Summary
- Recently uncovered internal documents corroborate allegations of Johnson & Johnson's culpability in the development of cancer in thousands of individuals.
- A rule change proposal put forth by the Trump Administration marks the end of the current pharmaceutical industry rebate system.
- Johnson & Johnson's pharmaceutical segment is heavily reliant on exclusionary rebate bundles to curb competition.
- With no apparent means for prevention or circumvention of the rule change, nearly half of Johnson & Johnson revenues are at high risk.
Shares of Johnson & Johnson (JNJ) fell nearly 20% in December following some alarming developments in the ongoing talcum powder/asbestos litigation. In case you missed the bombshell report out of Reuters, newly emerged documents revealed that JNJ executives were aware of the presence of asbestos in the company's raw and finished talc powders & attempted to conceal the findings from the public.
Five days later, a Missouri judge denied a motion to reverse the headline-grabbing $4.7 billion verdict reached by a St. Louis jury last year. This should have come as no surprise given the plaintiff-friendly reputation of the city; the meat and potatoes are in the appellate courts, where JNJ has found success in similar lawsuits. The company's track record of successful appeals may be hindered by the incriminating new evidence, though.
