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Drug fiends: even inside Johnson & Johnson, public safety can take a back seat to profits.

In your hall closet, just above the freshly folded towels, there probably waits a white and pink bottle of Johnson's baby powder. For years it has soothed sore bottoms or dried sweaty palms or simply sat there, a symbol of continuity. It's a product your mom used, maybe your grandmother. It's something you can trust.

That's precisely how its maker, Johnson & Johnson (J&J), wants you to feel. For a century, the world's largest health care conglomerate has successfully promoted its integrity and concern for consumer well-being as it sold Tylenol, Band-Aids, and a shampoo that promises "no more tears." Unlike Upjohn, soiled by the Halcion scandal, or the pushers of Selacryn or Oraflex or Versed, J&J has managed to preserve its fine reputation, not just as a money machine, but as an exemplar of ethics in commerce. One of only a handful of blue-chip corporations that have developed progressive benefits for their workers - offering family leave, helping employees care for their children and elderly parents - J&J several times has been enshrined by Fortune magazine as one of America's 10 Most Admired Corporations. That gleaming public image is personified by James E. Burke, J&J's chairman and chief executive officer from 1976 until 1989, who has been saluted by BusinessWeek as "one of the most admired executives in America."

No journalist or flack has done as much to crystallize the ethical image of Burke and J&J as did the deranged character who killed seven people in the Chicago area in 1982 by lacing Tylenol capsules with cyanide. J&J's aggressive response - clearing the shelves of Tylenol throughout the nation - underscored Burke's claim that J&J valued people over profits. J&J built its reputation on "helping people to heal," Burke told an audience of tens of millions on "60 Minutes" that year. William Webster, then-director of the FBI, validated that claim, telling Mike Wallace that "the attitude of top management has been first the interest of the public, then assisting law enforcement, and then their own corporate concerns for the product." Later, Ronald Reagan himself blessed Burke for living "up to the very highest ideals of corporate responsibility and grace under pressure."

But the next time you open that hall closet, consider this: Over the past 15 years, J&J and its subsidiaries have been accused of knowingly and needlessly endangering millions of people. A tour through the inner workings of the J&J empire suggests that, in the case of at least four drugs - Zomax, Suprol, Ortho-Novum birth-control pills, and Retin-A - J&J, under Burke's leadership, willfully disregarded public safety in order to push its products.

If these accusations taken together are warranted - and solid evidence supports them - they expose a moral swamp, the sort of shortsighted greed commonly associated with the makers of generic drugs, rarely with the high-minded J&J. They also reveal the remarkable forbearance with which not just the government (particularly in the Reagan era) but society at large treats corporate misbehavior. Today, you probably don't feel any different about that bottle of baby powder, or any less trusting of J&J, than you did five years ago. And far from being shamed for the damage done on his watch, Burke is still lionized for his exacting ethical standards. Upon Burke's retirement, television producer Norman Lear named him chairman of his Business Enterprise Trust, which, according to its press releases, seeks to celebrate corporate acts demonstrating "courage in upholding important business principles and serving the common good." No one had done a better job of revealing J&J's disinclination to do that than did The Washington Post. Yet rather than spurn the man ultimately responsible for the corporation's conduct, the paper's top officer, Katharine Graham, has named him an outside director of her company, which controls not just the Post but NewsWeek.

The story of J&J's sins is an object lesson in one of the great flaws of capitalism - one that is crucial, if a bit unhip, to point out as potentate after potentate chucks his Marx and starts negotiating with McDonald's. You won't hear it from George Bush or the folks at the American Enterprise Institute, but as anyone who doesn't misread history knows, the free-market system can drive even the most noble-seemimg businessmen to rank long-term common good behind short-term business principles - which is to say, profits. More telling than a binder full of Common Cause reports, the story of J&J's maneuverings through the gap-toothed federal drug approval process demonstrates why good government policing - fast, flexible regulation - is so critical, and such a far cry from what we now have. When a corporation freely and repeatedly can do so much harm and then escape meaningful punishment, and when a CEO can stand by while hundreds are injured and some even killed and still be hailed as a champion of corporate ethics, there is something deeply wrong with the way America is doing business.

