Masimo corporation awarded $420 million in US antitrust lawsuit on
medical device purchasing practices
24 March 2005
WASHINGTON, USA. The Medical Device Manufacturers Association (MDMA)
today hailed Masimo Corporation's victory this week in its federal antitrust
case against Tyco International as "a critical step" in addressing the
anticompetitive and other questionable practices by certain dominant
manufacturers and hospital group purchasing organizations (GPOs).
In determining that Tyco Healthcare violated antitrust laws related to
the sales of its pulse oximetry technology, a federal jury in the Central
District of California awarded Masimo $140 million, which was then trebled
to $420 million plus attorneys fees. The jury found that Tyco had utilized
various anticompetitive practices, including sole-source and high compliance
agreements, bundled rebates and co-marketing agreements, to exclude Masimo
from the marketplace. Irvine, California-based Masimo, an MDMA member,
manufactures and markets pulse oximetry technology that has been highly
acclaimed in clinical studies and by physicians and hospitals that have used
These exclusionary contracting practices have also been the subject of
three Senate Judiciary Antitrust Subcommittee hearings led by Senators Herb
Kohl (D-Wis.) and Mike DeWine (R-Ohio). Last October, Senators Kohl and
DeWine introduced the Medical Device Competition Act of 2004, which would
ensure open and fair access to innovative, cost-effective medical
technologies. Several federal and state agencies, including the U.S.
Department of Justice, are also investigating these practices.
"This decision is a victory for patients, innovation and the healthcare
system as a whole," said MDMA Executive Director Mark Leahey. "Dominant
manufacturers should not be able to prevent doctors, nurses and patients
from accessing innovative, cost-effective products."
The verdict also represents a victory for hospitals seeking to negotiate
contracts with manufacturers. Over the years, GPOs have been accused of
facilitating anticompetitive contracts between hospitals and dominant
manufacturers in exchange for millions of dollars in "fees" from the
manufacturers. Yet GPOs claimed the dominant manufacturers were responsible
for the terms of the contracts. "With this verdict, GPOs and their member
hospitals will have the legal cover to refuse onerous contracts from
dominant suppliers. The result will be a higher quality of care at a lower
cost," said Leahey.
Leahey added: "MDMA remains committed to working with Congress, and state
and federal agencies to ensure that hospital supply markets stay open, so
that competition is restored, costs are reduced, and patients and caregivers
get the products they need."
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