JAMES BURKE - CEO, JOHNSON & JOHSNON (1976 - 1989)

James Burke was CEO and Chairman of the Board of Johnson & Johnson from 1976 to 1989. He is a member of the Trilateral Commission, as was former Illinois Governor James Thompson. Burke was a member of the network around mega-investor Warren Buffett, which included Philip Morris director John S. Reed; Katharine Graham, the late chairman of the Washington Post, and her son; Capital Cities/ABC Chairman Thomas S. Murphy; James D. Robinson, former chairman of American Express; and Laurence Tisch of CBS. - also see: Burke Steps Down

THE TYLENOL MURDERS

Much of the evidence made public after the 1986 Tylenol tampering conflicted with evidence from the 1982 Tylenol murders investigation. Careless statements made by J&J executives and government officials in 1986 contradicted statements they’d made in 1982. Most interesting, are statements made at press conferences and on national television by Johnson & Johnson CEO James Burke.

Burke, apparently emboldened by his success in covering up the truth about the 1982 Tylenol murders, seemed to believe every word he uttered would be treated as gospel. He’d gotten away with his cock-sure attitude in 1982, but each time Burke shot his mouth off in 1986, he provided another clue to the inner workings of the Tylenol murders cover-up.

Burke never imagined his public statements, which he'd likely attribute to "bravado", would be so readily available to some schmuck like me, 26 years later, to expose just how culpable Burke and Johnson & Johnson are for the Tyenol tamperings that led to at least 12 deaths in 1982 and 1986.

Link to: James Burke's inteview on "The Donahue Show"

WHO'S GONNA TAKE AWAY HIS LICENSE TO KILL

Investigative journalist Morton Mintz commenting on Johnson & Johnson and the actions of James Burke:

“When a corporation freely and repeatedly can do so much harm and then escape meaningful punishment, and when a CEO can stand by while hundreds are injured and some even killed and still be hailed as a champion of corporate ethics, there is something deeply wrong with the way America is doing business.”

In 1975, the supreme court reviewed a case in which the CEO and president of a supermarket chain was personally convicted of Food, Drug, and Cosmetic Act violations involving rodent infestation of a food warehouse. The basis of the conviction was that the executive had failed to exercise the power he had to correct the violations. Affirming the conviction, the court held that the importance to the nation of a safe supply of food and drugs is so great that public policy can demand that a "responsible corporate officer can be liable without consciousness of wrongdoing."

So we have two CEOs, each supposedly "without consciousness of wrongdoing" occurring on his watch. One, unaware of rodent infestation, was convicted of violating federal law. The other, defending acts that resulted in repeated massive injury and death, won accolades for splendid management and became an arbiter of corporate ethics. Imagine if, instead, Burke had to do jail time for J&J's sins. You'd see an awful lot of high-flying CEOs suddenly take an active interest in whether those pills or Pintos or red dyes that look so good in the quarterly reports are poisoning people or blowing them up. - Drug Fiends, by Morton Mintz

“We don’t grow unless we take risks.
A successful company is riddled with failures.” - James Burke

THE 1982 TYLENOL MURDERS

Thursday, September 30, 1982

On Thursday morning, September 30, 1982, after learning about the Tylenol murders, J&J CEO James Burke called a staff meeting for Monday October 4, 1982.

Thursday, October 7, 1982

Seven days after first learning about the Tylenol poisoning, James Burke acknowledged that the original damage control group at corporate headquarters had evolved into three task forces working on an “image rescue project.” One of the task forces, concentrating on employee morale, had already produced an hour long videotape from news reports and the company officials. Burke, in the taped message, informed his employees that “people don’t blame us. They feel we are being victimized just like everyone else.” The tape was shown on October 7, on the employee’s TV network.

JOHNSON & JOHNSON'S DISTRIBUTION DECEPTION

The Extra-Strength Tylenol capsules that the Tylenol killer(s) filled with cyanide were not bottled, packaged, or labeled at J&J's manufacturing plants as Johnson & Johnson executives and FDA officials stated over and over again. Tylenol, like most pharmaceuticals in 1982 and 1986, was bottled, packaged, and labeled by repackagers.

FDA and Johnson & Johnson Conflicting Statements:

At a press conference held shortly after J&J learned about the Tylenol tamperings in 1982, the President of McNeil Consumer Products, while standing next to James Burke, said that Tylenol was packaged at the manufacturing plant. "Plastic shrink-wrap was wrapped around groups of six bottles at the MANUFACTURING FACTORY," he said.

But after the 1986 Tylenol murder, Johnson & Johnson executives and FDA officials said Tylenol was bottled at J&J's distribution center and "plastic shrink-wrap was wrapped around groups of six bottles at the DISTRIBUTION CENTER."

J&J hadn't moved the packaging process from its manufacturing plants to its distribution centers in 1986; J&J executives just told a boldface lie in 1982 when they said the cyanide laced Tylenol capsules had been packaged at their manufacturing plants.

Futhermore, Tylenol was never packaged for retail distribution at the manufacturing plants. The statement endorsed by James Burke that "Plastic shrink-wrap was wrapped around groups of six bottles at the MANUFACTURING FACTORY," is a lie.

The story told by J&J and FDA officials in 1986 discredited a critical component of their fictional approved theory from 1982, which relied on the deception that the Tylenol bottles could not have been tampered with at J&J's distribution centers because they'd been "sealed" in plastic shrink-wrap at the manufacturing factory.

