Dr Reddys faces price fixing allegations In US for 4 drugs

DRL informed the US stock markets regulator that it has been named with respect to four drugs namely, Divalproex ER, Meprobamate, Pravastatin and Zoledronic Acid.

Hyderabad: The Hyderabad based Dr Reddy’s Laboratories (DRL) seems to be heading towards trouble with its foreign operations as the firm recently informed that its US subsidiary Dr Reddy’s Laboratories Inc is facing drug overpricing allegations following a complaint by a US-based insurance company, as per the company’s latest filing to the US Securities and Exchange Commission (SEC).

United Healthcare Services is an American firm that offers health insurance policies and products under individual and group plans. The insurance firm lodged a complaint against DRL Inc and 42 others involving thirty generic drugs, alleging price-fixing plan to supply bids and assign customers with respect to the thirty drugs.

The company alleged that it had suffered 'several billion dollars' worth of economic damages traceable to unlawful price inflation by drug companies named in the lawsuit.

“On January 16, 2019, United Healthcare Services Inc, filed a complaint against Dr Reddy’s Laboratories Inc and 42 other defendants, involving a total of 30 generic drugs, alleging an ‘overarching’ price-fixing conspiracy to rig bids and allocate customers with respect to 30 drugs,” the company said in its filing.

DRL informed the US stock markets regulator that it has been named with respect to four drugs namely, Divalproex ER, Meprobamate, Pravastatin and Zoledronic Acid.

“Plaintiffs also allege that Dr Reddy’s (as well as all other manufacturers named) were part of a larger conspiracy as to all of the drugs named in the complaints. The complaint alleges violations of Section 1 of the Sherman Act, 15 USC §1, and violations of the Minnesota and 29 other states’ antitrust laws, Minnesota’s and 16 other states’ consumer protection statutes, and claims of unjust enrichment, seeking injunctive relief, recovery of treble damages, punitive damages, attorney's fees and costs,” it said.

However, the company repudiated any wrongdoing and said that it intends to vigorously defend against these claims.

This isn't the first time that Dr Reddy's and other Indian generic pharma companies have faced legal cases involving the price-fixing allegations in the US.

According to TOI, on September 25, 2018, Marion Diagnostic Center LLC and Marion Healthcare LLC, too filed a complaint against Dr Reddy’s Laboratories Inc and 22 other defendants alleging an “overarching conspiracy” for price fixing and to rig bids and allocate customers with respect to 16 drugs. In that complaint, Dr Reddy’s was specifically named with respect to two drugs — Meprobamate and Zoledronic Acid.

Except for Zoledronic acid injection, which was launched as recently as in 2017, the other three generic drugs of Dr Reddy's have been in the US market from 2009 and 2013 onwards and any adverse legal outcome in these anti-trust cases would make the company liable to pay substantial penalties, reports BS.

Also Read: Dr Reddy’s Q3 profit up by 45 per cent at Rs 485 crore