Ever since J&J introduced Tylenol in the early seventies, it has played hardball with its competitors in the crowded painkiller market - Bayer, Bufferin, St. Joseph's, and the like. So the company was understandably uneasy about the advent in 1971 of an inexpensive pain-relieving device - a one-time purchase - that involved no pill-taking at all. The device, called a transcutaneous electrical nerve stimulator, soothes pain by sending an electric current into the body through electrodes attached at the pain site. Apparently impressed with the product - produced by a small company with few resources to market it - J&J bought up the entire organization. Oddly enough, though, it never promoted the stimulator. J&J's real goal was apparently not preventing pain, but preventing competition. The founders of the usurped company sued, charging that J&J had, among other things, violated the Sherman Antitrust Act. After nearly 15 years of legal battles, J&J settled out of court.

That may have been one competitor down, but by October 1980 there were more anodynes than ever on the market. Tylenol and a dozen variations of aspirin crowded drugstore shelves; behind the counter sat hundreds more painkillers. It was a challenging time for J&J's subsidiary, McNeil Pharmaceutical, to be launching its new prescription painkiller, Zomax - particularly because there was no clear group of people for whom the drug's benefits outweighed its risks. Zomax was on the market for 28 months before McNeil suddenly recalled it. But by that time, so many physicians had been gulled into believing the painkiller to be both safe and useful that they had prescribed it for nearly 15 million people. By the Food and Drug Administration's (FDA) accounting, the drug had contributed to at least 14 deaths.

These deaths followed so-called "anaphylactoid reactions," allergic or hypersensitive responses that commonly lead to a drop in blood pressure, difficulty in breathing, facial swelling, rashing, and itching. Patients going into anaphylactic shock can also lose consciousness. In addition to the 14 who died, more than 2,200 other Zomax users suffered allergic reactions, including 403 for whom the reactions were life-threatening. (It is conventional scientific wisdom that adverse drug reactions are grossly underreported.) In addition, the FDA from the start considered Zomax, the first nonsteroidal anti-inflammatory drug it approved, to be the only drug of its kind to pose a possible cancer risk to humans. Based on an independent review of an animal study, Dr. M. Adrian Gross, a former FDA toxicologist, rated the cancer risk of Zomax "highly significant."

Yet the public has heard little about this. Why? In good part because J&J has worked damn hard to keep it from us. Although more than 600 Zomax product-liability lawsuits were filed in 43 states, McNeil used gag orders to bury damaging information that it had been compelled to turn over to plaintiffs. Washington Post reporters Benjamin Weiser and Elsa Walsh disclosed in October 1988 that McNeil "has taken only three cases to trial, choosing instead to settle cases outside the courtroom without admitting any liability. As part of these settlements, it obtained confidentiality agreements that prohibit opposing lawyers and their clients from revealing what they have learned about Zomax."

What were McNeil's attorneys trying to hide? Documents and testimony suggest that the company knew for years about the possibility of serious allergic reactions to Zomax but suppressed the information to preserve the drug's sales. In the Bible, Leviticus admonishes that one must not "put a stumbling block before the blind." You rarely hear it from the clergy, but a drug company that deceives physicians by knowingly failing to inform them fully and promptly of the hazards of a prescription drug is doing just that. The blind are of course the doctors' patients, nearly all of whom are ignorant of the complex pros and cons of the drug. So they must - blindly - trust their physicians, and perhaps pay with their health, safety, even their lives. That may have happened in the case of Zomax.

According to McNeil internal documents, during premarket testing of Zomax in the seventies, the company received reports that several users had suffered severe but nonlethal allergic reactions. These reactions should have been recognized as anaphylactic almost immediately, because Zomax is almost identical to Tolectin, a McNeil prescription arthritis drug that accounts for an extraordinary share of anaphylactic reactions among drugs in its class. But McNeil's testers neither identified the reactions correctly nor reported them in FDA-required labeling. According to a report by Patrick Seay, the company's regulatory affairs chief, one McNeil official complained around that time that the company was "reporting too many adverse reactions on our drugs." But the company had a more palatable explanation when later questioned by the Post. The premarketing evidence, they said, had been inconclusive.

