Joint replacements are the #1 expenditure of Medicare. The process of approving these medical devices is flawed according to the Institute of Medicine. It is time for patients' voices to be heard as stakeholders and for public support for increased medical device industry accountability and heightened protections for patients. Post-market registry. Product warranty. Patient/consumer stakeholder equity. Rescind industry pre-emptions/entitlements. All clinical trials must report all data.
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Twitter: @JjrkCh

Thursday, December 1, 2016

Convicted Corporate Criminal Johnson & Johnson (Acclarent) kicks employees under jail-time bus.

By Editor Filed in News November 30th, 2016 @ 10:21 am  Corporate Crime Reporter
In July, the former CEO and the former VP of sales of Johnson & Johnson unit Acclarent, Inc., a medical device company, were convicted by a federal jury in Boston in connection with distributing adulterated and misbranded medical devices.

Melayna Lokosky
In the same month, the company paid $18 million to resolve allegations that the company caused health care providers to submit false claims to Medicare and other federal healthcare programs by marketing its sinus spacer product for use as a drug delivery device without U.S. Food and Drug Administration (FDA) approval of that use.
Behind both cases – Melayna Lokosky – a former sales rep for the company.
She blew the whistle on the wrongdoing that led to the $18 million recovery and the criminal prosecutions.
Now she is on a campaign against what she calls the sociopathic business model.
Lokosky was a sales rep for Acclarent and was making $250,000 a year.
In 2011, she decided she would blow the whistle on the company’s fraud.
She laid out the case for the government.
Acclarent sold a variety of medical devices used in sinus surgeries, including a device known as the Relieva Stratus MicroFlow Spacer.
In 2006, Acclarent received FDA clearance to market the Stratus as a spacer to be used only with saline to maintain sinus openings following surgery.
The government alleged that Acclarent intended for the Stratus to be used instead as a drug-delivery device for prescription corticosteroids, including Kenalog-40, and that the device was specifically designed and engineered for this use.
Acclarent marketed the Stratus as a drug delivery device even after the FDA rejected the
company’s 2007 request to expand the approved uses for the Stratus.
Acclarent employees trained physicians using a video that demonstrated the Stratus being used with prescription corticosteroid Kenalog-40 and also used a white, milky substance resembling Kenalog-40 when demonstrating the Stratus.
In 2010, Acclarent added a warning to its label regarding use of active drug substances in the Stratus. The government alleged that Acclarent nonetheless continued to market the Stratus for drug delivery.
By May 2013, Acclarent discontinued all sales of the Stratus and the company agreed to withdraw all FDA marketing clearances for the device, which is no longer commercially available in the United States.
On July 20th, Acclarent’s former Chief Executive Officer, William Facteau, 47, of Atherton, California and former Vice President of Sales, Patrick Fabian, 49, of Lake Elmo, Minnesota were convicted following a six-week jury trial of 10 misdemeanor counts of introducing adulterated and misbranded medical devices into interstate commerce.
As a result of Lokosky’s whistleblowing, the government recovered $18 million. Lokosky’s share — $3.5 million.
“That number is not in my bank account, I can assure you,” Lokosky told Corporate Crime Reporter in an interview last week.
Because of taxes and your lawyer’s fee?
“Correct,” Lokosky said. “Reporters always want to know — what does the whistleblower get? It makes us look like we were greedy. I was making $250,000 a year. I would have made more money if I kept my mouth shut. That’s not why I did this.”
Taxes are 40 percent. The lawyer gets 40 percent. You are down to a couple of years’ salary.
“Less,” she says.”That’s not a complaint. That’s a reality. People should know that if you are going to go forward. The Department of Justice needs to fix it also. You are not talking about pharmaceuticals where you are talking about a billion dollars in damages. It’s not there. The Department of Justice says you are awarded that. That’s bullshit. I earned every penny of that. I was without a job for over three years.”
Facteau and Fabian were convicted at trial.
What was their sentence?
“They haven’t been sentenced yet. That comes January 11, 2017 in Boston.”
Did you know them?
“Yes. I worked with them.”
Did you testify against them?
“I could not because I was the whistleblower. I was in the courtroom every day with the exception of two days for six weeks.”
You were staring them down?
“It was mainly to see that what was being said was accurate. I don’t have an axe to grind with them. They are puppets. They got pinched. They didn’t have enough information to flip on higher ups. That is what happened.”
Was there a criminal case brought against a company?
“No. That’s the other thing wrong with the process. Once you file a whistleblower complaint, it goes behind closed doors. All of those I worked with at the Department of Justice and the FBI worked their asses off to get this done. And then it goes to DC and a settlement is decided on behind closed doors with Covington & Burling — Johnson & Johnson’s attorney — and the Department of Justice. And of course, the lawyers walk from the Department of Justice to Covington for a job afterwards.”
Who was the attorney for Johnson & Johnson?
“Ethan Posner. How many corporate integrity agreements does the company get to sign before the government realizes that the company has no integrity?”
What is your current work?
“I’m starting a consulting company. I’m consulting with companies about how to become more profitable and do it ethically.”
You have created something called the sociopathic business model. What is it?
“It’s a tool or checklist to help people to determine whether or not they are being abused by an institution. Once you see this pattern, you cannot unsee it.”
“Companies are encouraging, replicating and rewarding unethical and illegal behavior and removing those who expose that. The checklist helps people see if you are getting inconsistent and contradictory language to action. Regulatory is telling you one thing. Sales and marketing is telling you another. That’s a trigger for a sociopathic business model.”
“If a company is covering up sexism, retaliation, racism — in 99 percent of the cases it means they are engaged in far greater unethical and illegal activity.”
“This is laid out on my web site — I’m the first whistleblower under seal to start a blog in their own name about their own case without breaking the seal. According to the Department of Justice, I broke the spirit of the seal, but I did not break the seal. They were not happy about my blog. I got called back to the principal’s office in Boston and was told that I needed to take it down. I told them no — I have a First Amendment right. I will not take this down.”
“If the criminals can use the First Amendment, why don’t the people defending this law get to use it?”

