Dr. Reddy's resolves U.S. probe over child safety of drug packaging

By Nate Raymond

(Reuters) - Dr. Reddy's Laboratories Ltd will pay $5 million to resolve U.S. claims that the Indian company sold prescription drugs in the United States in packaging that was not tested for child safety, according to court papers filed on Monday.

The settlement was disclosed in documents filed in federal court in Trenton, New Jersey, over a year after the U.S. Consumer Product Safety Commission voted to refer a case involving the drugmaker to the U.S. Justice Department.

Dr. Reddy's in a statement said that the safety of patients and consumers was of "paramount importance" to the company. It said it disagreed with the allegations but agreed to the settlement to avoid prolonged litigation.

"Dr. Reddy's is not aware of any reports that any child gained access to these products as a result of the packaging or that any of the products caused children harm as a result of the packaging," the company said.

The Justice Department alleged that in 2011, Dr. Reddy's engineers concluded the packaging for five types of drugs that the company manufactured and imported for sale would not pass tests required in the United States to prove child resistance

The Justice Department in a lawsuit said that instead of notifying the CPSC or the public that its products put children at risk, the company quietly began altering its packaging while continuing to sell products in untested packaging.

The lawsuit said Dr. Reddy's violated the Consumer Product Safety Act by distributing drugs that did not comply with a law aimed at protecting children from accidentally ingesting medicines by requiring those drugs to be in special packaging.

Dr. Reddy's said products with the packaging at issue have not been distributed since June 2012.

In addition to the $5 million penalty, Dr. Reddy's under the settlement must maintain a program aimed at ensuring compliance with consumer protection laws and must have a system to ensure information is reported to the CPSC.

(Reporting by Nate Raymond in Boston; Editing by Leslie Adler)