Alli Recall Could Help Mitigate Reputation Damage In Face Of Tampering

GSK investigates tampering with its alli weight-loss drug and positions itself as a consumer advocate with a U.S. recall of the product. By showing it is “on the side of good” the firm could actually emerge from the crisis with a stronger reputation, says crisis management expert Gene Grabowski says.

GlaxoSmithKline PLC’s alli recall places patient safety ahead of sales in a way that could mitigate long-term damage to the weight-loss drug’s reputation, just as Johnson & Johnson did in its response to tampering with Tylenol in the 1980s.

GSK voluntarily recalled all lots of alli from the retail level in the U.S. and Puerto Rico March 27 – a day after it warned consumers that some packages of the weight-loss product may not include the correct drug, orlistat.

The U.K. firm said March 26 it is working with FDA to investigate consumer reports that “authentic-looking” alli cartons purchased at retailers in seven states “may contain a range of tablets and capsules of various shapes and colors” and not actual alli capsules, which are turquoise blue with a dark blue band imprinted with the words “60mg orlistat.”

In addition, Glaxo said, the bottles in the tampered products may not bear a label or an intact or original tamper evident seal with the words “sealed for your protection” printed across it. Additionally, lot numbers and expiration dates on the bottles might not match those on the cartons.

“The safety of our consumers is our first priority. We are focused now on ensuring consumers have the information they need to determine if the alli product they have is authentic, and we are pursuing the investigation to determine how and when this tampering occurred,” a GSK spokeswoman said.

She emphasized the firm does not yet know how counterfeit alli products reached retail shelves, but its investigation is examining all possibilities.

Information available so far about the tampering should lead consumers to understand Glaxo did not manufacture or distribute adulterated products, says Gene Grabowski, executive VP of Levick, a crisis and litigation communications firm.

At this point “it appears as though the tampering took place outside of the factory, [and] didn’t occur as a result of anything that happened on GSK’s part,” Grabowski said. This gives the firm a “relative advantage under the circumstance” because it “means that the company can position itself as an advocate for the consumer instead of the villain.”

He also noted Glaxo “is doing the exact right thing in recalling” alli because it demonstrates firm is “on the side of good” and working to protect consumers and find a solution.

Indeed, “the company may emerge from this with a stronger reputation, just like Tylenol did back in [the 1980s] when the granddaddy of all recalls took place” to address product tampering, Grabowski added.

J&J recalled 31 million bottles of Tylenol and lost more than $100 million as part of its response to intentional tampering by an outside party that began in September 1982 and resulted in multiple deaths. But the firm’s financial sacrifice and addition of tamper-evident seals to future products in response to the crisis helped the brand successfully recover from what could have been a lethal blow to its image. Moreover, it became the brand of choice because the tamper-evident seal led consumers to believe it was the safest option.

The incident also fueled an FDA rulemaking to require tamper-evident packaging beginning in 2000 (Also see "FDA "TAMPER-EVIDENT" OTC PACKAGING PROPOSAL WOULD REQUIRE ALL HARD-SHELL CAPS" - Pink Sheet, 24 Jan, 1994.).

Applying Lessons From Previous Counterfeiting

GSK’s current recall also echoes a similar situation in 2010. The firm quickly and effectively alerted consumers about a small quantity of counterfeit alli sold online that replaced the active ingredient orlistat with sibutramine, an ingredient used in the since-withdrawn Rx weight-loss drug Meridia and frequently found in adulterated weight-loss supplements (Also see "GSK's Quick Warning Of Fake Alli Exemplifies Effective Crisis Management" - Pink Sheet, 25 Jan, 2010.).

The firm avoided any long-term reputational damage to the alli brand in that case by quickly warning consumers about the risk within a month of uncovering it, educating consumers on how to tell the difference between legitimate alli and the fake product and recommending making alli purchases at retail stores since the fake product was sold only online.

Grabowski said in that case, as with the current problem, GSK became the consumers’ advocate by recalling the product. The firm sent a message that consumers’ best interest was its main priority, influencing consumers’ confidence in the product going forward.

