On January 8th, Bloomberg reported, citing sources familiar with the matter, that Johnson&Johnson (NYSE: JNJ) has tentatively agreed to pay approximately $700 million (approximately RMB 5 billion) to resolve an investigation by more than 40 states in the United States into the company's baby powder. Johnson&Johnson was accused of engaging in misleading marketing by not warning about the potential health risks associated with the product's ingredients when selling baby powder.
Insiders say that the settlement agreement will allow Johnson&Johnson to avoid potential lawsuits, which accuse the company of concealing the asbestos content in its body powder, which could lead to various cancer risks. At present, representatives from Johnson&Johnson and the US state attorneys general are still finalizing the specific terms of the agreement, but an agreement has been reached on the approximate total compensation amount.
Multiple state investigations are still ongoing
Johnson&Johnson spokesperson Clare Boyle did not immediately comment on the latest $700 million compensation agreement on Monday (January 8) Eastern Time. But according to a spokesperson for Florida Attorney General Ashley Moody, investigations into the carcinogenicity of Johnson&Johnson baby powder are still ongoing in multiple states, and these investigations have not yet reached a settlement agreement. Moody has been responsible for the investigation and settlement negotiations of Johnson&Johnson.
Bloomberg reported that the settlement agreement is part of Johnson&Johnson's strategy to curb the increasing number of lawsuits over its baby powder product, with the focus on Johnson&Johnson concealing the health risks of the product.
According to a document submitted by Johnson&Johnson to the US Securities and Exchange Commission (SEC) in October last year, 42 states and the District of Columbia have launched a joint investigation into the marketing of the company's baby powder products, including requests from the Attorney General of several states in Arizona and North Carolina for further information.
As of now, Mississippi and New Mexico in the United States have filed lawsuits against Johnson&Johnson's baby powder marketing practices.
However, according to sources cited by Bloomberg, the agreement reached by Johnson&Johnson on Monday does not include lawsuits in Mississippi and New Mexico, as lawsuits against Johnson&Johnson are still ongoing and consumers hope to negotiate higher compensation. According to court documents, Mississippi hopes that Johnson&Johnson will be punished for over 6 million bottles of baby powder sold in the state since 1974 that did not adequately indicate cancer risk. If the judge imposes a fine of $1000 per bottle of baby powder under state law, it will result in Johnson&Johnson facing losses of up to $6 billion.
Currently facing over 50000 lawsuits
Johnson&Johnson is the world's largest manufacturer of health products, and its baby powder is one of its best-selling products. However, since 2014, the company has been embroiled in a lengthy legal battle over its baby powder being suspected of causing cancer.
Bloomberg reported that Johnson&Johnson is currently facing over 50000 lawsuits, most of which are filed against women with ovarian cancer, but some also suffer from mesothelioma, a cancer associated with exposure to asbestos.
Previously, consumers of Johnson&Johnson baby powder claimed that Johnson&Johnson executives had known as early as the early 1970s that the product contained trace amounts of asbestos. According to data compiled by Bloomberg, since 2014, at least a dozen juries have ruled on Johnson&Johnson's talcum powder cancer lawsuit, which involved compensation of over $6.5 billion, but some of the compensation was later reduced or rejected on appeal.
In 2018, a court in Missouri, USA ruled that Johnson&Johnson paid nearly $4.7 billion in compensation to 22 women who claimed the asbestos in Johnson&Johnson's body powder was related to their ovarian cancer. The judge involved in this case stated that Johnson&Johnson has been distorting the safety of these (talcum powder) products for decades. Afterwards, Johnson&Johnson filed an appeal, but it was rejected by the Supreme Court.
Johnson&Johnson has always insisted that its talcum powder products are not carcinogenic, and its sales of baby body powder have a history of over a century. Johnson&Johnson has also won multiple related lawsuits in court, and some of them were dismissed before the trial.
Under immense litigation pressure, Johnson&Johnson attempted twice to force previous talcum powder consumers to reach a settlement through bankruptcy law, but both attempts ended in failure.
The Daily Economic News reporter also noted that Johnson&Johnson had previously proposed to settle all current and future baby powder related lawsuits in its subsidiary's bankruptcy filing for $9 billion, and the latest settlement agreement of $700 million is part of this proposal.
In addition, in 2020, Johnson&Johnson withdrew its talcum powder from the US and Canadian markets due to declining sales, replacing talcum powder with corn starch based products, and promised to stop producing all baby talcum powder containing talcum powder globally by the end of 2023.