According to this new version of events, since Tylenol was not packaged until after it was shipped from the manufacturing plants to the distribution centers, the Tylenol could have been adulterated at one of J&J's distribution centers before it was packaged.

J&J and FDA officials followed up this revelation with statements that really opened up the number of points in the distribution channel where Tylenol capsules could have been laced with cyanide.

Regarding the 1986 Tylenol tamperings, J&J spokesman Robert Kniffen said:

“While the two tainted samples were handled at the same place only two weeks apart, the company considered it unlikely that the tainting had occurred there because each bottle was usually safeguarded by five seals.”

Kniffin went on to say, “the bottles at the distribution center are typically covered by two additional sealed wrappings: a clear plastic binder that is heat-sealed around all sides of six bottles, and a shrink-wrapped plastic binding around groups of cartons, each of which contains 12 groups of six-packs.”

Also in 1986, FDA Commissioner Frank Young made a statement almost identical to Kniffen's.

"The most plausible explanation is tampering at the local level. In addition to the triple seal on each bottle”, Young said, “the bottles at the distribution center are typically covered by two additional sealed wrappings: a clear plastic binder that is heat-sealed around all sides of six bottles, and a shrink-wrapped plastic binding around groups of cartons, each of which contains 12 groups of six-packs”

Both Kniffen and Young said, “the bottles at the distribution center are typically covered by two additional sealed wrappings,” and Kniffen added, “each bottle was usually safeguarded by five seals.”

Their phraseology reveals the obvious; Johnson & Johnson and the FDA officials knew that some Tylenol was not bottled or sealed at J&J’s regional distribution centers. Since some Tylenol was not packaged by Johnson & Johnson, then all of the un-packaged Tylenol shipped from J&J's distribution centers could have been easily adulterated at any point within the channel of distribution.

J&J executives and FDA officials knew full well that the Tylenol shipped to most of Johnson & Johnson's large customers was not bottled or packaged by J&J. The Tylenol that was adulterated with cyanide in 1982 and 1986 was shipped from a Johnson & Johnson distribution center to a customer's repackaging facility, and then bottled, packaged, and labeled by the customer.

That customer appears to have been Jewel Foods.

UNDER CONSTRUCTION

The 1986 Tylenol Murder

February 10, 1986

J&J CEO James Burke learns that Dianne Elsroth died on February 8 after taking two Tylenol capsules that had been filled with cyanide. There is no evidence that the tamper-resistant packaging had been exploited.

February 14, 1986

James Burke says he considers the Tylenol tamperings "an act of terrorism."

Tylenol case study: According to James Burke, pulling the capsules would be a "victory for the terrorists."

James Burke Thanks his Co-conspirators

During Congressional testimony Burke said:

I have been deeply impressed by the committment and performance of government agencies, especially the FDA and FBI. I cannot imagine how an agency could have been more professional, more energetic or more rational in excercising their responsibilities to the American people.

In addition, the media performed a critical role in telling the public what it needed to know for its own protection. In the vast majority of instances, this was accomplished in a timely and accurate fashion. Within the first week following the Westchester incidents, polling revealed nearly 100 percent of consumers in New York area were aware of the problem. I believe this is an example of how a responsible press can serve the public well being.

The wide availability of self-medications through the open market in the United States is part of an unparalleled health care delivery system. We must work together to maintain the advantages of this system. For industry and government, this means doing what is appropriate to provide for the safety of consumer products. At the same time, we must maximize the freedom and accessability needed for maintaining full advantage of an open marketplace - not the least of which is enlightened product selection. For the consumer, this means continued education and awareness. As has often been noted, no system yet designed can absolutely gaurantee freedom from product tampering; the careful consumer must always be the most important single element in providing for his or her own safety.

Chief of Johnson & Johnson To Step Down in Revamping

October 25, 1988

By DANIEL F. CUFF

James E. Burke, whose steady leadership was credited with helping Johnson & Johnson weather the Tylenol-poison crisis in 1982, plans to step down next April in a major management restructuring at the health-care company.

The company's announcement yesterday said that Ralph S. Larsen, 49 years old, would replace Mr. Burke, 63, as chairman and chief executive. Mr. Larsen will head an office of the chairman that will include Robert E. Campbell, 55, and Robert N. Wilson, 48, as vice chairmen.

The Tylenol crisis began when seven people in the Chicago area died after swallowing Tylenol capsules laced with poison in what was thought to be a case of tampering. The case remains unsolved.

Mr. Burke's sense of openness and accountability as he appeared on television during the crisis was thought to have helped restore trust in the company and to have saved Tylenol as a product.

Mr. Burke said yesterday of the Tylenol affair that ''you couldn't find anything more traumatic.''

Stepping down with Mr. Burke will be David R. Clare, also 63, who is president and chairman of the executive committee. After the annual stockholders meeting on April 26, Mr. Burke will become chairman of the strategic planning committee and Mr. Clare, chairman of the finance committee. Mr. Burke will retire in February 1990, when he turns 65. Mr. Clare will retire in July of that year.

Mr. Burke said a three-person office of the chairman was necessary to manage the expanding company. ''Our business has grown so in size that we began to believe we had to reorganize it around three sectors,'' he added. ''We needed three people to run them.''

Mr. Larsen, Mr. Campbell and Mr. Wilson already serve as chairmen of the three business sectors. Mr. Larsen heads the consumer division, Mr. Campbell, the professional sector, and Mr. Wilson, pharmaceuticals.

