The next hearing session of the United States Judicial Panel on Multidistrict Litigation (“JPML”) is scheduled for May 28, 2020. In light of the Covid pandemic, all oral arguments are scheduled to be completed virtually by Zoom conference. Only three matters are set for oral argument to consider motions to transfer each to one to a centralized district for coordinated pretrial proceedings. Two out of the three involve marketing, sales practices and products liability issues. The remaining 2020 JPML Hearings are scheduled for: July 30 in Boston, Massachusetts; September 24 in Birmingham, Alabama; and December 3 in San Antonio, Texas. It remains to be seen when the JPML will transition back to live hearings and, if so, the restrictions under which they will do so.
Overview of March 2020 Hearing Session
The first virtual 2020 JPML hearing took place on March 26. Following the hearing, the JPML issued transfer orders centralizing cases and creating new Multidistrict Litigation (“MDL”) in three matters:
Matters Set for Oral Argument on May 28
The following matters are scheduled for oral argument during the May 28 hearing session:
- MDL No. 2936 – In Re: Smitty’s CAM2 303 Tractor Hydraulic Fluid Marketing, Sales Practices and Products Liability Litigation
- MDL No. 2938 – In Re: Evenflo Company, Inc., Marketing, Sales Practices and Products Liability Litigation
- MDL No. 2939 – In Re: Family Dollar Stores, Inc., Access for Individuals with Disabilities Litigation
Notes on May’s Motions to Transfer
MDL No. 2936 – In Re: Smitty’s CAM2 303 Tractor Hydraulic Fluid Marketing, Sales Practices and Products Liability Litigation. Defendants Smitty’s Supply Inc. and CAM2 International, L.L.C. have requested transfer of 8 class action lawsuits, each representing a consumer of a different state. The lawsuits allege defendants negligently designed, manufactured, and sold their 303 Tractor Hydraulic Oil. The lawsuits additionally contend defendants engaged in deceptive and misleading marketing and labeling of by representing the product met certain manufacturer specifications and provided certain anti-wear and protective benefits when it allegedly did not meet the stated specifications or provide the stated benefits. Plaintiffs filed suit against manufacturers and retailers, asserting claims of negligence, breach of warranties, fraudulent and negligent misrepresentation, and consumer protection law violations. Smitty’s Supply Inc. and CAM2 International, L.L.C.’s request transfer to the Eastern District of Louisiana. Retailer defendant Tractor Supply Company joined in the request for consolidation but alternatively requested transfer to the Southern District of Texas – Houston Division. Plaintiffs in all 8 actions are represented by the same law firm, Horn, Aylward and Bandy, LLC. Plaintiffs brief opposes consolidation and contends counsel have informally coordinated discovery in all actions thus far, and each action represents separate and different classes of purchasers located only in the state of purchase – thus avoiding competing and/or overlapping classes.
MDL No. 2938 – In Re: Evenflo Company, Inc., Marketing, Sales Practices and Products Liability Litigation. With over two dozen class action lawsuits pending against Evenflo Company, Inc. (“Evenflo”), plaintiffs’ counsel have filed multiple Motions to Transfer. Plaintiffs have overwhelmingly agreed to the transfer request, as has Evenflo, but the transferee court is hotly disputed. The suggested transferee courts are the United States District Court for the District of Massachusetts, the Eastern District of Wisconsin, and the Southern District of Ohio. Specifically, Evenflo recommended either the Honorable Douglas R. Cole or the Honorable Michael H. Watson of the Southern District of Ohio. Plaintiffs in the pending lawsuits allege misconduct related to the Big Kid Booster Seat; specifically, the lawsuits claim Evenflo deceptively advertised, marketed, and labeled the booster seat as safe for children under 40 pounds, as exceeding governmental testing standards, and as “side impact tested” when the company’s own testing showed a demonstrable lack of safety and significant potential for injury. The Big Kid Booster Seat is manufactured in Ohio, Evenflo’s operational office is in Ohio, and although 70 employees relocated to Massachusetts in 2018, they are mostly executives and the bulk of Evenflo’s employees are in Ohio.
MDL No. 2939 – In Re: Family Dollar Stores, Inc., Access for Individuals with Disabilities Litigation. Family Dollar, as the defendant in multiple class action lawsuits alleging the company has inadequate operational and management policies such that it does not enforce requirements that its store aisles be wide enough to comply with Title III of the Americans with Disabilities Act, requests consolidation and coordination of the pending actions in the Northern District of Illinois, where one of the actions is currently pending.
