Johnson & Johnson recalls 33,000 bottles of Baby Powder as FDA finds traces of asbestos

J&J is voluntarily recalling the lot, #22318RB, which consists of 33,000 bottles, and is encouraging people who bought the product to discontinue use. The company said that it is working with the Food and Drug Administration (FDA), which tested the bottle, and has started an investigation into how and when the product was contaminated.

FDA spokeswoman Gloria Sanchez-Contreras said the contaminated bottle contained chrysotile fibers, a type of asbestos. The FDA recommended that consumers stop using the lot immediately and contact J&J for a refund. Another lot of Johnson’s Baby Powder the FDA tested was negative for asbestos, the agency said in a statement.

J&J shares fell 6.2% to $127.70 at the close in New York, the biggest drop since December 2018. The stock has been under pressure as investors try to ascertain the company’s potential liabilities in a series of lawsuits related to talc and other products.

“Thousands of tests over the past 40 years repeatedly confirm that our consumer talc products do not contain asbestos," J&J said in a statement on Friday.

J&J is looking into whether cross-contamination of the sample caused a false positive, whether the product was appropriately sealed and maintained in a controlled environment, and whether the product was a counterfeit.

Sanchez-Contreras said the FDA “stands by the quality of its testing and results and is not aware of any adverse events relating to exposure to the lot of affected products." The FDA has tested about 50 cosmetic products for asbestos since 2018 and plans to release the full results by the end of this year, the agency said.

During a brief call with investors on Friday, J&J global supply chain and women’s health executives said they had received the product’s test results the previous day and acted promptly to inform the public. The investigation could take 30 days or more, they said. The executives didn’t take questions from participants on the call.

Legal implications

Chief Financial Officer Joseph Wolk said on a Tuesday conference call with investors that the company wouldn’t set aside any legal reserves for the more than 100,000 lawsuits it faces across its portfolio of drugs, consumer products and medical devices, saying it expects to fight and win many of the claims.

“The management team here will look at what a reasonable outcome could be for all stakeholders involved," Wolk said. “When products are safe, when they’re effective, we’re going to look to make sure that those products aren’t subject to what’s become unfortunately a big business model for plaintiff’s attorneys."

J&J has already settled some of the lawsuits in which plaintiffs claim they were given cancer by the talc-based personal care products, but 15,500 suits remain, according to a July filing with the U.S. Securities and Exchange Commission.

Company spokesman Ernie Knewitz declined to comment on the contamination beyond the news release and said he wouldn’t speculate on what the development means for the litigation.

Baby Powder-related liabilities could eventually cost the company as much as $10 billion, according to Bloomberg Intelligence. Though the product accounts for only a small fraction of J&J’s annual revenue, it’s been a core brand for the company for more than a century.

Longstanding claims

Lawyers for women who blame their cancers on asbestos-tainted talc powder contend internal J&J documents indicated officials knew since the 1970s that powder mined in places such as Vermont and Italy contained trace amounts of asbestos, but failed to alert consumers or regulators. Asbestos is often found intertwined with talc.

“Had J&J acted responsibly and removed Johnson’s Baby Powder from the market in the 1970s, they would have saved the lives of thousands of women who have died needlessly of ovarian cancer," Leigh O’Dell, an Alabama lawyer who is leading the plaintiffs’ cases that have been consolidated before a federal judge in New Jersey for pretrial information exchanges, said on Friday.

Mark Lanier, who persuaded a St. Louis jury last year to hit J&J with a $4.7 billion verdict on behalf of more than 20 women who said they developed ovarian cancer through long-term use of the company’s talc-based products, said he doesn’t expect this to be the last time that its talc will be found to contain asbestos.

“This confirms thousands of tests" over the years that have uncovered asbestos in J&J’s Baby Powder, he said.

Given that J&J’s lawyers made public statements this month that the company’s talc-based products were free of asbestos, the recall couldn’t come at worse time, said Nora Engstrom, a Stanford University law professor. The company has vowed for years that extensive testing showed no traces of asbestos, she noted.

“The wisdom of J&J’s broad defense strategy for these talc cases clearly is now in doubt," Engstrom said.

J&J has refuted and, in many cases, appealed verdicts against it, citing conflicting evidence on whether talcum powder can cause cancer. In a statement provided to Time magazine after a new study’s publication, the company maintained that Baby Powder is safe.

“We sympathize with anyone suffering from cancer, and we understand patients and their families are seeking answers. The facts are clear — Johnson’s Baby Powder is safe, does not contain asbestos nor does it cause cancer, as reflected in more than 40 years of scientific evidence," the statement reads.

J&J said in February that it had received subpoenas and inquiries related to its iconic baby-powder products from the U.S. Justice Department, the SEC and the top Democrat on the Senate Committee on Health, Education, Labor and Pensions. Knewitz, the J&J spokesman, said at the time the company would cooperate with the inquiries.

Bloomberg News reported in July that the Justice Department is pursuing a criminal investigation into whether J&J lied to the public about the possible cancer risks of its talc powder.