Wednesday, August 24, 2011

Why Cultivate Weldon's Confidence? - CEO Goes to White House Days After His Company's Latest Guilty Plea Announced

Earlier this month, US President Barack Obama met "with eight business leaders to hunt for ideas to revive the economy," according to the Wall Street Journal.  At the session, the President asked "what he and his administration could do to improve their confidence...."  The reporters' White House informants emphasized that the point was "listening to the CEOs and not telling them what to do."

Included amongst the eight CEOs was "Bill [William] Weldon of Johnson & Johnson."  Why would the US President want to improve Mr Weldon's confidence?

Johnson and Johnson's Latest Guilty Plea

After all, two days earlier, Bloomberg noted how Mr Weldon's company was ready to plead guilty, yet again.
Johnson & Johnson (JNJ) said it reached an agreement to settle a misdemeanor criminal charge related to marketing of its antipsychotic drug Risperdal.

The U.S. has been investigating its Risperdal sales practices since 2004, including allegations the company marketed the drug for unapproved uses, J&J said in its quarterly filing yesterday. The Justice Department and the U.S. attorney in Philadelphia 'are continuing to pursue both criminal and civil actions,' the company said.

In particular,
The agreement in principle on the criminal charge is 'pursuant to a single misdemeanor violation of the Food, Drug and Cosmetic Act,' the company said.

Other Recent Johnson and Johnson Legal Misadventures
This would be just the latest in a string of adverse legal results for Johnson and Johnson. As Bloomberg noted regarding Risperdal:
Last year, jurors in Louisiana ordered the drugmaker to pay almost $258 million to state officials for making misleading claims about the antipsychotic’s safety. J&J has appealed. [see our post here]

In June, a South Carolina judge ordered J&J officials to pay $327 million in penalties for deceptively marketing the medicine. J&J has asked the judge to throw that verdict out. [see our post here]

'The attorneys general of approximately 40 other states have indicated a potential interest in pursuing similar litigation against' the Janssen unit, J&J said.

Furthermore, the company has been in legal hot water regarding how it sold other products:
In April, in a separate case, J&J agreed to pay $70 million to resolve criminal and civil charges after admitting it bribed doctors in Europe and paid kickbacks in Iraq to win contracts and sell drugs and artificial joints. As part of a deferred prosecution agreement, J&J subsidiary DePuy was charged with conspiracy and violations of the Foreign Corrupt Practices Act. [see our post here]

In May 2010, J&J’s Ortho-McNeil Pharmaceutical LLC pleaded guilty to a misdemeanor charge of selling a misbranded drug, admitting it illegally marketed its Topamax epilepsy drug. J&J paid $81 million to resolve criminal and civil cases. [see our post here]

Johnson and Johnson's 25 Recalls
And just a few days after President Obama's meeting with Mr Weldon and his fellow CEOs, just the latest in the string of recalls of apparently defective products was announced by Johnson and Johnson. Tylenol, made by the McNeil Consumer Healthcare division of Johnson and Johnson, was the recalled product this time, per the Wall Street Journal Health Blog. Note that this post was part of the blog's now long-running J+J Recall Watch feature, and the post cataloged 25 separate recalls of Johnson and Johnson products since 2009, including previous recalls of various versions of Tylenol, and a June, 2011, recall of Risperdal. We have written several times about the inability of Johnson and Johnson management to fulfill a core component of any drug company's mission, to produce pure, unadulterated products (look here, here and here).

We have also noted several times (e.g., here, here, and here) how CEO William Weldon continues to get richer and richer despite his company's guilty pleas, product recalls, and other questionable behavior (for more details about the latter, look here).

Whose Confidence to Cultivate?

So again I ask, why would the US President want to cultivate William Weldon's confidence?  At best, I can only hope that Mr Weldon was invited to the White House because its staff did not do their homework, and only noted the size of the company he leads, rather than the rate of its blunders and misdeeds. 

There is already too much evidence that government is excessively cozy with the leaders of big health care (and other) corporations, and gets too much of advice from them rather than from less well-heeled citizens.  At least, if the President is going to get advice from corporate CEOs, he should try to find some whose companies appear to be better lead.    

Maybe the difficulty he would have finding such CEOs in the health care field would provide a clue that true health care reform requires better leadership and governance of health care organizations. 


Anonymous said...

"So again I ask, why would the US President want to cultivate William Weldon's confidence? At best, I can only hope that Mr Weldon was invited to the White House because its staff did not do their homework, and only noted the size of the company he leads, rather than the rate of its blunders and misdeeds."

So much of this happens at the White House that either there is a lack of competence or they invite these folks because they are potentially big campaign donors.

Anonymous said...

It has been business as usual in the White House. The POTUS has been nothing but a DISappointment. From advice from Weldon to HIT advice from his personal HIT advisor, Allscripts' CEO Tulman, he has heard only one side, and it is sinking his ship.

Steve Lucas said...

Let us also not forget the President’s close relationship with the CEO of GE. Along with positive coverage on NBC and CNBC we see that GE Capital received one of the first bailouts. The CEO has also held several advisory positions over time.

With this in mind we must remember that GE has a very large stake in the imaging industry producing multi-million dollar pieces of equipment that are often funded in some way by the government.

Currently imaging is one of the fastest growing parts of our national medical expense.

Steve Lucas

Afraid said...

Well, the positive thing about Obama's presidency is that less people will be fooled in the future when voting. Indeed I wonder how many young folks have been turned off totally by his presidency. I guess we will tell next election.

Who knows what we will get next as president and congress. Whoever gets there seems to bang the gong of whoever paid for them to get there and not those who voted for them.