Aug. 21 (Bloomberg) -- Johnson & Johnson, which faces about 8,000 lawsuits over hip implants it recalled in 2010, agreed to pay about $600,000 to resolve three cases in the first settlements of the litigation, people familiar with the accords said.
Officials of J&J’s DePuy unit agreed earlier this month to settle Nevada residents’ suits over the company’s ASR hip implants, two people familiar with the agreement said. The company will pay about $200,000 a case to resolve the suits before they were scheduled to go to trial later this year, the people said. They spoke on condition of anonymity because they weren’t authorized to speak publicly about the accords.
J&J officials were able to negotiate settlements “at the low end of what the company should have expected” to pay, Eric Gordon, a business professor at the University of Michigan who follows the pharmaceutical industry, said in a telephone interview yesterday. “J&J should have expected to pay in the $200,000-to-$500,000 range per case.”
J&J’s DePuy unit recalled its 93,000 ASR hips worldwide in 2010, including 37,000 in the U.S., saying more than 12 percent of the devices failed within five years. Lawsuits in federal and state courts describe patients in pain and immobilized by joint dislocations, infections and bone fractures.
Patients suing J&J, based in New Brunswick, New Jersey, claim metal debris from the hips, made from a cobalt and chromium alloy, causes tissue death around the joint and may increase metal ions in the bloodstream to harmful levels.
Bill Price, a spokesman for J&J, declined in a phone interview yesterday to comment on the settlements.
J&J faces more than 8,000 cases alleging the ASR hips are defective, according to court filings. U.S. District Judge David Katz in Toledo, Ohio, is overseeing about 6,000 federal suits that have been consolidated for pretrial evidence gathering. The drugmaker also is defending itself in more than 2,000 cases filed in courts in California, Maryland, Nevada and other states.
The first settlements involve cases filed in state court in Las Vegas, the people familiar with the accords said. Claims by Annelise Rundle, Martha Bender and Katherine Guy had been consolidated and set for trial Dec. 3, according to court documents.
Rundle, 74, Bender, 69, and Guy, 60, all had ASR hip replacements done by the same surgeon during the past six years, court filings in Las Vegas show. All three later had the artificial hips removed after experiencing pain and other side effects, according to the filings.
Tests on Rundle showed she had health problems associated with metal filings from her hip, her lawyers said in the filings. In Bender’s case, doctors discovered evidence of bone damage from the device, lawyers said.
“Each of these plaintiffs has incurred a painful and debilitating hip-revision surgery as a result of the failure of their DePuy ASR Hip,” their lawyers said in a December filing.
J&J lawyer’s countered in court filings that the hips didn’t cause Rundle and the other women to develop life-threatening illnesses.
Medical records turned over by Rundle’s doctors, for example, showed she was “generally healthy with no major medical problems,” the company’s lawyers said in a Jan. 17 court filing in Las Vegas challenging the women’s request for an early trial date.
Brian Franciskato, a Kansas City, Missouri-based lawyer for the three women, declined in a telephone interview today to comment on the settlement.
The company said in January that it spent about $800 million on the recall during the past two years. It wouldn’t estimate its product-liability costs.
J&J faces a state-court trial in Prince George’s County, Maryland, in January involving three hip-replacement recipients, according to court filings. Those cases would be the first to go to trial if they aren’t settled.
The first federal trial of claims over the devices is expected in March or April, lawyers involved in the consolidated cases said earlier this year.
The University of Michigan’s Gordon contends it may cost the drugmaker as much as $2 billion to resolve all litigation over DePuy’s ASR hips.
“They’re looking at a giant number before it’s done because there are a giant number of cases,” Gordon said. The biggest benefit to J&J out the Nevada settlements is that the drugmaker has “anchored settlement expectations at the low end of the range,” he said.
J&J’s rose 8 cents to $67.78 in New York Stock Exchange composite trading. The company’s 4.95 percent bonds, due to mature in May 2033, fell $1.23, or 1 percent, to $121 after news of the hip settlements was announced.
The consolidated Nevada cases are Rundle v. DePuy Orthopaedics Inc., A-11-636272, Clark County District Court (Las Vegas).
The 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).
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