Several hospitals have filed class action antitrust lawsuits against Intuitive Surgical, one of the largest surgical robot makers, alleging that it used its market power to force them to sign restrictive repair contracts and buy replacement parts at inflated prices.
Despite limited evidence that they work better than other minimally-invasive surgeries, more hospitals are buying surgical robots. As of last year, Intuitive had installed 3,720 of its da Vinci surgical robots in the U.S., according to a filing with the Securities and Exchange Commission. These devices are expensive, costing up to $2.5 million each, and often come with thousands of dollars in additional annual costs.
In a complaint filed earlier this month, 13-hospital system Franciscan Health said it had to sign a five-year service contract, which could be voided if it sought out third-party repair services for its da Vinci surgical robots. These services cost between $80,000 and $190,000 per year.
According to the lawsuit, one customer that had tried to use a third-party robot repair service found its device stopped functioning during an operation, forcing the surgeons to finish the surgery manually.
Franciscan Health alleged that some hospitals who try to use third-party services receive cease-and-desist letters from Intuitive threatening to refuse future maintenance, and in some cases, even threatening to disable the robot.
In a separate lawsuit filed this month, New York-based Kaleida Health said independent robotic repair companies also received cease-and-desist letters demanding that they not contact its customers to offer repair services.
Both lawsuits focused on limitations in maintaining and re-using surgical instruments that come with the robots. Each one comes with a series of attachments that resemble traditional laparoscopic surgical tools, such as a scalpel and scissors, but they also have an embedded chip to track how many times the device is used. In some cases, the instruments could only be used 10 times before the hospital had to purchase more devices, both lawsuits claimed.
These service contracts and accessories are a big source of revenue for Intuitive Surgical. It brought in $2.46 billion in instruments and accessories alone last year, and another $724 million in services, collectively making up more than half of its total revenue.
Both class action lawsuits are seeking a judgment that Intuitive Surgical violated antitrust law, and treble damages. Intuitive Surgical did not respond to requests for comment at the time of publication.
The cases are Kaleida Health v. Intuitive Surgical Inc. and Franciscan Alliance Inc. v. Intuitive Surgical Inc. Both were filed in the U.S. District Court for the Northern District of California.
Image from flickr user Roswell Park