(Bloomberg) -- Turing Pharmaceuticals was warned by New York’sattorney general that the distribution network for a rarely usedcancer drug, whose 55-fold overnight price hike drew widespreadcriticism, may violate antitrust laws.

State officials made their concerns known to Turing and ChiefExecutive Officer Martin Shkreli in an Oct. 12 letter obtainedby Bloomberg.

Turing’s decision to raise the price of the decades-oldmedicine, which it acquired in August, brought a storm ofcriticism, including from Democratic presidential candidateHillary Clinton, whose subsequent vow to reform thedrug industry sent the biotech sector plummeting.

After acquiring the anti-parasitic drug Daraprim, New York-basedTuring implemented the price increase.

The treatment, the only federally approved drug for a conditionthat can arise in patients with weakened immune systems, such asthose with aids or cancer, was raised from $13.50 to $750 perpill.

Read: CVS accused of overcharging for genericdrugs

Lower price

Shkreli initially defended the move, saying it was a bargaineven at the higher price, since it can save a patient’s life withina limited amount of time. He later said he would lower the cost,without saying by how much.

Shkreli and another representative for Turing didn’t immediatelyrespond to e-mails requesting comment on the letter from theattorney general’s office. The New York Times reported the letterearlier.

Read: Worry over who gets $15,000drug

In the letter, the antitrust bureau chief for New York AttorneyGeneral Eric Schneiderman asked Shkreli to contact the office“immediately” to respond to concerns that the company’s salespractices were intended to deter generic pharmaceutical firms fromcreating alternatives to the drug.

"We understand that Turing is not permitting Daraprim to be soldin retail pharmacies, but rather is distributing it only through asmall number of specialty pharmacies," said Eric Stock, the bureauchief, in the letter.

Inhibit competition

The move may inhibit competition by preventing genericdrug-makers from obtaining access to samples, Stock said. Withoutsamples, other drugmakers would be unable to conduct studies neededto win regulatory approval for generic versions, he said.

"Turing’s actions may be restraining competition unlawfully, andhave the potential to greatly impede access to a drug that iscritical for the public health," Stock said.

Shkreli, 32, is under investigation by federal prosecutors inBrooklyn, New York, in an unrelated matter.

The office is looking into potential securities law violationswhile he was at Retrophin Inc., another biotechnology firm hefounded.

In an interview in January, Shkreli said he was unaware of thecriminal probe and denied wrongdoing. Retrophin later disclosed theinvestigation and sued Shkreli for $65 million, claiming hebreached his duty of loyalty to the biopharmaceutical company in along-running dispute over his use of company funds.

Before Shkreli started Turing, Retrophin implemented a similarlylarge price increase for another older drug, Thiola. The drug, usedto treat a painful condition that causes repeated kidney stones,went from $1.50 a pill to more than $30, Benjamin Davies, aPittsburgh-based surgeon, wrote last year in TheStreet.com.

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