An indecent settlement | The Hindu

Op-Eds by Judicial Reforms · June 26, 2019
Author(s): Prashant Reddy

There have been no mass tort cases in India like the Acetabular Surface Replacement (ASR) hip implant case. In this, Johnson & Johnson has been accused of selling its faulty ASR hip implants to approximately 4,700 Indian patients between 2004 and 2010. The company announced a global recall of the ASR hip implants in 2010 after doctors in the U.K. and Australia reported an extremely high failure rate for the implant. The metal in the implant was apparently degenerating, causing damage to the bone and tissue, apart from leeching dangerous metals like cobalt and chromium into the blood stream of the patient. By 2013, J&J announced a $4 billion settlement to cover the claims raised by 12,000 patients in the U.S.

Meanwhile, in India, individual patients filed cases against the company before consumer courts. There was no governmental response till 2017 when the Drug Controller General of India (DCGI) set up a committee of experts to probe the matter. This committee stated that J&J, as part of its global recall, had published advertisements in two English language newspapers informing patients that it was affecting a recall of the ASR hip implants and would pay for the revision surgery of those patients who required the implant replaced. Apparently 1,032 Indian patients contacted the company in response to these advertisements. And of these patients, the company paid for revision surgeries of 254 patients, while another 774 patients were kept on monitoring. The remaining 3,600 patients are likely not even aware of the issues with their hip implants because J&J did not contact each patient individually.

The challenge before court
In 2018, an expert committee under Dr. R.K. Arya recommended that J&J be ordered to pay each patient a baseline compensation of ₹20 lakh and additional compensation based on the age of the patient and disability suffered by him. When the DCGI ordered J&J to pay compensation as per the formula laid down by the expert committee, its order was challenged before the Delhi High Court on April 8, 2019 by J&J which argued, and rightly so, that only courts of law and not regulators like the DCGI could order payment of compensation.

In May, the company struck an entirely different chord, claiming that it was willing to pay ₹25 lakh to patients who had a revision surgery and approached the government’s committee, provided that the payment was not construed as an acceptance of any liability. As per the court’s order, this settlement offer would not affect the patient’s right to claim further compensation subject to the fact that any possible future award of compensation from a court would have to be adjusted with the ₹25 lakh already paid. The order records that J&J was in effect extending this offer to merely 67 of the 289 patients who had approached the ‘expert committee’ of the Central government because only these 67 patients had been “verified” and had received revision surgeries.

Problems with the settlement
There are several problems with this settlement. The first is that the patients who are the most important stakeholders are not party to this litigation. One of the fundamental tenets of law is that no order, not even one that is perceived to be a favourable order, should be passed by a court of law without hearing the parties who are going to be impacted by the order. The only way patient interests can be protected is to invite patients to be part of the process. This is not merely an issue of abstract theory but one of practical implications. For instance, if there was even one lawyer for the patients present in court, he or she would have informed the court that most patients have not approached the expert committee of the government because it was as clear as day that the committee did not have any legal powers to award damages. Instead, most patients moved consumer courts seeking compensation. Thus, dealing with the claims of only the 289 who contacted the committee is pointless. The same lawyers would have also informed the court that as per the expert committee report, J&J has knowledge of at least 254 patients who have had revision surgery. Why then is J&J prepared to pay only 67 patients who had the revision surgery? Also, what of the remaining 3,600 patients who have not been informed of problems with the implant?

The perfect smokescreen
The second problem with this payment of ₹25 lakh per patient is that there is no theory of damages supporting the payment of this amount. Normally damages are split under different heads such as loss of future earnings and solatium for hardship — all of which will be calculated on the basis of the age of the patient. A 40-year-old patient who has a much higher earning potential than a 60-year-old patient deserves to be compensated at a higher rate. J&J needs to explain the basis of treating all the patients equally. The expert committee had recommended ₹20 lakh as a baseline compensation to which more could be added as per a formula it proposed. Going by this formula, the compensation payable to these patients would depend on age and disability and would be far in excess of the ₹25 lakh proposed by J&J. The High Court needs to guarantee some transparency in this regard since there are pending cases before the consumer courts which will be dealing with similar questions.

The third tragedy with this settlement is that it provides the perfect smokescreen to both J&J and the DCGI who have so far had to deal with intense media scrutiny over their failures to take care of patient interests. By presenting to the media a deal that has the blessings of the Delhi High Court, both J&J and the DCGI will get away with the appearance of having taken care of patients even when it is clear that ₹25 lakh is a pittance of a compensation. The image of this settlement which costs J&J a paltry sum of ₹16.75 crore will end the public pressure on the company despite no justice being done to the patients.

Prashant Reddy T. is a Senior Resident Fellow at Vidhi Centre for Legal Policy.

Originally published – https://www.thehindu.com/opinion/op-ed/an-indecent-settlement/article28138182.ece


About Prashant Reddy:

Sneha is a Research Fellow with Vidhi Karnataka where she works on Urban Development and Municipal Governance. Prashant Reddy T. is a Senior Resident Fellow with the Judicial Reforms team. His areas of interest include judicial reforms, intellectual property law and drug regulation. He has a B.A.LLB (Hons.) degree from the National Law School of India University and a LLM degree from Stanford Law School. Prashant was awarded the Tata Scholarship by the J.N. Tata Endowment for pursuing his LLM. He is the co-author of ‘Create, Copy, Disrupt: India’s Intellectual Property Dilemmas’ which was published by Oxford University Press. He has been published in peer reviewed academic journals in India and abroad, as well as in newspapers, national magazines and digital platforms such as the Hindu, Indian Express, Business Standard, Economic Times, Caravan, Open, Scroll, Wire, Hoot, Bloomberg Quint and Live Law. He previously blogged for SpicyIP which is India’s leading blog on intellectual property law. Link to full bio