* FDA says was misled in Motrin recall, DOJ probing
* J&J officials say company was not straightforward
* A version of Children's Tylenol back next week
* Analysts see little impact on J&J leadership
* Shares close down 0.6 percent
By Susan Heavey
WASHINGTON, Sept 30 Already battered by a wave
of product recalls, Johnson & Johnson (JNJ.N) acknowledged on
Thursday it had misled consumers and U.S. regulators as it
quietly removed its Motrin painkiller from the market.
Company officials underwent another grilling in Congress
with the consumer giant facing a widening criminal probe and
struggling to move beyond a damaging series of recalls that has
pulled nearly 200 million bottles of its medicine from U.S.
shelves this year, including top-selling children's medicines.
Lawmakers angrily accused the company of placing profits
over the welfare of its customers, and J&J officials said their
McNeil unit should have alerted stores and the Food & Drug
Administration to the 2009 Motrin recall, rather than buying
back the stock through contractors posing as customers.
"I believe McNeil should have handled things in a more
straightforward manner," said Colleen Goggins, head of J&J's
McNeil consumer unit.
The Motrin case came to light earlier this year as
lawmakers probed other recalls that have eroded consumer trust
and spawned lawsuits against J&J, one of the United States'
most iconic companies and in business since 1886.
Some adult Motrin packages were pulled from more than 200
stores before the company alerted the FDA to its actions,
according to internal company e-mails released by the House of
Representatives Oversight and Government Reform Committee.
The FDA was told of the Motrin recall in April of 2009, but
was not alerted to its breadth or how it would be conducted
until three months later, an agency official said. It then
called on McNeil to conduct a formal recall.
"There were contractors going out, telling people to act
like regular customers and (to) not really tell the truth about
what they were doing in the stores," said FDA Deputy
Commissioner Joshua Sharfstein.
Sharfstein told lawmakers the Department of Justice had
launched a criminal probe into the Motrin case. The department
declined to comment.
The U.S. attorney's office in Philadelphia is already
probing J&J over this April's recall of more than 40
potentially contaminated children's medicines such as
Children's Tylenol and Benadryl. [ID:nN28273080]
Johnson & Johnson's chief executive sought to assure angry
lawmakers and the public that the drugmaker had changed its
ways in the wake of the recalls.
"This was not one of our finer moments," J&J CEO William
Weldon told the panel.
The committee called the hearing after a session in May
that lawmakers said cast doubts on the company's earlier
testimony and the extent of the Motrin case.
An email released by the committee shows a worker for one
contractor knew the buyback could be viewed negatively.
Pulling specific faulty lots "will take time and may draw
suspicion to what we are doing," an employee for Inmar Inc
[INMAI.UL] told McNeil managers. "Some stores will not care,
others will ask specifically what we are doing."
GETTING BUYERS BACK
This year's recall of children's medicines was prompted by
an FDA inspection that found filthy equipment and contaminated
ingredients at a Pennsylvania factory. Problems with a Puerto
Rico plant triggered other recalls.
Company and FDA officials say there have been no reported
injuries from the recalled medicines.
Weldon said the company is spending $100 million to improve
McNeil's manufacturing and said at least one product --
grape-flavored Liquid Children's Tylenol -- would be back on
the market next week.
The company has also fired some McNeil employees, said
Goggins, who is due to retire March 1.
The withdrawals have left many store shelves bare of liquid
children's medicines with cheaper, store brands trying to fill
the gap. That's been a potential boon for companies like
Perrigo Co PRGO.O, which makes generic alternatives.
Experts have said J&J will have to work hard to convince
buyers to come back to its pricier, brand-name alternatives
once production resumes.
Weldon has not announced any plans to retire, but the
recalls have marred his largely successful eight years at the
helm. Analysts say he is secure in his job.
"This may create a bigger black eye for J&J, but I'd be
pretty surprised if it will push Weldon out of his position,"
said Morningstar analyst Damien Conover.
Despite the recalls, shares of J&J, a huge diversified
healthcare company, have largely tracked the broader market.
J&J's stock ended Thursday down 0.6 percent at $61.96 on the
New York Stock Exchange, while the S&P 500 index .SPX was
down 0.3 percent.
J&J told investors in July that the recalls cut quarterly
sales by $200 million, or about 5 cents per share.
Republicans on the committee said some of the blames lies
with the FDA, which could have acted sooner.
"It looks like there was much too much of a cozy
relationship," said Republican Representative Jason Chaffetz.
FDA's Sharfstein said the Motrin incident highlights the
agency's reliance on voluntary company actions and the need for
greater agency power to demand recalls.
Committee Chairman Edolphus Towns hopes to pass legislation
giving the agency that authority, but Congress is unlikely to
act in the few weeks it will be in session after the November
Towns said that even if the FDA was technically aware of
the Motrin recall, it did not excuse what J&J did. "Johnson &
Johnson had both the legal and the moral obligation to do the
right thing, and they did not," he said.
(Additional reporting by Ransdell Pierson in New York and
Jeremy Pelofsky in Washington; Writing by Andy Sullivan;
Editing by Lisa Von Ahn, Matthew Lewis and Tim Dobbyn)