Johnson & Johnson Hip Implants in India: Promise of a Hefty Payout by the US courts Should Not Derail Reforms in Judicial Processes & Drug Regulatory System

The Johnson & Johnson hip implants crisis has sparked outrage on several fronts—the seeming brazenness of the company in applying for an import licence although it knew its devices were faulty, the inexcusable lethargy of the Central Drugs Standard Control Organisation (CDSCO) in cancelling the company’s import and marketing permissions, and the bewildering delay in setting up an expert committee to conduct a thorough enquiry. What appears to have incited the most passion, however, is the amount of compensation recommended by the expert committee.The committee has recommended a base amount of 20 lakhs rupees, which is expected to generate a monthly interest amount approximately equaling the minimum wages of an unskilled Delhi worker. The report of the committee notes that this is 13,350 rupees as of 3rd March, 2017. It should also be noted that this is the current standard for calculating compensation for clinical trial-related injuries as well.Inequitable Treatment of Indian Victims?When this amount is contrasted with the settlements that the company has entered into after litigation in Australia and the United States, the sense of injustice is deepened. In Australia, the Federal Court approved a settlement agreement that saw the company agree to pay AUD 250 million; in the US, over 12,000 lawsuits in different parts of the country were ultimately settled by a payment obligation of nearly USD 2.5 billion. The individual base awards, with exceptions permitting both smaller and larger amounts were approximately equivalent to INR 28 lakhs and 1.8 crores in Australia and the US respectively.When broken down like this, the amount of compensation paid to Australian patients is much closer to the amount recommended by the expert committee in India than it is to the amount awarded in the US. One of the reasons for this significantly higher payout is because of a litigation culture that is specific to the US and which is the bread and butter of a battery of lawyers specializing in mass tort actions in product liability.The Doctrine of Forum Non ConveniensAre Indian patients better off suing in the US then? If the amount of compensation likely to be awarded and a quicker judicial process are important concerns (as they should be), then certainly, as another commentator has already pointed out. How likely are US courts to hear the claims of Indian patients, though? The answer to this requires an examination of the doctrine of forum non conveniens in actions initiated by foreign plaintiffs.This doctrine allows courts to dismiss a case on the ground that it is inconvenient to the defendants for the case to be tried in the court in which the claim is made, and that an adequate alternative forum exists.However, the manner in which the doctrine has been applied by US courts over the years suggests that defendants no longer have to discharge a high burden of proof by demonstrating that they are being sued in a US forum by the plaintiffs as a form of harassment. Instead, courts may simply decide that another venue is more appropriate to the case. Academics argue that this jurisprudence has resulted in inequitable results for foreign plaintiffs and limited liability for US corporations.The Bhopal ExperienceHow does a US court determine which forum is more appropriate? A mix of private and public interest factors is applied to assess. Private interests include easy access to proof and costs involved in the attendance of witnesses; public interests include the burden of litigation on the US judicial system and which forum has a more substantial interest in hearing the case.In the Bhopal Gas Leak case, the actions brought against Union Carbide Corporation were dismissed by applying the doctrine of forum non conveniens. New York District Judge Keenan found that the regulatory reforms ushered in by the Indian government in the aftermath of the tragedy demonstrated that it had a strong interest in the dispute. This is despite the fact that the Indian government itself brought these claims on behalf of the victims, arguing that they would not be able to receive adequate compensation quickly from Indian courts.In the Johnson & Johnson case, while the US courts are likely to provide higher compensation and speedier resolution, the doctrine of forum non conveniens will be a major barrier to overcome. One of the first questions that will be asked is whether the Indian legal system provides an adequate alternative? Although representative suits can be filed under Order 1, Rule 8 of the Code of Civil Procedure, 1908 to address the claims of multiple plaintiffs in a consolidated manner, the glacial pace of civil litigation makes this option a non-starter. The National Consumer Disputes Redressal Commission, with a disposal rate of 84.82% (although it still has over 18,000 cases pending) and lower fees for making a complaint (INR 5,000 if the compensation claimed is above 1 crore) is probably a better bet, although State and District consumer forums have begun to resemble civil courts in the time taken to settle disputes.Even if US courts were to hold that India’s consumer protection regime does not provide an adequate alternative, could it still find that the Indian government has a substantial interest in the matter? In the wake of Bhopal, the Indian government introduced amendments to the Factories Act and a spate of environmental legislation—this turned out to be one of the reasons for the US court dismissing the claims.This application of the forum non conveniens doctrine has awkward implications for the Indian government. In the interest of ensuring that a large group of patients receive the compensation that they deserve, must it refrain from undertaking the systemic reform of its drug regulatory system that is unequivocally required? The fact that this issue has to be framed in a Catch-22-esque sort of manner is an embarrassing indictment of the Indian judicial system.It’s Not All About the MoneyReports of victims’ accounts of their ordeal reveal that their fight for justice is not motivated only by a desire for monetary compensation. They rightly demand the prosecution of Johnson & Johnson officials, doctors and hospitals for criminal negligence under the Indian Penal Code. Prosecution under section 18, read with section 27 of the Drugs and Cosmetics Act, 1940 is also an option.At the time of application of its renewal certificate and import licence, Johnson and Johnson failed to inform the Drugs Controller-General India (DCGI) of the intervention by the Therapeutic Goods Administration, Australia.This omission amounted to a violation of the conditions of the Registration Certificate under Form 41 of the Drugs and Cosmetics Rules, 1945, which requires the manufacturer or authorized agent to inform the DCGI of restrictions imposed by regulatory authorities of other countries where the drug or device is marketed.It could be argued that the device was being marketed without a valid licence given that it was obtained by misrepresentation. This should attract a minimum term of imprisonment of three years under the Drugs and Cosmetics Act. Although the Act also allows fines imposed to be paid as compensation to victims, this applies only to adulterated and spurious drugs; these terms cannot be applied meaningfully to medical devices.The promise of a hefty payout by the US courts should not stand in the way of wholesale reforms to our judicial processes or our drug regulatory system, especially since there is no guarantee that claims by Indian plaintiffs will be heard. The Bhopal disaster showed that the government was a bad negotiator for its citizens. In the present case, its bargaining power is weakened by the absence of a civil liability obligation under Drugs and Cosmetics Act.The CDSCO has just announced the constitution of Central and State level committees that will determine the quantum of compensation ‘as admissible under appropriate law.’ It remains unclear what this appropriate law is. Although it is hoped that this process provides redress to the victims, the CDSCO would also do well to zealously pursue criminal prosecution against the relevant parties, provide the best lawyers to those who wish to pursue a speedy claim before the National Consumer Disputes Redressal Commission, and begin the process of regulatory reform that prevents a repeat incident.(The author is Senior Resident Fellow, Vidhi Centre for Legal Policy. This is an opinion piece and the views expressed above are the author’s own. The Quint neither endorses nor is responsible for them.)

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