Generic drugmaker under federal pricing probe
- Federal antitrust authorities are investigating generic drugmaker Taro Pharmaceutical over the pricing of its drugs and have subpoenaed documents related to communications between Taro and its competitors, the company revealed in regulatory filing with the Securities and Exchange Commission.
- Taro, along with two senior executives in its commercial division, last week received grand jury subpoenas from the Antitrust Division of the U.S. Department of Justice, according to the filing.
- Although few details were disclosed, Taro indicated the DOJ is seeking documents tied to its corporate records, generic drugs and pricing, and communications "with competitors and others regarding the sale of generic pharmaceutical products."
Taro Pharmaceutical, which is headquartered in Israel, makes over 200 generic and over-the-counter drugs, mostly destined for sale in the U.S. market.
The SEC filing did not reveal much about the nature of the DOJ investigation, although Taro said it intends to respond to the subpoena and "otherwise cooperate."
More than half of Taro's U.S. revenues came from sales to wholesalers and other chains, according to a 2016 annual report (Taro's fiscal year ended March 31, 2016).
Taro sells a number of dermatology and cardiology drugs, most notably the steroid clobetasol, a topical treatment used for skin conditions such as eczema and psoriasis. Sales of Clobetsaol accounted for nearly 11% of Taro's revenues last year.
While Taro is based in Israel and trades on the New York Stock Exchange, nearly 80% of its voting power is owned by the Indian generic giant Sun Pharmaceutical, according to Taro's annual report. Taro's current chairman, Dilip Shanghavi, is the founder and managing director of Sun and the company's CEO plans to return to an executive position at Sun after stepping down from his role with Taro at the end of the year.
The two companies are further intertwined operationally, as Taro has outsourced some activities, including IT to Sun.
U.S. authorities are investigating a number of other drugmakers over practices tied — both directly and indirectly — to the sale and distribution of prescription drugs.
Biogen, Jazz Pharmaceuticals, Gilead and Valeant have all been subpoenaed by federal lawyers over their relationship with so-called co-pay charities, which help patients afford drugs. And the New York Attorney General recently announced an investigation into Mylan N.V. over potential antitrust practices related to its EpiPen product.
- Taro Pharmaceuticals Form 6-K
- Stat Feds probe drug maker for prices of generic dermatology meds
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