I need help answering question 1 and 2 of the last page .

all T-Mobile Wi-Fi 8:20 PM ( 2 42% Done The Dalkon Shield - Ignoring... "I've got to believe that had they known early on what they were dealing with they wouldn't have touched it with a ten-foot pole. It was just that one step led to another, until they had the grenade spinning in the middle of the floor. "[ I Nevertheless, the dire consequences to the company and to its customer-victims represent a classic example of a monumental ethical mistake that should have been handled better. (See the Issue Box, "Must Management Assume the Worst Scenario?") ISSUE BOX-MUST MANAGEMENT ASSUME THE WORST SCENARIO? The Dalkon Shield turned out to be an unmitigated disaster - for the thousands of women victims, and also for the company. Certainly, no company would undertake a business venture that was likely to produce such results. There should be a commonality of interests on the part of consumers and firms to prevent such happenings. Ignoring the issue of a company's culpability for not noticing and then covering up the danger, another question should be asked: Does ignorance of future dire consequences relieve a firm of much of its blame? The contentious segment of the general public-lawyers as well as politicians eager to mollify their constituents-sees a no mercy scenario: the corporation is guilty despite ignorance of any wrongdoing, or any danger, at the time. But is this the most equitable viewpoint? We live in a complex world. And our products are increasingly more complex technologically; some products, such as drugs, asbestos, and cigarettes, may well have long-term consequences far beyond our ability to predict at this time. Was this the case with the Dalkon Shield? In today's environment, firms are not able to escape the long-term negative consequences of their products. The litigious environment will not permit this, however ignorant the firm may have been. Ethically, the blame has to be more muted for a firm that could not see any dire consequences. But, does the very fact of not knowing really excuse a firm? Does such "unknowing" absolve Robins with its Dalkon Shield? Hardly. Although knowledge of long- term consequences for any product may be limited, this does not preclude adequate and objective testing to achieve a high level of safety assurance. This Robins did not do. Furthermore, when the first suspicions were raised of possible problems, it ignored them and even concealed them. Here was Robins's great ethical and moral misdeed: it placed short-term company profits above very strong doubts of customer health and safety. INVITATION TO DISCUSS Robbins's executives may argue that if they had had any idea of the serious danger of the Shield, they would have jerked it from the market, but they had nothing to confirm this until too late. Therefore, they should be exonerated from any serious wrongdoing. Discuss the pros and cons of this defense. WHAT CAN BE LEARNED? The Robins Company's actions seemed exemplary at first: 1. Identify a business opportunity or strategic window. 2. Find or develop a product to fit this strategic window. 3. Beat competition in being the first to capitalize on this opportunity.all T-Mobile Wi-Fi 8:20 PM CO 42% Done The Dalkon Shield - Ignoring... proviews, they were deemed Promoting the Dalkon Shield An aggressive marketing strategy was put in place. Several hundred salespeople were trained to contact physicians. The advertising itself was directed at both the medical professionals-physicians as well as agencies and clinics that provided IUDs-and women directly to persuade them to accept the Shield if their physicians should so recommend, and even to request and insist on the device if their physicians were skeptical. Consequently, in addition to medical journals, Family Circle, Mademoiselle, and similar magazines carried Dalkon Shield advertising. Robins wanted to position the Shield as a superior product. In 1970, it was promoted as a modern, superior IUD, with the lowest pregnancy rate (1.1 percent), lowest expulsion rate (2.3 percent), and the highest continuation rate (94 percent). Other promotional literature stated that it was the only IUD anatomically engineered for optimal uterine placement, fit, tolerance, and retention. In the ads in major medical journals, Dr. Davis (the original researcher and coinventor) was shown as an impressive research physician, with citations from the articles he had published. Not disclosed was his financial interest in the product and that he was hardly the objective and unbiased researcher risk to deemed essential to sound medical research. marker The Shield proved to be a popular product in the contraceptive market. By 1972, an estimated 12 million IUDs were in use worldwide, with 3 million in the United States. And the Shield was in the forefront: some 1, 146,000 were sold in 1971, with an estimated market share of 40 percent. In one month, April 1972, some 88,000 women were fitted with the Shield. But the physician complaints began to mount. In the early months, many of these complaints focused on the difficulty of inserting of the Shield -later, these complaints would assume a more serious nature. Aprinted ral objections, by August 1973, more than 5 million pieces of promotional literature had been printed. The sales pitch did not change: "No general effects on the