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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Sunday, July 23, 2017

American Healthcare Giant J&J Stonewalling in Australia: Transvaginal Mesh


July 20, 2017  FiDA highlight

* The world’s biggest healthcare group has quietly cut its exposure to victims in its vaginal mesh class-action lawsuit.
* Seven Johnson and Johnson subsidiaries are in breach of the Corporations Act.
* With no explanation, J&J and its auditor PwC reduced accounting disclosures and transparency.
The 700 women suing Johnson and Johnson for faulty vaginal mesh implants will not be pleased to hear that the healthcare giant has quietly reduced its exposure to medical negligence lawsuits.
Buried in Johnson and Johnson’s disclosures to the corporate regulator is a letter from the group’s lawyers King & Wood Malleson to the corporate regulator which shows a Deed of Cross Guarantee between seven of the group’s subsidiaries has lapsed. By allowing the Deed to lapse, the company has effectively reduced the pool of assets which creditors can access in a legal claim.
Previously, this Deed had ensured that the seven Johnson and Johnson companies had, until this year, guaranteed each others’ debts. This no longer appears to be the case. In the event therefore of a successful class action lawsuit, a claim potentially worth hundreds of millions of dollars, the 700 women may have less access to the assets of the world’s biggest healthcare company.
The company, whose market value in the US is $US370 billion, refused to respond to questions for this story. Communications director Meshlin Khouri claimed, “We are endeavouring to respond to your questions in the timeframe that you’ve requested …”.
We extended the timeframe and Khouri failed to respond to all questions. Gavin Fox-Smith, managing director of Johnson and Johnson Medical Australia/NZ was approached for comment but also declined to respond.
Johnson and Johnson is being sued in a class action lawsuit in the Federal Court. The plaintiffs claim faulty pelvic implants have caused them debilitating pain and that Johnson and Johnson failed to properly test the devices. The case is expected to run for six months. It follows a successful class lawsuit last year in which a $250 million settlement was struck with victims of faulty Johnson and Johnson hip implants.
An analysis of ten years of Johnson and Johnson financial statements shows a swathe of irregularities. Unlike its Big Pharma peers Abbvie and Gilead, Johnson and Johnson pays a reasonable amount of tax. Over ten years, the company racked up $12 billion in revenues and paid $238 million in income tax. In comparison to aggressive transfer pricing culprits Gilead and Abbvie, Johnson and Johnson showed gross margins of 40 per cent in Australia over the period; an indication that it is not pillaging the Australian tax base quite as aggressively as its peers.
However, enshrining the trend towards increasingly shoddy accounting and poor financial disclosure by multinational companies and their Big Four auditors – PwC, Deloitte, KPMG and EY – the financial statements of Johnson and Johnson are littered with faults.
For a start, its seven subsidiaries which had been covered by the aforementioned Deed of Guarantee, have failed to file accounts and are now two and a half months late. We can safely assume that the Australian Securities & Investments Commission (ASIC) has failed to fine the company for these myriad breaches.
Without any explanation by its directors or by its auditor PwC, Johnson and Johnson quietly changed from lodging General Purpose financial statements to the inadequate and skimpy Special Purpose variety in 2009.
Here is a company therefore which deems there are no other “users” of its financial statements than its parent company in New Jersey. Here is a company, the world’s largest healthcare group, an institution which has attracted billions of dollars in taxpayer support from Australia’s Pharmaceutical Benefits Scheme, but which deems that no other party apart from its parent company could be interested in its financial statements.
That is, directors and their auditors at PwC deem the victims of Johnson and Johnson lawsuits, the company’s staff, its creditors and the taxpaying public which subsidises the PBS – none of these stakeholders are deemed to have any interest in its financial statements.
PwC, which cooly picked up $6.6 million over the decade for audit and tax advice can’t even get its numbers straight. According to its “Auditors’ Remuneration” note, PwC earned $1.07 billion in audit fees over the past two years, rather than $1.07 million.
Moreover the accounts are larded with completely spurious information about accounting policies relating to items which don’t exist. All this mirrors a systemic failure: a failure of the Australian Accounting Standards Board (AASB) a failure of successive governments and their Ministers for Finance, a failure of accounting peak bodies, a failure of ASIC to police the sector and above all a failure of the global accounting firms to which all these governments, agencies and peak bodies kow-tow.
If the government really had the backbone to fix this problem it could instruct ASIC to issue a guidance note requiring all foreign multinational companies to lodge General Purpose financial statements. This damaging failure of accountants to be accountable could be fixed in a week. Instead, the world’s largest companies operating in Australia, jagging billions in taxpayer subsidies, file inadequate financial statements which allow them to hide critical information and avoid tax.

michaelwest.com.au has been sponsored by GetUp! and the Tax Justice Network to conduct an investigation into the financial statements and tax affairs of 20 multinational companies. 
https://www.michaelwest.com.au/exposed-how-johnson-johnson-cut-its-risk-in-vaginal-mesh-lawsuit/

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