A Johnson & Johnson (NYSE:JNJ) subsidiary allegedly issued a sham recall of its drug-eluting CoStar coronary stent and spiked a distribution deal with Biotronik AG that cost the German medical device giant $100 million, according to a lawsuit filed in New York’s highest court.
The lawsuit against J&J’s Conor Medsystems accuses it of reneging on a supply contract for the CoStar stent, which Conor recalled in 2007 after it fared badly in a clinical comparison with Boston Scientific’s (NYSE:BSX) Taxus DES. But the recall was a sham aimed at eliminating a competitor to J&J’s Cordis Cypher stent in Europe, according to court documents (Johnson & Johnson bought Conor just before the CoStar recall).
“J&J made what it called a ‘business decision’ to pull CoStar from the market and thereby eliminated Biotronik as a stent competitor in Europe,” according to the documents. “J&J imposed that business decision on Conor, and then seized on the label ‘recall’ to justify a breach of the agreement.”
“They said they’d supply the stents, and they didn’t,” added Biotronik attorney Ronald Rauchberg during a hearing before Justice Bernard Fried of the Supreme Court of the State of New York, according to Health Law 360.
“This case begins and should end with the unambiguous terms of the distribution agreement,” Conor Medsystems countered, according to the documents, citing a provision of the deal giving it the “exclusive right and obligation to issue recalls … or similar remedial actions” for CoStar.
“Biotronik does not dispute that if Conor had continued to market CoStar, patients using the product could have an increased risk of heart attack and death if not treated, and would also be more likely to incur the inherent risk of heart attack and death if not treated, and would also be more likely to incur the inherent risk of additional medical procedures,” according to a legal filing. “Biotronik also alleges that Conor was not truly motivated by concerns for patients in recalling CoStar, or that the CoStar recall was otherwise a ‘sham,’ but, after extensive discovery, it can marshal no evidence to support that claim.”
Last month, Cordis announced its plans to exit the coronary stent business by the end of this year.