[For the complete q/a transcript of the Interview with Melayna Lokosky, see 30 Corporate Crime Reporter 46(12), November 28, 2016, print edition only.]

Sunday, November 27, 2016

UN-Informed Consent & Sales Reps in the Operating Room

By Sandra G. Boodman November 15, 2016

Illustration by Jeannie Phan for The Washington Post

They are a little-known presence in many operating rooms, offering technical expertise to surgeons installing new knees, implanting cardiac defibrillators or performing delicate spine surgery.
Often called device reps — or by the more cumbersome and less transparent moniker “health-care industry representatives” — these salespeople are employed by the companies that make medical devices: Stryker, Johnson & Johnson and Medtronic, to name a few. Their presence in the OR, particularly common in orthopedics and neurosurgery, is part of the equipment packages that hospitals typically buy.
Many “people who don’t work in health care don’t realize that industry reps are sometimes in the OR,” said Josephine Wergin, a risk management analyst for the ECRI Institute, a Pennsylvania nonprofit that conducts research on medical subjects for the health care industry. “A lot of times they are the real experts on their products.”
Unlike rotating teams of nurses and surgical techs, reps are a consistent presence, experts say, often functioning as uber-assistants to surgeons with whom they cultivate close relationships and upon whom their six-figure salaries depend.
Although they don’t scrub in, reps are expected to be intimately familiar with the equipment they sell, making sure it is at the ready for the surgeon and poised to answer technical questions.
Who’s The Expert?
But how much influence do reps wield, how necessary and costly are their services and does their presence in the OR, which may not be disclosed to patients, raise ethical questions about informed consent? A string of court cases has raised questions about their involvement in surgeries that went awry, dating back to the late 1970s when a New York sales manager who had not graduated from high school tried for three hours to fix a prosthetic hip while a surgeon allegedly left the OR.

