Packaging violations: US justice department probes Dr Reddy's

The latest development is in addition to the US Consumer Product Safety Commission's ongoing engagement with the company on the same issue

The US Department of Justice is currently investigating a complaint related to the violation of child resistant packaging regulations against Hyderabad-based Dr Reddy's Laboratories Limited under the Federal False Claims Act.

This was in addition to the Consumer Product Safety Commission (CPSC)'s ongoing engagement with the company on the same issue. In a filing with the US Securities and Exchange Commission(SEC), Dr Reddy's acknowledged these developments while denying the alleged violations.

According to the filing, in May 2012 the CPSC requested the company's US subsidiary to provide certain information regarding the compliance with requirements of special packaging for child resistant blister packs for six products sold by Dr Reddy's in the US from the year 2002 through 2011. The company provided the requested information.

However, in a letter dated April 30, 2014 CPSC alleged that the company has violated the Consumer Product Safety Act (CPSA) and the Poison Prevention Packaging Act (PPPA) and intends to seek civil penalties. The commission asserted that the company sold prescription drugs having unit dose packaging that failed to comply with the CPSC's special child resistant packaging regulations under the PPPA and failed to issue general certificate of conformance. The commission also asserted that the company violated the CPSA by failing to immediately advise the CPSC of the alleged violations.

"The company disagrees with the CPSC's allegations and is engaged in discussions with the CPSC regarding its compliance with the regulations,"Dr Reddy's maintained.

Simultaneously, the Department of Justice is also currently investigating a complaint related to these issues under the Federal False Claims Act.

In its filing Dr Reddy's said an unfavourable outcome in these matters could result in significant liabilities, which could have a material adverse effect on the company. However the company clarified that at this stage of the proceedings, it cannot conclude that the likelihood of an unfavourable outcome is either probable or remote.