Sunday, January 16, 2011
NRA vs ATF
Jim Cavanaugh former ATF Special Agent talks with Rachael Maddow the importance of the ATF in American Law enforcement and the need for properly appointed leader of that organization.
Can Johnson & Johnson Get Its Act Together?
Kevin Wolf/Associated Press
William Weldon of J.& J. told Congress that when a troubled plant reopened, it would “represent the state of the art.”
Multimedia
Kevin Wolf/Associated Press
William Weldon of J.& J. told Congress that when a troubled plant reopened, it would “represent the state of the art.”Multimedia
By NATASHA SINGER and REED ABELSON
LITTLE red flags jut out from the shelves at a CVS drugstore in suburban Boston, alerting shoppers to shortages of nearly a dozen Johnson & Johnson products. Among them are Motrin, Rolaids, children’s Tylenol liquid and adult Tylenol, Mylanta, Pepcid AC and even some Neutrogena skin care products.
“Looking for Tylenol pain relief products?” asks one of the signs. The notices at CVS serve as a stark reproof to Johnson & Johnson, whose brands have for more than a century been synonymous with quality. Some of its products are in short supply at drugstores and supermarkets because the McNeil Consumer Healthcare unit of J.& J. last year recalled about 288 million items, including about 136 million bottles of liquid Tylenol, Motrin, Zyrtec and Benadryl for infants and children.
Johnson & Johnson has had to recall such a variety of products because of quality-control problems across product lines, in multiple factories and in several units last year. Some of its consumer products, for instance, may have contained bits of metal. Others came in bottles with a moldy smell. And some products have gone missing from stores with hardly an explanation. All of this has put the company and its manufacturing under the intense scrutiny of lawmakers and officials at the Food and Drug Administration.
“It looks like a plane spinning out of control,” says David Vinjamuri, a former J.& J. marketing employee who now trains brand managers at his company, ThirdWay Brand Trainers.
While the drugstore signs that helpfully suggest “Try CVS/pharmacy brand” are intended to assist frustrated shoppers in identifying alternatives to missing brand-name products, they also serve as constant reminders of another of J.& J.’s continuing problems: It must persuade millions of disappointed customers to once again pay a premium for products that may no longer seem to be of any higher quality than the less expensive store brand.
“I don’t even consider buying them any more,” says Thien-Kim Lam, a mother of two and a blogger in Silver Spring, Md. In a post last spring titled “Makers of Tylenol, I’m Disappointed in You” on the blog DC Metro Moms, Ms. Lam wrote about the huge recall of J.& J. infants’ and children’s medicines.
Now, she says, the frequent recalls have prompted her to switch to generic cold and cough medicines for her children. “It’s like a breakup,” she says. “I’m done. I’ve moved on.”
Bonnie Jacobs, a McNeil spokeswoman, says the company is committed to restoring McNeil’s reputation as a world-class manufacturer of over-the-counter medicines. “We will invest the necessary resources and make whatever changes are needed to do so, and we will take the time to do it right,” she wrote in an e-mail last Thursday.
If Queen Elizabeth II had been the chief executive of Johnson & Johnson, she might have called 2010 an “annus horribilis.”
J.& J.’s troubles with some of its consumer products began in earnest last January, when McNeil recalled millions of pill bottles after some consumers complained that they smelled like mold. By December, when it recalled 13 million packages of Rolaids soft chews that may have been contaminated with metal or wood particles, the company had closed one plant in Fort Washington, Pa., for an overhaul and had yet to solve the quality problems at another, in Puerto Rico.
The response of J.& J.’s chief executive, William C. Weldon, has been to allocate more than $100 million to upgrade McNeil’s plants and equipment, appoint new manufacturing executives, hire a third-party consulting firm to improve procedures and systems at McNeil and shore up quality control companywide. In Congressional testimony last fall, he promised that when the Pennsylvania plant reopened, it would “represent the state of the art in medicine production.” And he has repeatedly tried to reassure consumers, as he did when he promised that J.& J. had “no higher concern than providing parents with the highest-quality products for their children.”