Despite their role, device reps have received little scrutiny, in sharp contrast to drug salespeople, whose role has been the subject of considerable research.
“There’s so little public awareness of this,” said Adriane Fugh-Berman, an associate professor of pharmacology at the Georgetown University School of Medicine and director of PharmedOut, a project that focuses on prescribing and drug-marketing practices. Fugh-Berman is the coauthor of a recent study that raises questions about whether surgeons rely too heavily on reps for technical expertise and assistance, to the potential detriment of patients.
But the cost of medical devices, an industry with about $150 billion in annual U.S. sales, combined with concerns about conflicts of interest by doctors who must report industry payments as part of the Affordable Care Act, has resulted in increased scrutiny, as hospitals from Savannah to Stanford seek to standardize and circumscribe the activities of device salespeople.
Several high-profile lawsuits have played a role, among them a 2006 Ohio case in which a surgeon and a rep were ordered to pay a patient $1.75 million after botched brain surgery. The salesperson had wrongly assured the surgeon that a bone cement was suitable for sealing a hole in the patient’s skull. In 2003, Endovascular Technologies pleaded guilty to 10 felonies in federal court and paid more than $92 million in criminal and civil penalties for covering up problems including 12 deaths associated with an abdominal device. Doctors had been removing the device using a technique devised by reps that had never been approved by the Food and Drug Administration.
Some hospitals, most notably Loma Linda University Medical Center in California, have largely eliminated reps in orthopedics, buying implants directly from the manufacturer at a substantial discount and training surgical technicians to take their place in the OR. Loma Linda’s chief of orthopedics said the hospital has saved about $1 million annually, a savings of about 50 percent on the cost of the devices, without affecting outcomes.
“I think there is a role” for reps, said Lisa McGiffert, director of the Consumer Reports Safe Patient Project. But, she added, when it comes to choosing the best device — such as a prosthetic knee — “can the patient trust that they’re getting the expertise of the doctor or the influence of the rep?”
The presence of device reps in the OR, she added, also raises questions about the adequacy of consent, if patients are not explicitly informed of their presence.
Learning On The Fly
ECRI recently repeated its recommendation that hospitals obtain explicit written consent from patients if reps are to be present and warned surgeons against learning “how to use … devices on the fly.”
How often that happens is unclear, because what happens in the OR tends to stay in the OR. A small 2014 study suggests that reps’ over-involvement is not uncommon.
A survey conducted by researchers at New York’s Albany Medical College found that 88 percent of 43 device reps said they had provided verbal instructions to a doctor during surgery, while 37 percent had participated in a surgery in which they felt their involvement was excessive, often because the surgeon lacked sufficient expertise. Twenty-one percent said they had direct physical contact with hospital staff or a patient during an operation, which could violate hospital policy as well as state law.
Terry Chang, associate general counsel of AdvaMed, a device industry trade association, points to its code of ethics as well as newly revised guidelines issued by the American College of Surgeons, which state that reps are to refrain from medical decision-making and participating in surgery.
But Chang says that reps, who have witnessed dozens if not hundreds of the same procedures, provide an essential benefit for doctors and patients. They “are only present at the behest of the physician and only as a trainer,” and they provide “a live interactive resource.”
Their value, Chang said, lies in their expertise, which can make surgery faster and more efficient. “For a lot of institutions, it’s a bandwidth issue,” he said, echoing a finding in Fugh-Berman’s study that some surgeons prefer working with reps because they are more knowledgeable than hospital staff.
Gerald Williams, a Philadelphia joint replacement specialist who is president of the 18,000-member American Academy of Orthopaedic Surgeons, agrees. “Even if a surgeon is extremely familiar” with a device, “there are different teams scrubbing in” who typically have less familiarity with the procedure and the surgeon’s process than a rep with whom a surgeon regularly works.
“Their presence is dictated by the complexity of the surgery,” he said. “They are probably there close to 100 percent in complicated cases such as spine surgery and joint implants.”
Williams said he doesn’t tell his patients that a rep will be in the room, adding, “I don’t tell them there’s a circulating nurse, either. My patients look at me as being the captain of the ship. I think if I told them about a rep, they would all be supportive of it.”
While salespeople have been in operating rooms for decades, their participation mushroomed beginning in the late 1990s with the proliferation of total joint replacement operations, said Linda Groah, the longtime executive director of AORN, the Association of periOperative Registered Nurses.
These days, “there’s much more control of the reps,” she said. “They just don’t come through willy-nilly.'”
But Jeffrey Bedard’s 2014 study about their role in the OR makes it clear that in some cases, there may be a chasm between guidelines and actual practice.
Bedard, who conducted his research as a graduate student in medical ethics, said it was prompted by his experience as an orthopedic device rep in the late 1990s. He subsequently became a drug salesman and now works in the pharmaceutical industry.
Bedard vividly remembers participating in one case involving a patient in her mid-40s. The surgeon, with whom he had not previously worked, refused all preoperative training, including watching a video, on a new $10,000 hip replacement system. “He said, ‘You’re going to be there, right?'” Bedard remembers being asked.
“To say that the case was a train wreck would be an understatement,” Bedard recalls. The surgeon repeatedly cursed at him and at the circulating nurse, who continually monitors the patient and is responsible for ensuring that the proper equipment is available, as he struggled to perform the procedure. “I had to hold up the illustrated surgical technique and talk him through the case step by step,” Bedard remembered. “I was absolutely beside myself.”
Bedard recalled that when he called his supervisor to report what had happened, “my boss said: ‘You just made $1,000 for three hours’ worth of work. What are you complaining about?'”
Judging by the responses to his anonymous survey, which found that 37 percent of reps said they believed they had been excessively involved in an operation and 40 percent had attended a surgery in which they questioned the surgeon’s competence, Bedard said little appears to have changed. “As a rep,” he said, “you’re paid to sell, to grow your business.”
Two years ago, Gary Botimer, a joint replacement specialist who is chief of orthopedics at Loma Linda, undertook a radical experiment: He got rid of reps in joint replacement cases. Botimer negotiated a steep discount on the price of artificial joints bought in bulk from a well-known American manufacturer and sent hospital surgical techs to the technical training given to device salespeople.
“It took me two years to convince the administration” to do this, recalled Botimer, who said that one surgeon, who had significant financial ties to a manufacturer, quit. “I took a lot of bullets.”
“What we basically did is to take the skill set of the reps and replace it with our own employees, who don’t have a conflict of interest,” Botimer said. “It’s very easy to train your own people. We have found that the techs are better than the reps.”
The ‘Rep-Less Model’
To lay the groundwork, Botimer said he and other surgeons reviewed the literature to select the best implants as the hospital’s standard. After the program was launched in 2014, Botimer said, he and his staff tracked the outcomes of all 500 joint replacement cases for one year to see if the “rep-less model” was equivalent. No difference in outcomes was detected, he said, but the hospital saved $1 million each year. (While standard implants are used in about 90 percent of cases, Loma Linda surgeons are free to use other devices if they believe doing so is in the patient’s best interest.)
The program has been so successful that it is being extended to other orthopedic surgeries, such as trauma and spine operations, he said. Botimer added that he is fielding inquiries from other hospital systems contemplating a similar move.

