Tampering: A Touchy Issue in Need of Study

Last fall, a former San Marino broker was sentenced to 27 years in prison for lacing over-the-counter drug capsules with rat poison and then making anonymous phone calls about it to the media.

His sole purpose was to knock down the price of the stock of the manufacturer, SmithKline Beckman. The broker had stock options on which he could profit if the stock dropped in price.

It turned out that the broker hadn’t used a lethal dose of poison, and in any case, the capsules were found before anyone was injured. Yet the judge, in imposing such a heavy sentence, pointed to the impact the case had on confidence in the drug industry and on its cost of operations. For SmithKline, the affair cost $45 million in product recalls and four times the usual amount of advertising to get back market share.

The case is a striking example of a problem that gets headlines when there is an epidemic of threats but not enough attention in between.

Product tampering, which the 1982 Tylenol deaths thrust into the public’s consciousness, has become an increasingly difficult problem from the standpoint of both protecting consumers and preventing economic disaster for producers. It presents government, business and the media with some tough decisions about how to react.

Obviously, the main goal is to head off injury, but the problem is compounded by the fact that the number of instances of actual tampering is minuscule compared to the number of threats received.

In 1984, hundreds of threats concerning Girl Scout cookies were reported to the Food and Drug Administration. The threats badly disrupted cookie sales, and reports about them had the effect of producing more threats. There were enough cases of actual tampering to make the problem far more than a hoax, yet the ratio of actual tampering to threats reported was about three out of every 100.

One FDA official tells of a period last year in which the agency looked into 740 reported tampering threats of all kinds and found only four actual products it could even examine. Even at that long-shot ratio, the reaction of public authorities and businesses usually is to respond to a tampering threat by getting a product off the shelves where possible.

The problem is that with today’s mass distribution and with the potential destruction of public confidence in a product, responding to a threat, whether tampering has actually occurred or not, runs up millions of dollars of costs.

Many of the companies involved are big enough to absorb the shock, but ultimately such costs wind up getting passed on to consumers. And if smaller companies had been the target, the threat could have meant financial ruin.

When Gerber suffered a rash of threats and incidents in 1986, it was forced to contend not with a single product, as in the case of Tylenol, but with its entire brand across 40 states. Its market share fell precipitously to 52.5% and even a concerted drive to recover lost ground left the brand below its 66% pre-scare level five months later. As it turned out, most cases of actual tampering involved customers who contaminated the product themselves.

The dilemma for business and for government regulators is how to react properly without making matters worse. The same dilemma faces the news media. In the case of Gerber, sales slumped badly in one Midwest town where the tampering threats were heavily reported but, not surprisingly, weren’t affected much in another where coverage was less extensive.

The problem, of course, is in knowing ahead of time how much warning needs to be sounded. In the case of the Tylenol poisonings, producer Johnson & Johnson maintains that heavy coverage undoubtedly saved lives by alerting consumers not to use the capsules.

There are no ready answers to the problem, but clearly more study is needed to develop better guidelines for all concerned. Research is under way into past cases in hopes of producing better ways to gauge the seriousness of a threat.

Manufacturers have made considerable progress is improving packaging to discourage tampering, but more can be done to tighten operating standards at the distribution and retail levels. Tougher restrictions on the sale of poisons will help, as will greater publicity about stiff sentences imposed on those caught.