Johnson and Johnson Lawsuits
Written by Andrew Sarski on July 27, 2011
Johnson & Johnson Faces Numerous Legal Problems
A series of setbacks have tarnished the reputation of Johnson & Johnson since 2009. In March 2011, Johnson & Johnson signed a consent decree with the U.S. government which requires the company to correct manufacturing-quality problems at three plants operated by McNeil Consumer Healthcare. In April 2011, J&J agreed to pay nearly $80 million in settlements for U.S. and U.K. lawsuits alleging that the company paid bribes to doctors in three European countries, as well as kickbacks to a pharmacy company that caters to nursing home patients, in order to get the company to buy J&J drugs. Last year, J&J agreed to pay more than $81 million to resolve a U.S. investigation of its illegal promotion of antiepileptic drug Topamax for unapproved uses. Negative reports about Johnson & Johnson’s business practices and frequent drug recalls caused the company’s shares in the New York Stock Exchange to drop in value 3.2% last year.
Frequent J&J Recalls of Pharmaceutical Drugs
Since September 2009, J&J has recalled more than twenty-five types of pharmaceutical drugs due to issues like contamination and incorrect labeling. Among these was the recall of children’s Tylenol in April 2010, which forced the company to suspend the operations of its facility in Pennsylvania. The results of a government investigation indicated that contractors bought defective painkillers which were used in the production of the Tylenol. Another J&J plant in Puerto Rico has also faced significant problems, according to a Food and Drug Administration report posted on the agency’s website. Among the issues at the plant were substandard drugs, failure to detect incorrect expiration dates on labels, failure to pinpoint product detects during routine testing, failure to adhere to laboratory controls, and insufficient training of laboratory staff. The lawsuits filed against Johnson & Johnson by shareholders claim that some of the company’s current and former managers and directors breached their fiduciary duty by allowing numerous product recalls, kickback charges, and other instances of alleged wrongdoing to take place. The plaintiff seeks to proceed as a class action lawsuit for investors who bought shares of J&J between October 2008 and July 2010.