“This is a big change in the culture, and no one makes that change easily,” he said. “You have operating [room] personnel who’ve only known one way of doing things, doctors who are afraid to try it and administrators worried that docs would turn on them. We’ve spent a couple of years proving to everybody that their worst fears didn’t happen.”

Tuesday, November 22, 2016

Bayer Essure: Failure to Inform Patients of Harm or to Follow Patient Outcomes

Bayer’s Essure Contraceptive Implant, Now With a Warning

By RONI CARYN RABIN            NOVEMBER 21, 201

Kim Myers used to compete in rodeo-style barrel horse races, but after being sterilized with an implantable device called Essure, the pain was so intense that she had to stop.
The device’s small metal and polyester coils had pierced her fallopian tubes, her doctor found, so the two implants were removed. But the sharp, laborlike pains didn’t really subside until three years later, when Ms. Myers had a hysterectomy.
Then her surgeon discovered the cause: A piece of metal coil was still embedded in her uterus.

Kim Myers, 53, in the stable at her home in Wesson, Miss. Even after her two Essure implants were surgically removed, her sharp pains didn’t subside until she had a hysterectomy.
“Doctors kept saying there was nothing wrong with me,” said Ms. Myers, 53, of Wesson, Miss. “I knew, with every fiber of my being, there was still something there.”
Ms. Myers was among a parade of women who testified before the Food and Drug Administration 14 months ago, saying they’d been injured by Essure and urging officials to pull the device from the market.
Essure comprises two small coils, made of a nickel alloy and a polyesterlike fiber, placed in the fallopian tubes through the vagina. The coils are designed to provoke an inflammatory response that causes scar tissue to form and block the tubes, a process that can take three months.
F.D.A. officials declined to withdraw the device, saying that Essure was safe and effective for many women although some experienced “very serious and sometimes debilitating problems.” But last week the agency ordered that a so-called black box warning be placed on the device’s packaging saying it could cause the kinds of injuries Ms. Myers sustained.
The implant may puncture the fallopian tubes and uterus, and travel into the abdomen and pelvic cavity, the warning notes, causing persistent pain and requiring surgical removal.

Officials at Bayer, which makes and sells Essure, say poor surgical skills are to blame for complications like Ms. Myers’s and insist there is no proof the device causes other reported side effects like chronic pain and autoimmune disorders.
“These are so common to women,” said Dr. Edio Zampaglione, Bayer’s vice president for United States medical affairs.