body, blood, or brain... safe and trouble-free... the safest and most satisfactory method of contraception. .. truly superior." A new, smaller Shield had been brought out, and this was especially directed to women who had never borne children. However, no safety and effectiveness testing was ever done with this new version. Shield Comes under Government Investigation GOV In June 1973, Henry S. Kahn, a researcher working for the Centers for Disease Control, headed a study to assess the safety of IUDs in general. In a survey of physicians in the United States and Puerto Rico, some surprising and troubling things surfaced. There seemed to be a significant correlation between the Dalkon Shield and the incidence of women hospitalized for a complicated pregnancy. He suggested that a more detailed investigation was warranted. At about the same time, Representative L. H. Fountain of North Carolina was chairing a subcommittee investigating whether medical devices should be subject to the same kinds of controls as drugs. In the months that followed, more serious problems came to light, including some Shield-related deaths. In October 1973, Robins changed its Shield package label to include the warning; "Severe sepsis with fatal outcome, most often associated with spontaneous abortion following pregnancy with the Dalkon Shield in situ has been reported. In view of this, serious consideration should be given to removing the device when the diagnosis of pregnancy is made with the Dalkon Shield in situ."all T-Mobile Wi-Fi - 8:18 PM ( 2 42% upperiowa.brightspace.com This is an era of caveat vendidor-let the seller beware. Businesses today have to recognize that this is no longer an age of caveat emptor-let the buyer beware. This philosophy ruled the business environment for many decades, but now the pendulum has swung to caveat vendidor-let the seller beware. Products or business practices that are perceived as not in the best interest of the public are subject to reprisals" either through customer resentment and public outcry or through lawsuits. Woe to the firm that does not recognize this or underestimates the environmental constraints. 10 QUESTIONS 1. At what point in the Dalkon Shield's life did unethical practices first become apparent? . What should have been done at that point? 3. Can a firm guarantee complete product safety? Discuss. 4. Design a strategy for the Dalkon Shield that would have minimized the problems Robins eventually faced. What might be some concerns with such a strategy? . After this disaster, do you think Robins could ever have regained a sufficiently respected image to be a viable business under the same management? Even the same name? Why or why not? 6. Do you think prison sentences should have been the fate of top executives? HANDS-ON EXERCISE You are the public relations director for Robins in late 1972. Some disquieting information has come to you about far-higher-than-expected physician complaints about the Shield. Top management has so far been unconcerned about such reports, especially because of Food and Drug Administration complacency. Develop a plan of action for dealing with potential product safety problems that can be persuasively presented to top management. TEAM DEBATE EXERCISE The worst has happened. The Shield has been shown to be a dangerous product, and the company guilty of disregarding earlier claims of such dangers even while it continued to advertise product safety. In a congressional hearing, the issue is: (1) Was the company guilty of subordinating everything to maximizing profits, or (2) Did company officials simply panic, faced with a calamity of severe consequences, and resorted to the defense mechanism of denial. In a simulated court-room environment, defend top management against the prosecutors' charge of sheer callousness to product safety in pursuit of big profits. INVITATION TO RESEARCH Were any jail sentences or huge fines meted out to corporate executives? Why do you think this is? Investigate the performance of American Home products since it took over Robins in 1988. Was this a wise acquisition?T-Mobile Wi-Fi 8:19 PM ( 2 42% Done The Dalkon Shield - Ignoring... 1 of 11 Chapter Fourteen: The Dalkon Shield-Ignoring User Safety OVERVIEW It is February 29, 1984. Three company executives have been summoned to appear in federal district court before Judge Miles Lord in Minneapolis, Minnesota. They are E. Claiborne Robins Jr., A. H. Robins Company president and CEO; Dr. Carl D. Lunsford, director of research; and William A. Forrest, Jr., the company's general counsel. With them in the courtroom is a horde of lawyers. To the three executives' acute shock, embarrassment, and anger, they hear Judge Lord publicly chastise them and their company for their conduct regarding the marketing of the Dalkon Shield, an intrauterine birth-control device. For some months, Judge Lord had been involved with a combined suit against the company by seven women who had been seriously injured by the Shield. The investigation delved into past Dalkon Shield litigation and the legal tactics employed by Robins for more than ten years. The judge noted in his stinging rebuke: And when the time came for these women to make their claims against your company, you attacked their characters. You inquired into their sexual practices and into the identity of their sex partners. You Judge ruined