Biotronik: J&J ran "sham" recall | Legal Roundup

July 13, 2011 by MassDevice staff

Johnson & Johnson's Conor Medsystems allegedly issued a sham recall of its CoStar drug-eluting stent and spiked a distribution deal with Biotronik, according to a lawsuit filed by the German medical device giant; plus, J&J is accused of further chicanery with an oral cancer test and its Listerine mouthwash; and Becton, Dickinson ekes out a partial win in a patent infringement case involving retractable syringes.

Conor Medsystems

A Johnson & Johnson (NYSE:JNJ) subsidiary allegedly issued a sham recall of its drug-eluting CoStar coronary stent and spiked a distribution deal with Biotronik AG that cost the German medical device giant $100 million, according to a lawsuit filed in New York's highest court.

The lawsuit against J&J's Conor Medsystems accuses it of reneging on a supply contract for the CoStar stent, which Conor recalled in 2007 after it fared badly in a clinical comparison with Boston Scientific's (NYSE:BSX) Taxus DES. But the recall was a sham aimed at eliminating a competitor to J&J's Cordis Cypher stent in Europe, according to court documents (Johnson & Johnson bought Conor just before the CoStar recall).

"J&J made what it called a 'business decision' to pull CoStar from the market and thereby eliminated Biotronik as a stent competitor in Europe," according to the documents. "J&J imposed that business decision on Conor, and then seized on the label 'recall' to justify a breach of the agreement."

"They said they'd supply the stents, and they didn't," added Biotronik attorney Ronald Rauchberg during a hearing before Justice Bernard Fried of the Supreme Court of the State of New York, according to Health Law 360.

"This case begins and should end with the unambiguous terms of the distribution agreement," Conor Medsystems countered, according to the documents, citing a provision of the deal giving it the "exclusive right and obligation to issue recalls ... or similar remedial actions" for CoStar.

"Biotronik does not dispute that if Conor had continued to market CoStar, patients using the product could have an increased risk of heart attack and death if not treated, and would also be more likely to incur the inherent risk of heart attack and death if not treated, and would also be more likely to incur the inherent risk of additional medical procedures," according to a legal filing. "Biotronik also alleges that Conor was not truly motivated by concerns for patients in recalling CoStar, or that the CoStar recall was otherwise a 'sham,' but, after extensive discovery, it can marshal no evidence to support that claim."

Last month, Cordis announced its plans to exit the coronary stent business by the end of this year.

Lawsuit: J&J spiked oral cancer test to boost Listerine sales

Johnson & Johnson is accused of further chicanery in another lawsuit, this time in the federal courts.

A complaint filed by Oral Cancer Prevention International Inc. alleges that the health care giant deliberately looked to spike sales of an oral cancer test to protect its Listerine mouthwash.

The suit, filed in the U.S. District Court for New Jersey, accuses J&J of inducing OraPharma Inc. to breach a deal to distribute OCPI's OralCDx Brush Test to dentists "in order to protect sales of its mouthwash, Listerine, which has been linked to oral cancer," according to the complaint.

"The effect of that behavior, based on OraPharma's projections, is that an estimated 584 cases of otherwise preventable oral cancer in the State of New Jersey and 7,300 such cases throughout the U.S. will occur over the term of the Sales Agreement. The number of deaths that will result from that conduct is unknown," according to the lawsuit.

On the brink of executing the distribution deal, OraPharma (then owned by J&J, which subsequently sold it to Water Street Healthcare Partners), "OCPI was suddenly informed that the Listerine division of J&J, which had just learned of the imminent signing of the agreement with OCPI, had prevailed upon J&J management to direct OraPharma to not execute it," according to court documents. "Johnson & Johnson never had any intention of allowing OraPharma to sell OralCDx to those dentists most likely to adopt its use in their practices, but only allowed OraPharma to enter into the Sales Agreement as a means to control and suppress sales of OralCDx to those dentists who J&J considered most likely to recommend the use of Listerine mouthwash to their patients, thereby depriving the public of a known cancer prevention product and destroying OCPI's dental business."

BD ekes out partial win in retractables case

One front of a long-running war pitting Retractable Technologies Inc. (AMEX:RVP) against industry giants like Becton, Dickinson & Co. (NYSE:BDX) and the group purchasing organizations that dominate the hospital supplies market ended with a partial win for BD.

A federal appeals court overturned part of a $5 million patent infringement verdict against BD and its Integra retractable syringe line. The U.S Court of Appeals for the Federal Circuit ruled that BD's 3ml version of the device doesn't violate the RTI patents, but upheld a finding that the 1ml version does infringe.

Because BD dropped the smaller syringe, "there is no impact to our customers," BD spokeswoman Liz Ryan Sax told Bloomberg.

Little Elm, Texas-based Retractable sued BD in June 2007, claiming the Becton syringes infringe patents covering its VanishPoint devices. But RTI's battle began in the early 1990s, when founder Thomas Shaw invented the first retractable syringe after seeing a news program about a doctor who contracted HIV from an accidental needle stick.

Large medical device makers and the GPOs that act as sales liaisons between them and hospitals effectively kept the RTI syringes off the market until the device makers could come up with competing devices, according to a series of lawsuits Shaw and RTI have filed over the years. In fact, the Federal Circuit decision could bolster another RTI lawsuit accusing BD of anti-trust violations, the company told Bloomberg.

"BD used Retractable Technology’s own patented technology to maintain their monopoly in the syringe market," RTI lawyer Roy Hardin told the news service. "If you’re monopolist in a marketplace, there are certain things you can’t do."