Kanebo’s costly scandal

The scandal involving Kanebo Cosmetics’ skin-whitening products shows that the company’s business-as-usual attitude has caused suffering for a large number of consumers. Both people in the pharmaceutical, cosmetics and food industries, and experts and officials engaged in examination of the safety of related products should draw lessons from the Kanebo scandal and ask themselves whether they are doing their best to ensure that its products are safe for consumers and taking timely action to issue product recalls when necessary.

A team of lawyers appointed by Kanebo issued a report on Sept. 11 criticizing the company for dragging its feet in issuing the recall of skin-whitening products that have been blamed for leaving nearly 10,000 customers with leukoderma — a loss of skin pigmentation. The report said that the company should have taken necessary steps in September 2012 at the latest when evidence suggested that the products were causing leukoderma. It wasn’t until July that Kanebo began to recall 54 products containing 4HPB, a synthetic substance that it had developed.

On Sept. 12, it was also reported that professor Yoshiharu Fukuda of Yamaguchi University stated in his scientific paper in 1998 that three workers at a chemical factory handling raspberry ketone, a raw material for making 4HPB, developed leukoderma around 1992, and that this matter became a subject of discussion by a panel of the health and welfare ministry’s Pharmaceutical Affairs and Food Sanitation Council in 2007. 4HPB is produced by mixing raspberry ketone with hydrogen.

One of the panel members said that if raspberry ketone is applied to facial skin and then exposed to sunlight, the skin may undergo a change. But the Pharmaceuticals and Medical Device Agency, which carried out advance screening of the substance, said that it was not aware of such a possibility and the discussion ended. As professor Fukuda points out, if panel members had read his paper carefully, they might have discussed the matter in a more cautious and thorough manner.

Kanebo applied for approval of the use of 4HPB as a nonmedicinal product in 2006 and the health and welfare ministry granted approval in 2008. One cannot help but suspect that the council holds only perfunctory discussions when dealing with nonmedicinal products. The category of nonmedicinal products falls between drugs for medical treatment and cosmetics. Companies that sell nonmedicinal products are allowed to stress stronger effects in their ads than they can with ordinary cosmetics.

In its own investigation through Sept. 1, which consisted of visits to customers, Kanebo confirmed that 9,959 people have suffered from leukoderma through the use of their skin-whitening cosmetics containing 4HPB. The lawyers’ report discloses that while Kanebo was aware of many complaints from customers and alerts from doctors, the company did not take action immediately. Kanebo says that its employees had a biased assumption that the white blotches were caused by diseases and that information-sharing did not work well in the company. But it is clear that Kanebo officials and employees lacked an awareness that cosmetics can cause health problems. The lawyers’ report said that it is not unreasonable to think that Kanebo ignored “inconvenient” information.

The report discloses many instances of inaction on the part of Kanebo. Around Oct. 3, 2011, a customer complained of a white blotch, but Kanebo failed to deal with the complaint in a serious manner and instead told her that a disease was causing her blotchy skin. In February 2012, the Kansai branch of Kanebo confirmed that three sales workers suffered from leukoderma. But the company merely insisted that it was a coincidence that all three workers developed white blotches and recommended that they see a doctor. It did not carry out an investigation into this case, failed to conduct any tests and did not consult with any doctors over about this case.

If Kanebo had decided at this stage to recall the products in question, it might have been able to prevent the development of leukoderma in thousands of its customers, but it lacked a proper sense of crisis. As the report emphasizes, merely telling the employees to go to a doctor is not the right attitude for a major corporation like Kanebo to take.

On Sept. 4, 2012, a doctor at a university hospital in Osaka Prefecture treated a Kanebo customer suffering from leukoderma and concluded that the Kanebo products used by the customer caused the white blotches. The lawyers point out that when this conclusion was conveyed to the section in charge at Kanebo’s headquarters, Kanebo should have started to collect information on the problem and initiated a product recall. In and after July 2012, Kanebo received a series of inquiries about leukoderma from customers across the nation But it continued to refuse to accept that its products were causing leukoderma.

On May 13, a doctor in a university hospital in Okayama Prefecture sent an email to Kanebo expressing his suspicion that its skin-whitening product was causing leukoderma. As late as May 29, the research and technology supervision section, after meeting the doctor, called on the president and chairman to stop selling the products. But the company dragged its feet again and didn’t decide to recall them till June 28, and then it continued to ship the flawed products until it officially announced the recall on July 4.

The scandal has caused Kanebo’s sales to plummet and it will have to pay far more in compensation than it would have if it had recalled the products in a timely manner when the problem first became apparent. Kanebo plans to shoulder all transportation and medical costs for the nearly 10,000 affected customers — something it should continue to do until their health issues are resolved — as well as pay solatia depending on the degree of skin damage. There is also a chance that customers who are dissatisfied with Kanebo’s measures may file lawsuits against it.

Kanebo must focus on fixing the flaws in its corporate culture that caused this scandal. It must overhaul its safety controls, improve its system to collect and share customer complaints among all relevant employees and officials, and ensure that problems are handled in a appropriate and timely manner. Only by doing so can it hope to regain the public’s trust.