Those reassurances, however, have been followed by yet more recalls. What is most perplexing is the seeming inability of executives to solve — and satisfactorily explain — the manufacturing issues that dog the company. Federal regulators have continued to fault the McNeil unit for failing to identify and address systemic problems at its plants, and consumers remain mystified about why simple products like O.B. tampons can disappear from drugstore shelves.
In July, McNeil submitted a plan to the F.D.A. detailing how it intends to overhaul its operations. To comply with regulatory standards, McNeil is undertaking thorough manufacturing and quality-control reviews for all its products, Ms. Jacobs says.
That means the recalls may continue. Last Thursday, Ms. Jacobs said the company would “take whatever steps are needed to ensure our products meet quality standards, including further recalls if warranted.”
Only a day later, McNeil recalled 47 million units of Sudafed, Sinutab, Benadryl and other drugs from wholesalers because of issues like inadequate equipment cleaning practices. The company said that the recalls were not a result of health problems and that consumers could continue to use the products.
JOHNSON & JOHNSON, with about $62 billion in sales in 2009, makes thousands of different kinds of products, including Band-Aids, baby shampoo, cardiac stents and advanced drug treatments for rheumatoid arthritis. It solidified a reputation for product quality with a company credo, dating from 1943, saying that the company owed its first responsibility to the mothers and fathers, doctors, nurses and patients who use its products.
With such a diversity of products and operating companies, Johnson & Johnson’s overall business has not suffered significantly. But the string of recent recalls at McNeil threatens to weaken the kind of trust that made many people willing to pay more for J.& J. brands.
“Nothing is more valuable to Johnson & Johnson than the brand bond of trust with consumers,” says Erik Gordon, a professor at the Ross School of Business at the University of Michigan. “But this is almost like, ‘If it’s an even-numbered day, it’s time for another quality problem at Johnson & Johnson.’ ”
And, as the signs in CVS indicate, competitors — whether drugstore brands or other household names like Advil from Pfizer or Triaminic from Novartis — have muscled into the shelf space vacated while J.& J. puts its plants in order. In the year ended on Dec. 26, for example, sales of children’s liquid Tylenol and Motrin decreased 60 percent or more while drugstore brands have gained 93 percent, according to the SymphonyIRI Group, a market research firm that tracks mass-market sales excluding those at Wal-Mart.
Mark Mandel, a father in Chicago, says his family previously bought infants’ Tylenol and Motrin drops on the assumption that the branded products were of better quality than generics. But to regain his business now, Mr. Mandel says, J.& J. would have to demonstrate that it had better manufacturing standards.
“There were reasons we weren’t buying generics before,” says Mr. Mandel, a microbiologist at the Feinberg School of Medicine at Northwestern. “But they are lower than the concerns we have about Johnson & Johnson right now.”
YouGov BrandIndex, a market research firm that tracks consumer attitudes, says it has noticed a steady, albeit not steep, erosion over the last 18 months in how consumers perceive not just drug brands like Tylenol but also J.& J. While many consumers are still loyal, says Ted Marzilli, a senior executive at the firm, the company needs to avoid death by a thousand cuts.
“They’ve really got to stop the bleeding,” Mr. Marzilli says. “What the company really needs to do is not have any more recalls for six months, nine months, 12 months.”
Ms. Jacobs says the company intends to “build back our brands by producing the reliable, high-quality products that consumers expect of us and we expect of ourselves.”
Consumers have typically been willing to forgive a brand for one incident or product problem, industry analysts say, if a company acts swiftly to rectify the situation and to issue an apology — as J.& J. did in 1982 when seven people died in the Chicago area after a tampering incident in which Tylenol was laced with cyanide.
The most recent recalls of Tylenol and other products have been more of an inconvenience to consumers than a serious health risk. Federal officials have said there was no evidence that deficiencies in the recalled products caused severe illness or death.
