Merck, Eli Lilly Probed for Alleged Drug over Pricing

By Money Times

Nov 09, 2015 02:20 AM EST

The Justice Department launched an investigation on drug makers Merck & Co, Valeant Pharmaceuticals International, and Eli Lilly & Co for alleged overpricing.

The Wall Street Journal reported that the US Attorney's office in Eastern District of Pennsylvania, along with the Justice Department's civil division set a probe on Merck, Eli Lilly, and Valeant on how these drug makers calculate and report their product pricing to the government medical rebate program. The drug companies announced these probes during their SEC filings last week.

BBC News writes that Merck is being investigated for its asthma inhaler medication called Dulera. Meanwhile, Eli Lilly is being probed on how it calculated its medical rebates associated to the US government insurance program catering low income earners. A Lilly spokesman said that the company believes its "accounting practices related to average manufacturer prices and the Medicaid drug rebate program are correct."

According to a report by Reuters this investigations on Merck and Eli Lilly comes a few days after the US Senate Special Committee on Aging began a probe on certain drug companies such as Valeant, as well as on Turing Pharmaceuticals. Drugmakers' shares significantly decreased in the past several weeks after Hillary Clinton rapped drug pricing as part of her campaign. Merck and Lilly's share also dropped 1 percent on the New York Stock Exchange Friday.

Meanwhile, the Democrats on the House Committee on Oversight & Government Reform also came up with a task force to fight the skyrocketing prices of prescription drugs. Hillary Clinton and Bernie Sanders also suggested coming up with measures to mitigate drug costs. These measures include letting the federal Medicare program to negotiate prices with drug makers directly.

The US federal law mandates that drug makers must give price discounts to Medicaid programs to control costs. Most of these drug companies are supposed to pay rebates worth 17.1% to 23.1% of the average price.

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