Tylenol Case

Tylenol Case - CHAPTER SIX Case: Johnson & Johnson and...

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Unformatted text preview: CHAPTER SIX Case: Johnson & Johnson and the Tylenol Murders Before September 30, 1982, manufacturers felt that if they made a good product and dealt fairly with consumers, retailers, employees, and other publics, they could maintain a positive image and be considered con- sumer-friendly, a good company with which to do business. ‘ Johnson 8: Johnson was one of those companies. It was an old and trusted company. With 165 companies in 53 countries throughout the world, it made baby products: baby powder, lotions, shampoos, cotton swabs, adhesive bandages, surgical instruments, Reach toothbrushes, Ortho-Novum birth control pills, and pharmaceuticals in the World Health Organization list of essential drugs. Johnson 8: Johnson was a household name. The corporation also had a positive image among its employees. It was listed as one of the 100 best places to work. The company credo was writ— ten by the son of the company’s founder in the 19405 (see. Fig. 6.1). The credo said that the company had four responsibilities in the following or- der of priority: (1) to the consumer, (2) to the employees, (3) to the com- munities, and (4) to the stockholders. 86 .n if“? 1‘... ". q inn-L13: L1. Our Credo We believe our first responsibility is to the doctors. nurses and patients. to mothers and fathers and all others who use our products and services. In meeting their needs everything we do must be of high quality. We must constantly strive to reduce our costs in order to maintain reasonable prices. Customers’ orders must be serviced promptly and accurately. Our suppliers and distributors must have an opportunity to make a fair profit. We are responsible to our employees. the men and women who work with us throughout the world. Everyone must be considered as an individual. We must respect their dignity and recognize their merit. They must have a sense of security in their Jobs. Compensation must be fair and adequate. and working conditions clean. orderly and safe. We must be mindful of ways to help our employees fulfill their family responsibilities. Employees must feel free to make suggestions and complaints. There must be equal opportunity for employment. development and advancement for those qualified. We must provide competent management. and their actions must be just and ethical. We are responsible to the communities in which we live and work and to the world community as well. We must be good citizens — support good works and charities and bear our fair share of taxes. We must encourage civic improvements and better health and education. We must maintain in good order the property we are privileged to use. protecting the environment and natural resources. Our final responsibility is to our stockholders. Business must make a sound profit. We must experiment with new ideas. Research must be canted an. innovative programs developed and mistakes paid for. New equipment must be purchased. new facilities provided and new products launched. Reserves must be created to provide for adverse times. When we operate according to these' principles. the stockholders should realize a fair return. FIG. 6.1. The Johnson &Johnson credo that guided the company’s crisis team through the ordeal of saving the company’s image, even as news ac- counts reported that the company’s Tylenol product was killing consum- ers. (Source: Reprinted with permission-from Johnson &Johnson.) 87 88. CHAPTER 6 The company also had continually good relationships with the media. Little did it realize just how crucial those relationships would become. September 50 began like any other workday at the headquarters in New Brunswick, N]. Then a fateful telephone call came in. A reporter from the Chicago Sun—Times telephoned a public" relations staff member asking such questions as “How long has Tylenol been on the market?” and “What is Tylenol’s share of the market?” The reporter did not know why he was asked to prepare background in- formation on Tylenol. Someone else was writing the story. An editor had merely assigned him to do background research to use in the main story. The Johnson &Johnson staffer, who then alerted most of the department, thought the call was a bit strange and reported it to Public Relations Direc- tor Robert Kniffin. Kniffin called Arthur Quilty, an executive committee member who had responsibility for McNeil Consumer Products Corpora- tion, a subsidiary. Quilty alerted James Burke, CEO. The reporter later called back and explained there had been reported deaths from the intake of Extra Strength Tylenol. Corporate Vice President Lawrence Foster, who was on vacation, called in, as was his daily practice, and