But the number and variety of problems have stirred concern among government officials and consumers that the McNeil unit has suffered from a systemic breakdown of its manufacturing procedures. Last May, the House Committee on Oversight and Government Reform opened an investigation into the recalls.
Questions are still swirling around another event, described by some House committee members as a “phantom recall,” in 2009 — in which McNeil hired outside contractors to quietly buy back certain defective Motrin products from store shelves. The products did not dissolve properly, a problem that could cause the pills to work less effectively.
Last week, the state of Oregon filed a lawsuit accusing Johnson & Johnson and McNeil of misrepresenting the quality and efficacy of those products.
“They did not want the negative publicity that would come with admitting they had a defective product, the negative publicity that comes with any recall,” John Kroger, Oregon’s attorney general, said.
Ms. Jacobs of McNeil said the unit’s actions “were consistent with applicable law, and there was no health or safety risk to consumers associated with this limited recall.”
The company disputed the allegations, she said, and would seek to have the lawsuit dismissed.
But Mr. Weldon, while saying that he believed McNeil had acted with good intentions, has emphasized that in retrospect, the company should have handled things differently.
“This episode was not a model for how I would like to see Johnson & Johnson companies approach problems with defective products when they arise,” he said during Congressional testimony last September.
NOTHING better illustrates Johnson & Johnson’s difficulties in remedying McNeil’s woes — and the longstanding frustration of federal regulators — than the events at the company’s plant in Las Piedras, Puerto Rico. Consumers started complaining as early as April 2008 about moldy-smelling Tylenol arthritis caplets that they said nauseated them or gave them stomach problems.
McNeil did not alert the F.D.A. until September 2009 and then didn’t start a substantial recall until December 2009 — during an F.D.A. inspection of the plant, according to F.D.A. documents.
In January 2010, the agency sent a warning letter to Peter Luther, the president of McNeil, complaining that the company’s initial investigation “was unjustifiably delayed and terminated prematurely.” It said that even though consumers had also complained about a moldy smell in Rolaids and Extra-Strength Tylenol, the company had not widened its investigation to include those products.
Only after the F.D.A. inspection did McNeil executives recall millions of bottles of Tylenol, Motrin, Benadryl and other pills. The company identified an unusual source for the moldy odor: chemical contamination from a byproduct of a pesticide used to treat wooden pallets. It has since stopped using the pallets.
The F.D.A. says the company should have acted faster. “When something smells bad literally or figuratively, companies must aggressively investigate and take all necessary actions to solve the problem,” said Deborah M. Autor, director of the office of compliance at the F.D.A. Center for Drug Evaluation and Research, during a press conference last year.
But Johnson & Johnson executives say that identifying the root cause of the problem was a difficult and lengthy process. Indeed, F.D.A. documents indicated that the consumer complaints subsided for a time in 2008 — leading the company to conclude the issue had gone away — only to resume months later.
In a letter to the agency last February, Mr. Luther, the McNeil president, explained that the odor issue was an extremely unusual problem. The investigation, he wrote, had been challenging because there were very few research labs able to test for the chemical later identified as the cause of the smell. McNeil, he assured the F.D.A., was making changes in the ways that it handled consumer complaints, conducted investigations and notified the agency.
Last October, McNeil recalled yet another lot of Tylenol because consumers again complained of an odor, and the next month in an inspection report, the F.D.A. cited additional lapses at the Puerto Rico plant.
McNeil says that it has been working diligently to ensure that its manufacturing operations meet F.D.A. standards and that it plans to address the agency’s most recent concerns.
J.& J.’s troubles have not been limited to its over-the-counter products, which could suggest that the company may suffer from even broader problems. Last year, its DePuy medical device unit recalled two kinds of hip implants, affecting tens of thousands of patients worldwide. Its vision care unit recalled millions of soft contact lenses sold abroad.
