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Johnson & Johnson to Pay Millions to Settle Baby Powder Dispute

Johnson & Johnson (NYSE:JNJ) shares gained ground Wednesday, despite word the has reached a tentative settlement to resolve an investigation by more than 40 states into claims the company misled patients about the safety of its talc baby powder and other talc-based products.

Notably, the settlement does not resolve the tens of thousands of consumer lawsuits, some of which are slated to go to trial this year, alleging that those talc-based products caused cancer.

Those cases have for decades caused financial and public relations trouble for J&J, which contends that its talc-based products and now-discontinued talc baby powder are safe for consumers.

J&J said in an October securities filing that 42 states and Washington, D.C., had launched a joint investigation into its marketing of talc-based products. The company will pay $700 million to settle the probe, its CFO Joseph Wolk told The Wall Street Journal on Tuesday.

Last year, J&J only set aside about $400 million to resolve U.S. state consumer protection claims.

J&J, which reported fourth-quarter results on Tuesday, has twice tried to resolve the consumer talc cases by offloading those liabilities into a subsidiary, LTL Management, and having that unit file for Chapter 11 bankruptcy protection.

A New Jersey bankruptcy judge in July rejected the second bankruptcy attempt, stating that LTL Management wasn’t in sufficient financial distress. A U.S. appeals court in April dismissed the first bankruptcy attempt for the same reason.

JNJ shares opened Wednesday 59 cents higher to $160.35.

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