Pierre J. Dupasquier, now a company group chairman, will become chairman of the consumer sector when Mr. Larsen becomes chairman and chief executive of the company.

For the last three years, Mr. Larsen, Mr. Campbell and Mr. Wilson have been groomed to succeed Mr. Burke and Mr. Clare in the atmosphere of ''creative conflict'' that Mr. Burke endorses.

Mr. Larsen said the new managment structure reflected the growing size and complexity of Johnson & Johnson, which has annual sales of $9 billion and a large worldwide organization. ''We think it makes sense to have a team approach,'' he added.

Mr. Burke said that naming the three executives to run the company would foster the decentralization he believes in. ''Decentralization equals creativity,'' he added. ''And creativity equals real productivity.''

Mr. Burke grew up in Slingerlands, N.Y., near Albany, and graduated from Holy Cross College. He is also a graduate of the Harvard Business School's famous class of 1949, which produced some of the nation's top business leaders, including Thomas S. Murphy, chairman of Capital Cities/ABC Inc.

Mr. Burke worked for Procter & Gamble for four years before joining Johnson & Johnson in 1953. His forte was product innovation. He said he tried to create an environment where failures could be accepted. ''We have to lose in order to grow,'' he once said.

Mr. Larsen, a graduate of Hofstra University, will become only the fifth chairman in the 102-year history of Johnson & Johnson, which is based in New Brunswick, N.J. He joined the company as a manufacturing trainee in 1962. In 1980 he left to serve as president of the consumer products division of Becton, Dickinson & Company, a maker of health-care products. He returned to Johnson & Johnson in 1983.

Drug fiends: even inside Johnson & Johnson, public safety can take a back seat to profits

Excerpts from a 1991 article by Morton Mintz

In your hall closet, just above the freshly folded towels, there probably waits a white and pink bottle of Johnson's baby powder. For years it has soothed sore bottoms or dried sweaty palms or simply sat there, a symbol of continuity. It's a product your mom used, maybe your grandmother. It's something you can trust.

That's precisely how its maker, Johnson & Johnson (J&J), wants you to feel. For a century, the world's largest health care conglomerate has successfully promoted its integrity and concern for consumer well-being as it sold Tylenol, Band-Aids, and a shampoo that promises "no more tears." Unlike Upjohn, soiled by the Halcion scandal, or the pushers of Selacryn or Oraflex or Versed, J&J has managed to preserve its fine reputation, not just as a money machine, but as an exemplar of ethics in commerce. One of only a handful of blue-chip corporations that have developed progressive benefits for their workers - offering family leave, helping employees care for their children and elderly parents - J&J several times has been enshrined by Fortune magazine as one of America's 10 Most Admired Corporations. That gleaming public image is personified by James E. Burke, J&J's chairman and chief executive officer from 1976 until 1989, who has been saluted by BusinessWeek as "one of the most admired executives in America."

No journalist or flack has done as much to crystallize the ethical image of Burke and J&J as did the deranged character who killed seven people in the Chicago area in 1982 by lacing Tylenol capsules with cyanide. J&J's aggressive response - clearing the shelves of Tylenol throughout the nation - underscored Burke's claim that J&J valued people over profits. J&J built its reputation on "helping people to heal," Burke told an audience of tens of millions on "60 Minutes" that year. William Webster, then-director of the FBI, validated that claim, telling Mike Wallace that "the attitude of top management has been first the interest of the public, then assisting law enforcement, and then their own corporate concerns for the product." Later, Ronald Reagan himself blessed Burke for living "up to the very highest ideals of corporate responsibility and grace under pressure."

But the next time you open that hall closet, consider this: Over the past 15 years, J&J and its subsidiaries have been accused of knowingly and needlessly endangering millions of people. A tour through the inner workings of the J&J empire suggests that, in the case of at least four drugs - Zomax, Suprol, Ortho-Novum birth-control pills, and Retin-A - J&J, under Burke's leadership, willfully disregarded public safety in order to push its products.

Upon Burke's retirement, television producer Norman Lear named him chairman of his Business Enterprise Trust, which, according to its press releases, seeks to celebrate corporate acts demonstrating "courage in upholding important business principles and serving the common good." No one had done a better job of revealing J&J's disinclination to do that than did The Washington Post. Yet rather than spurn the man ultimately responsible for the corporation's conduct, the paper's top officer, Katharine Graham, has named him an outside director of her company, which controls not just the Post but NewsWeek.

The story of J&J's sins is an object lesson in one of the great flaws of capitalism - one that is crucial, if a bit unhip, to point out as potentate after potentate chucks his Marx and starts negotiating with McDonald's. You won't hear it from George Bush or the folks at the American Enterprise Institute, but as anyone who doesn't misread history knows, the free-market system can drive even the most noble-seemimg businessmen to rank long-term common good behind short-term business principles - which is to say, profits. More telling than a binder full of Common Cause reports, the story of J&J's maneuverings through the gap-toothed federal drug approval process demonstrates why good government policing - fast, flexible regulation - is so critical, and such a far cry from what we now have. When a corporation freely and repeatedly can do so much harm and then escape meaningful punishment, and when a CEO can stand by while hundreds are injured and some even killed and still be hailed as a champion of corporate ethics, there is something deeply wrong with the way America is doing business.