when he learned what had happened, he immediately returned to the office and took charge of the public relations activities. The corporation had no specific crisis communications plan—-few com- panies did at the time. It did have an emergency plan and call list for such incidents as plant fires. The first step was to notify the chain of command- There was an immediate meeting in Burke’s office with top executives, including Lawrence Foster, head of public relations; David Clare, presi- dent and chairman of Johnson 8: Johnson’s executive committee; Joseph Chiesea, president of McNeil Consumer Products Company; and David Collins, chairman of McNeil. At that meeting, Foster dispatched Kniffin to McNeil’s headquarters nearby. Collins, who had been president of McNeil Pharmaceuticals and knew the subsidiary well, was sent to McNeil by Burke. This would actually have been the next step in a crisis communications plan—had there been such a plan. I , The executives all said that it was a period of great fear. There were no warnings, no prodromes. Nothing like this had ever happened to them or any other company that provides products for human consumption. What was going on? Was there a psychopathic murderer in the plant? When the story ran in the media, the public also was afraid. The very idea that a person could take a capsule for a headache and die was terrorizing. People were saying, “I have a terrible headache, but I’m alive.” Even con- JOHNSON 8c JOHNSON AND THE TYLENOL MURDERS ' 89 _ Sumers outside the Chicago area were afraid of Tylenol capsules, if not also afraid of all over-the-counter pain medications. Collins immediately set up a 7-member crisis team. The team’s first task was to find out what sickness it was actually facing. Then it would deter- mine how to go about the healing process. The crisis team handled deci— sions in the area of communications and was in charge of all strategies and tactics. With Burke’s approval, the team decided to recall all Tylenol cap~ sules from stores in the Chicago area. The recalled batch was tested and two additional cyanide—laced capsules were discovered. Still, the team and company were uncertain of how the cyanide got into the capsules. It indeed hoped that the criminality was not in the company, but there was no certainty. Johnson &Johnson had one overriding priority: Warn the public. The company did just that by being completely open and cooperative with the media in getting the news out. Foster said he believed that three points marked the reason Johnson & Johnson was successful in coping with the crisis: 7, 1. The company was open to the media. 2. It was willing to recall the product no matter what that meant to the company. 3. It appealed to the American sense of fair play and asked for the pub- lic’s trust. Foster was responsible for the communications aspect of the crisis team’s work. The team was concerned with aiding police and the FBI in finding the responsible party and in dealing with the Food and Drug Ad- ministration (FDA). First, the crisis team identified its key publics: 1. Consumers (through the media) 2. The medical profession 3. Employees and other internal groups 4. The FDA All publics were notified initially, and the team kept in touch with them throughout the crisis. ' The first story appeared in the morning edition of the Chicago Sun-Times on October 1. The Chicago Tribune ran a story that same after- noon under a banner headline: CHAPTER 6 90 5 Deaths Tied to Pills Fear Killer Put Cyanide in Tylenol A study of the Tribune’s coverage revealed that the newspaper was as Sup- on as it could have been in the telling of the bad portive ofJohnson &Johns news, especially considering the usual “in-your-face” coverage of crises in f two Tribune stories are shown in Figs. 6.2 the 19905. The opening pages 0 _ and 6.5. The company’s executives, the police, the FBI, and the newspa- : pers knew from the start that the tampering could possibly have happened ' at the plant. Nevertheless, there was no insinuation of this in the Tribune’s coverage. ‘ The name Johnson &Johnson was not m tinuation of the story on page 2, nearly buri inches of copy, was the following statement: entioned on page 1. In the con- ed in the middle of 12 column on for Johnson 8: Johnson, parent firm of the company that A spokespers “launched an investigation r makes Tylenol, said Thursday evening his firm this morning to track down the capsules.” _ The spokesman, Robert Andrews, and two otherJohnson &Johnson offi- cials met for an hour and a half with Elk Grove Village detectives and evi- dence technicians. He said his firm is “collectively shocked.” (Houston 8: Griffin, 1982, p. 2) out the Tylenol crisis in that one is- 11 other mentions of the not as familiar a There were four Tribune