An inside look at 'phantom' drug recalls

NEW YORK (CNNMoney.com) -- Lawmakers finally get to grill Johnson & Johnson CEO William Weldon about the circumstances that triggered half a dozen recalls of its popular pain and cold drugs.

Absent due to illness from the first hearing held in May, Weldon will testify before the Congressional Committee on Oversight and Government Reform's second Johnson & Johnson recall hearing on Thursday.

Among J&J's recalls this year was the largest children's medicine recall in the United States. In late April, more than 135 million units of children's Tylenol, Benadryl and Motrin medicines were recalled due to possible bacterial contamination and the presence of small metal parts.

Regulators said only a "remote" potential for serious health problems existed.

Since that recall, Johnson & Johnson (JNJ, Fortune 500) and McNeil Consumer Healthcare, the unit which made those drugs, have been the subject of a Congressional investigation.

Besides the problems related to children's medicine, lawmakers say they uncovered an effort by McNeil to secretly remove more than 88,000 defective Motrin tablets from stores in June 2009.

J&J hired third party subcontractors INMAR and WIS who specialize in product recalls recalls. These subcontractors sent workers into thousands of stores nationwide to secretly purchase all affected Motrin products from store shelves.

Lawmakers dubbed this a "phantom" recall.

Food and Drug Administration guidelines recommend that defective drugs be officially recalled by the manufacturer, but the agency can't force a company to conduct a recall.

J&J and the FDA are at odds about what happened with Motrin. The agency maintains that J&J was hiding the nature of its activities. J&J says it informed the agency of the company's plan to conduct a product removal.

How do recalls really work? Donald Aday, president and CEO of Strategic Solutions International, is an expert on how the product removal process works in the event of a recall.

"Normally, once a company determines that a drug product has to be recalled from the market, the proper procedure is to first notify the FDA that the product will be removed from store shelves, distribution centers, warehouses and anywhere else in the supply chain."

Aday said all the major players specializing in product reclamation know how the process works, what the rules and regulations are, and what constitutes an 'unauthorized' recall.

"With a recalled drug product, the process is very stringent," said Aday. "The manufacturer has to account for every unit of the recalled product. It's also good business practice for the manufacturer to then alert the public through a press release that such a recall is taking place."

In the case of the phantom Motrin recall, McNeil never issued a press release about its activities.

Going into the stores: Because manufacturers typically don't have the manpower needed to visit thousands of stores to remove products, the work is contracted out to third party vendors specializing in this type of work such as Inmar, WIS and Strategic Solutions, Aday's company.

CNNMoney.com spoke to a former Inmar employee who did not want to be named about how the company conducts product removal from stores.

"When Inmar is contracted for a big product removal, we manage the process and we hire a company like WIS to provide additional manpower to go into stores," he said.

He explained that when Inmar employees go into stores to remove recalled products, the standard protocol is to alert store management about the purpose of the visit.

"All communication between the client, Inmar and stores that we go into is always above board, or it should be," he said.

Although he said he did not have first-hand knowledge of Inmar's involvement in the "phantom" Motrin recall, he said he was very surprised by Inmar's clandestine product removal.

"It was out of the ordinary for Inmar," he said.