Tylenol Maker to Pay $25M for Selling Metal-Contaminated Drugs

A Johnson & Johnson (NYSE:JNJ) subsidiary pleaded guilty on Tuesday to selling liquid medicine contaminated with metal and agreed to pay $25 million to resolve the case, the U.S. Department of Justice said on Tuesday.

The subsidiary, McNeil Consumer Healthcare, pleaded guilty to one federal criminal charge in the case.

In 2010, the company launched mass recalls of certain children's over-the-counter-medicines, including Infants' Tylenol and Children's Motrin, made at its Fort Washington, Pennsylvania plant.

It was the latest in a series of recalls at the time. There were far-reaching multiple recalls from 2008 to 2010 involving hundreds of millions of bottles and packages of consumer brands such as Tylenol, Motrin, Rolaids, Benadryl and other products due to faulty manufacturing. The recalls kept widely used products such as Children's Tylenol off pharmacy shelves and seriously tarnished J&J's once-sterling reputation.

In addition to metal particles getting into liquid medicines, there were moldy odors and labeling problems. For example, the label for Sudafed allergy tablets incorrectly repeated the word "not" to say "do not not divide, crush, chew or dissolve the tablet."

In the case involving metal particles, the troubles began in May 2009 when a consumer complained after noticing "black specks" in the bottom of a bottle of Infants' Tylenol. The specks were found to be nickel and chromium particles.

In 2010, Johnson & Johnson's U.S. consumer product sales fell by more than 19 percent, a decrease of $900 million. The rash of consumer medicine recalls in 2009 and 2010 were largely responsible for the first back-to-back years of company sales declines since World War Two.

Carol Goodrich, a spokeswoman for McNeil Consumer Healthcare, said the plea agreement "closes a chapter" and that the company has "been implementing enhanced quality and oversight standards across its entire business."

As part of the agreement, McNeil also agreed to further safety measures before reopening its Fort Washington facility.

(By Lindsay Dunsmuir)