J&J Pays $22.9 Million Settlement Over Drug Recalls
Johnson & Johnson has agreed to a $22.9 million settlement with investors, according to a Bloomberg Law report on July 17. The settlement will go to investors who filed a lawsuit against the company after the largest recall of over-the-counter children’s medicine in US history. The suit, which was filed in the US District Court of New Jersey (Trenton), claims J&J misled investors about quality-control failures that led to not only to the historic recall, but also a plant closing, and a congressional probe.
The lawsuit focused on the recall of over-the-counter medications made by McNeil Consumer Healthcare, a subsidiary of Johnson & Johnson. Investors claimed the J&J executives made misleading statements about the reasons behind the recall and they suffered stock losses after the true reasons behind the recall were found out by the public.
No Admission of Wrongdoing
While the settlement brings closure to the issue, J&J will make no admission of wrongdoing. Ernie Knewitz, a spokesman for J&J, was quoted in an email saying, “We maintain that the claims in this action are without merit, and settled this case in order to avoid the expense, distraction and time associated with continuing litigation.” The proposed settlement filed with the courts on July 15, 2013, would cover buyers of J&J shares between October 14, 2008 and July 21, 2010.
The next step for Johnson & Johnson should be to focus their attention on the DePuy hip recall. It’s troubling that J&J moved so quickly to settle a lawsuit brought by its investors, but puts up a fight over the DePuy recall lawsuits. Could the difference have something to do with priorities when it comes to investors and patients?