Any number and variety of crises can threaten a life sciences company and ultimately interrupt its operations, impact its bottom line, and damage its brand reputation. Perhaps it is the FDA issuing a Warning Letter or demanding the initiation of a product recall. It could be a very observant member of the plaintiffs’ bar watching reports of adverse events and seeking patients injured by the product. All companies hope that they never encounter the worst case scenario in which a product problem gives rise to a rash of serious injuries or deaths, causing―among other serious problems―front page news. However, regardless of how a crisis arises, it is vital to a company’s survival that it be prepared for effective message management. This installment of Litigation 360 takes a closer look at using communications to mitigate a crisis.
A Model Response: The Tylenol Crisis
What is an effective response to a crisis? How should a company communicate with the public to mitigate any risk to public health, preserve its reputation, and attempt to prevent future law suits? The “gold standard” in crisis response was set back in 1982 by Johnson & Johnson when it was forced to manage the Tylenol crisis. The Tylenol crisis began in the Chicago suburbs in the fall of that year. Over a span of just a few days, seven people died after ingesting Extra-Strength Tylenol capsules. The connection between the deaths and Tylenol was made by two local firefighters listening to their police radios, who heard Tylenol reported in association with two of the deaths and notified their superiors of the connection.1 After further investigation, it turned out that the deaths were not related to the actions of Johnson & Johnson. Rather, these were murders. Someone had tampered with the bottles, lacing multiple capsules in several bottles with lethal amounts of cyanide and then returning the bottles to store shelves. However, what made Johnson & Johnson’s response to this crisis so admirable is that, even after it was discovered that the deaths were the result of criminal acts committed well after the drugs had left the company’s control and not related to the company’s own operations, Johnson & Johnson never hesitated to act without regard for its own finances in order to halt any further risk of public harm.
At the time of this crisis, Tylenol dominated the over-the-counter pain reliever market. Many prominent marketing professionals were certain that an incident of this magnitude was not survivable for the company. What did Johnson & Johnson do that was so important to the company’s immediate survival and eventual return to market prominence?2 It operated under the following principles:
These steps are crucial to any plan for effective crisis management, but the Tylenol case occurred 32 years ago, in a drastically different world. What does crisis management look like now, in a world powered by the internet and a 24-hour news cycle? Can a company still control its message and respond effectively? How can the lessons of the Tylenol crisis be applied to various crises in our new media climate?
Scenario 1: Recall3
Acme Medical Devices is a manufacturer of Class II, 510(k) cleared devices. Over the last few weeks, it has received an unusual number of complaints for one of its devices. The higher than usual number of complaints for one particular device repeatedly presenting the same problem triggers Acme’s quality department to take action. There have been no patient injuries to date, but if this problem were to continue recurring, there is some degree of potential that a patient could be harmed. Acme’s quality manual contains a decision tree that addresses whether the company should recall the product and whether notice in the form of a medical device report (MDR) must be sent to the FDA. Acme makes the decision to both submit an MDR and to recall the product. What does effective communication look like in this scenario?
- MDR. The MDR must be filed with all necessary information in a timely manner. Timeliness depends upon the type of adverse event that has occurred. Most adverse events may be reported within 30 calendar days of when the company becomes aware of the problem. However, if action is required to prevent an unreasonable risk of substantial harm to the public health, or if the FDA has requested it, then the MDR must be filed within five work days of when the company becomes aware of the problem. In either case, all of the information outlined in the regulations must be supplied.4
- Recall. Recall communications have three main components: 1.) notification of the FDA, 2.) notification of the public, and 3.) evaluation of the effectiveness of the recall. In step one, companies must submit as much information as they have about the recall to the local district FDA office. This information should include a product description, any approval numbers or identification codes used by the agency, identifying information for the specific items recalled (e.g., lot or batch numbers, serial numbers, etc.), and the company’s strategy for conducting the recall. The company should also include drafts of its intended public communications for the FDA’s review. Once the company has spoken about the recall and its recall communication plan with the local FDA office, then step two begins with a press release. Often the release is a joint communication from the company and the FDA. (This should be discussed when reporting the recall to the agency.) The press release should include much of what is disclosed to the FDA – a description of the product, the volume of product being recalled, the level of distribution the product has reached (e.g., clinical setting vs. retail), the reason for the recall, product identifiers (e.g., lot/batch and/or serial numbers), as well as instructions for what parties in possession of the product should do (e.g., whether it should it be returned to the manufacturer and whether there will be reimbursement for costs or a replacement device issued, etc.?).
