Commentary

J&J Hits Back Hard After Reuters Report Charges Talc Cover-Up

Despite its denials, Johnson & Johnson’s stock continues to take a pummeling in pre-market trading this morning after a Reuters investigation charged Friday that the company had, for decades, hidden information about tests that found its talcum powder was sometimes tainted with small amounts carcinogenic asbestos. 

As it has for years, J&J adamantly denied the allegations and is running an ad in major print and online news outlets today carrying the headline: “Science. Not Sensationalism.”

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A J&J press release about the ad further charges that the story “misrepresented J&J, our product, our actions, and the science about talc. Reuters misled its readers by printing inaccurate statements, withholding crucial information that otherwise undermines its thesis. Reuters published this story even though it was advised that it had the facts wrong.” It also claims that Reuters omitted “substantial amounts of information” it had provided prior to publication that support its claims that talc does not cause cancer.

Reuters’ Lisa Girion wrote that nearly two decades after a lawsuit filed by 52-year-old Darlene Coker, who was dying of mesothelioma, was dismissed without J&J being ordered by the court to release internal documents, the material Coker and her lawyer sought is finally emerging.  

“J&J has been compelled to share thousands of pages of company memos, internal reports and other confidential documents with lawyers for some of the 11,700 plaintiffs now claiming that the company’s talc caused their cancers -- including thousands of women with ovarian cancer,” Girion reports.

“A Reuters examination of many of those documents, as well as deposition and trial testimony, shows that from at least 1971 to the early 2000s, the company’s raw talc and finished powders sometimes tested positive for small amounts of asbestos, and that company executives, mine managers, scientists, doctors and lawyers fretted over the problem and how to address it while failing to disclose it to regulators or the public,” she continues. “The documents also depict successful efforts to influence U.S. regulators’ plans to limit asbestos in cosmetic talc products and scientific research on the health effects of talc.”

J&J first “forcefully denied” the Reuters report in a statement Friday sent to the Associated Press.

“The New Brunswick, New Jersey, company also has publicly maintained in recent years there is no science to back alleged links between its powder and cancer. J&J has won several recent court cases alleging liability and damages, and is appealing other judgments, including $4.6 billion awarded in July to 22 women who claimed its product caused their ovarian cancer,” according to a CBS News story on 4CBS Denver’s website.

J&J had also established the website http://www.factsabouttalc.com. It contains extensive information about talc’s “safety,” the studies that support its claims and the litigation it is involved with.

“You’ve probably read news stories about juries awarding large verdicts in cases alleging that Johnson’s Baby Powder can cause ovarian cancer or mesothelioma. But you may not have read or heard this: of all the verdicts against Johnson & Johnson that we have already appealed, not one has been upheld,” it says.

“I have known this company and its CEOs and senior leaders for more than thirty years, competed against them, and worked with them over a decade ago. J&J is one of the highest integrity companies in the world,” writes Bill George, the former chairman and CEO of Medtronic, who is currently a senior fellow at Harvard Business School,  for CNBC.

“Its leaders -- led by current CEO Alex Gorsky, as well as predecessors Bill Weldon, Ralph Larson and Jim Burke -- put the famous J&J Credo at the forefront of every decision they make.

“Written in 1943 by then-chairman Robert Wood Johnson, the Credo states in its opening lines: ‘We believe our first responsibility is to the patients, doctors and nurses, to mothers and fathers and all others who use our products and services. In meeting their needs everything we do must be of high quality.’” 

Nonetheless, J&J’s “shares extended declines in pre-market trading Monday following last week's move that lopped $40 billion in market value from the iconic consumer brands group” after the Reuters story broke, The Street’s Martin Baccardax writes this morning.

“But the hit to J&J’s reputation may be the most difficult to fix,” suggested Reuters' Robert Cyran in a “Breaking Views” column Friday. 

“In the 1980s, seven people died after taking Tylenol painkillers that had been laced with cyanide. The company’s response to that tragedy -- recalling 31 million bottles, taking out advertisements warning customers, and introducing tamper-proof packaging -- became a staple business-school lesson in reputation-buffing. If the company really sat on troubling data relating to a product used on babies around the world, it might end up being taught as a counter-example.”

But if J&J’s defensive efforts continue to hold up in court, it may have an even more compelling case study for the textbooks -- and the marketplace.

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