Pamela MoharCTAC 354

Johnson & Johnson: Managing Through Crisis

Following the company through the talcum powder-cancer crisis, using Louis Pondy’s model of Phases of Organizational Conflict

How Organizations Manage Through CrisisBased on the model by Louis Pondy, 1967

Image: http://catalog.flatworldknowledge.com/bookhub/reader/7635?e=wrenchorgcomm-27115-20150223-161255-574682

Pre Crisis

Latent Conflict – parties are involved in interdependent relationships with incompatible

goals

The Research1961-1985 – Multiple studies done to prove the ability of

inert carbon particles to travel from the vagina to the

fallopian tubes (World Health Organization, 2010, p 402)

1971 – Henderson first reports the presence of talc particles in ovarian and cervical tumors and cervical tissue of cancer patients (World Health

Organization, 2010, p 402)

1982 – Dr. Daniel Cramer releases the first study to

show a statistical link between talcum powder

and ovarian cancer (Berfield, et al, 2016)

Latent Conflict– US National Toxicology Program (NTP), 1993 – declared clear

evidence that talc is a carcinogen, regardless of the presence of asbestos-like fibers (Bodine, 2016)

– 1999 – American Cancer Society started recommending women use cornstarch-based products as genital powder (Berfield, et al, 2016)

Pre Crisis

Perceived Conflict – involved parties see their situation characterized by incompatibility and interdependence

Perceived Conflict– Alfred Wehner was hired as an outside consultant for Johnson & Johnson

– Primary task was to evaluate the research on ovarian cancer and talc and advise the company on its response

– 1997 – in a letter to Michael Chudkowski, J&J’s manger of preclinical toxicology, voiced concerns over the integrity of the research documents

– Referred to statements on talc research documents provided by the the Cosmetic Toiletry and Fragrance Association (funded heavily by J&J) as inept, misleading, and false (Berfield, et al, 2016)

Pre Crisis

Felt Conflict – there is a focus on the conflict issue; parties plan conflict management strategies

Felt Conflict – 1990’s

– Johnson & Johnson and supplier company, Imerys (formerly Luzenac), spearheaded the Talc Interested Party Task Force (TIPTF) in response to the 1993 NTP report (Berfield, et al, 2016)

– The Cosmetic Toiletry and Fragrance Association was made up of different organizations that pooled their money in order to defend the use of talc products through TIPTF (Bodine, 2016)

*As of 2016, the NTP has not released an official review of Talc (Boyle, 2016)

Felt Conflict - 2000

– NTP voted 13-2 to list talc as a potential carcinogen*, when used perinally (Berfield, et al, 2016)

– “[We] dodged a bullet…based entirely over the confusion of the definition issue,” Richard Zazenski, Luzanec executive, after convincing the NTP not to declare an official status on the use of talc

– Federal Regulations in the 1970’s led the cosmetic industry to discontinue use of dangerous materials (i.e. asbestos fibers) in the creation and distribution of talc-based products

Felt Conflict - 2004

In response to the nomination of talc for the 2004 NTP list of toxic substances, Daniel Harris, former President of Luzenac, wrote:

“The nomination category is overly broad and would be understood by the layperson to encompass all cosmetic products containing talc, when in fact, it appears that the intent of the Agency is to focus only on a potential increased risk of ovarian cancer among women utilizing body powder products in a particular manner.“

(D. Harris, personal correspondence, 19 July 2004)

Felt Conflict - 2006– International Agency for the Research on Cancer, WHO, declared that

perineal use of cosmetic-grade talc was possibly carcinogenic, citing a “modest, but unusually consistent, excess in risk” (Berfield, et al, 2016)– Noted that bias in the studies can’t be ruled out

– Canadian government classified talc as a toxic, cancer-causing substance in its’ Hazardous Products Act and Controlled Products Regulations (Bodine, 2016)– Imerys Talc began distributing talc to Johnson & Johnson that contain

warnings from the IARC and Canadian government in regards to the classification of talc as a cancer causing substance

Crisis

Manifest Conflict – parties enact conflict through communication, various strategies are used creating

cycles of escalation and de-escalation

Manifest Conflict– 2009 – Diane Berg filed the first lawsuit against Johnson & Johnson, accusing

the company of gross negligent and fraud (Nwazor, 2016)

– J&J offered a $1.3 million settlement with a confidentiality clause (Nwazor, 2016)

– Berg declined the settlement, stated that creating awareness was more important than money (Nwazor, 2016)

– South Dakota jury found in favor of Berg, stating that there was a link between ovarian cancer and talcum powder (Nwazor, 2016)

– Awarded no monetary compensation, as the jury could not conclusively find that her cancer was caused by the use of J&J products

Manifest Conflict

– February 2016 – St. Louis jury awards $72 million in damages to the family of Jacqueline Fox, who died from ovarian cancer in 2015 (Berfield, et al, 2016)– Jury found Johnson & Johnson liable for failing to warn women of the

risks associated with using talcum powder in the genital area

– J&J also found guilty of negligence and conspiracy

– Ruled that the talcum powder contributed to the development of her ovarian cancer