- Effectiveness Checks. Having initiated and communicated the recall, the company must begin harnessing its message. Companies do not often run into Tylenol situations; however, recalls are one scenario in which companies should always plan for the worst and hope for the best. In the case of a recall, companies must make public health their top priority and use clear and diligent communication to carry out a recall. It is the recalling party’s responsibility to assess how much recalled product there is on the market, which parties possess it, and how much of it has been used, discarded, or returned/corrected. The goal is to ensure that there is no potentially harmful product left on the market to endanger the public health. This is a lofty goal, and in practice it is often unattainable, but a full accounting of all recalled product is the goal that recalling companies should endeavor to reach. It may entail repeated attempts to follow the distribution chain through distributors, mailings to health care providers, and repeated press releases, depending upon the depth and breadth of the particular recall.
Scenario 2: FDA Inspection
It is not uncommon for a recall to trigger an FDA inspection, especially if the company is nearing the time when a regular inspection could be due, or if it has a history of product or compliance problems. In our particular scenario, let’s suppose that “Acme” was last inspected 19 months ago and that, at its last inspection, the FDA discovered and cited deficiencies in the design control, process control, and CAPA systems. Given the FDA’s awareness of the company’s difficulties in the areas that are critical to ensuring that product meets the design specifications and functions properly, an inspection in the face of a recall should not be unexpected. The FDA investigator would likely focus on the company’s investigation into the root cause of the product problem that caused the recall, starting with the complaints and working backward through the CAPA files.
In this scenario, we will assume that Acme had not sufficiently completed and implemented the corrections it promised after its last inspection. At the closeout meeting following the inspection, the investigator presents the company with an FDA Form 483, outlining a list of the compliance deficiencies that were noted during the inspection.
The next steps in this situation differ somewhat from a recall in that the audience is now just the FDA, rather than the public. While a 483 is a public record, it is not published by the FDA; it must be requested through the Freedom of Information Act (FOIA), which has a nearly six month backlog of requests. Further, only the 483 itself is available through FOIA. The company’s response to the agency is not publicly available. However, rule #1 still applies – public health must be the company’s top priority. With a 483, this priority is applied through ensuring that all processes and procedures are compliant with the FDA’s regulations in order to avoid future risk to the public health.
Particular attention must be paid to the swiftness of communications in the event of a 483, as a company has only 15 business days in which to submit a response to the FDA. In the response, the company must take responsibility for its actions, owning deficiencies when they are present, and only questioning observations when there is a clear disagreement as to the circumstances. The company must then be proactive about outlining its amelioration plan in a manner that ensures the problems will be corrected this time. The company should bear in mind that it likely lost some credibility with the FDA in not following through on its promised corrective actions after its last inspection, especially where that failure potentially caused or failed to prevent a product recall. Each observation should be responded to with a reason for the failure, a statement of how the company has ensured that products were not affected by the failure or how affected products were removed from the market or corrected, an analysis of the problem and identification of the root cause, and an outline of how the root cause will be addressed to prevent future recurrences.
Scenario 3: FDA Warning Letter
Let’s assume that Acme wrote a very thorough response to the FDA, but that it was not sent until the 18th business day after the 483 was issued. The FDA has stated that it will not consider responses to 483s sent outside of the 15 business day window, so for practical purposes, Acme’s second 483, with recurring deficiencies, received subsequent to a product recall, has gone unanswered. Given the severity of the deficiencies, the fact that the recall demonstrated that the deficiencies are affecting product quality, and the impression in failing to respond to the 483 that Acme does not understand the significance of regulatory compliance, the FDA issues a Warning Letter. A Warning Letter is an official enforcement action, and it is a public enforcement action. The Warning Letter is published on the FDA website concurrently with its issuance to the recipient.