stories ab sue. Other than in the preceding quoted passage, a company were of McNeil Consumer Products Company, name to consumers as Johnson 8: Johnson. The captions for the related photographs on pages 1 and 2 of the Tri- bune also did not mention the company. The caption on page 2 indicated that medical examiners believed “the capsules were tampered with after leaving the manufacturer’s plant in Pennsylvania” (Shanker & Grady, Octo— ber 1, 1982). On Saturday, October 2, the ardess is 7th Capsule Poison Victi dominant headline on the page. A dreds of people in Tehran, Iran, took t ries about the Tylenol crisis: one about the efforts to track the source of the other about funeral services for, the victims. October 3, the Tribune’s front-page banner headline, ning Probe," referred to a story about a man le of months before for stealing Tylenol. The ferring to the Johnson 8: John- headline in the Chicago Tribune was “Stew- m.” The page-1 headline was not the bomb explosion that had killed hun- poison, and an On Sunday, “Shoplifter Is Sought in Poiso who had been arrested a coup story continued on page 4 with excerpts re son plants. The first excerpt read as follows: CHICAGO TRIBUNE Dust is collecting on some drugstore shelves in the Chicago area, and people apparently are learning to live with headaches in the wake of last week’s tragedy involving Extra Strength Tylenol laced with cyanide. An informal survey of drug- stores throughout the Chicago area showed that sales of most aceta- minophen products have dropped while sales of aspirin have increased slightly. Acetaminophen is the nonaspirin substance used in Tylenol and other pain relievers. “In general acetominophen products are not selling. Point blank. Done in. Dead. Aspirin products are picking up a bit, but the scare seems to have Spread through the shelves,” said pharma— cist Paul Bablak of the Hinsdale Medical Center Pharmacy. “We’re collecting a lot of dust on our shelves. People are scared. and you really can’t blame them." If the fear of cyanide poison- ing can be measured by the still— packed medication shelves at drugstores, then the fever is spreading through the metropoli- tan area, several other pharmacists Other remedy may be safe, but customers don’tbuy it FIG. 6.2. One of four news stories appearing in the Chicago Tribune on said. “I think everybody’s walking around with headaches," said Jerry Denny, a pharmacist at Family Pharmacy in west suburban La Grange. “All the acetaminophen products are ' just sitting on the shelves. " Even generic aceta- minophen is moving slowly.” The slow sales were found not only in smaller, private drug- stores but also in chain stores. Jane Armstrong, director of con— sumer affairs for the Jewel Foods Co., which operates almost 200 Jewel grocery stores and Osco drugstores in the Chicago area, said, “It's too early to tell what’s happening to other acetaminophen products. We have noticed an increase in aspirin sales, although it’s not a groundswell at this point.” The results have been the same for major drug wholesalers inthe area. Drug buyers from sev- eral large wholesalers said they expect orders to increase for aspirin and the substitute aceta- minophen products once fear sub— sides, but they added that it is too soon to accurately measure the effect of the tragedy on drug sales. October 1, 1982, the first day of news coverage of the Tylenol crisis. Note that the story did not mention Johnson &J0hnson. (Copyrighted Chicago Tribune Company. All rights reserved- Reprinted with permission.) 91 Stores nationwide quickly ordered personnel Thursday to strip their shelves of Extra-Strength Tylenol capsules and hospital spokesmen reported rashes of phone calls after cyanide-tainted capsules were linked in three deaths and possibly two others in suburban. Chicago. - The nation’s largest grocery chain, Safeway, in Oakland, Calif., ordered all stores to remove bottles of the over-the-counter pain killer in the 96,000-bottle lot-- MC 3000-—which was recalled by McNeil Consumer Products Co., of Fort Washington, PA. ' All 1,000 Revco Discount Drug Centers and 400 CVS pharmacies in New England pulled every bottle of Extra-Strength Tylenol. “We have pulled it off our shelves completely,” said Bernie Thomas of Perry Drug Stores, Inc., which operated 124 stores in five states, including 98 in Michigan. Meanwhile, poison centers and hospitals were reported swamped with thousands of calls from worried consumers, many of whom said they took Tylenol capsules from the recalled lot, but apparently suffered no ill effects. “We’ve had questions ranging from ‘Do you know anything about Tylenol being contaminated’ to ‘Oh my God, I just took Extra-Strength Tylenol, am I going to die?” said Cathy Piccillo of the Indiana Poison Center, which received 50 phone calls. FIG. 6.3. Another of the four stories appearing in the Chicago Tribune on the first day of coverage of the Tylenol crisis. Again, there was no mention of Johnson &Johnson. (Source.