Bausch & Lomb Reeling From CDC Report Now Linking Two of Its Leading Products to Additional Fungal Eye Infections

Bausch & Lomb’s problems just got significantly worse as the Centers for Disease Control and Prevention (CDC) has notified the company additional cases of Fusarium keratitis involving contact lens wearers have been linked to another of its leading products.

According to a press release, the CDC has found some 27% of the reported cases of the rare fungal infection in contact lens wearers occurred in people who had used <"">ReNu MultiPlus, a contact lens storage solution that has approximately a 40% share of the

ReNu With MoistureLoc, with a market share of less than 10% ($45 million in sales in 2005), has been linked to a high percentage (57%) of the <"">Fusarium keratitis cases. According to a statement from Bausch & Lomb, it was this inordinately high proportion of ReNu With MoistureLoc cases reported to the CDC that prompted the voluntary recall of the product pending an investigation.

Shares of Bausch & Lomb plummeted almost 10% following the disclosure of the latest CDC information. Since last summer, the company has seen its stock fall from almost $90 a share to only $43.20 on Wednesday.

Some 20% of the company’s annual sales and over 50% of its profits are generated by its contact lens product lines. Consumers and retailers are expected to be cautious with respect to ReNu MultiPlus if Bausch & Lomb opts to continue marketing it while the CDC, FDA, and the company itself continue their investigations.

Presently, the CDC has received 191 reports of eye infections caused by the Fusarium keratitis fungus, with 86 of those cases being confirmed. Some 54 of the 58 contact lens wearers stated that they had used a Bausch & Lomb lens cleaning solution.

While the outbreak of this severe fungal infection is serious enough, the perception (fueled by contradictory statements from Bausch & Lomb) is that far too little was done by the once highly respected company to isolate the problem, advise the public, recall the product, and investigate the source of the fungus.

Even last week, no sooner had the ink dried on a Wall Street Journal report that Bausch & Lomb had learned of eye infections linked to its ReNu With Moisture-Loc from Hong Kong health officials in November 2005, than the timeline was moved backward.

While Bausch & Lomb claimed that the November time frame was the very earliest it knew of a potential problem, it appears that, for a second (or even third) time, the company may have been guilty of two of the cardinal sins of product recalls; delay and misinformation by the manufacturer.

Bausch & Lomb first stated February 18, 2006 was the earliest indication that there may be “an unusual occurrence with this infection.” That date, however, was somewhat misleading, since Hong Kong health officials had admittedly told the company in November 2005, that they had “noted an increase in hospital admissions due to contact-lens-related keratitis from June to September 2005.”

The company claimed that nothing in the November contact with Hong Kong authorities, or the investigation being done at the time, seemed to require further action since no definitive link had been made between its product and the “spike” in Fusarium infections.

Apparently, however, the Hong Kong government “alerted Bausch & Lomb Inc. to eye infections in users of its contact lens solution in September 2005, way before the company withdrew its product in February this year.” (Reuters 4.27.06)

According to that report, Hong Kong’s Health Department had detected the spike in Fusarium cases in July and August and, as a result, had conducted tests of the eye solution.

Although no link had yet been made in September, this latest revelation clearly indicated to experts that there was certainly a reason for Bausch & Lomb to take more than a passive role where a very serious eye-related problem was detected in users of one of its eye-care-related products.

Although Bausch & Lomb reported the Hong Kong “incident” to the FDA in December 2005, its report stated that “no causal factors can be determined and no conclusion can be drawn.”

That optimistic appraisal of the situation would not have sounded a warning in the U.S. It also may have lulled Bausch & Lomb into a false sense of security regarding the safety of its product thereby delaying its response to the problem when it finally burst onto the scene in April.

In any event, the shifting timeline has not been a good thing for Bausch & Lomb for a number of reasons.

As we have previously reported, when pharmaceutical products are linked to adverse reactions, serious side-effects, or contamination, a manufacturer’s immediate reaction to the problem is often the most critical factor in assessing whether the “crisis” was managed correctly.

Many perceptions, inferences, and consequences are directly related to the effectiveness of the initial steps taken by any company once the safety of one of its products is brought into question.

The company’s perceived concern (or lack thereof) for the safety of the public in general, and its own customers in particular, will be largely defined by the speed and scope of its reaction to the crisis.

A quick and decisive reaction will usually serve to boost confidence and trust in the company, while slow or evasive actions will only generate mistrust and second-guessing.

Immediate steps to address the crisis will unquestionably save additional injuries or deaths. Thus, immediate voluntary recalls are always seen as responsible gestures. Such actions are expensive, but it is money well spent in terms of damage control. Forced recalls dictated by government agencies or court orders are extremely damaging to a company’s image.

Any perceived delay or deception in dealing with a product-related crisis can do irreparable (or, at the very least, long-term) damage to a company’s reputation and sales. It may also have a spillover effect on the company’s other products even though they are not involved in the problem and remain perfectly safe.

A company’s initial reaction to a crisis will unquestionably find its way into any subsequent litigation related to it. Quick, decisive, and thoughtful actions will serve as strong defensive statements, while a slow, evasive, and self-serving approach will provide the plaintiffs with a powerful weapon against the company involved.

Unless there has been some illegal or otherwise improper conduct, an immediate response that effectively addresses the problem will usually stave off monetary penalties and punitive measures by regulatory authorities.

Dealing with a crisis in an open and effective manner will avoid recriminations within the company and circumvent such internal problems as stockholders’ derivative lawsuits.

In the case of Bausch & Lomb, crisis management experts and business analysts have pointed out that the delay in implementing a crisis management plan was inexcusable and therefore highly damaging to the company’s overall image, stock value, and sales of other unrelated products.

Those observations have become even more applicable now that the company’s stock price has fallen considerably and another of its leading products may have a similar infection-related problem. Bausch & Lomb’s effort to keep ReNu MultiPlus on the market while minimizing the risk to the public that this second product might be causing cannot be helping the company’s image either.

As the timeline is moved further back, the missteps by the company take on more significance and do greater damage to its image and credibility.

Although the infection issue is serious enough in terms of finding out why it has occurred, the perceived failure by Bausch & Lomb to take immediate corrective action in terms of a recall or warning blitz has becoming even more of a problem for the company.

While the company maintains that it reacted quickly and decisively in the matter, the perception is that it did not. The revelations that these problems were developing since as early as July 2005 as the Fusarium infections began to appear in Hong Kong is troubling to say the least.

Crisis management consultants believe Bausch & Lomb would have been well-served by recalling the product immediately upon release of the CDC warning. While some retailers followed that path, the manufacturer did not. The hesitation allowed the product to remain on the market for a considerable length of time when it should have been already on its way back to the company.

The delay in launching an all-out media bombardment containing warnings and safe eye-care procedures has also been seen as a problem for the company. While government agencies reacted to protect the public as soon as they could, Bausch & Lomb could have done so much sooner given its immediate knowledge of the Asian cluster of what is normally a very rare infection.

With individual personal injury lawsuits and class-actions starting to be filed, Bausch & Lomb is undoubtedly in for years of litigation. Its conduct so far has only made matters worse and may ultimately form the basis of punitive damage claims.

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