High cost of talc litigation: J&J’s finances and reputation at risk

talc bottles 314x210 High cost of talc litigation: J&Js finances and reputation at riskThis week The New York Times featured an article about the high cost of the talc litigation as one woman after another brings suit against Johnson and Johnson alleging that its talc-containing products caused her ovarian cancer.

“The tally of damages from verdicts against Johnson & Johnson is already in the hundreds of millions of dollars. And the harm to the company is not just financial: Its reputation could suffer if baby powder, one of its longest-standing products, is seen by the public as unsafe,” according to The Times. Financial analysts are drawing similar conclusions.

For comparison, look at the past experience of rival drug company Merck, which 10 years ago was still reeling from the legal fees from Vioxx lawsuits, three years after removing the drug from pharmacy shelves. The Times reports that the litigation cost the company more than $1 billion in legal fees covering the nearly 20 suits that went to trial before Merck agreed to settle the remaining 27,000 suits for $4.85 billion.

So far Johnson and Johnson reports to have spent $806 million last year in litigation expenses and $400 million during the second quarter of 2017. Already in 2017, a California jury awarded one woman with terminal ovarian cancer $417 million. The Times points out that $347 million of this was punitive damages only awarded in 5 percent of civil trials and usually awarded as a harsh judgement of a defendant’s behavior. All four of the Missouri juries that found in favor of plaintiffs in talc cases last year also awarded high punitive damages.

Following the first Missouri trial on behalf of deceased plaintiff Jacqueline Fox, in an interview that aired on NBC’s Today Show, Jere Beasley, the family’s attorney, said, “I’ve had very few juries award more money than I’ve asked for; they awarded one million dollars for every year that Ms. Fox had lived and we’d only asked for 10 to 15 million.” The verdict included $10 million in actual damages, and $62 million in punitive damages.

The Times notes that these talc cases are “emotionally compelling.” Nearly 5,000 women, many of whom are terminal, are asking Johnson and Johnson to warn other women about the risk of using talc for feminine hygiene by changing the label. In the most recent trial in California the plaintiff’s attorneys revealed that competing companies already include an ovarian cancer warning on their talc products. These women alternately ask that Johnson and Johnson replace the allegedly carcinogenic product with the safer cornstarch product that they already manufacture, market and sell.

The New York Times
Beasley Allen