McNeil’s Tylenol recall hurts all branded drug manufacturers

Most branded over-the-counter (OTC) medications offer one primary benefit over their functionally-equivalent generic alternatives: a consumer perception of superiority in quality and safety.  This is why McNeil’s most recent recall of Tylenol and 5 other medications, driven by both quality and safety issues, is a blow for all manufacturers of branded OTC drugs.

McNeil’s current recall is a result of an unusual moldy, musty, or mildew-like odor in the 6 different affected products (plus line extensions).  The smell was also associated in some cases with nausea, stomach pain, vomiting, or diarrhea.  The cause is attributed to a chemical applied to the wooden pallets used to transport packaging material.

This is, of course, not the first recall for Tylenol.  Its most famous recall was in 1982, when 7 people were killed by Tylenol that was deliberately laced with cyanide.  Whoever caused the issue was never caught.  Even before Johnson & Johnson (McNeil’s parent company) knew the cause of the problem at the time, they aggressively pulled all products from retail shelves in a move that was long heralded as a model for crisis management.  A smaller and less serious recall ocurred in 1986.

This time is different.  For one thing, J&J knew about complaints of the funky odor and resulting illnesses it caused as far back as 2008.  Yet they failed to either follow up aggressively or notify the FDA.  And the FDA is none too pleased about that, leading to the recent issuance of a scathing “warning letter” which J&J must address within 15 days.  In addition, unlike the 1982 case of deliberate tampering, this current issue seems to have been caused by sloppy manufacturing and logistics practices, plain and simple.

When you’re dealing with complex, regulated products and complicated distribution systems, occasional safety issues are bound to arise from time to time.  But when quality and safety are the very aspects of differentiation on which your branded product relies, slip-ups like McNeil’s current ones can really create some serious brand vulnerability.

Generic OTC products offer absolutely equivalent efficacy to their branded cousins.  So if the pricier brands aren’t perceived as truly safer than the generics, what’s left?  (devil’s advocate for a moment: the branded products do tend to innovate more often with packaging and delivery system innovations…but even these functional attributes, when successful, are always quickly copied by the generic manufacturers)  So fundamentally, branded OTC medications are primarily relying on their reputation and their perceived safety and quality.

There’s an old rule of thumb in advertising that it takes about 3 ‘impressions’ of a message before it starts to sink in for consumers.  It’s not implausible to apply that same logic to brand crises.  With at least 3 quality & safety-related recalls to date, Tylenol is beginning to send a real message that may start to sink in for consumers: branded OTC medications may be just as prone to safety issues as their generic equivalents.  And if that message sinks in, its good news for OTC generic manufacturers and bad news for the branded pharmaceutical industry in general.