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Johnson & Johnson to settle baby powder probe for $700 million

By Nithya Bose in Business News, posted January 24, 2024

Johnson & Johnson has tentatively agreed to pay $700 million to resolve a probe by 40 US states into its talcum-based baby powder marketing.

J&J's Chief Financial Officer Joseph Wolk said the agreement in principle with attorney general offices in most US states is an “important step” for the firm.

He said the company tries to “reasonably put the matter behind us.”

The investigation involves 42 states and Washington, D.C., with New Mexico and Mississippi having filed lawsuits alleging violations of consumer-protection laws.

J&J still faces bill of billions in personal injury lawsuits

However, the potential settlement addresses only a fraction of the broader litigation concerning the safety and marketing of J&J's talcum powders.

Notably, it does not resolve the personal injury lawsuits filed by over 52,000 plaintiffs in various US courts.

The suits claim that the use of J&J's powders, notably Johnson’s Baby Powder, led to cancer.

The company expects to incur additional costs, running into billions of dollars, to resolve the extensive litigation.

A previous proposal to pay at least $8.9 billion to settle personal injury lawsuits through a bankruptcy plan was rejected by a judge.

J&J is now pursuing an alternative bankruptcy plan to reach a consensual resolution, with estimates suggesting the ultimate settlement cost could range between $10 billion and $15 billion.

Despite maintaining that its talc-based powders are safe and do not contain asbestos or cause cancer, the company faces a considerable legal burden.

Many personal injury lawsuits, particularly from women alleging ovarian cancer development, have been filed against J&J.

J&J no longer sells talc-based baby powder.

Last year, the company separated its consumer-health business into Kenvue, a stand-alone entity selling a cornstarch-based version of Johnson’s Baby Powder.

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However, J&J retained the legal liabilities associated with the talc-based powder in the US, leading to ongoing substantial costs to address the extensive litigation.

The company has explored Chapter 11 bankruptcy cases to handle mass claims, but these attempts have faced legal challenges.

Despite winning the majority of trials related to talc allegations, J&J has paid significant damages.

The company paid $2.1 billion to 20 women after the Supreme Court declined to hear the company’s appeal in 2021.

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