One of the more serious business issue DECN has is trying to work around JNJ's threats to potential retail outlets that suggests if any business sells our products, they will pull all JNJ products from that retail outlet.
This "threat" was an outgrowth of the settlement of the Lanham Act case DECN had with J&J in May 2016 where J&J insisted that its Lifescan OneTouch Ultra brand was protected by god, as well as message board bashers and KB haters in collusion with J&J. When the patents cases were settled (both of them) so was the Lanham Act case, but the Lanham Act case had been already subject to an injunction against Shasta. So, J&J seized on that injunction, even after the settlement and amended their "proprietary" clause in what they call their Franchise Agreements, where they stuck in a clause regarding generic test strips and meters.. This clause contained a direct threat to Franchisees where rebates for Lifescan strips would be terminated as well as rebates for all other J&J consumer products (not drugs). J&J rebates account for almost all of the profits pharmacies make on J&J products. In February 2017 CVS alerted DECN to this clause which is known in the trade as an "illegal tie-in."
Recently, the 10Q indicates there are two major Retail outlets that will hopefully soon start selling DECN products. So what has changed? Why the change of heart?
In May 2017 J&J sent certified letters to all of their Franchisees and eliminated the generic products clause in the Franchise Agreements, but in the cover letter to the removal letter, they continue to say that sales of generic products will continue to count against the rebate tiers. The end result was that 100% of the rebate penalties remained, but attacks on all other rebates on all other J&J consumable products were removed, ending the illegal tie-in.
Several large Franchisees are testing this change in J&J policy, but it is slow. When I have a moment, I will discuss the business model implications of a big box carrying DECN "generic" products and why it is still tough sledding.
This "threat" was an outgrowth of the settlement of the Lanham Act case DECN had with J&J in May 2016 where J&J insisted that its Lifescan OneTouch Ultra brand was protected by god, as well as message board bashers and KB haters in collusion with J&J. When the patents cases were settled (both of them) so was the Lanham Act case, but the Lanham Act case had been already subject to an injunction against Shasta. So, J&J seized on that injunction, even after the settlement and amended their "proprietary" clause in what they call their Franchise Agreements, where they stuck in a clause regarding generic test strips and meters.. This clause contained a direct threat to Franchisees where rebates for Lifescan strips would be terminated as well as rebates for all other J&J consumer products (not drugs). J&J rebates account for almost all of the profits pharmacies make on J&J products. In February 2017 CVS alerted DECN to this clause which is known in the trade as an "illegal tie-in."
Recently, the 10Q indicates there are two major Retail outlets that will hopefully soon start selling DECN products. So what has changed? Why the change of heart?
In May 2017 J&J sent certified letters to all of their Franchisees and eliminated the generic products clause in the Franchise Agreements, but in the cover letter to the removal letter, they continue to say that sales of generic products will continue to count against the rebate tiers. The end result was that 100% of the rebate penalties remained, but attacks on all other rebates on all other J&J consumable products were removed, ending the illegal tie-in.
Several large Franchisees are testing this change in J&J policy, but it is slow. When I have a moment, I will discuss the business model implications of a big box carrying DECN "generic" products and why it is still tough sledding.
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