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Defective design problems with recalled DePuy hip ASR replacements are beginning to bite into Johnson and Johnson quarterly profits.

Recently, the medical product company reported only $218 million in net earnings for the last quarter of 2011.

The reduced earnings was attributed to a $2.9 billion charge, which included expenses from DePuy ASR hip lawsuits, among other charges.

J&J set aside $1B

This charge follows a nearly $1 billion set aside in the fourth-quarter 2010 for costs associated with DePuy hip problems, including funds for potential DePuy ASR settlements and costs associated with the recall program.

Litigation and Settlement charges could exceed $5B

According to experts, DePuy and other manufacturers of similar metal on metal implants could ultimately face $5 billion in legal costs and settlement fees associated with problems from metal-on-metal hip replacements.

In August 2010, a DePuy ASR recall was issued after the system was linked to a higher-than-expected failure rate. By the time the DePuy hip implant was removed from the market, about 37,000 of the devices had already been used in the United States.

At the time of the recall, Johnson & Johnson indicated that the DePuy ASR failure rate was about 12%.

According to some experts the actual percentage of people who are likely to experience problems with their implant, including loosening, metal poisoning and possible revision surgery, is going to be higher with time.

Federal MDL Consolidation in Ohio

Since the recall, a growing tsunami of lawsuits over the DePuy ASR hip have been filed against Johnson & Johnson in courts throughout the United States.

The federal DePuy ASR litigation has been consolidated for pretrial proceedings in the U.S. District Court for the Northern District of Ohio as part of an MDL, or multidistrict litigation. About 3,500 DePuy ASR metal hip recipients have sued the company so far.

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