UPDATE: JNJ Settles Hip Lawsuits for $2.5 Billion

Johnson & Johnson’s hip recall nightmare may finally be over.

On Nov. 19, JNJ announced it would pay $2.5 billion to settle the thousands of lawsuits brought by hip replacement patients who accuse the company of selling faulty implants that led to injuries and additional surgeries.

The agreement presented in U.S. District Court in Toledo, Ohio, is one of the largest for the medical device industry. It resolves an estimated 8,000 cases of patients who had to have the company’s metal ball-and-socket hip implant removed or replaced. The company expects to make most of the payments to patients in 2014.

“We are committed to the well-being of ASR patients, as demonstrated by the voluntary recall and the program providing support for recall-related care,” said Andrew Ekdahl, worldwide president, DePuy Synthes joint reconstruction. “The U.S. settlement program provides compensation for eligible patients without the delay and uncertainty of protracted litigation. DePuy remains committed to our purpose of advancing innovative treatment options to serve those who need joint replacement surgery.”

Prior to confirmation of the settlement, rumors were swirling about the amount the company would have to pay.

Early reports said the company was willing to pay more than $4 billion to settle thousands of lawsuits over its faulty ASR hip implants, according to Bloomberg news, which citing three sources familiar with the deal.

The settlement resolved more than 7,500 lawsuits filed against JNJ’s DePuy Orthopaedics unit in state and federal courts by patients who have had the defective replacement joints removed.

JNJ officials originally declined to comment on the settlement rumor.

The company has spent months preparing for the first federal trial involving its recalled ASR implants but the case was postponed three times — most recently on Oct. 25 due to difficulties scheduling expert witnesses and depositions. The judge assigned to the case consolidated the 7,860 lawsuits pending against DePuy into one bellwether trial to advance the litigation in a timely manner; the most recent postponement delayed the tribunal for possibly 90 days.

An additional 3,600 ASR lawsuits are pending in state courts, two of which already have been settled—a California jury awarded $8.3 million to a retired Montana prison guard in March (DePuy, naturally, is appealing the verdict) and an Illinois jury sided with the company in April, rejecting claims that DePuy’s ASR XL hip implant was defectively designed and causes debilitating injuries.

“Originally we believed many of these cases would wrap up in 2013, however since DePuy was able to sustain a victory in the Illinois trial it has enabled DePuy to continue to drag out the litigation,” Chris Janish, CEO of Legal-Bay LLC, told a South Carolina newspaper last month. “Our clients are very frustrated with DePuy at this point, however some of them just cannot wait for justice and need funds to survive.”

Joint replacement registries in both Australia and the United Kingdom have recorded higher than expected complications with DePuy’s ASR Hip Resurfacing System and ASR XL Acetabular System total hip replacement, including a loosening of the implant within the body, bone fractures near the implant, dislocation and a condition called metallosis, which occurs from the rubbing of metal parts.

The growing number of patients needing a second hip replacement prompted Johnson & Johnson’s DePuy Orthopaedics unit to recall 93,000 of its ASR XL Acetabular System, a hip socket used in traditional replacement surgery, and ASR Hip Resurfacing System, a partial hip replacement that involves placing a metal cap on the ball of the femur in order to preserve more bone. The company announced the recall on Aug. 26, 2010, admitting that 12 percent of the implants failed within five years. Internal J&J documents show 37 percent of ASR hips failed after 4.6 years; in Australia, the failure rate climbed to 44 percent within seven years.

JNJ faces a total of 12,000 suits in state and federal courts in California, New Jersey and Ohio. The reported $4 billion settlement would provide compensation to hip patients based on factors including age, extent of injuries and number of replacement/revision procedures, the anonymous sources told Bloomberg. The agreement also compensates patients who suffered “extreme injuries” from the implant’s failure or endured long hospital stays after replacement surgeries.

Claims filed by patients fearing future revision surgeries would be considered in a second round of deals, the sources contend.

Besides compensating affected patients, J&J also will reimburse Medicare and other insurers for claims paid on behalf of hip implant patients, a condition that could add hundreds of millions of dollars to the reported settlement value.

The accord is the second multibillion-dollar agreement this month for the New Brunswick, N.J.-based healthcare titan. The company announced on Nov. 4 that it would pay $2.2 billion to resolve criminal and civil probes into the marketing of Risperdal and other medicines.