- Copyrighted Chicago Tribune Company. All rights reserved. Reprinted with permission.) 92 JOHNSON 8: JOHNSON AND THE TYLENOL MURDERS 93 Consumers nationwide were urged to stop using Extra Strength Tylenol cap- sules. Johnson &Johnson, parent company of the painkiller’s manufacturer, announced it is recalling all Extra Strength Tylenol in the Chicago area (Shanker 8r Grady, 1982, p. 4) The second excerpt took the following form: Investigators have been unable to'determine how and where the cyanide capsules were placed in any of the suspect containers—whether the killer in- filtrated the drug company’s sophisticated manufacturing and distribution system at some point between plants in Pennsylvania and Texas and ware- houses elsewhere or whether thekiller removed and replaced containers once they had been placed on the shelves of local stores. Stein said he could not rule out “factory error” because of the reported disclosure by Lawrence Foster, aspokesman for Johnson 8: Johnson. Foster said potassium cyanide is used in chemical tests at some of McNeil’s laboratories, but not in the manufacturing process. The labs are re- mote from the manufacturing areas and cyanide would be detected even if someone tried to introduce it during manufacturing, he said (Shanker 8r Grady, 1982, p. 4) There was another front-page story in the October 3 Tribune, this one about a 12-year-old who had died from the poison 4 days before. Johnson 8: Johnson installed 53 telephones to communicate with publics during the crisis. Pretaped statements were placed on special toll-free telephone lines to expedite news gathering. The messages were regularly updated. A full-page advertisement was placed in major Chicago neWSpapers offering consumers an exchange of Tylenol capsules for Tylenol tablets. During the first week of the crisis, Kniffin handled the media from McNeil, whereas Foster was in charge at headquarters. Approximately 180,000 news stories ran in newspapers nationally. The story was at the top of television and radio neWscasts. Two thousand telephone calls were taken from the media. Thirty rheu— sand calls from consumers came in during the first months following the deaths. Still there were glitches. During the first 5 days, as the Chicago Tribune articles showed, Foster is- sued a statement to reporters that there was no cyanide in the manufactur- ing plants. A few days later, the Associated Press heard that there was cyanide in the plants and called Foster to confirm the report. After check- ing again, Foster discovered that indeed a small amount of cyanide was . used in the manufacturing plant for quality-assurance testing of some kind. 94 CHAPTER 6 However, the cyanide was kept in a completely separate facility from the production line. Also, none of it was missing. There was no way that it could have gotten into-:lthe capsules accidentally. Even if it had, it would have been so dispersed as to be harmless. Foster called the Associated Press and told it the truth. He has a reputa- tion for being honest, fair, and ethical. He could not afford a cover-up. When he told the wire service that there was no way the cyanide could have gotten into the capsules, the reporters believed him and agreed not to run the story—unless some other news outlet got the information, too. Sure enough, the Newark Star-Ledger got word of the information, called Johnson 8: Johnson for confirmation, and again Foster said, “Trust me.” The reporter agreed. ' Keeping his promise to the Associated Press, Foster called and told the wire service that the Newark Star-Ledger had the information but had also agreed not to run it. The Associated Press agreed once more not to run the story unless still another newspaper or TV station got the information. Af- ter all, the Star-Ledger was basically a neighbor to the company. However, when the New York Times got the information, Foster de— cided to give up. He called both the Associated Press and the Star-Ledger and asked them to use discretion in running the story. The resulting stories had very little impact. They were run in insignificant places in the Sunday newspapers, and the facts were not blown out of proportion (as had hap- pened with other crises). The newspapers merely reported the informa- tion as Foster had revealed it. With this Foster realized that his positive dealings with the media over the years had paid off. The story could have made front-page headlines ev- erywhere, but it did not because the media trusted the public relations pro- fessional from their past dealings with him. The FBI and the FDA never found