The FDA apparently agreed. Despite investigators' concerns about the possible cancer risk, the drug received federal approval in October 1980, a decision based largely on the belief among key agency personnel that the painkiller was as effective as morphine. Did the FDA cite a study to justify that crucial belief? No, FDA officials later admitted - no such study existed. Nevertheless, the drug immediately went on sale, and the carcinogen question was brushed aside. Within four months, Zomax had captured 11 percent of the prescription painkiller market.

Determining cancer risks may take awhile, but allergic reactions are easier to see. Shortly after marketing began, McNeil received reports of several more reactions. So in July 1981 - nine months after it started promoting the drug - McNeil revised the prescribing instructions to disclose that "anaphylactoid reactions have been reported." But the disclosure was tucked away in the "precautions" section, not in the more conspicuous "warnings" section - a decision that one of McNeil's own executives later decried as a triumph of sales over safety. Seay, the regulatory affairs chief, noted in a 1984 overview of marketing strategy that the marketing division had gained "a greater role in the content and changes of the package insert" at the expense of the medical side. "We resisted too much and waited too long," he wrote. And he was right. But package labeling wasn't the half of it.

Totalled recall

In February 1982, immediately following a report in the Journal of the American Medical Association (JAMA) of a case of anaphylactic shock in a Zomax user, a directive to play down the report went out to McNeil's sales force. "This information is being sent to you so you will be fully prepared to respond to a physician or pharmacist who initiates discussion on the article," the memo said. "You should not bring up the subject."

The memo may as well have been a cue to the FDA, which looked into the matter after the JAMA report but did nothing. Inside McNeil itself, however, the subject wouldn't die. Later that year, a McNeil researcher reviewing the 178 known reactions to Zomax discovered a pattern: Many of the reactions occurred in people who took the drug intermittently. Intermittent users were Zomax's largest market, about 75 percent; any adverse reactions among this group of casual users would unquestionably slow sales. So under the guise of informing the public, McNeil did a little damage control. In the spring of 1982, it drafted a "Dear Physician" letter to 200,000 doctors specifying that reactions might occur in intermittent users. By the time the letter was mailed, however, it consisted of a single, and singularly vague, sentence: "Hypersensitivity upon reexposure or extended use cannot be ruled out." The word "intermittent" had been excised.

But McNeil appeared to be apprehensive even about that mild statement. Just seven days after the mailing, the company launched a new, high-pressure sales campaign. "We're calling it |Operation 111,'" sales vice president Thomas H. Odiorne said in an April 16 mailgram. "Now, if that sounds like war, well, in our world of selling that's what it is." Explaining the name "Operation 111," the mailgram said that McNeil hoped to reap $111 million in annual sales of sister drugs Zomax and Tolectin. For the next 10 weeks, the mailgram instructed, the sales force was to concentrate exclusively on the two products.

Not everyone at McNeil was happy with that war cry. The tension between profits and public safety came to a head in two days of meetings in February 1983 at McNeil headquarters in Spring House, Pennsylvania. Three of the firm's top physicians, including Dr. James A. Dale, an associate medical director, told the company president that they were so concerned about the safety of Zomax that they themselves would not prescribe it. But McNeil executives, accountable to James Burke, refused to recall the drug, deciding instead to strengthen the warning in the labeling. In the company's view, this was the prudent course, given what was known at the time. But while the new warning was being prepared, McNeil learned of fatal anaphylactic shock in three Zomax users.

Another jolt followed quickly: Several nonfatal anaphylactic reactions in Syracuse, New York, were reported by a local television station that featured a Syracuse physician's account of his own life-threatening reaction to Zomax. This was the first bad publicity for Zomax to appear in the lay press, and it was such publicity that McNeil most feared. The next day, March 4, McNeil announced it was recalling the drug from the U.S. market. The decision was made by Burke himself.

Your FDA on drugs

Where was the FDA during all this? A report released the previous year by the General Accounting Office (GAO) provides a glimpse of the investigative team charged with safeguarding America's health from greedy corporations. It took the agency an average of 13 weeks - and sometimes more than a year - to enter reports of adverse reactions into its computer tracking system. A later GAO report found that 102 of 198 new drugs approved by the FDA between 1976 and 1985 caused serious reactions that often were not detected or disclosed by the agency until several years after approval. The Zomax case followed that trend. While 2,000 allergic reactions had been reported to the FDA, a House subcommittee that oversees the agency, chaired by Ted Weiss, later found that it had been "unaware" of most of them. As for the risk to intermittent users, an FDA official later testified that he'd known about those reactions as early as March 1982. Yet it wasn't until 11 months later - a month before McNeil withdrew the product altogether, and after 14 people had died - that the FDA advised McNeil even to warn doctors about possible reactions.

