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OVERCHARGING CASES IN US

P A Francis
Wednesday, June 28, 2017, 08:00 Hrs  [IST]

A leading financial daily last week reported that some of the major Indian drug companies and their subsidiaries in the US are facing a series of court cases for overcharging a number of life saving medicines they are marketing there. The report says that the US Department of Justice is pursuing an anti-trust probe against a dozen pharma companies including some of the Indian drug makers along with their US subsidiaries. The allegations against these companies are rigging prices of drugs and colluding to delay entry of drugs of the competitors in the market. In a recent case, filed early this month in the court of Pennsylvania, one leading Indian company was accused of paying its rival Cephalon, to delay the entry of Provigil, a drug used to treat narcolepsy. In another case, two other leading Indian companies along with two others were dragged to the court by KPH Healthcare services for colluding with five other drug makers to inflate the price of Ursodiol used to treat gall bladder stones and eczema. Another top Indian company is facing a class action suit against its US subsidiary along with other drug makers for artificially inflating price of generic Clobatesol. It was also reported that a number of states in the US had jointly filed a case against another leading Indian drug firm and others for fixing prices of generic drugs used for the treatment of diabetes.

Indian pharmaceutical companies established themselves as suppliers of generic drugs at reasonable prices in the US and European markets just over 20 years ago. In those years the US and European pharma companies have been mainly selling branded and patented drugs in their markets at very high prices. India’s emergence as a dependable supplier of quality generic medicines at much lower prices during that period was indeed a major relief to lakhs of poor patients in those countries. Patient groups and NGOs welcomed India’s entry as a dependable supplier of quality generic medicines. Indian companies have been making good profits even at the prices they were selling at that time. But over the years, Indian companies started jacking up the prices of generic drugs taking advantage of their near monopoly situation in these markets. Along with this, entry of some US companies and many medium scale Indian players into generic business brought in tough competition among themselves leading to the unfair trade practices. Obviously the US government and patient groups should not be expected to be oblivious to such profiteering in these life saving products. The US government action against Indian and other companies is thus not totally unexpected. The US government has already hinted that pricing of essential drugs, both branded and generic, going to be under strict scrutiny very soon. And its impact on India’s pharmaceutical sector will be huge especially when a dozen or more Indian companies exporting to the US are already in trouble for their manufacturing practices and product quality.

 

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