Johnson & Johnson to pay $6.5 billion to resolve nearly all talc ovarian cancer lawsuits in U.S.
Johnson & Johnson on Wednesday said it plans to pay $6.5 billion over 25 years to settle nearly all of the thousands of lawsuits in the U.S. claiming its talc-based products caused ovarian cancer, pending approval of the claimants.
Those cases have for decades caused financial and public relations trouble for J&J, which contends that its now-discontinued talc baby powder and other talc products are safe for consumers. About 99% of the talc-related lawsuits filed against J&J and its subsidiaries stem from ovarian cancer.
The company recorded a charge of about $2.7 billion in the first quarter to raise its reserve for talc claims to about $11 billion.
The deal, pending approval by claimants, would allow J&J to resolve the lawsuits through a third bankruptcy filing of a subsidiary company, LTL Management. Courts have rebuffed J&J’s two previous efforts to resolve the lawsuits through the bankruptcy of that subsidiary, which was created to absorb the company’s talc liabilities.
J&J will begin a three-month voting period for claimants, in hopes of reaching a 75% support threshold needed for a bankruptcy settlement that would end the litigation entirely and prevent future lawsuits. Claimants did not have the opportunity to vote in LTL Management’s previous bankruptcy cases, J&J executives said on a call with investors on Wednesday.
J&J has the “significant support of the overwhelming majority of the claimants” based on conversations with their lawyers or representation, the executives added.
“We firmly believe this plan is in the best interest of claimants and should receive a favorable and immediate confirmation from the bankruptcy court,” said Erik Haas, J&J’s worldwide vice president of litigation, during the call.
He contended the settlement is a far better recovery for claimants than would be likely in a trial.
“As that track record shows, most of bearing claimants have not recovered, nor are they expected to ever recover anything 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 claimants will never see their day in court.”
Still, litigation has resulted in some large verdicts for claimants. That includes a roughly $2 billion award in favor of 22 women who blamed their ovarian cancer on asbestos in J&J’s talc products.
Shares of J&J rose more than 2% in premarket trading 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 mesothelioma lawsuits filed to date.
J&J noted on Wednesday that it has reached “final and comprehensive” settlements to resolve an investigation by a coalition of more than 40 states into claims the company misled patients about the safety of its talc baby powder and other talc-based products.
The company has also reached an agreement in principle to resolve claims brought by suppliers of its talc, which include Imerys Talc America, Cyprus Mines Corporation and their related parties.