In April of 2017, multi-district litigation (known as “MDL 2775”) was established in federal court in Baltimore, Maryland before United States District Court Judge Catherine C. Blake against Smith & Nephew, which is based in England and sells its products, which are not limited to hip implants, in 90 countries across the world. The headquarters for Smith & Nephew in the United States are located in Memphis, Tennessee.
An MDL is a “Multi-District Litigation” and these are used to more efficiently speed up the legal process when cases involving many people, such as class actions and mass torts, are filed in the US. Their purpose is to instead of having thousands of cases filed in dozens of jurisdictions is to consolidate these to one court and under one judge.
From 28 to over 600 lawsuits
The Smith and & Nephew MDL began with 28 individual defective hip lawsuits transferred from 19 district courts from across the country. Since then, the coordinated litigation has grown to include more than 600 individual lawsuits. Most of the pending lawsuits relate to cases where patients were implanted with Birmingham resurfacing hip implants (which include a femoral head and acetabular cup but not a femoral stem) and underwent revision surgery due to metallosis, elevated cobalt and chromium ions in the bloodstream and joint fluid, pseudotumor formation, and premature failure of the devices.
There are also a number of individual lawsuits pending and coordinated in the MDL that relate to Smith & Nephew R3 and Birmingham total hip implant devices (which include a femoral stem in addition to the cobalt-chrome femoral head and acetabular cup), which the MDL was expanded to include in 2018. These total hip implant lawsuits also allege that the Smith & Nephew metal-on-metal hip implant products are defective due to an excessive failure rate, the need for revision surgery, and injuries to patients due to heavy metal toxicity and poisoning.
As of May of 2019, more than 1 million pages of documents have been produced from the manufacturer in MDL 2775 with additional discovery continuing through the end of 2019. Most of the discovery so far has focused on the Smith & Nephew Birmingham Resurfacing hip implant. Discovery relating to Smith & Nephew total hip arthroplasty devices, including the Birmingham THA and R3 products, is continuing on a parallel track and expected to be expedited soon, especially in light of the failed mediations and settlement discussions for these particular lawsuits. Dozens of depositions of witnesses in the United States and overseas will also be completed in the coming months in preparation for the first jury trials in the MDL proceedings, which are anticipated to begin in March of 2020. We anticipate that case-specific discovery will be initiated in the latter part of 2019 once Judge Blakes decides which individual patient lawsuits will be included in the pool of cases for these initial MDL bellwether trials in 2020. Judge Blake has encouraged the parties to continue to engage in settlement talks, especially with regard to the THA lawsuits. Smith & Nephew has not been as motivated to discuss settlement on the hundreds of lawsuits involving resurfacing devices, as it contends that those cases are subject to dismissal due to federal medical device preemption laws.
Legal Claims Against Smith & Nephew
The lawsuits that have been filed on behalf of injured patients allege various claims against Smith & Nephew for the metal-on-metal total hip and resurfacing implant products, including that:
- The devices are defectively designed and generate dangerous metal debris through contact on the articulating surface which causes harm to patients;
- The warnings that accompanied the products and information that was provided to implanting surgeons and patients were inadequate;
- The products were not properly approved or cleared by the FDA for implantation in patients;
- The products have an excessively high failure rate after implantation in patients due to metallosis;
- The marketing and promotion of the implant system to surgeons was deceptive and misleading;
- Smith & Nephew failed to properly monitor patients, the published medical information, international device registries, and other sources to identify and address potential safety risks;
- The hip implants products were not properly tested and studied prior to implantation in patients;
- The manufacturer violated various federal and state consumer protection requirements relating to design and manufacture of the devices; and
- Various other allegations relating to defects and negligence in the design, manufacture, marketing, promotion, and safety surveillance and monitoring of the Smith & Nephew hip implant products.
Smith & Nephew has been selling Birmingham resurfacing total hip arthroplasty hip implant products in the United States since 2006. This resurfacing hip implant, often referred to as a “BHR implant” includes a femoral head and a matching acetabular cup, both of which are made from a cobalt-chromium alloy. The R3 Acetabular Hip System incorporates the Birmingham components but has interchangeable liners made of polyethylene, ceramic, or metal. The R3 implant with a metal liner is the product that is included in the MDL litigation, and has been marketed in the United States since 2009.