The F.D.A. also took the unorthodox step of guiding Bayer in the development of a new checklist of risks for doctors to review with patients before implanting the device. The three-page checklist is broken into five sections, each followed by a spot for the patient’s initials, and is to be signed by both doctor and patient.
The checklist is not mandatory, and critics say it does not mention many common side effects linked to Essure, like heavy, painful menstrual bleeding.
Some doctors complain that the checklist is intrusive and burdensome, may dissuade physicians from using the implants, and is based on anecdotes rather than scientific clinical trial data. Some providers, including Planned Parenthood, have said they will inform patients of the risks and benefits, but not ask them to sign the document.
“There’s no question there are complications, but there are risks and benefits to everything we do in medicine, and we don’t have good data to establish the magnitude of the problem,” said Dr. Christopher M. Zahn, the vice president of practice for the American College of Obstetricians and Gynecologists.
“Decisions like these should be made based on data that’s appropriately vetted, not a series of anecdotal reports,” Dr. Zahn said, referring to the black box warning and the checklist.
Dr. Zampaglione of Bayer noted that some studies had shown that other methods of permanent sterilization, not just Essure, have caused serious long-term adverse events as well.
The F.D.A. approved the implant in 2002 after a fast-track review process that prioritized the device because it was the first sterilization procedure for women that could be done in a doctor’s office, without an incision and without general anesthesia. It offered an option to tubal ligation, commonly known as having one’s “tubes tied.”
Pain and other serious side effects emerged in the clinical trials of Essure. The device could not always be implanted, and failed to block the tubes in a significant percentage of patients. According to the new checklist, nearly one in 10 women who try Essure cannot rely on it to prevent pregnancy.
The F.D.A. approved Essure after trials lasting a year or two, even though the implant was meant to last for life. By the end of last year, the agency had received nearly 10,000 reports of injuries and pregnancies related to the device, as well as reports of a very small number of fatalities.
Many doctors who insert the implant do not know how to remove it.
By contrast, drug trials are required to have a comparison group of participants who are given a placebo.
Earlier this year, Bayer agreed to begin tracking 1,400 women who have the device implanted over the next five or six years. The study is supposed to report final results in 2023, but is already behind schedule.
This study has a comparison group of sorts: It will also follow 1,400 women who choose a more traditional form of sterilization using laparoscopic surgery.
The women will be followed for three years after the sterilization procedures to see how many in each group develop complications like chronic pelvic pain, heavy bleeding and autoimmune disorders, as well as how often each intervention fails, leading to pregnancy.

Researchers will also track how many women with Essure develop such severe complications that they have to undergo surgery to remove the implants.

Friday, November 4, 2016

Harmed Patients Given Unjust Solomon's Choice: Trust the Settlement is Best Option or Jury Trial

Additional information:

Plaintiffs’ Leadership Counsel Announce a Settlement Program for Wright Medical Metal-on-Metal Hip Implants

Anthonia Spencer | November 2, 2016

After a hard-fought, almost 5-year battle in federal court in Atlanta, Georgia and in California state court, we are pleased to announce a settlement program that will resolve a significant number of claims against Wright Medical.  Wright Medical has agreed to settle approximately 1,300 claims of certain Wright Medical metal-on-metal hip implant patient-claimants whose hips were revised at least 150 days and no more than eight years post-implant.  There are approximately 2,300 pending claims involving Wright Medical’s Conserve, Lineage, and Dynasty metal-on-metal hips.  Plaintiffs’ Leadership Counsel’s retained financial analysts have been evaluating Wright Medical’s ability to settle these cases for years. Based on that analysis, we believe that Wright Medical was not in a position to and therefore could not agree to settle the remaining claims involving revisions occurring after eight years or other cases that it deemed not qualified at this time.  During the negotiations with Wright Medical, it was made clear that claims for revised Wright metal-on-metal hips that are not included in this settlement will be part of subsequent settlement programs.
The Wright Conserve Multi-District Litigation (MDL) was consolidated in February 2012 in federal court in the Northern District of Georgia before the Hon. William S. Duffey, Jr., United States District Judge.  Additionally, a Judicial Council Coordination Proceeding (JCCP) petition was approved in May 2012 before the Hon. Jane Johnson, Los Angeles Superior Court Judge, consolidating California state-court cases involving Wright Medical hip replacement and revision matters, including Wright Medical’s Conserve, Lineage, and Dynasty hip implants.  The Hon. Diane M. Welsh (Ret.), led the extended settlement negotiations and tirelessly worked with the parties for several years to help facilitate the settlement.
Wright Medical’s hip and knee division (OrthoRecon) was sold in January 2014, and the successor corporation has a defense that it did not inherit the liability.  Our financial analysts’ review further indicated that Wright Medical’s ability to fund this settlement depended largely on insurance coverage and a bond issue used, in part, to raise money for this settlement.  Wright Medical has been engaged in litigation in Memphis with most of its insurance carriers and recently finalized an agreement with 3 of the carriers.  It remains in litigation or coverage disputes with its remaining carriers.  In light of our analysis of Wright Medical’s financial condition, this is a timely and meaningful settlement, offering $170,000 to claimants who had the monoblock Conserve Cup, the device with the most frequent failures, and $120,000 to those who had the metal-liner Dynasty and Lineage devices.  An additional, but capped, limited fund is also available for claimants who suffered discrete and defined claims of extraordinary injury.  More importantly, the settlement program calls for pre-qualification, without registration, coupled with a very simple administrative process for claimants not pursing extraordinary injury claims that will lead to expeditious payments expected to be largely complete by summer 2017.  Counsel for eligible claimants will be notified of their pre-qualification by February 3, 2017.

