Johnson & Johnson has announced a comprehensive settlement, agreeing to pay $6.5 billion to resolve the vast majority of U.S. lawsuits alleging that its talc-based products caused ovarian cancer. This settlement, facilitated through the third bankruptcy filing of its subsidiary LTL Management, marks a significant development in a series of legal battles that have tarnished the pharmaceutical giant's reputation and impacted its financial performance.
The proposed payment plan involves disbursing approximately $6.48 billion over a 25-year period, covering claims that J&J's baby powder, used for feminine hygiene, led to ovarian cancer in users. This resolution will address nearly all of the existing and foreseeable claims, with about 99% of the talc-related lawsuits linked to ovarian cancer allegations against J&J and its subsidiaries.
As part of the settlement strategy, J&J introduced a reorganization plan for LTL Management, distinct from previous arrangements. This new plan includes a three-month solicitation period during which claimants can vote for or against the proposal. If approved by 75% of voting claimants, the subsidiary will proceed with a "prepackaged" Chapter 11 bankruptcy to finalize the settlement's confirmation.
While this settlement aims to conclude the majority of talc-related litigations, J&J emphasized that pending personal injury lawsuits related to mesothelioma, a type of cancer affecting the lungs and other organs, will be managed separately. The company noted it has already resolved 95% of the mesothelioma cases filed against it.
In addition to the lawsuits directly involving consumers, J&J also faces state consumer protection claims, which it plans to address outside of this settlement plan. The company confirmed that agreements in principle are already in place to settle these matters, as well as all talc-related claims included in the bankruptcy cases filed by its talc suppliers.
Despite the financial burden of the settlement, Johnson & Johnson maintains that its talc-based products are safe and insists that the claims lack merit. This stance underscores the company's ongoing commitment to defending the quality and safety of its offerings amidst ongoing legal challenges.
The announcement had an immediate impact on J&J's stock, which rose more than 2% in pre-market trading, reflecting investor relief at the company's steps to cap its legal liabilities in these protracted talc litigation cases.
