Lawsuits force Johnson & Johnson to work as a team
  • Thu, 07/12/2012 - 3:12pm

Johnson & Johnson’s corporate structure fell under scrutiny in 2010 after contamination and faulty labels led to the recall of over 40 medications, Bloomberg reported yesterday.

U.S. lawmakers got involved when a recall of children’s Tylenol forced the drug company to forgo production at a Pennsylvania plant.

According to Bloomberg, Johnson & Johnson’s setup allowed various units to function outside of corporate headquarters. Shareholders claimed that this prevented the company’s directors from being informed and active in their units. Investors’ lawyers remarked that the structure “resulted in a lack of accountability” and became an “excuse for plausible deniability among senior management and J&J’s board.”

Lawyers for J&J investors also reportedly stated, “Plaintiffs believed the J&J board and senior management should be held responsible for not stopping widespread wrongdoing that seriously harmed J&J business.”

According to July 11 court filings, Johnson & Johnson will institute corporate governance changes to settle investors’ lawsuits filed against directors in federal court in Trenton, New Jersey. Bloomberg stated that the company will form a board-to ensure that all units operate according to regulations. That board will also use updated risk-management policies. Investors’ lawyers claim this will force directors to “take responsibility for identifying and addressing problems”.

In an e-mailed statement, Johnson & Johnson spokesman Al Wasilewskia said the company still denies the lawsuits’ claims. According to Bloomberg, he also said that Johnson & Johnson “has a long commitment to compliance, quality and good corporate governance” and that the company accepted the settlement to avoid further litigation.

The company’s new Regulatory, Compliance and Government Affairs committee is expected to submit an annual report to shareholders.

Based in New Brunswick, New Jersey, Johnson & Johnson remains the world’s largest health product manufacturer, according to the Bloomberg story.


About the Contributor

Jessica Davids
I report on FDA developments and new pharmaceutical launches, risks, and safety concerns.

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