Johnson & Johnson announced Wednesday that the corporate plans to pay $6.5 billion over 25 years to settle nearly the entire hundreds of lawsuits within the U.S. alleging that its talc-based products cause ovarian cancer until the plaintiffs received consent.
These cases have caused financial and public relations problems for J&J for a long time, as the corporate claims that is the case with its now-discontinued talc baby powder and other talc products secure for consumers. Approximately 99% of talc-related lawsuits filed against J&J and its subsidiaries are as a result of ovarian cancer.
The company took a charge of about $2.7 billion in the primary quarter to extend its provision for talc losses to about $11 billion.
The deal, subject to plaintiff approval, would allow J&J to resolve the lawsuits through a 3rd bankruptcy filing by a subsidiary, LTL Management. Courts have rejected J&J's two previous attempts to resolve the lawsuits through the bankruptcy of that subsidiary, which was created to take over the corporate's talc liabilities.
J&J will begin a three-month voting period for plaintiffs in hopes of reaching the required 75% support threshold for a bankruptcy settlement that will completely end the litigation and forestall future lawsuits. Filers didn’t have the chance 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 plaintiffs” based on discussions with their attorneys or representatives, the executives added.
“We firmly believe that this plan is in the best interests of the applicants and should receive positive and immediate confirmation from the bankruptcy court,” Erik Haas, global vp of litigation at J&J, said throughout the call.
He claimed that the settlement represents much better compensation for the plaintiffs than can be the case in a lawsuit.
“As this track record shows, most warehouse plaintiffs have not recovered their claims and are not expected to ever recover anything in court,” Haas said. “At the rate at which use cases have been litigated, it would take decades to litigate the remaining cases, meaning most plaintiffs will never see their day in court.”
Still, litigation has resulted in some serious verdicts for plaintiffs. This includes one roughly $2 billion Award benefiting 22 women who blamed asbestos in J&J talc products for his or her ovarian cancer.
Shares of J&J closed greater than 4% higher on Wednesday.
J&J said the remaining pending lawsuits relate to a rare variety of cancer called mesothelioma and can be addressed outside of the brand new settlement plan. The pharmaceutical giant said it has already settled 95% of the mesothelioma lawsuits filed up to now.
J&J noted Wednesday that it had arrived “finally and comprehensively.” settlements solve one Investigation by a coalition of greater than 40 states in claims the corporate misled patients about it Security its talc baby powder and other talc-based products.
The Company has also reached an agreement in principle to resolve claims by suppliers of its talc, which include Imerys Talc America, Cyprus Mines Corporation and their related parties.
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