Johnson & Johnson Faces Billions in Hip Replacement Damages

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Johnson & Johnson (NYSE: JNJ) will reportedly pay over $4 billion in to settle legal disputes concerning hip implants. Three sources reported the potential terms to Bloomberg on Tuesday. The lawsuits being settled are against Johnson & Johnson’s DePuy unit, and recalled ASR hip implants.

In 2010, DePuy voluntarily began recalling the ASR XL Acetabular System, and ASR Hip Resurfacing System because a high number of patients with those implants needed what is known as a “revision surgery,” a second hip replacement. The recall announcement stated the company expected to pay “cover reasonable and customary costs associated with the recall of ASR.”

In 2011, the British Orthopaedic Association studied the ASR replacements. The Association found that within six years, there was a revision rate of 49 percent. The replacement rate of other devices is 12 to 15 percent within five years. Bloomberg‘s sources said the average per patient payout will be $300,00 or more. The terms of the settlement will not prevent future claimants seeking reimbursement for a replacement of the ASR. Unless 94 percent of eligible claimants sign on to the settlement, Johnson & Johnson can remove itself from the deal.

Product liability law professor at the University of Virginia, Carl Tobias, told the media outlet the settlement “resolves a lot of litigation that could have dragged on for years and cost J&J much more money in the long run.”

In its third-quarter filing with the SEC, Johnson & Johnson stated the ASR replacements were involved in approximately 12,140 direct, pending litigation claims as of September 29. In the ASR cases, and others, claimants are seeking “substantial compensatory and, where available, punitive damages,” according to the filing. Johnson & Johnson does not believe settlements in the cases will impact the company in the long run. It sees the potential impact contained to the fiscal period in which the case is settled.

Earlier in November, Johnson & Johnson reached a settlement with the Department of Justice, federal investigators and forty-five states concerning issues surrounding the drug Risperdal. Janssen Pharmaceuticals, Inc. pled guilty to a misdemeanor charge, and Johnson & Johnson agreed to pay approximately $2 billion dollars. The case was heard in a federal court in Toledo. People familiar with the matter expect decision sometime next week.

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