By David Voreacos
Oct. 10 (Bloomberg) --
Johnson & Johnson has spent at least $68.7 million to settle hundreds of lawsuits filed by women who suffered blood clots, heart attacks or strokes after using the company's Ortho Evra birth-control patch, court records show.
J&J, the world's largest maker of health-care products, avoided trials through the confidential settlements and hasn't released the financial details to investors.
Of 562 complaints reviewed by Bloomberg News, the vast majority of users alleged the patch caused deep-vein thrombosis, or blood clots in the legs, and pulmonary embolisms, or blood clots in the lungs. Some blamed it for heart attacks or strokes. The complaints blamed Ortho Evra for the deaths of 20 women.
One settled case involved Ashley Lewis, a 17-year-old high school junior from St. Louis who died in 2003. She developed a blood clot in her lung after wearing the patch for six months, according to Roger Denton, an attorney for Lewis's family, including her son, who was a one-year-old when she died.
``It's a very tragic case,'' Denton said. Her parents ``were completely unaware that there was any significant risk to her by using the birth-control patch,'' Denton said.
Complaints filed on behalf of 4,000 women in state and federal courts claim the company hid or altered data about the risks of high levels of estrogen released by Ortho Evra. More than 5 million women have used the patch since sales began in 2002. The New Brunswick, New Jersey-based company voluntarily strengthened the warning label in 2005, 2006 and 2008 with the approval of the U.S. Food and Drug Administration.
Benefit Fund
The $68.7 million estimate of J&J's payments is based on the size of a so-called common benefit fund that finances a group of lawyers who gather evidence available for use by all attorneys who sued the company.
Participants pay 3 percent of their settlements to the fund, which had $2.06 million as of March 31, according to a filing by Janet Abaray, an attorney. She is helping to lead litigation before U.S. District Judge David Katz in Toledo, Ohio, where 1,330 patch cases were consolidated.
``Several hundred individual cases'' had been settled by March 31, Abaray said in an April 17 court document. ``There have been a significant number that have settled since then,'' she said in an interview. Court papers don't indicate how much J&J paid in each case.
`Safe and Effective'
``Ortho Evra provides a needed birth-control option for women and physicians,'' said Gloria Vanderham, a spokeswoman for Ortho Women's Health & Urology unit, a division of J&J subsidiary Ortho-McNeil Pharmaceutical. ``When used according to the FDA- approved label, Ortho Evra is a safe and effective method of hormonal birth control.''
Vanderham declined to comment on any settlements or the company's disclosure practices. In its only public statement about settlements, a company spokesman said in April 2007 that J&J was settling cases, declining to be more specific.
She said the company ``recommended to the FDA that there should be label changes and then worked with the agency to determine what the actual changes would be.''
Johnson & Johnson also ``regularly and properly disclosed data to the FDA, the medical community and the public in a timely manner,'' Vanderham said.
The company's current label warns that Ortho Evra exposes women to 60 percent more estrogen than the typical birth-control pill and that higher estrogen increases side effects. Studies show Ortho Evra can double the risk of serious blood clots compared with the pill, according to the label.
Liability Insurance
In its last annual report on Feb. 26, the company reported no reserves for Ortho Evra cases and said any liability from them ``will be substantially covered by existing amounts accrued in the company's balance sheet and, where available, by third-party product liability insurance.''
J&J, which makes diaphragms and birth-control pills, developed the patch as an alternative method of hormonal birth control for women who might forget to take their pills daily.
The company reports sales of the Ortho Evra patch with those of its birth-control pills, folding both into overall sales of hormonal contraceptives. J&J reported 2007 sales of $900 million for that category, a decrease of 9 percent. The company's total revenue was $61.1 billion.
J&J's annual report cited ``a significant decline'' in Ortho Evra sales because of ``labeling changes and negative media coverage concerning product safety.''
J&J fell $1.73 to $55.85 or 3 percent in New York Stock Exchange composite trading. Shares reached a 52-week low of $52.06, a loss of 9.6 percent, just minutes after trading began.
`Unpredictability'
Drugmakers settle cases to achieve certainty about their liabilities in mass-tort cases, said Stanford University law professor Robert L. Rabin. Finding an upper limit on damages ``diminishes that sense of unpredictability that is anathema to drug companies,'' Rabin said. At a trial, serious injuries may sway juries, he said.
The pace of J&J settlements has increased as the U.S. Supreme Court prepares to hear arguments this fall on the legal doctrine of pre-emption, said plaintiffs' lawyer Andy Alonso. The Supreme Court could rule that pre-emption bars consumers from relying on state law, as Ortho Evra users did, to sue for damages linked to products approved by federal regulators.
J&J argued in court papers filed in federal court in Toledo on Feb. 22 that state jurors can't conclude that a drug is unreasonably unsafe if the FDA's experts say it is safe and effective and the warning label is adequate.
Public Citizen's Health Research Group, a Washington-based advocacy organization, petitioned the FDA in May to ban the patch within six months, even after the three label changes.
`Dangerously High'
``It still has dangerously high levels of estrogen,'' said Sidney Wolfe, director of the group. ``There are no unique benefits. If there is a drug with no unique benefits, and it has unique risks, and there are alternatives, why should anyone use it? What is the purpose of the FDA if not to regulate products like that?''
FDA spokeswoman Rita Chappelle said: ``Because we do have a citizen's petition in house, as a matter of policy we would not make any comment while we are reviewing the petition. We are in the process now of addressing the petition.''
