The Tylenol Mafia (40 page)

Within a few months of Elsroth’s death, rat poison was found in Contac cold capsules in Houston, and in
Teldrin
allergy capsules in Orlando. In the Seattle area, two people died in June 1986 after consuming cyanide-laced Excedrin. That same month, cyanide-laced capsules were also found in unopened bottles of Excedrin and Anacin-3 in Seattle area stores. At least a half dozen people were known to have died from poisoned OTC drug capsules between February and June of 1986. Still, Frank Young toed the company line. “The FDA is not now considering any ban on capsules,” said Young. “You are on a slippery slope when you allow a group of terrorists to start driving products off the market.”

Then, the generic drug scandal hit, and Frank Young came under fire. From 1981 to 1987, FDA chemists had been pocketing thousands of dollars in cash or gifts to rig the drug approval process in favor of certain generic drug companies. By November 1987, it was clear that bribery was rampant in the FDA’s generic drug division. The White House asked Young to resign, giving him a make-work post in an advisory job for Health and Human Services. Young was never charged with anything other than being asleep at the wheel while staffers in the FDA’s generic division were on the take. Five FDA officials and 40 generic drug company employees were eventually convicted of felonies for their roles in the generic drug bribery scandal.

“[Young] was a good soldier for the Reagan regime,” wrote syndicated columnist, Jack Anderson. “But a good soldier in the Reagan army had to be an advocate of deregulation and hands-off government, even in the agency that is supposed to protect consumers from dangerous food and drugs. The hands-off approach didn’t work for the FDA much better than it worked for the savings and loan industry, the Defense Department, or the Housing and Urban Development Department,” wrote Anderson. “Now, with Reagan enjoying retirement, people like Frank Young are paying for what they did to please the big guy.”

Frank Young’s penance was short lived. Young, like former FDA Commissioner, Arthur Hayes, and Deputy Commissioners, Novitch and Norris, went on to a lucrative career in the industry he had been in charge of regulating, or rather deregulating. Young served as a director for numerous pharmaceutical and medical device companies, including Essex Woodlands Health Ventures,
Agennix
, Inc., La Jolla Pharmaceuticals Company, Light Sciences Oncology,
Elusys
Therapeutics, and Golden Pond Healthcare.

Corporate executives often hold positions in government agencies while simultaneously holding positions at their private sector corporations. During World War II, Robert Wood Johnson II was the chairman of J&J, a brigadier general in the United States Army, the chairman of the Smaller War Plants Corporation, and a vice-chairman of the War Production Board, all at the same time. In 1981, President Reagan appointed James Burke to the President’s Commission on Executive Exchange. Burke remained on that Commission throughout the remainder of his career at Johnson & Johnson. William O. Baker, a member of J&J’s Board of Directors in the 1980s, served on President Reagan’s Foreign Intelligence Advisory Board. He was also a consultant to the National Security Agency and consultant to the Department of Defense beginning in 1959. Clifton C. Garvin, a member of Johnson & Johnson’s Board of Directors in the 1980s was appointed to President Reagan’s National Productivity Advisory Committee in 1981, and he later served on President Reagan’s Private Sector Survey on Cost Control.

In the 1980s, J&J executives and Board members also belonged to private organizations that shape public policy. Two such groups, often called “secret societies,” were the Trilateral Commission and the Council on Foreign Relations. J&J CEO, James Burke, and J&J Vice-Chairman, Robert Wilson, were both members of the Trilateral Commission. Its 60 delegates from the United States also included Illinois Governor, Jim Thompson.

James Burke was a member of the Council on Foreign Relations. J&J Board members, Thomas Murphy and Joan
Ganz
Cooney, were also members of the Council on Foreign Relations. FBI Director, William Webster, was a regular attendee of Council on Foreign Relations meetings and became a member in 1995. Many of the most powerful politicians and business leaders in the world, regardless of their party affiliation, regularly attend meetings of the Trilateral Commission and the Council on Foreign Relations.

