Dr Reddy's, Sun Pharma under cartelisation probe in US

The US authorities are probing charges of price collusion and cartelisation by Indian drug makers Sun Pharmaceutical Industries, its US subsidiary Taro Pharmaceutical, and Dr Reddy's Laboratories.

The US department started investigating into the matter two years ago into the cartelisaion charges, which involve about two dozen drugs and several companies, including Indian generic drug makers.

If proved, these companies could face criminal charges and could face penalties if they are held responsible for fixing prices of drugs.

The companies have been summoned several times and asked to share details of pricing and sale of the products.

A grand jury probe is examining whether some executives collided to raise prices and the first charges could emerge by the end of the year, a Bloomberg report said.

In their filings to the New York Stock Exchange in August and September, respectively, Dr Reddy's and Taro confirmed they had received subpoenas from the US DoJ seeking information related to pricing and sale of generic drugs.

Israel-based Taro said two officers from its commercial team, too, had been issued summons while Dr Reddy's said it was asked to submit information by the Attorney General of Connecticut state.

In their filings, the companies said details sought pertained to corporate and employee records, generic pharmaceutical products and pricing, communication with competitors and others regarding sale of the products. The companies said they were co-operating with the investigation agencies.

Sun Pharma refused to make further comments on pending investigation while Dr Reddy's too declined an additional comment.

Reports said the drugs under investigation included said a drug used for treating bacterial infections and another used against heart ailments.

The anti-trust investigation comes at a time when drug makers are already facing the heat over abnormal price hikes of certain products in the US. With Democratic presidential candidate Hillary Clinton promising action against price gouging by drug makers, there is a the possibility of DoJ widening its probe to include more drug makers and products.

Drug pricing has become a sensitive subject in the US in recent times with the government bearing down on pharmaceutical companies for increasing prices.

While earlier investigations into drug carelisation have centered around increase in prices of branded products, generics have also come under scrutiny recently.

The companies under probe also include Mylan NV, Teva Pharmaceutical Industries Ltd, Actavis, which Teva bought from Allergan Plc in August, Lannett Co Inc, Impax Laboratories, Inc, Covis Pharma Holdings Sarl, Mayne Pharma Group Ltd, and Par Pharmaceutical Holdings are the other companies that were issued grand jury subpoenas, the report said.

Investigations into price collusion allegations could be time consuming and are often difficult to prove. However, this a serious charge and if proved, companies may have to pay a hefty penalty.

The first charges in the current probe could emerge by the end of the year.