Johnson & Johnson stock price falls after federal subpoena on alleged asbestos in baby powder

The Justice Department and the Securities and Exchange Commission are investigating Johnson & Johnson over concerns the company's baby powder may have contained asbestos.

The agencies subpoenaed the health care product maker in the wake of several jury awards to plaintiffs who claimed the company's talc products were tainted with asbestos and caused their cancers. The agencies seek documents about those matters and other suits Johnson & Johnson faces filed by shareholders and pension holders over the situation.

Johnson & Johnson shares fell 1.4 percent in early trading Thursday to $134.43.

About 13,000 plaintiffs seek claims in pending lawsuits involving talc-based body powders. "The Company is cooperating with these government inquiries and will be producing documents in response," Johnson & Johnson said in an SEC filing Wednesday.

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Sen. Patty Murray, D-Wash., the top Democrat on the Senate Health Committee sought information from Johnson & Johnson about the company's knowledge of potential asbestos in its talcum-based products.

Last year, courts in New Jersey and California awarded damages to plaintiffs who claimed Johnson & Johnson talc products tainted with asbestos caused their mesothelioma. In July 2018, a St. Louis jury awarded $4.7 billion to 22 women who said asbestos in the company's talc powder contributed to their ovarian cancer.

In the SEC filing, Johnson & Johnson said, "The Company believes that it has strong grounds on appeal to overturn these verdicts."

Johnson & Johnson said in a statement to USA TODAY that the agencies' and Sen. Murray's inquiries "are related to news reports that included inaccurate statements and also withheld crucial information that had already been made public in the litigation and in prior media reports about the ongoing talc litigation that adversely impacted our share price in late December 2018."

The statement continued: "Decades of independent tests by regulators and the world’s leading labs prove Johnson & Johnson’s baby powder is safe and asbestos-free, and does not cause cancer. We intend to cooperate fully with these inquiries and will continue to defend the Company in the talc-related litigation."

The Justice Department and the SEC declined to comment.

Details about the DOJ and SEC inquiries come two months after reports in The New York Times and Reuters revealed documents suggesting the company knew about the risk of asbestos in its powders for decades and sought to keep the issue quiet.

Johnson & Johnson stock plummeted after those reports, falling 17 percent, resulting in a decline in the company's market value of about $40 billion.

Those reports prompted Murray to seek information from Johnson & Johnson, she said. "I am troubled by recent reports of an alleged decades-long effort by Johnson & Johnson to potentially mislead regulators and consumers about the safety of one of its products, which may have resulted in long-term harm for men, women and children who used Johnson & Johnson baby powder," she wrote in a letter to Johnson & Johnson Chairman and CEO Alex Gorsky late last month.

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