For the officials from government regulatory agencies involved in the Tylenol murders investigations, the interests of Johnson & Johnson carried far greater weight than did the interests of the Tylenol victims. In 1982, FDA Commissioner, Arthur Hayes, quickly exonerated Johnson & Johnson of any responsibility for the Tylenol tamperings. During the 1986 Tylenol tampering investigation, it was especially evident that the federal government was not going to allow a proper investigation of Johnson & Johnson or the Tylenol manufacturing and distribution network. The overt involvement of the FDA and the FBI in covering up the identity of the exact repackaging facility where the 1986 Tylenol tamperings occurred made it readily apparent on whose behalf these agencies were acting.

None of the evidence from the Tylenol poisoning incidents in 1982 or 1986 was ever presented in a public hearing. During both investigations, false information was publicized about the corrosiveness of cyanide, and information was suppressed regarding the packaging and the distribution of Tylenol. Officials used a red herring, which they called a madman, to divert the public’s attention away from the distribution channel. In 1982, this defective investigative strategy was directly implemented by a handful of men beholden to “Big” Jim Thompson.

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“Big” Jim Thompson, the U.S. attorney in the Northern District of Illinois from 1971 to 1975, hired Dan Webb, Tyrone Fahner, and Anton Valukas as his assistant U.S. attorneys. Thompson, Webb, Fahner, and Valukas became loyal lifelong friends. These men all had roles in the investigation of the 1982 Tylenol murders. Journalist Cheryl Lavin wrote in the
Chicago Tribune
in 1990 that these former federal prosecutors dance at each other`s weddings, commiserate over their divorces, and refer cases to one another.

Commenting on his decision to hire Dan Webb as an assistant U.S. attorney, Thompson said, “I saw a very bright, ambitious, appealing kid who I thought could make a great trial lawyer. It turns out I was right. He`s one of the toughest, smartest ones I know. That`s how I raised him.”

Dan Webb was appointed to serve as U.S. attorney in the Northern District of Illinois in 1981. He led the prosecution team that convicted James Lewis for extortion. James Margolis, an assistant U.S. attorney at the time, was also a member of that team. In 1984, Big Jim appointed Margolis to the newly created position of state inspector general. In that position, Margolis continued to investigate only one Tylenol suspect – James Lewis.

Even Michael Monico, the lawyer who represented Lewis in his extortion trial, was one of Big Jim’s boys. Monico had worked as an assistant U.S. attorney under Thompson in the early 1970s.
The National Law Journal
, in an article about the Tylenol extortion case, noted the intensity between “the strikingly handsome” Michael Monico and the “boyish” Dan Webb. Before the ruling came down against Lewis - Monico told Webb, “after this is all over, I’ll still be ‘strikingly handsome’ and you’ll still just be ‘boyish.’”

Jim Thomson, as the U.S attorney in Illinois in the early 1970s and as the State’s governor from 1977 to 1991, surrounded himself with like-minded Republican loyalist. On November 12, 1980, Governor Thompson, by Executive Order, instituted a hiring freeze for all state agencies, boards, bureaus, and commissions under his control as governor. The order affected approximately 60,000 state positions. These positions could only be filled if the candidates were first approved by the Governor’s Office of Personnel, an office created by Thompson. The practice essentially consisted of denying the hiring of persons not affiliated with the Republican Party. Thompson’s Republican patronage mill rivaled even the Democratic patronage mill in Cook County, known as “The Chicago Democratic Machine.”

Near the end of Thompson’s fourteen-year reign as Governor, the U.S. Supreme Court held that Thompson’s policy of doling out state jobs to the party faithful violated the U.S. Constitution. The court ruling affirmed what critics had said all along: The hiring freezes Thompson imposed, more or less continuously, throughout his tenure were merely patronage tools used to ensure that Republicans got available state jobs.

In 1982, Big Jim’s boys handled the Tylenol murders investigation in a manner that reflected the homogeneous thinking of the administration in charge at the Governor’s Mansion in Springfield, Illinois, the White House in Washington D.C., and the headquarters of Johnson & Johnson’ in New Brunswick, New Jersey. Near the end of 1982, Tyrone Fahner gave a rather pitiful assessment of the Tylenol murders investigation. “When all this is said and done,” remarked Fahner, “the most interesting story to come out of this - outside of the terrible tragedy - will be that we drummed up every bit of scud walking around. We found the people who said they had done it, who had access to chemicals, who acted weird, who potentially were in the right place at the right time. And we did some incredibly fine investigative work… and we came up dry.”

