July 27, 2016 — San Diego, CA. It has paid out billions of dollars to settle allegations of fraud and wrongdoing; it faces several thousand more lawsuits pending in state and federal courts regarding at least seven of its drugs, medical devices and consumer products. Yet the $70-billion-per-year conglomerate Johnson & Johnson is still one of America’s most-admired companies, according to the Harris Poll’s 2016 Reputation Quotient Summary Report. This annual ratings list ranks the 100 most visible companies in the US based on their reputation as perceived by the general public. In 2016, Johnson & Johnson came in at #9 with an “excellent” rating, flanked by Berkshire Hathaway at #8 and Kellog Company at #10. It seems despite the lawsuits past and pending, J&J remains as pure as its silky white baby powder in the eyes of the American consumer.
Johnson & Johnson is no stranger to good press (or bad press for that matter). The company has received numerous awards throughout the years glorifying its reputation with the American public. It has been named on multiple Most Reputable Companies lists and earned favor with the LGBTQ community, the Latino community, and with women and working moms. It has even been named the #1 Best Corporate Citizen in the Healthcare Industry in 2015 by CR Magazine.
Johnson & Johnson’s reputation appears to be spilling over into its bottomline as it brings in millions of dollars from top-performing pharmaceutical drugs, medical devices and consumer products – the same products that have put thousands of its consumers in the hospital and, in some cases, the grave.
Third-largest Pharma Settlement; 6 products under fire
At the same time Johnson & Johnson is raking in record profits and basking in the glow of perceived corporate responsibility, it has been the subject of numerous lawsuits and paid out record-breaking settlements over criminal and civil allegations.
Johnson & Johnson made history in 2013 when it agreed to pay what would become the third-largest settlement ever reached between the US Department of Justice (DOJ) and a pharmaceutical company. The $2.2 billion settlement resolved allegations that J&J illegally promoted its popular antipsychotic drug Risperdal to children, the elderly and people with mental disabilities, and provided illegal kickbacks to physicians who prescribed the drug, among other allegations. The company pled guilty to $400 million in criminal charges, but did not admit liability to over $1.39 billion in civil allegations.
The drug at the center of the DOJ litigation, J&J’s antipsychotic Risperdal, is also the subject of over a thousand lawsuits pending in state and federal court, some of which have ended in multi-million-dollar verdicts.
It’s not just Risperdal, either. J&J is being sued by thousands of everyday consumers for harm allegedly caused by at least four drugs, one medical device and one consumer product. Let’s take a look at the products that put the Big Pharma company in the hot seat.
Johnson & Johnson continues to be slammed in court regarding its antipsychotic Risperdal. The company has shelled out over $73 million in 2015 and 2016 after juries handed down at least four verdicts in favor of the plaintiffs. The lawsuits alleged Johnson & Johnson hid evidence that Risperdal could cause abnormal breast growth in boys, a condition called gynecomastia.
The company’s omission of pertinent trial data may have helped the drug gain approval from the FDA in 2006 for treatment of certain mental health disorders in children and adolescents. Since the drug’s approval in 1993 until 2006, Risperdal was only approved for treatment in adults.
Over 1,700 lawsuits are still pending in a Philadelphia court.
Johnson & Johnson maintains a whopping 16.9% of the oral anticoagulant market thanks to its blockbuster drug Xarelto. Xarelto sales increased 26% year over year to $594 million in the second quarter of 2016. It remains the second-best-selling, new-generation blood thinner on the market today.
Thousands of lawsuits are being filed in courts across the country alleging the blood thinner caused dangerous bleeding episodes. Many of these lawsuits are being filed by family members on behalf of loved ones who died after taking Xarelto.
The novel anticoagulant is used to thin patients’ blood to prevent clots but it can often thin the blood too much making even a nose bleed dangerous. There is currently no antidote to Xarelto, so if a patient starts bleeding uncontrollably there is no way to stop it.
Johnson & Johnson’s new-generation type II diabetes drug Invokana has also helped fuel its profits despite lawsuits alleging harm caused by the drug.
In the second quarter of 2016, J&J reported sales of Invokana were up 20% at $383 million. The anti-diabetes drug has also made headlines as patients report kidney failure and a dangerous and uncommon condition of type II diabetes called diabetic ketoacidosis. Many patients have died as a result of taking the novel diabetes drug, which works by preventing the kidneys from reabsorbing blood sugar.
The drug has been on the market for merely three years.
Lawsuits regarding J&J’s fluoroquinolone antibiotic Levaquin are in the early stages. The FDA has issued several warnings about the popular antibiotic, including that it can increase a person’s risk for tendon ruptures and nerve damage.
Most recently, the FDA warned the drug should not be used to treat common illnesses in people who have other treatment options because the risks don’t outweigh the benefits. The agency required J&J put a black box warning on the antibiotic, the strongest warning issued by the FDA, in July 2016.
Recent studies have also linked the drug to damage to the body’s most important artery, the aorta, prompting lawsuits from across the country.
Yet another Johnson & Johnson device accused of harming women, power morcellators were used during minimally invasive surgeries, like hysterectomies, to chop organs into smaller pieces for easier extraction. It was during these procedures that the device often spread undiagnosed cancer throughout the abdomen, dramatically reducing a woman’s chances of long-term survival.
Johnson & Johnson removed its power morcellator product from the market in 2014, and in March 2016 agreed to settle cases pending in a multidistrict litigation (MDL). Settlements so far have ranged from about $100,000 to $1 million, but some cases have yet to settle.
Not even Johnson & Johnson’s iconic baby powder is safe from scrutiny. The company’s flagship product has been linked to cases of ovarian cancer in women who used the product on their genitals for hygienic purposes. “A sprinkle a day” sang the jingle for Shower to Shower, a former J&J product also wrapped up in the talcum powder litigation alleging the company did not adequately warn consumers of the risk of talc-based products.
Studies have been conflicting regarding the powder’s link to ovarian cancer, but the jury wasn’t out when it came to laying blame on J&J for women’s suffering. At least two juries have handed down verdicts in favor of the plaintiffs, awarding both compensatory and punitive damages. One other Talcum powder lawsuit ended with a verdict against J&J, though no punitive damages were awarded. In total, J&J has paid $127 million to plaintiffs harmed by its baby powder products.
There are roughly 1,200 lawsuits now pending in state courts in Missouri and New Jersey. With two verdicts handed down in favor of the plaintiffs it remains to be seen if Johnson & Johnson will settle the remaining lawsuits.
Will J&J still be on top in 2017?
The above-mentioned lawsuits may only be the tip of the iceberg. Products as old as baby powder are landing people in the hospital the same as drugs approved merely 3 years ago.
Johnson & Jonson may want to stand by its products, but to put profits over people is simply inexcusable.
“When companies put profit over patients’ health and misuse taxpayer dollars, we demand accountability,” wrote then-Associate Attorney General Tony West in a 2013 press release announcing the DOJ’s settlement with J&J.
Johnson & Johnson should be held accountable by the Department of Justice, by the courts hearing the lawsuits regarding seven of the company’s leading products, and by the court of public opinion. So where will you rank Johnson & Johnson next year on the list of most-reputable companies?