May 1, 2024 - Business

Johnson & Johnson announces $6.5B settlement over ovarian cancer allegations

A baby powder bottle on a table

Photo: Justin Sullivan/Getty Images

Johnson & Johnson said Wednesday that it has reached a new settlement with people who allege the company's talc-based baby powder caused their ovarian cancer.

Why it matters: J&J faces tens of thousands of lawsuits over accusations that its baby powder was cancerous.

  • The company discontinued the baby powder in 2022 but maintains that it was safe.

Between the lines: The company agreed to pay the present value of $6.5 billion over 25 years to settle the ovarian cancer cases.

  • The company said 99.75% of the pending talc lawsuits are part of the negotiated deal and that $6.5 billion "is a far better recovery than the claimants stand to recover at trial."

Zoom in: J&J said the deal calls for a third bankruptcy filing of its subsidiary, LTL Management, to which the company transferred its talc liabilities in what critics say was an attempt to avoid paying much to victims.

  • The company tried filing LTL in bankruptcy twice before — and both times the case was rejected as courts ruled the parent company was financially capable of paying the claims without bankruptcy protection.
  • This time around, the bankruptcy strategy might have a better shot since so many alleged victims signed onto the new deal.

The intrigue: This deal is smaller than the previous one, which was for $8.9 billion but also included mesothelioma cases. This settlement does not include those cases, which J&J said it will address out of court.

  • The company said it has now set aside a total of $11 billion to resolve all the cancer claims, including a new charge of $2.7 billion in the first quarter of 2024.

How it works: If 75% of claimants officially cast votes agreeing to accept the deal, the company would file LTL in a "prepackaged" bankruptcy.

The bottom line: People suffering from cancer they believe was caused by J&J's baby powder may soon get compensation.

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