Plaintiffs’ Leadership Counsel consists of Michael L. McGlamry of Pope McGlamry, P.C. in Atlanta, Georgia, / 404-523-7706; Raymond P. Boucher of Boucher LLP in Woodland Hills, California, / 818-340-5400; Helen Zukin of Kiesel Law in Beverly Hills, California; Peter Burg of Burg Simpson in Englewood, Colorado; Christopher Yuhl of Yuhl Carr, LLP in Marina del Rey, California; Sean Jez of Fleming Nolen & Jez, L.L.P. in Houston, Texas; and Ellen Relkin of Weitz & Luxenberg, P.C. in New York, New York.


Wright Medical Group to settle over metal-on-metal hip implants for up to $240M: 5 things to know  

Written by  Eric Oliver Date created | Thursday, 03 November 2016 20:07

Amsterdam, Netherlands-based Wright Medical Group entered into a Master Settlement Agreement over litigation on its Hip Implant products.

Here's what you need to know.

1. Wright and the lawyers representing the plaintiffs agreed to settle 1,292 revision claims concerning its Conserve, Dynasty or Lineage hip implants

2. Wright will settle for up to $240 million with $180 million in cash and $60 million for insurance recoveries.

3. The settlement requires a 95 percent opt-in clause. Wright Medical will void the settlement if more than 5 percent of the plaintiffs opt out of it.

4. CEO Robert Palmisano said he was pleased to reach the settlement, and the company will now focus on "accelerating growth opportunities in its extremities and biologics markets."

5. Wright will "vigorously defend" any claims that were not settled. The company estimates there are 600 cases that will not be included in the settlement.


Wright Medical Group N.V. Announces Entry Into Metal-On-Metal Hip Litigation Settlement AgreementPreviously Disclosed Agreement In Principle with Three Insurance Carriers Also Finalized Settlement In Line with Previously Disclosed Range of Loss

