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Recent multidistrict litigation stemming from Johnson & Johnson hip implant products including the DePuy Pinnacle Hip Replacement System, DePuy ASR Hip Resurfacing System, DePuy ASR XL Acetabular System may ultimately cost Johnson & Johnson billions of dollars to resolve.
Johnson & Johnson
Johnson & Johnson is a multinational Fortune 500 medical device, pharmaceutical and consumer packaged goods manufacturer founded in 1886 by three brothers — Robert, Edward, and James Johnson — in New Brunswick, New Jersey. The company initially focused on the production of wound care products such as bandages, sutures and baby products, and sold first aid kits to railroad workers and health products related to women’s care such as hygiene and pregnancy. Now, Johnson & Johnson is the largest worldwide pharmaceutical and medical device company the first orthopedics device company in the United States.
Johnson & Johnson’s brands include numerous household names of medications and first aid supplies. Among its well-known consumer products are the Band-Aid Brand line of bandages, Tylenol medications, Johnson’s baby products, Neutrogena skin and beauty products, Clean & Clear facial wash and Acuvue contact lenses.
The company includes approximately 250 subsidiaries with operations in over 60 countries and products sold in over 175 countries, with worldwide sales of $70.1 billion during 2015. The company’s commons stock is a component of the Dow Jones Industrial Average with the ticker symbol JNJ.
Johnson & Johnson’s business is divided into three major segments — Pharmaceuticals, Medical Devices and Consumer Products — whose respective percentages of 2015 total company revenues were 44.9%, 35.9%, and 19.3%.
DePuy is a franchise of orthopaedic and neurosurgery companies. DePuy Manufacturing, founded in 1895 in Warsaw, Indiana by Revra DePuy, began designing and building fiber splints to replace wooden barrel staves that were used to set fractures. DePuy now operates from several countries, including the United Kingdom, Japan, France, Germany, Ireland and Australia.
DePuy develops and markets products under the Codman, DePuy Mitek, DePuy Orthopaedics and DePuy Spine brands.
- DePuy Orthopaedics designs, manufactures, markets and distributes products for reconstructing damaged or diseased joints and for repairing and reconstructing traumatic skeletal injuries.
- DePuy Spine products facilitate fusion of the spine and correction of spinal deformities, preserving motion of the spine and repairing bone fractures.
- Codman products provide for the surgical treatment of neurological and central nervous system disorders through products such as hydrocephalic shunt valve systems, implantable drug pumps and micro-surgical instrumentations.
- DePuy Mitek products offer devices in sports medicine for the treatment of soft tissue injuries.
Johnson & Johnson acquired DePuy in 1998, rolling it into the Johnson & Johnson Medical Devices group. Johnson and Johnson completed the acquisition of Synthes in June 2012 for $19.7 billion, which was then integrated with the DePuy franchise to establish the DePuy Synthes Companies of Johnson & Johnson which includes Codman & Shurteff, Inc., DePuy Mitek, Inc., DePuy Orthopaedics, Inc. and DePuy Spine, Inc.. In May 2016, DePuy Orthopaedics, Inc. acquired Biomedical Enterprises, Inc., an industry leader in small bone fixation. In December 2016, DePuy Synthes announced it would acquire Pulsar Vascular Inc., adding Pulsar to its Codman division.
DePuy was the first orthopedic manufacturer to make a metal-on-metal design for hip replacements. However, three of the company’s hip replacement devices have caused an unexpected high failure rate in some patients including the ASR XL Acetabular System total hip replacement, the Pinnacle Hip Replacement System, and the ASR Hip Resurfacing System. DePuy recalled all ASR hip implant systems sold since 2003 in August 2010. DePuy said the recall was due to unpublished National Joint Registry data showing a 12% revision rate for resurfacing at five years and an ASR XL revision rate of 13%. All hip prostheses fail in some patients, but the normal anticipated rate is about 1% per year.
Further, metal debris from wear of the implant led to reactions in many patients that destroyed the soft tissues surrounding their joints, leaving some patients with long-term disability. Ions of cobalt and chromium — the metals from which the hip implant was made — were also released into the blood and cerebral spinal fluid in some patients.
Despite a large number of adverse event reports and the fact that the ASR system was modeled after the Pinnacle system, a recall for the product was never issued. The device was ultimately discontinued in 2013, but some physicians may have continued use of the device until inventories were depleted and many patients may have received the implant components from outside of the U.S. The Pinnacle Hip Replacement System, ASR Hip Resurfacing System, and the ASR XL Acetabular System have been used by about 70,000 patients in the United States alone.
Johnson & Johnson’s financial statements reveal that as of October 2, 2016, in the United States, there were approximately 2,900 plaintiffs with direct claims in pending lawsuits regarding injuries allegedly due to the DePuy ASR XL Acetabular System and DePuy ASR Hip Resurfacing System and 9,300 with respect to the Pinnacle Acetabular Cup System, with the caveat that
“many [ASR] lawsuits in the United States will remain, and the settlement program does not address litigation outside of the United States. … The Company continues to receive information with respect to potential costs associated with this recall on a worldwide basis. The Company has established accruals for the costs associated with the DePuy ASR Hip program and related product liability litigation. Changes to these accruals may be required in the future as additional information becomes available. … Claims for personal injury have also been made against DePuy and Johnson & Johnson relating to DePuy’s Pinnacle Acetabular Cup System used in hip replacement surgery. The number of pending product liability lawsuits continues to increase, and the Company continues to receive information with respect to potential costs and the anticipated number of cases.”