Johnson & Johnson has announced a plan to pay $6.5 billion over 25 years to settle most of the lawsuits in the U.S. alleging that its talc-based products caused ovarian cancer. The company has faced financial and public relations challenges due to these lawsuits, despite maintaining that its talc products are safe. The majority of the lawsuits against J&J relate to ovarian cancer, prompting the company to record a charge of $2.7 billion in the first quarter to raise the reserve for talc claims to around $11 billion.
The settlement deal is contingent on approval by the claimants and would involve resolving the lawsuits through a third bankruptcy filing of a subsidiary company, LTL Management. J&J had attempted to use bankruptcy proceedings to address the talc-related lawsuits in the past, but those efforts were rejected by the courts. Claimants will now have the opportunity to vote on the proposed settlement plan, with a 75% support threshold required for it to be approved. The executives at J&J believe that the settlement is a more advantageous outcome for claimants compared to going to trial, where recovery could be unlikely for many.
Although some claimants have been awarded significant verdicts, such as a $2 billion award to 22 women, many may never see their day in court due to the sheer volume of cases. J&J has resolved the majority of mesothelioma lawsuits, which are related to a rare cancer, separately from the new settlement plan for ovarian cancer cases. The company has also settled an investigation by a coalition of states into claims of misleading patients about the safety of its talc products. In addition, J&J has reached an agreement in principle to settle claims brought by its talc suppliers.
The settlement plan is expected to receive approval from the bankruptcy court, as J&J claims to have the support of the majority of claimants based on conversations with their legal representatives. The executives believe that this plan is in the best interest of the claimants and offers a more favorable recovery than what might result from a trial. The hope is that settling these lawsuits will provide resolution for both J&J and the claimants involved, putting an end to long-standing legal battles and preventing future litigation. The company has taken steps to address various aspects of the lawsuits, including resolving mesothelioma cases and reaching agreements with states and suppliers related to claims of misleading marketing.
