Johnson & Johnson may pay more than $250 million to resolve suits over its ASR hip implants that were excluded from a $2.5 billion settlement of similar claims last year over the device’s failure, two people familiar with the accord said.
J&J, the world’s largest seller of health-care products, is weighing whether to settle more than 1,000 lawsuits over removals of the recalled hip implants that occurred after August 2013, said the people, who requested anonymity because they weren’t authorized to speak publicly about the accord. The hips were made by J&J’s DePuy unit.
The company is considering extending the same settlement terms that covered patients who had their ASR implants removed earlier than last summer, the people said. Under that accord, J&J agreed to pay an average of about $250,000 per surgery and cover related medical costs to resolve about 8,000 cases.
“This is a sign that J&J is trying to get a solid handle on its whole ASR problem,” said Carl Tobias, who teaches product-liability law at the University of Richmond in Virginia. “They are not done paying yet, but they are moving in the right direction.”
If J&J resolves the additional suits, it will have settled about 75 percent of its total U.S. caseload. The total cost of the settlements over ASR, which stands for articular surface replacements, may exceed $4 billion by the time J&J resolves the remaining implant cases, Tobias said. The accord doesn’t cover hip litigation outside the U.S.
J&J and DePuy recalled 93,000 ASR hip implants worldwide in August 2010, saying 12 percent failed within five years. Internal J&J documents showed 37 percent of ASR hips failed after 4.6 years. The failure rate in Australia in 2012 was found to be 44 percent over seven years of use.
Last year’s ASR settlement came after a California jury concluded that a retired prison guard was entitled to $8.3 million in damages over his hip implant. The panel found the device’s design was flawed and that DePuy officials failed to properly warn about its risks.
J&J, based in New Brunswick, New Jersey, touted the ASR metal-on-metal implants, first sold in the U.S. in 2005, as a design that would last 20 years and offer greater range of motion, according to court filings.
As failures rose, patients complained the hips caused dislocations and pain, and forced them to suffer removal surgeries known as revisions. They also alleged the chromium- and-cobalt implants were defectively designed, allowing metal ions to build up in recipients’ bloodstreams.
Mindy Tinsley, a spokeswoman for DePuy, declined to comment on the potential settlement, calling it “speculation.” J&J has spent about $1 billion on both medical costs and informing patients and surgeons about the ASR hip recall, an official said last year.
The drugmaker’s shares have risen 16 percent so far this year.
The company faced a total of 12,700 hip lawsuits filed or consolidated in federal and state courts in Ohio, California, Illinois and New Jersey prior to the settlements, according to an August filing with the U.S. Securities and Exchange Commission.
Among those cases are about 3,000 suits filed by patients whose ASR hips haven’t yet failed, people familiar with the settlement talks said.
As part of the ASR accord’s extension, J&J is offering to ease procedural deadlines for ASR hip patients who haven’t yet had removal surgery, the people said. That would extend the time patients have to sue if their implants fail in the future, they added.
J&J is only willing to freeze suit-filing deadlines if implant patients who sued even though their devices haven’t failed dismiss their cases, according to a filing Thursday in federal court in Toledo, Ohio.
U.S. District Judge David Katz in Toledo, who is overseeing the consolidation of ASR suits filed in federal courts across the country, Thursday ordered plaintiffs who’ve sued prior to having their device fail to decide whether to continue pressing their cases or accept the company’s offer.
If plaintiffs dismiss their suits, they’d have a year from the time of any future hip-removal surgery to refile their complaint, Katz said. Implant recipients would be barred from refiling their cases in state court, the judge said.
The extension of the ASR settlement is aimed at resolving as many as 1,500 suits by implant recipients who had the devices removed over the last 14 months, the people said.
They said J&J officials sought to exclude the cases from the $2.5 billion settlement in 2013 to give the company time to assess which suits were worthy of compensation.
Under the proposed extension of the ASR settlement, J&J would repay insurers who covered the medical costs of removing recalled hip implants from patients after August 2013, the people said.
They said that as with the earlier settlement, patients who underwent revision surgery during the past 14 months would have their cases evaluated and those with “extraordinary injuries” could receive more than the average payment.
Last week, a federal jury in Dallas rejected a graphic designer’s similar claims against DePuy’s line of Pinnacle hip devices. The panel rejected the woman’s failure-to-warn claims and found the hips implants were properly designed.