WSJ: JNJ Facing $1+ Billion in ASR Costs (written by Lauren Uzdienski @ HealthPointCapital)
A Wall Street Journal article on Friday highlighted three companies facing “mass litigation”: Toyota for unintended acceleration, BP for last year’s massive oil spill and, now, DePuy and the ASR XL hip.
The metal-on-metal hip has already led to a recall and may have contributed to former DePuy Ortho president David Floyd’s resignation. The Journal reports that around 1,000 lawsuits have been filed in federal and state courts alleging that DePuy was aware of the ASR’s risks and unusual failure rate before the company stopped manufacturing the devices in 2009 or initiated the recall. DePuy spokespeople have claimed that the U.K. registry data publicized last year was their first indication that there was a problem with the device, which the company estimates has been implanted in about 37,000 patients in the U.S. and about 93,000 worldwide.
DePuy could face more than $1 billion in litigation and other expenses associated with the ASR. The company has said they will cover all medical costs associated with the ASR, including revision surgery, and has already responded to 27,000 patients.
Hip Joints Set Off New Rush to Court (Wall Street Journal)
First came a flood of lawsuits blaming Toyota Motor Corp. cars for unintended acceleration, then a wave of litigation over BP PLC’s massive oil spill. Now, artificial hip joints made by Johnson & Johnson have plaintiffs’ attorneys flocking to the courthouse.
“Everybody is looking for the next big tort,” says California attorney Dana Taschner, who is representing clients in numerous lawsuits against J&J, as well as the other two companies.
About 1,000 lawsuits have been filed in federal and state courts accusing the drug and medical-device maker of knowing about problems with some of its metal-on-metal hip joints before its DePuy Orthopaedics Inc. unit stopped making them in 2009. J&J, which later recalled the joints world-wide, denies the allegations and is fighting back.
The number of hip-joint lawsuits against J&J pales beside the tens of thousands filed against Merck & Co. over the painkiller Vioxx, withdrawn from the market in 2004, and the myriad suits filed over the years against asbestos makers. But the litigation could expose the New Brunswick, N.J., health-care company to $1 billion-plus in potential liability and other costs, according to a Wells Fargo analyst.
A spokeswoman for DePuy declined to comment on the liability issue, except to say that J&J boosted its reserves for product-liability costs, for products including the recalled hip joints, by $570 million last year. In addition, J&J, which had 2010 sales of $61.6 billion, has put aside about $280 million to cover surgeries and other medical care for patients with those joints.
A panel of federal judges has consolidated many of the hip-joint lawsuits in federal court in Ohio. Some plaintiff’s lawyers are pushing for the court to certify the plaintiffs in the case as a class, whose complaints can be combined into a single lawsuit.
Florida attorney Ben Gordon, one of the leaders of the plaintiffs committee in the federal litigation, said J&J has turned over more than 200,000 of the nearly 18 million pages of internal documents it is expected to submit.
Such mass litigation is a big business, often producing multimillion-dollar settlements and sometimes similarly large jury verdicts for plaintiffs. Defense attorneys, meanwhile, can rack up huge bills for their services during the long-running cases.
But these battles also can be a gamble. Plaintiff’s attorneys in the Toyota case have spent millions of dollars hiring experts and translating Japanese documents. But a recent government report that blamed driver error—and not Toyota—for incidents in which the company’s vehicles appeared to speed out of control could end up undermining their case.
J&J, whose products range from Band-Aids to cancer drugs, recalled its metal-on-metal hip joints last year after British data showed them wearing down or otherwise requiring replacement at unusually high rates. That was the first indication the company had of any flaws in the product, the DePuy spokeswoman said.
Some patients had to undergo risky and expensive surgery to remove and replace the recalled implant—a metal ball and socket designed to replicate a natural hip joint.
J&J estimates that about 37,000 patients in the U.S. and about 93,000 world-wide have received the recalled device. The DePuy spokeswoman said the company will cover the cost of all medical care associated with the device, including replacement surgery. She wouldn’t say how many replacement surgeries it has paid for but said that, as of mid-June, DePuy had helped nearly 27,000 callers, many of whose calls led to claims for reimbursement.
