Stryker Agrees to Settlement With U.S. Government

The medical device maker Stryker will pay the federal government $13.3 million to settle allegations that it bribed public health officials overseas to secure business, a violation of the Foreign Corrupt Practices Act.

The Securities and Exchange Commission (S.E.C.) said Stryker subsidiaries made $2.2 million in illegal payments to government employees in Argentina, Greece, Mexico, Poland and Romania from August 2003 to February 2008. Stryker made the payments to get or retain business, but it recorded them as legitimate consulting and service contracts, travel costs, charitable donations and commissions.

The S.E.C. claims that Stryker made $7.5 million in illicit profits as a result of the illegal payments. Stryker will pay the Treasury $7.5 million, plus $2.3 million in interest. It will also pay a $3.5 million civil penalty.

According to the S.E.C., Stryker had anticorruption corporate policies, but did not do enough to put them in action and legitimately regulate its operations. The company virtually ignored its internal compliance programs.

The Department of Justice and the S.E.C. began investigating the payments in 2007. The government has since closed its investigation into the matter.

J&J to Pay Huge Fine Over Risperdal

Johnson & Johnson is paying the third-largest pharmaceutical settlement ever to settle civil and criminal fines that it improperly marketed and promoted the antipsychotic drug Risperdal.  Much of the conduct occurred when current J&J CEO Alex Gorsky was vice president for sales and marketing or president of the pharmaceutical unit.

 

The United States Attorney General said that the company "recklessly put at risk the most vulnerable members of our society."  In response, J&J's vice president and general counsel said "This resolution allows us to move forward and continue to focus on delivering innovative solutions that improve and enhance the well-being of patients.

 

Federal officials said the company knew that Risperdal posed serious risks for older adults, such as an increased risk of strokes, but played them down.  J&J also knew that children were susceptible to certain health risks from taking the drug, including the possibility that boys could develop breasts through elevated production of the hormone prolactin, federal officials said.  Despite this, J&J told its sales representatives to visit child psychologists and mental health facilities that mainly focused on children and to promote the drug for defecit hyperactivity disorder and obsessive-compulsive disorder.

Rumored $4 Billion Settlement in DePuy ASR Reached

Major news outlets are reporting breakthrough in settlement negotiations in the DePuy ASR hip litigation. DePuy, a subsidiary of Johnson & Johnson, is rumored to have agreed in principle to a $4 Billion agreement to settle lawsuits over their metal-on-metal hip product.

Neither the Plaintiff or Defendant leadership committees-nor the Court for that matter-has confirmed these reports.

The reports claim that the settlement will resolve more than 7,500 lawsuits in federal and state courts against J&J. The 7,500 number is an estimate for how many filed lawsuits are for Plaintiffs who have had a revision surgery. That number is important because as of right now, it appears the settlement would only be for those Plaintiffs who have already had a revision surgery, with an average payout of $300,000-$350,000. It is rumored that the agreement does not bar Plaintiffs whose artificial hips fail in the future from seeking compensation from J&J. Of course, there are many different factors to this agreement including those Plaintiffs who cannot have a revision surgery because of their current health conditions.

There is an open court hearing next week in the MDL Court in Ohio, where many people think the settlement will be announced.

The settlement will be the second multibillion-dollar agreement this month for J&J, the world’s largest seller of health-care products. The corporation agreed on November 4 to pay $2.2 billion to resolve criminal and civil probes into the marketing of Risperdal and other medicines. I will be posting a blog on that subject in the next few days.

J&J has spent about $993 million on medical costs and informing patients and surgeons about the recall. J&J set aside an undisclosed amount for litigation, which it increased before June 30. See my previous blog posts regarding that subject.

Details of the rumored are sketchy, but it has been reported that 94 percent of eligible claimants must sign up for the settlement or J&J can withdraw from the deal. This is often times referred to as a Defendant’s ‘Opt-out clause’ and is very common in mass tort global settlement agreements.

J&J recalled 93,000 ASR hip implants worldwide in August 2010, saying 12 percent failed within five years. About one-third of that number were sold in the United States. The product went on the market in 2003.

J&J had touted the metal-on-metal implants, first sold in the U.S. in 2005, as a new design that would last 20 years and offer greater range of motion. DePuy officials have long insisted that they acted appropriately in recalling the device when they did. However, internal company documents disclosed during the discovery phase of the ongoing litigation showed that DePuy officials were long aware that the hip had a flawed design and was failing prematurely at a high rate. Those documents revealed that internal DePuy projections estimated that it will fail in 40 percent of patients in five years-a rate eight times higher than for many other hip devices. Other documents showed that the head of DePuy’s orthopedic unit, Andrew Ekdahl, oversaw the introduction of the hip and was warned by a company consultant in 2008 that the implant appeared to have a design flaw.

As failures mounted, patients complained in lawsuits that the metal-on-metal implant caused soft tissue necrosis, pseudo tumors, metalossis, pain and follow-up surgeries known as revisions. They claimed that debris from the chromium and cobalt device caused tissue death and increased metal ions in the bloodstream.

Claims by unrevised Plaintiffs may be handled in a second round of settlements.

The $4 billion settlement will provide compensation to hip patients based on factors including age, extent of injuries and whether they had one or more surgeries to replace defective implants. Typically, a matrix-type grid is used to categorize Plaintiffs based on these factors.

The accord also provides more compensation to hip recipients who suffered “extreme injuries” from the device’s failure, or endured long hospital stays after removal surgeries.

Also reported was that J&J also has agreed to set aside funds to reimburse Medicare and other insurers for claims paid on behalf of hip-implant patients, which could add hundreds of millions of dollars to the value of the settlement.

Of course, any proposed settlement would have to win Court approval.

DePuy continues to face thousands of lawsuits involving another all-metal hip that it no longer sells called the Pinnacle.