USA — Johnson & Johnson has taken a significant step towards resolving the allegations that its baby powder containing talc has caused cancer by earmarking nearly US$9 billion to cover the potential liability.

This proposal marks a turning point in the legal battle that J&J has been fighting for years. The company has faced thousands of lawsuits from consumers alleging that its talc-based products have caused cancer.

Noteworthy, the proposed amount is more than four times what the company had previously set aside for this purpose.

The announcement, made on Tuesday, included a proposal in which a J&J subsidiary would re-file for Chapter 11 bankruptcy protection and seek court approval for a plan that would result in one of the largest product-liability settlements in U.S. history.

The plan includes a transfer of US$8.9 billion to the subsidiary, LTL Management, payable over the next 25 years.

This amount is a significant increase from the US$2 billion that the New Brunswick, New Jersey, company had set aside in October 2021.

The revised amount is being backed by more than 60,000 parties that have filed lawsuits alleging harm from J&J talcum powder, according to the company.

The lawsuits filed against J&J alleged that its talcum powder caused users to develop ovarian cancer or mesothelioma, a cancer that affects the lungs and other organs, through use for feminine hygiene.

These claims have contributed to a drop in J&J’s sales of baby powder, prompting the company to stop selling its talc-based products in 2020. Later, in 2021, J&J announced plans to discontinue sales of the product worldwide.

Late Tuesday, LTL Management, the Johnson & Johnson subsidiary, filed for bankruptcy protection for a second time, with the intention of presenting a reorganization plan containing the proposed settlement to a judge as soon as May 14, according to court filings.

However, the ruling that followed determined that LTL Management had no legitimate claim to bankruptcy, as it was not in financial distress.

J&J has consistently denied the allegations and has defended the safety of its products. However, the legal battle has taken a toll on the company, with the lawsuits resulting in significant legal expenses and tarnishing the company’s reputation.

Despite the proposed settlement, J&J is not admitting any wrongdoing, and company executives emphasized this in a statement on Tuesday, maintaining that the claims “are specious and lack scientific merit.”

The company’s worldwide vice president of litigation, Erik Haas, stated that fighting the lawsuits in court would be an expensive and lengthy process, spanning several decades.

A Reuters investigation conducted in December 2018 revealed that J&J was aware for decades of tests that showed its talc sometimes contained carcinogenic asbestos.

However, the company kept that information from regulators and the public. Despite this, J&J maintained that its Baby Powder and other talc products are safe, do not cause cancer, and do not contain asbestos.

In 2020, Johnson & Johnson announced its decision to halt the sale of talc Baby Powder in the United States and Canada.

The company cited “misinformation” about the product as the reason for this decision. Following this, the company announced its intent to discontinue the sale of the product worldwide in 2023.

The decision to discontinue the sale of talc-based Baby Powder was a significant one, considering that the product had been a staple of J&J’s consumer health business for over a century.

The move was not just a response to the lawsuits filed against the company, but also an acknowledgment of the evolving consumer preferences and the increasing demand for more natural and safer products.

Moreover, the decision was not just limited to Baby Powder but was part of a broader strategy to revamp J&J’s entire consumer health portfolio.

The company’s consumer health unit had been struggling for years, facing stiff competition from rivals and a decline in demand for some of its flagship products.

As part of its efforts to revive the unit, J&J had been exploring options to divest some of its brands and focus on more profitable and high-growth segments.

In this context, the decision to discontinue the sale of talc-based Baby Powder can be seen as a calculated move by J&J to mitigate potential legal risks, protect its brand reputation, and shift its focus to more promising areas of growth.

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