Johnson and Johnson It said Wednesday it plans to pay $6.5 billion over 25 years to settle nearly all of the thousands of lawsuits in the United States claiming its talc-based products caused ovarian cancer, pending approval from plaintiffs.
Those cases have caused decades of financial and public relations problems for J&J, which maintains that its now-discontinued baby powder and other talcum powder products are safe for consumers. About 99% of talc-related lawsuits filed against J&J and its subsidiaries stem from ovarian cancer.
The company booked a charge of about $2.7 billion in the first quarter to increase its reserve for talc claims to about $11 billion.
The agreement, pending approval by the plaintiffs, would allow J&J to resolve the claims through a third bankruptcy filing by a subsidiary, LTL Management. Courts have rejected J&J's two previous attempts to resolve the lawsuits by bankrupting that subsidiary, which was created to absorb the company's talc liabilities.
J&J will begin a three-month voting period for plaintiffs, hoping to reach the 75% support threshold needed for a bankruptcy settlement that would end the litigation entirely and prevent future lawsuits. Plaintiffs did not have a chance to vote in LTL Management's previous bankruptcy cases, J&J executives said on a call with investors Wednesday.
J&J has “significant support from the overwhelming majority of plaintiffs” based on conversations with their attorneys or representatives, the executives added.
“We firmly believe this plan is in the best interests of plaintiffs and should receive immediate favorable confirmation from the bankruptcy court,” Erik Haas, J&J's global vice president of litigation, said during the call.
He argued that the settlement is a much better recovery for plaintiffs than would be likely at trial.
“As that record shows, most plaintiffs have not recovered anything, nor are they ever expected to do so at trial,” Haas said. “At the rate at which use cases have been tried, it would take decades to try the remaining cases, meaning most plaintiffs will never make it to court.”
Still, the litigation has resulted in some important verdicts for plaintiffs. That includes an award of approximately $2 billion to 22 women who blamed their ovarian cancer on asbestos in J&J's talcum powder products.
J&J shares closed more than 4% higher on Wednesday.
J&J said the remaining pending lawsuits relate to a rare cancer called mesothelioma and will be addressed outside of the new settlement plan. The pharmaceutical giant said it has already resolved 95% of the mesothelioma lawsuits filed to date.
J&J said Wednesday that it had reached “final and complete” agreements to resolve an investigation by a coalition of more than 40 states into claims that the company misled patients about the safety of its baby powder and other powder-based products. of talc.
The company has also reached an agreement in principle to resolve claims brought by suppliers of its talc, including Imerys Talc America, Cyprus Mines Corporation and their related parties.
