Johnson & Johnson CEO testified Baby Powder was Secure 13 days before FDA bombshell

Facing off against a plaintiff’s attorney for the first time about Johnson & Johnson’s Baby Powder, the provider’s Chief Executive Alex Gorsky earlier this month insisted that the business’s iconic brand was secure. Reuters report.

“We unequivocally believe that our talc and our baby powder doesn’t contain asbestos,” Gorsky testified at an Oct. 3 deposition in a case involving a retired Indiana school professor who alleges his cancer was caused by the Baby Powder he utilized for decades. The deposition hasn’t been previously reported.

Johnson & Johnson CEO

Gorsky, citing”thousands of studies and tests” to support his testimony, said:”I am unaware of our baby powder or talc containing asbestos.”

That is harder for him to say now. Last Wednesday, just 13 days after his deposition, the U.S. Food and Drug Administration advised the healthcare giant it had found asbestos, a known carcinogen, in a bottle of Johnson’s Baby Powder.

On Friday, a day after getting the complete FDA evaluation results, J&J remembered 33,000 bottles of Baby Powder in america. It marked the first time that the company has remembered Baby Powder for potential asbestos contamination and also the first time U.S. regulators have declared finding asbestos in the item.

The recall is the latest blow to a healthcare conglomerate that has for many years attempted to project an image as a caring company. It’s now facing thousands of lawsuits over an assortment of goods, including legal activity by over 15,000 consumers asserting its talc powders caused their cancers.

Shares in J&J, which in February said it had received subpoenas in the U.S. Justice Department and U.S. Securities and Exchange Commission for records about the asbestos contamination allegations, dropped nearly 6 percent on Friday after the recall was announced. The questions include a criminal grand jury investigation into how forthright J&J has been about the security of its powders, according to individuals knowledgeable about the matter.

In the deposition, Gorsky was pressed again and again to say – without qualification – that the business’s powders were debris free. However, in answering questions under oath for the first time at the talc lawsuit, he adhered to his statement that he”believed” J&J’s powders were sterile.

The FDA finding will make it far more challenging for Gorsky and the enterprise to keep on stating that they”believe” that the talc powders are free of asbestos,” said Elizabeth Burch, a product liability specialist at the University of Georgia School of Law. She said the test outcome and remember lend authenticity to what plaintiffs have been arguing in court for months.

J&J stands behind the safety of its talc and said it is exploring the FDA test outcome. The company said it jumped with the remember”from an abundance of caution.”

In a statement on Sunday J&J said:”Thousands of evaluations within the past 40 years repeatedly affirm that our customer talc products do not contain asbestos, including previous evaluations by the FDA as recently as last month.”

 

In a written reply to questions from Reuters on Monday, J&J added that Gorsky had no understanding of this FDA finding of asbestos in the time of his deposition.

The business also said the FDA advised it on Sept. 20 that a trial of its own Baby Powder didn’t find any asbestos. Neither had the regulator discovered asbestos during testing in 2010 with the”most sophisticated testing methods out there.”

Gorsky’s testimony echoed statements he made after Reuters on Dec. 14 last year published an investigation that found J&J understood for decades asbestos lurked in its talc.

Internal business records, trial testimony and other evidence reveal that from 1971 into the early 2000s, the corporation’s raw talc and completed powders occasionally tested positive for small quantities of asbestos, the Reuters investigation discovered. Company executives, mine managers, scientists, physicians and lawyers fretted over the issue and how to tackle it, while failing to disclose it to regulators or the general public.

Jim Kramer, the attorney who deposed Gorsky this month, said he intends to ask the New York state judge in the case to allow him to question the CEO another time in light of the FDA’s findings and the recall.

J&J declined to comment on the prospect of another round with Kramer or about its legal strategy after the FDA evaluation outcome.

Gorsky faces at least one more residue, this one dictated by a Missouri judge for Baby Powder cancer cases pending in that state. That has not yet been scheduled.

DISCUSSED DROPPING TALC POWDERS
In his daylong videotaped deposition, Gorsky, a former Army Ranger, recounted his efforts to stem the growing controversy over one of the corporation’s signature products.

Sitting at the head of a conference table with the blinds drawn in the midtown Manhattan offices of a mediation company, he testified that J&J considered dropping talc powders.

“We had talks internally along the way regarding if we depart… talc on the industry or not,” Gorsky said in the deposition.

In the long run, however, Gorsky said the company, which also sells Baby Powder made from cornstarch, stuck with talc since it was confident about its security and since many customers liked its feel.