AMSTERDAM, The Netherlands, Nov. 02, 2016 (GLOBE NEWSWIRE) -- Wright Medical Group N.V. (NASDAQ:WMGI) today announced that on November 1, 2016, its wholly owned subsidiary Wright Medical Technology, Inc. (WMT) entered into a Master Settlement Agreement (MSA) with Court-appointed attorneys representing plaintiffs in the previously disclosed metal-on-metal hip multi-district litigation known as In Re: Wright Medical Technology, Inc., CONSERVE® Hip Implant Products Liability Litigation, MDL No. 2329 (MDL) and the consolidated proceeding pending in state court in California known as In re: Wright Hip System Cases, Judicial Council Coordination Proceeding No. 4710 (JCCP).  In addition, on October 28, 2016, the Company entered into a Settlement Agreement with three of its insurance carriers (Three Settling Insurers). 
Under the terms of the MSA, the parties agreed to settle 1,292 specifically identified CONSERVE, DYNASTY or LINEAGE revision claims which meet the eligibility requirements of the MSA and are either pending in the MDL or JCCP, or are subject to tolling agreements approved in the MDL or JCCP, for a total settlement amount of $240 million, of which approximately $180 million will be funded from cash on hand and $60 million will be funded from insurance recoveries.
Eligibility requirements of the MSA include that the claimant has a pending or tolled case in the MDL or JCCP, has undergone a revision surgery within eight years of the original implantation surgery, and that the claim has not been identified by WMT as having possible statute of limitation issues.  Claimants who have had bilateral revision surgeries will be counted as two claims but only to the extent both claims separately satisfy all eligibility criteria. 
The MSA includes a 95% opt-in requirement, meaning the MSA may be terminated by WMT prior to any settlement disbursement if claimants holding greater than 5% of eligible claims in the Final Settlement Pool elect to “opt-out” of the settlement.  No funding of any individual plaintiff settlement will occur until the 95% opt-in requirement has been satisfied or waived.
Robert Palmisano, president and chief executive officer, commented, “We are very pleased to have reached this settlement agreement, in particular the population of claims that the settlement covers as well as the required 95% opt-in rate for those claims.  With this clarity, we will continue to focus on accelerating growth opportunities in the extremities and biologics markets.  This settlement addresses approximately 85% of the known U.S. revision claims that do not have potential statute of limitations issues and removes a great deal of the uncertainty that has been associated with this litigation.”
Wright will continue to vigorously defend metal-on-metal hip claims not settled pursuant to the MSA.  As of September 25, 2016, the company estimates there were approximately 600 outstanding metal-on-metal hip revision claims that would not be included in the MSA settlement, including approximately 200 claims with an implant duration of more than eight years, approximately 300 claims subject to possible statute of limitations preclusion, approximately 30 claims pending in U.S. courts other than the MDL and JCCP, approximately 50 claims pending in non-U.S. courts, and approximately 20 claims that would be eligible for inclusion in the settlement but for the participation limitations contained in the MSA.  The company also estimates that there were approximately 700 outstanding metal-on-metal hip non-revision claims as of September 25, 2016.  These non-revision cases are excluded from the MSA.
The final MSA settlement amount (not to exceed $240 million), and the final number of claims settled under the MSA, will depend on, among other things, the number of claimants electing to participate in the settlement and the mix of products implanted in the settling claimant group.  Claims which do not meet the eligibility requirements of the MSA, new claims, and claims which have opted-out of the settlement will not be settled under the MSA and the company will continue to defend these claims. 
The company previously disclosed a loss range applicable to a substantial portion of revision cases of $150 million to $198 million and, in accordance with U.S. generally accepted accounting practices (US GAAP), recognized as a charge within discontinued operations in the second quarter of 2016 $150 million, the low end of the range of probable loss for these cases.  During the third quarter of 2016, the company recorded charges of approximately $39 million to increase its accrual from the low end of its previous range of probable loss to the amounts in line with the final agreements and to record accruals for certain other revision cases. Please refer to the disclosures in the company’s third quarter 2016 quarterly report on Form 10-Q for a full discussion of our accruals and disclosures related to this matter.   
WMT has agreed to escrow $150 million to secure its obligations under the MSA, and parent corporation Wright Medical Group N.V. has agreed to guaranty WMT’s obligations under the MSA.     
The MSA will help bring to a close significant metal-on-metal litigation activity in the U.S.  Some lawsuits, however, will remain and Wright will continue to defend against remaining claims and any future claims that could be filed.  The ultimate cost to entirely resolve these matters will depend on many factors that are difficult to predict and may be materially different than the amounts accrued to date, including future revision claims and additional insurance recoveries.  Further charges may need to be recorded in the future as additional information becomes available.  
Internet Posting of Information
Wright routinely posts information that may be important to investors in the “Investor Relations” section of its website at  The company encourages investors and potential investors to consult the Wright website regularly for important information about Wright.
About Wright Medical Group N.V.
Wright Medical Group N.V. is a global medical device company focused on extremities and biologics products. The company is committed to delivering innovative, value-added solutions improving quality of life for patients worldwide and is a recognized leader of surgical solutions for the upper extremities (shoulder, elbow, wrist and hand), lower extremities (foot and ankle) and biologics markets, three of the fastest growing segments in orthopaedics.  For more information about Wright, visit
™ and ® denote trademarks and registered trademarks of Wright Medical Group N.V. or its affiliates, registered as indicated in the United States, and in other countries.  All other trademarks and trade names referred to in this release are the property of their respective owners.
This release includes forward-looking statements under the Private Securities Litigation Reform Act of 1995.  These forward-looking statements generally can be identified by the use of words such as “will,” “may,” “continue,” “anticipate,” “expect,” “could,” “believe,” “estimate,” “future,” other words of similar meaning and the use of future dates.  Forward-looking statements in this release include, but are not limited to, statements about the effects of the settlement agreements and the amount and funding of the settlement amounts. Forward-looking statements by their nature address matters that are, to different degrees, uncertain. Each forward-looking statement contained in this release is subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such statement.  Applicable risks and uncertainties include, among others, risks and uncertainties associated with the MSA and the settlement agreement with the Three Settling Insurers, including without limitation, the final MSA settlement amount and the final number of claims settled under the MSA,  the possibility that the 95% opt-in requirement may not be achieved, the resolution of the remaining unresolved claims, the effect of the broad release of certain insurance coverage for present and future claims, the resolution of the company’s dispute with the remaining carriers; and the other risks identified under the heading “Risk Factors” in Wright’s Annual Report on Form 10-K for the year ended December 27, 2015 filed by Wright with the SEC on February 23, 2016 and Wright’s Quarterly Report on Form 10-Q for the quarter ended September 25, 2016 anticipated to be filed by Wright with the SEC on November 2, 2016.  Investors should not place considerable reliance on the forward-looking statements contained in this release.  Investors are encouraged to read Wright’s filings with the SEC, available at, for a discussion of these and other risks and uncertainties. The forward-looking statements in this release speak only as of the date of this release, and Wright undertakes no obligation to update or revise any of these statements.  Wright’s business is subject to substantial risks and uncertainties, including those referenced above.  Investors, potential investors, and others should give careful consideration to these risks and uncertainties. 
Investors & Media:
Wright Medical Group N.V.
Julie D. Tracy
Sr. VP, Chief Communications Officer
(901) 290-5817 (office)
Wright Medical Group N.V.

Wednesday, November 2, 2016

Deaf and Blind Medical Device Giant J&J: Harmed Patients Demand REAL Consumer Warranties!

