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Do we know if this settlement is actually significant in incentivizing J&J to never pull this shit again?

by PuppyTailWags 4y ago

deleted 4y ago
[deleted]
dylan604 4y ago
The fact that they continue to sell the product in other countries suggests "no".
- justrealist 4y ago
  Not really accurate. The problem was the contamination, not the Talc. They have changed the process to remove the asbestos contamination, but have gone a step further in the US, out of risk-aversion, to replace the Talc with cornstarch entirely.
  - kevin_thibedeau 4y ago
    All talc is associated with asbestos. You can't remove it all, only choose mines with lesser proportion.
- fauxpause_ 4y ago
  The product is not the problem. It is a useful product when it meets quality controls.
Maximus9000 4y ago
It looks like about 6 months of net income. That's pretty big but not huge. https://www.macrotrends.net/stocks/charts/JNJ/johnson-johnson/net-income https://www.macrotrends.net/stocks/charts/JNJ/johnson-johnso...
- fauxpause_ 4y ago
  That’s huge.
  - runarberg 4y ago
    To put this in a more tangible context. A person getting 100 000 USD in annual income, being fined 50k for being criminally negligent, causing provable harm (say they injured several children by driving into a playground while drunk). 50k is big, but not huge.
    - pessimizer 4y ago
      As pointed out by a sibling comment, income is revenue, not profit. So it's as if a person who makes $100K got to write off the $85K they spent on rent and other expenses, and was fined half of the $15K they had left.
      - lostlogin 4y ago
        > fined half of the $15K they had left. And then allowed to pay it over 25 years during a period of very high inflation. A year from now that debt is considerably smaller in real terms, even if they pay zero.
    - riffraff 4y ago
      The analogy is slightly off tho, J&J does not only do talc, it's a huge conglomerate. IMO it's a sizeable enough amount to affect the company for a while, but I think it's unlikely it will prevent the same issues forever, simply because people in the company change and the underlying incentives are not influenced by a single event like this. Edit: what I meant is that it the analogy would be like "this dishonest bit I did for this marginal extra income screwed my whole income"
      - fauxpause_ 4y ago
        Yes, this is the right analysis. Baby powder is < 0.02% of JJ revenue. The entire consumer segment is only ~14B (again, in revenue). An 8B loss is very punishing for something that produced 0.02% of revenue (and probably wasn’t high margin?) https://www.cnbc.com/amp/2018/12/17/talc-baby-powder-concerns-setback-for-jjs-consumer-products-unit.html https://www.cnbc.com/amp/2018/12/17/talc-baby-powder-concern... Oldish source
fauxpause_ 4y ago
More than half a year’s total profits
etothepii 4y ago
J&J almost certainly don't have an insurance tower that goes anywhere near that. This a huge settlement. The biggest tower I know of is only $2b, but I don't know the whole market.
- atlasunshrugged 4y ago
  I've never heard of the term "insurance tower" before. Does it just mean coverage? If you have a link to any good blog explaining that'd be great!
  - yourapostasy 4y ago
    An insurance tower is the total insurance package assembled by a policy holder between primary and excess insurance policies, as once explained to me by my broker. I gather that it is a different animal than re-insurance between insurance companies, as that is not policy-specific.
vb-8448 4y ago
It appears to be huge, but it will be stretched on 25 years, so it's not a big deal for them.
refurb 4y ago
Pull what shit exactly? Talc naturally has asbestos in it. J&J tested their talc and said the levels were so small as to not be a health hazard. Lawyers brought civil suits claiming it was a health hazard. The courts agreed. The courts also agreed that breast implants cause cancer. Of course turns out they dont.
- lostlogin 4y ago
  > Pull what shit exactly? The bit where they decided a know carcinogen wasn’t going to cause cancer. That’s the shit they pulled.
  - refurb 4y ago
    Coffee is a carcinogen. Alcohol is a carcinogen. Hell, hot water causes an increase in throat cancer. You going to sue Nescafe into oblivion as well? https://www.researchgate.net/publication/21242820_Ames_the_Ames_test_and_the_causes_of_cancer https://www.researchgate.net/publication/21242820_Ames_the_A...

