Ranbaxy pays $500M to settle adulterated drugs suit

Ranbaxy has agreed to pay $500 million to settle a whistleblower lawsuit that claimed the pharmaceutical manufacturer made and distributed adulterated drugs at two facilities in India. The payment includes $350 million as a civil settlement plus $150 million in criminal fines.  

The U.S. Department of Justice (DOJ) reported that this is the largest drug safety settlement to date with a generic drug manufacturer.

Ranbaxy came under fire in November 2012 after its generic statin product was contaminated with bits of glass. The company voluntarily recalled 10 mg, 20 mg and 40 mg dosage strengths of its atorvastatin calcium tablets packaged in 90- and 500-count bottles that potentially contained small glass particles. It resumed supplying atorvastatin in those doses in the U.S. on March 26.

The settlement announced by the DOJ revolved around safety investigations involving Ranbaxy USA, which the government accused of allowing adulterated products from plants in India to be introduced into the U.S. market. Ranbaxy USA is a subsidiary of the generic pharmaceutical manufacturer Ranbaxy Laboratories.

A drug is considered adulterated if manufacturers fail to adhere to quality control practices under current Good Manufacturing Practice regulations. In an inspection in 2006, the FDA determined that the plant in Paonta Sahib had incomplete records and inadequate protocols to assess the stability of the drugs gabapentin, ciprofloxacin and Sotret, the branded generic form of isotretinoin.

Ranbaxy acknowledged the FDA’s findings from that inspection as well as inspections of the Dewas facility in 2006 and 2008 that detailed similar problems. In addition, Ranbaxy USA admitted to failing to alert the FDA in a timely manner about lots of Sotret and gabapentin that had failed certain tests.  

Ranbaxy USA pleaded guilty to federal charges and agreed to pay a criminal fine and forfeiture of $150 million and to settle civil claims under the False Claims Act and related state laws for $350 million. In the civil suit, the government alleged that Ranbaxy “knowingly caused false claims for those drugs to be submitted to Medicaid, Medicare” and other federal programs, according to court documents.

Dinesh Thakur, a former Ranbaxy executive who filed a qui tam action in the U.S. District Court of Maryland in 2007, will receive $48.6 million. Ranbaxy also agreed to pay fees and costs incurred in the action.

In a release, Thakur said he “discovered that the company falsified drug data and systematically 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.”

Ranbaxy said in a release that it signed a consent decree with the FDA in December 2011 in which it “committed to further strengthen procedures and policies to ensure data integrity and to comply with Current Good Manufacturing Practice.” It said it had anticipated the settlement agreement and had made provisions for the $500 million in fines.