The company has denied the Consumer Product Safety Commissions (CPSC) allegations in the matter.
The Indian drug major said in a filing with US Securities and Exchange Commission (SEC) that the issue is related to compliance with requirements of special packaging for child resistant blister packs for six products sold by the company in the United States from 2002 through 2011.
The filing said: "The company disagrees with the CPSCs allegations and is engaged in discussions with the CPSC regarding its compliance with the regulations. Simultaneously, the Department of Justice (the DOJ) is also currently investigating a complaint related to these issues under the Federal False Claims Act.
"At this stage of the proceedings, the Company cannot conclude that the likelihood of an unfavourable outcome is either probable or remote."
In May 2012, CPSC had requested Dr Reddys Laboratories Inc, a wholly owned subsidiary of the Company in the US, to provide certain information with respect to compliance with requirements of special packaging for child resistant blister packs for six products sold by the company in the US during the period commencing in 2002 through 2011.
The company provided the requisite information. The CPSC subsequently alleged in a letter dated April 30, 2014 that the company violated the Consumer Product Safety Act (CPSA) and the Poison Prevention Packaging Act (PPPA) and intends to seek civil penalties.
Specifically, the CPSC asserted, among other things, that from or about August 14, 2008 through June 1, 2012, the company sold prescription drugs having unit dose packaging that failed to comply with the CPSCs special child resistant packaging regulations under the PPPA and failed to issue general certificates of conformance.
In addition, the CPSC asserted that the company violated the CPSA by failing to immediately advise the CPSC of the alleged violations.
Dr Reddys however said that no provision is made in the companys unaudited condensed consolidated interim financial statements as of June 30, 2014.
An unfavourable outcome in these matters could result in significant liabilities, which could have a material adverse effect on the company, it further said.