December 6, 2012 / 1:05 AM / 5 years ago

U.S. medical supply companies hit with $200 million antitrust suit

NEW YORK (Reuters) - Cardinal Health Inc and Owens & Minor Inc were hit with a $200 million antitrust lawsuit Wednesday by a specialty medical supply distributor that accused the two U.S. companies of conspiring to wrest away customers and keep it from expanding its market share.

The lawsuit was filed in Kansas federal court by Suture Express Inc, a specialty medical supply distributor that sells suture and endomechanical products to healthcare providers. In the lawsuit, Suture Express alleged that Cardinal and Owens & Minor exploited their dominance in the medical supply distribution market to punish healthcare providers who buy certain products from Suture Express.

Cardinal and Owens & Minor are both broad-based medical and surgical supply distributors that carry a wide range of products, in addition to suture and endomechanical products. The lawsuit alleged that Cardinal and Owens each threatened their customers with a prohibitive surcharge of as much as 5 percent on the rest of their products, if the customers did not also purchase their suture and endomechanical supplies from Cardinal or Owens & Minor.

“This predatory pricing enhances defendants’ market power, raises barriers to entry and impedes the ability of Suture Express to compete,” the complaint said. Although Cardinal and Owens & Minor compete in the same market, they “present a united front against acute care providers’ dealing with Suture Express,” the complaint said.

In doing so, healthcare providers have no option but to purchase those products from Cardinal or Owens & Minor, raising their costs and undermining Suture Express’ customer base, the lawsuit said.

The lawsuit is seeking $200 million from Cardinal and Owens & Minor. Neither company could be immediately reached for comment after regular business hours Wednesday.

Suture Express’ chief executive, Brian Forsythe, said the goal of the lawsuit was to “provide a level playing field so that healthcare providers don’t face a penalty for choosing distributors like Suture Express.”

Cardinal and Owens & Minor together control more than two-thirds of the $22 billion acute care medical-surgical distribution market in the United States, according to the complaint. Suture and endomechanical products together make up approximately 10 percent of all medical and surgical supplies distributed in the United States to hospitals and other acute care providers, the complaint said.

The case is Suture Express Inc v. Cardinal Health Inc and Owens & Minor Inc, in the U.S. District Court for the District of Kansas. Case number not immediately available.

Reporting by Jessica Dye; Editing by Lisa Shumaker

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