US-based pharmaceutical giant Johnson and Johnson () Pvt. Ltd on Wednesday approached Delhi high court challenging the Union government’s orders to pay compensation to Indian patients hurt by its “faulty" hip implants, in a move that could heighten tensions between it and India.

The high court deferred the matter to 26 February as another public interest litigation (PIL) in the same matter is pending before the Supreme Court.

Johnson and Johnson’s move has caught the government unawares as it is in the process of plugging a gap in the law that reportedly invited the legal challenge in the first place, spelling a prolonged battle for trouble-stricken patients. With no specific legal provisions in the existing Drugs and Cosmetics Act, 1940, or rules to provide compensation to patients in such cases, there is no way for the government to force the company to pay up.

According to a senior official in the health ministry, the government will file an affidavit in the Supreme Court urging the court to direct Johnson and Johnson to compensate patients.

Johnson and Johnson had told the regulatory authority in September that it was “agreeable" to working with the Drug Controller General of India (DCGI) to “compensate" people fitted with Johnson and Johnson’s “faulty" acetabular surface replacement (ASR) hip implant in India.

The health ministry had on 29 November approved a formula, based on the percentage of disability, age factor and risk factor, devised by a government panel of experts for determining the quantum of compensation. According to this formula, Indian patients suffering because of the hip implants sold by Johnson and Johnson would get as much as ₹ 1.2 crore each and an additional ₹ 10 lakh for “non pecuniary" losses. The minimum compensation according to the formula in case of a disability would be ₹ 33 lakh.

The health ministry had said on 29 November that patients could “secure compensation from Johnson and Johnson in days to come". “Compensation will be paid in a time-bound manner through bank accounts of affected persons by Johnson and Johnson Pvt. Ltd," the health ministry had said. Apparently, the government was awaiting correspondence or an acceptance from the company following a letter written to it on 30 November.

The company challenged the government’s formula. “The company had used a lacunae in the law because of which the government cannot compel it to compensate, though in earlier meetings they said they were committed to paying compensation," said another senior official in the health ministry. Around 4,700 ASR surgeries were carried out in India between 2004 and 2010. However, only 1,080 patients could be traced through the ASR helpline. ASR was sold in India by DePuy International, a subsidiary of Johnson and Johnson.

Public health experts say the legal compulsion for compensation can come through a court case invoking tort law, product liability law and consumer protection law.

India’s top drug advisory board met on 29 November and constituted a sub-committee of experts to tighten the law on compensation in case of injury.

Johnson and Johnson said that its commitment to paying compensation has not changed. However, it blamed lack of transparency on the part of the government for its move to approach the court.

“Throughout this process, we have done our utmost to offer assistance to all authorities. However, we have not been given an opportunity to appear before the Central Expert Committee and critical gaps and factual inaccuracies have been allowed to stand uncontested. The formula for compensation needs to be within a fully transparent and legal framework arrived at through due process, and only after proper hearing of the facts and positions of all parties. The outcome also needs to be within a legal framework which is applicable across the Industry...," the company said.

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