News

J&J Said Facing Criminal Probe on Talc

19.07.2019 -

Still facing thousands of lawsuits claiming that its talc products caused the plaintiffs’ cancer, US healthcare giant Johnson & Johnson (J&J) has won some smaller cases and lost bigger ones – which it is appealing.

If widely circulated reports, claiming the company knew that some of the products contained asbestos and did nothing, hold water, the consumer health specialist may be in worse trouble.

In February of this year, J&J acknowledged it had received federal subpoenas as part of a US investigation, but did not reveal whether the probes were civil or criminal. According to a report by the Bloomberg news agency late last week, the company is under a criminal investigation by the Department of Justice (DOJ), and a grand jury has been impaneled.

Along with the Justice Department, J&J over the past months is said to have received subpoenas from the US Securities and Exchange Commission and the office of US Senator Patty Murray of the state of Washington. Murray reportedly contacted J&J’s CEO Alex Gorsky after reading a Reuters story that said the company’s talc products contained asbestos.

Bloomberg said federal investigators are looking into whether J&J misled the public with statements that its talc products hav always been asbestos-free. Documents from the 1960s and 1970s purportedly show that an internal analysis detected the contaminant but management was undecided on how to respond.

J&J has asserted that there is “nothing new” in the Bloomberg report and that it has “fully cooperated” with the investigation. It continues to maintain that its iconic baby powder “does not contain asbestos or cause cancer, as supported by decades of independent clinical evidence.”

The company’s share price fell 5% on the news and rekindled the discussion as to whether an out-of-court settlement could be in the offing. J&J is also embroiled in lawsuits that claim it pushed its opioid products despite knowing their risk of addiction. The US is in the midst of a major opioid crisis.

In stock market circles, speculation is focused not so much on whether J&J will settle but on how much it will cost. Market research group Morningstar estimates the company will end up settling all talcum/opioid cases for $3 billion, while Bloomberg Intelligence estimates worst-case legal liabilities of $15 billion.

According to the Seeking Alpha portal, J&J has set aside “billions” to pay any final settlement and has $15 billion in cash, sufficient for the worst-case scenario.