A shareholder lawsuit filed last month against Johnson & Johnson’s directors, meanwhile, catalogs a long list of “federal and state regulatory investigations, subpoenas and requests for documents, F.D.A. warning letters, news articles and the recall of products accounting for hundreds of millions of dollars of corporate losses.”
Ms. Jacobs says the company intends to defend itself in court.
THE manufacturing problems over the last year have clearly cost J.& J. In the third quarter, overall consumer sales in the United States fell 25 percent, to $1.3 billion from $1.7 billion for the same period in 2009, but sales of over-the-counter medicines and nutritional products declined about 40 percent, to $438 million, the company said. The company plans to report fourth-quarter results later this month.
While the company is estimating that the total hit to sales in 2010 from problems at the Pennsylvania plant is likely to be around $600 million, it has begun reintroducing only a few of the products that were once available. Executives say they hope to get more of the missing medicines back on the shelves by the middle of this year and to reopen the plant by year-end.
Although some in the industry are optimistic that the company can quickly regain its perch, some Wall Street analysts are not convinced. This month, Goldman Sachs lowered its 2011 earnings estimates for the company, partly because of the time it might require to bring the closed plant up to the F.D.A.’s standards.
“We believe recovery could be slower than expected,” Jami Rubin, a Goldman analyst, warned investors, noting that generic alternatives may now be entrenched with consumers.
Nor has the company improved its communication with the public. Last year, drugstores across the country started running out of O.B. tampons, a product made by McNeil-P.P.C., another company unit.
The product shortage — and limited information provided by the company about the reasons behind the supply problem — caused even louder howls of frustration among some women than the children’s medicine recall.
“It was like a brick wall,” says Susan Pickin, a mother of a 5-year-old daughter in Manhattan, describing her phone conversation with a McNeil customer service representative. The conversation, Ms. Pickin says, left her wondering whether the company had permanently retired the tampons because of a safety issue or whether the items might soon reappear in stores.
Ms. Jacobs, the McNeil spokeswoman, says the company discontinued the most absorbent of the products, called “Ultra,” last year, but that there had been no unusual reports of health problems. The company has begun shipping other O.B. products, now available in some stores.
Ms. Jacobs declined to explain the nature of the supply disruptions that caused the shortage.
THE variety, magnitude and duration of the manufacturing and quality problems perplex some industry watchers.
“This is really unusual to have this gross systemic failure,” says Donald Riker, the editor of OTC Product News, an industry newsletter on over-the-counter drugs.
The reasons for McNeil’s woes remain unclear. Some critics, including former employees, say Johnson & Johnson has lost sight of its credo, while others suggest that the company decentralized its oversight of manufacturing and quality control in error.
Others say it was simply a matter of cost-cutting. The December lawsuit, for example, cited two unnamed former employees who contended that the company failed to address the manufacturing problems at McNeil because it was trying to save money.
Other former employees who are not involved in the lawsuit say that J.& J. seemed to hesitate in recent years to invest in new manufacturing equipment.
“It takes a lot of money to buy equipment and maintain quality,” says Patrick Bols, who left Johnson & Johnson’s pharmaceutical division in the late 1990s and owns stock in the company.
McNeil declined to comment on what specifically led to its manufacturing troubles. But Ms. Jacobs said the company was taking steps to address all the factors that could have contributed. Since last summer, the company has met the monthly goals it set in its overhaul plan submitted to the F.D.A. And Johnson & Johnson has since revamped and centralized its quality-control operations, naming a longtime executive to oversee a new system of quality control across the corporation and to report directly to Mr. Weldon.
Even some critics say Johnson & Johnson seems to be taking steps to remedy its problems. “It takes a while,” Mr. Bols says, “to get it right again.”
A federal carrot and stick to ease public pension crisis
BY DARRELL ISSA
FRIDAY, JANUARY 14, 2011 AT MIDNIGHT
The growing crisis of public-sector employee pension liabilities is a complex web of legal loopholes, questionable funding formulas and benefit levels that threaten to bankrupt state and local governments across the country. Many states are already at an endangered level, and it is now estimated that more than half of the state pension plans will run out of funds entirely within the next 20 years. California has the highest unfunded pension liability in the country at nearly $60 billion.