Ever since J&J introduced Tylenol in the early seventies, it has played hardball with its competitors in the crowded painkiller market.... So the company was understandably uneasy about the advent in 1971 of an inexpensive pain-relieving device called a transcutaneous electrical nerve stimulator - a one-time purchase - that involved no pill-taking at all.

....J&J bought up the entire organization, but never promoted the stimulator. J&J's real goal was apparently not preventing pain, but preventing competition. The founders of the usurped company sued, charging that J&J had, among other things, violated the Sherman Antitrust Act. After nearly 15 years of legal battles, J&J settled out of court.

In October 1980 J&J's subsidiary, McNeil Pharmaceutical, introduced a new prescription pain medicine; Zomax. Launching Zomax was particularily challenging because there was no clear group of people for whom the drug's benefits outweighed its risks. Zomax was on the market for 28 months before McNeil suddenly recalled it. But by that time, so many physicians had been gulled into believing the painkiller to be both safe and useful that they had prescribed it for nearly 15 million people. By the Food and Drug Administration's (FDA) accounting, the drug had contributed to at least 14 deaths.

In addition to the 14 who died, more than 2,200 other Zomax users suffered allergic reactions, including 403 for whom the reactions were life-threatening. (It is conventional scientific wisdom that adverse drug reactions are grossly underreported.) In addition, the FDA from the start considered Zomax, the first nonsteroidal anti-inflammatory drug it approved, to be the only drug of its kind to pose a possible cancer risk to humans. Based on an independent review of an animal study, Dr. M. Adrian Gross, a former FDA toxicologist, rated the cancer risk of Zomax "highly significant."

Yet the public has heard little about this. Why? In good part because J&J has worked damn hard to keep it from us. Although more than 600 Zomax product-liability lawsuits were filed in 43 states, McNeil used gag orders to bury damaging information that it had been compelled to turn over to plaintiffs. Washington Post reporters Benjamin Weiser and Elsa Walsh disclosed in October 1988 that McNeil "has taken only three cases to trial, choosing instead to settle cases outside the courtroom without admitting any liability. As part of these settlements, it obtained confidentiality agreements that prohibit opposing lawyers and their clients from revealing what they have learned about Zomax."

Documents and testimony suggest that the company knew for years about the possibility of serious allergic reactions to Zomax but suppressed the information to preserve the drug's sales.

According to McNeil internal documents, during premarket testing of Zomax in the seventies, the company received reports that several users had suffered severe but nonlethal allergic reactions. These reactions should have been recognized as anaphylactic almost immediately, because Zomax is almost identical to Tolectin, a McNeil prescription arthritis drug that accounts for an extraordinary share of anaphylactic reactions among drugs in its class. But McNeil's testers neither identified the reactions correctly nor reported them in FDA-required labeling.

The FDA apparently agreed. Despite investigators' concerns about the possible cancer risk, the drug received federal approval in October 1980, a decision based largely on the belief among key agency personnel that the painkiller was as effective as morphine. Did the FDA cite a study to justify that crucial belief? No, FDA officials later admitted - no such study existed. Nevertheless, the drug immediately went on sale, and the carcinogen question was brushed aside.

Totalled recall

In February 1982, immediately following a report in the Journal of the American Medical Association (JAMA) of a case of anaphylactic shock in a Zomax user, a directive to play down the report went out to McNeil's sales force. "This information is being sent to you so you will be fully prepared to respond to a physician or pharmacist who initiates discussion on the article," the memo said. "You should not bring up the subject."

Later that year, a McNeil researcher reviewing the 178 known reactions to Zomax discovered a pattern: Many of the reactions occurred in people who took the drug intermittently. Intermittent users were Zomax's largest market, about 75 percent; any adverse reactions among this group of casual users would unquestionably slow sales. So under the guise of informing the public, McNeil did a little damage control. In the spring of 1982, it drafted a "Dear Physician" letter to 200,000 doctors specifying that reactions might occur in intermittent users. By the time the letter was mailed, however, it consisted of a single, and singularly vague, sentence: "Hypersensitivity upon reexposure or extended use cannot be ruled out." The word "intermittent" had been excised.

Just seven days after the mailing, the company launched a new, high-pressure sales campaign. "We're calling it "Operation 111," sales vice president Thomas H. Odiorne said in an April 16 mailgram. "Now, if that sounds like war, well, in our world of selling that's what it is." Explaining the name "Operation 111," the mailgram said that McNeil hoped to reap $111 million in annual sales of sister drugs Zomax and Tolectin.

Not everyone at McNeil was happy with that war cry. Three of the firm's top physicians, including Dr. James A. Dale, an associate medical director, told the company president that they were so concerned about the safety of Zomax that they themselves would not prescribe it. But McNeil executives, accountable to James Burke, refused to recall the drug, deciding instead to strengthen the warning in the labeling. While the new warning was being prepared, McNeil learned of fatal anaphylactic shock in three Zomax users.

Another jolt followed quickly: Several nonfatal anaphylactic reactions in Syracuse, New York, were reported by a local television station that featured a Syracuse physician's account of his own life-threatening reaction to Zomax. This was the first bad publicity for Zomax to appear in the lay press, and it was such publicity that McNeil most feared. The next day, March 4, McNeil announced it was recalling the drug from the U.S. market. The decision was made by Burke himself.