When it came to the Tylenol murders, Big Jim’s boys were inclined to dismiss the relevance of the physical evidence available to them. However, they did understand that the two boxes of Tylenol capsules stumbled upon by deputies Al Swanson and Joseph Chavez in the Howard Johnson’s parking lot at 2:32 a.m. on September 28, 1982 were an important clue to identifying the Tylenol killer.

Both boxes of Extra Strength Tylenol capsules in the Howard Johnson’s parking lot had initially each contained 72 bottles, but one of the boxes had been opened, and only two dozen bottles remained in that box. Cyanide-laced Extra Strength Tylenol capsules from those boxes, or other boxes, were delivered by truck drivers, merchandisers, or rack jobbers to retail stores and pharmacies. The varying degree of corrosion indicated that the cyanide-laced Tylenol capsules had been filled with cyanide at different times, probably over a period of weeks.

In February 1986, J&J executives came clean, at least partially, about the Tylenol distribution network. They revealed that the company shipped Tylenol to wholesalers from three J&J regional distribution centers located in Glendale, CA, Montgomeryville, PA, and Round Rock, TX. J&J was shipping Tylenol through these same regional distribution centers in 1982 also. Tylenol was shipped to states east of the Mississippi River (including Illinois), from J&J’s Montgomeryville distribution center.

There is no question that Tylenol was being shipped in bulk containers of Tylenol powder from J&J’s Montgomeryville facility to repackagers’ warehouses in 1986. And there is really no question that J&J was also shipping bulk containers of Tylenol from its Montgomeryville facility to repackagers’ warehouses in 1982. A tip-off to these shipments of bulk Tylenol comes from the disparity in the number of Tylenol bottles purported to have been in the distribution channel in 1982, versus 1986.

On February 14, 1986, Joseph Chiesa, the president of McNeil Consumer Products, said 1 million bottles of Tylenol capsules (regular and extra strength) were estimated to be in the distribution system throughout the United States. That number did not jive with the number of capsules that J&J spokesperson, Robert Kniffin, had said were in the distribution channel in 1982.

After J&J announced the recall of all Tylenol capsules on October 5, 1982, Kniffin said that J&J would destroy 22 million bottles of Tylenol capsules (regular and extra strength) with a retail value of $79.2 million. Kniffin said this included 11 million bottles previously sold to consumers and being returned and an additional 11 million bottles in the channel of distribution that were being returned by retailers and distributors.
It makes no sense that there were eleven times as many bottles of Tylenol capsules in the distribution channel in October 1982 than there were in February 1986.

Annual Tylenol sales were about $450 million in 1982 and $525 million in 1986. About 30 percent of those sales were from capsules. Weekly sales of Tylenol capsules in 1986 were about $3.0 million. At $3.70 per bottle, J&J was selling about 811,000 bottles of Tylenol capsules per week. The one million bottles of Tylenol capsules that J&J said were in the distribution channel in February 1986 represented 9 days, or about 1.23 weeks of supply (1,000,000 / 811,000 = 1.23 weeks = 9 days).

In 1982, J&J was selling about $2.6 million in Tylenol capsules each week. At $3.60 per bottle, J&J was selling about 722,000 bottles of Tylenol capsules per week. The 11 million bottles of Tylenol capsules that J&J said were in the distribution channel in October 1982 represented a whopping 107 days, or about 15.23 weeks of supply (11,000,000 / 722,000 = 15.23 = 107 days). The 1.23 weeks of supply in February 1986, and the 15.23 weeks of supply in September 1982 cannot both be correct.

Food and drug wholesalers keep very low levels of inventory on hand, typically carrying just enough of a given product to cover less than a month worth of sales. Food and drug stores also keep low inventory levels of food and non-food products on hand, typically just enough to cover less than two weeks of sales. A wholesaler that sold $10 million worth of products per week could easily handle that volume by keeping $40 million in inventory on hand, enough to cover four weeks of sales. If that same wholesaler kept a 12-week supply of inventory on hand, it would need to tie-up $120 million in inventory. No wholesaler would buy $120 million in inventory at once when it only needed to keep $40 million or less of inventory on hand to service its customers.