Antitrust Law Daily Wrap Up, ANTITRUST NEWS: LifeScan alleged to have monopolized the blood glucose test strip market, (Aug 1, 2014)

By Linda O’Brien, J.D., LL.M.

A provider of blood glucose monitoring systems has engaged in anticompetitive conduct by organizing a group boycott of a competitor’s generic blood glucose test strips and conditioning incentives provided to wholesalers and retailers on their agreement not to purchase or distribute the competitor’s test strips, according to a complaint filed in the federal district court of Philadelphia (UniStrip Technologies, LLC v. LifeScan, Inc., July 29, 2014).

LifeScan, Inc., a subsidiary of Johnson & Johnson, is a leading marketer of blood glucose monitoring systems, which include blood glucose test strips and blood glucose meters.

The complaint states that, in 2014, UniStrip Technologies began marketing and selling low cost generic blood glucose test strips that had been approved by the Federal and Drug Administration (FDA) for use in brand name meters, such as certain models of meters sold by LifeScan. UniStrip’s test strips were subjected by the FDA to the same clinical testing, scrutiny, and approval process as the name brands. UniStrip studies show that UniStrip test strips deliver high levels of accuracy and precision when tested as intended and are offered for sale at prices significantly below those of name brands.

To thwart UniStrip’s lower priced competition, LifeScan began a campaign to restrain trade and monopolize the blood glucose test strip market. LifeScan coerced actual and potential purchasers of UniStrip test trips—wholesalers, and retailers—not to purchase and sell UniStrip’s test strips. LifeScan also conditioned the payment or allowance of discounts, rebates, and other incentives provided to wholesalers and retailers on their agreement not to purchase or distribute UniStrip test strips. This scheme was implemented to deprive consumers of the alternative of purchasing lower-cost generic test strips, the complaint charged.

According to the complaint, consumers will pay substantially higher prices for test strips than they would in a fully competitive and open market as a direct result of LifeScan’s anticompetitive conduct. The agreements allegedly limited, if not eliminated, the availability of UniStrip test strips and restricted consumer choice of test strips. Moreover, there are no legitimate business justifications that require LifeScan to impose its anticompetitive conditions.

Self-testing blood glucose monitoring systems are used as an aid to monitor the effectiveness of diabetes control. Patients with diabetes look for ways to cope with the high cost of managing the disease. Blood glucose monitoring options should not be cost-prohibitive. Generic blood glucose test strips provide an alternative that can save thousands of dollars per year for people with diabetes on test strips along.

Unistrip asserts claims for attempted monopolization, unlawful exclusionary arrangements, international interference with prospective economic advantage, and violations of Sections 1 and 2 of the Sherman Act. The action seeks declaratory and injunctive relief, damages, costs of suit, attorneys’ fees, and any other just and proper relief.

The case is No. 2:14-cv-04518-JHS.

Attorneys: Neill W. Clark (Faruqi & Faruqi, LLP) and Maxwell M. Blecher (Blecher Collins Pepperman & Joye, P.C.) for UniStrip Technologies, LLC.

Companies: UniStrip Technologies, LLC; LifeScan, Inc.; LifeScan Scotland, Ltd.

News: Antitrust PennsylvaniaNews