Manifest Conflict

– May, 2016 - Gloria Ristesund awarded $55 million in damages against Johnson & Johnson by a St. Louis jury (Bodine, 2016)

– A hysterectomy led to the discovery of talc in her ovarian cells

– Juror, Jerome Kendrick, on the ruling:

“They tried to cover up and influence the boards that regulate cosmetics. They could have at least put a warning label on the box but they didn’t. They did nothing.” (Bodine, 2016)

Post Crisis

Conflict Aftermath – short-term and long-term effects on the organization,

individuals, and relationships

Conflict Aftermath

– Johnson & Johnson claims it will fight every lawsuit in court (Bodine, 2016)

– Alleges no scientific evidence to back up recent court rulings

– Despite having offered a settlement to Berg, presumably when they thought a confidentiality agreement would stop their legal issues

– Court rulings have been as inconsistent as the studies about talcum powder

– Two recent cases in Atlantic City were thrown out for lack of scientific evidence, with the judge citing the medical experts as being unreliable

Reception Abroad

– “Legal experts” claim that only American courts will entertain this ruling – if the issue were brought forth to British courts, they would have been thrown out (Potts, 2016)

– Dr. Ahmed Ismail, UK gynecologist: “This is very, very unscientific. We are unable to detect the reasons for ovarian cancer. Whoever claims it is related to talcum powder, that’s a fallacy. We cannot say that we know there is a relationship between talcum powder and ovarian cancer.” (Potts, 2016)

– A Canadian class-action suit has already been filed, claiming Johnson & Johnson’s “[failure] to disclose these defects and the resulting risks to the health and life of the plaintiffs” (Paddon, 2016)

Further Discussion

– Why isn’t baby powder dangerous for babies?

Dr. Hal C Lawrence III, VP of the American College of Obstetrics and Gynecology, says, “With the amount of powder that’s been applied to babies’ bottoms, we would’ve seen something if talc caused cancer.” (Boyle, 2016)

– Talcum powder is not recommended for use on babies because it has been known to cause respiratory problems, including pneumonia (Weil, 2012)

– Is American culture creating the problem?

– Turn on the TV during the day and the majority of ads fall into 1 of 2 categories: pharmacy companies pushing medication or law firms pushing class action lawsuits against pharmacy companies

Johnson & Johnson:Medical Supply Distribution Empire

– Johnson & Johnson has a huge hold on the medical supply distribution business

– Baby products only make up a small percentage of the multi-billion dollar company

– Their brand was established based on these products, and is the prime business featured on their company home page

– Johnson & Johnson could do a favor for the pharmaceutical industry by ending this battle

– The company is losing credibility in the medical distribution area when they refuse to acknowledge any of the studies that show even a small link between the use of talc powder in the genital area and ovarian cancer

– Trust issues already exist between the general public and the pharmaceutical industry

ReferencesBerfield, Susan et al. Johnson & Johnson has a baby powder problem. Bloomberg, 31 Mar 2016. www.bloomberg.com/features/2016-baby-powder-cancer-lawsuits/.

Bodine, Larry. Behind the $55 million verdict: Johnson & Johnson knew about talcum powder cancer risks since the 1970’s. The Huffington Post, 4 May 2016. www.huffingtonpost.com/larry-bodine/behind-the-55-million-ver_b_9833366.html.

Boyle, Darren. Cancer patient who developed disease after using Johnson & Johnson talcum powder wins $70 million payout from the company. The Daily Mail, 28 Oct 2016. www.dailymail.co.uk/news/article-3882192/Cancer-patient-contracted-disease-using-Johnson-Johnson-talcum-powder-wins-70million-payout-company.html.

Nwazor, Toby. The Talcum Powder Lawsuit: The Truth, The Lies, The Cancer Victims. The Huffington Post, 27 June 2016. www.huffingtonpost.com/toby-nwazor/the-talcum-powder-lawsuit_1_b_10609474.html.

Paddon, David. Canadian class action launched over alleged Johnson’s baby powder risk. The Globe and Mail, 27 May 2016. www.theglobeandmail.com/news/national/canadian-class-action-launched-over-alleged-health-risk-in-johnsons-baby-powder/article30189981/.

Potts, Judith. UK ovarian cancer charities respond to suggested talcum powder link. The Telegraph, 23 May 2016. www.telegraph.co.uk/wellbeing/health-advice/uk-ovarian-cancer-charities-respond-to-suggested-talcum-powder-l/.

Talcum powder and cancer. American Cancer Society, 3 May 2016. www.cancer.org/cancer/cancercauses/othercarcinogens/athome/talcum-powder-and-cancer.

Weil, M.D., Andrew. (8 Oct 2012). How bad is baby powder? [Message 1]. Message posted to www.drweil.com/health-wellness/health-centers/children/how-bad-is-baby-powder/.