How did we get here? And is there a way out of this crisis without a bailout by federal taxpayers?
The first pension in the United States was created by the Continental Congress in 1776 to compensate retired and disabled military officers, soldiers and sailors. Nearly 100 years later, the first private pension plan was inaugurated by the American Express Co. Other companies followed to remain competitive in hiring and employee retention. By the 1920s, Congress passed laws to incentivize corporate contributions to pension funds and to exempt fund income from federal taxes. The growth of private-sector pension plans ballooned, and by 1929 more than 1.4 million American workers were covered.
Meanwhile, the federal government created a defined-benefit plan for federal workers, and state and local governments created other public-sector employee pension plans, most of which provided for law enforcement, firemen and public school teachers. As the number and size of public pension funds grew, so did the opportunity for waste, fraud and abuse.
Along the way, Congress passed new laws aimed at providing stricter participation and disclosure requirements. To prevent mismanagement of benefit plans, the secretary of labor was given broad discretion for enforcement and new investigatory powers.
Of course, the temptation often proved too great for unscrupulous politicians, labor leaders and fund managers to avoid. Here in San Diego, for instance, the city government was rocked for years because of deceitful accounting practices in the pension program, numerous conflicts of interest by city officials and a nearly $2 billion deficit that smeared the city with the label “Enron-by-the-Sea” in the national news.
More recently, a group of University of California administrators – among the highest-salaried employees in the university system – has threatened legal action against the governing board unless a $245,000-a-year pension cap is lifted. Never mind that the pension fund is already facing a burdensome $21.6 billion unfunded liability, or that the vast majority of faculty and staff oppose the move for fear that lifting the cap will further threaten an already unstable pension fund.
In New Jersey, Republican Gov. Chris Christie is fighting powerful public workers’ unions and their allies in the state legislature over his efforts to meet a $46 billion pension deficit and a $67 billion health care deficit by negotiating reduced pension benefits and requiring state employees to pay 30 percent of their premiums. California and New Jersey aren’t alone.
When you add up all the pension deficits across the country, states are now facing up to $3.2 trillion in unfunded liabilities. All the while, states are facing a collective budget shortfall of more than $100 billion next year alone. Yet lucrative pension promises are still being made to public employees, and the true burden to taxpayers is often hidden behind bogus accounting and opaque reporting.
That has to change.
Recently, I joined Reps. Devin Nunes, R-Clovis, and Paul Ryan, R-Wisc., in offering the Public Employee Pension Transparency Act to enhance the reporting requirements for state and local pensions, as well as to prohibit all future public pension bailouts by the federal government.
By mandating new transparency rules, public pensions will be forced not only to disclose their current liabilities using a uniform accounting standard, but also their underlying methods and assumptions to project realistic rates of return and tie assets to reasonable fair market evaluations. Moreover, the reform plan links federal tax-exempt bonding authority to states and local governments with compliance to the law. In essence, no transparency will mean no money.
Ignoring the pension problem will only send states’ budgets on a faster downward spiral toward bankruptcy and increase the likelihood that federal taxpayers will get stuck with the bill for benefits that are not only unaffordable but also far more generous than those enjoyed by most workers in the private sector who ultimately pay for them.
Issa, R-Vista, is chairman of the House Committee on Oversight and Government Reform.
FROM SIGNONSANDIEGO
FROM AROUND THE WEB
Weekly Republican Address
Weekly Republican Address 1/15/11
January 15, 2011
Rep. Jeff Flake (R-AZ) pays tribute to those whose lives were lost in the tragic event that took place in Arizona on January 8, 2011. While thanking the brave men and women who helped save many lives that day, Rep. Flake also reminds us of our duty to stand for freedom and American values.
