Federal District Court Upholds Antitrust Liability Verdict Against Tyco
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.
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