Bloomberg news reported yesterday that Johnson & Johnson may have reached a deal worth more than $4 billion to settle thousands of lawsuits involving DePuy Orthopedics’ recalled ASR hip implants. Although the company has yet to confirm reports from sources “familiar with the deal,” initial estimates suggest that patients could receive as much as $300,000 each for corrective surgeries.
Johnson & Johnson stock fell 73 cents in New York trading after news of the agreement broke.
More than 10,000 lawsuits have been filed at the federal and state level over Johnson & Johnson’s ASR XL hip implants following two 2010 studies highlighting the excessive failure rate of the devices. Patients alleged that the implants routinely failed, metal parts eroded, and metal particles shed and entered patients’ bloodstreams, causing pain and, in some cases, metallosis.
In 2010 the company recalled more than 90,000 ASR hip implants, citing a five-year, 12 percent failure rate in the device. According to Bloomberg an internal company document reported a much higher failure rate for ASR hip implants – 37% after 4.6 years.
In March, a jury awarded more than $8 million in damages to a man who alleged he was injured as a result of DePuy’s defectively designed hip implant. Johnson & Johnson was found to have acted negligently in its manufacturing of the device, and Loren Kransky was awarded $338,000 in medical bills, along with $8 million awarded for noneconomic losses. The jury stopped short of awarding punitive damages, however, finding that DePuy did not negligently cause the injury.
Nevertheless, Johnson & Johnson faced thousands of lawsuits from hip implant patients, and those lawsuits were consolidated in Ohio. In October, the first bellwether case at state level was settled by DePuy for an undisclosed sum in California.
The details of this week’s agreement are reported as follows:
The agreement is uncapped, and does not bar patients whose hips fail in the future from making claims.
More than 7,500 cases in which patients have had hip implants replaced after claiming the products are defective will be covered by the funds.
Ninety-four percent of eligible patients must sign up for the settlement for the company to honor the payments. Otherwise, Johnson & Johnson may withdraw from the deal.
Claims made by patients who suspect they may need revision surgery in the future will be handled in a second reported round of settlements.
Funds will also be set aside for Medicare payments and other insurance claims paid for patients.
Compensation will reportedly be awarded based on age, the nature of injuries, and whether surgery was required to replace defective devices.
The news comes hot on the heels of the company’s $2 billion agreement over allegations that it marketed and sold Risperdal beyond its FDA approval. In that case, whistleblowers alerted the U.S. government to the company’s allegedly illegal actions, prompting a major investigation and one of the largest settlement agreements in the U.S. history.
Bloomberg reports that Johnson & Johnson stock fell 73 cents in New York trading after news of the agreement broke.