 Oct 31, 2016 at 6:02 PM

The Affordable Care Act has laid the groundwork for a seismic shift in the way the medical device industry operates.
Traditionally, large companies like Johnson & Johnson built up an army of sales reps who would have relationships with the same hospital customer but touting the New Jersey’s companies individual products — be it cardio, ortho or general surgery. As value-based care gains a footing, health systems are focusing on how they can lower costs and improve outcomes through services and solutions as opposed to buying more and more hardware and implants that device firms are known for.
J&J’s medical device business has been ill-equipped to adjust to this shift and its financial performance has been poor. Last year it garnered $25.1 billion, down 8.7% from 2014. The division has also restructured and announced it would be eliminating thousands of jobs earlier this year. In a phone interview, Gary Pruden, J&J’s executive vice president and worldwide chairman for medical devices, explained how the unit is undergoing a wholesale metamorphosis to take advantage of the opportunities afforded by value-based care. One inspiration has been to take a page out of the consumer business book and see how it manages a really large customer:Walmart.

Gary Pruden, worldwide chairman,                                               J&J Medical Devices
“I have more than a dozen companies in the U.S. for example and in the past, they would all go to the hospital system provider separately. They all have separate P&Ls, they all operate independently, they all go separately,” Pruden recalled. “We made a conscious decision and actually this year we integrated all the different business into one single P&L and I have one single strategic account management group in the U.S.”
This model is unlike how other large device firms are fulfilling their go-to-market strategy. For them, the product business and solutions business sit separately, Pruden declared referring to the likes of Zimmer Biomet and Stryker.
“They are trying to bring together a compilation of [offerings] and those solutions providers operate separately from those individual businesses,” Pruden claimed. “And when you talk to [hospital] customers, that’s a little challenging. They want to talk to one person.”
At J&J, that single account management group now has the power to speak on behalf of the product and service offerings of J&J Medical Devices with a single voice as well as to strike deals with hospital customers, partner with them and write contracts. The goal is not only to lower their costs but also share in the risk for clinical outcomes, Pruden said. If J&J  is able to achieve both, it wins with greater volume of products sold.
Pruden wouldn’t provide specifics about the value-based care offerings but said that there are certain demonstration projects with certain hospital customers, both U.S and globally. Through them, J&J’s medical device business can offer its expertise in providing end-to-end supply chain solutions for hospitals, perioperative efficiency, clinical standardization programs as well as in help in figuring out bundled payment programs.
In trying to create a model by which the devices team at J&J would be able to provide savings by managing a customer’s supply chain end-to-end, the inspiration came from the conglomerate’s consumer business.
“With Walmart, we have a very unique partnership where we have a large number of people working in Bentonville, on behalf of Walmart that help manage the end-to-end supply chain,” Pruden said.
This model is already being put to use in the U.S., but Pruden declined to identify the customer or customers with whom this program has rolled out. [In May, Pruden’s presentation to analysts showed the Medical Devices business had at least had eight such customers – or strategic partners. They include New England Baptist Hospital, OSF Healthcare, Saint Luke’s Health System, Grupo Angeles Servicios De Salud and Schulthess Klinic among others]
He was similarly elusive when asked about the types of products for which the corporation has taken on some risk. This is in direct contrast to other device companies that are not only providing full-throated support for alternative payment models that mean bearing more risk with hospitals but actually identifying the product at the heart of the matter.
Take Stryker for instance.
Earlier this year, the Kalamazoo, Michigan orthopedic company announced that it is providing no less than a “money-back guarantee” for customers who use its SurgiCount system to keep track of the surgical sponges that in some cases may inadvertently get misplaced, ending up inside surgical patients. Stryke said that it would offer up to $5 million in product liability indemnification to hospitals and an additional guarantee to refund the incremental cost hospitals bear to invest in its SurgiCount program compared with the hospital’s previous sponge spending for up to three years.
Medtronic, the largest pure-play device company, has also gone at-risk with its Tyrx absorbable antibacterial envelope. The mesh device is meant to encapsulate a pacemaker and ICD  and release antimicrobial agents over a period of seven days to prevent surgical site infections of such cardiac devices.
While Pruden didn’t provide any specific example of products that J&J Medical Devices, he was very emphatic about the need for device makers to assume some risk with their products as they become more of a strategic partner to hospitals than a supplier. And that can mean the difference between a supplier relationship always on the verge of being cut and a long-term strategic partner.
“That’s the essence of what I am doing – aggregating our businesses at scale, offering some willingness to take some risk and leveraging the enterprise and some of the things we can do to create some value,” he said. “Partnerships that only go one way don’t last very long.”