Financial Statement Analysis: Further Putting Its Recall Motives In Question Is J&J?s New Statement

Further Putting Its Recall Motives In Question Is J&J?s New Statement

Further Putting Its Recall Motives In Question Is J&J?s New Statement

A new Johnson & Johnson (J&J) statement that the DePuy hip replacement recall “is not expected to have a material adverse effect on the company’s financial position” is making its recall motives more suspicious. The recall had been estimated to cost J&J about billion, according to a New York Times analysis, with complaints continuing to rise for this year alone. The British Joint Registry estimated that nearly one third ofDePuy hip replacement fail after six years, thus more complaints are expected to be filed.

Critics have questioned J&J’s motives when it hired BroadSpire to handle the DePuy ASR hip replacement recalls, and by settling claims with patients before they fully understand their legal rights or the likely cost of their hip-related medical costs in the future, they’ve been accused of cutting down on their expenses.
DePuy said that all they wanted was to provide efficient assistance to patients and healthcare providers to counter the allegation. J&J’s new statement, however, hinted of a different motive, one that is beneficial to the company itself.

With DePuy accounting for 75 percent of the 5,000 complaints received by the US Food and Drug Administration (FDA) on hip replacement since January of this year, it is hard to believe that J&J’s financial position will not be “adversely affected.” It does not bode well for some 93,000 patients worldwide implanted with the DePuy ASR hip replacement systems that a study by the National Joint Registry (NJR) of England and Wales had suggested that the five-year failure rate of this product was approximately 13 percent. The hip implant of one in every eight patients who had the DePuy ASR hip replacement will have their implant failing in five years.  

The critics are then not far off with their allegations as to J&J’s motive in letting BroadSpire handle the recall by taking this into consideration. It may seem the right move but in actuality it is taking advantage of victims by putting them under the care of doctors on J&J’s payroll, not the patient’s own doctor, and requiring those patients to hand over medical records the company would not normally get a look at unless the patient was represented by an attorney. "You can see how the company wants to make sure they only pay what they consider in their own mind legitimate claims," said David Prince, professor of law at William Mitchell College of Law.

With 700 complaints filed for the last two months alone, the issues on DePuy hip replacement recall are not expected to die down soon. A growing number of victims also have their implants lasting only a fraction of that time with some experiencing pain within less than a year, aside from medical studies suggesting that more than 1 in 8 patients would have their implant failing within five years. 

Katherine is following news on the DePuy hip replacement recall. She is insistent that legal action be taken as a result of J&J's neglect to provide consumers with safe and effective hip replacement devices.