US probes Dr Reddy’s drug pricing mechanism

By: | Published: February 26, 2015 12:36 AM

Dr Reddy’s Laboratories (DRL) has received a letter from the US Congress seeking information on increase in prices of two drugs...

Dr Reddy’s Laboratories (DRL) has received a letter from the US Congress seeking information on increase in prices of two drugs — divalproex sodium ER and pravastatin sodium, according to its Form 6K filing to the SEC.

“On October 2, 2014, two members of the United States Congress wrote to us requesting information and expressing concern over the ‘escalating prices’ of two products, divalproex sodium ER and pravastatin sodium, marketed by us in the US. We subsequently responded to this letter and clarified, among other things, that: (a) we launched divalproex sodium ER on August 19, 2013 and have not implemented a price increase on this product since then; and (b) we sold pravastatin sodium in the US only during January 1, 2012 to August 20, 2012, during which we did not increase the price of this product,’’ the company said in the filing.

Besides, there is also a civil investigative demand (CID) from the Office of the Attorney General, state of Texas. The CID includes a broad range of requests for information, documents and data regarding sales and price reporting in the US marketplace of certain products.

When contacted, Calvin Printer, vice-president, corporate communications, Dr Reddy’s, said, “We confirm having received the CID. We are working closely with the office of the Attorney General, state of Texas, in responding to their queries so as to expedite a speedy redress to the information they have sought from us. At this point, we do not have any further comment as the matter is work in progress.”

“On or about November 10, 2014, we received a CID from the Office of the Attorney General, state of Texas requesting certain information for the period of time between January 1, 1995 and the date of the CID… We subsequently communicated with the Texas AG, at which time they requested a sample of certain transactional data pertaining to one calendar quarter requested in the CID, and we agreed to provide it no later than February 20, 2015,’ the company said.

The company also has received subpoena duces tecum (for production of evidence) from the Office of the Attorney General, California. “On November 3, 2014, we received a subpoena duces tecum to appear before the Office of the Attorney General, California and produce records and documents relating to the pricing of 15 products. A set of five interrogatories related to pricing practices has been served as well. We have communicated with the California AG, and we are working with them in tandem with the Texas AG in order to avoid duplication of efforts in providing the voluminous data requested,’’ the company said in the filing.

In October 2014, the US Congress had sent information letters to 14 pharmaceutical companies over initiating a probe into the staggering price rise of generic drugs. The three Indian companies include Sun Pharmaceuticals, Dr Reddy’s Laboratories and Zydus Pharmaceuticals.

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