Ranbaxy USA Agrees to Pay $500 Million
to Settle Criminal and Civil Charges

In the largest drug safety settlement to date with a generic drug manufacturer, Ranbaxy USA Inc., a subsidiary of Indian generic pharmaceutical manufacturer Ranbaxy Laboratories Limited, has pleaded guilty to felony charges relating to the manufacture and distribution of certain adulterated drugs made at its manufacturing facilities in Paonta Sahib and Dewas, India. The criminal plea encompassed three counts of violating the federal Food, Drug, and Conmetic Act and four felony counts of knowingly making material false statements to the FDA. Ranbaxy USA also agreed to pay a criminal fine of $130 million, forfeit an additional $20 million, and settle civil claims under the False Claims Act and related State laws for $350 million. In the agreements, the company admitted:

The civil settlement resolved a lawsuit filed in U.S. District Court for the District of Maryland under the qui tam (whistleblower) provisions of the False Claims Act, which allow private citizens to bring civil actions on behalf of the United States and share in any recovery. In this suit, the U.S. Government contended that Ranbaxy manufactured, distributed, and sold drugs whose strength, purity, or quality differed from their specifications or were not manufactured according to the FDA-approved formulation. The Government further contended that, as a result, Ranbaxy knowingly caused false claims for those drugs to be submitted to Medicaid, Medicare, TRICARE, the Federal Employees Health Benefits Program, the Department of Veterans Affairs, and the U.S. Agency for International Development (USAID), which administers the U.S. President's Emergency Plan for AIDS Relief (PEPFAR). In the civil settlement, Ranbaxy agreed to pay $350 million to resolve allegations that it caused false claims to be submitted to government health care programs between April 1, 2003, and September 16, 2010, for certain drugs manufactured at the Paonta Sahib and Dewas facilities. The federal government's share is approximately $231.8 million, and the remaining $118.2 million will go to the states participating in the agreement. The whistleblower, Dinesh Thakur, a former Ranbaxy executive, will receive approximately $48.6 million from the federal share. Except for the allegations to which Ranbaxy pleaded guilty in the Criminal Information, there has been no determination of liability as to the claims settled by the civil agreement.

In 2012, FDA and Ranbaxy agreed to an injunction that prevents drugs produced at the Paonta Sahib and Dewas facilities from entering the U.S. market until the facilities have been brought into full compliance with the FDCA and its implementing regulations. Since September 16, 2008, when the FDA placed drugs from those facilities on an Import Alert, Ranbaxy has not imported drugs from those facilities into the U.S. In addition, the injunction requires Ranbaxy to review and verify data contained in its past drug applications to the FDA.

The criminal case was prosecuted by the U.S. Attorney's Office for the District of Maryland and the Civil Division's Consumer Protection Branch. The civil settlement was negotiated by the U.S. Attorney's Office for the District of Maryland and the Civil Division's Commercial Litigation Branch. The case was investigated by agents from the FDA's Office of Criminal Investigations and USAID's Office of Inspector General. The FDA's Office of Chief Counsel, HHS Office of Counsel to the Inspector General, Office of the General Counsel-CMS Division, and the National Association of Medicaid Fraud Control Units also provided assistance.

The Fortune CNN Blog has published a gripping account of Ranbaxy's wrongdoing.

In January 2014, the FDA prohibited Ranbaxy from manufacturing and distributing active pharmaceutical ingredients for FDA-regulated drug products from its facility in Toansa, India, which means that all four of its facilities are now restricted. The FDA Web site contains an index of its actions against Ranbaxy.

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This article was revsed on February 2, 2014.

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