Ranbaxy to pay $500 million to settle cases in US

Company was selling sub-standard drugs; submitted false claims to health authorities

By Jyotsna Singh
Published: Tuesday 14 May 2013

The US subsidiary of Indian pharma Ranbaxy Laboratories Ltd has agreed to pay $ 500 million under a settlement agreement with the US Department of Justice. The company has agreed to pay the fine to settle civil and criminal cases relating to selling sub-standard drugs and submitting false data to the US health authorities.  A former senior official of the company, Dinesh Thakur, who is the whistleblower in the case, is entitled to $48.6 million.

Ranbaxy was found selling drugs, which did not meet required safety standards, manufactured at its plants in India at Paonta Sahib in Himachal Pradesh and Dewas in Madhya Pradesh. The company, which is India’s largest generic drugmaker, is also alleged to have given false data to the US health authorities.

The settlement is the largest-ever made by the US justice department with a generic drug maker over drug safety. Ranbaxy USA pleaded guilty to three felony counts related to drugs that did not meet specifications. It pleaded guilty to four counts of making false statements to the US health authorities.

Out of the total settled fine, Ranbaxy will pay $350 against civil claims relating to sub-standard drugs. These drugs were sold in the US market in 2005-06. The drugs in question are acne drug Sotret; epilepsy and nerve pain drug gabapentin; and antibiotic ciprofloxacin. Rest of the amount, $150 million, is to settle charges of submitting false claims to the US government's health programmes from April 1, 2003 to September 16, 2010.

An official statement issued by the drug maker read: “Under the terms of the final settlement agreement, Ranbaxy and its affiliates have agreed to settle alleged civil violations of the False Claims Act with the US, all 50 states and the District of Columbia. Separately, a US subsidiary, Ranbaxy USA, Inc., has agreed to plead guilty to a criminal information charge of violations of the Food, Drug and Cosmetic Act and other criminal statutes. Ranbaxy’s payments related to both the civil and criminal settlements total $500 million in aggregate.”

One who blew the whistle

The eight year lawsuit started after Dinesh Thakur, former Ranbaxy director and global head for research information and portfolio management, blew the whistle on the company and told health authorities about the irregularities in the company. “Eight years ago, as the director of project and information management at Ranbaxy, I discovered that the company falsified drug data and systemically violated current good manufacturing practices and good laboratory practices. Ranbaxy’s management was notified of these widespread problems. When they failed to correct the problems, it left me with no choice but to alert healthcare authorities,” said Thakur in a statement. He worked for two years with US regulatory authorities to expose the malpractices. He thereafter filed a lawsuit to hold Ranbaxy accountable.

"Along the way, the government barred the importation of Ranbaxy drugs, held the company accountable for its data fraud under FDA's Application Integrity Policy, and required it to implement corrective measures to prevent the problems from recurring,” he added.

The agreement has been in the works for sometime. In 2011, the company set aside $ 500 million to resolve the matter after reaching a settlement with the US Food and Drug Administration (USFDA). It expected to be booked for civil and criminal liabilities after the US government initiated investigations into the matter. USFDA banned the company from selling about 30 drugs in 2008 in the US after it found manufacturing deficiencies at plants in India. In 2009, FDA accused the company of providing false data and test results in drug applications. It halted reviews of drugs made at a plant in northern India.

Subscribe to Daily Newsletter :

Comments are moderated and will be published only after the site moderator’s approval. Please use a genuine email ID and provide your name. Selected comments may also be used in the ‘Letters’ section of the Down To Earth print edition.