Inflated prices to 1000 per cent; Lupin, Sun Pharma, Dr Reddys, others face lawsuit
Mumbai: In a major setback, a group of domestic pharmaceutical companies including Zydus Cadila, Lupin, Aurobindo Pharma, Dr Reddy's Labs, Wockhardt, Glenmark, Sun Pharma are in a soup as 40 US states have filed legal proceedings against these pharma majors.
According to a recent report by TOI, lawsuits have been filed against pharma majors for allegedly conspiring in inflating prices of widely prescribed generic medicines as high as 1000 per cent.
Besides domestic firms, global pharma biggies including Teva, Pfizer, Sandoz and Mylan are also under alleged implication.
It has been reported that the complaint lodged by 44 US states in US district court in Connecticut mentions that 20 drug companies allegedly engaged in conspiracies to split the drug market in order to evade competition and also prevent prices from falling or rising.
Expressing concern over the same, experts state that the domestic industry, already struggling with pricing pressure in the US, faces one of the biggest such probes ever which, if proven, can suffer prosecution and financial burden on companies.
The development put a restriction on the entire pharma sector as the US is the most profitable market, contributing a significant portion to revenues.
Presently, the case as lengthy as 500 pages was filed by the US states on May 10. The lawsuit expands a complaint of price collusion filed in the year 2016, which is still pending in the US courts. The case was first investigated in 2014.
The hike in drug prices from both branded as well as generic manufacturers has sparked resentment, with criticism coming from across the political spectrum, including from President Donald Trump.
Over time, the industry-wide scheme reportedly impacted prices of over 300 generic drugs in the US including HIV, diabetes, asthma medication, high cholesterol, oral antibiotics, blood thinners, cancer drugs, contraceptives and antidepressants, reports TOI.
Commenting on the same, Surajit Pal associate vice-president, Prabhudas Lilladher told TOI, "The role of domestic companies (under investigation) appears to be minimal, probably to the extent of three to four molecules, while we expect the penalty would not be over $50 million each."
Meanwhile, stock prices of most companies witnessed a sharp drop on the Bombay Stock Exchange to the tune of 4-9% recently as the US probe on price-fixing seems to have impacted the overall domestic pharma sector. Consequently, Sun Pharma scrip tanked the most by nearly 10% to Rs 397.
However, domestic companies are of the opinion that they would defend these allegations. A Sun Pharma spokesperson told TOI, "We believe the allegations made in these lawsuits are without merit, and we will continue to vigorously defend against them."