J&J implant case: The moral hazard of multinationals
Value placed on Indian lives has always been a bit lower in multinational balance sheets
Is Johnson and Johnson (J&J) a highly innovative, socially responsible company or is it a callous, uncaring pharma multinational? Actually it is both, depending on the geography you are looking at. In the US, based on performance parameters, such as innovation, social responsibility and employee engagement, J&J took the top ranking among healthcare and life-sciences companies in the recently released Management Top 250 list (n.wsj.com/2wE6WsZ).
In India, though, as evidence continues to tumble out in the infamous metal-on-metal acetabular surface replacement (ASR) implant case, it has been anything but a model of rectitude and responsible behaviour (bit.ly/2oCyYSb).
In fact, the company has sounded most insincere in its clarification to Mint, which had first reported on the controversy claiming that “voluntary recall of its controversial hip implant does not mean it is faulty”.
Now J&J is a pedigreed pharma pioneer with a 70-year history of operating successfully in India, so we must take what it says at face value. But there is the small matter of a federal jury in Dallas ordering the company to pay more than $1 billion in compensation and punitive damages, following its ruling in favour of six patients over their claims that its DePuy medical devices subsidiary deliberately hid flaws in the metal-on-metal artificial hips from doctors and patients.
And just two months ago, a jury in a Missouri circuit court awarded $4.14 billion in punitive and $550 million in compensatory damages to 22 women and their families, who had claimed that asbestos in the company’s talcum powder products caused them to develop ovarian cancer.
Still, the developer of critical drugs, such as the autoimmune Remicade, the anticoagulant Xarelto or Darzalex for multiple myeloma, is a well-respected company, the pride of corporate America and a showcase for Big Pharma.
In the absence of adequate compensation provisions in the country’s laws related to such cases, Indians can forget about these levels of compensation no matter how grievous their suffering. The 3,828 people who died on the night of 2 December 1984 at the Union Carbide factory in Bhopal, received a total compensation of $470 million after the toxic gas leak, the effects of which linger even today in forms too heart-rending to describe.
While the political and legal machinations that surrounded that tragedy and its aftermath need little recounting, it is worthwhile recalling the final binding judgment (which came in 2010) delivered by chief judicial magistrate Mohan P. Tiwari: “The tragedy was caused by the synergy of the very worst of American and Indian cultures. An American corporation cynically used a third-world country to escape from the increasingly strict safety standards imposed at home. Safety procedures were minimal and neither the American owners nor the local management seemed to regard them as necessary.”
The resonance with the present case involving the faulty hip implant devices is striking. For nearly 10 years the patients, numbering a few thousand, have been battling their crippling condition virtually alone with little help from either the government or the company. Till the media raised the issue following the Mint investigation, patients like Vijay Anant Vojhala, Raj Shroff, Daisy Bharucha (who sadly passed away four years ago), and many others, who needed revision surgeries, have had little support.
What’s more, even now, after all the furore, the best they can hope for, after their lives and those of their families, have been torn asunder, is a paltry compensation of ₹20 lakh with some associated costs thrown in. And that, too, only after they have manoeuvred their way through the complex mechanism of tests proposed by the special committee set up by the government to look into the case. A J&J spokesperson in India dubbed the company’s actions in the matter “appropriate”. That’s revealing. A sum of $2.5 billion for 8,000 patients in the US set against an average of ₹20 lakh for each patient similarly affected in India.
Yes, that does sound appropriate enough.
After all, from Union Carbide in 1984 to J&J in 2018, the value placed on Indian lives has always been a bit lower in multinational balance sheets.
Sundeep Khanna is a consulting editor at Mint and oversees the newsroom’s corporate coverage. The Corporate Outsider looks at current issues and trends in the corporate sector every week.
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