Thursday, March 24, 2011

A Jury Finds Johnson and Johnson's Risperdal Marketing "Willfully Deceptive," but What Will It Take to Change Company Leadership?

For Johnson and Johnson, it's deja vu all over again, as reported by the Spartansburg (SC) Herald Journal:
A Spartanburg jury decided that Johnson & Johnson and a subsidiary violated South Carolina's Unfair Trade Practices Act, but the company will wait until damages are determined next month before it decides whether to appeal the jury's decision.

Also,
The jury decided Tuesday the company willfully violated the act by sending a 2003 letter to doctors that attorneys for the state said sought to minimize the risk of hyperglycemia — or high blood sugar — and diabetes reported by patients using Risperdal.

The letter was sent to about 700,000 doctors nationwide — 7,200 of those in South Carolina.

The jury decided that warning labeling included with the drug was also willfully deceptive.

This is not the first such lawsuit involving Risperdal,
South Carolina's lawsuit was the fourth state lawsuit to go to trial.

In West Virginia, claims involving Risperdal were dismissed with prejudice last December following the company's appeal.

In October, a jury in Louisiana awarded almost $258 million in civil penalties to the state. Janssen will appeal that decision.

In a jury trial in Pennsylvania in June, a judge dismissed the state's case against Janssen.

Note that we posted about the Louisiana verdict here.

The hits, they just keep on coming for Johnson and Johnson, which has been recalling a dizzying array of products due to manufacturing problems.  A new recall was just announced today, and there have been 20 separate recalls since mid-2009.

Just eight days ago we contrasted the opulent compensation given the Johnson and Johnson CEO in 2010 (about $29 million) with the company's poor financial performance, seeming inability to make pure, unadulterated, safe products as manifested by multiple recalls, and ethical problems as indicated by legal settlements and guilty pleas. Today we have added another recall, and a jury verdict against the company finding its marketing was deceptive.  So the cognitive dissonance evoked by comparison of executive pay and corporate dysfunction continues. 

Is there any degree of organizational dysfunction that could possibly induce a health care corporate CEO to feel shame for continuing to extract millions from the flailing beast?  Is there any degree of disconnection between executive compensation and corporate performance that could possibly induce complacent corporate boards to feel shame for enriching the hired executives who presided over the mess?

Probably not.  The events surrounding the global financial collapse suggested that somehow expecting corporations to regulate themselves was at best foolishly naive (e.g., see here).  Presumably former US Federal Reserve Chair Allan Greenspan really thought that markets could regulate themselves, and that fraud could not exist because markets in his idealized view would punish it themselves,
he didn't believe that fraud was something that needed to be enforced or was something that regulators should worry about....

But then he later admitted: 
Those of us who have looked to the self-interest of lending institutions to protect shareholder's equity – myself especially – are in a state of shocked disbelief
We do not yet seem to be at the point that will we generate enough "shocked disbelief" about the misbehavior of current health care organizations to realize that they will not police themselves, and a true health care reform movement will have to figure out how to reasonably regulate them.  (I submit that perusing the archives of Health Care Renewal will suggest that we should have been at that point years ago.)

If we do not fix the severe problems affecting the leadership and governance of health care, and do not increase accountability, integrity and transparency of health care leadership and governance, we will be as much to blame as the leaders when the system collapses.

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