Dispute Over FDA Approval and Federal Medical Device Preemption Immunity
One of the critical issues in the pending lawsuits across the county is the manner in which the BHR implant components were approved or cleared by the FDA for sale. Smith & Nephew contends that it is immune from liability for any alleged defects in the design of its BHR products on the basis that the Food & Drug Administration approved the product through a Premarket Approval application, commonly known as the “PMA” process (which is a more rigorous review process by the FDA than is often used for other hip implant products). The Defendant also contends that this immunity extends to the Birmingham and R3 total hip implant products as well.
This legal doctrine, approved by the United States Supreme Court, is medical device preemption and is highly controversial and unknown to most patients that assume that a company that produces a medical product that causes an injury should be able to be sued in court by the patient. The Plaintiffs claim in this litigation that the BHR acetabular cup was approved by the PMA process, but that the modular femoral head and femoral stem components used to construct the Smith & Nephew total hip arthroplasty system were not approved by the FDA, such that the Defendant should not be immune from liability for the alleged defects in the design of the product.
10+ Years of Hip Implant Safety Issues
Over the last 10 years, there have been numerous recalls and safety alerts regarding metal-on-metal and modular hip implants. The first recalled devices included the Zimmer Durom Cup and DePuy ASR metal-on-metal hip implant products. These products were noted to have an excessive premature failure rate due to excessive metallic debris emanating from the articulating surface of the implant, where the cobalt-chromium metal femoral head was coming into contact with the cobalt-chromium metal acetabular cup (the part of the implant that replaces the hip socket). This process is known as metallosis and leads to bone and soft tissue damage in the hip joint which undermines support and proper functioning of the hip implant. Ultimately, patients with failed metal-on-metal or modular hip implants require revision surgery and are faced with a number of potential complications including the need for revision surgeries, dislocations, infections, pseudotumor formation, elevated cobalt and chromium metal ions, fluid accumulations around the hip, persistent hip pain, loss of abductor muscles, and inability for the hip to function properly.
Since the first recalls by Zimmer and DePuy in 2008-2010, other metal-on-metal and modular hip arthroplasty devices have been recalled by Biomet, Smith & Nephew, Wright Medical, and Stryker.
The modular hip implant recalls have focused on similar injuries of metallosis leading to premature failure of the devices and the need for revision surgery and medical treatment for various complications, including significant damage to hip muscles, post-operative infections, dislocations, and femur fractures due to the trauma of the revision surgery to remove the well-incorporated femoral stem from the patient’s leg bone. In addition to the device recalls, some of these manufacturers and other, smaller companies decided to stop selling metal-on-metal and modular hip implants due to decreased demand for the products and/or an inability to meet the FDA’s request for enhanced data and studies to substantiate the long-term safety of the implanted devices. There have also been various recalls of these hip implant products in Australia, the United Kingdom, and other parts of the world due to the same concerns.
A worldwide recall of Smith & Nephew’s R3 metal liner was initiated in 2012 after post-surgery surveillance, as documented in international joint registries, noted a 6.3% revision rate within four years of implantation, which was substantially higher than expected based upon published medial data. Post-marketing reports also indicated that female patients, male patients older than 65, and patients that required a femoral head larger than 48 millimeters were at a greater risk of requiring a revision surgery than expected.
The Mass Tort Team at Searcy Denney has nearly two decades of experience in litigating more than 1,000 product liability lawsuits against modular and metal-on-metal hip implant manufacturers. In addition, partners Cal Warriner and Brenda Fulmer have been appointed by state and federal court judges to leadership positions for coordinated litigation involving these defective devices.
Did you know that 32 million Americans have at least one medical device implant?
As the main regulatory agency charged with ensuring the safety and efficacy of drugs and medical devices, the Food and Drug Administration (FDA) is entrusted with the safety and well-being of countless Americans every day. Their mission statement describes the agency as being “responsible for protecting the public health by ensuring the safety” of products, such as medical devices and pharmaceutical drugs.
However, the reality is that many people are hurt by medical devices that have slipped through loopholes in the FDA’s regulatory framework. This includes the 510(k) Fast Track program.
What is the 510(k) Fast Track Program?
Americans want solutions, and they want them fast. In an effort to reduce the time it takes for a medical device to become available to the public, many manufacturers often use a fast-track premarket approval process known as the 510(k) Fast Track program when submitting their devices to the FDA for marketing approval.