“We had the ideal testing processes in place and therefore there was… no clinical reason or security reason to draw it,” he testified.

“There were actually differences between cornstarch and talc-based baby powder in its own texture, in its absorbency,” stated Gorsky, who was J&J’s CEO because 2012. The company”felt it was important to have different choices in the marketplace based upon different customer needs.”

The plaintiff’s attorney pressed the 59-year-old Gorsky on his usage of the word”believe” when asked about asbestos in J&J’s talc. “My follow up is,” Kramer said, “can you not answer the question as I’ve presented it with a yes or a no?”

Gorsky, who stated in the deposition he uses Johnson’s Baby Powder and had used it on his son, did not budge. “I didn’t personally conduct each and every test. I will only… gauge it based upon the information and totality that has been presented to me.”

In its replies to Reuters queries on Monday, the company reiterated that”Mr. Gorsky isn’t a scientist and didn’t run the tests. He consequently relies on others to advise him.”

Before the FDA evaluation outcome, Gorsky’s focus on what he”believed” to be true was useful to J&J’s legal position, stated Andrew Bradt, a Berkeley Law professor at the University of California. Many state laws require plaintiffs to establish companies understood a product was defective, and when Gorsky had said talc doesn’t include asbestos then opposing attorneys could attempt to undermine his announcement by comparing it with the results of evaluations J&J understood about over the years indicating otherwise.

Nevertheless, in light of the FDA asbestos discovery, plaintiff attorneys could now make it seem like he was being reluctant in his deposition, Bradt said.

‘MAD MONEY’
A lot of the testimony based on Gorsky’s attempts to quell investor and public concerns raised by the Dec. 14 Reuters investigation and a story published hours afterwards in the New York Times. The Reuters report had prompted a stock selloff that erased about $40 billion in the organization’s market value in 1 day.

In the following days, J&J tweeted, posted on Facebook, conducted a string of full-page newspaper advertisements, printed a lengthy rebuttal to the Reuters investigation on its own site and announced a $5 billion stock buyback.

In video published in December and featured on J&J’s site, Gorsky highlighted that authorities” have always found our talc to be asbestos-free.”

Jim Cramer, the host of the CNBC investing show”Mad Money,” gave Gorsky the opportunity to present his side of the story last December, according to copies of mails shown at the deposition.

Hours after the Reuters and New York Times articles were printed, Cramer delivered a message to Gorsky’s work email, stating:”Dear Alex, if you believe these talc tales aren’t truthful, I would really like to understand how to refute them! — all the best, Jim.”

And that day, Cramer sent a followup:”Thank you, Alex. Don’t be afraid to overwhelm me. I will work all weekend to tell the truth about your great company!!! -Jim.”

Gorsky appeared in person at the”Mad Money” studio the next Monday, Dec. 17.

“We want to be certain that our integrity and trust that we have earned over the past 130 years is preserved for another 130 years,” he told viewers.

“We unequivocally believe that our talc, our Baby Powder, does not include asbestos,” Gorsky said on the air.

In an email to Reuters, Cramer said his aim”was to get Alex Gorsky on CNBC first and to ask all of the toughest questions… There were no ground rules and nothing was off the table.” At the conclusion of the Dec. 17 broadcast, there was a revelation that Cramer’s charitable trust possessed J&J shares.

It still has a bet now, Cramer said.

TESTING ACCURACY
After the question of earlier evaluation results came up in the deposition, Gorsky said occasional findings of asbestos in talc have not held up under scrutiny. Such evaluations were then found to be”erroneous or incomplete,” he said.

A New Jersey judge overseeing thousands of talc lawsuits consolidated in a federal court is expected to rule shortly on a J&J petition to disqualify expert witnesses hired by plaintiffs, including the head of an asbestos testing laboratory who testified in previous trials he found the contaminant from the business’s powders.

In a filing Friday, plaintiffs’ lawyers drew the judge’s attention to the FDA finding of asbestos at the jar of Baby Powder and stated they’ve requested J&J to turn over documents related to the FDA test results and any communications with regulators.

At a brief conference call Friday with journalists and analysts, J&J officials predicted the FDA test results”extremely unusual,” and implied the sample might have been infected by an external source or come from a counterfeit bottle.

A couple of hours later, the FDA shot back with a defense of its own lab analysis, saying it was not aware of”any records pointing to fake Johnson’s Baby Powder in the U.S. market.”

The FDA declined to give additional comment for this report.

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