By the time McNeil ceased sales in the United States, it had sold $100 million worth of Zomax here, although the company admitted it knew of five Zomax-related deaths and of 1,100 reports of allergic reactions. Still, J&J was not going to give up its millions so easily. After the recall, McNeil sought FDA approval to remarket the drug with a strict new package insert, saying it was approved only for chronic pain, and even then as a last resort. And it continued to sell the drug abroad - another stumbling block before the blind - well into the following year.

Burke told the The Washington Post he was proud of his company's handling of Zomax, rejecting suggestions that J&J should have withdrawn the drug immediately after the February meetings in Pennsylvania. Once the company decided to recall the drug, he said, "I think we did a good thing - I don't see how you could do it any faster."

Dr. Dale wasn't quite so proud. The deaths "were avoidable," he told the Post. "They were avoidable side effects. . . . I feel guilty. . . . We met and had the opportunity to take action. . . . We could have done something sooner."

Despite his devastating perspective on J&J's marketing of Zomax, Dale has never testified in a Zomax lawsuit. In the several cases in which his testimony was sought - testimony in which he would reveal the advice of McNeil's three top physicians at the February 1983 meetings - J&J did what it has done in numerous embarrassing law suits: It settled, on condition that the court files be sealed forever.

Kidney lies

One case of bad judgment? Consider Suprol, another prescription anti-inflammatory drug with potential for high profits. Like Zomax, Suprol was heavily promoted to physicians as an alternative painkiller to addictive narcotics - just the thing for folks with morning stiffness, muscle pulls, or back pain. Like Zomak, it caused a spate of serious adverse reactions that were reported with something less than candor to the FDA. Like Zomax, it caused benign tumors in rodents, meaning it posed a possible carcinogenic risk to humans. And like Zomax, Suprol remained on the market long after it should have been removed if J&J really did put safety first.

Suprol is a tradename for suprofen, invented by J&J's Belgian subsidiary in 1972 and sold in Europe by J&J's subsidiaries there beginning in 1982. In the United States, J&J's Ortho Pharmaceutical subsidiary filed an application for FDA marketing approval in 1978 - a sloppy piece of work, according to Dr. John F. Harter, the FDA medical officer who had primary responsibility for Suprol. The application "has been plagued from beginning to end with |bad data,'" much of which was "the result of poor |workmanship,'" he said in an internal memo in June 1985. "We communicated this lack of confidence to J&J's top management," he added, "but as far as we can tell, it has had little effect on tying up the loose ends in this application."

In 1982 and again in 1983, while the Suprol application was pending at the FDA, at least seven studies were being carried out on human volunteers in the United States and abroad. Ominously, some of the volunteers suffered acute renal (kidney) toxicity. More particularly, young men - usually in their mid-thirties - developed a rare "flank pain syndrome," a severe pain between the ribs and both hips that radiates to the abdomen or groin, accompanied by blood in the urine. In some users, the drug also decreased their kidneys' ability to filter noxious chemicals from their blood.

In the last two months of 1985, the Institute for Clinical Pharmacology (IPHAR) in West Germany performed two more studies commissioned by J&J's Swiss subsidiary - studies that showed clear evidence of Suprol's adverse effect on the kidney. Of 24 healthy young male volunteers, the final data showed, 9 - an astonishing 37.5 percent - "suffered either mild or moderate flank pain." Three more had symptoms of Suprol-related renal toxicity.

During the approval process, FDA regulations require the manufacturer to "promptly report any findings associated with the use of a drug that may suggest significant hazards, contraindications, side effects" - a noble requirement, but study after study, by Congress and the GAO, has shown that the FDA is not able to enforce it. On Christmas Eve 1985, knowing nothing at all about the findings of the IPHAR studies, the agency approved Suprol.