By the time McNeil ceased sales in the United States, it had sold $100 million worth of Zomax here, although the company admitted it knew of five Zomax-related deaths and of 1,100 reports of allergic reactions. Still, J&J was not going to give up its millions so easily. After the recall, McNeil sought FDA approval to remarket the drug with a strict new package insert, saying it was approved only for chronic pain, and even then as a last resort. And it continued to sell the drug abroad - another stumbling block before the blind - well into the following year.

Burke told the The Washington Post he was proud of his company's handling of Zomax, rejecting suggestions that J&J should have withdrawn the drug immediately after the February meetings in Pennsylvania. Once the company decided to recall the drug, he said, "I think we did a good thing - I don't see how you could do it any faster."

Dr. Dale wasn't quite so proud. The deaths "were avoidable," he told the Post. "They were avoidable side effects. . . . I feel guilty. . . . We met and had the opportunity to take action. . . . We could have done something sooner."

Despite his devastating perspective on J&J's marketing of Zomax, Dale has never testified in a Zomax lawsuit. In the several cases in which his testimony was sought - testimony in which he would reveal the advice of McNeil's three top physicians at the February 1983 meetings - J&J did what it has done in numerous embarrassing law suits: It settled, on condition that the court files be sealed forever.

Kidney lies

One case of bad judgment? Consider Suprol, another prescription anti-inflammatory drug with potential for high profits. Like Zomax, Suprol was heavily promoted to physicians as an alternative painkiller to addictive narcotics - just the thing for folks with morning stiffness, muscle pulls, or back pain. Like Zomak, it caused a spate of serious adverse reactions that were reported with something less than candor to the FDA. Like Zomax, it caused benign tumors in rodents, meaning it posed a possible carcinogenic risk to humans. And like Zomax, Suprol remained on the market long after it should have been removed if J&J really did put safety first.

J&J's Ortho Pharmaceutical subsidiary filed an application for FDA marketing approval in 1978 - a sloppy piece of work, according to Dr. John F. Harter, the FDA medical officer who had primary responsibility for Suprol. The application "has been plagued from beginning to end with |bad data,'" much of which was "the result of poor |workmanship,'" he said in an internal memo in June 1985. "We communicated this lack of confidence to J&J's top management," he added, "but as far as we can tell, it has had little effect on tying up the loose ends in this application."

In 1982 and again in 1983, while the Suprol application was pending at the FDA, at least seven studies were being carried out on human volunteers in the United States and abroad. Ominously, some of the volunteers suffered acute renal (kidney) toxicity. More particularly, young men - usually in their mid-thirties - developed a rare "flank pain syndrome," a severe pain between the ribs and both hips that radiates to the abdomen or groin, accompanied by blood in the urine. In some users, the drug also decreased their kidneys' ability to filter noxious chemicals from their blood.

In the last two months of 1985, the Institute for Clinical Pharmacology (IPHAR) in West Germany performed two more studies commissioned by J&J's Swiss subsidiary - studies that showed clear evidence of Suprol's adverse effect on the kidney. Of 24 healthy young male volunteers, the final data showed, 9 - an astonishing 37.5 percent - "suffered either mild or moderate flank pain." Three more had symptoms of Suprol-related renal toxicity.

On Christmas Eve 1985, knowing nothing at all about the findings of the IPHAR studies, the FDA approved Suprol.

Later, J&J also claimed ignorance. "We were not aware of the existence of the . . . syndrome at the time," a J&J spokesman told me for a Washington Post story. The company added that IPHAR did not report the data even to the Swiss subsidiary until February and March 1986; the results were not relayed to McNeil Pharmaceutical until March and May 1986. In the meantime, sales continued apace.

The deception of the hapless FDA did not end with delayed reporting. Two months after finally receiving the IPHAR data, McNeil informed the agency that the volunteers with flank pain "did not require hospitalization . . . or discontinuation in the study." But in the fall of 1986, when McNeil submitted the actual studies to the FDA, it amended its initial claim. Actually, the company conceded, three of the men had "required hospitalization," while three others required "discontinuation from the study." Despite the confession, J&J insisted to the Post nearly a year later that "the IPHAR cases were nonserious [and] did not need to be reported at all."

Dr. Michael Dunn, a kidney expert at Case Western Reserve University had been consulted by McNeil about adverse reactions to Suprol. Afterward, he was asked by Weiss's Subcommittee on Human Resources and Intergovernmental Relations to review the IPHAR studies. His conclusion was harsh toward both J&J and the FDA. Would the IPHAR and other studies "have alerted competent medical reviewers to the drug's unusual renal toxicity . . . ?" "Absolutely yes," he responded. "I don't see how you could look at this data and not see a danger sign. You would literally either not have to look or have a severe visual problem."

How could J&J and the many affiliates that sold Suprol have missed the renal toxicity that Dunn and other experts saw as utterly obvious? How could the FDA have so misread the studies? Or is the better question: Did they miss it? The following chronology suggests that the knowledge was indeed attainable - and perhaps more of it was attained than J&J would like to admit.

March 1986: McNeil submits to the FDA a revised labeling that, for the first time, warns of flank pain and renal toxicity.

April: McNeil says, in the first of three increasingly worrisome "Dear Doctor" letters in six months, that it has 16 U.S. reports of "abrupt onset of flank pain after one to two doses" of Suprol.

June: The FDA, aware of 90 reports of kidney damage - mostly in young men who had taken only one or two capsules - tells McNeil to mail a second "Dear Doctor" letter.

