Bloomberg News

J&J’s Floyd Says Hip Sales Halted for Business Reasons

February 21, 2013

The former president of Johnson & Johnson’s (JNJ:US) DePuy unit testified that months before recalling 93,000 metal-on-metal hip implants, the company phased out the device because of declining sales, not mounting safety concerns.

The executive, David Floyd, testified yesterday in state court in Los Angeles, where J&J is presenting its evidence in defense of the first of 10,000 lawsuits to go to trial over DePuy’s ASR device. In the case, Loren Kransky, 65, claims the hip implant was defectively designed and J&J failed to warn of the risks.

J&J, the world’s biggest seller of health-care products, recalled its ASR hips in August 2010 after saying at least 12 percent failed. Since then, the failure rate has climbed, reaching 40 percent in Australia. Analysts say it could cost New Brunswick, New Jersey-based J&J billions of dollars to resolve the lawsuits.

The decision in late 2009 to halt ASR sales came from a companywide process known as “rationalization,” to streamline the DePuy product line “from a very large sprawling one to a more focused one,” Floyd said in videotaped testimony played for the jury.

‘In Decline’

“It was a product that was overall in decline,” he said. “It was the most expensive product in our portfolio, and there was price push back.”

He said surgeons often chose in the operating room whether to use the ASR or a cheaper DePuy hip, the Pinnacle, which they picked more often depending on a patient’s size.

“In the vast majority of those cases, they weren’t even using ASR,” he said. “We were taking in double the inventory (JNJ:US), double the logistic effort to get the inventory and the instruments there, double the cost to the hospital.”

Sterilizing two sets of instruments could cost hospitals $1,000 each, he said.

“It was a huge amount of resources being consumed for a product that ultimately didn’t get used,” he said. “It was pretty clear that it was a significant advantage to us to move away from ASR and toward Pinnacle.”

Phasing out the ASR, he said, would save on manufacturing, marketing, education and support costs (JNJ:US).

‘Business Reasons’

“The decision to rationalize was not based on clinical data,” Floyd said. “The decision to rationalize was based on business reasons. Do we want to support two major products or just one?”

The ASR, made of chromium and cobalt, consists of a cup placed inside the hip and a ball sitting atop the femur that rotates in the hip.

Kransky, a retired prison guard, had an ASR hip implanted in December 2007 and had it replaced, or revised, in February 2012. Plaintiffs in thousands of lawsuits claim that the hips caused pain and dislocation and that metal debris entered surrounding tissue and the bloodstream.

Kransky’s lawyers said J&J failed to heed mounting complaints by surgeons about failures after U.S. sales began in 2005. J&J also considered a redesign in 2008 and scrapped it.

Floyd, DePuy’s president from September 2007 to March 2011, said the revision rate shouldn’t exceed 1 percent a year. Ten percent, he said, “would be an unacceptably high failure rate at one year, but at 10 years, it would not be.”

Floyd said that in August 2008, three surgeons complained of high revision rates, and the company’s quality department investigated. DePuy concluded that ASR didn’t pose a safety problem, he said. Rather, the surgeons all implanted the cup of the device at an angle greater than 40 to 45 degrees, he said.

‘Educate Surgeons’

The company then began a campaign to “educate surgeons in the proper technique for implanting cups,” he said.

Kransky’s lawyers claim DePuy failed to test the ASR cup at a variety of angles of implantation in the hip, and it only tested one of several sizes.

By December 2009, DePuy decided that the ASR would be “discontinued globally over the next 12 months,” Floyd said.

“So that we’re clear and that the jury is clear, was the ASR platform rationalized because of its clinical performance?” J&J attorney Robert Tucker asked Floyd.

“It was not,” Floyd said.

“So that we’re clear, was the ASR platform rationalized solely because of commercial decisions?” Tucker asked.

‘Commercial Reasons’

“It was rationalized for commercial reasons,” Floyd said.

Floyd said that in early 2010, the company wrestled with the appropriate response to escalating failure rates for smaller cup sizes. He said DePuy considered a recall then and ultimately decided to issue a field safety notice that alerted surgeons to the data.

“We did not believe we had adequate scientific evidence to tell 90-some thousand patients around the world, most of whom, to our knowledge, their hip was performing very well, that their hip had been recalled,” Floyd said.

U.S. sales had halted by July 2010, he said. The company opted for a recall a month later upon learning the failure rate after five years in the U.K. was 12 percent for the ASR model that involved only placing a new ball atop the femur, and 13 percent for the total hip replacement model sold in the U.S.

“No one was getting the product anymore, so the recall was not done to stop people from getting implantations,” Floyd said. “The recall was done because we felt an obligation to communicate to patients that, based on this revision rate, patients and surgeons need to be aware of these rates so they could appropriately evaluate and follow up.”

The case is Kransky v. DePuy, BC456086, California Superior Court, Los Angeles County (Los Angeles).

To contact the reporters on this story: Maurice Possley in Los Angeles Superior Court at mauricepossley@gmail.com; David Voreacos in Newark, New Jersey, at dvoreacos@bloomberg.net

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net


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