Through this process, the manufacturer must demonstrate the device is safe and effective enough to be marketed without further testing. Thus, the length of the approval period is significantly shortened.
How Products Are Approved Under the 510(k) Program
For a device to be approved under 510(k), manufacturers must first file a Premarket Notification (PMN). The FDA will review the PMN within 90 days to determine which class the device falls into.
Devices are put into one of three categories:
- Class I: This class is considered “low risk” and involves devices not intended to treat potentially fatal conditions, or that won’t cause life-threatening harm if misused. Class I devices are available over-the-counter and not governed by the FDA.
- Class II: This class is for “medium risk” devices that are not typically intended to treat potentially fatal conditions but can cause harm if misused. Class II devices are eligible for 510(k).
- Class III: This class is for “high risk” devices that are intended to support or sustain life and present high risk of injury or death if misused. Class III devices are not eligible for 510(k).
In addition to this three-tiered system, the FDA allows what is known as substantial equivalency through the 510(k) program. This means that a new device can be approved if the manufacturer can demonstrate that it is as safe and effective as a similar, previously approved medical device, known as the primary predicate.
To prove substantial equivalency, the device must have:
- The same intended use as the predicate; and
- The same technological characteristics as the predicate;
- The same intended use as the predicate; and
- Different technological characteristics, yet does not raise different questions of safety and effectiveness; and
- The information submitted to FDA demonstrates that the device is at least as safe and effective as a similar, the legally marketed previously approved device.
Proving a device is similar enough to another device already on the market bypasses specific testing. Because of this, almost two out of three 510(k) applications are cleared within six months.
Why the 510(k) Program is Faulty
The FDA’s 510(k) fast-track program often causes more problems than it solves.
Thousands of unsuspecting consumers might imagine that our medical device industry only delivers quality, life-saving products to Americans in need. However, the reality is that our medical device industry actually willingly bypasses important testing by expediting the approval process, skipping vital steps that could save lives.
Fast-tracking puts devices on the market with little to no specific testing. Because many products do not undergo important clinical trials, consumers end up being the true test subjects for manufacturers. New side effects and dangers are only discovered over the life of the device – and without clinical trials – unsuspecting patients can be injured.
To complicate matters, it is difficult to remove a device from the market once it has been approved, even if it has injured multiple consumers. If a device’s primary predicate is recalled, there is a significant chance that the substantially equivalent 510(k) device is also dangerous. However, the two products are treated separately, meaning the 510(k) device may remain on the market even if its predecessor was later proven dangerous.
Popular Medical Devices Recalled After 510(k) Program Approval
Many products fast-tracked through the 510(k) Fast Track Program have caused untold damage to countless Americans. Notorious devices include metal-on-metal implants and transvaginal mesh.
Certain hip replacements released to the public were made of titanium parts, which corroded when the joints rubbed together. This released metallic debris into the bloodstream, leading to a dangerous condition known as metallosis, or blood poisoning. These metal-on-metal implants received 510(k) clearance without additional clinical testing after proving substantial equivalence to earlier devices.
Another example, transvaginal mesh, received nationwide attention after the FDA received more than 3,000 reports of adverse reactions in just two years. Two such products – ProteGen bladder sling and Mentor ObTape – have been removed from the market. However, Avaulta’s vaginal mesh sling remains on the market, despite numerous side effects and lawsuits filed by recipients.
The FDA has since concluded that transvaginal mesh, originally labeled as having “moderate risk,” was linked with serious complications such as organ perforation, chronic infections, mesh erosions and other permanent damage.
Contact the Defective Drug Attorneys at Searcy Denney
Unfortunately, the FDA’s 510(k) program has caused many Americans to be unwillingly used as guinea pigs for uncovering dangerous side effects of medical devices that should have been properly tested beforehand. If you were harmed by a dangerous medical device, you are not alone. Thousands of injured individuals have taken legal action to stand up against Big Pharma.
Our team of experts understands the pain and heartache caused by dangerous medical devices. With our experience, we can help answer any of your questions so that you feel confident in your choice to seek legal remedy.
At Searcy Denney, we stand upon 40 years of experience helping our clients return to their normal lives after they are injured from the negligent and careless acts of others. We can help you, too. Find out how in a free, private consultation today by calling (800) 388-3905.
