Tyco found to unlawfully maintain monopoly
power and to have utilized unlawful restraints of trade and exclusionary dealing arrangements in the pulse oximetry market
Irvine, California, March 29, 2006 - Masimo, the inventor of Pulse
CO-Oximetry™ and read-through motion and low perfusion pulse oximetry,
announced that a federal court in Los Angeles has upheld the jury
liability verdict that Tyco Healthcare violated the antitrust laws
through anticompetitive business practices specifically related to the
sale of its Nellcor pulse oximetry products. On March 21, 2005,
after a four-week trial, the jury found that Tyco had unlawfully
maintained monopoly power, and that Tyco's sole-source agreements,
bundling of unrelated products, market-share based compliance pricing
contracts and co-marketing agreements with patient monitoring companies
were unlawful restraints of trade and exclusionary dealing
arrangements. The jury awarded Masimo $140 million in damages.
On March 22, 2006, the Court upheld the liability verdicts, but
reversed the jury's findings based on 2 of the 4 specific practices,
bundling and co-marketing agreements, and, as a result, set aside the
jury's damages award and ordered a new trial on damages. The
jury's original findings that Tyco violated Section 3 of the Clayton
Act and Sections 1 and 2 of the Sherman Act were upheld by the Court.
Joe E. Kiani, Chairman and CEO of Masimo stated that, "We are happy
that the court has upheld the jury's findings that Tyco's market share
based pricing and single source contracts are illegal, which we hope
will improve access to cost-effective innovative products that improve
patient care. In hope of opening the markets even further to
healthy competition, we will continue to press the courts on the
practices of bundling of unrelated products. Medical products,
from drugs, pacemakers to pulse oximeters, should be judged on their
own merits and not based on artificial restraints on purchasing placed
on the hospitals by large manufacturers. The American
people should get the best care possible."
For many years, some large sellers of medical products have used
bundling to exclude competition. Tyco, for example, reduces the
discount on many other unrelated products if the hospital chooses to
purchase just a small number of Masimo's pulse oximeters, even though
the hospital continues to purchase just as much or even greater volume
of the unrelated products. Thus, the discount on the whole bundle of
products has the effect of being completely attributable to the pulse
oximeters. The discount lost on the other unrelated products is
sometimes large enough that it can even exceed the whole cost of the
pulse oximeters. This makes the decision to purchase the product
of clinical choice from Masimo very difficult for hospitals.
These schemes can not only cause short term risk to certain patients
and clinicians, because the particular hospital may have chosen the
substandard product, but long term, such bundling practices will drive
competition and innovation out of the healthcare space.
About Masimo
Masimo develops innovative
monitoring technologies that significantly improve patient care-
helping solve "unsolvable" problems. In 1995, the company debuted
Read-Through Motion and Low Perfusion pulse oximetry, known as SET, and
with it virtually eliminated false alarms and increased pulse
oximetry's ability to detect life-threatening events. Over 70
independent clinical studies have confirmed that Masimo SET technology
allows clinicians to accurately monitor blood oxygen saturation in
critical care situations. In 2005 Masimo introduced Rainbow SET and
with it, Pulse CO-Oximetry, which, for the first time, noninvasively
monitors the level of carbon monoxide and methemoglobin in the blood,
as well as oxygen saturation, pulse rate and perfusion index, allowing
early detection and treatment of potentially life-threatening
conditions.
Masimo, founded in 1989, has the mission of "Improving Patient
Outcome and Reducing Cost of Care by Taking Noninvasive Monitoring to
New Sites and Applications." Additional information about Masimo and
its products may be found at www.Masimo.com
Contact:
Brad Langdale
Masimo Corporation
[email protected]
(949) 297-7009