A Congress that reasserts its power
By George F. Will
Sunday, January 16, 2011;
Unlike most of the 111 that preceded it, the 112th Congress must begin the process of restoring the national regime and civic culture the Founders bequeathed. This will require reviving the rule of law, reasserting the relevance of the Constitution and affirming the reality of American exceptionalism.
Many congressional Republicans, and surely some Democrats with institutional pride, think Congress is being derogated and marginalized by two developments. One is the apotheosis of the presidency as the mainspring of the government and the custodian of the nation's soul. The second is the growing autonomy of the regulatory state, an apparatus responsive to presidents.
The eclipse of Congress by the executive branch and other agencies is Congress's fault. It is the result of lazy legislating and lax oversight. Too many "laws" actually are little more than pious sentiments endorsing social goals - environmental, educational, etc. - the meanings of which are later defined by executive-branch rule-making. In creating faux laws, the national legislature often creates legislators in the executive branch, making a mockery of the separation of powers. And Congress makes a mockery of itself when the Federal Register, a compilation of the regulatory state's activities, is a more important guide to governance than the Congressional Record.
Unfortunately, courts long ago made clear that they will not seriously inhibit Congress's scandalous delegation of its lawmaking function to others. So Congress should stop whining about the actions of the EPA (emissions controls), the FCC ("net neutrality"), the Interior Department (reclassifications of public lands) and other agencies and should start rereading Shakespeare: "The fault, dear Brutus, is not in our stars, but in ourselves, that we are underlings."
Conservative senators passing through the Capitol reception room should ponder the portrait of Ohio's Robert Taft (d. 1953), who was conservatism when it stressed congressional supremacy. America was born in recoil against an overbearing executive's "repeated injuries and usurpations" (the Declaration of Independence); modern conservatism was born in reaction against executive aggrandizement, first by Franklin Roosevelt, then by his acolyte Lyndon Johnson.
But beginning in 1968, Republicans won five of six and then seven of 10 presidential elections, and experienced rapture with Ronald Reagan. Then they lost their wholesome wariness of executive power. Today, conservatives should curl up with a good book by a founding editor of National Review - James Burnham's "Congress and the American Tradition."√
Regarding the relevance of the Constitution, you must remember this: Rep. Nancy Pelosi, asked about the constitutionality of the health-care legislation - a subject now being seriously litigated - said, "Are you serious? Are you serious?" She was serious.
She seriously cannot comprehend that anyone seriously thinks James Madison was serious when he wrote (Federalist 45), "The powers delegated by the proposed Constitution to the federal government are few and defined." Unfortunately, for too long too many supine courts have flinched from enforcing the doctrine of enumerated powers, and too many Congresses have enjoyed emancipation from that doctrine. So restraint by the judiciary must be replaced by congressional self-restraint.
The idea of American exceptionalism is obnoxious to progressives, who, evidently unaware of the idea's long pedigree (it traces to Alexis de Tocqueville) and the rich scholarship concerning the idea, assume it is a crude strain of patriotism. America, Tocqueville said, is unique because it was born free - free of a feudal past, free from an entrenched aristocracy and established religion.
The American Revolution was a political, not a social, revolution; it was about emancipating individuals for the pursuit of happiness, not about the state allocating wealth and opportunity. Hence our exceptional Constitution, which says not what government must do for Americans but what it cannot do to them.
Americans are exceptionally committed to limited government because they are exceptionally confident of social mobility through personal striving. And they are exceptionally immune to a distinctively modern pessimism: It holds that individuals are powerless to assert their autonomy against society's vast impersonal forces, so people must become wards of government, which supposedly is the locus and engine of society's creativity.
Two years into Barack Obama's presidency, we now know what he meant about "hope" and "change" - he and other progressives hope to change our national character. Three weeks into his presidency, Newsweek, unhinged by adoration of him and allowing its wishes to father its thoughts, announced that "we are all socialists now" and that America "is moving toward a modern European state." The electorate emphatically disagreed and created the 112th Congress, with its exceptionally important agenda.
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