Indian pharma giants in US generics price fixing scandal

Glenmark, Dr Reddy’s, and Sun Pharma are among Indian pharma companies facing accusations of a widespread price-fixing scandal in the US, with the intention of inflating the price of generic drugs.

Investigations underway into drug price fixing

Forty-six US states are investigating allegations that the Indian pharma companies artificially inflated prices in order to reduce competition in the generics industry in the US. Following new litigation, there are now 15 different drugs at issue in the country and a total of 18 defendants in the case.

In addition, two senior executives, Satish Mehta (Emcure Pharmaceuticals Ltd), and Rajiv Malik (Mylan N.V.) are under investigation. However, a spokesman for Mylan insisted that an internal enquiry had failed to unearth any evidence of price-fixing by any of their employees. Dr Reddy’s and Glenmark have also robustly denied the claims, whilst stating that they are co-operating fully with US investigators. Emcure has stated its intention to forcefully defend itself against the allegations.

The companies’ response is not surprising, bearing in mind the damage that can be done to their reputations, even though the investigation is in its very early stages.

Penalties

Citi Research reported recently that the cumulative sales of 13 of the drugs mentioned in the lawsuit are estimated to be approximately $1.2 billion. Should any or all of the defendants be found guilty of the alleged misconduct, the penalty would be a multiple of the profits that they made from the price fixes.

India is the largest exporter of generics, with $16.4 billion in sales in 2016, and the country’s top 10 pharma firms hold a 24% share in the US generics market between them.

As a result of these allegations and the ongoing investigation, Indian pharma companies’ share values plummeted earlier this week.

This most recent legal stand in the fight against price fixing will undoubtedly send shock waves throughout the pharma manufacturing industry. Regardless of the outcome of the case, it will surely be the fee-paying public who come out on top, as legislators continue the fight to keep generics as an affordable alternative to expensive branded medicines.

 

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