Johnson & Johnson (J & J) is an international organization based in America, which provides consumers with medical services by selling drugs. It is also a manufacturer of other goods like beauty products and was founded in 1886. Within the last five years, J & J has faced many antitrust probes with regard to the production and sale of drugs despite the company’s good status in America’s healthcare system. Therefore, this paper sheds light on how J & J was charged with antitrust actions and the various mitigation efforts to avoid such actions.
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In 2006, J & J was accused of using its sutures monopoly to boost its sales of other surgical products. Ethicon, which is a division of J & J was accused of blocking the competition in the market for trocars tools used in keyhole surgery. These accusations were brought about by Applied Medical which is based in Rancho Santa Margarita. The company claimed that J & J had offered discounts on the sale of sutures to hospitals where it was also selling trocars and clip appliers. A branch of J & J based in New Brunswick opposed the accusations, saying that other suppliers who also offered sought to offer lower prices through contracts were not rejected. However, J & J’s spokesman defended the company by saying that they were awarded the contract because they gave the highest competitive bid which could benefit the customers. The jury, which had nine judges – six women and three men took two days to reach their final decision, in which J & J won (Bloomerg News, 2006).
Another lawsuit filed in 1996, but later decided in 2009 was alleged that J & J sold replacement contact lenses at a very high price because the company and other lens manufacturers had agreed with AOA, in infringement of antitrust laws, that their lenses would only be available in an eye care professional and so the consumers had difficulties in buying the lenses from pharmacies. After the case, the company promised to take action by giving offers to Maryland residents who bought the replacement lenses from 1st January 1988 to get $50 if they purchase 4 or other multi packets of these lenses. If a customer bought the disposable lenses for the second time, he got $25 to get his eyes checked by a professional (Patel & Rushefsky, 2006).
The Company agreed that it will distribute $30 million refunds to its customers. It also agreed to pay $25 million in cash to clear up funds and pay $8million in cash for the people who ceased to use their contact lenses. The customers also filled out the forms to get $60 in coupons or get $50 cash.
Consequently, J & J has agreed to change their lending practices. It is selling these lenses for houses, pharmacies, and stores to resell them to customers, provided they follow the instruction of the prescription and obey the rules and regulations of the government laws. This will benefit the consumers who will get the lenses for less and with price stability and so they will be able to access the lenses from many outlets.
In 2009, a lawsuit was filed against J & J and Omnicare Company in California. It was discovered that J & J collaborated with Omnicare, which is a pharmaceutical company to dominate medicine delivery to nursing homes while defying Medicaid laws. The complaints claimed that about 1.4 million managers were charged for drug prescriptions and that they had an overdose of drugs which was in the interest of J & J to increase income and profitability. It is also claimed that J & J paid Omnicare to create a program that was used to increase drug use, especially for the elderly. This was seen as a fraudulent business practice because people paid extra money for extra drugs. These two companies were charged with involving themselves in fraudulent, unlawful, and unfair business. The case was settled and the plaintiffs were to be paid all the costs including attorney fees, and damages. J & J was ordered to pay more than &50 million by a judge for overpricing drugs and participating in a marketing strategy that led to the rise of many drugs and overprescription. It also paid $7 million for violating state statutes (Singer, 2010).
There were other charges where the company was bribing doctors in Europe and paying inducements to the Iraqi government to illegally get business and get contracts from United Nations for food programs. The government accused the Company of giving money and gifts to doctors in Romania, Greece and Poland so that they could recommend their drugs to the patients. The company learned that bribery is not the best and paid $70 million to settle its criminal charges without denying or agreeing to the accusations.
According to the mentioned charges, it is evident that J & J has been able to deal with all the antitrust actions. J & J strives to maintain its status in the healthcare industry by ensuring that quality standards are incorporated in its production and supply processes. Furthermore, rewarding the parties affected by illegal activities shows that J & J is ready to avoid antitrust actions; in essence, antitrust actions are mainly perpetrated by third parties or firms affiliated to J & J. For instance, in 2010, J & J’s Ortho-Clinical Diagnostics division was accused of selling blood reagents without testing and illegal price-fixing. Later, J & J won the case and it was closed (Voreacos, 2011).
The company has shown improvement by agreeing to pay and settle criminal charges to the affected parties to rebuild its trust. In some cases, the penalties has been reduced because the company agreed to cooperate with the investigators. In this regard, J & J must also put in place programs that conform to anti-bribery rules in all its businesses. The organization should hire compliance officers who reports to the managers about any criminal activities. They should come up with other marketing strategies rather than bribery or overcharging drugs, not forgetting the fact that big pharmaceutical companies are under income strain.
J & J’s management must have a clear decision making model and understand financial and economic implications to provide good services. This is because many healthcares are being set up and there is need to retain customers. With good decision making, the management is able to provide the required medical services while considering the safety of their products with prevention of medical errors. Their products should be accessible wherever patients need them by having many qualified outlets. The care for the patients should be efficient and effective, meaning that the Company should give the right quality care (Chrichton, 2003).
In conclusion, J & J has used millions of money in settlement of many charges that it has faced in many years. In all of these cases, the J & J’s management has faced the repercussions and hence they should change their marketing strategy, improve on drug quality and hire executive sales team so that they can market their products worldwide, and implement quality healthcare team and management systems. This will help in regaining the consumers’ trust because there are many competitive health care services and therefore, there is need to remember that everyone deserves quality health care.
Chrichton, A. (2003). Health Care. A Community Concern Development in Organizations of Health Care Services. Alberta, Canada: University of Calgary Press.
Bloomberg News. (2006). Johnson & Johnson Wins Antitrust Suit. The New York Times.
Patel, K. & Rushefsky, M. (2006). Health Care Politics and Policy in America (3rd ed.). New York: M.E. Sharpe, Inc.
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Singer, N. (2010). J & J is accused of Drug Kickbacks. The New York Times.
Voreacos, D. (2011). J & J Says U.S. Closed Antitrust Probe of Blood Reagents. Bloomberg. Web.