J&J to pay $700M to settle states’ talc-marketing probe

Johnson & Johnson has tentatively agreed to pay about $700 million to resolve an investigation by more than 40 U.S. states of claims that it wrongfully marketed its talc-based baby powder by not warning about possible health risks, according to people familiar with the deal.

The settlement would avert potential lawsuits alleging that J&J hid any links between the talc in its powder and various cancers, according to the people, who asked not to be named because the pact isn’t yet public. They said J&J and representatives for state attorneys general are still hammering out the specific terms of the accord but have reached an agreement on the total amount.

The settlement is part of J&J’s strategy to corral a growing number of suits accusing it of concealing baby powder’s health risks after two failed attempts to use the bankruptcy courts to impose a settlement on former users. The decade-long litigation, plus the prospect of potential future cancer suits, has limited the company’s stock price, analysts have said.

As part of its bankruptcy settlement offer, J&J officials said last year they set aside $400 million to resolve U.S. states’ consumer protection claims. The company agreed to increase the payout after both sides met with a mediator in December, the people said.

So far only Mississippi and New Mexico have filed lawsuits against J&J over the marketing. But J&J said in an October securities filing that 42 states and the District of Columbia had launched “a joint investigation into the company’s marketing of its talcum powder products.” Attorneys general from states including Arizona, North Carolina and Texas issued demands for information about J&J’s alleged mishandling of baby powder.

J&J, the world’s largest maker of health care products, has legal exposure far beyond the states’ claims. It faces more than 50,000 suits alleging that to protect one of its best-known products, it concealed that asbestos in its talc-based powders posed a cancer risk. Most of those claims are over women who got ovarian cancer, but others involved mesothelioma, a cancer tied to asbestos exposure.

Most of the cases are consolidated before a federal judge in New Jersey. The company had offered to settle all current and future claims for $9 billion as part of the bankruptcy filing of one of its units.

J&J maintains that its talc-based products don’t cause cancer and that it has marketed its baby powder appropriately for more than a century. The company has won a number of cases in court and had other suits thrown out before trial.