Key understanding to Price cartelisation probe in pharmaceutical Industry

Recently in last 7 days, we have observed price cartelisation issue cropped up and pharmaceutical companies stocks are vulnerable. So, let understand what is price cartelisation is all about.

What Price cartelisation probe?

The US authorities are probing charges of price collusion and cartelisation by generic drug makers in US. Drug pricing has become a sensitive subject in the US in recent times with the government bearing down on pharmaceutical companies for increasing prices.

In economics, a cartel is an agreement between competing firms to control prices or exclude entry of a new competitor in a market. It is a formal organization of sellers or buyers that agree to fix selling prices, purchase prices, or reduce production using a variety of tactics.

In past, investigations into drug carelisation had seen branded pharmaceuticals, generics have also come under scrutiny recently. This is majorly, becuase of increased poularity of generic drugs in USA.

What if companies found guilty of Price cartelisation?

If proved, these companies could face criminal charges and could face penalties if they are held responsible for fixing prices of drugs.

Which are the companies under scrutiny?

The companies under probe also include Indian drug makers Sun Pharmaceutical Industries, its US subsidiary Taro Pharmaceutical, Dr Reddy’s Laboratories, Mylan NV, Teva Pharmaceutical Industries Ltd, Actavis, which Teva bought from Allergan Plc in August, Lannett Co Inc, Impax Laboratories, Inc, Covis Pharma Holdings Sarl, Mayne Pharma Group Ltd, and Par Pharmaceutical Holdings.