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Home » Masimo throws down the gauntlet with $1M challenge against Covidien

Masimo throws down the gauntlet with $1M challenge against Covidien

May 31, 2013 By Arezu Sarvestani

arm wrestling

Medical device maker Masimo (NSDQ:MASI) spared little time in firing back against rival Covidien (NYSE:COV), challenging Covidien’s newly re-labeled Nellcor pulse oximeters to best Masimo’s SET devices in a head-to-head study.

But Masimo isn’t all talk – the company’s got money on the line, a cool million dollars to any hospital that proves that Nellcor is more accurate than Masimo SET.

Masimo hopes the guarantee "sends a clear message" to its customers, founder and CEO Joe Kiani said in prepared remarks. Covidien responded that the it doesn’t engage in performance guarantee programs in observance of fraud and abuse laws.

The latest slap-fight began in response to Covidien’s announcement that the FDA cleared the Nellcor pulse oximeters for diagnosing congenital heart disease in newborn babies. The new labeling for the Nellcor devices recognizes the devices for motion-tolerant screening, a newly established federal recommendation.

Masimo took issue with the claim, arguing that Covidien failed to define "motion-tolerant" and that the motion performance of the Nellcor devices hasn’t changed since 2006.

"Covidien’s recent announcements appear to be an attempt to create an impression that Nellcor products are clinically equivalent, or even superior, to Masimo’s products," Masimo’s Kiani said in prepared remarks. "The performance of Nellcor pulse oximeters has not changed since 2006 when they introduced the version of their technology that is still the same today, after the U.S. Court of Appeals for the Federal Circuit directed the Federal District Court in Los Angeles to enjoin the Nellcor pulse oximeter that infringed Masimo’s breakthrough measure-through motion patents."

Masimo also took exception to Covidien’s ISO compliance claims, its labeling as a screening method for diagnosing infants with CCHD and the general performance of the Nellcor devices compared to Masimo SET.

Covidien in turn issued a statement to media, responding to each of Masimo’s qualms. The CCHD guidelines recommended to the U.S. Dept. of Health & Human Services state that "screening should be performed with pulse oximeters that are motion tolerant, report functional oxygen saturation, have been validated in low perfusion conditions; and have been cleared by the FDA for use  in newborns," according to a press release.

"Covidien is the only pulse oximetry provider that meets all of these recommendations," the company added.

Ultimately, Masimo used the occasion to renew the "Masimo SET $1 Million Performance Guarantee," which is not a new boast.

Masimo’s had a standing challenge since 2000, when the device maker issued a $250,000 guarantee that "Masimo SET will outperform all other pulse oximeters." By 2002 the challenge had transformed into the $250,000 "No Bull Guarantee," and its target was narrowed to a head-to-head comparison against a Nellcor oximeter, according to archived press releases.

Masimo in 2007 expanded the guarantee to a $500,000 reward and again included all commercially available pulse oximetry technologies and in 2008 Masimo upped the reward to $1 million and launched its "Fact vs. Fiction" website, which aims to challenge alleged myths such as "Nellcor invented pulse oximetry" and "Masimo litigates rather than innovates."

"Covidien does not offer performance guarantee programs, unlike the competition, due to potential legal risks pursuant to existing federal and state fraud and abuse laws in the United States," the company said today in an emailed statement.

COV shares took a modest hit today, down 0.8% to $64.32 as of about 12:40 p.m. At that time MASI shares were up 0.5% to $21.90.

Filed Under: News Well, Pediatrics Tagged With: Covidien, Masimo, Oximeter

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