Later, J&J also claimed ignorance. "We were not aware of the existence of the . . . syndrome at the time," a J&J spokesman told me for a Washington Post story. The company added that IPHAR did not report the data even to the Swiss subsidiary until February and March 1986; the results were not relayed to McNeil Pharmaceutical until March and May 1986. In the meantime, sales continued apace.

The deception of the hapless FDA did not end with delayed reporting. Two months after finally receiving the IPHAR data, McNeil informed the agency that the volunteers with flank pain "did not require hospitalization . . . or discontinuation in the study." But in the fall of 1986, when McNeil submitted the actual studies to the FDA, it amended its initial claim. Actually, the company conceded, three of the men had "required hospitalization," while three others required "discontinuation from the study." Despite the confession, J&J insisted to the Post nearly a year later that "the IPHAR cases were nonserious [and] did not need to be reported at all."

J&J's seeming indifference baffled Dr. Michael Dunn, a kidney expert at Case Western Reserve University who had been consulted by McNeil about adverse reactions to Suprol. Afterward, he was asked by Weiss's Subcommittee on Human Resources and Intergovernmental Relations to review the IPHAR studies. His conclusion was harsh toward both J&J and the FDA. Would the IPHAR and other studies "have alerted competent medical reviewers to the drug's unusual renal toxicity . . . ?" "Absolutely yes," he responded. "I don't see how you could look at this data and not see a danger sign. You would literally either not have to look or have a severe visual problem."

How could J&J and the many affiliates that sold Suprol have missed the renal toxicity that Dunn and other experts saw as utterly obvious? How could the FDA have so misread the studies? Or is the better question: Did they miss it? The following chronology suggests that the knowledge was indeed attainable - and perhaps more of it was attained than J&J would like to admit.

March 1986: McNeil submits to the FDA a revised labeling that, for the first time, warns of flank pain and renal toxicity.

April: McNeil says, in the first of three increasingly worrisome "Dear Doctor" letters in six months, that it has 16 U.S. reports of "abrupt onset of flank pain after one to two doses" of Suprol.

June: The FDA, aware of 90 reports of kidney damage - mostly in young men who had taken only one or two capsules - tells McNeil to mail a second "Dear Doctor" letter.

October: Shortly before J&J's U.K. subsidiary ends Suprol sales "on commercial grounds," the United Kingdom's drug regulators advise the FDA that its approval of Suprol "should be revoked." The FDA does not reexamine the data. McNeil, in its third "Dear Doctor" letter, advises that "Suprol should not be considered as the initial treatment for" its approved uses.

February 1987: In a letter to the FDA, Rep. Weiss cites seven studies that preceded the IPHAR research and that "were reported well before Suprol's U.S. approval," which found flank or groin pain in 24 of 107 healthy male volunteers.

May 13: The European Community's drug-safety panel recommends suspension or withdrawal of all remaining licenses to sell Suprol "in view of the specific hazard in young males, without significant benefits, compared to other [nonsteroidal anti-inflammatory drugs] in the same group."

May 15: McNeil announces worldwide suspension of Suprol sales on the basis of the EC action. By then, more than 300 cases of flank pain had been reported in an estimated half-million American users.

It's important to note that the FDA itself took no decisive action to ban Suprol. But it did cast a few belated stones. As a result of the Weiss hearing, the FDA conducted an extensive investigation into the adverse-reaction reporting practices of McNeil and Ortho. Agency inspectors found "reporting deficiencies that appeared to have compromised the complete and timely communication of some adverse drug reactions between some Johnson & Johnson affiliated companies which, on a few occasions, resulted in an incomplete data submission to the FDA," wrote Daniel L. Michels, the FDA's top official for compliance with the drug law, in a February 1989 letter to J&J CEO Burke. In other words, J&J's subsidiaries kept bad news from each other. Nevertheless, Michels said, the investigation "did not produce sufficient findings of violations" to warrant further action or referral to the Justice Department. He concluded by telling Burke, in a polite way, to get his act together: "Please advise us within 30 days of corrective actions taken or measures that you plan to take to preclude recurrence of these and similar events. . . . Assuring the coordination and cooperation of affiliated companies in processing such information is the responsibility of the Johnson & Johnson parent company."

