Case Study 2
This case study explores the various ethical issues surrounding J&J’s product Tylenol. Founded in 1886, J&J is a leading healthcare company and manufacturer of medical devices and pharmaceutical products. In 1956, it acquired McNeil Laboratories, which used to sell the painkiller Tylenol as an over-the-counter (OTC) drug. During the 1960s, the aggressive production of Tylenol made it the most popular drug as compared to other analgesics such as Aspirin and Ibuprofen. In 1975, J&J slashed Tylenol’s price by one-third to beat a low-priced analgesic called Datril. The sales revenue of Tylenol in 1975 was $50 million which increased to $400 million in 1981.
In 1982, a 12-year-old girl named Mary Kellerman of Chicago died after she took extra strength Tylenol capsules for headache. Subsequently, there were 6 more reported deaths within 2 days after consuming Tylenol. The news spread like a wild fire and created the nationwide panic. A hospital in Chicago received 700 distress calls in a single day. People started admitting themselves to hospitals fearing cyanide poisoning. In just 10 days, J&J received 1411 calls from customers.
Responding to the crisis, J&J sent alert messages to its consumers via the national media and the police against consuming any type of Tylenol product. The company recalled all the Tylenol bottles from the US retail stores, which were 31 million bottles worth more than $100 million. It temporarily closed the production, distribution, and advertising of Tylenol. This was followed by a warning from the Food and Drug Administration (FDA) of the US against taking Tylenol capsules.
J&J fully cooperated with the federal investigators to determine the cause of cyanide tampering. After testing of 8 million Tylenol capsules, it was revealed that in six different stores in Chicago, 75 capsules had been opened and filled with 65 mg of cyanide in eight different bottles. Although the tampering was local, the company decided to recall all Tylenol products at the national level. This decision led to a loss of $1.24 billion due to the damage of goodwill and brand value. The market share of J&J dropped from 37% in early 1982 to just 7% by late 1982. To rebuild its image, J&J launched an aggressive promotional campaign. By the end of 1982, J&J relaunched Tylenol in a new triple-tamper-resistant package. As a result, the company recaptured 32% of its previous 37% market share just 6 months after bottle tampering.
The company was lauded for its prompt action in recalling Tylenol products and giving priority to consumer safety over loss of revenue. The company’s honest, open, and transparent communication with the public helped it to maintain its credibility and establish trust with the public. Instead of considering the financial loss, the company’s CEO, James Burke, sent a team of scientists to investigate the source of tampering.
QnA:-
Q.1. What was the reason of Tylenol-related deaths in 1982?
(A) cyanide poisoning
(B) Tampering of Bottles
(C) Both a and b
(D) Datril a new competitive drug came in the market.
Q.2. Which were the ethical steps taken by J&J to avert that crisis?
(A) J&J sent alert messages to its consumers Giving priority to consumer
(B) safety over loss of revenue
(C) All the options are correct
(D) Sent a team of scientists to investigate the source of tampering
Q.3. Other drugs in competition to Tylenol were?
(A) Aspirin
(B) Ibuprofen
(C) Morphine
(D) Both a and b
Q.4. It temporarily closed the production, distribution, and advertising of Tylenol. J&J fully cooperated
TRUE
FALSE
Q.5. Emerging economies find it difficult to recuperate their ailing economies, because?
(A) They have not fully utilized the 1 tool at their disposal
(B) They are totally ignorant of what the adequate use of fiscal policy can do to the economy
(C) They know how to use it in an efficient and sustainable way
(D) Both a and b
Q.6. The tools of Fiscal policy are?
(A) Government Spending and Taxation
(B) CRR
(C) SLR
(D) Open market operations
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