A Delaware chancery court decreed that Johnson & Johnson Inc. owes investors in Auris Health Inc. more than $1 billion over allegations that J&J had undercut Auris products after the 2019 acquisition of Auris. The outcome highlights the hazards of acquisitions of companies that are competitive in a particular product space, but a shift in FDA policy regarding robotic surgical systems may have also played a role in this outcome.

The FDA’s regulation of medical technology may be assumed to have a number of unintended consequences, and one of those seems to be the lawsuit between Johnson & Johnson (J&J) and Auris Health Inc. Due to a 2018 FDA policy change regarding 510(k) devices, a robotic surgery system acquired by a J&J subsidiary from Auris was forced into the lengthier de novo premarket channel. This change ultimately helped derail the development effort for the Auris Iplatform surgical system and thus played a role in the $2.35 billion lawsuit alleging that J&J had engaged in fraud in its deal with Auris over the acquisition.