Ranbaxy and DOJ agree to largest generic drug safety settlement ever

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June 6, 2013

Ranbaxy and DOJ agree to largest generic drug safety settlement ever 

Steven M. Sellers

In the largest drug safety settlement the Department of Justice has ever executed with a generic drug manufacturer, Ranbaxy USA pleaded guilty to seven felony counts and agreed to pay a total of $500 million in fines and forfeitures. The DOJ alleged that Ranbaxy knowingly produced adulterated drugs at two plants in India that were later distributed in the United States and that Ranbaxy officials failed to notify the FDA of tests that showed numerous drugs it produced were out of specification, impure, and did not meet shelf life standards.

Ranbaxy USA, a subsidiary of India’s largest generic drug manufacturer, pleaded guilty to seven felony counts and agreed to pay a total of $500 million in fines and forfeitures to resolve claimed violations of the Federal Food, Drug, and Cosmetic Act (FDCA). The U.S. Department of Justice (DOJ) alleged in civil and criminal complaints that Ranbaxy knowingly produced adulterated drugs at two plants in India in 2005 and 2006 that were later distributed in the United States. It also alleged that Ranbaxy officials failed to notify the FDA of tests that showed numerous drugs it produced were out of specification, impure, and did not meet shelf life standards. The DOJ characterized the agreement as the largest drug safety settlement ever executed with a generic drug manufacturer. (U.S. ex rel. Thakur v. Ranbaxy Lab. Ltd., No. 1:07-cv-0962 (D. Md. filed Apr. 13, 2007), U.S. v. Ranbaxy Lab. Ltd., No. 1:12-cv-00250 (D. Md. filed Jan. 25, 2012), U.S. v. Ranbaxy USA, Inc., No. 1:13-cr-0238 (D. Md. filed May 13, 2013).)

The whistleblower case was filed under seal in 2007 on the federal government’s behalf and on behalf of 16 states and the District of Columbia where the drugs had been prescribed, alleging that Ranbaxy violated the False Claims Act and its state equivalents. The relator, Dinesh Thakur, was Ranbaxy’s director of project and information management in India from 2003 to 2005. He discovered that company officials had fabricated data to substantiate representations about drug formulations, bioequivelance, and stability for abbreviated new drug applications (ANDA) filed with the FDA. His investigation confirmed that company officials “had engaged in a pattern of conduct to knowingly fabricate data which was incorporated into filings with regulators in an effort to deceive regulators into approving [Ranbaxy’s] drugs,” according to the civil complaint. The fabricated data allegedly supported successful ANDA submissions filed as early as 1998 for various drugs, including antibiotics, acne treatments, and drugs for elevated cholesterol and hypertension.

Thakur presented his findings to his supervisor, Rajinder Kumar, Ranbaxy’s head of research and development, who conveyed the information to the company’s board of directors in 2004. Confronted with the fraud allegations, Ranbaxy officials “knowingly concealed from authorities the FDCA and other law violations and requested that Dr. Kumar destroy the evidence of the fraud,” at which point Kumar resigned, according to the recently unsealed complaint.

As part of settlement, Ranbaxy admitted that it continued to distribute batches of adulterated or compromised drugs in the United States for the treatment of epilepsy (gabapentin), severe acne (isotretinoin), and bacterial infections (ciprofloxacin) between 2005 and 2008, even though it had been advised by the FDA and its own consultants of problems with the drugs. The Justice Department said in a statement that “Ranbaxy USA was aware at various times between June and August 2007 that certain batches of gabapentin were testing out of specification, had unknown impurities, and would not maintain their expected shelf life,” but it “did not notify FDA and institute a voluntary recall until October 2007.”

The FDA put the drug manufacturer on notice of its concern about its two plants in India several years ago. In 2008, the agency warned Ranbaxy that inspectors had discovered violations of the FDA’s good manufacturing practices at plants in Dewas and Paonta Sahib, including cross-contamination of drugs, improper mixing of penicillin products, and inadequate recordkeeping. The DOJ eventually requested a permanent injunction against the company that resulted in a 2012 agreement in which Ranbaxy agreed to suspend operations at the plants pending correction of the violations.

In the criminal case, Ranbaxy pleaded guilty to three felony FDCA counts and four counts of knowingly making false statements to the FDA, paid a fine of $130 million, and forfeited an additional $20 million. Ranbaxy did not admit civil liability but agreed to pay $350 million to settle the FDCA claims and related state law allegations. The federal government’s overall settlement share was about $231.8 million, while another $118.2 million was allocated to the participating states. Thakur received about $48.6 million as relator of the FDCA violations.

“Ranbaxy is the latest to join the ranks of pharmaceutical companies successfully buying their way out of accountability,” said Brian Aylstock of Pensacola, Fla., who represents plaintiffs injured by pharmaceutical drugs. In the past few years, he said, several manufacturers “have pleaded guilty to similar charges and have collectively paid billions of dollars to resolve criminal charges related to the marketing of their drugs. This is becoming far too common of a practice in this industry, and it is clear that these companies have a total lack of respect for the law.”


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