A Medical Device Daily

OraSure Technologies (Bethlehem, Pennsylvania) reported the results of its arbitration with Prestige Brands (Irvington, New York).

Since April 2003, Prestige has exclusively distributed OraSure’s cryosurgical wart removal product in the U.S. under the name Compound W Freeze Off.

The arbitration arose after Prestige acquired the Wartner cryosurgical wart removal product line in September 2006 (Medical Device Daily, Sept. 26, 2006). Wartner competes directly in the domestic market against the Freeze Off product, in violation of a non-compete provision contained in the companies’ distribution agreement.

According to OraSure, the arbitration panel has concluded that Prestige’s acquisition of Wartner breached the non-compete provision, that OraSure is entitled to an award of its legal fees and share of arbitrators’ costs and that all counterclaims asserted by Prestige are rejected. The panel also found that the parties’ distribution agreement will terminate on Dec. 31 and that OraSure is not entitled to receive other compensatory damages.

“As we expected, Prestige was found to have breached the non-compete provision of our distribution agreement and we are pleased that we will receive an award of our legal fees,” said Douglas Michels, OraSure’s president/CEO. “The arbitration panel’s decision to deny compensatory damages is disappointing as is the termination of our agreement with Prestige. Since we understood that termination of the agreement was possible, we have been evaluating alternative product and distribution options and are preparing to implement these strategies to keep our cryosurgical product in the U.S. [over-the-counter] market.”

During its third quarter investor earnings call, scheduled for Oct. 30, the company said it would update its financial guidance for 2007 to reflect business developments, including the expected impact of the Prestige arbitration decision.

OraSure makes oral fluid specimen collection devices and tests and other diagnostic products.