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Aceto gets subpoena in federal investigation of generic drug prices

The Port Washington company says it "is one of many operating companies in the generic pharmaceutical industry to receive a subpoena" from the Justice Department.

Aceto Corp. is headquartered in Port Washington.

Aceto Corp. is headquartered in Port Washington.  Photo Credit: Barry Sloan

Drug seller Aceto Corp. in Port Washington said Monday it has received a subpoena in the federal investigation of price fixing allegations in the generic drugs industry.

Aceto said it “is one of many operating companies in the generic pharmaceutical industry to receive a subpoena from the Department of Justice relating to its yearslong investigation into the industry. The company is currently preparing its response to the subpoena,” it said in a securities filing.

Aceto representative Jody Burfening said Monday it would have no further comment.

The news follows last week’s announcement by Aceto that it is exploring options to sell itself or some of its divisions in the face of falling drug prices. Following that announcement, Aceto shares fell 64 percent on April 19. 

News of the antitrust subpoena came before the stock market opened on Monday. Aceto shares fell 23 cents, or 9 percent, to close at $2.28 on the Nasdaq Stock Market. As recently as August the shares were trading at $17.10. 

Aceto sells chemicals, generic drugs and drug ingredients. In the past few years it has greatly expanded its drug portfolio by purchasing other companies and product lines.

The federal probe into generic drug prices dates to at least 2015. In December 2016, Aceto said it wouldn't be affected by subpoenas delivered to Citron Pharma LLC, a New Jersey company from which Aceto purchased some products. As part of the transaction, Aceto was indemnified against any potential liabilities.

On Monday a half-dozen other drugmakers on Long Island either declined to comment or did not respond to questions from Newsday about whether they have received DOJ subpoenas.

Major national companies, including Endo International PLC, Mylan NV, Perrigo Co., and Teva Pharmaceutical Industries Ltd., received subpoenas several years ago related to an alleged conspiracy to set drug prices and divide up customers to prevent competition. The conspiracy caused prices for some drugs to spike between 2013 and 2015, the DOJ has said.

In 2016 the Government Accountability Office issued a report showing that the prices for 300 out of 1,441 generic drugs climbed 100 percent or more at least once between 2010 and 2015.

DOJ has been joined by attorneys general for 45 states who allege the price fixing cost U.S. businesses and customers more than $1 billion.

Makan Delrahim, head of DOJ's antitrust division, has vowed to seek monetary damages. "To the extent that taxpayers have had to pay that bill, I think the taxpayers should recover," he said in January at George Mason University in Virginia. "We will get involved on the civil side to recover damages for the U.S. government."

Aceto employed 286 as of June 2017, according to a securities filing.

The company reported a loss of $13.4 million in the six months ended Dec. 31, 2017, compared with a profit of $4 million in the same period a year earlier. Sales totaled $356 million in the six months ended Dec. 31, a 41 percent increase from 2016.

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