Durom Cup Hip Device Sales Halted Over Questionable DesignJul 24, 2008 | Parker Waichman LLP
The nation’s biggest producer of orthopedic devices says it is suspending sales of an artificial hip component that some say is failing at high rates. Zimmer Holdings, based in Warsaw, is also lowering its earnings outlook due to the suspension; shares fell sharply yesterday. The Durom cup has been implanted in over 12,000 patients since it was first sold in the United States in 2006.
Doctors have been voicing complaints in recent months that the Zimmer devices—a hip socket known as the Durom cup—was failing in their patients. In those cases, the patients were required to undergo replacement surgery. Zimmer said its investigation determined that the Durom cup was not defective and that even some experienced surgeons found it difficult to implant the device. Zimmer said it expected to resume sales once it initiated specialized training for doctors.
Zimmer said it expected general need for early replacement of the device in patients to be low; however, Zimmer data and interviews with doctors suggest that hundreds of patients might need such procedures going forward.
Zimmer said the sales halt would cut $20 to $30 million from its sales estimates and that its expected earnings for the year would be $4.05- $4.10 a share, down from its earlier forecast of $4.20-$4.25 a share. Bruce Nudell, an analyst at UBS who covers medical devices, said that Zimmer had not issued any warnings that sales would be halted. “They had given hints that there would not be a recall but this came as a surprise,” Mr. Nudell said.
Problems with the Durom cup became known in April when a Los Angeles surgeon, Dr. Lawrence Dorr, publicly warned other orthopedists about cup failures he was hearing about from his patients. At that time, Zimmer said it would initiate an investigation but that it saw no reason to take other action, such as halting sales. Zimmer cited European data that indicated that the Durom cup was doing well there; however, the version of the Durom cup used outside the US is a bit different from the one used in the US. Additionally, while US doctors use the Durom cup in traditional hip replacement surgeries, surgeons in other countries use the device in a relatively new kind of hip surgery known as resurfacing, which involves different surgical techniques.
Zimmer, which announced the sales suspension late Tuesday, said its investigation found that using the cup required a higher degree of precision. Dr. Dorr, who said he had stopped using the device last year, said he did not plan to start reusing it. “It is a bad design,” he said. Mr. Nudell, the analyst, said other doctors were happy with the cup, but he expected Zimmer might see a 50 percent drop in the product’s use when sales resumed.
As a result of halting sales, Zimmer said that it was also suspending United States premarketing trials of its system for resurfacing, the surgical process that is used in Europe with the Durom cup. That decision will put Zimmer further behind competitors that already have such products on the American market.