The consumer-health company, Kenvue, achieved a significant win in its legal battle involving its painkiller, Tylenol, on Monday. This victory alleviates concerns about a potential substantial settlement over allegations that the medication causes neurological disorders in children.
On Tuesday morning, Kenvue stock rose by 4.3% following a ruling by federal-district court judge, Denise Cote. Judge Cote's order prevents the plaintiffs from presenting evidence supporting a causal connection between prenatal exposure to Tylenol and autism spectrum disorder (ASD) or attention deficit/hyperactivity disorder (ADHD) in court.
With limited options remaining for the plaintiffs to proceed with the litigation, Kenvue plans to file a motion to dismiss the lawsuits.
"These lawsuits have generated confusion regarding the safety of one of the most extensively researched medications in history," stated Kenvue in a released statement. "Doctors recommend acetaminophen as a first-line treatment for fever or pain during pregnancy. It is scientifically established that not addressing these conditions can have severe health consequences for both mother and baby."
Judge Cote presides over a consolidated federal proceeding comprising around 600 Tylenol cases. She made her ruling after hearing expert testimonies from both sides during a Daubert hearing, which sets the stage for upcoming trials between the parties.
Both the plaintiffs and defendants requested that Judge Cote prevent the opposing side's experts from testifying in future trials. In her decision on Monday, Judge Cote granted permission for testimony from the defendants' experts but excluded those from the plaintiffs.
In her extensive 148-page opinion, Judge Cote mentioned consulting the Food and Drug Administration (FDA) for their input. The FDA's response indicated that they believe the scientific evidence does not establish a link between acetaminophen and ASD or ADHD.
Prenatal Exposure to Acetaminophen and Neurodevelopmental Disorders
In a recent ruling, Judge Cote reviewed the testimony presented by the plaintiff's experts in a case involving prenatal exposure to acetaminophen and its potential link to Autism Spectrum Disorder (ASD) and Attention-Deficit/Hyperactivity Disorder (ADHD). With these rulings, there is no admissible evidence to support the claim that acetaminophen exposure during pregnancy causes ASD or ADHD in offspring, according to Judge Cote.
While some published research has suggested a possible connection between prenatal acetaminophen exposure and an increased risk of ASD and ADHD, the scientific community has not reached a definitive conclusion. Major medical organizations in the United States maintain that the use of acetaminophen to manage pain and fever during pregnancy is appropriate.
The defendants in this case include a former division of Johnson & Johnson, now a subsidiary of Kenvue, as well as several retail chains that sell store-brand acetaminophen. Earlier this year, concerns were raised about the potential financial impact of this litigation on Kenvue.
Although investors have become more attuned to product liability cases, the focus during Kenvue's separation from Johnson & Johnson in August was primarily on the talc litigation faced by Johnson & Johnson. The talc-related liabilities were not transferred to Kenvue, making the exchange offers for Kenvue shares more attractive. The Tylenol cases faced by Kenvue received little attention from Wall Street analysts at that time.
Following the recent ruling, it appears that the plaintiffs have limited options to pursue further legal action. J.P. Morgan analyst Andrea Teixeira stated, “This is a clean sweep for the defendants. While there may be some legal wrangling ahead, we believe Judge Cote’s ruling effectively collapses the plaintiffs’ case in the multidistrict litigation.” Teixeira maintains an Overweight rating on Kenvue stock with a $25 price target.
At the time of writing, attorneys representing the plaintiffs have not provided a comment regarding the ruling.
