J&J raises baby powder settlement offer to more than $8.2 billion

Johnson & Johnson has increased its offer to settle thousands of lawsuits by people who say its baby powder gave them cancer to more than $8.2 billion, according to people familiar with the matter.

The offer, an increase from the drugmaker’s previous $6.5 billion offer, signals that J&J may have to pay at least $1.7 billion more to settle all claims in the years-long dispute . Under the new terms, the plaintiffs could receive higher payouts and about $650 million in covered legal fees, said the people, who asked not to be identified discussing the proceedings. J&J declined to comment.

Related: J&J in Talks with Holdouts for $6.5B Talc Solution

Regulatory discussions continue. J&J claims that its now-retired talcum powders have never caused cancer and have properly marketed their baby powder for more than 100 years.

J&J recently won the support of more than 75 percent of baby powder claimants for an out-of-court settlement that includes claims that the talcum-based version caused ovarian and other gynecological cancers. Having even more people sign the agreement could help the company more quickly use bankruptcy courts to limit liability to a unit it set up to handle the lawsuits.

The company could file its latest Chapter 11 case in the coming days, even though a group of alleged victims has so far balked at the terms.

Related: J&J Sees Texas as Site for Next Round of Baby Powder Fight

J&J shares were down less than 1 percent in early trading Friday. Shares are up about 5% so far this year, including more than 13% since hitting a low in late May.

Earlier this month, the company said it had reached a settlement with a key plaintiff group that should help move the settlement forward quickly. That settlement came after negotiations with Allen Smith, a Mississippi attorney who tried the first case alleging the company’s talcum-based baby powder caused ovarian cancer in 2009 and opposed J&J’s settlement proposals for years days.

Payment company

Separately, the company said it had resolved 95 percent of claims that its baby powder was contaminated with asbestos and caused mesothelioma, a type of cancer that forms in the tissues around the heart and lungs.

Guggenheim analyst Vamil Divan said in a recent note to investors that an additional $1.1 billion would be “within the range of what we think investors would be comfortable with the company paying.” A possible increase of $1.1 billion from the $6.5 billion offer was previously reported.

“We believe the positive headlines pointing to the resolution of this issue likely played a role in the movement we’ve seen” in the company’s stock in recent months, he wrote. J&J shares are up more than 13% in the past three months.

J&J’s decision to sweeten its settlement offer would bring to more than $13.4 billion the total the firm has agreed to pay — or has already spent — to resolve the baby powder cases. Most of the cases are brought before U.S. District Judge Michael Shipp in Trenton for pretrial briefings.

The New Jersey case is IN RE: Johnson & Johnson Talcum Powder Products Marketing, Sales Practices and Products Liability Litigation, 16-md-2738, US District Court for the District of New Jersey (Trenton).

Top photo: Johnson & Johnson baby powder for sale at a pharmacy in New York, U.S., Wednesday, March 27, 2024. Johnson & Johnson is scheduled to release earnings numbers on April 16. Photographer: Gabby Jones/Bloomberg.

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