Endo Sets Aside $520M to Resolve Mesh Litigation

Endo Health Solutions is currently facing thousands of vaginal mesh lawsuits – 13,464 as of February 19, 2014, to be exact. The company’s American Medical Systems, Inc. unit is accused of manufacturing defective vaginal meshes that caused injuries to thousands of women. Last week it emerged that Endo has begun covering its bases in anticipation of the suit’s resolution, with $520 million put aside so far.

In a regulatory filing released on Wednesday, Endo revealed that the company had recorded an incremental pretax charge of around $316 million in the last quarter of 2013, raising its total liability reserve to around $520 million – a big increase, and one that’s worth taking note of.

AMS and the company intend to contest vigorously all currently pending cases

In a statement, Endo explained that “the increase in our reserve reflects management's ongoing assessment of our product liability portfolio, including the vaginal mesh cases, the status of the company's ongoing settlement discussions related to vaginal mesh litigation and the inherent uncertainty as to the ultimate costs of resolving this litigation.”

It also added that it was “reasonably possible” product liability suits could cost the company more than the $520 million earmarked so far, but said that “AMS and the company intend to contest vigorously all currently pending cases and any future cases that may be brought.” It seems that the reserve is not so much an admission of guilt as a sensible business precaution. Endo firmly denies that its mesh products were the cause of patient’s injuries, which included pain, discomfort, incontinence, and permanent scarring.

It might be worth noting that a company in a similar position, Biomet, settled its mesh lawsuits earlier this month to the tune of $56 million, while still maintaining that its product was never the cause of plaintiffs’ injuries (See Biomet Settles Hip MDL, Maintains Hips Were Not The Cause of Injuries). So, culpability is not necessary linked to whether medical device manufacturers choose to settle suits against them. This makes predicting Endo’s intentions especially tricky.

According to Fierce Medical Devices, Endo indicated as early as last June that it would choose to settle certain vaginal mesh lawsuits. At the time $54.5 million was paid to resolve several product liability suits related to the company’s mesh products. Could the dramatic increase in the company’s reserve funds mean a raft of settlements are on the horizon? It’s hard to say – defending itself against the suits could easily cost Endo millions of dollars in and of itself. There’s also a glimmer of hope for mesh companies: last week Johnson & Johnson won its first bellwether trial after the judge ruled that the plaintiff simply didn’t have enough evidence. With such mixed results – some companies settling, other fighting on – the only real way to know how Endo will fair is to watch closely the litigation in the coming weeks.