J&J unit to pay $2.5 billion in U.S. hip implant settlement

NEW YORK (Reuters) - A unit of Johnson & Johnson has agreed to pay an estimated $2.5 billion to settle thousands of lawsuits from individuals allegedly injured by the company’s artificial hip implants, the company announced Tuesday.

The settlement, announced during a hearing in federal court in Ohio on Tuesday, would compensate an estimated 8,000 patients who underwent surgery to replace their hip implants, according to a statement from Johnson & Johnson unit Depuy Orthopaedics Inc and lawyers for the plaintiffs.

The company was defending more than 12,000 lawsuits in U.S. state and federal court over injuries allegedly caused by its metal-on-metal ASR hip-replacement systems, according to a regulatory filing.

Depuy recalled the ASR hip system in 2010, after data suggested that it failed at a higher-than-expected rate. At the time, the company had sold about 93,000 systems worldwide.

Metal hip implant systems like Depuy’s ASR hips were designed to be more durable, replacing a traditional metal-on-plastic ball-and-socket design. Instead, some patients who received the ASR hips reported experiencing pain, swelling, joint dislocation and sometimes damage to the central nervous system, thyroid and heart.

The settlement would compensate plaintiffs who have undergone surgery to replace their hips as of August 31, 2013, the company said Tuesday. The company estimated that 8,000 plaintiffs would be eligible.

There is no cap on the amount of individual claims, according to Peter Flowers, one of the lead lawyers for the plaintiffs. Eligible U.S. plaintiffs can seek compensation for costs associated with their revision surgery, as well as payments of qualified liens by healthcare providers associated with the surgery, Flowers said.

Plaintiffs who experienced more serious complications can apply to receive additional funds, Flowers said.

“From my clients’ perspective, this has been a long time coming,” Flowers said.

Plaintiffs who opt not to participate in the program, or those who have not undergone revision surgery to replace their implants, will continue to litigate.

The company said it will continue to defend itself in the remaining lawsuits not resolved by the agreement. It also said that it expected the cost of the settlement program to be covered by reserves it had previously set aside, and did not expect to record an additional charge in connection with the agreement.

“The U.S. settlement program provides compensation for eligible patients without the delay and uncertainty of protracted litigation,” said Andrew Ekdahl, president of Depuy Synthes Joint Reconstruction, in a statement.

The settlement is not subject to court approval, according to a Johnson & Johnson spokeswoman, Lorie Gawreluk.

The announcement comes just weeks after Johnson & Johnson announced it would pay $2.2 billion to resolve civil and criminal probes into its marketing of several medications, including the anti-psychotic drug Risperdal.

While the settlement announced Tuesday aims to end a substantial chunk of the ASR hip litigation, Johnson & Johnson is still facing more than 5,000 lawsuits in connection with its Pinnacle hip implants. Its Ethicon subsidiary is also a defendant in more than 23,000 lawsuits over vaginal mesh implants, according to a quarterly filing with the U.S. Securities and Exchange Commission.

Reporting by Jessica Dye; Editing by Bernard Orr