LONDON, Nov 4 (APM) - U.S. prosecutors are bearing down on generic companies in a sweeping criminal investigation into suspected price collusion, a fresh challenge for an industry that is already reeling from public outrage over the spiralling costs of some medicines, it is being reported.
The antitrust investigation by the Justice Department, which started about two years ago, now spans more than a dozen companies and about two dozen drugs, according to people familiar with the matter, Bloomberg is reporting. The grand jury probe is examining whether some executives agreed with one another to raise prices, and the first charges could emerge by the end of the year, they said.
Though individual companies have made various disclosures about the inquiry, they have identified only a handful of drugs under scrutiny, including a heart treatment and an antibiotic. Among the drugmakers to have received subpoenas are industry giants Mylan and Teva Pharmaceutical Industries.
Other companies include Actavis, which Teva bought from Allergan in August, Lannett Co, Impax Laboratories, Covis Pharma Holdings Sarl, Sun Pharmaceutical Industries, Mayne Pharma Group, Endo International's subsidiary Par Pharmaceutical Holdings and Taro Pharmaceutical Industries, Bloomberg reports.
All of the companies have said they are cooperating except Covis, which said last year it was unable to assess the outcome of the investigation.
"Teva is not aware of any facts that would give rise to an exposure to the company with respect to these subpoenas," Teva spokeswoman Denise Bradley said in an e-mail.
"To date, we know of no evidence that Mylan participated in price fixing," Mylan spokeswoman Nina Devlin said in an e-mail, Bloomberg said.
Mayne continues to cooperate with the Justice Department and believes the investigations will not have a material impact on its future earnings, the company said in a statement on Thursday.
Allergan, Impax and Sun declined to comment beyond their filings. Representatives of Endo, Covis, Taro and Lannett did not respond to requests for comment, Bloomberg said. A Justice Department spokesman declined to comment.
Shares of all companies named in the investigation fell on the news. Lannett plunged 27% to close at $17.25 in New York trading on Thursday. Impax fell 20% to $16.50, Endo declined 19% to $14.63, Teva dropped 10% to $39.20, Allergan fell 5% to $188.82 and Mylan fell 7% to $34.14.
Shares of Concordia International Corp, which bought most of Covis's assets, fell 6% to 4.37 Canadian dollars. Taro shares fell 7% to $93.68. Mayne's shares fell 16% to A$1.435 at 2:56 p.m. Sydney time on Friday. Sun Pharma lost 4% to 673.25 in Mumbai morning trading on Friday.
Drug pricing has met fierce criticism from U.S. lawmakers over the past year. Former hedge fund manager Martin Shkreli triggered a firestorm and was bitterly criticised by Democratic presidential candidate Hillary Clinton after he acquired an old antiparasitic drug, Daraprim, and raised the price to $750 a pill from $13.50. (APMMA 45317)
Valeant Pharmaceuticals has been lambasted by Congress for boosting prices of older drugs. In September, representatives grilled Mylan chief executive officer Heather Bresch over the company's sixfold price increase since 2007 to $600 for a pair of EpiPen allergy shots. (APMMA 49679)
While attention so far has been mainly focused on branded drugs, which are more expensive, the Justice Department probe is now bringing the generics industry into the fray.
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