Turing Pharmaceuticals is back in the news over its marketing and distribution of Daraprim, the anti-parasitic drug crucial for treating toxoplasmosis, which can be fatal to patients with compromised immune systems. As you have probably read by now, Turing recently acquired the rights to Daraprim and thereafter announced its intention to raise the cost of each pill from $13.50 to $750.00. This planned moved elicited a public outcry, including from Hillary Clinton and other presidential candidates. Ultimately, Turing head Martin Shkreli backed down, stating that the price would be lowered to an undisclosed amount.

However, Turing’s original announcement and resulting public scrutiny apparently also drew the attention of the New York Attorney General’s Office. It has been reported that the antitrust chief under AG Eric Schneiderman sent Shkreli and Turing a letter requesting that Shkreli contact the AG’s office to discuss Turing’s distribution channel. Reportedly, Turing does not permit Daraprim to be sold in retail pharmacies; rather, Turing distributes the drug through a small number of specialty pharmacies.

The NYAG’s Office is concerned that this is essentially an effort to limit the ability of generic drug manufacturers to obtain samples of the medication necessary to develop and seek regulatory approval for a competing generic. Only doctors and patients are able to obtain Daraprim from the specialty pharmacies, thereby potentially cutting off efforts of generic drug manufacturers to develop lower-cost generic equivalents. The AG’s office expressed concerns that Turing’s actions “may be restraining competition unlawfully, and have the potential to greatly impede access to a drug that is critical for the public health.”

Notably, such a limited distribution network could help explain why Turing believed it could raise the price of Daraprim 5,000 percent and yet not draw competing generic manufacturers into the Daraprim market. The NYAG’s scrutiny of Turing follows on statements from Sen. Amy Klobuchar of Minnesota directed to FTC Chairwoman Edith Ramirez seeking an investigation into whether Turing or any other pharmaceutical companies have run afoul of regulations by restricting drug distribution. As Sen. Klobuchar remarked, “Some companies may be combining a substantial price increase for a prescription medication with a closed distribution system.” Clearly such efforts to suppress generic drug development while charging hefty premiums will be closely scrutinized by antitrust regulators, at both the federal and state levels.