The company, parent of Minnetonka-based American Medical Systems, took the first step to end litigation that investors feared could cost billions.
The parent company of a Twin Cities medtech firm will pay $830 million to settle thousands of lawsuits from women claiming a mesh it produced for use in pelvic surgeries degraded afterward, causing pain and other problems.
Endo International, which has owned American Medical Systems Inc. of Minnetonka since 2011, will provide about $40,000 each to claimants in about 20,000 lawsuits. Women who required multiple corrective surgeries after the product, called a vaginal mesh, was implanted can seek more money, under the settlement terms.
American Medical Systems is one of several manufacturers to be sued by women who claim they suffered further pain and injury after the implant was used to treat a pelvic organ prolapse, a discomforting but not life-threatening condition typically suffered by older women.
In 2010 alone, the FDA said U.S. doctors performed at least 100,000 procedures using vaginal mesh inserts. Tens of thousands of women have filed such lawsuits. Plaintiffs’ attorneys advertise online and late-night TV for litigants. Johnson & Johnson, the largest maker of health care products in the U.S., stopped selling several lines of vaginal inserts last year.
Endo’s settlement was announced Thursday, a day after the Food and Drug Administration said the product should be subject to stricter safety requirements because it is a high-risk device.
The volume of litigation has also cast attention on the FDA’s approval process. Some mesh products were permitted by the FDA after manufacturers, rather than taking them through clinical trials, proved they were “substantially equivalent” to one that was already on the market.
“The meshes are an example of innovative devices that seemed good at the time but were not sufficiently tested before being introduced,” Erik Gordon, a University of Michigan professor who teaches about how drugs are developed, told Bloomberg News.
The devices were used to fortify pelvic muscles and to treat pelvic organ prolapse, which occurs when the bladder, uterus and bowel become so weak or stretched that they drop into the vagina. In the lawsuits, women said the implants caused organ damage, incontinence and made sex painful.
American Medical Systems was already facing lawsuits over the product when it was acquired for $2.9 billion in 2011 by Endo, which is based in Dublin, Ireland. Endo subsequently vowed to vigorously defend AMS against the suits. In announcing the settlement, Endo said it would make the payments through 2016.
“This settlement has been the result of adversarial, but respectful and professional negotiations on the part of all parties,” Joseph Rice, a South Carolina-based plaintiffs’ attorney who helped negotiate the deal, said in a statement.
Shares in Endo’s stock initially rose sharply Friday after analysts wrote the settlement removed a liability that had potentially been worth billions. In a conference call with investors and analysts Friday, Endo chief executive Rajiv De Silva said the company still faces more than 23,000 claims over the inserts. Endo’s shares closed down nearly 1 percent on the Nasdaq Stock Market.
In one of the unsettled cases, Endo is currently slated to face trial in a Minnesota state court next year.
Taking steps to put the litigation behind could free Endo to get back involved in medical industry acquisition activity, Morgan Stanley analyst Christopher Caponetti wrote. He noted the company has previously said it aims to make two to three deals in the near future.
Associated Press and Bloomberg News contributed to this report.
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