By BARRY MEIER The New York Times
Published: November 19, 2013
Johnson & Johnson and lawyers for patients injured by a flawed hip implant announced a multibillion-dollar deal Tuesday to settle thousands of lawsuits, but it was not clear whether the deal would satisfy enough claimants.
Under the agreement, the medical products giant will pay some $2.475 billion in compensation to an estimated 8,000 patients who have been forced to have the all-metal artificial hip removed and replaced with another device.
Separately, the company has agreed to pay all medical costs related to such procedures, expenses that could raise the deal’s cost to Johnson & Johnson to some $3 billion, said people familiar with the proposal.
The typical patient payment for pain and suffering caused by the device will be about $250,000 before legal fees, under the plan. Based on standard agreements, plaintiffs’ lawyers would receive about one-third of the overall payout, or more than $800 million, with those who negotiated the plan emerging as big winners.
The settlement plan, which was submitted to a federal judge in Toledo, Ohio, on Tuesday, must receive the support of 94 percent of eligible claimants to go forward. Whether it will reach that goal is unclear. Under the deal, some patients will receive relatively small payouts and others will see payments reduced because the plan imposes a user’s fee on awards based on how long a patient had the implant.
Some patients, many of whom who suffered severe pain and injury from metallic debris generated by the debris, spent years trying to convince doctors there was a problem while Johnson & Johnson was denying one.
The now-recalled device, known as the Articular Surface Replacement, or A.S.R., ranks as one of the most-flawed medical implants sold in recent decades. The DePuy Orthopaedics division of Johnson & Johnson estimated in an internal document in 2011 that the device would fail within five years in 40 percent of the patients who received it.
Traditional artificial hips, which are made of metal and plastic, typically last 15 years or more before requiring replacement. DePuy recalled its device in mid-2010 amid rising failure rates.
The A.S.R. was sold in two versions, one for use in traditional hip replacement and the other for use in an alternative procedure known as hip resurfacing. Beginning in 2003, it was implanted in about 93,000 patients, about one-third of them in the United States.
The A.S.R., which had a metal ball and a metal cup, sheds metallic debris as it wears, generating particles that have damaged tissue in some patients or caused crippling injuries.
The precise value of the settlement is not known because it will vary based on the number of plaintiffs who qualify for it.
DePuy faces some 12,000 A.S. R-related legal claims in the United States. Lawyers estimate that about 8,000 of those claims involve patients who underwent operations to have an A.S.R. removed and replaced.
The remaining plaintiffs, about 4,000 patients, will not receive any compensation, though there is a provision to add $250,000 to the deal for each patient who undergoes a replacement procedure before the plan is finalized. The lawyers believe that Johnson & Johnson will probably have to make a subsequent settlement with added patients as the device fails in them.
Thus far, only two A.S.R. lawsuits have gone to trial. In March, a Los Angeles jury ordered DePuy to pay $8 million in damages to a Montana man after finding that the A.S.R. was defectively designed. Then in August, a Chicago jury sided with DePuy and rejected claims that it had inappropriately marketed the implant.
Under the plan announced Tuesday, the $2.475 billion payment by Johnson & Johnson would be divided into two pots.
The deal would create a $2 billion pool to cover basic awards and a separate $475 million pool to cover additional payments to compensate those patients who sustained more significant injuries related to the device or its removal and replacement.
The average basic award of $250,000 will be affected by a variety of factors. Under the plan, plaintiffs who smoke, are overweight or are older will see their payments reduced.
In addition, patients who had the device longer will also see reductions. For example, the average payment to a patient who had the device for five to six years would fall to $225,000 and be reduced to $200,000 for a patient who had the device six to seven years.
For patients who qualify for the special pool, their payouts would increase based on the severity of their injuries. Lawyers do not know what the number of patients would be to qualify for the pool but they estimate that the figure might be about 10 percent of claimants.
Some of the patients included in the pool would be individuals who had A.S.R.'s on both hips or who had a hip so badly damaged by the device that a procedure to replace it was not completely successful.
Johnson & Johnson’s decision to separately pay all medical costs related to a device replacement is unusual, lawyers said. Typically, such costs are part of a settlement award and a claimant is then liable for paying back an insurer or Medicare for their medical costs.
If the deal is approved, the biggest single payment will probably go to a group of lawyers who negotiated the plan. Under the plan they could receive a 6 percent fee, or about $150 million.
