Three Minnesota men who developed a portable electric painkiller device have won a $170.4 million federal antitrust suit against Johnson & Johnson Inc., the country's largest maker of pharmaceuticals and related products.
A spokesman for Johnson & Johnson, headquartered in Brunswick, N.J., said Thursday's decision in U.S. District Court will be appealed to the 8th U.S. Circuit Court of Appeals in St. Louis.
According to Daniel Shulman, a lawyer for the three inventors, Johnson & Johnson suppressed a "cure for pain" in order to protect its drug business, especially Tylenol, an over-the-counter aspirin substitute that generates more than $25 million a year in profits.
The "cure" is a pocket-sized, battery-powered device called a transcutaneous electronic nerve stimulator, or TENS. It delivers ultra-small electrical impulses from batteries like those in a pacemaker. The impulses penetrate to nerves and deaden pain. The device can be placed directly onto a painful area or connected to a pain spot by wires running from the device to an electrode on the skin. Thus a user can go about his normal daily routine.
The plaintiffs in the five-month jury trial, Normal R. Hagfoars, Stanley McDonald and Clayton Jensen, developed the device about 10 years ago and marketed it through their company, StimTech.
Johnson & Johnson acquired StimTech in 1974, promising the three men $1.3 million for starters and $5.7 million more if StimTech prospered in the next five years.
However, under Johnson & Johnson it lost money in that time, so the developers got nothing. They convinced the jury that Johnson & Johnson broke its promise to improve and promote the painkiller device worldwide amd violated federal antitrust law by keeping it under wraps.
Johnson & Johnson, which had sales of $4.8 billion last year, contended that the developers were incompetent and had misrepresented StimTech's profit potential, and that it had to sink $11 million in StimTech to make up for its losses. Another defense was that TENS did not compete in the same markets with drugs.
The jury set the antitrust award at $56.8 million, which is automatically tripled under federal antitrust law. In addition, the jury awarded $37 million on counts that Johnson & Johnson fraudulently induced the plaintiffs to enter into a contract that was then breached, and for punitive damages in that connection.
It was not clear, however, whether the $37 million would be in addition to, or part of, the $170.4 million award.
Joseph Alioto Jr., a San Francisco lawyer who also represented the trio, said that if the TENS device had not been suppressed it could have created an industry surpassing the drug business. He said the Johnson & Johnson's suppression was so effective that 80 percent of the nation's doctors still don't know about the device.
Attorney Shulman siad that a number of companies now manufacture similar devices, which cost from $300 to $500 and are sold in this country only by prescription. Shulman estimated that the price could be brought to as low as $10 to $20 with volume production.