J&J proposes $8.9 billion deal to settle claims about its talc-based powder

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Pharmaceutical giant Johnson & Johnson is offering to pay $8.9 billion over 25 years to settle claims that its talc-based baby powder may cause cancer, relying on a bankruptcy maneuver to try and move on from the lawsuits.

The company on Tuesday said the proposed deal would not be an admission of wrongdoing but that paying money through a subsidiary, LTL Management, under Chapter 11 bankruptcy protections would be the speediest way to settle the issue.

“The company continues to believe that these claims are specious and lack scientific merit,” said Erik Haas, worldwide vice president of litigation for Johnson & Johnson. “Resolving this matter through the proposed reorganization plan is both more equitable and more efficient, allows claimants to be compensated in a timely manner, and enables the company to remain focused on our commitment to profoundly and positively impact health for humanity.”

The U.S. Bankruptcy Court for the District of New Jersey must approve the filing.

The Food and Drug Administration has pointed to research showing a possible link between powders containing talc and ovarian cancer, though it said the studies are inconclusive. The agency also warned about possible contamination of talc-based powder with asbestos.

A Reuters investigation said J&J knew about potential amounts of asbestos in its powder but kept it quiet. The company says it never hid information about its powder and continues to believe its products are safe.

“Notwithstanding the lack of scientific validity to these claims, plaintiff trial lawyers continue to relentlessly advertise for talc claims, supported by millions of dollars of litigation financing, all in the hopes of a massive return on investment,” said John Kim, chief legal officer of LTL Management. “LTL’s goal has always been to resolve these claims quickly, efficiently and fairly for the claimants, both pending and future, and not incentivize abuse of the legal system.”

J&J announced last year it would stop selling talc-based powder globally, however, calling it a business decision due to low demand.

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