any evidence of tampering at the two Johnson 8: Johnson plants. They found that the contaminated capsules had come from both plants—one in Texas, the other in Pennsylvania—but for the first time, there was basic proof that the tampering was not an inside job. The finger now pointed to some external, malicious psychopath who bought the Tylenol, laced it with cyanide, and placed it back in the contain- ers and on the selves of stores. After the crisis team discovered what had transpired, its members were relieved to be assured that the contamination could not have occurred in the plants. The task of the team now turned to saving Tylenol and restoring sales. The team was not worried thatJohnson &Johnson would go under because of the company’s diversified product line. Sales were not down for otherJohnson &Johnson products. There was no boycott against the com— pany. However, there was a fear of Tylenol capsules. The future of TylenOl was at stake. JOHNSON 8tJOHNSON AND THE TYLENOL MURDERS 95 To reach the employees who had been on pins and needles while the company battled the crisis, CEO Burke spoke to an assembly at McNeil and promised that Extra Strength Tylenol was coming back. Employees wore “We’re Coming Back” buttons. Those employees who had been manufactur- ing Tylenol were given other temporary jobs. Videotaped reports of activi- ties were shown to employees explaining what was going on with the crisis. Information packages were sent electronically—fax, telegram, other methods—to major distributors who, in a short time, notified half a million retailers and medical professionals. Up to this point, there was a debate over whether to recall the product. The FBI and the FDA advised against a recall because it would mean giving in to the terrorists. The decision not to recall would have flown if it had not been for a copy- cat crime that took place in northern California on October 5. The company decided then that removing the product from all stores was the only way to show the public that it was concerned about the welfare of its customers. On October 5, all Tylenol products were removed from stores nationwide. Later, there were approximately 250 copycat reports, all of which were found to be groundless. During the recovery period, a decision was made to repackage the prod- uct. A 60-second television commercial featuring the medical director at McNeil notifying consumers of the upcoming return of Tylenol aired in Octo- ber and November to an estimated 85% of US. television households. The triple-seal safety package devised for the product was announced at a November 11 news conference transmitted by satellite to 29 different sites where reporters were gathered. Burke also announced the availability of coupons that could be used toward the purchase of any Tylenol product and a special toll-free telephone number through which consumers could learn about the special promotion. More than 200,000 calls came in to the toll-free information number. Coverage of the press conference in the I, Kansas City Times applauded Burke and the company for their efforts and ' described the new Tylenol safety package as having “glued flaps which must be forcibly opened. Inside, a tight plastic seal surrounds the cap and E. an inner foil seal wraps over the mouth of the bottle” (Goodman, 1982). Johnson 8: Johnson could not have paid for better news coverage. Johnson 8: Johnson executives did interviews with network television shows, such as “Donahue,” “60 Minutes,” and “Nightline,” as well as with major newspapers and magazines, such as the Wall Street Journal and Fortune. As a result of the crisis, all Tylenol capsules were discontinued, as were capsules of other brand names. Tamper-proof, triple-sealed safety contain- drawal. Other manufacturers followed suit. ers were swiftly placed on the shelves of retailers 10 weeks after the with- ' ' 96 CHAPTER 6 The crisis cost the company more than $100 million. Tylenol regained 100% of the market share it had before the crisis, Seven people died. Other lives were saved by the company’s decision to recall all the capsules in the Chicago area. The Tylenol murderer was never found. A $100,000 reward offered by Johnson &Johnson still remains unclaimed. An October 11 Washington Post front—page article praised Johnson 8: Johnson’s crisis reSponse: “Johnson 8: Johnson has effectively demon- strated how a major business ought to handle a disaster ... What executives have done is communicate the message that the company is candid, con- trite and compassionate, committed to solving the murders and protecting the public” (Knight, 1982). ...
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Tylenol Case - CHAPTER SIX Case: Johnson & Johnson and...

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