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Rediff.com  » Business » Sun Pharma, Dr Reddy's price scrutiny in US reaches next level

Sun Pharma, Dr Reddy's price scrutiny in US reaches next level

October 21, 2014 10:39 IST

PharmaThe US legislature’s probe into 'abnormal' increases in drug prices by 14 pharmaceutical companies, including India’s Sun Pharmaceutical Industries and Dr Reddy’s Laboratories, has gone to the next level.

Congress (the legislature) has written to US health secretary (minister in their terminology) Sylvia Burwell, seeking ‘immediate’ and ‘aggressive’ action over the issue.

On October 2, a legislature committee wrote letters to the 14 companies, initiating an investigation and seeking details about recent price increases in several generic products available in the American market.

It said there had been price increases of 390-8,200 per cent across 10 products.

The Indian drug majors are already under scrutiny from the US Food and Drug Administration.

The latest letter to Burwell says, “We would like to know what steps the Department is currently taking to address this issue, as well as the steps the department may take in the future.

"We request a description of the authorities the agency possesses to address this issue and your assessment of whether legislative action may be required.”

Adding: “We believe the federal government must act immediately and aggressively to address the increasing cost of drugs.

"With that goal in mind, we ask that you provide to our offices, analysis of the national average drug acquisition cost data maintained by the Centres for Medicare and Medicaid Services that our staff has requested, so we can understand the price increase trends.”

Unlike India, the US is a free market for pharmaceutical pricing. Drug prices in the US are essentially governed by competition.

Insurance companies negotiate on these with drug manufacturers but there are no restrictions or caps on prices of either generic products or new or innovative medicines.

The drug companies had been required to reply by this Thursday.

The development comes in the wake of the ongoing tussle between the Indian and American authorities over issues such as intellectual property rights and increasing regulatory enforcements on Indian companies.

Issues entailing IPR, especially with reference to pharmaceuticals and information technology, were close to the top of the list on Prime Miniser Narendra Modi’s agenda during his recent visit to the US.

On April 30, the US Trade Representative had again rapped India on IPR protection and enforcement, reiterating this country being on a ‘priority watch list’.

Of late, Indian drug makers have been facing stringent enforcements in the US, the world’s largest pharma market.

Several manufacturing plants of leading domestic companies such as Ranbaxy, Sun, Wockhardt and Strides Arcolab have come under the FDA scanner for compliance issues.

The frequency of regulatory inspections in Indian plants has also increased significantly in recent years.

UNDER THE LENS

  • On October 2, a legislature committee wrote letters to the 14 companies, initiating an investigation and seeking details about recent price increases in several generic products available in the American market
  • It said there had been price increases of 390-8,200 per cent across 10 products
  • US is a free market for pharmaceutical pricing. Drug prices in the US are essentially governed by competition

The image is used for representational purpose only

Digbijay Mishra in New Delhi
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