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This article was first published 9 years ago  » Business » 3 Indian pharma firms named in US Congress price probe

3 Indian pharma firms named in US Congress price probe

By Digbijay Mishra & Sushmi Dey
October 09, 2014 08:14 IST
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Details on prices sought as 10 generic drugs become up to 83 times costlier in 6 months

The US Congress seems to have gone on the offensive against 14 generic drug manufacturers, including three top Indian firms — Sun Pharmaceutical Industries, Dr Reddy’s Laboratories and Cadila Healthcare — following an abnormal rise in prices of 10 generic medicines.

On October 2, a day after Prime Minister Narendra Modi’s return from America, the Congress initiated a probe and wrote to these firms, seeking details about recent hikes in prices of several generic products available in the US market.

Industry officials maintain there is no provision under law by which the Congress could conduct such investigation. But the development is significant, especially against the backdrop of a continuing tussle between India and the US over issues related to intellectual property rights (IPR) and the American regulator increasing enforcements on Indian firms.

On April 30, the US’ Special 301 report, an annual review of the global state of IPR protection and enforcement, had classified India as a ‘priority watch-list country’. Issues around IPR, particularly for pharmaceutical and information technology products, were top on Modi’s agenda during his US visit.

Unlike India, the US is a free market for pharmaceutical pricing. Drug prices there are essentially governed by competition. Besides, insurance firms negotiate for those with drug manufacturers. However, there is no restriction or cap on prices of either generic products or new and innovative medicines, experts explained.

The US Congress’ letters to drug makers have pointed out that prices of 10 generic products were raised by 40 to 83 times between October 2013 and April this year, and asked the companies to give detailed information on the matter.

“We are conducting an investigation into the recent staggering price increases for generic drugs used to treat everything from common medical conditions to life-threatening illnesses,” said the letters, addressed to senior management executives of these companies. Apart from the three Indian companies, the investigation includes Teva, Mylan, Actavis, Apotex, Endo, Global Pharmaceuticals, Heritage Pharmaceuticals, Lannett Company, Marathon Pharmaceuticals, PAR Pharmaceutical Companies Inc and West Ward Pharmaceutical Corp.

The development had a rub-off on the Indian pharma companies' stocks, which mostly traded in the red on BSE on Wednesday. Dr Reddy's shares shed about four per cent of their value to close at Rs 2,963.65 apiece, while the Sun Pharma scrip declined about two per cent from its previous close to end at Rs 198.90.

Though the Congress letters have indicated a deadline of October 23, a top executive of one of the Indian drug firms said companies were not obliged to give any detail sought by the American Parliament body.

A spokesperson for Dr Reddy's Labs said the company was not selling in the US market one of the products listed by the Congress, while it had not raised the price of the other drug. "We are okay with our position and we will respond to them within the mentioned deadline," the spokesperson said.

The Congress has sought details like companies' total gross revenue from these drugs; dates, quantities, purchasers and prices for sale of these drugs; besides profit projections and other information.

Indian drug makers have lately faced stringent enforcements in the US, the world's largest pharmaceutical market. Several manufacturing facilities of leading companies like Ranbaxy, Sun Pharma, Wockhardt and Strides Arcolab have come under the scanner of the US Food and Drug Administration (US FDA) for compliance-related issues. The frequency of regulatory inspections of Indian plants has also increased significantly in the past few years.

While norms in India have also become relatively strict in recent years, Indian regulators and the government are still far from matching the US and European standards. After a directive by the Supreme Court, the Indian drug regulator, as well as the health ministry, has adopted a cautious approach in approving new medicines and clinical trials. But the government's approach in dealing with the prices of imported medicines and checking the quality of drugs available in the domestic market remains lenient.

Even in the case of compulsory licensing, the government has so far not invoked any, despite several recommendations from the health ministry. The single compulsory licence for the generic version of Nexavar was also granted by the patent controller.

Super regulator?

Ambit: The Congressional investigation seeks information like total gross revenue of the companies concerned from sale of the drugs in question

Finer details: The probe also seeks dates, quantities, purchasers, prices paid, profit projections and pricing in other markets

Companies: Letters have been sent to 14 firms, including Sun Pharma, Dr Reddy’s, Cadila, Actavis Plc, Apotex Corp, Endo International, Global Pharmaceuticals, Heritage Pharmaceuticals and Lannett Company

Price hikes: The US Congress has pointed out hikes of 40 to 83 times in prices of 10 products —Sun Pharma, for example, is said to have raised the prices of Doxycycline Hyclate by about 83 times and Albuterol Sulfate by 41 times in the October 2013 to April 2014 period

Replies: Sought from the companies concerned by October 2

Hurdles in the US

Indian drug majors’ facilities banned by the US recently

Sep 2008: Ranbaxy’s Paonta Sahib and Batamandi (Himachal Pradesh) and Dewas (Madhya Pradesh) facilities; US FDA also banned 30 drugs


May: Wockhardt’s Waluj unit in Aurangabad (Maharashtra)

Jun: RPG Life Sciences’ units in Ankleshwar (Gujarat) and Maharashtra

Sep: Ranbaxy’s plants in Mohali (Punjab)

Nov: Wockhardt’s Chikalthana plant in Aurangabad (Maharashtra)


Jan: Supplies from Ranbaxy’s active pharmaceutical ingredient unit in Toansa (Punjab) stopped

Mar: Sun Pharma’s Karkhadi (Gujarat) unit

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Digbijay Mishra & Sushmi Dey in New Delhi
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