Strong words. Of course, by that time, Suprol had already been off the market for a year and a half.

Poison pill

In the case of Suprol, it took the action of foreign governments to drive a problem drug off the American market. But sometimes - as with a phenomenally popular birth control pill - J&J evaded foreign regulation as well as the home-grown FDA.

On June 30, 1971, a physician prescribed Ortho-Novum 1/50 for Pauline Jane Buchan, a 23-year-old Ontario mother. She was in excellent health, a nonsmoker with no predisposition to a stroke. Yet after taking the pill only briefly - slightly less than six weeks - she suffered a stroke. It left her permanently disabled, damaging her brain and substantially paralyzing her left arm and leg. The pill had been issued with no warning that it increases the risk of a stroke - another stumbling block.

In 1974, Buchan sued Ortho Pharmaceutical (Canada) Limited, a wholly owned subsidiary of J&J, and won $606,795 in damages. The company filed an appeal, but in 1986 the Ontario Court of Appeals threw it out. "[I]t can properly be assumed," Judge Sydney L. Robins said in the appellate court's opinion, "that Ortho [Canada] was aware of or had available to it all of the information possessed by Ortho U.S. with respect to their mutual products including adverse reaction reports, medical and scientific studies on birth control pills, and, in particular, the information which led to the warning given to prescribing physicians in the United States."

The warning given to physicians in the United States was adequate; the warning given to physicians in Canada was not. In its entry for Ortho-Novum 1/50 in the 1971 Physicians' Desk Reference (PDR), for example, Ortho U.S. specifically warned physicians of the "statistically significant association between cerebral thrombosis and the use of oral contraceptives." In the "adverse effects" section of the Canadian equivalent of the PDR, Ortho Canada omitted any mention of cerebral thrombosis or stroke.

In the "file cards" provided to physicians by Ortho U.S. as early as 1968, physicians were urged to "be alert to the earliest manifestations of thrombolic disorders," including "cerebrovascular disorders," and to discontinue use of the pill "immediately" if any thrombolic disorders occur. No such warning appeared in the cards provided to physicians by Ortho Canada. The contrast was similar in the bulletins given to the salesmen who called on physicians and in pamphlets given to doctors for distribution to patients.

The pharmaceutical industry has a long and nasty tradition of making claims of safety and efficacy in other countries that it cannot make in the United States. This tradition was upheld by Ortho Canada. Yet even at home, Ortho was having trouble coming clean to the millions of women who used its products. In February and March 1987, FDA inspectors found "serious violations" of drug law involving the manufacture of Delfen Contraceptive Foam. "Your firm failed to take appropriate measures to prevent [the over-the-counter product from] being contaminated with objectionable micro-organisms," the agency said in a "Regulatory Letter" obtained under the Freedom of Information Act. Ortho also "failed to conduct investigations of complaints, and it failed to include in the written record the reasons that investigations were not conducted," Matthew H. Lewis, the FDA's district director in Newark, told Gary Parlin, the company's president. The firm sent two reply letters to the agency, but these were unresponsive to the violations, Lewis said. Yet the FDA neither fined nor censured the company, and the press never reported the story. In this case, as in the others, J&J had little trouble dropping the corporate veil. Only now, after two decades of corporate darkness, is it finding that veil a little harder to draw.

Ponce de lyin'

Today, Zomax and Suprol are off the market, Ortho-Novum's warnings appear in Canada, and - presumably - the micro-organisms infesting the Delfen Contraceptive Foam have been corralled. But J&J's biggest commercial deception is raging still in one of the most profitable pharmaceutical "breakthroughs" of the past 20 years: the discovery of a fountain of youth in a tube, Retin-A.

If a drug manufacturer mounts a costly public relations campaign persuading large numbers of women that its prescription skin cream retards wrinkles, it can be confident of making a pile of money. But what if the product hasn't been demonstrated to be an effective wrinkle-fighter? What if it hasn't been shown to be safe for long-term use? What if some supposedly independent physicians who publicly bless the product have hidden financial ties to the manufacturer? What if the PR campaign violates federal law?

