Johnson & Johnson (J&J) is one of the largest and most well-known healthcare companies in the world. With over 130 years of history and operations in over 60 countries, J&J produces a wide range of medical devices, pharmaceuticals, and consumer packaged goods. However, over the years, the company has faced controversies related to ethical practices. This article will examine some of J&J’s major ethical issues and analyze whether the company can be considered ethical overall.
J&J’s Ethical Challenges Over the Years
Some of the major ethical controversies faced by J&J over the past decades include:
- Recalls of defective products – J&J has had to recall numerous products due to quality issues or contamination. Some major recalls include children’s Tylenol in 1982, hip implants in 2010, and baby powder in 2019.
- Questionable marketing practices – J&J was fined over $2 billion in 2013 for improperly marketing prescription drugs and paying kickbacks to doctors. The company also faced lawsuits for misleading marketing of vaginal mesh implants and opioid painkillers.
- Talc and asbestos contamination – J&J faced thousands of lawsuits alleging its talcum powder products were contaminated with asbestos and caused cancer. While J&J maintains its baby powder is safe, it has discontinued sales of talc-based powder in North America.
- Price gouging – The company has been accused of drastically increasing prices of critical drugs like Daraprim by over 50% overnight.
- Anti-competitive practices – J&J paid $360 million in 2011 to settle allegations of paying bribes to doctors and pharmacists to promote its drugs over rivals.
These examples indicate lapses in integrity, responsibility, and transparency – all important ethical values for companies.
Assessing J&J’s Response
How a company responds to ethical crises can reveal a great deal about its corporate values and commitment to ethics. Here is an assessment of how J&J has reacted to its main controversies:
Recalls
J&J has been proactive about recalling defective products and owns up to its quality control issues. However, critics argue that many product issues could have been prevented with more stringent quality control measures.
Legal Settlements
Though J&J has paid billions in fines and settlements, the company maintains it has done nothing illegal. It has settled claims to avoid further legal costs but denied intentional wrongdoing.
Talc Issues
J&J has vigorously defended its talcum products as safe and claims it is being unfairly targeted by money-seeking attorneys. However, its refusal to admit even the possibility of risks has raised doubts.
Pricing Controversies
The company has made limited concessions on drug pricing issues amid public pressures. But its significant pricing power and opacity around pricing decisions raise fair pricing concerns.
While J&J has tried to learn from its mistakes, its responses have often been more defensive than transparent. The company needs to improve accountability and engage more sincerely with impacted stakeholders.
J&J’s Ethics Policies and Programs
J&J does have extensive ethics, compliance, and values statements in place, including:
- Credo – J&J’s statement of values emphasizes responsibilities towards patients, doctors, employees, communities, and shareholders.
- Code of Business Conduct – Provides guidance on ethics issues from conflicts of interest to human rights.
- Office of Ethics and Compliance – Oversees ethics training and compliance programs across the company.
- Supply Chain Transparency – J&J audits suppliers and aims to ensure no child or forced labor in its supply chain.
These initiatives indicate that J&J is aware of the need for an ethical culture. However, there appear to be gaps between its aspirational values and actual behaviors.
External Ethics Ratings
Third-party ethical ratings provide another perspective on J&J’s record. Here is a look at some key ratings:
| Rating Agency | Rating |
|---|---|
| MSCI ESG Rating | AA |
| Sustainalytics ESG Risk Rating | 24.1 (Medium risk) |
| ISS QualityScore | 1 (Highest concern) |
| Statista Survey – U.S. Pharma Industry Reputation | 3.8/5 average rating |
While J&J scores well on some broad ESG assessments, it gets low marks for governance and ethics controversy levels from ISS. Surveys also show high drug pricing has hurt overall pharma reputation. There is room for improvement in how J&J is perceived externally.
Potential Steps to Improve Ethics
For J&J to achieve higher ethical standards, here are some steps it could take:
Strengthen Quality Control
Preventing quality issues proactively through stringent protocols and controls would reduce compliance risks and product recalls.
Commit to Fair Pricing
Pricing lifesaving drugs reasonably, with transparency on R&D costs and profit margins, would demonstrate values-based pricing.
Increase Transparency
Being more forthcoming on risks associated with products and publicly addressing controversies can improve consumer trust.
Engage with Critics
Seeking input from consumer advocates, non-profits, and impacted patients can help J&J understand concerns and improve accountability.
Reward Ethics
Incentivizing ethical behavior in executive pay and promotions can reinforce values-based leadership.
Prioritizing ethics and values consistently – not just in policies but decisions and actions – is key to protecting J&J’s reputation.
Conclusion
Johnson & Johnson has exhibited both ethical lapses and genuine efforts to improve compliance over its long history. Recalls, lawsuits, and controversies reveal questionable practices that point to gaps between J&J’s ethical ideals and actual conduct.
However, the company’s ethics policies, principles, and programs demonstrate a recognition of the importance of ethics. For J&J to convince stakeholders of its commitment to integrity, it needs to back up words with transparent, values-driven actions even at the cost of short-term profits. The company’s huge patient reach and resources also give it the ability to set industry standards and advocate for patients’ interests.
Ultimately, J&J must strive for both excellence in its offerings and ethical excellence in its practices. With proactive ethics leadership and judicious implementation of ethics across operations, J&J can work towards restoring its reputation as a trusted healthcare brand.