families and reputations and careers in order to intimidate.those who would raise their voices against you. You introduced issues that had no relationship to the fact that you had planted in the Chastil bodies of these women instruments of death, of mutilation, of disease. Another of your callous legal tactics is to force women of little means to withstand the onslaughts of your well-financed team of attorneys. You target your worst tactics at the meek and the poor. You have taken the bottom line as your guiding beacon and the low road as your route. WO Judge Lord ordered a search of the company's files. Court-appointed officials found strong evidence that the company had covered up its knowledge of the Dalkon Shield's dangers. Robins's officials retaliated by bringing a lawsuit against Judge Lord-which they subsequently lost. Between 1971 and 1975, Robins had sold more than 4 million Dalkon Shield IUDs in eighty countries of the world. In so doing, it had ignored ever-increasing concerns of physicians and others about the Shield's effectiveness and safety. In the United States alone, more than 2 million women were fitted with the inadequately tested contraceptive device by doctors who believed the optimistic claims of the company. As a result, thousands of women suffered serious damage caused by the shield-from pelvic infection to sterility, miscarriage, and even death.Aretolem This became one of the biggest business blunders of all time, made so much worse by a firm that at first blinded itself to any danger, then tried to cover it up, until finally the mess was too big to bury. How could a respected management, one with the reputation of a multigenerational family firm at stake, have accepted such risks with an untested new product in the crass pursuit of short-term profits? And how could it, in a panic over impending lawsuits, have so deceived itself, as well as the medical unethicalall T-Mobile Wi-Fi 8:20 PM CO 42% Done The Dalkon Shield - Ignoring... N 3 of 11 Schmid Laboratories turned down the idea, but then Upjohn made an offer. However, at a medical meeting in Bedford, Pennsylvania, another company was attracted, A. H. Robins. On June 12, 1970, after three days of negotiating, Robins topped the Upjohn offer and bought ownership rights to the Dalkon Shield for $750,000 plus consulting fees and a royalty of 10 percent on all U.S. and Canadian net sales. (That figure ultimately came to nearly $1.2 million.) THE A. H. ROBINS COMPANY The A. H. Robins Company, headquartered in Richmond, Virginia, was a relatively small company ($135 million in sales at the time), but it had subsidiaries in more than a dozen foreign countries. It was best known for such products as Robitussin cough syrup, Chap Stick lip balm, and Sergeant's Flea and Tick collars. It was no fly-by-night company; for more than a century, it had been a solid business citizen. In 1860, Albert Hanley Robins opened a small apothecary shop in downtown Richmond. In 1878, he expanded into manufacturing: while A.H. Robins handled walk-in business, selling the patent medicines of the day; his son and daughter-in-law had a small pill-rolling operation upstairs. So the mom-and-pop undertaking continued until 1933, when a grandson, Edwin Claiborne Robins, took over management with dreams of expanding. He stopped selling medicines directly to the public and turned instead to selling prescription drugs to physicians and pharmacists. The first such product was a stomach remedy, Donnatel, which is still a major product. After World War II, the company became a major manufacturer of mass-marketed prescription and nonprescription drugs. In 1963, with net sales of $47 million and profits near $5 million, the firm went public. In the process, E. Claiborne Robins Sr. turned his family into one of the wealthiest in Virginia. In 1978, E. Claiborne Robins Jr. became president and CEO. Since 1965, the company had been interested in the birth-control market and particularly in intrauiterine devices, although it had never made or sold a medical device or gynecological product before and had no obstetrician or gynecologist on its staff. It had considered buying the rights for the Lippes Loop, but then the Dalkon Shield opportunity surfaced. The potential for IUDs as a group seemed attractive. But perhaps the biggest plus for IUDs was that they did not require filing a New-Drug-Application (NDA) with the Food and Drug Administration. Since the agency only had jurisdiction over drugs and not over medical devices (which was how IUDs were classified), a manufacturer did not have to file an NDA demonstrating that it had established relative safety with reliable and sufficient clinical and animal testing. Thus, lengthy research safety testing of the Dalkon Shield could be avoided. (On May 28,1976, the Medical Device Amendments were enacted to bring medical devices under the supervision of the Food and Drug Administration, but these amendments came five years after the Dalkon Shield was first brought to market.) Robins quickly made plans to bring the Shield to market, and its assembly was assigned to the Chap Stick division. The company saw an urgent need to get into the market before potential competitors could rush in. In January 1971, only six months after Robins acquired the rights, the Dalkon Shield was ready for national distribution. The profitability potential