October: Shortly before J&J's U.K. subsidiary ends Suprol sales "on commercial grounds," the United Kingdom's drug regulators advise the FDA that its approval of Suprol "should be revoked." The FDA does not reexamine the data. McNeil, in its third "Dear Doctor" letter, advises that "Suprol should not be considered as the initial treatment for" its approved uses.

February 1987: In a letter to the FDA, Rep. Weiss cites seven studies that preceded the IPHAR research and that "were reported well before Suprol's U.S. approval," which found flank or groin pain in 24 of 107 healthy male volunteers.

May 13: The European Community's drug-safety panel recommends suspension or withdrawal of all remaining licenses to sell Suprol "in view of the specific hazard in young males, without significant benefits, compared to other [nonsteroidal anti-inflammatory drugs] in the same group."

May 15: McNeil announces worldwide suspension of Suprol sales on the basis of the EC action. By then, more than 300 cases of flank pain had been reported in an estimated half-million American users.

The FDA itself took no decisive action to ban Suprol.

Poison pill

On June 30, 1971, a physician prescribed Ortho-Novum 1/50 for Pauline Jane Buchan, a 23-year-old Ontario mother. She was in excellent health, a nonsmoker with no predisposition to a stroke. Yet after taking the pill only briefly - slightly less than six weeks - she suffered a stroke. It left her permanently disabled, damaging her brain and substantially paralyzing her left arm and leg. The pill had been issued with no warning that it increases the risk of a stroke - another stumbling block.

In 1974, Buchan sued Ortho Pharmaceutical (Canada) Limited, a wholly owned subsidiary of J&J, and won $606,795 in damages. The company filed an appeal, but in 1986 the Ontario Court of Appeals threw it out. "[I]t can properly be assumed," Judge Sydney L. Robins said in the appellate court's opinion, "that Ortho [Canada] was aware of or had available to it all of the information possessed by Ortho U.S. with respect to their mutual products including adverse reaction reports, medical and scientific studies on birth control pills, and, in particular, the information which led to the warning given to prescribing physicians in the United States."

The warning given to physicians in the United States was adequate; the warning given to physicians in Canada was not. In its entry for Ortho-Novum 1/50 in the 1971 Physicians' Desk Reference (PDR), for example, Ortho U.S. specifically warned physicians of the "statistically significant association between cerebral thrombosis and the use of oral contraceptives." In the "adverse effects" section of the Canadian equivalent of the PDR, Ortho Canada omitted any mention of cerebral thrombosis or stroke.

In the "file cards" provided to physicians by Ortho U.S. as early as 1968, physicians were urged to "be alert to the earliest manifestations of thrombolic disorders," including "cerebrovascular disorders," and to discontinue use of the pill "immediately" if any thrombolic disorders occur. No such warning appeared in the cards provided to physicians by Ortho Canada. The contrast was similar in the bulletins given to the salesmen who called on physicians and in pamphlets given to doctors for distribution to patients.

In February and March 1987, FDA inspectors found "serious violations" of drug law involving the manufacture of Delfen Contraceptive Foam. "Your firm failed to take appropriate measures to prevent [the over-the-counter product from] being contaminated with objectionable micro-organisms," the agency said in a "Regulatory Letter" obtained under the Freedom of Information Act. Ortho also "failed to conduct investigations of complaints, and it failed to include in the written record the reasons that investigations were not conducted," Matthew H. Lewis, the FDA's district director in Newark, told Gary Parlin, the company's president. The firm sent two reply letters to the agency, but these were unresponsive to the violations, Lewis said. Yet the FDA neither fined nor censured the company, and the press never reported the story.

Corporate punishment

The unqualified success of J&J, by capitalist standards, points to a massive failure - not just of government regulation, but of capitalism itself.

It may seem unfair at first glance to impute to James Burke personal responsibility for the corporate conduct detailed here. As chairman and CEO of J&J, he was, after all, at the apex of an enterprise that by 1990 had 175 subsidiaries, nearly 83,000 employees, sales of $11.2 billion, and profits of $1.1 billion. But even if full weight is given to that excuse, I believe it is indeed fair to hold Burke - and all senior executives similarly situated - personally accountable. One reason is that Burke has yet to acknowledge that any executive involved in the immorality repeatedly evidenced here may have acted improperly in any way at any time. He has, in a word, stonewalled: no apologies, no repudiations, no punishments.

But suppose that Burke were to at least admit that, without his knowledge, subordinates had put people at risk of needless disease, injury, or death; suppose too, that he invoked his ignorance of their wrongdoing as his defense. It's a defense that doesn't wash. "Duty arises from our potential control over the course of events," the philosopher Alfred North Whitehead once said. "Where attainable knowledge could have changed the issue, ignorance has the guilt of vice." For Burke in the episodes cited here, the knowledge was readily attainable.

The sterling reputations of James Burke and J&J prove that the use of our media and government make that scapegracemanship not just possible, but positively easy.

February 23, 1986

TYLENOL: DESPITE SHARP DISPUTES, MANAGERS COPED

By STEVEN PROKESCH

Almost from the moment on Feb. 10 when the news broke that a Westchester County woman had died after taking a cyanide-laced Tylenol capsule, Johnson & Johnson found itself racing to stay in control of a rapidly changing situation.

As consumer fears mounted, the company had to move quickly to ensure public safety yet prevent the episode from becoming a staggering blow.

