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After billions in legal costs, Johnson & Johnson plans to halt talc sales worldwide

August 21, 2022
Life sciences

Through years of costly ligitation over its talc-based baby powder, Johnson & Johnson has stood by its iconic product.

On Thursday, when J&J revealed that it will discontinue sales of the product around the world in 2023, the healthcare giant maintained its long-held position that the powder is safe.

Two years ago—with settlements and litigation piling up and sales in decline—J&J discontinued sales of talc powders in the United States and Canada. Next year, the talc-based baby powder will be replaced worldwide by the company’s cornstarch-based version, a move J&J insists is a “commercial decision.”

The company has sold the product for more than a century and its concerns with it go back at least half that time. In 1971, J&J funded a study where it injected asbestos into prisoners in Pennsylvania to compare their skin reactions to those using talc. Earlier this year, J&J apologized for the study while adding such tests on prisoners were “widely accepted” at the time.

In 2019, after the FDA found trace amounts of asbestos in the product, J&J recalled 33,000 bottles out of “an abundance of caution.” By that time, the company was already under a mountain of lawsuits.

J&J has won its share of those verdicts but they continue to mount, numbering 40,300, it said in an SEC filing from last month. In 2018 in Missouri, the company was slapped with a $4.7 billion verdict, which was reduced to $2.1 billion on a successful appeal.

Last year, in a ploy to reduce its losses from litigation and settlements, J&J established a holding company, LTL Management, in which to funnel the lawsuits and then declare it bankrupt. The move, known as a Texas two-step, was first used by firms decades ago to mitigate costs associated with asbestos claims.

In February of this year, a New Jersey judge affirmed J&J’s ability to use Chapter 11 to hasten a sweeping settlement which would resolve the outstanding cases. But three months later, a federal appeals court said it would revisit the case.

Johnson & Johnson paid $7.4 billion in litigation expenses between 2020 and 2021, an annual filing shows. The company cited talc litigation as a primary driver of legal costs during both years.

By Kevin Dunleavy


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