No Adverse Events Reported

“A decision about a recall involves a number of factors and will vary depending on the situation. Safety is always our first priority,” the GSK spokeswoman said.

She noted that to date GSK has not received any reports of serious illness related to the tampering. By removing all the product from store shelves, the firm might be able to keep it that way.

The spokeswoman also noted the March 26 consumer alert included all known carton lot codes that were reported by consumers that are associated with the tampering, but if more information becomes available GSK will post it on www.myalli.com. The lots linked to the tampering so far include:

• Carton Lot 14372, Expiration: 02/28/2016
• Carton Lot 14395, Expiration: 02/28/2016
• Carton Lot 14124, Expiration: 09/30/2015
• Carton Lot 14267, Expiration: 01/31/2016
• Carton Lot 14442, Expiration: 04/30/2016

Tampered products so far have been found in Alabama, Florida, Louisiana, Mississippi, New York, North Carolina and Texas, according to GSK.

The firm applied lessons learned from the 2010 alli counterfeiting to this case, including posting a large banner about the tampering on the top of the alli website, along with frequently asked questions and images of legitimate products to help consumers identify tampering.

Additionally, on its alli website the firm is providing information on how to achieve healthy weight loss for those consumers who do not want to use alli while this issue is ongoing. This kind of support likely will help build and maintain consumer loyalty so consumers will want to continue partnering with GSK and purchase alli again when the tampering issue is resolved.

A History Of Crisis Management

A marketplace crisis is nothing new for the alli brand, which launched in 2007 with much fanfare as the first OTC weight-loss drug. While GSK has managed each crisis with mixed success, the events have taken a toll on sales.

Over the last several years adverse event reports have associated orlistat, the drug’s active ingredient, to kidney stones, rectal bleeding, liver damage and rare cases of hepatitis .

Glaxo tried to reassure users by saying these issues did not appear in clinical trials and only occurred in a very small percentage of the millions who have safely used alli since its launch. However, the brand’s sales and reputation suffered as some consumers considered those risks outweigh the benefits.

Sales of the brand also suffered when a shortage of orlistat forced the product off the shelf for about six months in 2012. When the ingredient again became available, GSK aggressively reached out with emails to users announcing the product’s return and created a tool on its website to help consumers find where in their area the drug was available (Also see "Consumers Need Motivation To Buy Brands Returned To Stores After Absence" - Pink Sheet, 16 Jul, 2012.).

Restocking after the shortage gave the brand a bump in sales in 2013, but before that sales were sliding dramatically – dropping 23.15% in 2010 from 2009 and 16.46% in 2009 from 2008 (Also see "FDA Evaluates Alli For Potential Serious Risk Of Kidney Stones" - Pink Sheet, 16 Jan, 2012.).

Some consumers also were turned off from the drug’s embarrassing side effects, including rectal leakage if a user consumes too much fat at one time while taking the drug. The firm tried to counter this with mixed success with an education campaign and detailed diet plan (Also see "Alli Campaign Seeks To "Drive Behavior Change," Stresses Healthy Choices" - Pink Sheet, 17 Jan, 2011.).

In addition to dragging down sales, those factors could have contributed to GSK’s failed attempt to sell the brand in 2012 when it pared down its consumer health care product business, selling six brands to Omega Pharma NV for $619 million and 19 brands to Aspen Pharmacare Holdings Ltd.for $236 million ( and (Also see "Omega Pharma Acquires Six Glaxo OTC Brands, But Alli Lingers" - Pink Sheet, 19 Mar, 2012.)). The firm gave up trying to sell the brand later that year and said it would reinvest in alli’s marketing.

Asked about the brand’s future with GSK, the spokeswoman said an OTC weight-loss medication is important considering researchers estimate that two-thirds of Americans either are overweight or obese. “GSK is committed to fully investigating this issue and doing everything possible to prevent future issues with alli,” she said.