Sun Pharma Receives Grand Jury Summons

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Sun Pharmaceuticals, India’s largest drug maker, recently disclosed that the United States Department of Justice (DOJ) has subpoenaed the company seeking information about pricing and marketing of the generic drugs it sells in the United States.

The anti-trust division of the DOJ has also issued summons to the company’s U.S. subsidiary to appear before a grand jury.

While Sun Pharmaceuticals did not elaborate on the particular reasons for the summons, it stated that the DOJ has sought “documents from [Sun Pharmaceuticals Industries Inc] SPII and its affiliates relating to corporate and employee records, generic pharmaceutical products and pricing, communications with competitors and others regarding sales of generic pharmaceutical products and certain other related matters.”

Sun Pharmaceuticals stated that SPII is responding to the subpoena, and it is “of the opinion that the outcome of the above-referred inquiry is unlikely to have any material adverse impact on the consolidated operations or consolidated financial results of the company.”

It Isn’t Just Sun Pharma

While the specifics of the summons are not currently clear, the prices of generic drugs have come under increasing scrutiny by both the government and health insurance companies over the course of the past several years. The scrutiny essentially started when United States Senator and current Democratic candidate for President Bernie Sanders, along with Representative Elijah Cummings, opened a congressional investigation in October 2014 into fourteen drug companies, including Sun Pharma, over their price increases of generic drugs.

In February 2015, Sanders and Cummings went a step further, and asked the Department of Health and Human Services (HHS) to investigate such increases in generic drug prices, citing specifically to doxycycline hyclate 100-mg capsules, of which prices had more than doubled in the year through June 2014. Around that time, Myland and Endo International Plc received notice from the DOJ seeking details of pricing of doxycycline based drugs.

The February 2015 letter resulted in a December 2015 report issued by the HHS Office of Inspector General (OIG) that found that “generic drug price increases exceeded the statutory inflation factor applicable to brand-name drugs for 22 percent of the quarterly AMPs we reviewed.” The report recommended that Centers for Medicare and Medicaid Services (CMS) consider seeking legislative authority to extend the additional rebate provisions to generic drugs. The Bipartisan Budget Act of 2015 addressed those concerns by including provisions extending an additional rebate to generic drugs.

Dr. Reddy’s Lab and Allegran Plc also received summons from United States regulators seeking pricing details. However, the details of the products involved in those instances were not disclosed.

It is clear from the past two years, and the fact that summons and subpoenas are still being issued on the topic, that the DOJ is going to continue focusing on pricing of generic drugs until another hot topic surfaces.

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