Nov 02, 2017 05:01 PM IST | Source:

US states look to widen price fixing probe into Dr Reddy’s, Sun Pharma & others

This was in addition to the previous lawsuit filed against two other Indian drug makers Heritage Pharmaceuticals a part of Emcure, and Aurobindo Pharma.

Viswanath Pilla @viswanath_pilla
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Five Indian generic drug makers were named in the expanded anti-trust investigation opened by Connecticut and 45 other US states for alleged conspiracy and collusion to unreasonably restrain trade, artificially inflate and manipulate prices and reduce competition.

The states are seeking to expand the complaint to include Indian drug makers such as Dr Reddy's, Emcure Pharmaceuticals, Glenmark Pharmaceuticals, Sun Pharmaceutical Industries and Zydus Pharmaceuticals (Cadila Healthcare).

This was in addition to the previous lawsuit filed against two other Indian drug makers Heritage Pharmaceuticals a part of Emcure, and Aurobindo Pharma.

The latest lawsuit increases the number of generic drug manufacturer defendants from six to 18 in the case and the number of drugs at issue in the litigation from two to 15.

In addition to doxycycline hyclate delayed release, an antibiotic, and glyburide, oral diabetes medication prices of at least 13 generic drugs will be probed including medicines such as Acetazolamide, used to treat glaucoma and epilepsy; Doxycycline monohydrate, an antibiotic; Fosinopril-hydrochlorothiazide, used to treat high blood pressure; diabetes medications Glipizide-metformin and Glyburide-metformin; Leflunomide, used to treat rheumatoid arthritis; Meprobamate, an anxiety medication; Nimodipine, a calcium channel blocking agent used to reduce problems caused by a bleeding blood vessel in the brain; Nystatin, an antifungal medication;Paromomycin, an antibiotic used to treat certain parasite infections; Theophylline, used to treat asthma and other lung problems; Verapamil, used to treat hypertension; and Zoledronic acid, used to treat hypercalcemia.

"In the expanded complaint, the states allege a number of specific illegal agreements among the defendants to fix prices and allocate customers for a number of generic drugs," said a statement from the office of George Jepsen, Attorney General of Connecticut who is leading the coalition in new, expanded complaint in Federal Generic Drug Antitrust Lawsuit.

"The states further allege that these conspiracies were part of a much broader, overarching industry code of conduct that enabled the defendant manufacturers to divvy up the market for specific generic drugs in accordance with an established, agreed-upon understanding for assigning each competitor their share of the market," the statement added.

"Generic drugs are a multibillion-dollar industry," Attorney General Jepsen said, "but it's an industry based on products that people need and rely upon every single day for their health and well-being. The allegations of our complaint are shocking, and the depth and breadth of the conspiracies alleged are mind-blowing. The harm caused to America's economy and households is real – additional financial burdens for patients paying for needed medications, higher premiums as health insurers pass higher drug costs onto consumers and greater costs to cash-strapped states paying for care through public health insurance programmes."

Citi Research report estimated the cumulative sales of the 13 drugs added in the lawsuit to be around USD 1.2 billion.

In July 2014, the state of Connecticut initiated an antitrust investigation of the reasons behind suspicious price increases of certain generic drugs.

The investigation, which is still ongoing as to a number of additional generic drugs, generic drug companies and key executives, uncovered evidence of well-coordinated and long-running conspiracies to fix prices and allocate markets for certain generic drugs.

Simultaneously, for the first time, the states have also sued two senior executives—Rajiv Malik, President and Executive Director of Mylan NV, and Satish Mehta, Chief Executive Officer and Managing Director of Emcure Pharmaceuticals, which is the parent company of Heritage Pharmaceuticals.

Mylan said it found no evidence of price-fixing on the part of Mylan or its employees, and added it will be defending its top executive Rajiv Malik.

“Dr Reddy’s is aware of the on-going investigation by the US Department of Justice (DoJ) into this matter and the recent amended complaint issued by the Attorneys General of Connecticut and other States," said the spokesperson of the company.

"The company intends to continue cooperating fully with all authorities on this matter and as it is sub-judice, wish to refrain from further comment at this point in time,” the spokesperson added.

Another drug maker Glenmark declined to comment.

"While we do not comment on ongoing litigation, Glenmark prides itself on conducting its business with the utmost integrity and complying with all applicable laws, rules and regulations," a Glenmark from statement said.

The other drug makers were not reachable or emails sent to them yet to elicit a response.

Emcure said to Mint newspaper that it strongly disputes the States’ claims and intends to "forcefully defend against them”.

Analysts said anti-trust investigations take years and are often difficult to prove in courts.

"It's not a major concern for Indian drug makers," said Amey Chalke, Research Analyst at HDFC Securities.

"In the past there are several such cases but nothing came out of them. It's diificult to establish and prove these cases before courts based on circumstantial evidence," Chalke said.

With USD 16.4 billion sales in 2016, India is the largest exporter of generic drugs.
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