Merck, Eli Lilly targeted in federal drug pricing probe

Biotech stocks crushed under political pressure
Biotech stocks crushed under political pressure

Merck and Eli Lilly are both being investigated by the Justice Department for their drug-pricing practices.

The pharmaceutical giants both disclosed the probes by the U.S. Attorney's office in Philadephia in SEC documents.

Lilly (LLY), based in Indianapolis, said it is being asked about "our treatment of certain distribution service agreements with wholesalers," and how that affects the price it is allowed to charge Medicaid.

New Jersey-based Merck (MRK) said it has been asked for documents related to its "contracting and pricing of Dulera Inhalation Aerosol with...Medicare Part D [drug] plans."

Both companies say in the filings that they are cooperating with the probes.

Related: Biotech stocks crushed under political pressure

Drug pricing policies have come under a great deal of scrutiny recently after it came to light that two smaller companies, Turing Pharmaceuticals and Valeant Pharmaceuticals (VRX), bought the rights to niche drugs and vastly increased their prices.

Valeant has been subpoenaed by the U.S. attorneys in Massachusetts and New York. And the Senate Special Committee on Aging has announced it has a probe into Turing's practices.

Personal Finance

CNNMoney Sponsors