J&J sweetens controversial talc settlement deal

In a bid to put litigation over the safety of its talc products into the rearview mirror, Johnson & Johnson has added another $1.1 billion to its settlement offer, according to media reports.

Citing two people familiar with the case, Reuters said the increase would hike the total nominal value of the settlement to more than $9 billion paid over 25 years. Its previous offer was for around $6.5 billion at present value, with a nominal value of $8 billion, taking into account inflation over time.

It also said that J&J has reached an agreement with one of the lawyers resisting a deal, Allen Smith, who along with another firm represents around 12,000 plaintiffs out of several tens of thousands who claim its talc products could cause cancer.

The agreement includes "additional monetary and non-monetary benefits for all talc claimants," according to J&J, and takes the proportion backing the settlement above 75% – the threshold needed to push the deal through.

J&J has sought to resolve the litigation by creating a new company called LTL Management LLC to take responsibility for the litigation – separate from its core businesses – that would handle the settlement whilst filing for bankruptcy.

The so-called ‘Texas Two-Step’ strategy has been criticised for allowing defendants facing liability claims to sidestep their legal and financial obligations, and J&J has struggled to get the plan through.

After it was blocked on multiple occasions in the courts, earlier this year J&J gave claimants until 26th July to vote on its plan and then extended the deadline at the request of plaintiffs' legal representation. The new offer is "the best and most realistic option available for claimants to recover for their claims in a timely manner," according to Smith.

J&J has taken all its talc-based products off the market as of 2023 and is now using cornstarch instead. In its second-quarter results update, the company said "talc matters" had resulted in an on-paper charge of $3 billion in the first six months of the year, down from $7.1 billion in the same period of 2023.

The current settlement relates only to ovarian and other gynaecological cancers, which make up the bulk of the class action litigation the company is facing. Claims talc caused other cancers like mesothelioma – linked to asbestos, which some claim is present in small amounts in talc – are not included.