What has become clear, through interviews with James E. Burke, the company chairman, and other Johnson & Johnson officials, is that once the company found itself embroiled in yet another product-related death, following a spate of similar crimes in 1982, the aim was to control consumer reaction, exercise damage control and make the best of a bad situation.

It was not always easy, nor was it accomplished without sharp disputes among executives, with some of them shouting at each other in discussions over what to do next.

Corporate managers always have to strike a balance between the demands of various constituencies: customers, employee groups, suppliers and shareholders. But how Mr. Burke and Johnson & Johnson reacted in the latest Tylenol crisis offers a glimpse into the process in the midst of a highly charged atmosphere.

The crisis began when Diane Elsroth, the Westchester woman, died in Yonkers on Feb. 8; news of her death was disclosed Feb. 10. The Federal Food and Drug Administration and the company immediately started collecting Tylenol capsules in the area. On Feb. 13 the F.D.A. discovered a second bottle of tainted capsules and warned consumers nationwide not to take the capsules. The company began a recall in Westchester and asked retailers around the country to remove the capsules from their shelves.

On Feb. 17 the company began a nationwide recall and announced it would end sales of all nonprescription drugs in capsule form.

Since these events, the 60-year-old Mr. Burke, who has led the company since 1976, has struck a balance between what is good for consumers and what is good for Johnson & Johnson, according to many observers. In recent polls, for instance, the public credited the company with having made the appropriate response to the crisis.

Johnson & Johnson's handling of a similar situation in 1982, when seven people died in the Chicago area after taking tainted Tylenol capsules, enabled the company to regain its leading share in the analgesic market despite a sharp initial decline. In that case, Johnson & Johnson recalled all its Tylenol capsules and introduced a triple-sealed, tamper-resistant package.

Mr. Burke learned of Miss Elsroth's death about 4 P.M. on Feb. 10. He ordered what turned out to be continuous polling of consumers to monitor their fears about, perceptions of and intentions toward all Tylenol products.

Even before the final decisions on the recall and discontinuance of the non-prescription capsule was made last Sunday, Mr. Burke was promoting Tylenol in the form of caplets, elongated, coated tablets that are said to be easier to swallow than normal tablets. Whether at news conferences or in his numerous television appearances, Mr. Burke readily admits, he wasted no opportunity to get across the message that Johnson & Johnson had a safe alternative to capsules.

''I am an aggressive marketing person,'' Mr. Burke said in an interview Thursday in his office in Johnson & Johnson's gleaming white headquarters in New Brunswick, N.J. ''I've never denied that.''

Johnson & Johnson officials also acknowledge that outside events as much as devotion to the company's widely touted credo, which in essense promises to put safety above profits, led to the company's drastic actions. These events included state bans on the sale of Tylenol capsules and spreading consumer apprehension.

Merely pulling nonprescription capsules off the market could ultimately cost as much as $150 million after taxes, company officials say. Johnson & Johnson had earnings last year of $613.7 million on revenues of $6.24 billion. Company Saw Threat To Market Share The action also could jeopardize Tylenol's 35 percent share of the $1.5 billion over-the-counter, pain-reliever market. Johnson & Johnson's revenue from Tylenol, its most profitable single brand, is $525 million, and the capsule had accounted for about a third of that, or roughly $175 million.

Besides its economic significance to the company, Tylenol was a product important to Mr. Burke's career. He had been a champion of Johnson & Johnson's decision in the 1970's to turn Tylenol into a mass-marketed drug, Still, Johnson & Johnson has been widely praised by analysts, government officials and others for its actions in the ordeal.

''This company has figured out if you do poorly by the American public, they won't respect you, and if you do well by them and look out for their interests, they'll give you a second chance,'' said John A. Norris, deputy commissioner of the Food and Drug Administration. Johnson & Johnson has acted in ''enlightened self-interest,'' Mr. Norris said.

In doing so, however, Johnson & Johnson often found itself racing to stay in control of a rapidly changing situation.

For instance, Johnson & Johnson officials have repeatedly said that one reason they decided to stop selling capsules was that they could not guarantee that the capsules could not be tampered with.

In interviews on Thursday and Friday, company officials said they also believed they had no choice because they doubted that many states would allow sales of Tylenol capsule until a guarantee of safety could be made. At least 14 states have indefinitely banned Tylenol capsules.

Shifting consumer reaction to the news events also forced the company's hand. After the drug agency discovered a second bottle of cyanide-tainted Extra-Strength Tylenol capsules on Feb. 13, consumer loyalty to Tylenol began to deteriorate. Telephone surveys told the company that its effort to persuade customers that the Tylenol tampering was a local incident was failing.

''There was definitely a trend,'' said David E. Collins, chairman of the McNeil Consumer Products Company, the Johnson & Johnson subsidiary that makes Tylenol.

Still, the deliberations that ultimately led to the decision to stop making capsules were far from harmonious. Meetings in Mr. Burke's 11th-floor office were often punctuated by ''yelling and screaming,'' Mr. Burke said. He added, however, that confrontational meetings are part of Johnson & Johnson's approach to forging consensus.

McNeil officials initially resisted the growing feeling among Johnson & Johnson's executives that the crisis had to be treated as a national event. When Mr. Burke and David R. Clare, the company's president, began to push for the end of Tylenol capsules, McNeil officials argued that such a decision was too drastic.

