Johnson & Johnson Faces Shareholder Suits Over Children’s Med Recall

Earlier this month, McNeil Consumer Healthcare’s recall of<""> children’s over-the-counter (OTC) medicines caught the attention of the House Committee on Oversight and Government Reform. According to The Washington Post, the Committee opened an investigation into the recall, which involved more than 40 different types of children’s and infants’ medicines. Now, the Wall Street Journal is reporting that three lawsuits have been filed against officials at pharmaceutical giant Johnson & Johnson (J&J).

The lawsuit alleges that the officials, regarding the recent recall, “breached their fiduciary duties” regarding how the OTC medications’ recalls were dealt with by not stopping or preventing certain activities, which include illegal kickbacks—violations of the False Claims Act—off-label drug marketing, and good-manufacturing practices violations, said the Journal. One of the lawsuits also alleges that J&J officers “wasted” J&J assets, “unjustly enriched themselves,” and caused J&J to release “inaccurate and incomplete proxy statements,” said the Journal.

Details about the lawsuit were disclosed in a regulatory filing this week and that the lawsuits were filed in federal court in New Jersey between April 21 and May 6, said the Journal. Each lawsuit, referred to as shareholder derivative complaints, were filed against specific directors, officers, and staff on behalf of J&J, explained the Journal.

McNeil issued the recall saying some drugs might contain a higher concentration of active ingredient than is specified, others may contain inactive ingredients that may not meet internal testing requirements, and others may contain tiny particles. The medications—43 varieties of Tylenol Infant Drops, Children’s Tylenol Suspensions, Children’s Tylenol Plus Suspensions, Motrin Infant Drops, Children’s Motrin Suspensions, Children’s Zyrtec Liquid in Bottles, and Children’s Benadryl Allergy Liquid in Bottles—were recalled in the U.S. and 11 other countries.

We also recently reported that the Food & Drug Administration (FDA) cited deficiencies at the company’s Fort Washington, PA facility that could have caused bacterial contamination of raw materials in the recalled products. The agency also charged that McNeil knowingly used bacteria-contaminated materials to make the recalled drugs. While FDA officials said that none of the final product had been found to be contaminated, they cautioned that a further review of inspectors’ observations is still needed to reach a firm conclusion.

The FDA’s report on the Fort Washington facility cited more than 20 manufacturing problems, including not properly testing for contamination of the recalled products. The agency also faulted McNeil for failing to initiate corrective action after receiving 46 consumer complaints from June 2009 to April 2010 regarding foreign materials in the drugs.

According to The Washington Post previously, the House committee is investigating conflicting accounts of what prompted the recall, as well as McNeil’s handling of consumer complaints. The Committee wants to look at a chronology of events leading up to the recall, as well investigation reports from both McNeil and the FDA and plans to ask the FDA for its procedures governing routine inspections of OTC drug makers and recalls, the Post said.

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