Decision Diagnostics Corp. and Its Subsidiary Pharmatech Solutions, Inc. Sue Johnson & Johnson Division LifeScan, Inc. and LifeScan Scotland Ltd. for Antitrust Violations
LOS ANGELES, CA--(Marketwired - April 04, 2013) - Decision Diagnostics Corp. (OTCBB: DECN) the exclusive world-wide sales, service and regulatory processes agent for the Shasta GenStrip, the revolutionary at-home glucose test strip specifically designed to work with the Johnson & Johnson's LifeScan family of glucose testing meters, announced today that on March 28, 2013 the company and its subsidiary PharmaTech Solutions, Inc. filed antitrust counterclaims against LifeScan, Inc. and LifeScan Scotland, Ltd. (collectively, "LifeScan") in a patent action brought by LifeScan (2011cv04494) that is presently pending in the Northern District of California. DECN and PharmaTech are defendants in that action. DECN is a leading provider of prescription and non-prescription diagnostics, home testing products for the chronically ill and a premier developer of revolutionary cell phone centric e-health products and technologies.
The counterclaims assert violations of the Sherman Antitrust Act, which carry with them, if successful, awards of treble damages, attorneys' fees, and injunctive relief. DECN and PharmaTech allege that the LifeScan parties, which are subsidiaries of pharmaceutical giant Johnson & Johnson, have violated both Sections 1 and 2 of the Sherman Act. Section 1 makes illegal every "contract, combination. . . or conspiracy in restraint of trade." Section 2 forbids monopolization and attempts to monopolize a product market. DECN and PharmaTech allege in their counterclaims that both prongs of the Act have been violated, by among other things, LifeScan's instituting of baseless patent litigation against PharmaTech and DECN intended to exclude the Shasta GenStrip from competing in a market dominated by LifeScan.
LifeScan and Johnson & Johnson have long claimed to be the market leader in the home blood glucose monitoring market, boasting an over thirty percent (30%) share of that market. The market is highly concentrated, dominated by four major pharmaceutical companies which together control 83.5% of that market. Blood glucose monitoring systems are comprised of a monitor and testing strips. Significantly, until the potential entry of the Shasta GenStrip, all four market leaders paired their propriety blood glucose meters with their own testing strips, forestalling any competition from competing strips, which could offer substantial costs savings to consumers. The FDA 's recent clearance of the GenStrip for use with certain OneTouch Ultra meters clears the way for such competition and for the substantial consumer savings it would bring.
The antitrust counterclaims allege that, to maintain its much-vaunted market leadership in the blood glucose monitoring market, LifeScan has illegally "tied" the use of its popular OneTouch Ultra meters to its own proprietary testing strips. Tying arrangements violate Section 1 of the Sherman Act because they force purchasers to forego free choice in the marketplace. These "tying" transactions are often declared to be illegal "per se," that is, so plainly in contravention of antitrust principles that they require no further analysis of effects on competition.
The counterclaim alleges that, to the extent that LifeScan claims its meters (glucose measuring device) are protected by patent, which DECN and PharmaTech vehemently dispute, LifeScan has no right to expand any such rights to control the sale of strips. There is no functional reason to require consumers to use the LifeScan strips, nor is there any patent justification. PharmaTech and DECN claim that LifeScan has taken numerous steps, including the institution of baseless patent litigation, to eliminate competition and to exclude the GenStrip from the market so as to require exclusive use of the LifeScan strips with the OneTouch Ultra meter. These tactics violate longstanding and fundamental antitrust principles. They injure consumers by forbidding competition from the lower-priced GenStrip. Second, DECN and PharmaTech also allege that LifeScan has monopolized and is attempting to monopolize the market for test strips compatible with LifeScan's meters and has created a dangerous probability of success. These acts have no basis in any patent or functional principal, and only serve the purpose of preserving LifeScan's market dominance.
GenStrip™ test strips are a product of Shasta Technologies, LLC and are not manufactured, distributed, endorsed, or approved by nor associated with LifeScan®, Inc., a Johnson & Johnson® Company, manufacturers and distributors of the OneTouch® Ultra® Family of Meters and OneTouch® Ultra® test strips.
Forward-looking statements are statements made herein which do not address historical facts and, therefore, could be interpreted to be forward-looking statements. We can give no assurance that the expectations indicated by such forward-looking statements will be realized. There may be other risks and circumstances that we are unable to predict. When used in this release, words such as "believes," "expects," "forecasts," "intends," "projects," "plans," "anticipates," "estimates" and similar expressions are intended to identify forward-looking statements, although there may be certain statements not accompanied by such expressions. Such statements are subject to factors that could cause actual results to differ materially from anticipated results. The forward-looking statements included in this press release represent our views as of March 31, 2013. We anticipate that subsequent events and developments may cause our views to change.
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