J&J Unveils Hip Accord That May Exceed $4 Billion

Photographer: Scott Eells/Bloomberg

The Johnson & Johnson logo is arranged for a photograph in New York. The company recalled 93,000 ASR hip implants worldwide in August 2010, saying 12 percent failed within five years. Internal J&J documents show 37 percent of ASR hips failed after 4.6 years. Close

The Johnson & Johnson logo is arranged for a photograph in New York. The company... Read More

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Photographer: Scott Eells/Bloomberg

The Johnson & Johnson logo is arranged for a photograph in New York. The company recalled 93,000 ASR hip implants worldwide in August 2010, saying 12 percent failed within five years. Internal J&J documents show 37 percent of ASR hips failed after 4.6 years.

Johnson & Johnson (JNJ) agreed to pay at least $2.47 billion to settle thousands of lawsuits over its recalled hip implants, lawyers for the company and patients told a judge in outlining an accord that may be worth more than $4 billion.

The agreement would resolve about 8,000 U.S. suits against J&J’s DePuy unit brought by patients who have already had artificial hips removed, Susan Sharko, one of the company’s lawyers, told U.S. District Judge David Katz yesterday in Toledo, Ohio. The company will pay an average of about $250,000 for each surgery and cover related medical costs, Sharko said.

“The settlement provides compensation for eligible patients without the delay and uncertainty of protracted litigation,” Andrew Ekdahl, worldwide president of DePuy Synthes Joint Reconstruction said in a statement.

The settlement, which doesn’t require the judge’s approval, is the second multibillion-dollar accord this month for J&J, the world’s largest seller of health-care products. The company, based in New Brunswick, New Jersey, agreed Nov. 4 to pay $2.2 billion to resolve criminal and civil probes into the marketing of Risperdal and other medicines.

Litigation Cost

J&J has spent about $993 million on medical costs and informing patients and surgeons about the hip recall, Lorie Gawreluk, a DePuy spokeswoman, has said. J&J set aside an undisclosed amount for litigation, which it increased before June 30, she said.

The company recalled 93,000 ASR hip implants worldwide in August 2010, saying 12 percent failed within five years. Internal J&J documents show 37 percent of ASR hips failed after 4.6 years. Last year, the failure rate in Australia climbed to 44 percent within seven years.

Under the terms of the accord, only plaintiffs who had an ASR hip implanted in the U.S. and had it removed by Aug. 31 are eligible for this settlement, Sharko said. The patients must have had the implant for at least 180 days before having it removed, she said.

The program is structured in two parts, she said. Under one part, patients will receive a base award of $250,000, subject to reductions. Under the other part, the award will go higher for patients who can demonstrate ``extraordinary injuries'' related to their hip implant or removal, Sharko said.

The settlement doesn’t bar patients whose hips fail in the future from seeking compensation, said Steve Skikos, co-leader of a group of plaintiffs’ lawyers overseeing hip cases consolidated before Katz. That may add billions of dollars to the ultimate value of the accord.

New Design

J&J had touted the metal-on-metal implants, first sold in the U.S. in 2005, as a new design that would last 20 years and offer greater range of motion.

As failures mounted, patients complained in lawsuits that the metal-on-metal implant caused dislocations, pain and follow-up surgeries known as revisions. They claimed that debris from the chromium and cobalt device caused tissue death and increased metal ions in the bloodstream.

The company faces a total of about 12,000 suits filed in federal courts and state courts in California, Illinois and New Jersey. The settlement covers the more than 7,500 patients who had surgery to have DePuy hips removed. The remaining claims were filed by patients who haven’t yet had revision surgeries.

The J&J hip settlement dwarfs a 2001 accord Sulzer AG (SUN) reached with patients who claimed that company’s hip and knee implants were defective. Sulzer, based in Winterthur, Switzerland, agreed to pay $1 billion to resolve those suits.

The settlement came as welcome news for Roger Poulter, 55, and his wife, Loretta, 57, of Medford, Wisconsin. Both have sued J&J over multiple hip replacements.

``I'm relieved that they settled the case,'' said Roger Poulter. ``It's been quite a long time.''

Poulter, a high school agriculture teacher, said he and his wife cut their own firewood to heat their home on property where snow piles high in the winter. They both worry about hip dislocations when working on their land, he said.

The consolidated federal case is In re DePuy Orthopedics Inc., ASR Hip Implant Products Liability Litigation, 10-MD-2197, U.S. District Court, Northern District of Ohio (Toledo).

To contact the reporters on this story: Jef Feeley in federal court in Toledo, Ohio, at jfeeley@bloomberg.net; David Voreacos in federal court in Newark, New Jersey, at dvoreacos@bloomberg.net

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net

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