DePuy Announces U.S. Settlement Agreement to Compensate ASR™ Hip System Patients Who Had Surgery to Replace Their ASR Hip
WARSAW, IN, November 19, 2013 – DePuy Orthopaedics, Inc. (DePuy) and the Court-appointed committee of lawyers representing ASR™ Hip System plaintiffs today announced a settlement agreement to compensate eligible ASR patients in the United States who had surgery to replace their ASR hip, known as revision surgery, as of August 31, 2013.
“We are committed to the well-being of ASR patients, as demonstrated by the voluntary recall and the program providing support for recall-related care,” said Andrew Ekdahl, Worldwide President, DePuy Synthes Joint Reconstruction. “The U.S. settlement program provides compensation for eligible patients without the delay and uncertainty of protracted litigation. DePuy remains committed to our purpose of advancing innovative treatment options to serve those who need joint replacement surgery.”
The U.S. settlement is valued at approximately $2.5 billion, based on an estimate of 8,000 patients participating in the program. The amount of the settlement program has been included as part of previously accrued amounts, and no additional charge to the company’s earnings is being recorded in connection with this settlement. Any remaining related established product liability reserve is based on currently available information and changes to the reserve may be required in the future as additional information becomes available. The majority of the payments related to this settlement are projected to occur during 2014 from currently available cash.
U.S. Settlement Program
For U.S. ASR Patients Who Had Surgery to Remove Their ASR Hip As of August 31, 2013
The U.S. settlement program is available for U.S. ASR patients who had revision surgery for reasons related to the recall as of August 31, 2013. Patients eligible for this program can speak with their lawyer, if they have one, or contact the U.S. settlement program claims processor at www.USASRHipSettlement.com or (877) 391-3169. ASR patients do not need a lawyer to participate in the program.
For U.S. ASR Patients Who Have Surgery to Remove Their ASR Hip After August 31, 2013
For U.S. patients who have revision surgery after August 31, 2013, the existing Broadspire program providing support for recall-related care is available. U.S. patients are encouraged to call 1-888-627-2677 for more information.
For more information about the U.S. settlement program, please visit www.ASRHipInfo.com.
Status of Litigation
Judge David Katz of the U.S. District Court of the Northern District of Ohio is presiding over the federal multidistrict litigation. The consolidated state litigations are presided over by: Judge Brian Martinotti of the Superior Court of New Jersey, Bergen County; Judge Deborah Mary Dooling of the Circuit Court of Cook County, Illinois; and Judge Richard Kramer of the San Francisco County Superior Court, California. The settlement agreement was presented to these judges and Maryland State Court Judge, the Honorable Crystal Dixon Mittelstaedt, at a court hearing today.
The settlement agreement will help bring to a close significant ASR litigation activity in the U.S. However, some lawsuits in the U.S. will remain. DePuy will continue to defend against remaining claims and believes its actions related to the ASR Hip System have been appropriate and responsible.
In August 2010, DePuy issued a voluntary recall of the ASR Hip System after receiving new information from the UK National Joint Registry as part of the company’s ongoing surveillance of post-market data concerning the ASR Hip System, which showed a revision rate that was not in line with data previously reported in that registry. The product continues to perform well in some patients. Since the recall decision was made, DePuy has worked to provide patients and surgeons with the information and support they need, including the global program providing support for recall-related care, which has thus far resulted in thousands of payments to patients.
DePuy Orthopaedics, Inc. is part of DePuy Synthes Companies of Johnson & Johnson.
(This release contains “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995. The reader is cautioned not to rely on these forward-looking statements. These statements are based on current expectations of future events. If underlying assumptions prove inaccurate or unknown risks or uncertainties materialize, actual results could vary materially from the expectations and projections of DePuy Orthopaedics, Inc. and Johnson & Johnson. Risks and uncertainties include, but are not limited to, general industry conditions and competition; economic factors, such as interest rate and currency exchange rate fluctuations; technological advances, new products and patents attained by competitors; challenges inherent in new product development, including obtaining regulatory approvals; challenges to patents; significant adverse litigation or government action; impact of business combinations; financial distress and bankruptcies experienced by significant customers and suppliers; changes to governmental laws and regulations and domestic and foreign health care reforms; trends toward health care cost containment; increased scrutiny of the health care industry by government agencies; changes in behavior and spending patterns of purchasers of health care products and services; financial instability of international economies and sovereign risk; disruptions due to natural disasters; manufacturing difficulties or delays; complex global supply chains with increasing regulatory requirements; and product efficacy or safety concerns resulting in product recalls or regulatory action. A further list and description of these risks, uncertainties and other factors can be found in Exhibit 99 of Johnson & Johnson’s Annual Report on Form 10-K for the fiscal year ended December 30, 2012. Copies of this Form 10-K, as well as subsequent filings, are available online at www.sec.gov, www.investor.jnj.com or on request from Johnson & Johnson. Neither DePuy Orthopaedics, Inc. nor Johnson & Johnson undertakes to update any forward-looking statements as a result of new information or future events or developments.)