According to the FDA itself, none of these are hypothetical questions. "We do not have data to assess the long-term safety of Retin-A for chronic use for wrinkling," Commissioner David A. Kessler testified before Congress in June, noting that one unknown is whether the drug, a photosensitizer, could increase the risk of skin cancer. Because of this dearth of information, the FDA has continued to withhold approval of the drug as a wrinkle fighter. But thanks to weak agency enforcement and willful J&J promotion, doctors all across the country are prescribing Retin-A to anxious women. Why such cavalier corporate behavior? J&J's estimated profit from Retin-A was nearly $100 million in 1989 alone. The ultimate market is estimated at $1 billion to $3 billion.

That's a piece of supreme good fortune for one Dr. Albert M. Kligman, a professor of dermatology at the University of Pennsylvania. In 1967, he invented and patented Retin-A, which the FDA approved as a treatment for acne, and then licensed it to Ortho Pharmaceuticals. Years later, Kligman claimed that for sun-damaged skin Retin-A was also a wrinkle-retardant. Instead of waiting for the FDA's imprimatur, Ortho did an end-run around the agency, massively promoting the purported miracle cream to physicians and - unusual for a prescription drug - directly to the press and public.

Prescribing a drug for a different use than the one for which it has been approved is not illegal. But promotion of that unapproved use is. In the fall of 1987, a PR firm retained by Ortho sent local television stations a letter touting Retin-A as a wrinkle-remover for sun-damaged skin and offering to arrange appearances for dermatologists "to go on TV and talk about Retin-A and wrinkles."

One of the televised skin doctors, Diane Kleinsmith, appeared on "Hour Magazine" saying that the drug "increases the blood flow to the skin, and it also increases the cell renewal, or turnover rate of the cells." What the viewers were not told - and what "60 Minutes" eventually revealed - was that Kleinsmith was on Ortho's payroll. The PR firm paid her and other doctors $500 to $2,000 for each of as many as 20 TV appearances.

TV stations were not the only ones fooled. At the end of 1987, JAMA published a small study in which Dr. John Voorhees, professor and chairman of dermatology at the University of Michigan, hailed Retin-A as a wrinkle-retardant. And the PR circus began. Immediately after publication, Voorhees and Ortho, freezing out independent scientists, held a press conference at the Rainbow Room of the Waldorf-Astoria in New York - an audience and locale chosen in order to grab headlines and thus build consumer clamor for Retin-A. That afternoon, Voorhees compared the drug's benefits favorably to those of cosmetic surgery, showing striking before-and-after slides. That night, all three networks trumpeted the happy news. "A skin cream that actually makes wrinkles disappear," said Dan Rather on CBS. As intended, hundreds of thousands of men and women asked their doctors to prescribe Retin-A. Dr. Robert Katz, a solo practitioner in Rockville, Maryland, later testified before a House subcommittee that the day after the Rainbow Room session, he "received 30 calls requesting either information or prescriptions of the drug for this unapproved purpose. In addition, a very high percentage of patients coming into the office for other reasons also coincidentally requested the Retin-A for wrinkles." The drug's sales tripled, and J&J stock rose five points.

Problem was, Voorhees was not an ideally independent - or ideally thorough - scientist. Despite the flood of publicity, his study involved only 30 people. His press conference was planned and paid for by Ortho. And since 1986, "60 Minutes" revealed, J&J had made grants of nearly a million dollars to his department at Michigan. After his thinly populated Retin-A study, the company had hired him directly as a consultant. Nor was Voorhees the only one working on promotion. Ortho itself had distributed a newsletter to dermatologists touting Retin-A as "an excellent way to build a practice." But it wasn't until July 1989 - two years after Ortho had begun to publicize Retin-A for wrinkle removal in the press - that the company applied to the FDA for approval of the drug for that purpose.

In the spring of 1990, the National Institutes of Health asked Dr. David Vickers, professor and chairman of dermatology at Case Western Reserve University, to chair a panel of experts on Retin-A. The panel concluded that there is no reliable evidence that the drug removes wrinkles, and that its safety as an acne drug does not mean that it is safe to apply to sun-damaged, aging skin. "I have concerns about long-term safety," Vickers told the "60 Minutes" audience. As for efficacy, the British Journal of Dermatology made a devastating comparison. Plain abrasive soap "can have similar and even more dramatic effects" on the skin than Retin-A.

