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Business News/ Companies / J&J said to reach $4 billion settlement of hip-implant suits

J&J said to reach $4 billion settlement of hip-implant suits

The accord will resolve more than 7,500 lawsuits over J&J's recalled defective hip implants

“The company will pay an average of $300,000 for each of those removals,” the people said. Photo: Luis García/Wikimedia commonsPremium
“The company will pay an average of $300,000 for each of those removals,” the people said. Photo: Luis García/Wikimedia commons

Wilmington, Delaware:Johnson and Johnson (J&J) will pay more than $4 billion to resolve thousands of lawsuits over its recalled hip implants in the largest settlement of US legal claims over a medical device, three people familiar with the deal said.

“The accord will resolve more than 7,500 lawsuits in federal and state courts against J&J’s DePuy unit," said the people, who requested anonymity because they weren’t authorized to speak publicly about the settlement. “Patients who’ve already had hips removed claimed in those cases that the implants were defective."

“The company will pay an average of $300,000 for each of those removals," the people said. “The agreement doesn’t bar patients whose hips fail in the future from seeking compensation from J&J," they said. “That means the settlement is uncapped in terms of its total value," according to the people. The settlement is to be announced next week.

“The agreement resolves a lot of litigation that could have dragged on for years and cost J&J much more money in the long run," said Carl Tobias, who teaches product-liability law at the University of Richmond in Virginia.

Metal ball

Lawyers for patients claim debris created by the artificial hip’s metal ball sliding against a metal cup can cause tissue death around the joint, and may increase the amount of metal ions in the bloodstream to harmful levels.

The settlement follows another J&J agreement, announced 4 November, to pay $2.2 billion to resolve criminal and civil probes into the marketing of Risperdal, an antipsychotic drug, and other medicines.

The hip pact dwarfs a 2001 accord Sulzer AG reached with patients who claimed that company’s hip and knee implants were defective. Sulzer, a Winterthur, Switzerland-based pump maker, agreed to pay $1 billion to resolve those suits, then the largest settlement involving hip implants.

J&J’s DePuy unit recalled 93,000 implants in 2010, including 37,000 in the US, after more than 12% failed within five years. That rate is climbing, along with lawsuits by patients blaming the chromium and cobalt devices for pain, metal debris and replacement surgeries.

$993 million

Mindy Tinsley, a spokeswoman for DePuy, declined to comment on the accord. J&J, based in New Brunswick, New Jersey, has spent about $993 million on medical costs and informing patients and surgeons about the recall, Lorie Gawreluk, another spokeswoman for the company, said earlier this year.

“J&J set aside an undisclosed amount for litigation, which it increased before 30 June," she said.

J&J fell 73 cents to $93.56 in New York Stock Exchange trading.

The company is facing a total of about 12,000 suits over the DePuy hips filed in courts in Ohio, California and New Jersey, including the 7,500 cases to be resolved by the settlement.

“The remaining cases were filed by patients concerned their hips could go bad in the future, the people said. Their claims would be handled in a second round of settlements," they said.

J&J lost an $8.3 million verdict in the first trial over the hip device and won the second. In the first case, a California state court jury in March awarded compensatory damages to a retired Montana prison guard. The panel ruled that the device was defectively designed and DePuy was negligent. It also held, however, that DePuy properly warned of the risks and that the company didn’t owe punitive damages.

DePuy said it would appeal the jury’s decision on design defect.

Defective design

In the second case, an Illinois state court jury in Chicago six weeks later sided with DePuy, rejecting a defective-design claim by an Illinois nurse.

The J&J hips were made from a cobalt-and-chromium alloy used in two related models—the ASR XL Acetabular System, and the ASR Hip Resurfacing System. In announcing its recall, J&J cited unpublished data from the U.K. showing that within five years, 13% of ASR XL hips failed and needed revisions, and 12% of the ASR Hip Resurfacing System failed.

At the first trial, in Los Angeles, lawyers for plaintiff Loren Kransky argued DePuy failed to test the device adequately before selling it in the US, buried surgeon complaints of mounting failures, and studied a redesign of the ASR before scrapping that effort in 2008.

J&J had been set to face seven trials over the next six months hinging on claims the defective hips injured patients, including the first federal trial set for Cleveland in September. “The company settled that case and another set for trial in state court in California in October for undisclosed sums," the people said.

Provide compensation

The $4 billion settlement will provide compensation to hip patients based on factors including age, extent of injuries and whether they had one or more surgeries to replace defective implants, according to the people.

The accord also provides more compensation to hip recipients who suffered extreme injuries from the device’s failure, or endured long hospital stays after removal surgeries.

“J&J also has agreed to set aside funds to reimburse Medicare for claims paid on behalf of hip-implant patients, which could add hundreds of millions of dollars to the value of the settlement," the people said. Bloomberg

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Published: 13 Nov 2013, 10:48 AM IST
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