Johnson & Johnson Proposes $8.9 Billion to Settle Talc Cancer Claims

Bottles of Johnson & Johnson's baby powder line a drugstore shelf in New York on Oct. 15, 2015. Lucas Jackson/Reuters

Pharmaceutical giant Johnson & Johnson has proposed an $8.9 billion settlement to resolve thousands of lawsuits accusing the company of selling baby powder and other talc products that caused cancer.

The pharma firm shared details of the proposal in an April 4 statement announcing that it has refiled its subsidiary LTL Management LLC. for voluntary Chapter 11 bankruptcy protection, a move that could “equitably and efficiently resolve all claims arising from cosmetic talc litigation against the Company and its affiliates in North America.”

Johnson & Johnson (J&J) created the LTL subsidiary in October 2022 to house its liabilities stemming from more than 40,000 lawsuits alleging that the company’s baby powder and other talc products contained traces of asbestos, which has been blamed for causing ovarian cancer and mesothelioma, a deadly cancer that affects the lining of the lungs.

The LTL immediately filed for bankruptcy.

However, the U.S. 3rd Circuit Court of Appeals in Philadelphia in January dismissed the bankruptcy, ruling that neither J&J nor the subsidiary had a legitimate need for bankruptcy protection because they weren’t in “financial distress.”

April 4’s bankruptcy protection filing marks the second time LTL Management has filed for Chapter 11 with the intent to present a reorganization plan with the proposed settlement to a judge as soon as May 14.

Johnson & Johnson and its other affiliates didn’t file for bankruptcy protection and will continue to operate their businesses as usual.

Settlement Details

According to the announcement, Johnson & Johnson has agreed to pay out up to $8.9 billion over 25 years to resolve all current and future talc claims, which is $6.9 billion more than the $2 billion committed in LTL’s initial bankruptcy filing in October 2021.

The proposed settlement still needs the approval of a bankruptcy court, but the company stated that it had secured commitments from more than 60,000 current claimants to support the new terms.

Johnson & Johnson announced in 2020 that it would stop selling its baby powder in the United States and Canada over what it called “misinformation” about the product and stated that it would phase out sales of those products worldwide in 2023.

In the announcement on April 4, Johnson & Johnson stated that neither its original filing for bankruptcy nor its refiling amount to an admission of wrongdoing or an “indication that the company has changed its longstanding position that its talcum powder products are safe.”

“More than 40 years of studies by medical experts around the world continue to support the safety of cosmetic talc,” the company stated. “Nonetheless, resolving this matter as quickly and efficiently as possible is in the best interests of the Company and all stakeholders.”

“The Company continues to believe that these claims are specious and lack scientific merit,” said Erik Haas, worldwide vice president of litigation at Johnson & Johnson.

J&J Touts Bankruptcy Plan

“However, as the Bankruptcy Court recognized, resolving these cases in the tort system would take decades and impose significant costs on LTL and the system, with most claimants never receiving any compensation. Resolving this matter through the proposed reorganization plan is both more equitable and more efficient, allows claimants to be compensated in a timely manner, and enables the Company to remain focused on our commitment to profoundly and positively impact health for humanity,” Haas said.

Leigh O’Dell, one of the lead attorneys representing plaintiffs in the talc lawsuits, told CNBC on April 4 that Johnson & Johnson is “seeking an extremely deep discount on justice and is not really offering anything other than another bankruptcy and more delay, delay, and delay.”

“This new filing should be viewed as a shameful attempt to run out the clock on people dying of cancer and convince some lawyers to give up,” she said.

However, Mikal Watts, one of the plaintiff lawyers who negotiated the proposed settlement, said it’s “the culmination of a job well done” and that J&J is committed to “fairly compensate these deserving women” who have dealt with cancer as a result of the talc products.

J&J stated last month that it asked the Supreme Court to revise its effort to resolve the thousands of lawsuits by putting its subsidiary through bankruptcy.

Reuters contributed to this report.