Small particles of glass are to blame for the recall of a widely used fluticasone nasal spray that treats symptoms of hay fever in children.
The nasal spray, known by its brand name Fluticasone Propionate Nasal Spray USP and manufactured by Apotex Corp., of Weston, Fla., was pulled voluntarily from the market by the company, which said the glass particles could clog the bottle and cause it to malfunction and, more importantly, abrade the inside of the nose. The U.S. Food & Drug Administration (FDA) said the issue was detected via a complaint.
Glass Particles Found in Spray Bottle
“The glass particles could block the actuator and impact the functionality of the pump,” the FDA said in a safety alert titled “Fluticasone Propionate Nasal Spray by Apotex Corp: Recall – Due to Potential for Small Glass Particles.” “There is a potential for patients to be exposed to the glass particles and mechanical irritation cannot be ruled out. Local trauma to the nasal mucosa might occur with use of the defective product.”
With the exception of the complaint, Apotex Corp. has not been made aware of any other adverse events as a result of the recall.
“Patients, wholesalers, retailers, hospitals or institutions with Lot# NJ4501 and an expiration date of July 2020, should stop use and distribution of the remaining units and quarantine immediately,” according to the safety alert. “Healthcare Professionals in your organization should be informed of this recall.”
Fluticasone Widely Used for Allergies
Fluticasone Propionate Nasal Spray USP is for patients between the ages of 4 and 17 who suffer from seasonal allergies, sinus pain, sneezing and a stuffy nose. The drug also helps with itchy, watery eyes. It is a corticosteroid. WebMD explains its uses:
“The dosage is based on your age, medical condition, and response to treatment. Do not increase your dose or use this drug more often or for longer than directed. Your condition will not improve any faster, and your risk of side effects will increase. You may be directed to start with a higher dose of this drug for the first several days until you have begun to feel better, then decrease your dose. Children may need to use this drug for a shorter amount of time to lower the risk of side effects. If a child is using the over-the-counter product, read the package information to see how long he / she should use it and when you should check with the doctor.”
WebMD notes that the drug does not relieve symptoms immediately.
“You may feel an effect as soon as 12 hours after starting treatment, but it may take several days before you get the full benefit. If your condition does not improve after 1 week, or if it worsens, stop using this medication and consult your doctor or pharmacist. If you think you may have a serious medical problem, get medical help right away.
Precautions Necessary for Fluticasone Use
WebMD describes some of the precautions, as well.
“Rarely, using corticosteroid medications for a long time can make it more difficult for your body to respond to physical stress. Therefore, before having surgery or emergency treatment, or if you get a serious illness / injury, tell your doctor or dentist that you are using this medication or have used this medication within the past few months. Though it is unlikely, this medication may slow down a child’s growth if used for a long time. The effect on final adult height is unknown. See the doctor regularly so your child’s height can be checked. During pregnancy, this medication should be used only when clearly needed. Discuss the risks and benefits with your doctor. It is unknown if this drug passes into breast milk. Consult your doctor before breast-feeding.”
Anyone who has experienced problems with Fluticasone Propionate Nasal Spray USP should contact his or her physician immediately. The affected product’s label reads “50 mcg per spray 120 Metered Sprays.” It was distributed to wholesalers, including Sam’s Club and Walmart, nationwide.
“When inhaling nasal spray, glass probably tops the list of things you hope aren’t accidently in the bottle,” Healthcare Packaging states in an article on its Web site titled “Nasal Spray Recalled After Packaging Found to Contain Glass Particles.” “According to a recent FDA news release, Apotex Corp. has voluntarily recalled one lot of Fluticasone Propionate Nasal Spray for just that reason.”
Consumers who have questions about the recall are encouraged to reach out to Apotex Corp. at (800) 706-5575 or at email@example.com. Healthcare professionals are encouraged report adverse events to the FDA MedWatch program at fda.gov/medwatch A form also can be obtained by calling (800) 332-1088.
In an age where data is widely available and almost everything is stored online, data breaches are becoming more common, and the outcomes of cases involving data breaches are unpredictable. Data involved in a breach can range from financial data, such as credit card numbers, to health data, such as treatments and medical history. Based on previous settlements reached, stolen health data typically has the most extensive damages due to the incredibly personal nature of the data, while stolen credit card data has the least damages. It is a lot easier to cancel and replace a credit card than it is to replace identifying information such as a Social Security number. When there is a breach of identifying information, continued alertness is necessary to prevent identity theft, adding to the costs.
