Johnson & Johnson shares drop

Baby powder recalled due to asbestos concerns

Johnson & Johnson is recalling a shipment of baby powder after the Food and Drug Administration discovered evidence of asbestos in one of the bottles, the company said Friday, a move that undercuts its defense in a growing number of claims that its talcbased products were contaminated with the potent carcinogen.

The regulator found trace levels of chrysotile asbestos in samples taken from a bottle of baby powder purchased from an online retailer, Johnson & Johnson said. The company has, for years, denied that the carcinogen is, or ever was, present in its talc-based products.

This is the first time Johnson & Johnson has ever pulled baby powder from the market over asbestos concerns, a spokesman for the company said, and comes as Johnson & Johnson is battling thousands of lawsuits brought by people who said that baby powder and other talc-based products caused them to develop cancer. Some have mesothelioma, an aggressive cancer that is considered the signature disease of asbestos exposure, while others have ovarian cancer, which has also been linked to asbestos.

The recall will undermine defense claims against those suits and could lead to the company having to pay more or to settle cases, said Erik Gordon, a University of Michigan business professor who studies corporate governance. Shares of the company fell 5% in early afternoon trading Friday.

But in announcing the recall, the company also repeated part of its long-running defense against cancer claims, saying that “thousands of tests over the past 40 years repeatedly confirm that our consumer talc products do not contain asbestos.” The company said it was recalling the shipment out of an “abundance of caution.”

Although Johnson & Johnson said it has started “a rigorous, thorough investigation into the matter,” it also appeared to question the testing process, saying in a statement that it is working with the FDA to “determine the integrity of the tested sample and the validity of the test results.”

The recalled baby powder was produced and shipped last year. The recalled lot, #22318RB, involves 33,000 bottles sold by a retailer, which sold products online but may have shipped powder to stores, the spokesman, Ernie Knewitz, said. The FDA has not responded to questions about the identity of the retailer.

A New York Times investigation last year found that Johnson & Johnson executives were aware for decades of the risks of

asbestos contamination in talc but did not warn consumers. Internal memos and reports made public during litigation against the company document executives’ concerns about potential contamination that date back 50 years.

Earlier this year, Johnson & Johnson disclosed that it is being investigated by the Justice Department and Securities and Exchange Commission over concerns about possible asbestos contamination of its talc-based products.

The company is now entangled in litigation on multiple fronts. On Thursday, it agreed to pay $117 million to settle claims that it deceptively marketed transvaginal pelvic mesh implants. Earlier this month, a jury in Philadelphia ordered Johnson & Johnson to pay $8 billion to a Maryland man who accused the company of downplaying the risks associated with the antipsychotic drug Risperdal. The company has also agreed to settle claims involving its role in the nationwide opioid crisis.

Lee Hambright, an analyst with Bernstein, wrote in a note to clients last week that Johnson & Johnson could face $5 billion in legal liability over the talc litigation. Of the 15,500 talc lawsuits the company has disclosed, Hambright estimated that 1,000 involved mesothelioma cases.

Talc is a natural mineral that is mined from underground deposits, but asbestos can form under the same geological conditions that form talc, and geologists said veins of asbestos can intermingle with talc in underground mines.

Johnson & Johnson officials emphasized that the level of asbestos detected was very low, the amount being “two ten-thousands of a percent” of the sample. U.S. health agencies, however, said there is no known safe level of exposure when it comes to asbestos.

While health risks increase with heavier and longer exposure times to asbestos, overall evidence suggests no level of asbestos exposure is safe, and disease has been found in people with only brief exposures, according to the National Cancer Institute.