Healthcare Business News

Indian drugmaker Ranbaxy agrees to $500M settlement

By Joe Carlson
Posted: May 13, 2013 - 3:15 pm ET

The Indian generic drugmaker Ranbaxy, which already operates under an unprecedented consent decree banning sales of many of its products in the U.S., agreed to plead guilty in federal court and pay $500 million to resolve allegations of shoddy factory inspections and poor quality control.

Ranbaxy, which calls itself India's largest drugmaker in financial disclosures, agreed to have its subsidiary Ranbaxy USA plead guilty to seven felony counts of introducing “adulterated” drugs into interstate commerce and making false statements to the Food and Drug Administration. All of the drugs were produced at company plants in Paonta Sahib and Dewes, India, which were also specifically cited in the consent decree, a U.S. Justice Department statement said.

The agreement says the company manufactured numerous drugs between 2003 and 2007 that lacked proper testing to ensure that their active ingredients were as potent as advertised. The company also submitted false test results to the FDA purporting to show that Ranbaxy officials were investigating drug quality and manufacturing specifications.

The company agreed to pay $150 million in criminal sanctions. That's in addition to $350 million in civil penalties under the False Claims Act, which was implicated because the drugs that the company sold to government health programs like Medicare and Medicaid were not legal under the Food, Drug and Cosmetic Act.

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“While we are disappointed by the conduct of the past that led to this investigation, we strongly believe that settling this matter now is in the best interest of all of Ranbaxy's stakeholders,” said Arun Sawhney, president and managing director of Ranbaxy, in a news release. “Ranbaxy has successfully launched several generic products recently and is well-positioned for future growth in the U.S. and around the world.”

Although the corporation admitted criminal violations of the FDCA, the allegations related to the false billing of health programs was settled without an admission of liability, the settlement says. States that participated in the litigation will receive part of the civil settlement for their Medicaid programs, such as New York, which is receiving $44 million.

The case that led to the settlements was filed by a former Ranbaxy executive, Dinesh Thakur, who will receive $48.6 million from the federal share of the settlements. Thakur formerly worked as global head of research information at Ranbaxy, a job that he said gave him access to information about what he described as falsified drug data and systemic violations of rules on manufacturing and laboratory practices.

He said that he first notified company officials, and when they did nothing, he began his litigation eight years ago.

Financial disclosures from Ranbaxy said the company is working diligently toward meeting the terms laid out in its consent decree, which was announced last year along with initial word of the $500 million settlement.

Follow Joe Carlson on Twitter: @MHJCarlson

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