The Type of Data in a Data Breach Matters
There are two cases that illustrate the disparity between settlements involving different types of data. An infamous hacker who goes by the name “Cumbajohnny” was responsible for hacking both T.J Maxx and Heartland Payment Systems. Data for approximately 130 million credit and debit cards was stolen from Heartland, and more than 45 million credit card5s were affected from the T.J Maxx breach. However, the Heartland settlement was $500,000, despite involving the breach of three times the amount of data. The T.J Maxx settlement was valued at $6.1 million. The court’s value was based on the type of data breached; Cumbajohnny and his cohort stole identification information from at least 450,000 customers of T.J Maxx, including Social Security and driver’s license numbers. Although the nominal value of credit card information was larger for Heartland, considering the threat of identity theft, the real value of the 455,000 people affected from T.J Maxx was much greater. In fact, eighty-six percent of the T.J Maxx settlement was from the much smaller number of identifying information stolen, and the other fourteen percent is attributed to the 45 million stolen card records.
Although identifying information is valuable in settlements, medical records often add the most value to a data breach settlement because they contain deeply personal information. For example, the breach of Advocate Health Care included unencrypted medical records, affecting 4.03 million patients. The case settled for $5.55 million, remaining the largest HIPAA settlement to date. This case exemplifies the need to keep up with the swiftly-evolving digital landscape to protect clients’ information. It may also demonstrate legislative attention to particularly personal and sensitive data. Due to the variation and uniqueness of each data breach case, it is important to evaluate the types of compromised data.
Identify Theft Also Important Factor
Generally, cases with elements identity theft will be stronger because it is difficult to prove standing without it. Some jurisdictions require the plaintiff to have suffered from identity theft to have standing. It can be difficult to prove that the hacker had malicious intention and/or sold the data they stole, and until they do sell it, some jurisdictions will not give the class standing. For large data breach cases, such as the T.J Maxx settlement, the plaintiff’s attorneys must be prepared to litigate the case under the standing rules of the federal court in any district because many cases filed all over the country can be consolidated into one federal district court for multidistrict litigation.
The value of data breach cases does not only include the monetary value of the breach. Protection against future losses, such as improved digital security and credit monitoring, are important to preventing identity theft and ensuring the affected company isn’t breached again. It can be beneficial to the plaintiff if the company at fault had a previous breach and did not take proper measures to increase their security.
What Happened After the Breach?
Before initiating a case, it is valuable to research what a company has already done after experiencing a breach. Oftentimes, the company will offer one-year free credit-monitoring for customers who experience ongoing credit risk. While credit-monitoring is helpful for preventing a breach, some companies may only monitor one of the three credit bureaus (Equifax, Experian, and TransUnion) to keep costs low, leaving customers vulnerable to fraudulent activity that shows up on other bureau’s credit reports.
Researching if the company bulked up its security after a breach is also useful. It can be difficult to find exactly what the company did in the aftermath because the discovery may not be accessible. Cybersecurity blogs can come in handy to get technical details of how the hacker was able to get into the company’s system in the first place and learn what, if anything, the company did to improve security. If there is a lot of room for security or credit-monitoring improvement, the value of the settlement may be greater, however the court can enforce this by either raising the dollar value of the settlement or mandating the company increases security. For example, after the Target data breach, which affected 41 million customers, the settlement required Target to employ a chief officer who manages security, to actively monitor its systems for security events, provide security training to its employees for five years, and perform routine security assessments. The case settled for $18.5 million, but the injunctive relief was much greater.
Third Party Vendors Can Play Role
Determining if the company or a third-party vendor is at fault for the breach can be challenging. The company experiencing the data breach often claims they have the most up-to-date security systems, however discovery usually reveals gaps that the hackers used to get in and out with the data. If a third-party could be responsible, it would be best to establish the relationship between the company and the vendor as soon as possible and determine if the vendor is primarily responsible for the breach.
An example where the vendor was unmistakably at fault is the case of the Stanford Hospital data breach. The hospital’s business associate (BA), Multi-Specialty Collection Services, LLC, posted 20,000 patients’ emergency room records, including hospital account numbers, billing charges, and emergency room admission and discharge dates, to a student homework website asking how to graph the patients’ data. Stanford Hospital properly encrypted the records before sending them to the vendor, but they were still responsible for paying the administration costs of the $4 million settlement. The hospital also agreed to train its vendors on how to most effectively protect patient data. Since vendors are typically smaller entities, they likely have fewer resources, and this could affect the settlement amount.
