Johnson & Johnson sends baby powder lawsuits to bankruptcy as cancer claims mount

Pharmaceutical firm Johnson & Johnson has put into bankruptcy tens of thousands of legal claims that accuse its baby powder of causing cancer, offloading the potential liabilities into a newly created subsidiary. The American consumer goods firm has been embattled by more than 40,000 lawsuits that claim its baby talc causes ovarian cancer and mesothelioma. In 2019, the US Food and Drug Administration (FDA) also substantiated the claim by alerting people about the presence of asbestos- known to be a cancer-causing substance- in powder products. The company halted the sale of the product in US& Canada in May last year. 

J&J has opposed the lawsuits labelling them as “unrelenting assault” by greedy lawyers. But last week, the consumer goods company announced that it has formed a new subsidiary called ‘LTL Management’ and transferred US$2 billion baby powder lawsuit settlement money to the subsidiary. Now, in the latest development, CBS News reported that it has submitted LTL for bankruptcy, revealing its liabilities between $1 billion and $10 billion. 

“We are taking these actions to bring certainty to all parties involved in the cosmetic talc cases,” Michael Ullmann, Executive Vice President, General Counsel of Johnson & Johnson said. “While we continue to stand firmly behind the safety of our cosmetic talc products, we believe resolving this matter as quickly and efficiently as possible is in the best interests of the Company and all stakeholders.”

How will bankruptcy claim help J&J?

As of now, the company has already spent US$1 billion in legal proceedings. While the company has set aside US$4 billion for future lawsuits, bankruptcy protection could help them temporarily halt all the legal claims. The US Federal law obliged all legal lawsuits to be put on hold against a firm that files for bankruptcy until its official comes up with a plan to resolve the financial crisis. Notably, plaintiffs have objected to the claim stating huge profits that the J&J elicits every year.

J&J refutes allegations 

J&J has maintained that Baby Powder has been a trusted product for more than 100 years, and decades of independent scientific evaluations have repeatedly confirmed that it does not cause cancer. J&J asserted that not a single professional organization or regulator has concluded that there is scientific evidence to the claims of causation between talc and ovarian cancer.

Image: Pixabay