The Deipnosophist

Where the science of investing becomes an art of living

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Location: Summerlin, Nevada, United States

A private investor for 20+ years, I manage private portfolios and write about investing. You can read my market musings on three different sites: 1) The Deipnosophist, dedicated to teaching the market's processes and mechanics; 2) Investment Poetry, a subscription site dedicated to real time investment recommendations; and 3) Seeking Alpha, a combination of the other two sites with a mix of reprints from this site and all-original content. See you here, there, or the other site!

02 May 2010

McNeil Consumer Healthcare -- innocent?

So there I am, reading the article below and attempting to filter it with the Libertarian perspective; that McNeil Consumer Healthcare's decision(s) was (were) forced on them by an evil government. Probably at gunpoint, no less. 
Johnson & Johnson division recalls 43 OTC medicines for infants and children
By Lyndsey Layton
Washington Post Staff Writer
Sunday, May 2, 2010; A04 

A division of Johnson & Johnson is recalling 43 over-the-counter medicines made for infants and children -- including liquid versions of Tylenol, Motrin, Zyrtec and Benadryl -- after federal regulators identified what they called deficiencies at the company's manufacturing facility. 
The voluntary recall, which was announced late Friday by McNeil Consumer Healthcare, affects hundreds of thousands of bottles of medicine in homes and on store shelves throughout the United States and its territories and in nine other countries -- a vast portion of the children's medicine market. 
The Food and Drug Administration is advising parents and caregivers to stop using the affected products, although Commissioner Margaret A. Hamburg called the potential for serious health problems resulting from the medications "remote."
FDA inspectors had begun a routine inspection April 19 in the company's Fort Washington, Pa., plant when they noticed "manufacturing deficiencies" that triggered the recall, said Douglas Stearn, a senior FDA official.
Stearn said the plant's manufacturing process was "not in control," a term regulators use to describe flawed procedures that affect the composition of medicine. Federal investigators do not know when the problems at McNeil began, but Stearn said that "this does go back in time" and that "we have to try to figure that out."
While the FDA investigates, McNeil has suspended operations at the facility. In a statement, the company said: "Some of the products included in the recall may contain a higher concentration of active ingredient than is specified; others contain inactive ingredients that may not meet internal testing requirements; and others may contain tiny particles." It said the problems may affect "purity, potency or quality."
Marc Boston, a McNeil spokesman, would not discuss the deficiencies cited by the FDA or say when the manufacturing facility was shut down. The company also declined to disclose the amount of products affected by the recall. In addition to the United States, Puerto Rico and Guam, the medicines were sold in Canada; the Dominican Republic; Dubai, in the United Arab Emirates; Fiji; Guatemala; Jamaica; Panama; Trinidad and Tobago; and Kuwait.
A complete list of recalled products is on the company's Web site.
McNeil received consumer complaints associated with some of the recalled medicines, but the company's decision to pull them was not made on "the basis of adverse medical events," said Boston, who declined to elaborate.
If a child who has taken any of the recalled medications exhibits any unexpected symptoms, parents or caregivers should contact a doctor, federal officials said. Consumers or health-care providers who experience problems connected to the recalled medicines are asked to contact the FDA.

As of Saturday, the FDA was not aware of any health problems related to the recalled products, said spokeswoman Elaine Gansz Bobo.

Parents and caregivers can use generic versions of the affected medicines; they are not affected by the recall. The FDA cautioned against giving adult versions to infants and children, noting the potential for serious problems.

This is at least the third major recall of Tylenol products by McNeil since 2008.
In January, McNeil recalled 49 types of Tylenol products made for adults and two Tylenol products made for children after consumers complained of a mold-like odor and of temporary and minor nausea, stomach pain, vomiting and diarrhea. The company determined that some of the medicines had been contaminated by trace amounts of a chemical that is sometimes present on shipping and storage material.

In 2008, McNeil recalled 21 types of children's and infants' Tylenol liquid products, saying that although the products met internal standards, an unused portion of one inactive ingredient did not meet all quality standards.
Somehow the Libertarian perception of "business good, government evil: does not square with the reality. Moreover, I have to wonder: how are consumers supposed to make this company behave responsibly? I read this item, "McNeil received consumer complaints associated with some of the recalled medicines, but the company's decision to pull them was not made on "the basis of adverse medical events" and try to square that with the reality the Libertarians propose: that consumers vote with their feet, which makes the company clean up their efforts and act the role of good corporate citizen.

But this news shakes my newly-acquired perspective that business is good and government is bad bad bad. Without the FDA's routine inspection, this 'voluntary' recall would not occur at all. Obviously not.

I wonder how many children would have to become sick, or worse, die, before word of mouth spread for a sufficient number of consumers to take decisive action that caused the company, in turn, finally to make the
correct decision.
-- David M Gordon / The Deipnosophist


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