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The Johnson & Johnson Talc Lawsuit Isn’t Over Yet

Johnson & Johnson was ordered to pay $4.7 billion to 22 plaintiffs

By James Brumley, InvestorPlace Feature Writer

Strong Earnings Enough Reason to Stay Long JNJ Stock

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Johnson & Johnson (NYSE:JNJ) is on the hook for $4.7 billion after a Missouri court determined its talcum powder caused ovarian cancer in 22 women. That works out to be around $213 million per women, minus the attorney’s cut, of course.

That’s the biggest per-person damages award Johnson and Johnson has ever had to face.

The pharmaceutical and personal-care company will appeal the decision, obviously. And, given its track record as an appellant, it’s odds of getting the ruling overturned are actually quite good. Bolstering those odds of a successful appeal from Johnson and Johnson is a lot of inconclusive science about the connection between talc and ovarian cancer.

Does Talc Cause Cancer?

The question at hand, of course, is whether or not talc causes cancer. The answer is, no one yet knows for sure.

The American Cancer Society says the connection between asbestos-free talc (which is the kind that’s been used since the 70’s) and ovarian cancer is currently inclusive and research should continue. Studies that exposed lab animals to asbestos-free talc have had mixed results. And studies on human populations have also been mixed. Many of these studies have found a small increased risk for ovarian cancer with use of asbestos-free talc. These studies often rely on a person’s memory of having used talc years earlier, however, and memories can become foggy or altered over time. Therefore, the ACS states both population and laboratory-based studies need to continue.

The government-funded Women’s Health Initiative, conversely, studied more than 60,000 women over the course of twelve years, and found no connection between powder and ovarian cancer. It is very important to note, however, that this study was also based on surveys (and therefore memory), and that this study did not specifically ask about powder with talc, instead asking about “powder” in general. This study was also only conducted on postmenopausal women, and it is unknown if the results would have been different for younger women.

Mayo Clinic gynecologist Dr. Daniel Breitkopf noted in 2016 “It is unknown if the increased chance of ovarian cancer in talc users seen in these studies is due to the talc or some other cause,” but went on to hedge his bet by saying “Whether talc particles cause ovarian cancer has not been definitively determined by scientists. Given the uncertainty regarding talc, it seems prudent to limit its use in the genital area.”

Then there are the (relatively new) warnings on talcum powder packaging from some manufacturers, which were heavily touted during a court battle fought last year between ovarian cancer Eva Echeverria and Johnson & Johnson. Echeverria was awarded $417 million for her case.

The reality is, nobody really knows if talc causes cancer. It might. Or, the use of talc might simply coincide with other lifestyle choices or genetics that predispose an individual to cancer risks. So with current scientific evidence, there is no way of definitively blaming or clearing Johnson & Johnson baby powder of causing ovarian cancer.

But if something might cause cancer, is Johnson & Johnson right to continue selling it without even a warning label?

Bottom Line for Johnson & Johnson

Most legal appeals fail, but JNJ stock owners have good reason to remain optimistic. Just last month, a Missouri appeals court threw out a $55 million verdict against Johnson & Johnson in another talcum powder/cancer case, explaining the plaintiff — a South Dakota resident — didn’t have good enough reason to have the her case heard in Missouri.

So why did she? As it turns out, Missouri is notoriously pro-plaintiff. Among the 22 plaintiffs that were just collectively awarded $4.7 billion, 17 of them are not Missouri residents — so science aside, there might be basis for JNJ’s appeal.

A statement from Johnson & Johnson also explained:

“Every verdict against Johnson & Johnson in this court that has gone through the appeals process has been reversed and the multiple errors present in this trial were worse than those in the prior trials which have been reversed.”

Nothing is ever etched in stone, but it appears possible, if not likely, that the appellant court will be swayed by Johnson & Johnson’s arguments.

As of this writing, James Brumley did not hold a position in any of the aforementioned securities. You can follow him on Twitter, at @jbrumley.

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Article printed from InvestorPlace Media, https://investorplace.com/2018/07/johnson-johnson-talc-lawsuit-isnt-over-yet/.

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