A phantom recall continues to haunt Johnson & Johnson (JNJ).
An Oregon appeals court last week revived a 2011 lawsuit brought by state officials who claimed the health care giant exposed consumers to defective supplies of the Motrin pain reliever and violated the state’s unlawful trade practices act.
The move comes five years after J&J reached a deal with the federal government — known formally as a consent decree — to upgrade several manufacturing facilities in the wake of severe quality-control problems. Such agreements require companies to meet certain standards before the Food and Drug Administration will permit shipments to resume.
The manufacturing gaffes were widely publicized because they led to a long-running string of product recalls, some of which were handled poorly, sullying the company’s storied reputation among consumers and physicians. And many J&J shareholders filed lawsuits, one of which unsuccessfully sought to hold the company’s board of directors responsible for a lack of oversight.
One episode, in particular, proved troublesome for J&J. In 2008, the company discovered that a batch of Motrin pills made at a plant in Puerto Rico failed to dissolve properly. Instead of issuing a recall, a J&J contractor surreptitiously attempted to retrieve large amounts of Motrin by using “secret shoppers” to buy bottles from around 5,000 stores in the US, including a few dozen in Oregon.
The goal was to obtain data that J&J hoped would convince the FDA that a formal nationwide recall wasn’t needed. However, J&J initially failed to notify wholesalers and retailers about the defective Motrin and when the episode later came to light, J&J executives were asked to testify at a congressional hearing.
In their lawsuit, Oregon state officials contended the phantom recall — as it came to be known — failed to accomplish its goals. By the time J&J contractors “actually executed their secret buyback project [throughout 2009], 95 percent of the units distributed in Oregon that could have contained defective Motrin had already been sold to consumers,” the state contended in court documents.
It wasn’t until February 2010 that J&J notified wholesalers and retailers in Oregon they had sold defective Motrin. On that basis, Oregon state officials charged the health care giant misrepresented the effectiveness of its product and, ultimately, that consumers were at “material risk,” as a result.
For its part, J&J argued it did not violate the state’s trade practices act because there was no proof that defective Motrin was ever sold in Oregon. It was on that basis that a state court judge dismissed the lawsuit. But the appeals court disagreed. “A material risk that a product has a latent defect is exactly the kind of inherent feature of a product” that is protected under the law, the court wrote in its 15-page opinion.
In a brief statement, Oregon Attorney General Ellen Rosenblum said the “opinion is a powerful affirmation of Oregon’s consumer protection laws.” J&J said it that will appeal.
To what extent the lawsuit will impact J&J at this point is unclear. Meanwhile, the health care giant has, over the past year, largely resumed operations, notably at a key facility in Fort Washington, Pa., where its over-the-counter medicines division — known as McNeil Consumer Healthcare — is based.