Rancho Santa Margarita, California–based Applied Medical filed an antitrust complaint yesterday in Central California’s U.S. District Court.
“We are proud to be a leader in this competitive and growing space,” a Medtronic spokesperson said in a statement shared with MassDevice. “The claims are baseless and Medtronic will defend against the lawsuit filed by Applied Medical.”
Applied Medical said in a statement that it “hopes that this lawsuit will not only hold the defendant accountable for its actions but will also bring about lower prices and increased competition for advanced bipolar surgical devices, benefiting the public, patients, and healthcare overall.”
In its lawsuit, Applied Medical said Medtronic has a dominant 78% share of the advanced bipolar device market with its Ligasure device — and it has dominance when it comes to a host of other surgical devices.
The privately held company accused the publicly traded medtech giant of using its dominance to promote bundling agreements with individual hospital systems and healthcare group purchasing organizations such as Premier to shut out competition.
The bundling agreements have cost Applied millions of dollars in potential sales — as well as brand goodwill — because it is unable to compete, according to the complaint. The company said hospitals that don’t want to run afoul of the potential overall savings in the bundling agreements opt not to purchase Applied Medical’s Voyant intelligent energy system.
Applied Medical said Voyant has advantages over competing advanced bipolar devices and costs 15–20% less.
“Medtronic unlawfully leverages its monopoly power in other markets to coerce customers to accept its bundle and thereby purchase its advanced bipolar devices, and to gain and/or maintain its dominance in the advanced bipolar market,” the company said in its lawsuit.
Applied Medical said it only has a 3% share of the advanced bipolar devices market in the U.S. In Europe, where there is more regulatory scrutiny of bundling practices, it’s 50% in some countries, according to the company’s complaint.
Through its $50 billion acquisition of Covidien in 2015, Medtronic became the largest medical device company in the world. It remained at No. 1 in our sister site Medical Design & Outsourcing‘s most recent Medtech Big 100 report.
Medtronic reported nearly $32 billion in revenue and 95,000 employees during its most recent fiscal year. In contrast, Applied Medical said it has more than $800 million in annual revenue and 5,400 employees.