailers.

Of course, with a company so large and diverse as J&J, product recalls are going to occur, but the scale and regularity of the assorted problems continues to suggest that the management team will struggle to ensure that the decades-old corporate reputation for quality and reliability can be preserved. Investors, however, have downplayed the problems and decided any institutional issues are being addressed. Over the past year, J&J stock has climbed 34 percent, based on yesterday’s closing price, and this return does not include dividends

 


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