was intriguing: the production cost was only about 25 cents, while the, Shield was priced at $4.35. Although there were some quality-control problems, they were deemed not to be particularly serious.all T-Mobile Wi-Fi 8:19 PM CO 42% Done The Dalkon Shield - Ignoring... stake, have accepted such risks with an untested new product in the crass pursuit of short-term profits And how could it, in a panic over impending lawsuits, have so deceived itself, as well as the medical unethical profession and the general public, into believing that nothing was wrong, that others-that is, physicians themselves-were to blame? INTRAUTERINE CONTRACEPTIVES (IUDS) AND THE DALKON SHIELD Interest in birth control, and, in particular, IUDs as a form of contraception, goes back to ancient times, although most efforts were perilous and unreliable. Medical reports in the 1920s noted many cases of pelvic infection and inflammation with the crude IUD devices available then, and these devices were generally discredited. In the early 1960s, interest in birth control greatly increased because of two factors. First, fears had begun to emerge of an overpopulated world. These fears seemed justified, since a billion people had been added to the world's population between 1930 and 1960. Although most of the fears centered on the developing nations of Africa, Asia, and South America, the United States was also experiencing population growth, reaching the psychological milestone of 200 million in the 1960s. Second, the first oral contraceptive was approved by the Food and Drug Administration in 1960 and was enthusiastically received by both women and the medical profession. However, worries began to surface about the Pill. Some of these concerned its side effects, such as blood clots. Of even more concern was the possibility of long-term risks for women using the powerful birth-control hormones for as many as three decades of childbearing years. After decades of IUDs being discredited, two developments in the 1960s spurred interest in them. One was the discovery of a new, malleable, inert plastic from which IUDs could be made, and the second was the development of a new molding process. Two new IUDs were patented in 1966: the Lippes Loop and the Saf-T-Coil. Meantime, Hugh J. Davis, an associate professor of gynecology at Johns Hopkins, and Irwin Lerner, an inventor, came up with an idea for a new IUD-on Christmas Day, 1967. Initial results looked good, and Lerner applied for a patent in 1968. In shape, this new IUD resembled a shield and was a dime- sized, crablike plastic device with a string attached for removal by the physician. On February 1, 1970, the American Journal of Obstetrics and Gynecology published an article by Davis based on his testing at Johns Hopkins Family Planning Clinic of 640 women who had worn the device, named the Dalkon Shield. Davis cited five pregnancies, ten rejections, nine removals for medical reasons, and three removals for personal reasons. He reported a pregnancy rate of 1.1 percent The article impressed many doctors because of such favorable statistics and because it was tested at the prestigious Johns Hopkins School of Medicine. As a result, many became interested in obtaining the device for their own patients. Davis and Lerner decided to market the device themselves, and the Dalkon Company was formed in 1969. They worked to refine the product, and by April 1970, they introduced a new, improved device, which made the Shield more flexible and thinner, with barium sulfate to strengthen the plastic, while retaining its flexibility. However, lacking a sales organization, the owners quickly realized that the Shield would have to be distributed by an established corporation. Nall T-Mobile Wi-Fi 8:20 PM ( 2 42% Done The Dalkon Shield - Ignoring... company also neglected to conduct its own testing of the product, relying instead on the limited research that had been done by the Dalkon Shield's inventors, Robins did not question their research though it soon proved to be. Rather, it rushed the product to market, thankful that 8 of the Food and Drug Administration did not have to be involved. Good judgment would have mandated confirmation of the safety of the product by independent parties. But this would have taken time, time that Robins was fearful of spending. Recognizing an emerging and spectacular strategic opportunity, Robins pursued it with single-minded determination. Unfortunately, such determination ignored prudent and even ethical considerations. For example, much of the product information and advertising used was taken from Davis and Lerner's admittedly biased research, and the financial interest that these two "researchers" had in the Dalkon Shield was ignored and certainly never publicly mentioned. Physicians were thereby misled into thinking the research was objective and unbiased. The impressive research figures cited in the ads were soon to conflict with studies done by others. As one example, Robins's ads originally claimed that the Shield had a low pregnancy rate of 1.1 percent, but later studies showed pregnancy rates varying from 5 to 10 percent. But Robins continued to use the 1.1 percent rate in its advertising until late 1973, when the claimed pregnancy rate was revised upward. Other advertising claims attested to the safety and superiority of the Dalkon Shield, that "it was generally