Merck KGaA of Germany’s subsidiary Dey has come under fire from the US government for allegedly inflating the price of medicines supplied to the national Medicaid and Medicare programmes.

Dey, which makes respiratory and allergy drugs, insists that it has done no wrong in the case, which has been brought by the US Department of Justice and will be hear in the district of Massachusetts.

US federal law requires companies making medicines to provide federal programmes with the average wholesale prices of products that they wish to be reimbursed. The DoJ alleges that Dey reported inflated prices for its medicines in order to secure higher reimbursement levels for contracts.

The government's complaint alleges that since around 1993, Dey reported prices that were more than five times the actual sales prices on many of the drugs it manufactures, causing Medicare and Medicaid to reimburse Dey's customers in excess of $500 million for the drugs which are the subject of the complaint.

In a statement, the company said it "has consistently participated legally and ethically within national and state reimbursement systems," adding that it intends to defend itself vigorously against the claims.

The federal action follows a number of cases brought by states claiming pharmaceutical companies have been involved in this type of price-fixing. Late last year, for example, Missouri filed a lawsuit against four pharmaceutical companies - Boehringer Ingelheim's Roxane Laboratories unit, Mylan Laboratories, Teva Pharmaceutical Industries and Watson Pharmaceuticals - alleging that they inflated Medicaid prescription drug prices over the last decade.