The world's largest medical device company Medtronic is facing an antitrust lawsuit that accuses the company of stifling competition for its bundling contracts of bipolar energy devices.
The lawsuit was filed in Central California's U.S. District Court by California-based medical device company Applied Medical. Applied Medical accuses Medtronic of violating antitrust laws because it cannot compete with the way Medtronic bundles and contracts out its devices. Applied Medical argues that they were unable to obtain contracts with hospitals and other care facilities because Medtronic markets and offers their products in a way that illegally blocks competition.
Applied Medical currently operates in 80 countries, has roughly 4,100 employees, and is valued at $600 million. The company has an estimated 3% of the U.S.’s advanced bipolar energy device market. Meanwhile, the global dominator Medtronic is valued at $111.72 billion and operates globally with an overarching dominance of 78.5% over the market.
The industry of advanced bipolar direct energy devices is projected to continue its growth over the near and far future. This innovative technology revolves around electrosurgical generator systems and bipolar electrosurgical devices that are used during laparoscopic procedures. These cost-saving devices empower hospitals to drive down medical procedure costs, as well as lower the use of invasive surgeries.
The lawsuit says that Medtronic “unlawfully leverages its monopoly power in other markets to coerce customers to accept its bundle and thereby purchase its advanced bipolar devices, and to gain and/or maintain its dominance in the advanced bipolar market.”
Medtronic has pushed back about its presence in the advanced bipolar direct energy space saying that they are “proud to be a leader in this competitive and growing space.” Adding, “The claims are baseless and Medtronic will defend against the lawsuit filed by Applied Medical.”
Applied Medical argues that Medtronic’s “anticompetitive agreements” require that hospitals buy most or all of their advanced bipolar devices from Medtronic through the company’s bundling practices. The lawsuit argues that these bundling practices allow contract holders to enjoy 20% or more in rebates that ultimately bring costs down. In bringing these contract costs, other companies cannot fairly compete. Applied Medical argues that their Voyant intelligent energy system costs anywhere between 15% and 20% less than Meditronic’s comparative product and that hospitals could save more if they were to switch over to competitor products. However, Medtronic’s offering of a 20% rebate on bundled products makes competition nearly impossible.
This is not the first time Medtronic has been hit with legal action over its medical device practices. This new lawsuit comes just days after a California judge ordered Medtronic to pay out $106.5 million to Colibri Heart Valve, a Colorado-based company, over patent infringement claims.