The FDA's Web site includes a question-and-answer page posted after the last label change in January, noting results of three epidemiology studies. Two studies showed a doubling of the risk of serious blood clots compared with typical birth-control pills. The results ``support FDA's concerns regarding the potential for use of Ortho Evra to increase the risk of blood clots in some women,'' according to the Web site.
The risk of women dying while pregnant is higher than that for women using the patch, and the risk of patch users developing blood clots is small, J&J said in the Feb. 22 court filing.
Planned Parenthood
Planned Parenthood Federation of America offers the patch at more than 880 U.S. health-care centers and considers it safe and effective for eligible women, according to Dr. Vanessa Cullins, vice president for medical affairs.
Cullins, a former assistant professor at Johns Hopkins Medical School, said Planned Parenthood has studied all medical data on the patch and advises women on the risks.
``We make Ortho Evra available without reservation for healthy women who are candidates for combined hormonal contraceptive methods such as the patch, the pill, and vaginal contraceptive rings,'' Cullins said. ``We're not making distinctions among this class of contraceptive methods.''
The patch is designed to release continuous levels of progestin and estrogen through the skin and into the bloodstream for seven-day periods. Plaintiffs claim in court filings that J&J ignored warning signs of patch risks as early as 1998.
Volleyball Coach
One case set for trial involves Stephanie Rosfeld, a 25- year-old assistant volleyball coach at the University of Cincinnati who died of a heart attack in 2004 after using the patch for less than a month.
``We think the evidence is strong that she died of a blood clot caused by Ortho Evra that caused her heart attack,'' said attorney Abaray, who represents Rosfeld's husband. ``Our experts have eliminated other causes of death.''
Last year, J&J agreed to pay $1.25 million to settle a lawsuit over the death of Alycia Brown, a 14-year-old girl from La Crosse, Wisconsin, who had two blood clots in her lungs after using the patch, according to a document left in a court file and reviewed by Bloomberg News.
In the document, dated April 21, 2007, the company denies that Brown's use of Ortho Evra ``in any way caused or contributed to any such injuries, losses or damages.'' J&J said it was ``mindful of the uncertainties engendered by the possibility of litigation and are desirous of settling.'' It bars disclosure of the terms to the media or anyone else except as required by law.
College Student
The Brown settlement document was in the file of a lawsuit filed by the family of Zakiya Kennedy, an 18-year-old college student from New York who died after using the patch. Her case was settled in state court in Manhattan last year.
A document filed in state court in Los Angeles on March 3 by attorney Thomas Schultz said his firm, Lopez, Restaino, Milman & Skikos, had settled on behalf of 194 claimants. Another 37 plaintiffs settled, according to an April 16 filing in state court in Los Angeles by the Newport Beach, California, firm of Robinson, Calcagnie & Robinson.
Bloomberg News reviewed 361 cases dismissed ``with prejudice'' in federal court in Ohio, 152 in state court in New Brunswick, New Jersey, and 47 in state court in Los Angeles. Dismissing cases with prejudice means they can't be filed again. Available court documents don't indicate whether Johnson & Johnson settled those cases.
Confidentiality Agreements
Most cases dismissed with prejudice were settled, said several lawyers involved in the litigation, who declined to speak publicly because they signed confidentiality agreements.
Lawyers familiar with the Ortho Evra litigation who requested anonymity said J&J typically settles death cases for more than $1 million, deep-vein thrombosis cases for $125,000 to $175,000, and pulmonary embolisms for $140,000 to $300,000. Those amounts can vary depending on a woman's circumstances, the lawyers said.
The Ortho Evra settlements fall short of those involving Merck & Co.'s Vioxx painkiller. Whitehouse Station, New Jersey- based Merck has agreed to pay $4.85 billion to settle claims that Vioxx caused heart attacks, strokes and sudden death.
Unlike Merck, which reached a global settlement after trying 16 cases, J&J has never gone to trial over Ortho Evra.
Former users of the Ortho Evra patch live in ``constant fear'' of incurring a pulmonary embolism or deep vein thrombosis, according to plaintiffs' attorney Debra Brewer Hayes in Houston, who said she has settled about two dozen cases.
Mother of Two
Monica Johnson was a 41-year-old mother of two from Willingboro, New Jersey, who used the patch for less than a year when she suffered a pulmonary embolism and died in 2005, according to attorney Russell Rein in Pensacola, Florida. The company settled her case, Rein said in an interview.
``Their exposure was pretty high, so they were willing to talk turkey about settling,'' Rein said. `` They have been settling out quite a few cases where the damages are significant and the causation is clear.''
Lakesha Smith, 26, began wearing the Ortho Evra patch after she prematurely delivered a six-month-old baby who died within two hours, according to a complaint filed in state court in New Brunswick. After three weeks on the patch, Smith had seizures and a stroke, leaving her with ``serious and permanent injuries'' not specified in the complaint.
In the pre-emption case, the Supreme Court will hear arguments in November on whether Wyeth must pay $6 million to a musician, Diana Levine, who was injected with the company's anti- nausea treatment Phenergan. She developed gangrene, and her arm was amputated.
``It's pushing everyone to the table to try and settle cases,'' said plaintiffs' attorney Alonso in Great Neck, New York. ``I don't think anyone can honestly say what impact a decision in Levine will have in this litigation.''
Plaintiffs' lawyers are concerned that the Levine case will strengthen J&J's bargaining power, attorney Hayes said.
``If they were to win on pre-emption, the settlement values would drop to zero,'' Hayes said. ``My sense is they want to resolve this, put it behind them and move on.''
To contact the reporter on this story: David Voreacos in Newark, New Jersey, at dvoreacos@bloomberg.net.
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