Do we know if this settlement is actually significant in incentivizing J&J to never pull this shit again?

deleted 4y ago

[deleted]

dylan604 4y ago

The fact that they continue to sell the product in other countries suggests "no".

justrealist 4y ago
Not really accurate. The problem was the contamination, not the Talc. They have changed the process to remove the asbestos contamination, but have gone a step further in the US, out of risk-aversion, to replace the Talc with cornstarch entirely.
- kevin_thibedeau 4y ago
  All talc is associated with asbestos. You can't remove it all, only choose mines with lesser proportion.
fauxpause_ 4y ago
The product is not the problem. It is a useful product when it meets quality controls.

Maximus9000 4y ago

It looks like about 6 months of net income. That's pretty big but not huge. https://www.macrotrends.net/stocks/charts/JNJ/johnson-johnson/net-income https://www.macrotrends.net/stocks/charts/JNJ/johnson-johnso...

fauxpause_ 4y ago
That’s huge.
- runarberg 4y ago
  To put this in a more tangible context. A person getting 100 000 USD in annual income, being fined 50k for being criminally negligent, causing provable harm (say they injured several children by driving into a playground while drunk). 50k is big, but not huge.
  - pessimizer 4y ago
    As pointed out by a sibling comment, income is revenue, not profit. So it's as if a person who makes $100K got to write off the $85K they spent on rent and other expenses, and was fined half of the $15K they had left.
    - lostlogin 4y ago
      > fined half of the $15K they had left. And then allowed to pay it over 25 years during a period of very high inflation. A year from now that debt is considerably smaller in real terms, even if they pay zero.
  - riffraff 4y ago
    The analogy is slightly off tho, J&J does not only do talc, it's a huge conglomerate. IMO it's a sizeable enough amount to affect the company for a while, but I think it's unlikely it will prevent the same issues forever, simply because people in the company change and the underlying incentives are not influenced by a single event like this. Edit: what I meant is that it the analogy would be like "this dishonest bit I did for this marginal extra income screwed my whole income"
    - fauxpause_ 4y ago
      Yes, this is the right analysis. Baby powder is < 0.02% of JJ revenue. The entire consumer segment is only ~14B (again, in revenue). An 8B loss is very punishing for something that produced 0.02% of revenue (and probably wasn’t high margin?) https://www.cnbc.com/amp/2018/12/17/talc-baby-powder-concerns-setback-for-jjs-consumer-products-unit.html https://www.cnbc.com/amp/2018/12/17/talc-baby-powder-concern... Oldish source

fauxpause_ 4y ago

More than half a year’s total profits

etothepii 4y ago

J&J almost certainly don't have an insurance tower that goes anywhere near that. This a huge settlement. The biggest tower I know of is only $2b, but I don't know the whole market.

atlasunshrugged 4y ago
I've never heard of the term "insurance tower" before. Does it just mean coverage? If you have a link to any good blog explaining that'd be great!
- yourapostasy 4y ago
  An insurance tower is the total insurance package assembled by a policy holder between primary and excess insurance policies, as once explained to me by my broker. I gather that it is a different animal than re-insurance between insurance companies, as that is not policy-specific.

vb-8448 4y ago

It appears to be huge, but it will be stretched on 25 years, so it's not a big deal for them.

refurb 4y ago

Pull what shit exactly? Talc naturally has asbestos in it. J&J tested their talc and said the levels were so small as to not be a health hazard. Lawyers brought civil suits claiming it was a health hazard. The courts agreed. The courts also agreed that breast implants cause cancer. Of course turns out they dont.

lostlogin 4y ago
> Pull what shit exactly? The bit where they decided a know carcinogen wasn’t going to cause cancer. That’s the shit they pulled.
- refurb 4y ago
  Coffee is a carcinogen. Alcohol is a carcinogen. Hell, hot water causes an increase in throat cancer. You going to sue Nescafe into oblivion as well? https://www.researchgate.net/publication/21242820_Ames_the_Ames_test_and_the_causes_of_cancer https://www.researchgate.net/publication/21242820_Ames_the_A...