well tolerated by even the most sensitive women," and that no anesthetic was required. Only after many physicians complained about the difficulty of insertion was the advertising literature changed in November 1971 by removing the statement that no anesthetic was required. The claim of being safe and superior went unchanged. Robins continued to ignore reports of major problems-such as massive bleeding, pelvic inflammatory diseases, miscarriages, and even deaths-that kept coming in over the years following the introduction of the Shield. Admittedly, the term safety was relative: Was the Shield as safe or safer than the Pill? After all, the Pill was known not to be completely safe-it could cause serious side effects. Still, the evidence was mounting that there were significant dangers associated with the Shield, dangers beyond reasonable risk. Robins opted to ignore these far longer than was prudent and ethical. Robins maintained that its product was safe-and it proclaimed so publicly. But evidence suggests that the company knew otherwise. Internal memos indicated that the company knew of potential danger less than a month after it acquired rights to the Shield. And more internal company memos were to surface during subsequent litigation: two to three truckloads of incriminating papers. The basic component of Robins's strategy now became strictly defensive: to cooperate when necessary but to spend most of its time lobbying Congress and defending itself against lawsuits. Major concern was thus with legal and not ethical considerations regarding its past actions. So, what seemed at first to be an unassailable strategy was found seriously wanting. Was the company guilty of subordinating everything to the profit maximization goal, an end-justifies-the-means perspective? Or did it simply panic, faced with a calamity of extraordinarily severe consequences, and resort to the defense mechanism of denial? Roger L. Tuttle, a former A. H. Robins attorney, believed the latter: "I've got to believe that had they known early on what they were dealing with they wouldn't have touched it with a ten-foot pole. It was just that one step led to another, until they had the grenade spinning in the middle of the floor. " Iall T-Mobile Wi-Fi 8:20 PM ( 2 42% Done The Dalkon Shield - Ignoring... public. The women claimed that Aetna also participated in intentional destruction of evidence that would have helped the plaintiffs prove the dangers of the device. A bidding war developed for the troubled Robins Company. Rorer Group, a Pennsylvania pharmaceutical concern, made the first offer. Late in 1987, Sanofi, a French drug maker, made another takeover proposal. A week later, American Home Products Corporation joined the fast-developing bidding war. On January 20,1988, the bid by American Home Products was accepted. John Stafford, chairman and CEO of American Home Products, was interested in Robins because of the tax advantages and the acquisition of two popular consumer brands: Robitussin and Dimeatapp. "Franchises that powerful come along every few decades," he said.!And American Home could deduct its funding of Dalkon Shield liabilities from federal taxes. American Home offered Robins's shareholders $700 million in American Home stock and agreed to pay $2. 15 billion in cash to the trust fund of claims. In the final modification, the two top executives of Robins each gave $5 million in exchange for protection against being sued personally over the Shield. This plan, Robins's fourth in its twenty-nine months of bankruptcy proceedings, was the first to receive endorsement from both the company's shareholders and the committee representing the Shield claimants. POSTMORTEM Here we see a company in extremes. Its conduct led a well-regarded firm with a 100-year history down the road to bankruptcy, but even worse, the innocent public was brutalized. How could this have happened? After all, these were not deliberately vicious men; they were well intentioned, albeit badly misguided. Perhaps their worst sin was trying to ignore and then cover up their product's increasingly apparent serious health problems, doing this to such an extent that a federal judge castigated them for their company's corporate immorality. How could this situation-which everyone lost but the lawyers-have been permitted to get so out of hand? It began innocently enough, and in accordance with sound business strategy. Robins recognized an emerging opportunity: the birth control market. Although competitors were already in the oral contraceptive market, the IUD sector of this market was virtually untapped yet seemed to offer enormous potential. This sector appeared to be in the early stages of development, with no serious competitors. But the likelihood of strong competitive entry could not be ignored, and Robins thus saw the need to enter this IUD market quickly and secure a major share of it-that is, beat competitors to the punch. Again, we have to recognize that this is textbook business strategy. In accordance with the desirability of quickly entering the market, many decisions were made with little deliberation. One such decision was to assign production of the Dalkon Shield to the Chap Stick division of the company. Any similarity between the two products was remote at best, but this assignment seemed a matter of expediency and a means of offering lower labor