Oregon sues Motrin maker over secret drug recall

By Parija Kavilanz, senior writer


NEW YORK (CNNMoney) -- Oregon has sued Johnson & Johnson for allegedly selling defective Motrin drugs to consumers in the state for more than a year, and for trying to secretly remove the faulty drugs from stores.

"Companies that break the rules and put consumers at risk will be held accountable," Oregon Attorney General John Kroger said in a statement.

The state filed the lawsuit Wednesday against J&J (JNJ, Fortune 500) and its two subsidiaries, McNeil PPC Inc. and McNeil Healthcare Inc. The company's McNeil division makes over-the-counter cold and pain drugs such as Tylenol, Motrin and Benadryl.

The suit claims that J&J discovered in late 2008 that some supplies of Motrin sold in gas stations and convenience stores nationwide were defective because they were not properly dissolving.

Instead of issuing a public recall of the defective Motrin products, the suit alleges that J&J hired contractors to go into stores in early 2009 and secretly buy the faulty products without telling wholesalers, retailers or consumers about the problem.

Food and Drug Administration officials learned of this "phantom" Motrin recall mid-2009, but the suit alleges that J&J's McNeil division did not publicly announce a recall until February 2010.

The public first learned of the phantom recall when details of it emerged in June during a Congressional hearing addressing a series of other Johnson & Johnson recalls. That's when company executives as well as the FDA were questioned about an attempt to surreptitiously take Motrin off the shelves.

After months of maintaining that the company did not engage in any deceptive practices in the Motrin recall, J&J CEO William Weldon finally admitted to lawmakers in December that J&J secretly bought up defective drugs without informing regulators and consumers of its actions.

The Oregon lawsuit said that despite the secret Motrin removal, more than 787 eight-count containers of the allegedly defective Motrin remained in stores for sale in the state.

Additionally, the lawsuit alleges J&J's activities reflected multiple violations of Oregon's Unlawful Trade Practices Act (UTPA), which prohibits companies from "employing unconscionable tactics, making certain false or misleading representations, or failing to disclose a fact."

The state is suing J&J for civil penalties of up to $25,000 for each violation of the UTPA, which could amount to millions of dollars.

Oregon Attorney General's spokesman Tony Green said the state had offered a proposed settlement to J&J prior to the lawsuit, which included a payment of $725,000 by J&J to the Justice Department to settle the dispute.

Green said J&J rejected the settlement offer which then resulted in the suit.

McNeil said in a statement that the company's actions with regard to the Motrin removal were "consistent with applicable law and there was no health or safety risk to consumers associated with this limited recall."

"As there is no legal basis for the claims advanced by Oregon, we intend to seek dismissal of the Complaint," the company said. To top of page

Frontline troops push for solar energy
The U.S. Marines are testing renewable energy technologies like solar to reduce costs and casualties associated with fossil fuels. Play
25 Best Places to find rich singles
Looking for Mr. or Ms. Moneybags? Hunt down the perfect mate in these wealthy cities, which are brimming with unattached professionals. More
Fun festivals: Twins to mustard to pirates!
You'll see double in Twinsburg, Ohio, and Ketchup lovers should beware in Middleton, WI. Here's some of the best and strangest town festivals. Play
Index Last Change % Change
Dow 17,356.87 288.00 1.69%
Nasdaq 4,644.31 96.48 2.12%
S&P 500 2,012.89 40.15 2.04%
Treasuries 2.15 0.08 3.72%
Data as of 6:05am ET
Company Price Change % Change
Bank of America Corp... 17.26 0.54 3.23%
General Electric Co 24.43 0.00 0.00%
Apple Inc 109.41 2.66 2.50%
Cisco Systems Inc 26.81 0.22 0.85%
Microsoft Corp 45.74 0.58 1.28%
Data as of Dec 17

Sections

That number will likely grow as the Obama Administration eases restrictions with the Communist country. More

Laurie Segall sits down with Reddit founder Alexis Ohanian and founder of AeroFS, Yuri Sagalov, to discuss how immigration reform could bring more skilled tech workers to the U.S. More

News startup The Skimm announced a new round of funding, 1 million active readers, and plans to expand into a 'lifestyle brand.' More

Congress waited until the last minute to decide what to do with a slew of expired tax breaks. They extended most of them, and a handful will affect individuals directly. More

Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer.

Morningstar: © 2014 Morningstar, Inc. All Rights Reserved.

Factset: FactSet Research Systems Inc. 2014. All rights reserved.

Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved.

Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor’s Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2014 and/or its affiliates.