Former Synthes sales rep counter-sues in generic ortho devices battle (Mass Device)
Former Synthes sales rep turned Emerge Medical CEO John Marotta filed a countersuit against the med-tech giant’s claims that Marotta and others violated their non-compete agreements in selling cheaper “generic” versions of orthopedic screws and drill bits.
Former Synthes Inc. sales rep John Marotta fought back against his erstwhile employer, lodging a counterclaim alleging antitrust violations and claiming that the device giant is using litigation to crush competitors.
Marotta mans the corner office at Emerge Medical Inc., a Denver, Colo.-based orthopedic device maker that offers generic components like surgical screws and drill bits at lower prices.
Marotta is part of a growing interest in generic medical devices, a market that may play a role in increasing already-heavy pricing pressure on the device industry.
“The payers are moving in our direction,” Marotta told thePhiladelphia Inquirer. “If you have a $6,000 total knee replacement and a $3,000 total knee replacement that is substantially equivalent, with the same clinical outcome, the market will choose the $3,000 knee. Hospitals, surgeons, and device companies are all competing for dollars as it moves in this direction.”
Marotta resigned from his role at Synthes in April 2010, having incorporated Emerge Medical as a Colorado business in January 2010.
Synthes filed a lawsuit in March 2011 against Marotta and a clutch of other former employees who followed him to launch Emerge on the grounds that they violated non-compete agreements, attempted to steal Synthes customers and illegally used proprietary information.
“With an MBA paid for by Synthes freshly under his belt, Marotta resigned effective April 15, 2010, lying to Synthes by stating that he would be joining a non-competitor,” according to Synthes’ legal complaint. “Marotta’s and Emerge’s conduct as a whole is the epitome of unfair competition. But most importantly, however, Marotta developed and is marketing products and a company, Emerge, that lawfully belongs to Synthes.”
Marotta launched a counter-suit this week, claiming that Synthes has violated antitrust statutes, used its legal weight to limit competition and has sent Emerge’s customers letters containing misleading information in attempt to drive them back to Synthes.
“They are sending letters to our customers that are misleading and harmful,” Marotta told the newspaper. “Synthes is trying to eliminate a company thats purpose is to provide a cost-effective product to the American public. In my opinion, they use litigation, especially employment litigation, to deter competition in the marketplace.”
Synthes is currently in the midst of a $21.3 billion buyout by Johnson & Johnson (NYSE:JNJ), awaiting only approval from the European authorities to run with the deal.
Health care titan J&J recently inked a binding deal to sell the global trauma unit of subsidiary subsidiary DePuy Orthopedics to Biomet Inc., a move that may help appease Eurozone regulators, who voiced concerns that the high-profile merger may decrease competition in the med-tech industry.