J&J Vaccine Producer Drilled at House Hearing on Botched Vaccine Doses, Lavish Executive Bonuses, Stock Sales
Johnson & Johnson (J&J) documented serious contamination risks at a troubled Emergent Biosolutions Baltimore plant in June 2020 — seven months before a contamination incident ruined 15 million doses of COVID vaccine and derailed the company’s vaccine production plans.
The House Select Committee on Coronavirus launched a probe into Emergent last month after the company acknowledged “serious deficiencies” in the company’s manufacturing that caused a mix-up of AstraZeneca and J&J doses.
A memorandum released prior to Wednesday’s hearing raised questions about J&J’s lack of oversight of the Baltimore facility. The memo also cited large bonuses paid to top executives despite failures, and described other evidence recently obtained by the Select Subcommittee on the Coronavirus Crisis and the Committee on Oversight and Reform in their ongoing investigation into Emergent.
The memo revealed:
- Emergent was paid millions despite destroying millions of vaccine doses. The company charged the federal government $26 million per month in reservation fees to maintain its “readiness” to manufacture vaccines pursuant to “current good manufacturing practices.” As a result of these contract terms, taxpayers paid Emergent more than $271 million.
- New documents from two separate inspections performed in June 2020 showed Emergent was warned it needed “extensive training of personnel” and “strengthening of the quality function,” and that it had a “deficient” virus contamination control strategy. Despite concerns raised during four other inspections in 2020, Emergent failed to promptly and fully remediate the problems at the facility.
- Emergent privately admitted to manufacturing problems during an April 2021 inspection by the U.S. Food and Drug Administration (FDA).
- A key official who awarded contracts had previously been on Emergent’s payroll. Dr. Robert Kadlec, former consultant to Emergent, received at least $360,000 in consulting fees prior to joining the U.S. Department of Health and Human Services. Kadlec awarded Emergent billions in contracts.
- Company executives reaped a windfall as vaccines were destroyed. In February, — eight months after J&J documented serious contamination risks at the production plant — Emergent awarded millions in raises and bonuses to its senior executives, praising them for their “exceptional leadership” and “exemplary” performance in 2020. The vice president responsible for manufacturing received a “special bonus award” of $100,000 for significant contract development and manufacturing and in recognition of his exceptional performance in 2020.
The House report also documented in detail Emergent’s persistent problems with contamination, unsanitary conditions, mold, poor training, improper equipment and insufficient attention to procedures.
While Emergent received much of the blame for the manufacturing crisis, documents showed J&J was aware of serious risks of contamination at the Bayview Baltimore plant. A report from a virtual audit conducted in June 2020, cited mold, inadequate growing and wipe-down procedures, and “deficient” contamination-control measures.
“The site virus-contamination control strategy is deficient,” the J&J audit report said. “There is not a formal Bayview contamination control strategy for the site.”
J&J did not comment on its audit and did not respond to The Washington Post’s questions about what steps the company took after its findings.
The recent contamination incident at the Baltimore plant is not the first time Emergent has had to answer questions about its quality control.
ABC News previously reported on Emergent’s quality control issues at multiple locations, itemized in federal inspection reports over the course of more than a decade. Issues included leaks and cracks in critical equipment, mold, peeling paint, stained ceiling tiles, inadequate personnel training and IT infrastructures left vulnerable to data compromise, which were observed by investigators on site and flagged for immediate fixing.
The New York Times previously disclosed J&J’s negative findings from the June 2020 audit, but the full document released by the committee contained previously unreported details.
At Wednesday’s hearing, Rep. Carolyn Maloney (D-N.Y.) questioned Robert Kramer, president and CEO of Emergent, about his stock sales and suspicious timing in relation to the company’s vaccine problems. Between Jan. 15 and Feb. 8, Kramer made a series of stock transactions netting him more than $7.6 million. The transactions occurred just prior to revelations of the firm’s troubles, which promptly sent the company’s stock value tumbling.
“That makes me think you were more interested in enriching yourself than serving the public,” Maloney said. Kramer responded that all of his stock sales “were made pursuant to a plan that was approved by the company.”
According to the memo, Emergent’s compensation committee awarded Kramer a cash bonus of $1,225,020 in recognition of his performance in 2020 — on top of a base salary of $875,014 and $4.1 million in stock awards and options issued earlier in the year. The committee also approved a 2021 compensation package for Kramer of $7.8 million.
Emergent suspended production of the vaccine at the plant on April 19, at the request of the FDA, and still lacks certification necessary to resume. Vaccine production is expected to begin later this year with Merck.
J&J has history of misleading the public
J&J has a history of misleading the public with a long rap sheet spanning more than three decades.
In 2011, J&J was charged by the U.S. Department of Justice with conspiracy for paying off Greek doctors to advance its product sales. The Securities and Exchange Commission also charged civil complaints.
In 2010, the company paid out a $70 million penalty for buying off officials in Greece, Poland and Romania. An executive for J&J’s subsidiary, DePuy, was sentenced to a year in prison for corrupt payments to physicians within the Greek national healthcare system.
In 2013, J&J paid nearly $2.5 billion to compensate 8,000 recipients for its flawed hip implants. In 2016, another $1 billion was awarded to plaintiffs injured from this device.
When its Motrin IB caplets were discovered to not properly dissolve, J&J hired outside contractors to buy up store supplies in order to cover it up. It took a Congressional investigation to expose the deception.
In the 1990’s, J&J was fined $7.5 million for destroying documents in an effort to cover up an investigation into wrongful marketing of its Retin-A acne cream to remove wrinkles. It also paid out a settlement regarding false claims over condom protection against HIV and other STDs.
In 2001, J&J paid out $860 million in a class action lawsuit for misleading customers about prematurely discarding its 1-Day Acuvue soft contact lens.
In 2010 the company paid an $81 million settlement for misbranding its anti-epileptic drug Topamax to treat psychiatric disorders and hiring outside physicians to join its sales force to promote the drug for unapproved conditions. The following year, J&J paid $85 million for similar charges against its heart drug Natrecor.
In 2011, it was discovered that several J&J baby products contained carcinogenic ingredients. In 2013, the US Justice Department charged the company $2.2 billion in criminal fines for marketing its autism and antipsychotic drug Risperdal for unapproved uses.
In October 2019, a Philadelphia jury awarded a man $8 billion in punitive damages for failing to warn that the drug could cause young men to grow breasts. Other suits include litigation over its blood thinner Xarelto risks of internal bleeding, and a $775 million settlement to 25,000 plaintiffs.
In 2016, two women were awarded $127 million in damages for ovarian cancer linked to talc in J&J’s baby powder. J&J knew for decades asbestos lurked in its baby powder, reported Reuters. Over 14,000 lawsuits were brought against the company over the talcum-cancer risk.
More recently, J&J was ordered to pay out more than $4 billion for its role in the nation’s opioid epidemic.
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