In a way it kind of does because Counter takes the physical damage done to it that turn and doubles it back at the offender.
So when you use Iron Defense, and the next turn the opponent uses (let's say) bite on your Marowak while you are using Counter, then the opponent's Bite will not do as much damage as it would have done. Therefore your Marowak's Counter will double back less damage than it would have if you had not used Iron Defense the previous turn.
I hope this made sense.