Once again, the company must reassure a bifurcated audience – the FDA and the public – that it is committed to the public health. In responding to a Warning Letter, the company’s objective relative to the FDA is the same as with the 483. It needs to demonstrate to the federal agency with the authority to oversee its participation in the medical device industry that the company is compliant with all regulations. In this case, where the company drafted what it believes is a thorough response, but the response was not considered by the FDA prior to issuing the Warning Letter, the company may wish to reissue the materials submitted in response to the 483, but reframed to fit the Warning Letter. In this case, or especially if the company received the Warning Letter after timely submitting what they believed was a thorough response to the 483, they might wish to bring in outside experts with fresh perspective, whether FDA regulatory attorneys or consultants. In addition to demonstrating the company’s commitment to public health through compliant operations, the company must avoid further FDA enforcement actions, such as product seizures and plant shut downs, which come with highly visible negative press. Consider the image of federal agents blockading the entrance to your facility, clearly emblazoned with your company’s logo. More information about the FDA’s various enforcement actions is available in our Regulatory 360 series.
The Second Audience
But what of the second audience, the public? It is unusual for companies to make front-page news with product problems. Even recalls, unless they are quite serious, are not usually front-page stories. Unlike in the Tylenol scenario, the concerns companies are more likely to encounter are from shareholders, for example, as in the case of the FDA’s 2006-2008 investigation into Ranbaxy selling sub-potent, super-potent, or otherwise adulterated drugs, among other violations. At the time, Ranbaxy was in the midst of being acquired by Daiichi Sankyo and there was rampant speculation online that the regulatory investigation was causing the deal to fall through. Although the allegations affected generic Lipitor sold in the U.S., a story which did make the news, the media was not overly concerned with the public health. The Lipitor news was delivered by the media because it was a health-related press release, but the aspect given more prominent attention was business-oriented – that Ranbaxy’s stock had plummeted and the speculation about the Daiichi deal falling through. The stock value only began recovering after the then-CEO’s statement that the acquisition was still going forward.5
The other segment of the second audience that it is crucial to consider is the plaintiffs’ bar. Jokes have existed about lawyers chasing ambulances in hopes of finding a client for as long as there have been ambulances to chase. However, seeking out injured clients in this increasingly litigious society is far easier in the age of the internet. Adverse events are publicly available on the FDA’s website and patients often complain about medical experiences in online message boards. When the dots are so easy to connect, companies should always assume that litigators are watching for the next big class action. Once an attorney has a lead on a product problem, they can establish a website and utilize search engine tools to ensure that their site is a top result when patients search for information about the drug, device, or procedure in question, which makes seeking legal recourse that much easier for aggrieved patients.
We know that operating in this litigious society that feeds off of a 24-hour news cycle leaves little room for error, and even less time to think critically before responding to a crisis. For this reason, the art of message management is one that should always be proactive rather than reactive. The companies that fare best when faced with a crisis are those that have prepared thorough response plans before ever being faced with a serious challenge. Despite the changing times and technology, the lessons learned over three decades ago when Johnson & Johnson faced the Tylenol crisis hold true today: public health and safety must be of the utmost priority, companies must be prepared to act swiftly, and they must carefully balance the need to control the company’s message with the transparency necessary to maintain the public’s trust.
Please join us for the next installment of Litigation 360, in which Sara Dyson will delve further into how to develop a crisis response plan and team.
3 Readers may wish to read the FDA’s guidance document on conducting product recalls, available here: http://www.fda.gov/safety/recalls/industryguidance/ucm129259.htm.
4 21 C.F.R. §803.53.
For additional resources contact the Marketing department
Medmarc is a part of ProAssurance Group, a family of specialty liability insurance companies. The product material is for informational purposes only. In the event any of the information presented conflicts with the terms and conditions of any policy of insurance offered from ProAssurance, its subsidiaries, and its affiliates, the terms and conditions of the actual policy will apply.
Copyright © 2024 - Medmarc