costs. It might be argued that with such a new and unique product, there was not much more compatibility with any other division of the company. where Now we come to the point where Robins deviated from sound business strategy. It was entering a went market in which it had no previous experience whatsoever, one in which health dangers ought to have wron been carefully evaluated. Yet Robins had not a single obstetrician or gynecologist on its staff. The company also neglected to conduct its own testing of the product, relying instead on the limited research that had been done by the Dalkon Shield's inventors Robins did not question their research and testing, flawed though it soon proved to be. Rather, it rushed the product to market, thankful thatall T-Mobile Wi-Fi 8:20 PM CO 42% Done The Dalkon Shield - Ignoring... WHAT CAN BE LEARNED? 10 of 11 's actions seemed exemplary at first: lucmuy a vusiness opportunity or strategic window. 2. Find or develop a product to fit this strategic window. 3. Beat competition in being the first to capitalize on this opportunity. But there was one basic difference from other effective strategies: health and safety were more at stake with this particular product. This should have necessitated a more cautious approach to the window of opportunity to ensure that the product had no risks to customers. Yet, at Robins, health and safety considerations were ignored in a single-minded pursuit of profits. Everything else was secondary to this profit orientation. We can take several lessons from this case: A firm today must zealously guard against product liability suits. Any responsible executive now has to recognize that product liability suits, in today's increasingly litigious environment, can bankrupt a firm. The business arena has become more risky, more fraught with peril for the unwary or the naively unconcerned. Consequently, any firm needs careful and objective testing of any product that can even remotely affect customer health and safety-and this must be undertaken even if product introduction is delayed and competitive entry encouraged. Suspicions and complaints about product safety must be thoroughly investigated. We should learn unequivocally from this case that immediate and thorough investigation of any suspicions or complaints must be undertaken regardless of the confidence management may have in the product and regardless of the glowing recommendations from persons whose objectivity could be suspect. To procrastinate or ignore these warnings poses risks that should be unacceptable. In the worst scenario, go for a salvage strategy. Robins faced a crossroads in 1974. Scary reports of problems and lawsuits were flooding in. How should the company react? One course of action was to tough it out, trying to combat the bad press, denying culpability, and resorting to the strongest possible legal defense. This Robins opted to do. At stake were its reputation, its economic life, and the welfare of tens of thousands of women. The other recourse was what we might call a salvage strategy: recognition and full admission of the problem and removal of the Shield from more than 4 million women amid a full-market withdrawal. Expensive, yes, but far less risky for the viability of the company and certainly for the health of those women involved. Neither strategy is without major costs. But the first course of action puts major cost consequences in the future, where they may turn out to be vastly greater. The second course of action poses an immediate impact on profitability but may save the company and its reputation and return it to profitability in the future. This is an era of caveat vendidor-let the seller beware. Businesses today have to recognize that this is no longer an age of caveat emptor- let the buyer beware. This philosophy ruled the business environment for many decades, but now the pendulum has swung to caveat vendidor-let the seller beware. Products or business practices that are perceived as not in the best interest of the public are subject to reprisals-either through customer resentment and public outcry or through lawsuits. Woe to the firm that does not recognize this or underestimates the environmental constraints.all T-Mobile Wi-Fi 8:20 PM CO 42% Done The Dalkon Shield - Ignoring... Robins convened its own Ob-Gyn advisory panel in February 1974 to evaluate information on cases of spontaneous septic abortion among women who became pregnant with the Shield in place. The panel finally concluded that there was inadequate information to establish a cause-and-effect relationship. But problems continued to multiply. The Shield had a multifilament tail, compared with the monofilament tails used in all other IUDs. This tail was shown in several studies to be an excellent harbor for bacteria. In a letter dated May 8, 1974, Robins informed over 125,000 doctors that the Dalkon Shield should be removed immediately if a patient became pregnant and, if this was impossible, to perform a therapeutic abortion, The letter did not advise removal of the Shield for May nonpregnant women. The company also stated that it felt the problems shown with the Shield were common to all IUDs. This letter was reported in the Wall Street Journal, and Robins quickly issued a press release stating that it had no intention of canceling production of the Shield. There were more deaths, and