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Cyanide, Tylenol and How Free Markets Make You Safer

Today is the anniversary of one of the most significant food and drug related events in recent memory. Often discussed in college business classes these days, the 1982 Tylenol poisonings is usually heralded as the prime example of how companies should handle a consumer relations disaster. However, it is also a shining example of how the market itself—acting to protect its customers and thus its profits—can improve public safety. The actions that Johnson & Johnson took in the wake of this tragedy, without a doubt, improved the safety of consumers of all over-the-counter (OTC) drugs for the next 30 years.

Within three days, beginning on September 29, 1982, seven people in the Chicago area died after taking Extra-Strength Tylenol laced with cyanide. More than 30 years later, who committed this crime and why remains a mystery. After an investigation, it was determined that the cyanide was not introduced in the factory, which, according to Grey Hunter, author of True Crime Stories, “left only one other possibility. The Food and Drug Administration (FDA) and law enforcement agencies realized that someone had methodically taken the Tylenol bottles off the shelves at the stores where they were sold, filled the capsules with cyanide and returned them back to the shelves at a later period.”

The incident triggered nationwide panic and distrust of OTC medicine as well as numerous copycat attempts. Within the next month, the FDA counted 270 incidents of suspected product tampering. However, it was unlikely that any tampering following the Chicago deaths involved Johnson & Johnson products. That’s because the company immediately implemented a protocol to make sure that customers could rest assured that any OTC they purchased from Johnson & Johnson was tamper resistant.

While advertising genius Jerry Della Femina declared that Johnson & Johnson wouldn’t “ever sell another product under that name,” the company managed to turn the crises into a public relations campaign that would promote Johnson & Johnson products as safer than all others. Tylenol, which had been 37 percent of the analgesic market, plummeted to just 7 percent after the scare, but within a year it bounced back to a 30-percent market share. That is all thanks entirely to Johnson & Johnson’s robust campaign to prove to its customers that its top priority was their safety.

First, rather than trying to quiet the panic, the company alerted all its customers through the media not to consume any Johnson & Johnson products until they knew the extent of the tampering. They voluntarily recalled around 31 million bottles of Tylenol and stopped all production and advertising of the product, as well as offering to exchange all Tylenol capsules consumers had already purchased—as the number one analgesic in the nation this meant giving away millions of bottles of Tylenol. They even put up a $100,000 bounty on the killer!

Two months later, Johnson & Johnson reintroduced Tylenol onto the market with its new triple-seal tamper- resistant packaging.

After that tragedy, Johnson & Johnson engineers quickly developed an elaborate innovation dubbed the “triple safety-seal”: Boxes are glued shut at both ends and sealed in cellophane, the cap is surrounded with a red plastic seal and a foil seal is glued over the mouth of the bottle. In addition, six-bottle packs are heat-sealed in plastic binders, and shrink-wrapped plastic is put around cartons, which hold 12 packs each.

After the Chicago cyanide incident, a number of similar poisoning incidents occurred in Orlando, Houston, New York and Seattle. While the FDA eventually implemented a rule (in 1989) requiring OTC drug manufacturers to use packaging with at least one tamper-resistant technique—the industry beat the FDA to the punch much earlier. By 1986, nearly every drug company had implemented tamper-resistant packaging. According the Proprietary Association, which represents OTC drug manufacturers, the industry spent around $500 million to implement tamper-resistant or “tamper-evident” packaging. They did this, not because the FDA was going to require it, they did it because they had to in order to compete with Johnson & Johnson and to meet consumers’ demands for safety.

While most OTC drug maker now simply comply with the FDA’s bare minimum requirement for safety, the Tylenol incident is a great example of how companies, operating on the profit motive, can and do react faster than government agencies to protect consumer safety.