Some patients who received the recalled hip joint, the so-called articular surface replacement, or ASR, system, say in their lawsuits that medical tests showed chromium and cobalt in their bloodstreams and allege the potentially toxic metals came from parts of the joint wearing down and leaching into their system.
Many of the plaintiffs also complain of pain and infections or inflammation, among the most common reasons that doctors removed and replaced the devices. “I had a lot of weird problems—urinary tract infections, fevers—they’d come back every time I stopped taking antibiotics,” said 59-year-old Lavonne Gordon, of Brea, Calif. Ms. Gordon says medical tests also revealed she had high levels of chromium and cobalt in her blood. She sued J&J claiming her problems were tied to the two DePuy devices she had implanted in August 2006. She is slated to have the second of the two recalled hip joints replaced this August.
Ms. Gordon’s lawsuit was filed in state court in California and has been consolidated with similar complaints there. A hearing on those suits is set for July 26.
Though the DePuy spokeswoman said the recalled joints contain cobalt and chromium, she said it wasn’t clear whether the devices contributed to elevated levels of those metals in patients’ blood or how many patients might have this problem.
In May, the FDA said particles from the metal-on-metal hip joints, such as cobalt and chromium, might wear off and make their way into a patient’s blood. The agency said this could contribute to heavy concentrations of cobalt and chromium in the body but it wasn’t clear if that would cause symptoms—such as trouble seeing and diseased heart muscle—that had been reported by a “small number” of those who received the joints. To better understand potential health effects, the FDA ordered J&J and other makers of the metal-on-metal joints to monitor the devices for possible health risks.
Most replacement hips are metal on plastic, but these joints also can wear down, potentially leaving plastic debris in the body, according to Mary O’Connor, chair of the orthopedic department at the Mayo Clinic Florida.
To attract new clients to the litigation, plaintiffs’ lawyers have launched websites, such as depuyhipreplacementlawsuit.com, and even YouTube videos to encourage patients who received the device to sue. They also have filed suits—several dozen, so far—alleging similar defects in another metal-on-metal DePuy hip device called Pinnacle, which remains on the market.
The DePuy spokeswoman said the company stands by Pinnacle. She called the product “one of the most widely used and clinically successful” hip-replacement devices on the market, and said it is “backed by more than a decade’s worth of clinical data consistently showing that it is a safe and effective option.”
The outcome of the ASR lawsuits may hinge on when DePuy learned the devices were faulty. A suit Mr. Taschner filed on behalf of hip-replacement patient Maurice Brigham accuses DePuy and J&J of knowing two years before the recall that the devices failed “early in a high percentage of patients.”
Most of the plaintiffs’ attorneys contend that officials from an Australian medical-device registry, a database that tracks patient complaints, first warned DePuy about high rates of failure and complications from the ASR devices in 2007. After analyzing the data, Australia’s medical-device regulator took action to curb the use of DePuy’s ASR hip joint, and achieved a “marked reduction” in implants of the device, an agency spokeswoman says.
“If you knew about the problem and didn’t recall the product for a year more, that tends to justify a higher award of punitive damages,” said Columbia University law professor John Coffee. But, he added, the defendant can seek to block the cases from being certified as class actions by arguing that injuries in each patient are different. That move could limit its liability, though individual cases could still rack up big awards or settlements if patients suffered significantly, Mr. Coffee said.
The spokeswoman for DePuy said the Australian database was among a variety of sources that the company monitored to keep track of the safety of its hip joints, but it was subsequent information from a British registry that prompted last year’s decision to recall the parts.
DePuy voluntarily recalled the devices last fall”in the best interest of patients,” after new data from the British database showed five-year rates for replacing the hip parts were 12% and 13%, higher than previously reported, the company spokeswoman said. Under generally accepted standards, DuPuy has said, no more than 5% of patients should require a repeat hip replacement surgery within five years.
The spokeswoman said DePuy monitors the performance of all its products, and the ASR devices appeared to have low replacement rates until the British data came out.
Write to Jonathan D. Rockoff at jonathan.rockoff@wsj.com and Dionne Searcey atdionne.searcey@wsj.com