by the end of June 1974, the Food and Drug Administration asked (not ordered) Robins to cease marketing the Shield, Bowing to public pressure, the company announced it would cease marketing the Shield until FDA tests were finalized. However, it still insisted that women who were currently using the Shield were in no danger. Meanwhile, the directors of Planned Parenthood and federally funded family planning programs urged the discontinuance of the Shield. In October 1974, a preliminary report from the FDA concluded that the Shield was as safe as any other IUD and attributed the problem to the fact that the Shield was the newest IUD on the market and was still undergoing a "shakedown" period. In December 1974, Alexander Schmidt, then commissioner of the FDA, announced that Robins could continue to market the Shield as long as accurate records were kept of all wearers. Lawsuits Replace Government Scrutiny Power of the cour Robins was never to remarket the device. Where the FDA failed, the judicial system took over. By March 1975, 186 suits had been filed against Robins. Also in March, the first judicial award was made: $10,000 compensatory and $75,000 punitive damages against Robins. In May, a $475,000 judgment was awarded to the estate of a woman who had died while using the Shield. In August 1975, Robins formally announced that it would not remarket the Shield, but insisted that women who had had it inserted previously were in no danger. Not until September of 1980, six years after problems with the Shield had begun to surface, did Robins finally send a letter to 200,000 doctors urging them to remove the device from all women who were still using them. The company stated that a "new" study showed that other problems, such as an infection called pelvic actinomycosis, were more likely the longer the device was worn. This move followed a $6.8 million judgment in Colorado in June 1980, in which $600,000 was awarded in compensatory damages and $6.2 million in punitive damages. The punitive award was of serious concern to the company since Robins' liability insurance covered only compensatory damages. By 1980, 4,300 suits were pending against Robins. Some attorneys were spending their entire time suing Robins; this became so popular a cause that a newsletter was published covering IUD litigation, and four-day yearly seminars were held so that more experienced lawyers could instruct on how best to sue Robins. The company's 1981 annual report noted that 2,300 cases were still pending, whereas 4,200 had been settled. Up to now, the company and its insurer (Aetna) had paid out $98 million for Dalkon Shieldall T-Mobile Wi-Fi 8:20 PM CO 42% Done The Dalkon Shield - Ignoring... The company's 1981 annual report noted that 2,300 cases were still pending, whereas 4,200 had been settled. Up to now, the company and its insurer (Aetna) had paid out $98 million for Dalkon Shield litigation. Lawsuits continued to multiply, and they became increasingly expensive for the company to deal with. For example, the average settlement in 1976 was $8,000; in 1984, the average was in the $400,000 range. As 1985 approached, Robins's sales continued to climb, reflecting the strength in its other product lines and its international operations. Profits rose more grudgingly because of the heavy legal costs-until 1984. (See Table 14.1 for the trend in sales and profits, as well as a chronology of major events.) Table 14.1: Trend in Sales and Profits, 1970-84, and Chronology of Major Events (hundreds of thousands of dollars) Sales Profits Profits as Major Events Percent of Sales 1970 132.6 15.7 11.8 June12, 1970, Robins buys the Dalkon Shield 1971 151.4 19.1 12.6 January 1971, Robins begins to market the Shield April 1972, peak month for number of women fitted with the Shield 1973 189.2 25.4 13.4 October 1973, Robins put warnings on packages June 1974, Robins suspends Shield sales in United States 1975 241.1 26.6 11.0 April 1975, Robins suspends Shield sales in other countries 1977 366.7 26.8 7.2 1979 386.4 44.7 11.6 June 1980, $6.8 million judgement against Robins 1981 450.9 44.2 9.8 1983 563.5 58.2 10.3 1984 631.9 (461.6) February 1984, Judge Miles Lord chastises Robins in loss Minneapolis court October 1984, Robins urges removal of all Shields, Robins establishes $615 million reserve for claims in late 1984 August 21, 1985, Robins files for bankruptcy In 1984, hounded by ever-mounting legal costs and judgments and running out of liability insurance coverage from Aetna, Robins took an extraordinary charge of $615 million as a reserve for claims. This resulted in a paper loss of $461.6 million in 1984. In August 1985, Robins filed enter li bankruptcy. Under iva | | bankruptcy, all litigation against a company is stayed while the company and its creditors attempt to devise a plan to pay the bankrupt company's debts. E. Claiborne Robins Jr. said the action was necessary to protect the company's economic vitality against those who would destroy it for the benefit of a few. Attorneys for the victims found this action to be fraudulent and in bad faith, an attempt by Robins to escape responsibility for the thousands of injuries the Shield had caused. Not even Aetna was to escape unscathed. In 1986, a group of former Dalkon Shield users sued Aetna, charging that it had conspired with Robins to keep the alleged health hazards of the IUD from the