Adetunji T. Toriola and Robert Field on the J&J Baby Powder Case

Johnson & Johnson is battling claims that it has prioritized revenues over ethics after a recent court case awarded damages to a woman who was diagnosed with cancer following years of using its talcum powder. Although this was the third such case, the company maintains that the medical evidence of the links between ovarian cancer and talc is uncertain. However, despite scientific facts, its brand image could take some knocks, say experts at Wharton and Washington University.

The links between ovarian cancer and talcum powder are not clear, according to Adetunji T. Toriola, assistant professor in the division of public health sciences at Washington University School of Medicine and a molecular cancer epidemiologist at its Siteman Cancer Center. “Some studies have found increased ovarian cancer with increased use of talcum powder in the genital areas, while others have not,” he said.

Toriola noted that the Lyon, France-based International Agency for Research on Cancer had in 2006 classified the use of talc-based body powder as “possibly carcinogenic to humans.” According to him, that means “there is not sufficient evidence of carcinogenicity in humans,” although the agency found sufficient evidence of that link in experiments with animals. “We need more data from prospective studies that follow women over time,” he said.

Could a case be made that J&J ignored the information or warnings from some of those studies? “It looks like they did. But there is no smoking gun at this point,” said Robert Field, Wharton lecturer in health care management and Drexel University law and health management professor. “[J&J] didn’t do what the asbestos companies did or the tobacco companies did, which was to actively suppress it. In those cases, you had billions and billions of dollars [awarded] in judgments.”

Toriola and Field discussed the ethical and business issues involved in the J&J case on the Knowledge at Wharton show on Wharton Business Radio on SiriusXM channel 111. (Listen to the podcast at the top of this page.)

Talc Damages: A Brief Account

The latest case is the third J&J has faced over its talcum powder product. On May 2, a judicial circuit court for the City of St. Louis in Missouri awarded $55 million in damages to Gloria Ristesund of South Dakota, who had used J&J’s talc-based feminine hygiene products for nearly 40 years and was diagnosed with ovarian cancer in 2011. Her cancer is now in remission. The award includes $50 million in punitive damages, which are imposed when courts want to punish a defendant over and above simple compensation ($5 million in this case). J&J faces more than a thousand such lawsuits in courts, and has been accused of ignoring warnings linking its talcum powder to ovarian cancer and failing to inform users of that potential risk.

“There is no smoking gun at this point.” –Robert Field

Earlier this year, the same St. Louis court had awarded $72 million in damages to the family of another woman who had used the product and died of ovarian cancer. Three years ago, a South Dakota court had found the company to be negligent in not warning Deane Berg, the petitioner, of the risks associated with its baby talcum powder that she had used for 30 years, but it did not award any damages.

J&J will appeal the latest verdict, according to a company statement. “Multiple scientific and regulatory reviews have determined that talc is safe for use in cosmetic products and the labeling on Johnson’s Baby Powder is appropriate,” it said.

Uncertain Links, but a Damning Judgment

According to reports, J&J was aware of medical concerns over talcum use in the 1990s, but the firm ramped up promotion of its baby powder to African American and Hispanic consumers, who are heavy users of its product.

“One thing that looks very bad for J&J is that the indications from the data … that the risks are particularly heightened among African American and Hispanic women … and J&J promoted that use among this population,” Field said. “It certainly looks like they were singling out a minority group.”

According to Field, that link between J&J’s talcum powder and African American/Hispanic women has been damaging for the company. “[The company’s actions here were] not just negligent but almost intentional,” he said. “They were completely rough riding and ignoring the evidence because they saw a potentially lucrative market. It looked bad to the jury, and that is one of the reasons they tagged on these huge, punitive damages.”

But the medical evidence there is slim, according to Toriola. He said one of the risk factors for ovarian cancer is reproductive history and the use of birth control. “It is likely and possible that women of African American descent have a different reproductive history compared to Caucasian women,” he said. But he also noted that those with a family history of ovarian and breast cancer have a higher risk. “All that needs to be considered as well in this case.”

‘Drawing a Line in the Sand’

“I don’t think the issue in this case has to do with placing revenue objectives over ethical behavior,” said Wharton management professor John Kimberly. “It has more to do with the company drawing a line in the sand, in the belief that ultimately their approach to assuring product safety will be validated.”

“It has more to do with [J&J] drawing a line in the sand, in the belief that ultimately their approach to assuring product safety will be validated.” –John Kimberly

According to Kimberly, J&J must have “carefully considered the reputational risks” as it decided how to proceed with the latest case. “J&J, like any other company, and particularly any consumer products company, always has to be mindful of its reputation among consumers,” he said. “They clearly have opted for an aggressive defense of their approach to product safety in this case.”

Impact on Brand Image

J&J’s baby powder was one of its earliest products and was launched in 1894, six years after the company was founded in New Brunswick, New Jersey. “In that sense, it reflects the essence and core of the brand heritage,” said Wharton marketing professor Patti Williams. “And of course, it is closely associated with the baby-focused business, where the credo itself is very important to consumers.”

J&J earned a reputation for living by its credo of putting consumers before profits in its handling of the Tylenol case in 1982, when bottles of the drug were found to contain traces of cyanide, resulting in seven deaths. The company spent more than $100 million in a nationwide recall of Tylenol, replacing bottles with new tamper-proof packaging.

That credo is “in J&J’s blood…. There is a real sense of what the credo means,” Wharton professor of legal studies and business ethics Thomas Donaldson told Knowledge at Wharton in a 2012 story. Around that time, the company faced a string of quality issues, including recalls of its Children’s Tylenol, Benadryl and hip-replacement devices, and a case involving its anti-psychotic drug Risperdal, where it agreed to pay a $158 million settlement.

According to Williams, J&J faces “a lot of risks” on the trust aspect in the fallout of the latest case. “Trust is crucial to a brand that has been built on its care and concern for babies,” she said. “To some extent the sense that the brand can be trusted to care for children is central to the essence of the J&J brand overall.”

“To the extent that consumers perceive this as the latest in a series of ways in which J&J hasn’t lived up to its credo, this could certainly be problematic for the brand.” –Patti Williams

Williams said it is not clear to what extent consumer perceptions of the J&J corporate brand — versus the individual product brands — still reflect the quality issues the company faced in earlier years. “However, I think that the centrality of [baby powder] to the J&J brand position is problematic,” she added. “To the extent that consumers perceive this as the latest in a series of ways in which J&J hasn’t lived up to its credo, this could certainly be problematic for the brand.”

Issues to Pursue

The case has brought into focus other issues that also merit attention, according to Toriola. He noted that the studies conducted thus far suggest a link to only one type of ovarian cancer, although that is the most common type. Also, only continued, long-term use of the talc could expose a person to those risks, as opposed to infrequent use, he added.

Toriola called for “a bigger investigation” into the suspected links between talcum powder use and ovarian cancer. “The most definitive evidence will come from a trial, but it is not ethical to conduct a trial,” he said. “The next step is a bigger study that just follows people over time who have used this product and compare it with others who have not used it. That is where you will find the ultimate evidence.”

Meanwhile, law firms have been actively pitching for business, promising to extract compensation for other users of the talcum powder. “The lawyers are all over the potential links between the use of the company’s talcum powder and the onset of ovarian cancer, sensing a potential gold mine,” noted Kimberly.