One trillion dollars. That’s how much the country spent on the opioid epidemic between 2001 and 2017, according to a report released by the nonprofit institute Altarum, a consulting group focused on improving public health.
The cost of the crisis trickles both up and down and impacts corporations, governments and insurance companies, as well as families, local businesses and neighborhoods.
“The greatest cost comes from lost earnings and productivity from overdose deaths – estimated at $800,000 per person based on an average age of 41 among overdose victims,” the report states. “This figure is largely made up of lost wages of workers and productivity losses of employers, but it also weighs on government in the form of lost tax revenue. It has increased in recent years as the epidemic has transitioned away from older people to younger ones and from prescription opioids to illicit drugs.”
Opioid Epidemic Results in High Costs to Society
More than 42,000 deaths were caused by opioid overdoses in 2016, according to the U.S. surgeon general’s office. In 2010, the death toll was 21,000. The startling spike spurred the office to take action, with Dr. Jerome Adams issuing an advisory: “Be prepared. Get naloxone. Save a life.” Naloxone is an easily administered nasal spray that quickly reverses the deadly symptoms of an overdose.
“Health care costs related to the opioid crisis reached $215.7 billion from 2001 to 2017,” the report states. “This stemmed largely from emergency room visits to treat and stabilize patients after an overdose, any associated ambulance and Naloxone use required, and related indirect health care costs associated with the increased risk of other diseases or complications.”
And the costs have nowhere to go but up.
“An additional $500 billion is estimated through 2020 if current conditions persist,” the report states.
Governing magazine, a nonpartisan news outfit, reports that Middletown, Ohio, spent $1 million-plus on ambulance dispatches for overdoses between October 2016 and October 2017. It also reports that Pennsylvania will spend $5 million this year on naloxone alone. In Nebraska, the epidemic costs $465 per resident. In West Virginia, it costs $4,793 per resident. The state has one of the highest rates of opioid overdoses in the country.
“The costs build up slowly over time, so you almost don’t even notice it,” Nashville lawyer Mark Chalos told the magazine in an article titled “How Much Is the Opioid Crisis Costing Governments?” “But when our people really started to dig into the budgets, they realized the costs are more significant.”
Geographic Factors in Opioid Epidemic
The American Enterprise Institute, a public-policy think tank, conducted a study on “The Geographic Variation in the Cost of the Opioid Crisis” and found the costs of the opioid epidemic are disproportionate at state and local levels, as exemplified by the Nebraska / West Virginia comparison.
“The types of costs attributable to opioid abuse – health care costs, criminal justice costs, and lost productivity, for example – are fairly well understood, as is the economic impact of the crisis at the national level,” the study states. “However, the economic burden of the opioid epidemic is unevenly distributed across the country, with many communities especially hard hit. As federal, state, and local policymakers and stakeholders seek to curb the epidemic, it is vitally important that they know how these costs are distributed.”
VSL – Value of a Statistical Life – A New Way to Measure Cost of Opioid Epidemic
Enter the White House’s Council of Economic Advisers, or CEA. The federal agency compiled a paper in November 2017 that used a metric called the Value of a Statistical Life, or VSL, to gain insight into the costs of the opioid epidemic. The VSL essentially puts a price tag on one’s willingness to lower his or her death risk. It is helpful for shaping policies and programs that reduce fatalities.
“CEA finds that previous estimates of the economic cost of the opioid crisis greatly understate it by undervaluing the most important component of the loss – fatalities resulting from overdoses,” states the executive summary of the paper, titled “The Underestimated Cost of the Opioid Crisis.” “CEA estimates that in 2015, the economic cost of the opioid crisis was $504.0 billion, or 2.8 percent of GDP that year. This is over six times larger than the most recently estimated economic cost of the epidemic.”
The paper states that though this is the first of its kind to be published, it will not be the last.
“A better understanding of the economic causes contributing to the crisis is crucial for evaluating the success of various interventions to combat it,” it concludes. “CEA will conduct further economic analysis of actual and proposed demand- and supply-side interventions; consider the impact of public programs such as Medicare and Medicaid; and explore the important role of medical innovation in combatting the crisis.”