Johnson & Johnson (NYSE:JNJ) subsidiary LifeScan is orchestrating a campaign to monopolize the market for test strips used with its blood glucose meters, according to a lawsuit filed last week by test strip rival UniStrip.
The lawsuit alleges that LifeScan sought to induce a boycott of UniStrip’s lower-cost test strips by coercing distributors to use the LifeScan strips, set up a discount program designed to encourage the exclusive use of LifeScan strips and filed a sham patent infringement lawsuit against UniStrip, according to court documents.
UniStrip, which won 510(k) clearance from the FDA for its competing test strips in November 2013, introduced its product into the U.S. market early this year, according to the complaint filed in the U.S. District Court for Central California. LifeScan enjoys a 40% share of the overall test strip market and a 100% share of the market for LifeScan’s OneTouch Ultra, Ultra2, UltraSmart and UltraMini blood glucose meters, the lawsuit claims. UniStrip said its test strips cost about a 10th of the price of LifeScan’s strips, which run roughly $60 for 50 strips.
"To thwart UniStrip’s lower priced competition, defendant LifeScan has engaged in a campaign that consists of at least the following anticompetitive and monopolistic acts: (a) coercively induced a group boycott of UniStrip’s test strips; (b) conditioned the payment or allowance of discounts, rebates and/or other incentives provided to actual and potential customers of LifeScan test strips on an agreement or understanding not to purchase or distribute UniStrip test strips; and (c) filed a bad faith patent infringement lawsuit against UniStrip based on one patent which has been judicially declared unenforceable and a separate patent which LifeScan knows UniStrip does not infringe," according to the complaint. "This multi-faceted anticompetitive scheme has been adopted and implemented for the purpose of depriving consumers of the opportunity or alternative of purchasing competitive, lower-priced, FDA-cleared test strips."
The lawsuit seeks judgments against LifeScan for restraint of trade, monopolization attempts, violations of the Clayton Act, intentional interference with prospective economic advantage and actual contractual relationships, damages, triple damages for federal antitrust violations, punitive or exemplary damages, legal costs and injunctions against the alleged "anticompetetive, predatory and/or exclusionary conduct" by LifeScan, according to the documents.