Visit www.ASRHipInfo.com for more information.
Press Contacts: Lorie Gawreluk 732-524-1413 email@example.com
Mindy Tinsley 574-372-7136 firstname.lastname@example.org
Investor Contacts: Louise Mehrotra 732-524-6491 LMehrot@its.jnj.com
DePuy Announces U.S. Settlement Agreement to Compensate ASR™ Hip System Patients Who Had Surgery to Replace Their ASR Hip
November 19, 2013 DePuy Orthopaedics, Inc. (DePuy) and the Court-appointed committee of lawyers representing ASR™ Hip System plaintiffs today announced a settlement agreement to compensate eligible ASR patients in the United States who had surgery to replace their ASR hip, known as revision surgery, as of August 31, 2013.
Contact Information - U.S. Settlement Program Claims Processor www.USASRHipSettlement.com (877) 391-3169 email@example.com
J&J to pay $2.5B to settle hip-replacement lawsuits
By Jaimy Lee Modern Healthcare
Posted: November 19, 2013 - 5:30 pm ET
Johnson & Johnson will pay about $2.5 billion to settle thousands of lawsuits filed by patients who already underwent surgery to replace the company's faulty metal-on-metal hip implants, which failed at higher rates than traditional hip implants and were eventually recalled.
About 8,000 patients who had revision surgery before Aug. 31 are part of the settlement, the New Brunswick, N.J.-based healthcare company said. More patients who received Johnson & Johnson's metal-on-metal hip implants are expected to undergo revision surgeries in the future.
"The U.S. settlement program provides compensation for eligible patients without the delay and uncertainty of protracted litigation,” said Andrew Ekdahl, worldwide president of the DePuy Synthes Joint Reconstruction business unit, which is part of Johnson & Johnson.
The settlement was announced Tuesday after the agreement was presented to the judge overseeing the federal multidistrict litigation consolidated in U.S. District Court in Toledo, Ohio.
The settlement comes just weeks after Johnson & Johnson agreed to pay $2.2 billion to settle allegations that it illegally marketed the antipsychotic drug Risperdal and two other medications.
Johnson & Johnson, which noted that there are still some ongoing lawsuits in the U.S., said that no additional charge to the company's earnings will be recorded as a result of the settlement.
The standard payment for patients who claim a share of the settlement is $250,000. The award may be reduced based on age, smoking status, and the length the device was implanted. Patients may get more than $250,000 if they needed multiple revisions or experienced complications such as a heart attack or pulmonary embolism associated with the revision. They must register their claims by Jan. 6.
About 93,000 people, including roughly 12,000 in the U.S., received the ASR XL Acetabular hip implant or the ASR hip resurfacing system, according to Johnson & Johnson's most recent financial filing. DePuy Orthopaedics, a Warsaw, Ind.-based subsidiary of Johnson & Johnson, recalled the metal-on-metal systems in August 2010. It is also facing lawsuits from patients in the United Kingdom, Canada and Australia.
Metal-on-metal hip implants have failed at higher rates than traditional implants with plastic bearings, prompting the Food and Drug Administration this year to propose regulations that would require manufacturers of market metal-on-metal hip implants test to provide more information about the safety and effectiveness of these devices.
Patients who received the metal-on-metal implants have reported a number of injuries, including adverse local tissue reactions and high ion concentrations of cobalt and chromium. The revision surgeries typically cost about $100,000.
Dr. Geoffrey Westrich, director of research for the adult reconstruction and joint replacement division at the Hospital for Special Surgery in New York, said patients having problems with the implants generally experience three types of responses. Some clearly need revision surgery. Others are not symptomatic or suffering any pain, but MRIs indicate that they have adverse tissue reactions and elevated metal ion levels. Those patients may also need revision surgery, Westrich said. A third group of patients may have slightly elevated ion levels and need to be monitored.
“There is no definitive answer what to do,” Westrich said. “Without regular follow-ups, we're not going to know who needs a revision.”
About 400,000 people received hip implants in 2011, including the roughly 50,000 people who have revision surgeries each year, said Dr. Josh Jacobs, president of American Academy of Orthopaedic Surgeons. While the revision procedures are fairly common, they are often not as successful as primary implants, he said.
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