America’s Most Admired Lawbreaker
On May 20, about 100 stock analysts gathered in the ballroom of the Hyatt Regency Hotel in New Brunswick, New Jersey, to hear good news from top executives at Johnson & Johnson: The company had 10 new drugs in the pipeline that might achieve more than a billion dollars in annual sales.
For 129 years, New Brunswick has served as the headquarters of J&J, America’s seventh most valuable public company. With consumer products from Band-Aids to baby powder, Neutrogena to Rogaine, Listerine to Visine, Aveeno to Tylenol and Sudafed to Splenda, Johnson & Johnson is the biggest and, according to multiple surveys, most admired corporation in the world’s most prosperous industry—healthcare.
But the real money—about 80 percent of its revenue and 91 percent of its profit—comes not from those consumer favorites, but from Johnson & Johnson’s high-margin medical devices: artificial hips and knees, heart stents, surgical tools and monitoring devices; and from still higher-margin prescription drugs targeting Crohn’s disease (Remicade), cancer (Zytiga, Velcade), schizophrenia (Risperdal), diabetes (Invokana), psoriasis (Stelara), migraines (Topamax), heart disease (Xarelto) and attention deficit disorder (Concerta).
Ads for many of these products dominate our television screens and magazine pages. Each drug relies on its own elaborate marketing plan and carefully pitched promotional materials, used by hundreds of salespeople whose incomes turn on how much product they can push to the thousands of doctors who write prescriptions. All command increasing portions of our health insurance premiums and our own wallets, as well as our hopes and anxiety when we or our loved ones fall ill.
What follows is the backstage story of how an iconic company marketed a blockbuster drug that raised those hopes and fed on that anxiety. It is a story that in its depiction of strategies, tactics and mindset should make us wonder about the prescription drugs that are so much a part of our lives.
The show that Johnson & Johnson put on that morning for the analysts at the hotel, which the company owns, would produce positive headlines in the news that afternoon. But the upbeat talk in the lavishly appointed ballroom was a world apart from the drab setting where a Johnson & Johnson whistleblower says she sat in a sales meeting being drilled on promotional materials she was told should not be left behind for fear that federal regulators might see them.
In the ballroom, the Wall Street people watched J&J executives talk about the miracle drugs they were moving through clinical tests—not about how their colleagues might, as investigators later charged, massage data to conceal potentially damaging test results.
Whether it was the head of central nervous system research or the woman in charge of the drive to intercept diabetes before it strikes, everyone on the podium easily answered questions from the analysts on issues ranging from cell structures to potential market sizes to development timelines. They exuded passion and confidence—which was nothing like how Johnson & Johnson executives, however well-rehearsed by batteries of lawyers, would comport themselves under oath when asked to answer for how they marketed Risperdal, the company’s billion-dollar antipsychotic drug.
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