Johnson & Johnson Drops Talc Powder Globally as Lawsuits Pile On




  • In Business
  • 2022-08-11 22:53:34Z
  • By Bloomberg
 

(Bloomberg) -- Johnson & Johnson said it plans to stop selling its legacy talc-based baby-powder products globally in 2023, a move that comes amid continued legal battles and years after the company discontinued the product in the US and Canada.

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J&J said Thursday that it had made the "commercial decision" to transition all its baby powder products to use cornstarch instead of talcum powder after conducting an assessment of its portfolio. The health conglomerate, which maintains the product is safe, has for almost a decade faced lawsuits accusing it of hiding cancer risks tied its talc-based baby powder.

"We continuously evaluate and optimize our portfolio to best position the business for long-term growth," spokesperson Melissa Witt said in an emailed statement. "Today's decision is part of a worldwide portfolio assessment, which evaluated several factors, including differences in demand for our products across geographic regions and evolving consumer trends and preferences."

Shares of the New Brunswick, New Jersey-based company rose less than 1% in post-market trading and had fallen 2.3% so far this year through Thursday's close.

In May 2020, as J&J navigated thousands of lawsuits accusing the product of causing some users' cancers, the company pulled its talc-based powders from the US and Canadian markets, citing another "commercial decision" based on declining sales.

"After decades of selling talc-based products the company knew could cause deadly cancers to unsuspecting women and men around the world, J&J has finally done the right thing," Leigh O'Dell, a lawyer for former talc users, said in an emailed statement Thursday. "They stopped sales in North America more than two years ago. The delay in taking this step is inexcusable."

Talcum Powder

Talcum powder has long been used in baby products because the mineral keeps skin dry and prevents diaper rash. The mines that produce the powder, however, can also yield asbestos, a mineral once used in products such as building insulation that researchers have linked to cancers. Some consumer companies have found corn starch can offer the same benefits of talc without the asbestos risk.

J&J said Thursday that its "position on the safety of our cosmetic talc remains unchanged."

The health conglomerate has spent years seeking ways to contain its legal liabilities. It faces 40,300 lawsuits in the US over its talc-based powders, according to a company filing last month with the U.S. Securities and Exchange Commission.

J&J sought bankruptcy protection for its newly created LTL Management LLC unit last year after arguing it was struggling to contain the lawsuits.

$2 Billion Trust

The company put $2 billion into a trust as part of the unit's bankruptcy to resolve all current and future talc claims. In February, a judge said the case could proceed in order to seek settlements, but his ruling is being appealed.

Lawyers for former talc users have challenged J&J's move to have the unit seek Chapter 11 protection to deal with the talc unit. A federal appeals court in Philadelphia will hear plaintiffs' arguments Sept. 19 that the move amounted to a "bad faith" bankruptcy filing because they contend J&J's financial position wasn't threatened by the talc litigation.

In court filings, J&J's lawyers have noted the company ran into stumbling blocks in working out a global settlement of the talc cases and faced mounting legal costs. The drugmaker's attorneys noted it paid more than $1 billion in legal fees over the last five years in the talc cases and had to deal with inconsistent jury verdicts.

J&J has been forced to pay about $3.5 billion in settlements so far to resolve talc cases, according to the company's bankruptcy filings. A 2018 jury verdict out of state court in St. Louis ultimately forced J&J to pay $2.5 billion to 20 women who targeted its baby powder for their ovarian cancer. Both the Missouri Supreme Court and the US Supreme Court refused to overturn the verdict.

Meanwhile, J&J plans to break off its consumer health business into a standalone company next year in a move that legal experts say could help it isolate liability should the Chapter 11 vehicle not succeed.

The case is LTL Management LLC, 21-30589, U.S. Bankruptcy Court, District of New Jersey (Trenton).

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