Did J&J break the law in promoting Retin-A? Four years after the first doctors appeared on TV to promote the supposed juvenescent, the FDA says the company's conduct is "under active investigation." This past June in The New York Times, J&J confirmed that the United States attorney in Newark was investigating whether Ortho promoted Retin-A for an unapproved use. In the meantime, tens of thousands more men and women are still venturing to their doctors to drink at J&J's fountain of youth.

Corporate punishment

The unqualified success of J&J, by capitalist standards, points to a massive failure - not just of government regulation, but of capitalism itself. Free marketeers argue that unethical behavior is ultimately punished by the market: Once Eli Lilly & Co. sells you Oraflex, you're not likely to have a whole lot of confidence in its other products. But given the willingness of even the noblest of corporations to bend the rules and risk lives to pump up the balance sheet, such faith in the swift vengeance of the invisible hand seems a bit blind. That the corporation is willing, after all, means the vengeance is weak. How can government create a less forgiving market? Here's a two-step program, tragically neglected since the advent of Ronald Reagan: Police new products thoroughly to try to head off any disasters, and then, if the disasters occur anyway, hold those ultimately responsible to account.

It may seem unfair at first glance to impute to James Burke personal responsibility for the corporate conduct detailed here. As chairman and CEO of J&J, he was, after all, at the apex of an enterprise that by 1990 had 175 subsidiaries, nearly 83,000 employees, sales of $11.2 billion, and profits of $1.1 billion. But even if full weight is given to that excuse, I believe it is indeed fair to hold Burke - and all senior executives similarly situated - personally accountable. One reason is that Burke has yet to acknowledge that any executive involved in the immorality repeatedly evidenced here may have acted improperly in any way at any time. He has, in a word, stonewalled: no apologies, no repudiations, no punishments.

But suppose that Burke were to at least admit that, without his knowledge, subordinates had put people at risk of needless disease, injury, or death; suppose too, that he invoked his ignorance of their wrongdoing as his defense. It's a defense that doesn't wash. "Duty arises from our potential control over the course of events," the philosopher Alfred North Whitehead once said. "Where attainable knowledge could have changed the issue, ignorance has the guilt of vice." For Burke in the episodes cited here, the knowledge was readily attainable.

The Supreme Court has endorsed Whitehead's logic. In 1975, the court reviewed a case in which the CEO and president of a supermarket chain was personally convicted of Food, Drug, and Cosmetic Act violations involving rodent infestation of a food warehouse. The basis of the conviction was that the executive had, but failed to exercise, the power to correct the violations. Affirming the conviction, the court held that the importance to the nation of a safe supply of food and drugs is so great that public policy can demand that a "responsible corporate officer can be liable without consciousness of wrongdoing."

So we have two CEOs, each supposedly "without consciousness of wrongdoing" occurring on his watch. One, unaware of rodent infestation, was convicted of violating federal law. The other, defending acts that resulted in repeated massive injury and death, won accolades for splendid management and became an arbiter of corporate ethics. Imagine if, instead, Burke had to do jail time for J&J's sins. You'd see an awful lot of high-flying CEOs suddenly take an active interest in whether those pills or Pintos or red dyes that look so good in the quarterly reports are poisoning people or blowing them up.

But that's a pale substitute for stopping a tragedy before it occurs. As the cases of Zomax and the other J&J drugs show, when it comes to flaws in consumer products, an early diagnosis can prevent a lot of pain. This spring, an FDA advisory panel noted grimly that the agency's nonenforcement "invites violations by unscrupulous companies," calling for "dramatic" steps to improve the FDA's efficacy. This fall, a congressional report accused the agency of letting dubious drugs slip onto the market. Each of those stories rated fewer than 10 inches in The New York Times. It's time for the president, presidential candidates, Congress, and Americans in general to wake up to the perverse, if understandable, incentives in the corporate culture. Most sensible corporations will break the rules if they know they can do so without significant public reprisals. The sterling reputations of James Burke and J&J prove that the use of our media and government make that scapegracemanship not just possible, but positively easy.
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Author:Mintz, Morton
Publication:Washington Monthly
Date:Dec 1, 1991
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