U.S. drugmakers Merck & Co and Eli Lilly & Co are being investigated by federal prosecutors over their drug-pricing practices, the companies disclosed.
The exact nature of the investigations and where they might lead was not immediately clear.
Lilly, in an Oct. 30 regulatory filing, said the Philadelphia U.S. Attorney’s Office and the civil division of the U.S. Department of Justice are investigating its distribution agreements with wholesalers. The agreements are used to determine Average Manufacturer Prices that are the basis of required rebates to the Medicaid healthcare program.
Under federal law, the government’s Medicaid program for the indigent receives about a 23 percent rebate to the average wholesale price.
Lilly spokesman Mark Taylor said the Indianapolis company is cooperating with the investigations. He noted that drugmakers every three months are required to provide the U.S. Centers for Medicare and Medicaid Services the average prices its wholesalers pay for their products.
“This inquiry is not in regard to our list prices, or how we price our medicines in general,” Taylor said.
The exact nature of the investigation and where it may lead was not immediately clear.
Merck, in a regulatory filing late on Thursday, said it had received a civil investigative demand for information from the Philadelphia U.S. Attorney’s Office, relating to pricing of its asthma inhaler product, Dulera.
Merck said it was cooperating with the investigation, but declined further comment.
The regulatory disclosures come as a U.S. Senate panel moves ahead with a probe into drug pricing by companies, including Valeant Pharmaceuticals International Inc and Turing Pharmaceuticals.
Drugmakers’ shares fell sharply in the past few weeks after Democratic presidential candidate Hillary Clinton criticized drug pricing on her campaign trail.
Shares of Lilly were down 0.3 percent, while Merck fell 1 percent in afternoon trading on the New York Stock Exchange, amid a 0.9 percent decline for the ARCA Pharmaceutical Index of large U.S. and European drugmakers. (Reporting by Ransdell Pierson in New York; additional reporting by Vidya L. Nathan in Bengaluru; Editing by Andrew Hay)