A federal judge will rule next week on what evidence will be admitted in ongoing lawsuits against Johnson & Johnson (J&J) alleging that asbestos in the company’s talc-based products has caused ovarian cancer and mesothelioma. The outcome of the hearing in a New Jersey court on July 22 will affect 85% of the cases against J&J.
As evidence mounts, J&J baby powder could also soon be taken off the market. Facing a criminal investigation by the U.S. Justice Department, the FBI, and the Securities and Exchange Commission (SEC), Bloomberg reports that the company has lost more than $15 billion in market value.
The US Food and Drug Administration (FDA) frequently mandates market recalls of food, medicines, medical devices, and any products that deemed to pose too great a risk to consumers. Most recently, the FDA issued recalls of talc-based cosmetic products from Claire’s Stores Inc, such as Claire’s Eyeshadow, Claire’s Compact Powder, and Claire’s Contour Palette. The FDA recalled the cosmetics due to the possible presence of asbestos fibers.
The public outcry over the potential of J&J baby powder and talc-based products to cause cancer continues to grow. Juries across the country have already awarded over $5 billion to consumers in cases against the company.
There are now more than 14,000 consumer active lawsuits alleging that the use of J&J talc-based products led to the development of cancers. The company also faces lawsuits from investors claiming that the company lied about the safety of its baby powder product, in addition to the lawsuits from the federal government.
As evidence continues to emerge in the cases against J&J, the FDA may take notice and consider a recall strategy for J&J baby powder.
Internal memos have shown that J&J knew of the talc-based products’ potential to be harmful to the health of consumers. The company’s talc supplier, Imerys Talc America, filed for bankruptcy in February, citing its inability to pay damages in an ever-growing number of lawsuits.
FDA Recall Depends on Health Hazard Evaluation
According to FDA regulations, a company must notify regulators if they believe their product poses a harmful risk to the health of consumers. The FDA may then decide to issue a recall, pulling the product off the market.
To issue a recall of J&J baby powder, the FDA would need to find that it poses a health risk to consumers. Regulators evaluate scientific documentation to determine whether a product causes injuries or disease, especially for at-risk populations like children. The FDA also looks at the likelihood that the product would cause an injury or disease, and how severe consequences of the health hazard are.
If the FDA decides to recall a product, they label it as Class I (the most hazardous), II, or III (the least hazardous) to tell consumers how serious the health hazard is. The FDA then issues warnings to the public, notifying them of the recall. The company selling the products may also issue a recall of their own.
J&J Denies Baby Powder Contains Asbestos
But J&J hasn’t notified the FDA of any risks to customers, despite evidence to the contrary, and they’ve denied that their products contain any asbestos.
“Johnson’s Baby Powder does not contain asbestos or cause cancer, as supported by decades of independent clinical evidence,” said J&J spokeswoman Kim Montagnino recently.
When discussing the company’s latest quarterly earnings report, J&J Chief Financial Officer Joseph Wolk told analysts that the baby powder is “safe” and the company had acted “responsibly.”
“We’ll continue to pursue defense of the company’s actions, as well as the product going forward,” he said.
Wolk also stated that the company has not set aside money for possible future settlements or liability payments, though the company has already reported spending $190 million on litigation costs in the second quarter of 2019.
“Our overarching strategy is to continue to defend ourselves for this product when the facts are so overwhelmingly on our side,” Wolk said in an interview with CNBC.
DOJ Begins Criminal Probe Into Johnson and Johnson
On July 12, the Justice Department announced a criminal investigation into whether J&J lied to the public about possible cancer risks associated with the use of its talc-based products. A grand jury in Washington D.C. is now examining the company’s internal documents to determine what the company knew about any carcinogens in its products, according to people with knowledge of the events.
Baby powder only amounts to a small fraction of J&J’s sales, but the company’s iconic baby powder has been widely used by consumers for more than a century. But juries have already delivered major verdicts condemning J&J for the carcinogenic effects of its baby powder. The 14,000 lawsuits pending across the country assert that the baby powder caused consumers to develop ovarian cancer or mesothelioma. Mesothelioma is a rare form of cancer, the only known cause of which is asbestos exposure.
J&J has defended its product as asbestos-free, citing decades of internal safety tests of its product. But the lawsuits against the company have made internal public memos that date as far back as the 1960s and ’70s in which company scientists warned that they had detected asbestos in J&J talc products. The company scientists warned that the asbestos contamination “was a severe health hazard” that could cause legal risk to the company.
Prosecutors from the Justice Department, FBI agents, and SEC officials may now be looking at whether public denials by J&J that their talc-based products ever contained asbestos were made in good faith. Approximately a dozen juries have concluded that J&J had knowledge that their baby powder and Shower to Shower products contained at least trace amounts of asbestos but failed to warn consumers or the FDA of possible health risks of using their products. The body of evidence against J&J continues to grow, as cancerous diseases caused by exposure to asbestos often don’t present themselves until decades after the exposure.
J&J Talc Supplier Files Bankruptcy
On February 13, 2019, Imerys Talc America Inc., a main supplier of talc for J&J, and its Paris-based parent company filed for Chapter 11 bankruptcy protection in a Delaware court due to the number of lawsuits filed against the company.
The talc supplies cited the 14,000 lawsuits against the company, claiming that its talc caused women to develop ovarian cancer and that asbestos in the talc caused others to develop mesothelioma. Under the terms of Chapter 11 bankruptcy, the company can now set up a trust fund to compensate plaintiffs in the lawsuits at a reduced cost to the company. A similar strategy has been used by companies in other mesothelioma lawsuits to shield themselves from billions of dollars in liability.
The bankruptcy filing came just days after a California jury heard evidence from a California woman with terminal mesothelioma in a suit against Imerys. The woman alleged that Imerys talc was the cause of her mesothelioma and she sued both the mineral production company (Imerys) and J&J. The jury ruled in her favor, determining that the company's talc was laced with asbestos and awarding her $29.4 million. Several previous suits against Imerys have awarded consumers over $100 million.
According to Imerys Talc America President Giorgio La Motta, company officials concluded that its “simply not in the best interests of our stakeholders to litigate these claims in perpetuity and incur millions of dollars in projected legal costs to defend these cases.’’
Mark Lanier, an attorney who won a $4.69 billion talc case against J&J said he was not surprised the talc supplier filed for bankruptcy.
“They knew their product caused immense grief to thousands of women and they knew they couldn’t escape accountability in the courts any other way,” he said.
J&J Investor Lawsuits Ramp Up Pressure
In addition to consumer lawsuits, several individuals invested in J&J have accused the company of defrauding them, arguing that the company was obligated to disclose their knowledge that their products were carcinogenic and contained traces of asbestos. The investors said the company’s failure to disclose health risks to consumers caused the company’s stock to become artificially inflated. The investor complaints prompted the ongoing SEC investigation into internal J&J documents which show the company has known about the health risks of its products for decades. FBI officials and a grand jury, as a part of the Justice Department investigation, are also reviewing the documents and interviewing witnesses.
Mounting Evidence Points to Possible FDA Recall
Evidence from the investigations and lawsuits is making it increasingly clear that J&J knew about the health risks of its products and hid this knowledge from consumers. The evidence and the potential risk to consumers may prompt the FDA to launch its own investigation and Health Hazard Evaluation to determine if J&J baby powder products should be taken off the market. The FDA will likely look to evidence from litigation against both J&J and Imerys to assess the seriousness of the current health hazard to consumers. If there is a recall, J&J will likely see a further drop in its market value.