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Stryker Rejuvenate's Mounting Lawsuits Hurt Second-Quarter Profits

Jul 22, 2013

Device maker Stryker experienced a financial blow associated with its recalled Rejuvenate hip implant device, creating a nearly 35 percent drop in second-quarter profits.

The $170 million hit also lowered Stryker’s earnings outlook for this year, according to New CFO William Jellison just announced during a conference call with investors that "[t]he most significant non-[generally accepted accounting principles] adjustments in the quarter, primarily related to a $170 million increase in the charge [were] associated with the voluntary recall of the Rejuvenate and ABG II modular hip stems. The adjustments also included an increase of $19 million for estimated settlement expectations for previously disclosed regulatory issues. We believe these are reasonable estimations of our exposure. However, no potential insurance offset that may be available to help cover some portion of the Rejuvenate recall has been included."

Recently, a Boynton Beach, Florida, orthopedic surgeon said that he has been removing artificial Stryker hips from patients complaining of injuries related to metal contamination associated with the now-recalled Stryker devices. For the past two years, Dr. Robert Zann said he implanted the Stryker Rejuvenate and ABGII modular hip systems in some 400 patients, according to a prior The Palm Beach Post report. Zann says he has since removed 100 of the defective systems and believes he has to remove another 100 more Stryker Rejuvenate devices.

“When I start operating, it is the same mess in them, every single one,” Zann said, describing a “high-pressure fibrous tumor-like pocket” full of fluid. In fact, said Zann, there is so much fluid that the mass “pops” when cut. Zann also said he is seeing inflamed muscle, and white, milky fluid surrounding the joint, according to The Palm Beach Post.

Zann reports that patients are suffering from blood contamination, as well as the formation of fluid-filled, painful masses in the area of the Stryker Rejuvenate joint device. The surgeon believes that the Stryker Rejuvenate and ABG II hip prosthesis recall are among the most serious medical device failures in recent years. In fact, wrote The Palm Beach Post, the revision rate could reach or exceed 50 percent since its approval in 2009.

Revision surgery to remove or explant a defective medical device is a very complex, painful, and expensive undertaking. Zann explained that revision surgery is also very wearing on medical professionals. “We are exhausted right now… This is really wearing us down,” Zann told The Palm Beach Post previously. Also, a revised device may perform worse than the original removed device, say surgeons, because of bone loss caused by the damage from, and removal of, the defective device.

Stryker was asked to cover Rejuvenate hip implant monitoring costs for Florida patients after a request was made in a purported federal class-action lawsuit. The litigation was filed over the Rejuvenate device. Stryker recalled its Rejuvenate implants in July 2012 and, in 2013, advised patients implanted with the Rejuvenate to talk to their physicians about checking the implant for problems, according to court documents, said previously. The documents cited a “risk of fretting and corrosion at the modular neck junction.”

Zann said he removes the recalled Stryker system once per every five surgeries he performs; his office has been inundated with patients implanted with Stryker devices responding to his warning letters asking them to come in for an MRI and metal testing, The Palm Beach Post reported. “This has been the worst year of my life,” Zann said. “I’m so frustrated, I can’t tell you.”

So far, over 80 lawsuits have been filed in New Jersey’s Bergen County, alone, which is where Stryker is based, according to The Palm Beach Post. An additional 30 lawsuits have been filed in federal court and more litigation is expected.

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