The timing of the recall was influenced by concerns other than the public's safety, which officials said was no longer threatened because the company had asked that capsules be removed from retailers' shelves. A $4-a-share plunge in Johnson & Johnson's stock price on Feb. 14, and a scheduled appearance by Mr. Burke on the ''Donahue'' television program on Feb. 18, caused the company to make the announcement on Feb. 17, the Presidents' Day holiday. Company officials had been talking of waiting until as late as last Thursday to announce the recall.

But they reasoned that if the announcement came on a holiday when the stock market was closed, investors would have a chance to digest the information and not react in panic. Moreover, Mr. Burke would not ''have to finesse'' questions about a possible recall on the Donahue show, Mr. Clare said. And given the company's obsession with maintaining its public credibility, this was key, he added.

Another reason for the timing of the decision was a fear that competitors would take advantage of Tylenol capsules' uncertain fate. These concerns had intensified after the company told retailers to remove the capsules from their shelves. The company worried that competitors might grab that empty space.

Mr. Burke ''wanted it resolved as soon as they could,'' said Harold Burson, chairman of Burson Marsteller, the public relations firm that was called in by Johnson & Johnson in the crisis. ''One of the objectives was to get back to business.''

In addition, throughout the crisis, Johnson & Johnson appeared obsessed with preserving the high level of public trust in the 100-year-old company and its products. The company credits this trust with Tylenol's remarkable comeback after the 1982 poisonings in the Chicago area. And it is something that Mr. Burke, in particular, takes very seriously.

The son of an insurance manager at New York Life, Mr. Burke still talks about his father's insistence on integrity. When he left Procter & Gamble to join Johnson & Johnson, he said, he found it had ''great values'' that he judged were akin to ''my own personal convictions.'' Credo of Responsibility To Users of Products In 1979, Mr. Burke initiated a companywide effort to recommit managers to its credo, which begins: ''Our first responsibility is to the doctors, nurses and patients, to mothers and all others who use our products and services.'' Mr. Burke said that during the crisis, ''nobody had to ask what the guidelines are.''

This led him to take an uncharacteristically visible role during the crisis. The last time he had done so was in the 1982 crisis. An intensely private man who is reluctant to talk about his personal life, the white-haired, blue-eyed executive abhors being in the spotlight.

''I really don't like this personal publicity; I don't feel comfortable with it,'' said Mr. Burke, who joined Johnson & Johnson in 1953 and who has played a key role in turning it from a concern whose main business had been supplying hospitals and health professionals into a major consumer products company.

Still, Mr. Burke said that as chief executive he felt that he had no choice but to act as the corporate spokesman because ''Johnson & Johnson can't be faceless; it has to be personalized.''

Moreover, his success in dealing with the public in 1982 made him the natural spokesman.

''He does exceptionally well on television,'' noted Lawrence G. Foster, the company's vice president for public relations. ''Why does a baseball manager go with his 20-game winner in the World Series?''

Known for guarding its secrets jealousy in calmer times, even to the point of keeping securities analysts at bay, Johnson & Johnson has gone out of its way to shape media coverage of the crisis. It has held three news conferences at its corporate headquarters and one in Washington, and Mr. Burke has made more than a dozen television appearances, agreeing to interviews on everything from national talk shows to local broadcasts.

The first news conference - held on Feb. 11, the day after the news of Miss Elsroth's death, was Mr. Burson's idea. The purpose was to project a positive image of the company. ''We had nothing new to say,'' the public relations executive said. ''But with the company having trouble returning the deluge of calls, I was alarmed we were jeopardizing our credibility.''

Five other people - Mr. Clare; Mr. Collins; Mr. Foster; George S. Frazza, the company's general counsel, and Joseph R. Chiesa, McNeil's president -have helped Mr. Burke manage the crisis.

Mr. Burke stresses that the six have operated as a team and that his style is to manage by consensus, not by edict. The decision to pull out of the capsule market might have come earlier than last Sunday, but Mr. Burke wanted everyone, including McNeil officials, to support such a major move.

Since Friday night, networks have been carrying commercials announcing the recall of Tylenol capsules and promoting the caplets. Mr. Collins, McNeil's chairman, acknowledges that it is going to be tougher to get capsule users to switch to caplets than it was to persuade capsule users in 1982 to buy capsules in the tamper-resistant packages that the company introduced.

For his part, Mr. Burke, who has been putting in 16-hour days, said he now plans to ''back out'' of handling Tylenol and let McNeil officials take charge of rebuilding Tylenol's image once again.

The initial signs are promising, they said. Of the nearly 205,000 Tylenol users who had telephoned Johnson & Johnson by midday Friday about exchanging their capsules, more than 95 percent requested caplets rather than cash. And Mr. Collins noted that on Wednesday and Thursday, McNeil had its two largest sales days in history.

But this seemingly promising news is not likely to set Mr. Burke's heart at ease. ''When everything is going right, I'm inclined to worry about what can go wrong,'' he said.

As consumer fears mounted, the company had to move quickly to ensure public safety yet prevent the episode from becoming a staggering blow.

It was not always easy, nor was it accomplished without sharp disputes among executives, with some of them shouting at each other in discussions over what to do next.

The company began a recall in Westchester and asked retailers around the country to remove the capsules from their shelves.

On Feb. 17 the company began a nationwide recall and announced it would end sales of all nonprescription drugs in capsule form.

Whether at news conferences or in his numerous television appearances, Mr. Burke readily admits, he wasted no opportunity to get across the message that Johnson & Johnson had a safe alternative to capsules.