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Chief executives and investor relations officers at companies in just about every industry sector have lately been called upon to calm the nerves of jittery shareholders worried about sinking sales, declining profits and plunging stock prices. But few have been confronted with a situation as dire as the one that confronted Baxter International’s top brass in 2008. The year began with actor Dennis Quaid pursuing a highly publicized lawsuit against Baxter, filed in December 2007, after his infant twins were mistakenly given near-fatal overdoses of heparin, a blood-thinning agent, at Cedars-Sinai Medical Center in Los Angeles. In testimony before the U.S. Congress and in interviews on “60 Minutes,” “Good Morning, America” and other programs, Quaid alleged that Baxter’s confusing product labeling had contributed to his newborns’ each having been given an adult dose of 10,000 units rather than a child-safe dose of 10 units.
[Links to profiles of the category winners are available at the end of this article.]
This wasn’t the only blow to heparin, which, despite its widespread use, is only a small part of the Deerfield, Illinois–based pharmaceuticals and medical device manufacturer’s portfolio; sales of the anticoagulant accounted for just $30 million of Baxter’s $11.3 billion revenue in 2007. In mid-January 2008 a spike in adverse patient reactions prompted the company to voluntarily recall the drug and suspend production. By April heparin had been linked to 81 deaths in the U.S. An investigation by the Food & Drug Administration traced the problem to a contaminated ingredient from a Chinese supplier, Changzhou SPL Co., whose production facility the agency itself was supposed to have inspected but hadn’t — the FDA had confused Changzhou with another Chinese supplier with a similar name.
To make matters worse, the FDA said it appeared that the imported ingredient, oversulfated chondroitin sulfate, might have been contaminated deliberately. A diplomatic tiff ensued, with China claiming the contamination had occurred after the product arrived in the U.S. The Chinese government refused to allow U.S. officials to investigate further unless the U.S. agreed to allow Chinese authorities to inspect Baxter’s facilities. A stalemate followed, and the Changzhou plant was shut down.
Testifying before Congress in late April, Baxter chairman and CEO Robert Parkinson Jr., said he felt “a strong sense of personal responsibility for these circumstances. I feel this responsibility because of who we are and what we do as a company.”
A CEO claiming personal responsibility for a product connected with the deaths of scores of people would be extraordinary under any circumstances, but even more so in this instance because Baxter was uninsured. The company had canceled its product-liability coverage in May 2007, saying it would self-insure because of the prohibitive cost of premiums.
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