Friday, September 17, 2010

Phantom Tylenol Recall

CNN reports that lawmakers and drug regulators released documents on Thursday that indicate Johnson and Johnson, the maker of Tylenol, may have known about problems with the drug months before the actual recall. To add insult to injury, Johnson and Johnson attempted a "phantom recall" of more than 88,000 Motrin tablets in June of 2009. The company hired a subcontractor to buy the products off of store shelves rather than take the products back and notify the public.

You don't need to look very far to see similar corporate tactics: According to internal timelines, Toyota knew of the accelerator defects in 2006. Now they spend millions on public relations to correct not just the product defect but the deceit behind it.

I would be curious to see a study on the long term cost-benefit analysis of a swift recall and taking responsibility early on vs. waiting. I suspect a swift recall would prevent injuries and save dollars on litigation, temper the media storm, and shorten the length of time the company's shortfalls fill the public domain. This would theoretically allow the company to return revenues to normal more quickly.

One thing I do know is that almost all major corporations regain public trust and revenue eventually--how many of us are still boycotting Exxon, or even BP for that matter? But the people killed by defective products and delay tactics of executives do not get to return to their families.

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