A Hard Decision to Swallow

By Stephen Koepp.

Johnson & Johnson Chairman James Burke is not one to back away from trouble. Appearing last week on the Donahue television program to answer questions about the Tylenol poisoning earlier this month, Burke reacted swiftly when one caller denounced the culprit as a terrorist. In a gesture that was rare for a buttoned-down businessman, he clenched his fist and pumped it in the air, as if to say, "Right on. I agree."

It was a fitting symbol of the drug manufacturer's dramatic response to ! the tragedy. Only the day before, Burke had announced that Johnson & Johnson would no longer sell any of its over-the-counter drugs in capsule form. The pharmaceuticals maker saw the move as the best hope of preventing a recurrence of the still unsolved poisoning of Diane Elsroth, 23, of Peekskill, N.Y., who died Feb. 8, after swallowing two Extra-Strength Tylenol capsules laced with potassium cyanide. Said Burke at a press conference: "We take this action with great reluctance and a heavy heart. But since we can't control random tampering with capsules after they leave our plant, we feel we owe it to consumers to remove capsules from the market."

The decision will cost Johnson & Johnson as much as $150 million to recall its capsules and scrap their production. In addition to Tylenol, Johnson & Johnson made and sold capsule forms of Sine-Aid, a remedy for sinus congestion, and Dimensyn, a medicine for the relief of menstrual pain. The capsule form of Tylenol amounted to about 30% of the pain reliever's estimated 1985 sales of $525 million. To make up for its loss, the company last week began promoting Tylenol in the form of caplets, which are the smooth, elongated tablets that Johnson & Johnson began producing in 1983, after seven people in the Chicago area were poisoned by tainted Tylenol capsules. The caplets, far more difficult to adulterate, already make up about 15% of all Tylenol sales.

Johnson & Johnson's sudden decision prompted the pharmaceutical industry to re-examine its widespread use of over-the-counter capsules, which now include dozens of preparations ranging from Contac decongestant to Dexatrim diet formula. But as the industry sent its packaging experts to Washington last week for an emergency meeting with Food and Drug Administration officials, most companies said that they would keep on using capsules.

A huge consumer demand for capsules still exists despite the Tylenol scare. Many people find the gelatin-cased medicine easier to swallow and less bitter than tablets. The bright color combinations of capsules also make them more readily identifiable. Moreover, because so many prescription medicines come in capsule form, a common--but false--impression has arisen that capsules are more effective than tablets.

For greater safety, several companies have devised methods of sealing the individual capsules to make them tamper resistant. Eli Lilly has developed a tiny belt of gelatin that binds, like a piece of tape, the top and bottom halves and makes it difficult to open a capsule without tearing it. Sterling Drug uses sound waves to create a kind of spot-weld on capsules of its Panadol pain reliever. Johnson & Johnson says that it too studied new methods of sealing capsules but decided that none was completely secure.

After the Chicago poisonings, which caused Tylenol's share of the pain- killer market to plunge from 35% to 7%, Johnson & Johnson staged what industry experts called a "miracle" comeback. The company spent an estimated $300 million to recall 31 million old packages of Tylenol capsules and promote new ones that were "triple sealed" to resist tampering. Now the company must restore confidence yet again. It will not be easy: the poisoned woman's mother described the plan to withdraw capsules from the market as "three years too late."

Even so, many consumers feel sympathy for the manufacturer, and investors have been impressed by the company's decisiveness. Said Robert Benezra, who follows the drug industry for the investment firm Alex Brown & Sons: "Johnson & Johnson acted responsibly in the interest of the public's safety. That's how the consumers see it." The company's stock price went up 1 1/2 points last week, to 49, in contrast to a fall of 5 3/4 during the week after the poisoning. Investors generally believe that Johnson & Johnson (1985 revenues: $6.4 billion) has the financial wherewithal to preserve Tylenol's position as the best-selling nonprescription pain reliever. During 1985, the brand held a 34% share of the $1.6 billion market. The company's debts are low, and it holds a cash reserve of some $800 million.

The method, the motive and the culprit behind the latest poisoning all remain a mystery. The FDA has examined almost 500,000 Tylenol capsules from across the U.S. for evidence of cyanide, but has turned up nothing since Feb. 13, when investigators found cyanide in a second bottle of capsules, taken from a store just a few blocks from where the fatal package was sold in Bronxville, N.Y.

As Johnson & Johnson's nightmare began to subside last week, another company's may have begun. Consumers in several states, including Florida, Georgia and Maryland, claimed to have found bits of broken glass in Gerber baby food and fruit juice. Local and federal authorities began trying to confirm the incidents to determine whether any pattern existed. But FDA officials suspected that if glass was indeed found in the Gerber containers, ) it was the result of jars that chipped during shipment rather than a rash of copycat mayhem.

With reporting by Raji Samghabadi/New York and Arturo Yanez/Chicago