Hip Defect Could Cost Johnson & Johnson Billions

A California jury ordered Johnson & Johnson (NYSE:JNJ) to pay $8.3 million in compensatory damages over its metal-on-metal hip implant, the first of 10,750 lawsuits.

The Depuy unit, reports Bloomberg, was used in over 93,000 implants around the world and is reported to have a 12 percent failure rate over five years. That number could be too low as reports out of Australia suggest that 44 percent fail in seven years.

The patient, Bill Kransky, is a retired prison guard from Montana that sued after finding that the design of the hip caused his injuries. However, he was denied punitive damages by the jury who believed the company did not act with fraud or malice.

“This is not an imperfect hip, this is a public health disaster,” Kransky’s attorney, Michael Kelly, said in closing arguments. “Somebody needs to tell them, ‘Don’t make Bill Kransky come to court. Build these things right. Don’t let this happen again.’”

The $8.3 million is a starting price for J&J, says Erik Gordon, a University of Michigan business professor.

“Most plaintiffs will get more sympathy from jurors than Mr. Kransky elicited,” Gordon said in an email. “A jury somewhere is going to hit the company with huge punitive damages to send a message that J&J refuses to hear.”

Some lawyers estimate that the lawsuits will cost billions of dollars to resolve. According to the New York Times, thousands of the individual cases have been consolidated into a single proceeding in a Federal District Court in Ohio, the outcome of which will go a long way towards predicting the total hit J&J will take.

Don’t Miss: Pfizer Halts Production Of Hepatitis C Drug.